SENATE BILL NO. 1 An Act relating to state implementation of federal statutes. Co-chairman Halford directed that SB 1 be brought on for discussion. SENATOR TAYLOR, sponsor of the legislation, noted that the bill was not originally referred to Finance. Referral was made when the legislation picked up additional fiscal notes. The bill was introduced as companion legislation to SJR 7--the Tenth Amendment resolution which has already passed the legislature and been transmitted to the Governor. That resolution demands that Congress stop passing federal mandates which exceed Congressional authority under the Tenth Amendment. SB 1 represents an attempt to identify federal mandates, both statutory and regulatory, which conflict with state policy or exceed state constitutional limitations. Similar legislation, passed in Colorado last year, declares that state government has an obligation to the public to do what is necessary to protect the right of citizens of the state while minimizing or eliminating additional cost or regulatory burden. To accomplish the foregoing goal, SB 1 requires annual review of each Congressionally mandated program by the executive branch. An annual report to the Governor and Legislative Budget and Audit Committee would set forth conclusions and make recommendations for changes in federal law to make programs more cost effective and consistent with state policy. A determination could also be made by the Dept. of Law concerning whether the mandate exceeds federal authority. Sec. 1 of the bill contains findings of urgent need to modify certain mandates because implementation of the mandates wastes the financial resources of the state, municipalities, and residents, and federal regulators often do not understand the needs and priorities of Alaskans. The bill provides for legislative review of federal mandates. The Legislative Budget and Audit Committee would be charged with making recommendations to the Governor on the need to seek a change in federal statutes, regulations or policies suited to state needs, suggest changes in the impacted state program to implement the mandate more efficiently, or to pursue legal challenge to the validity of the mandate. Passage of SB 1 will add credence to passage of SJR 7. Senator Taylor next referenced fiscal notes submitted by departments, noting the Dept. of Health and Social Services' claim it will need a $77.0 a year special assistant to review federal mandates. The Dept. of Public Safety requests $6.0 to establish a format and time table, seek field input, compile responses, draw conclusions, and issue a report. The Senator voiced his belief that the type of review envisioned by SB 1 is already part of the budget process. It is difficult to believe that departments do not review mandated programs with an eye toward cost effectiveness and inconsistency with state policy. Senator Taylor acknowledged that departments do not presently review programs to determine if they exceed constitutional authority. The intent of SB 1 is to flag a program for later review at the will of the Legislative Budget and Audit Committee rather than to make a determination at the department level. In that respect, SB 1 may need to be amended to strengthen legislative review. Senator Taylor voiced his belief that much of the work the proposed bill would generate at the department level is already being done. Co-chairman Halford asked the sponsor for a recommendation on fiscal notes to accompany the bill. Senator Taylor recommended a zero note. He reiterated that work contemplated by the bill should be ongoing at the present time, particularly in light of passage of SJR 7. Senator Zharoff directed attention to page 2, line 13, and noted language referencing "head of another agency." Senator Taylor suggested that the legislature would want to know if the Alaska Housing Finance Corporation, AIDEA, the railroad, etc. are adversely impacted by federal legislation. As an example, he cited the Americans with Disabilities Act. Senator Zharoff referenced a substantial fiscal note from the Dept. of Health and Social Services and suggested that a number of federal mandates impact the department and necessitate substantial review. Senator Taylor concurred. Senator Rieger asked if mandatory quarterly tax withholdings or social security payments would be included within the definition of federal mandates. Senator Taylor responded that the definition is generic and would include areas mentioned by Senator Rieger. The sponsor advised that those items would likely be included in reports to the legislature. Senator Sharp voiced support for the legislation. He noted concern that the state is often attracted to federal money, and it provides the necessary match without knowing what the overall economic impact will be, either long or short term. The proposed bill would force an economic evaluation, a determination of whether the program is necessary, and evaluation of future impact. Senator Taylor pointed to over $200 million in federal mandates, grants, and incentive programs within the Dept. of Education and noted that the department did not request additional moneys for review and evaluation. Senator Phillips MOVED that SB 1 pass from committee with individual recommendations and the zero fiscal notes. Senator Zharoff OBJECTED, voicing concern regarding the burden that would be placed upon the Dept. of Health and Social Services. He then REMOVED his OBJECTION. ELMER LINDSTROM, Special Assistant, Dept. of Health and Social Services, came before committee. He noted the wide variation in fiscal notes submitted by departments and suggested that it reflects a wide variation in assumptions of what the bill would entail. He explained that since work within the Dept. of Health and Social Services involves a great deal of federal activity, the department assumes it would be reviewing each federal dollar and each discrete program as a federal mandate and reporting new and additional information beyond historical analysis. If it is the intent of the sponsor and the legislature that the bill will merely entail a "recapitulation" of existing information and efforts, there will be no cost. Senator Donley voiced concern that passage of the proposed bill would impose a mandate on state departments without providing the necessary resources to do the work. He voiced support for the bill but not for zeroing of fiscal notes. The legislature may not get the results it seeks without making some accommodation or providing some resources. Co-chairman Halford voiced his belief that departments are already doing what the proposed legislation requests. The Dept. of Health and Social Service, in particular, must analyze federal programs to maximize federal share, etc. Co-chairman Halford called for objections to passage of the bill. None were forthcoming. SB 1 was REPORTED OUT of committee with a zero Senate Finance Committee fiscal note covering all departments. Co-chairmen Halford and Frank and Senators Phillips and Sharp signed the committee report with a "do pass" recommendation. Senators Donley, Rieger, and Zharoff signed "no recommendation."