HOUSE FINANCE COMMITTEE February 24, 1993 2:13 p.m. TAPE HFC 93-31, Side 2, #000 - #538. CALL TO ORDER Co-Chair Larson called the House Finance Committee to order at 2:13 p.m. PRESENT Co-Chair Larson Co-Chair MacLean Representative Hoffman Vice-Chair Hanley Representative Navarre Representative Brown Representative Parnell Representative Foster Representative Therriault Representative Grussendorf Representative Martin was absent from the meeting. ALSO PRESENT Sandy Nusbaum, Legislative Staff, Representative Gail Phillips; Vincent Usera, Assistant Attorney General, Department of Law. SUMMARY INFORMATION HJR 11 Proposing an amendment to the Constitution of the State of Alaska relating to repeal of regulations by the legislature. HJR 11 was reported out of Committee with a "do pass" recommendation and with a $2.2 thousand dollar fiscal impact note by the Office of the Lieutenant Governor, dated 2/1/93. EO 85 Moving the bonding program that serves as security for the collection of wages and payment for raw fish from the Department of Labor to the Department of Revenue. EO 85 was placed in a House Finance Committee Subommittee consisting of Representatives Hanley, Parnell and Brown. HOUSE JOINT RESOLUTION NO. 11 1 Proposing an amendment to the Constitution of the State of Alaska relating to repeal of regulations by the legislature. Co-Chair Larson noted that HJR 11 would allow the Legislature to repeal regulations adopted by a state department or agency by a joint resolution. The proposed amendment would be placed on the ballot on the next general election. SANDY NUSBAUM, LEGISLATIVE STAFF, REPRESENTATIVE GAIL PHILLIPS spoke in support of HJR 11. She noted that the Lieutenant Governor has formally endorsed HJR 11 (Attachment 1). She presented written remarks on behalf of Representative G. Phillips (Attachment 2). She noted that HJR 11 would permit the Legislature to take action on regulations promulgated by state agencies that may not properly implement the intent of the laws passed by the Legislature. She asserted that there is increasing evidence that regulations go beyond conforming with laws passed by the Legislature. She alleged that regulations many times ignore the legislative directive or go beyond the limits of what the legislature intended. She emphasized that once regulations go into effect they have the force of law, even though "no single person, elected by the voters, has approved them." Ms. Nusbaum observed that similar legislation passed the Senate during the Seventeenth Alaska Legislature and received support in the House. She noted that prior ballot proposals did not sufficiently explain the initiative. Co-Chair MacLean MOVED to report HJR 11 out of Committee with individual recommendations and with the accompanying fiscal note. There being NO OBJECTION, it was so ordered. HJR 11 was reported out of Committee with a "do pass" recommendation and with a $2.2 thousand dollar fiscal impact note by the Office of the Lieutenant Governor, dated 2/1/93. EXECUTIVE ORDER 85 Moving the bonding program that serves as security for the collection of wages and payment for raw fish from the Department of Labor to the Department of Revenue. Co-Chair Larson noted that EO 85 would move the bonding program that serves as security for the collection of wages and payments for raw fish from the Department of Labor to the Department of Revenue. 2 Representative Hoffman pointed out that AS 16.10.292 would be removed by the Executive Order. VINCENT USERA, ASSISTANT ATTORNEY GENERAL, DEPARTMENT OF LAW stressed that AS 16.10.292 requires the Department of Labor to provide the Department of Revenue with certification that the bonding had been accomplished. He asserted that once the program is transferred the process would be unnecessary. He stated that "it would be like Revenue certifying to itself." Mr. Usera assured Representative Hoffman that fisherman would be protected by the bonding program. Bonding requirements will not change. Representative Grussendorf reiterated that AS 16.10.292 is not included in EO 85. He asked if the Department of Revenue is assuming that they have the ability to show evidence of compliance. Mr. Usera affirmed that the Department of Revenue would have evidence of compliance with bonding requirements. Representative Brown referred to a memorandum by Legislative Counsel, dated 11/19/93 (Attachment 3). She stressed that AS 16.10.292 prescribes the form by which the bond is posted. She asserted that the removal of AS 16.10.292 has resulted in a substantive change in law. She emphasized that executive orders are not proper vehicles for substantive changes. Mr. Usera replied that Legislative Counsel has also said that there is no "practical effect" of the dropping of AS 16.10.292. Representative Brown recalled that previous testimony from the Department of Revenue did not state that the statute was not needed but emphasized that the Department intended to comply with the spirit of AS 16.10.292 through regulation. Representative Brown reiterated that AS 16.10.292 indicates the bond form. She asserted that bond form is substantive. Mr. Usera asserted that the intent of the program is to protect the fisherman. He reiterated that the processor would still have to post a bond. The bond will be held by the Department of Revenue and used to pay claims. Representative Brown asked if the form of bond is not specified if the processor could choose the bond form. Mr. Usera defined "form" as it is used in AS 16.10.292 to mean a piece of paper that is used to supply data. He asserted that "form" does not refer to the type of bond that is used. Representative Brown disagreed. She noted that 3 Legal Counsel interpreted "form" to mean type of bond. "This provision is beneficial because there are a couple of ways in which a processor may comply with the bonding requirement..." (Attachment 3). Representative Hanley read AS 16.10.292. "A fish processor or primary fish buyer... shall initially file evidence of compliance with the bonding requirements of AS 16.10.290 - AS 16.10.295, in the form prescribed by the commissioner." He interpreted the statute's intent as demonstrating that the processor has complied with the bond. Members debated the effect of removing AS 16.10.292. Co- Chair MacLean reiterated that Legislative Counsel concluded, "that the elimination of AS 16.10.292 has no practical effect on the ability of the commissioner of revenue to enforce the fish processor bonding requirements... The commissioner may adopt regulations that are reasonably necessary to specify the manner and form by which a fish processor demonstrates compliance with the bonding requirements." Mr. Usera stated that the intent of EO 85 is to transfer a program from the Department of Labor to the Department of Revenue. He noted that the Department of Revenue maintains a similar program in licencing requirements. He stressed the efficiency of consolidating functions. Representative Brown referred to the House Resource Committee's Letter of Intent. The letter states that, "approval of Executive Order 85 in no way implies approval of violation of the legal parameters of executive orders, nor should it be construed to mean that any inappropriate substantive changes proposed by executive order in the future will be accepted." She suggested that EO 85 be disapproved in order to demonstrate to the Administration that substantive changes cannot be made in executive orders. Members debated action on EO 85. Representative Parnell suggested that EO 85 be moved with a Letter of Intent similar to the House Resource Committee's. Representative Grussendorf suggested that EO 85 be held in committee until members further research the issue. Co-Chair Larson placed EO 85 in a subcommittee consisting of Representatives Hanley, Parnell and Brown. ADJOURNMENT The meeting adjourned at 2:45 p.m. 4