HB 71-AK REGIONAL ECONOMIC ASSISTANCE PROGRAM  8:12:02 AM CHAIR OLSON announced that the first order of business would be HOUSE BILL NO. 71 "An Act extending the termination date of the Alaska regional economic assistance program; and providing for an effective date." 8:12:44 AM REPRESENTATIVE REINBOLD moved to adopt the proposed committee substitute (CS) for HB 71, labeled 28-LS0288\U, Martin, 2/22/13 as the working document. CHAIR OLSON objected for the purpose of discussion. 8:13:09 AM GINGER BLAISDELL, Staff, Representative Shelley Hughes, Alaska State Legislature, stated the bill for reauthorization of the Alaska Regional Development Organizations (ARDORs) was requested by several chairs of individual ARDORs. She explained that the ARDORs do not sunset but will simply end. Currently, the ARDORs are scheduled to end on June 30, 2013. She related that HB 71 would extend the end date until 2018. During review of the program it was discovered that an audit has never been conducted, which should be done for performance sake. Additionally, the committee substitute, Version U, would change the end date until 2016, which would follow the projected completion date of the proposed audit. 8:14:23 AM KRIS CURTIS, Legislative Auditor, Legislative Audit Division, Legislative Affairs Agency (LAA), stated that she believes 2016 is appropriate date, which would allow the division time to complete an audit. She suggested the audit would start in January or possibly earlier. REPRESENTATIVE HERRON agreed an audit is needed since the program hasn't been audited in 25 years, but also because the ARDOR program should be reviewed for possible consolidation. Currently, 12 ARDORs exist, but he suggested that several ARDORs are under performers. Therefore, he concluded that a fewer number of ARDORs may be beneficial to the overall health of the organization. 8:15:58 AM REPRESENTATIVE MILLETT echoed Representative Herron's comments. She informed members that she has served on the Department of Commerce, Community & Economic Development's (DCCED) finance subcommittee this legislative session. She reported that the state spends $807,000 per year for 12 ARDORs, which amounts to $62,000 per ARDOR. Some ARDORs are prolific and operate effectively, including the Anchorage Economic Development Corporation (AEDC), Southwest Alaska Municipal Conference (SWAMC), and Southeast Conference ARDORS. However, she questioned what other ARDORS, such as Dillingham, Cordova, Juneau, Bethel, and Nome, are doing with the $62,000 they receive. The aforementioned makes her frustrated, she related. Upon reviewing the aforementioned successful ARDORs, she found them to be structured with significant engagement with private sector economic development groups. She opined that at some point the state should not continue to fund - at $800,000 per year - functions that can be done by the private sector. Furthermore, there is duplication of effort since the state already has the Department of Commerce, Community & Economic Development (DCCED). Representative Millett relayed that while she understands the reasons to develop the ARDORs, she is unsure the current program is effective. 8:17:49 AM CHAIR OLSON asked whether the audit would address these issues. MS. CURTIS answered yes; the auditors would take the concerns expressed today under consideration when requesting the special audit. She related that the request would be put forth and audited - typically on a first come, first audited basis. She said the auditors would review the legislative intent of the program and review the committee's concerns when the request is drafted. REPRESENTATIVE JOSEPHSON noted that he also sits on the DCCED's finance subcommittee and reported that the ARDOR budget has been cut. Thus, the program will have to fight for its survival. 8:18:58 AM CHAIR OLSON removed his objection. There being no further objection, the proposed committee substitute (CS) for HB 71, labeled 28-LS0288\U, Martin, 2/22/13, was adopted. CHAIR OLSON, after first determining no one else wished to testify, closed public testimony on HB 71. 8:19:41 AM REPRESENTATIVE MILLETT reiterated her concern regarding whether the program is effective and if these organizations need the $62,000 per year for each ARDOR to survive. With regard to spending the funds to maintain the program while the audit occurs, she suggested that each ARDOR could come before the committee - one by one - to articulate any accomplishments. In fact, she related that she has attempted this assessment with some ARDORs during which she has heard each ARDOR echo its role as essentially what she has viewed as DCCED's function. Therefore, the ARDORs seem like a large duplication in government, she reiterated. Representative Millett stated that although she does not object to moving the bill from committee, she would recommend the program sunset. CHAIR OLSON asked if she would like to hold the bill further. REPRESENTATIVE MILLETT answered no; that she can voice her opinion on the House floor and will discuss the bill further with others. 8:22:01 AM REPRESENTATIVE JOSEPHSON related that while the finance subcommittee decided to cut the ARDOR program funding - as mentioned earlier - there was not any testimony or inclination by the chair, Representative Costello, to end the ARDOR program. He agreed with Representative Millett that this is a conversation for the House floor. REPRESENTATIVE HERRON offered that the ARDOR program - given the right circumstances - is very important to the state. He did not think the department has the boots on the ground to really generate localized efforts that do contribute. He said he will defend the ARDOR program, except for the underperformers, which clearly exist. Thus the consolidation and better use of state funding is probably appropriate. CHAIR OLSON related the bill has a further referral to the House Finance Committee. 8:23:38 AM REPRESENTATIVE REINBOLD moved to report the proposed committee substitute (CS) for HB 71, labeled 28-LS0288\U, Martin, 2/22/13, out of committee with individual recommendations and the accompanying fiscal notes. There being no objection, CSHB 71(L&C) was reported from the House Labor and Commerce Standing Committee. 8:24:07 AM The committee took an at-ease from 8:24 a.m. to 8:26 a.m.