CS FOR SENATE BILL NO. 71(FIN) "An Act relating to special request registration plates celebrating the arts; relating to artwork in public buildings and facilities; relating to the management of artwork under the art in public places fund; relating to the powers and duties of the Alaska State Council on the Arts; establishing the Alaska arts and cultural investment fund; and providing for an effective date." 9:05:15 AM SENATOR GARY STEVENS, SPONSOR, thanked members for hearing the bill. The bill was related to the Alaska State Council on The Arts (ASCA) and the council had requested the legislation. It was a result of complications that had occurred during the council's budget cycle in 2019. The legislation would provide some needed stability to the council and make it less reliant on unrestricted general funds (UGF). 9:07:14 AM BEN BROWN, CHAIR, ALASKA STATE COUNCIL ON THE ARTS, thanked Senator Stevens for introducing the legislation. He detailed the purpose of the bill and explained that it was not simply about state license plates. Prior to holding the first contest to design an Alaska license plate, the council ensured that the winning plate would become one of the three default plates available in the state, meaning that it could be chosen by drivers at no additional cost. The license plate program had been a tremendous success and had become a popular option at the Division of Motor Vehicles (DMV). He thought that the license plates were so popular because Alaskans were unified in their love for the state's natural beauty. The council thought the popularity of the plates presented an opportunity to generate revenue with the program. The bill would implement a modest surcharge at a maximum of $50, though the charge would likely be much lower than the maximum. The goal was to charge just the right amount in order to reduce the council's reliance on UGF. In order to receive the allocation as a state arts agency from the National Endowment for the Arts (NEA), the council had to match dollar-for-dollar about a $700,000 grant that came to the council every year as part of a three-year partnership agreement. It was possible for the program to generate between $50,000 and $100,000. He relayed that it seemed that the governor and the Department of Administration were amenable to the bill. He was happy to discuss the vetting of the bill that took place in the House State Affairs Committee, which was the previous committee of referral. 9:10:18 AM Representative Wool wondered if the artistic plates would move in statute from the category of plates that could be selected at the DMV that came at no additional cost to the category of plates with an additional fee. Mr. Brown replied that the artistic plate would not be moved to another category in statute. He explained that the artistic plate would remain one of the three default plates. He relayed that the council was the only state agency with its own plate. The bill would simply allow for a surcharge of the artistic plate that would generate additional revenue. He indicated that Representative Jonathan Kreiss-Tompkins was involved in the original legislation for the artistic plate program and was insistent that the mechanism of the program stayed the same. He emphasized that the process would remain the same apart from the modest surcharge. Co-Chair Merrick indicated Representative Johnson had joined the meeting. Representative Wool understood that if a person wanted an artistic plate, there would be a surcharge that would benefit ASCA. Other plates that were not part of the default three also had surcharges, but the money would not go to a state agency. Mr. Brown responded that he was correct. 9:13:02 AM Co-Chair Foster asked if people who already had artistic plates would be grandfathered in and therefore not required to pay the surcharge. Mr. Brown responded that the charge would only apply when an individual received the physical plate. There would be no additional fee associated with car registration renewal stickers for individuals who already had artistic plates. Only upon receiving a new plate associated with the upcoming license plate design contest would the fee begin to apply. Co-Chair Foster asked whether the surcharge would be in addition to the fees already in place. Mr. Brown responded in the affirmative. The council was envisioning a charge in the $3 range. A person would not be paying $50 or $100 as they would with some of the other specialty plates. Representative LeBon suggested that people would only pay the surcharge once. Mr. Brown responded that he was correct. 9:14:47 AM Representative Johnson thought that the surcharge fee should be consistent. Mr. Brown responded that the bill was set up with input from DMV. The program would be easy to implement administratively as it would change the current system as little as possible. He spoke of the robust interest there had been in the design contest in the past. Over 15,000 people voted to select the currently offered artistic plate. Co-Chair Merrick indicated Representative Rasmussen and Representative Carpenter had joined the meeting. Representative Wool asked whether the $3 fee was the goal of the bill. He thought it seemed low and wondered if it would be enough to generate the revenue the council desired. He asked where the revenue would be applied. Mr. Brown thought people would pay more for luxury goods, but license plates were not a luxury item. There would be a public process in which the council would receive feedback on whether the $3 fee seemed reasonable. If the public thought the fee should be higher, it might be revised. 9:17:52 AM TIM LAMKIN, STAFF, SENATOR GARY STEVENS, noted that committee packets included a helpful document: "DMV License Plates Total by Calendar year" (copy on file). He explained that it behooved the council to not make the surcharge too high. The maximum fee was set at $50 in the bill simply to allow for flexibility, but it was unlikely that it would reach that amount. Co-Chair Merrick indicated that her notes reflected that three members recommended amending the bill. She asked what the suggestions were. Mr. Brown relayed that there was some discussion about other sections of the bill unrelated to license plates. There were some questions about legal counsel and ensuring that it was clear that the Attorney General would serve as legal counsel for ASCA. There were also questions about the Arts and Culture Investment Fund in Section 6 of the bill. He assumed that this section was the target of the amendments but disagreed with amending the section. There had been significant collaborative work to ensure that the bill would not create a dedicated fund but a designated fund. He elaborated that the $700,000 that ASCA received as part of the agreement with NEA was only 45 percent of the council's budget. The remaining 55 percent came from the Rasmuson Foundation and other state partners. The council was the only state agency leveraging non-governmental money to accomplish its work. He thought it was important to identify that the council was bringing in private funds. Co-Chair Merrick agreed that Section 6 might have been controversial. 9:21:30 AM Co-Chair Foster asked if the fund was sweep-able. Mr. Brown understood that it was not. Mr. Lamkin confirmed that the issue came up in the State Affairs Committee and representatives from the Department of Law and the Legislative Division reported that it was not sweep-able. 9:22:25 AM Co-Chair Foster asked what the vision was around capitalizing the fund. He wondered whether the state would capitalize the fund or if it would be a combination of state and private capitalizations. Mr. Brown responded that the fund consisted of money appropriated by the legislature, donation funds, and other sources. It was a combination of state, federal, and private contributions. Co-Chair Foster asked what the plan would be for the initial capitalization from the state. Mr. Brown responded that it would be the same as the budget allocation, which was approximately $3.7 million in the operating budget. He thought the allocation had been pleasingly consistent. 9:23:40 AM Representative Wool referred to the license plate handout. He noted that the artistic plate was the most popular option in 2019. He relayed that when he had recently gone to get a new license plate, he was told by a DMV employee that he would simply get whichever plate was on the top of the pile and he did not get a choice. He asked if the surcharge might cause the amount of artistic plates distributed to go down. Mr. Brown would be surprised if it was normal DMV procedure to get the plate that was at the top of the pile. He thought the only thing that would change would be that the artistic license plate would include the surcharge. He thought the question would be better suited for DMV in terms of how staff was trained. The goal was to make sure the license plates were accessible. He assured the committee that the artistic plate contest would be highly publicized. Co-Chair Merrick jokingly asked if rank-choice voting would apply. Mr. Brown supposed that it could, but it would be at the discretion of the council. Representative Thompson was in favor of the bill and offered to cosponsor it. 9:26:49 AM Co-Chair Merrick asked Mr. Brown to present the fiscal note from the Department of Education and Early Development (DEED)with control code zPppx. Mr. Brown deferred to Mr. Lamkin. 9:27:08 AM AT EASE 9:28:19 AM RECONVENED ANDREA NOBLE, EXECUTIVE DIRECTOR, ALASKA STATE COUNCIL ON THE ARTS, EAGLE RIVER (via teleconference), explained that Fiscal Note 6 with control code zPppx had a one-time impact of $6,000 in order to meet the obligations set forth in regulation. 9:30:17 AM Co-Chair Merrick asked Mr. Steininger to review Fiscal Note 4 put forth by the governor with control code FVAZY. NEIL STEININGER, DIRECTOR, OFFICE OF MANAGEMENT AND BUDGET, OFFICE OF THE GOVERNOR, explained that the fiscal note was indeterminate and structured to ensure that the fund would not be considered a dedicated fund. It would ensure that the funds were appropriated by the legislature before becoming available to the council. The fiscal note was a placeholder for a language section item that would include the amount of capitalization should the bill pass. Co-Chair Merrick indicated Fiscal Note 5 would be reviewed at a future meeting. 9:31:43 AM Representative Carpenter asked if there was an estimated cost that would be incurred by the Department of Law. Mr. Brown replied that the Department of Law was de facto counsel for ASCA. In 2019 when funds were vetoed, the assistant attorney general at the time was having to advise two clients with diametrically opposed positions, which was a violation of the rules of conduct. It would have been better to have a second attorney general to advise ASCA. He suggested that a fiscal note by the Department of Law would be indeterminate because ASCA's need for legal counsel was unpredictable. He added that in the unlikely event that ASCA needed to hire outside legal counsel, it would not be a reimbursable service agreement. Co-Chair Merrick indicated a representative from DMV was available to review Fiscal Note 5 from the Department of Administration with control code mqgls. 9:35:04 AM JEFFERY SCHMITZ, DMV, DIRECTOR, DIRECTOR, DIVISION OF MOTOR VEHICLES, DEPARTMENT OF ADMINISTRATION (via teleconference), reviewed the fiscal note. He explained that DMV made an estimate that just over 3,000 people would select the artistic plate option. However, it was unclear how accurate that estimate was. The surcharge amount was also unknown and the DMV based the estimate on the maximum surcharge of $50. Representative Wool asked how license plates were distributed. He asked if people were able to choose or simply given the next plate available. Mr. Schmitz responded that people were given a choice. It would not be the correct procedure if people were not offered a choice between plate types. CSSB 71(FIN) was HEARD and HELD in committee for further consideration. 9:37:17 AM AT EASE 9:39:21 AM RECONVENED Co-Chair Merrick invited Representative Wool to begin.