HB 254-EXTEND BIG GAME COMMERCIAL SERVICES BOARD  2:26:34 PM CHAIR COSTELLO reconvened the meeting and announced the consideration of HB 254. She relayed the intent to hear from the sponsor, hear a legislative audit update, hear from the administration, take questions and public testimony, and look to the will of the committee. 2:27:01 PM STEVE HANDY, Staff, Representative Louise Stutes, Alaska State Legislature, introduced HB 254 on behalf of the sponsor speaking to the following sponsor statement: House Bill 254 extends the Big Game Commercial Service Board's (BGCSB) sunset date from June 30, 2016, to June 30, 2019. The BGCSB provides a legislative command to assist in resource conservation and consumer protection. The Board develops professional and ethical standards, administers exams, makes final licensing decisions and takes civil action against persons who violate regulations. The BGCSB is staffed by the Division of Corporations, Business and Professional Licensing. The BGCSB consists of two licensed Registered Guide two licensed Transporters, two private landholders, two public members, and one member from the Board of Game. Board members are appointed by the Governor and confirmed by the Legislature. The Board's regulated professions include Assistant Guide, Class Guide Registered Guide and Transporter. MR. HANDY noted that the McDowell Group reported in 2012 that guided hunting in Alaska accounted for 2,210 jobs and $35 million in labor income, generated $78 million in economic activity, and brought in nearly $2 million from hunting licenses and big game tags. MR. HANDY mentioned the legislative audit and posited that an oversight by the legislature that allowed the board to sunset contributed to some of that debt. He noted that the legislature reinstated the board in December 2015 and SB 206 will extend the current sunset to 2019. He concluded saying that the Big Game Commercial Services Board is essential to the safety of hunters, guides and transporters and to the management of the resource itself. He requested the committee pass HB 254. CHAIR COSTELLO asked him to submit his comments to the committee in written form. SENATOR STEVENS asked what happens if the bill doesn't pass. MR. HANDY replied the board will sunset on June 30, 2016 and will completely shut down in about one year. 2:31:01 PM SENATOR MEYER asked if he read that the board is running a $1 million deficit. MS. HANDY said he believes it has decreased substantially since that number was published. He deferred further comment on the deficit to the auditor. 2:31:37 PM KRIS CURTIS, Legislative Auditor, Division of Legislative Audit, related that the division conducted a sunset review looking at whether the Big Game Commercial Services Board was serving the public interest and should be extended. Overall, the audit found the board provided assurance that individuals licensed to guide, outfit hunts, and transport hunters to and from hunt locations are qualified to do so. Also, the board's regulation and licensing of qualified guides, guide-outfitters, and transporters benefited the public safety and safeguarded the state's wildlife resources. In recognition that the board reported a $1 million deficit as of April 30, 2015, the division recommended a conditional three- year extension. The condition is the board demonstrate in January that it has the capacity to address its deficit. When the audit was done last summer, there were proposed regulations to increase licensing fees and add new activity fees. Both the division and the board believed those fees would be able to address the deficit, but the regulations were in draft form at the time of the audit. MS. CURTIS said the audit also recommended four operational improvements. The first was to the director of the Division of Corporations, Business and Professional Licensing (DCBPL) to ensure that staff adhere to procedures to provide efficient and effective support to the board. This is a repeat finding and while there were some improvements, problems continue in the area of public noticing exams and meetings. Additional improvement was recommended in those areas. The second recommendation was for the director of DCBPL to take steps to improve the timeliness of investigations. The audit looked at 25 investigative cases and 17 had periods of inactivity. According to the lead investigator, this was due to a lack of resources to address the large case load. The audit also found problems with effective case monitoring. The third recommendation was for the board and the director of DCBPL to work together to increase licensing fees to address the board deficit. This is the third time an audit has recommended addressing the deficit. The 2011 audit found the board had a deficit of $374 thousand, and the audit warned that it was likely to increase if the board did not increase fees or reduce expenditures. The deficit as of April last year was over $1 million. The growth was due to various factors. The board delayed increasing the fees, there was a reduction in the number of license renewals, and the division reallocated its indirect costs that resulted in another $200 thousand increase in the deficit. To address the deficit after the 2011 audit, the division proposed an increase in fees between 61 percent and 68 percent. The division did not carry through and raise the fees at that point, but did increase them about 44 percent in FY2014. However, the revenues were not enough to cover expenditures and the deficit continued to grow. The division has indicated it will raise fees and the belief is that those will be effective in addressing the deficit. The fourth recommendation is for the division director to ensure that the transporter license renewal application form complies with statute. The statute requires the licensees to sign an affidavit in the application that all activity reports have been filed with the department. The audit found no affidavit. MS. CURTIS reported that overall, the department and board concurred with all the recommendations. 2:37:40 PM SENATOR STEVENS asked if her office monitors the board's progress in following the recommendations of the audit. MS. CURTIS said there is no mechanism to formally monitor progress unless the audit division is formally requested to do so. 2:38:31 PM SARAH CHAMBERS, Operations Manager, Division of Corporations, Business and Professional Licensing, Department of Commerce, Community and Economic Development (DCCED), introduced herself. SENATOR GIESSEL said she assumes that the $20 thousand reflected in the narrative of the fiscal note is for board travel. MS. CHAMBERS confirmed the travel is for board members and one staff to attend board meetings. Typically there are two each year, one in Anchorage and one in Fairbanks. SENATOR GIESSEL suggested the board find ways to reduce traveling costs. CHAIR COSTELLO asked her to comment on the work to improve the financial standing of boards and her role in helping to address the recommendations in this audit. MS. CHAMBERS advised that the division has been working for several years with legislative finance, the director of administrative services, and the boards to improve the fee analysis structure by making it more detailed. She noted that board members now receive an interactive Excel spreadsheet that gives a better picture of the impact of different fees. She said that while fees were raised in 2013 and 2015, Legislative Finance warned that trying to eradicate the deficit in one fell swoop would probably put many of the guides and transporters out of business. She explained that the board and division paid special attention to ensure that non-contracting guides are not penalized. Some of the burden was placed on guides that contract and they also looked for new revenue sources. The hot record and transporter activity report database was restructured in response to the 2011 legislative audit, and a fee was attached to compensate for staff time helping state troopers fulfil their statutory need for that information. 2:43:33 PM SENATOR STEVENS asked who is objecting to the fee increases. MS. CHAMBERS replied transporters, in particular, have expressed concern about the impact of the new transporter activity report fee on their businesses. She has met twice with the transporter subcommittee to solicit new ideas, but the bottom line is that it's necessary to go forward with the deficit reduction. SENATOR STEVENS commented that it sounds as though the fee structure is in some form of evolution. MS. CHAMBERS clarified that last November the fees for this renewal period were adopted by the director and signed by the lieutenant governor. The deficit was below $900 thousand after the second quarter and the third quarter report is anticipated to show additional reduction. She maintained that the division has met the legislative commitment to set fees and will continue to review them through the annual fee analysis. 2:46:31 PM SENATOR GIESSEL suggested that transporters pass the licensing fees on to their clients. She pointed out that other boards are subsidizing the shortfall of the Big Game Commercial Services Board and it can't go on. She asked what the transporter license fee is currently. MS. CHAMBERS replied it is $850 every two years. SENATOR GIESSEL pointed out that the fee isn't as high as for other licensed professions such as direct entry midwives. She called on guides, outfitters, and transporters to step up and take responsibility. 2:48:52 PM CHAIR COSTELLO opened public testimony on HB 254. 2:49:06 PM SAM ROHRER, President, Alaska Professional Hunters Association (APHA), testified in support of HB 254. He said the board is critical to the long-term viability of the guide industry. It provides a conduit for meaningful input on regulations and provides for reasonable testing standards. He highlighted that the guiding industry supported the most recent fee increases. He encouraged the committee to move the bill today. 2:50:20 PM DICK ROHRER, representing himself, Kodiak, Alaska, testified in support of HB 254. He related that he became involved in the guiding industry in 1965 when he moved to Alaska and has been through various sunsetting and reinstatement of the board. He also served two terms on the board, beginning in 2005, after the board was reinstated. At that time the board, with Senator Steven's help, was able to clarify that privately owned cabins, particularly in remote areas, could be rented to big game hunters without the owner being required to have a guide or transporter license. That favored resident hunters. He also clarified that the point-to-point air taxi operators that do not advertise specifically for transporting hunters or don't charge an extra fee are not required to have a transporter license. Therefore, resident hunters that choose to use air taxi services are not affected. As a past board member, he encouraged the committee to move the bill today. SENATOR STEVENS asked Dick Rohrer if he supports the fee increases. DICK ROHRER confirmed that he supports the fees and expressed strong support for the current chief investigator. He expects she will bring investigative costs under control and good progress will be made in the next three years. 2:55:06 PM CHAIR COSTELLO closed public testimony on HB 254. She stated her intent to move the bill to give Senate Finance time to review it. 2:55:16 PM At ease 2:59:01 PM CHAIR COSTELLO reconvened the meeting and reopened public testimony. 2:59:24 PM ROD ARNO, Executive Director, Alaska Outdoor Council (AOC), testified in support of HB 254. He said the Big Game Commercial Services Board is needed now more than ever. As federal land managers change their purpose, the guiding industry will be in a pinch on federal lands which will put more pressure on state lands. That is where most Alaskan residents are hunting, particularly those from non-subsistence areas. He urged the committee to pass the bill to extend the sunset on the board. SENATOR GIESSEL requested he pass along her comments that other boards have been subsidizing the Big Game Commercial Services Board for many years, and it's time for these professions to step up. MR. ARNOS replied the AOC supports the increased fees. 3:01:28 PM CHAIR COSTELLO closed public testimony on HB 254. 3:01:37 PM SENATOR GIESSEL moved to report HB 254, labeled 29-LS1309\A, from committee with individual recommendations and attached fiscal note(s). CHAIR COSTELLO announced that without objection, HB 254 is reported from the Senate Labor and Commerce Standing Committee.