SB 71-COUNCIL ON ARTS: PLATES & MANAGE ART  3:27:05 PM CHAIR KREISS-TOMKINS announced that the next order of business would be 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." 3:28:05 PM SENATOR GARY STEVENS, Alaska State Legislature, prime sponsor, introduced SB 71. He paraphrased the sponsor statement [included in the committee packet], which read as follows [original punctuation provided]: Senate Bill 71 was introduced at the request of the Alaska State Council on the Arts (ASCA). ASCA is the state arts agency for Alaska, and exists to promote the creation, enjoyment, and practice of the arts by all Alaskans. ASCA was founded in 1966 by passage of its enabling legislation by the 4th Alaska State Legislature. In 2017 the 30th State Legislature passed House Bill 137 which re-designated ASCA as a public corporation and governmental instrumentality of the State of Alaska and restructured the agency. In 2019 ASCA was shut down for several months following the veto of all its funding in late June. The Legislature restored funding in July, and the funds remained in the budget signed into law in August 2019. When ASCA re-opened following the period of time in which the agency was not in operation, its Board of Trustees sought out ways in which operations could be improved. Some of the possible changes they identified require statutory changes. SB 71 contains four discrete provisions which are meant to allow for more stable operations of the ASCA. First, SB 71 would attach a surcharge to the highly successful Alaska Artistic License Plate Program launched with the passage of SB 154 by the 29th State Legislature (2016), and modified by the passage of SB 204 in the 30th Legislature (2018). The bill would allow ASCA to set the amount of the surcharge in an amount not to exceed $50 as a means of generating income to help support ASCA's operations. Second, this legislation clarifies ASCA's management responsibility for public artwork created through its programs, to include the management of the relocation, disposition, or exchange of such artwork. Third, this legislation would codify the existing practice of the Department of Law serving as legal counsel for ASCA. This comports with normal operating procedures for agencies of the State of Alaska. Fourth, SB 71 provides ASCA with the means to maintain and strengthen its partnerships with non-profit foundation supporters, which have been very successful in recent years, and which now result in over half of ASCA's operating budget coming from non-governmental sources. The statutory changes proposed in SB 71 would hold harmless, ASCA's private-sector fund raising efforts in the state budget process. Thank you for your consideration of this important piece of legislation. 3:29:31 PM REPRESENTATIVE EASTMAN inquired about the legal counsel referred to in Section 5 of the bill. 3:29:50 PM TIM LAMKIN, Staff, Senator Gary Stevens, Alaska State Legislature, on behalf of Senator Stevens, prime sponsor of SB 71, explained that the addition in Section 5 was in response to processes that occurred during the budget cycle, which required representation that put the Department of Law (DOL) in conflict with the Alaska State Council on the Arts (ASCA). He deferred to Mr. Brown for a more thorough explanation. 3:30:43 PM BENJAMIN BROWN, Chair, Alaska State Council on the Arts, recalled that the governor vetoed ASCA funding in 2019, which created challenges for the council. He said in response to those vetoes, he reached out to the assistant attorney general (AG) at DOL for legal advice regarding the agency shut down. The assistant AG also represents the Department of Education & Early Development (DEED), he noted. He reported that per the Alaska Rules of Professional Conduct, an attorney cannot represent two clients with adverse interests; therefore, DOL could not represent both ASCA and DEED. He said he didn't want to see the assistant AG put in that difficult position, so he wanted to create a provision in the enabling statute for ASCA that would allow a different attorney than the one representing DEED to be assigned. 3:34:14 PM REPRESENTATIVE EASTMAN wondered whether Section 5 would be effectively telling the assistant AG that he/she could not help the administration implement that policy agenda. 3:35:28 PM REPRESENTATIVE TARR contextualized the situation previously described by Mr. Brown. 3:36:15 PM REPRESENTATIVE STORY asked whether the Alaska arts and cultural investment fund was "sweepable." MR. LAMKIN referenced AS 37.05.142 pertaining to program receipts. He explained that as a public corporation, ASCA dealt with public and private moneys simultaneously. He indicated that the proposed legislation provided that money gathered from private donors would be held harmless in the event of a vetoed budget. 3:37:58 PM MR. BROWN, in response to Representative Story, believed that the funds would be sweepable. He explained that the bill delineated that the Alaska arts and cultural investment fund was composed of private foundation funds invested by partners, such as the Rasmuson Foundation, in the work done as a public corporation of the state. He added that the bill illustrated that the funds were different than designated and undesignated general funds. He shared his understanding that it wouldn't make a practical difference in terms of "sweepability." 3:39:36 PM REPRESENTATIVE STORY reiterated her interest in learning whether the fund was sweepable. 3:39:52 PM The committee took a brief at-ease. 3:40:02 PM CHAIR KREISS-TOMKINS said he would prefer if the fund was "non- sweepable." 3:40:16 PM REPRESENTATIVE CLAMAN expressed his interest in seeing a written response from the AG on the "sweepability" of these funds to gain clarity on the issue. CHAIR KREISS-TOMKINS agreed. 3:41:39 PM REPRESENTATIVE EASTMAN asked which provision in the bill pertained to holding the funds harmless. MR. LAMKIN said he would need a moment to review the bill. 3:41:53 PM REPRESENTATIVE CLAMAN shared his understanding that it was Section 6 of the bill. 3:42:12 PM MR. LAMKIN noted that AS 44.27.059 was outside of the Executive Budget Act and therefore, the receipt authority would not be subject to an outright veto. He deferred to Mr. Brown. MR. BROWN agreed with Representative Claman that a position from the AG on the fund's "sweepability" would be welcome. 3:43:57 PM REPRESENTATIVE EASTMAN asked whether the bill would curtail the legislature or the governor's ability to limit or veto receipt authority. 3:44:46 PM MR. BROWN stated his understanding that Representative Eastman was asking whether the bill would diminish legislative appropriation authority or the governor's veto authority, adding that the answer was no. He explained that the legislature would still have to give ASCA the ability to receive statutorily designated program receipts that would go into a fund, which was different than the current structure. He noted that in the event that the council were vetoed "out of existence" again, the process for accounting for or returning those funds would be clearer. He added that the primary intent was to ensure that the funds were in a specific place, so investing entities had a degree of confidence as to where they were. 3:46:38 PM REPRESENTATIVE CLAMAN contended that the question for the committee was whether funds donated to the ASCA by nonstate government entities or money appropriated by the legislature to the ASCA should be sweepable. He said he had "no confidence" that 35.06. answered that question in the current environment, opining that clarity needed to be determined and clearly provided in the legislation. He reiterated his belief that prospective counsel should weigh in, as they would be responsible for litigating any future lawsuit on "sweepability." 3:48:36 PM CHAIR KREISS-TOMKINS asked Ms. O'Sullivan to speak to the "sweepability" of the fund being established under SB 71 and funds like it. 3:49:23 PM KELLY O'SULLIVAN, Fiscal Analyst, Legislative Finance Division, shared her understanding that the fund would not be sweepable because money appropriated to the fund could be spent without further appropriation. CHAIR KREISS-TOMKINS asked whether Ms. O'Sullivan could assess how the administration might perceive the fund's "sweepability." MS. O'SULLIVAN suspected that the administration would determine the fund as non-sweepable. 3:50:42 PM MS. O'SULLIVAN, in response to a question from Representative Tarr, shared her understanding that the significant language was "to carry out the purposes of this chapter" on page 3, lines 27- 28; however, she noted that she was not an attorney. REPRESENTATIVE TARR asked where "sweepability" was addressed in the bill. MS. O'SULLIVAN said in general, if a fund was established that could be spent without further appropriation, it was subject to the sweep. REPRESENTATIVE TARR offered to follow up with Legislative Legal Services. 3:52:52 PM REPRESENTATIVE VANCE directed attention to Section 6 and asked what would happen with donations received by ASCA if the legislature did not make an annual appropriation to the fund. MS. O'SULLIVAN stated that typically, the money would stay in the fund. REPRESENTATIVE VANCE turned to page 3, lines 24-25 and sought to clarify whether donations would lapse. MS. O'SULLIVAN replied "Typically, donations do not lapse." 3:54:41 PM REPRESENTATIVE CLAMAN referencing page 3, lines 22-24, provided a scenario in which $100 was contributed to ASCA. He asked whether that $100 would be a contribution to the general fund (GF), which would then be appropriated by the legislature to the Alaska arts and cultural investment fund. He asked whether that was accurate. MS. O'SULLIVAN said generally, all money appropriated to the fund, including donations and GF program receipts, were included in the appropriation. REPRESENTATIVE CLAMAN restated his question, seeking to confirm whether a donation was effectually a contribution to the GF that was then appropriated by the legislature to the ASCA. MS. O'SULLIVAN believed that was true, as typically, moving money into a fund required an appropriation. She suggested following up with Legislative Legal Services. 3:56:49 PM REPRESENTATIVE EASTMAN restated his prior question, asking whether Section 5 created an impediment to the AG carrying out the administration's policy decision regarding ASCA. MR. BROWN shared a personal anecdote. He said ultimately, it would not impede the governor from carrying out his policy objective, it would just provide adequate legal representation to both entities as those policy decisions unfolded. 3:59:29 PM REPRESENTATIVE EASTMAN asked whether the council would be opposed to distinguishing between counsel in an advisory capacity versus counsel in a representative capacity to avoid a scenario in which the state was suing itself. MR. BROWN believed that was not a necessary step, as it would not comport with the way law was practiced in Alaska and the U.S. 4:01:07 PM REPRESENTATIVE CLAMAN requested hearing from the AG at the next bill hearing to gain perspective on the conflict-of-interest issue. MR. LAMKIN noted that the issue was covered quite a bit in the Senate, which led to an amendment that added the language on page 3, lines 17-18. 4:02:19 PM MR. BROWN pointed out that ASCA had endeavored to work with Governor Dunleavy and the administration on this legislation. He believed that the governor was ready to sign the bill into law if passed by the House. CHAIR KREISS-TOMKINS said with all respect to the work done in the Senate, the committee would still like to hear from DOL. 4:03:17 PM REPRESENTATIVE KAUFMAN inquired about the council's funding structure. 4:04:14 PM CHAIR KREISS-TOMKINS held that line of questioning for the next bill hearing. He announced that SB 71 was held over.