HB 90-STATE TREASURY WARRANTS  CHAIR BUNDE announced HB 90 to be up for consideration. 2:03:44 PM REPRESENTATIVE MAX GRUENBERG, said he is here on behalf of the House State Affairs Committee, which introduced HB 90. This bill codifies the National Bank of Alaska v. Univentures 1231, 824 nd P.2 1377 (Alaska 1992) case, a Supreme Court decision that makes treasury warrants negotiable instruments under the Uniform Commercial Code (UCC). Up until that time, the state had taken the position treasury warrants were not negotiable instruments, so banks were free to dishonor them. 2:05:09 PM Banks were left without recourse when they would cash someone's treasury warrant and then the state would later say for some reason it wasn't honoring it. In the Univentures case, the Alaska Supreme Court said, following a number of other state litigating similar issues, that treasury warrants are negotiable instruments. He was not aware of any opposition. CHAIR BUNDE asked in what situation would the state not honor a treasury warrant. 2:06:36 PM REPRESENTATIVE GRUENBERG related the Univentures case was a case in point. The state leased a property that was owned by a joint venture or a partnership. The people involved in the ownership had a falling out and because they litigated amongst themselves, they asked the state to put a stop payment on the warrants. In the meantime, the state had given a treasury warrant to one of the litigants. That person negotiated the warrant; the bank paid it and then the bank sent it through the channels. By that time, the state had received the word to not honor it. Another situation where it could have arisen would have been if a vendor had delivered some goods to the state; the state wrote a warrant and then for some reason found the goods or services to be defective. They could have technically dishonored it and because they are treasury warrants, the state could take the position of stopping payment. 2:08:05 PM CHAIR BUNDE said that basically the bill is telling the state that it cannot stop payment. REPRESENTATIVE GRUENBERG responded that it can do that, but only under the rules of the UCC - that say you can stop payment, but you must notify the bank in a reasonable time, so that the bank will have notice before it cashes the check. Once you have given proper notice you must dishonor the draft, but if you haven't given proper notice, you have to honor it. KIM GARNERO, Director, Division of Finance, Department of Administration, supported previous testimony saying that this bill simply codifies in law a 1992 ruling by the Alaska Supreme Court. CHAIR BUNDE said it is the practice of the committee to not pass a bill after the first hearing and that he would hold it for another hearing at a future date. He adjourned the meeting at 2:11:42 PM.