HOUSE FINANCE COMMITTEE March 3, 1998 1:45 P.M. TAPE HFC 98 - 49, Side 1 TAPE HFC 98 - 49, Side 2 TAPE HFC 98 - 50, Side 1 TAPE HFC 98 - 50, Side 2 CALL TO ORDER Co-Chair Gene Therriault called the House Finance Committee meeting to order at 1:45 p.m. PRESENT Co-Chair Hanley Representative Kelly Co-Chair Therriault Representative Kohring Representative Davies Representative Martin Representative Davis Representative Mulder Representative Foster Representative Grussendorf Representative Moses was absent from the meeting. ALSO PRESENT Representative Jeannette James; Representative Brian Porter; John Key, General Manager, Cominco Alaska; Jim Baldwin, Assistant Attorney General, Department of Law; Chris Christensen, General Counsel, Alaska Court System; Deborah Behr, Assistant Attorney General, Department of Law; Jeff Logan, Staff, Representative Green; Keith Laufer, Alaska Industrial Development and Export Authority, Department of Commerce and Economic Development; Randy Simmons, Executive Director, Alaska Industrial Development and Export Authority, Department of Commerce and Economic Development. SUMMARY HJR 36 Proposing amendments to the Constitution of the State of Alaska relating to redistricting of the legislature, and repealing as obsolete language in the article setting out the apportionment schedule used to elect the members of the first state legislature. HJR 36 was HELD in Committee for further consideration. HJR 44 Proposing amendments to the Constitution of the State of Alaska relating to redistricting of the legislature. HJR 44 was HELD in Committee for further consideration. HB 264 "An Act providing for a negotiated regulation making process; and providing for an effective date." CSHB 264 (FIN) was REPORTED out of Committee with "no recommendation" and with two fiscal impact notes, one by the Department of Revenue and one by the Office of the Governor. HB 386 "An Act relating to the financing authority, programs, operations, and projects of the Alaska Industrial Development and Export Authority; and providing for an effective date." CSHB 386 (FIN) was REPORTED out of Committee with a "do pass" recommendation and with a zero fiscal note by the Department of Commerce and Economic Development. HOUSE BILL NO. 264 "An Act providing for a negotiated regulation making process; and providing for an effective date." REPRESENTATIVE JEANNETTE JAMES, SPONSOR spoke in support of the proposed committee substitute for HB 264, Work Draft 0- LS0910\L, dated 2/25/98. Deborah Behr, Assistant Attorney General, Department of Law reviewed changes made by the proposed committee substitute. ? Page 3, lines 1 & 3, "An agency shall notify the public so that interested parties can apply..." Ms. Behr noted that this language allows flexibility to notify the public in a manner that results in the least cost. "Interested persons" was included to clarify that an individual may volunteer their time, even if they are not directly affected by the regulation. This is to allow retired public officials, judges and others to participate. ? Page 3, lines 17 & 18, "The agency should strive to achieve the balanced committee representation..." Ms. Behr emphasized that the intent is to achieve balance. It was not placed in statute because it would be difficult to assess when balance is achieved. ? Page 5, lines 16 & 17, "Members of a negotiated regulation making committee are responsible for their own expenses of participation." The prior version would have required agencies to certify need. The subcommittee decided that each member would pay his or her own way. Ms. Behr maintained that this provision would result in meetings being held in metropolitan areas. Groups will have to take donations and pay for their own members to travel. Teleconferencing will be used. ? Page 5, lines 26 - 29, Disclosure This would require a member to disclose gifts; grants or other financial benefits that exceed $150 dollars and have been accepted to finance the disclosure member's participation on the regulation committee. Ms. Behr did not think a member would have to disclose their salary. ? Page 7, line 17, Immunity for members of a negotiated rules making committee and its members. Ms. Behr noted that CSHB 264 (STA) did not provide absolute immunity to members participating on the committee. The proposed committee substitute provides absolute immunity. She observed that the members would only advise on various decisions. She emphasized that the provision would encourage private businesspersons to participate. ? Page 7, lines 27 - 30, Members of a Negotiated Rule Making Committee. Ms. Behr explained that this would exempt members from the provisions of the Executive Ethics Act. Public officers on a negotiated rule making committee would still be under the provisions of the Executive Ethics Act. Member's financial contribution to the meeting would be disclosed under previous provisions. This would indicate their position. Criminal provisions would still apply to gross conduct, such as accepting a bribe. ? Page 8, lines 1 - 5, Conforming amendment Ms. Behr observed that this provision would bring back the existing law after five years. Representative Mulder MOVED to ADOPT Work Draft 0-LS0910\L, dated 2/25/98. There being NO OBJECTION, it was so ordered. Discussion pursued regarding the amendment to the Executive Ethics Act. Ms. Behr clarified that the legislation takes negotiated regulation making committees out of the Act. She emphasized that they are short-term committees that are not making final decisions. Only their travel is disclosed. Representative Davies did not recall discussion on the subject during the subcommittee. Representative Kelly did recall some discussion on this matter during the subcommittee hearing. Representative James spoke in support of the provision. Representative Davies expressed concern with the provision. He noted that a person would not need to disclose close financial associations or their employer. Ms. Behr emphasized that the intent of the legislation is to encourage upper level executives of private businesses. Co-Chair Therriault observed that members do not authorize actions. Representative Davies spoke in support of balancing disclosure requirements to indicate a member's general bias. Co-Chair Therriault asked if there is a problem in the current stakeholder process mechanism. Representative Davies MOVED to ADOPT Amendment 1 (copy on file). Co-Chair Therriault OBJECTED for the purpose of discussion. Amendment 1 would amend page 5, line 17 by inserting "if they have adequate resources. However, an agency may pay for a committee member's reasonable travel and per diem expenses..." He observed that the amendment would allow agencies to pay for members. Members would still be generally responsible to pay their own way. Ms. Behr clarified that the legislation would not allow agencies to pay for a member's travel. She noted that if the section were deleted the status quo would prevail. She expressed concern with Amendment 1. She noted the difficulty in assessing the ability to pay. Representative Grussendorf spoke in support of allowing agencies to pay. He observed that there might be circumstances where an agency would want to pay someone's way to achieve balance on the committee. Representative Martin spoke against the amendment. He expressed concern that it would be costly. Representative James emphasized that it is a volunteer system that should not be costly. She preferred that agencies not pay for member's travel. Representative Davis stressed that it would not be fair to pay for some and not others. Representative Davies observed that industries would pay for their representation. He noted that members of the public might not have the same ability to pay. He stressed that the status quo allows agencies to decide. He pointed out that it would be cheaper to pay for one person's travel then to send several agency people to the area the person resides. Representative Grussendorf stressed that the ability to pay would differ. He emphasized that the amendment would help achieve balance. Representative WITHDREW Amendment 1. There being NO OBJECTION, it was so ordered. Representative Davies MOVED to delete subsection (c) on page 5, lines 16 and 17. He observed that the amendment would retain the status quo. There being NO OBJECTION, it was so ordered. Ms. Behr stated that the fiscal impact was not changed by the proposed committee substitute. Representative Martin MOVED to report CSHB 264 (FIN) out of Committee with the accompanying fiscal notes. There being NO OBJECTION, it was so ordered. CSHB 264 (FIN) was REPORTED out of Committee with "no recommendation" and with two fiscal impact notes, one by the Department of Revenue and one by the Office of the Governor. HOUSE BILL NO. 386 "An Act relating to the financing authority, programs, operations, and projects of the Alaska Industrial Development and Export Authority; and providing for an effective date." Co-Chair Therriault provided members with a proposed committee substitute for HB 386, Work Draft 0-GH2023\E, dated 3/3/98 (copy on file). KEITH LAUFER, ALASKA INDUSTRIAL DEVELOPMENT AND EXPORT AUTHORITY (AIDEA), DEPARTMENT OF COMMERCE AND ECONOMIC DEVELOPMENT reviewed the proposed committee substitute. He noted that the sunset date would be July 1, 2003. Minor wording changes occurred on page 5, line 11. Section 8 was replaced. The original legislation would have set up a procedure for AIDEA to create categories of confidential documents. Documents that could never be made confidential were identified. This provision was changed to set forth the specific items that can be made confidential on page 6, line 21 - page 7 line 2. Subsection (b) addresses concerns regarding information compiled by AIDEA that can also remain confidential if the information fits within one of the confidential categories. The definition of "political loss" was moved to section 10 by request of the drafter. "Shall" was changed to "must" on page 7, line 22. Other technical changes were made to conform to drafting recommendations. Section 23 is new. Section 23 is the legislative authorization to finance bonds for the DeLong Mountain transportation project at Red Dog mine and for the Nome port improvement project. The effective date was changed to clarify that only section 21 has a June 30, 1998 effective date. Representative Davies asked if legislative approvals in section 23 would follow the due diligence process. RANDY SIMMONS, EXECUTIVE DIRECTOR, ALASKA INDUSTRIAL DEVELOPMENT AND EXPORT AUTHORITY, DEPARTMENT OF COMMERCE AND ECONOMIC DEVELOPMENT clarify that the due diligence process would apply. The process would start in the following week. The Board of Directors must approve findings on the projects. Representative Grussendorf pointed out that "political loss" could refer to nationalization, confiscation, or destruction by military activities. Mr. Simmons agreed and noted that AIDEA used to require insurance on every export transaction regardless of the country of export. In response to a question by Representative Martin, Mr. Simmons noted that AIDEA could authorize bonds up to $400 million dollars a year. Bond covenants apply to certain coverage. (Tape Change, HFC 98 -49, Side 2) Mr. Simmons noted that AIDEA has $322 million dollars in loans outstanding. He clarified that the state of Alaska is not morally obligated on any of the bonds issued by AIDEA. JOHN KEY, GENERAL MANAGER, COMINCO ALASKA read his written testimony in support of HB 386 (copy on file). Mr. Simmons noted that there are 44 years left on the AIDEA loan to Red Dog. He explained that AIDEA owns the facilities on development projects they finance. The Alaska Industrial Development and Export Authority may receive payments to the State long after there are outstanding bonds. Red Dog would still be responsible for their financial commitments if the bonds were paid off. Representative Foster MOVED to ADOPT Work Draft 0-GH2023\E, dated 3/3/98. There being NO OBJECTION, it was so ordered. Representative Foster MOVED to report CSHB 386 (FIN) out of Committee with the accompanying fiscal note. There being NO OBJECTION, it was so ordered. CSHB 386 (FIN) was REPORTED out of Committee with a "do pass" recommendation and with a zero fiscal note by the Department of Commerce and Economic Development. HOUSE JOINT RESOLUTION NO. 44 Proposing amendments to the Constitution of the State of Alaska relating to redistricting of the legislature. Co-Chair Therriault provided members with a proposed committee substitute for HJR 44, Work Draft 0-LS0528\I, dated 3/3/98 (copy on file). Representative Mulder MOVED to ADOPT , Work Draft 0-LS0528\I, dated 3/3/98. There being NO OBJECTION, it was so ordered. REPRESENTATIVE BRIAN PORTER, SPONSOR, testified in support of HJR 44. He explained that the legislation would change the method of appointment to the reapportionment board. The legislation would codify single member districts for the House and Senate. The Alaska Supreme Court has indicated its support for single member districts. The Governor currently appoints the reapportionment board. He noted that only one other state involves their governor in the appointment of their reapportionment board. Under the legislation the chief supreme court justice would appoint the reapportionment board. He maintained that the current process is partisan. He discussed the 1992 reapportionment process. Due to litigation a superior court judge appointed a couple of masters to redraw the 1992 reapportionment plan. The court plan was rejected at the federal level. It was subsequently readjusted. Representative Porter stated that the Supreme Court has requested that page 3, line 3 be amended by deleting "subject to the provisions of this section" and inserting as provided by law". He observed that the legislature might want to provide criteria for how the appointments should be made. He asserted that at least one person should be appointed from each of the judicial districts to guarantee geographical representation. In response to a question by Representative Grussendorf, Representative Porter observed that if the plan were challenged in federal court, it would be appealed in federal court. If an Alaskan citizen challenged the plan, it would be brought before the Alaska Superior Court. He thought that the chief justice would have to remove himself if it were appealed to the Supreme Court. In response to comments by Representative Grussendorf, Representative Porter observed that interest in the issue would be greater as the event becomes closer. He stated that the intent is to be objective and to get partisan politics out of the process. He observed that the Supreme Court appoints the Ethics Committee. Co-Chair Therriault clarified that subsection (c) on page 3 was included in the previous version. Representative Davies stressed that the legislation would be more prospective if it were to apply after the next election. Co-Chair Therriault noted that the legislation's effective date is 2002. Representative Porter emphasized that the intent is to make the next reapportionment non-partisan. Representative Davies stated that the change could effect an individual's decision to run for office. Representative Martin asserted that any plan would be accused of being partisan. He stressed that an attempt to balance partisan interests can be made. He expressed concern with the criteria of "integrated socio-economic" areas. He gave examples of redistricting plans where he felt that the criteria for a integrated socio-economic area were misused. He observed the difficulty of integrating cultural groups in the State. He pointed out that population has not grown as fast in some areas of the State as in others. He suggested that it would be difficult to maintain socio-economic integration of areas. Representative Porter spoke in support of retaining the criteria of socio-economic integration. He stressed that this provision is intended to provide fair representation for the State's minority population. He noted that the United States Supreme court ruled in favor of one man one vote. States are generally allowed a variance in population between districts of 1 to 1.5 percent. He observed that the Alaska Supreme Court has allowed population variances of up to 10 percent. He acknowledged that the plan would not stop litigation. He asserted that there would not be a presumption of the partisan politics if the board is appointed through the court. He observed that the court will be able to use case law that has been developed over the years. He discussed the 1992 reapportionment process. Representative Martin asserted that the Justice Department and the Alaska Supreme Court are polarized. The US Supreme Court has emphasized one man one vote for equal representation. (Tape Change, HFC 98 -50, Side 1) In response to comments by Representative Martin, Representative Porter observed that the legislation would shorten the process by 90 days. He reviewed the reapportionment process timeline. He discussed page 5, line 21. If any litigation or interruption of the process occurs to the extent that the up coming election is affected then the prior reapportionment plan would be used. Representative Martin reiterated concerns regarding the use of the chief justice of the Supreme Court. Representative Mulder noted that a potential conflict of one judge does not mean that the court cannot make a decision. If a justice felt that they had a conflict, he or she, could excuse themselves. Representative Porter agreed and added that the same situation occurs with the appointment of the Ethics Board. Representative Martin maintained that the court should be kept as pure as possible. He noted that a tie decision could occur if one justice is removed. In response to a question by Representative Grussendorf, Representative Porter asserted that he would support the legislation regardless of the gubernatorial candidates. Representative Grussendorf did not think that "socio- economic" should be removed. Co-Chair Therriault pointed out that the legislation has been changed by the committee substitute. Representative Davies stated that the chief justice has the mantel of impartiality. He maintained that the legislation might have unintended consequences. He expressed concern that judges would be subjected to a litmus test. He felt that judges could be put in the position of standing against a recall election if reapportionment does not satisfy everyone. He observed that the Ethics Board is a judicial function. The legislation asks the court to be involved in a legislative issue. Representative Grussendorf noted that there has been discussion regarding legislative approval or the election of judges. Representative Porter pointed out that the other justices select the chief justice. He noted that all judges have their personal notions. The challenge is to make judgements based on the law. He stated that he would be opposed to the election of judges. Co-Chair Therriault clarified that the intent of the proposed change to page 3, line 3 is to allow the legislature to add through statute further restrictions to the appointment of the redistricting board. He stated that the legislature might want to require that members live in an area a certain length of time of be a state resident for a certain amount of time. Representative Porter suggested the use of "may be amplified through law". He observed that the intent is to minimize unnecessary language in the Constitution. He emphasized that the Constitution is automatically superior to statute. Statutes can only amplify the Constitution. JAMES BALDWIN, ASSISTANT ATTORNEY GENERAL, DEPARTMENT OF LAW discussed the committee substitute. He spoke in support of allowing the Court to do military surveys. He observed that over 9,000 of the people who applied for permanent fund dividends were active duty military. He noted that there are a number of nonresident military residing in districts that could affect redistricting. Mr. Baldwin clarified that the intent of the legislation is that "two contiguous" house districts could pertain to districts that are contiguous across waters. Mr. Baldwin discussed the proposed amendment to page 3, line 3. He expressed concern that a substantial portion of the constitutional amendment before the voters would yet to be enacted by law. He pointed out that partisan criteria could be enacted through statute. Mr. Baldwin observed that a member of the board couldn't run for office. He assumed that the State would have to show a compelling state interest to justify this discrimination. Mr. Baldwin discussed the current reapportionment process. He noted that, under the current provision, an officer of the Governor could make adjustments to the reapportionment plan proposed by the Board. He asserted that the legislation does not provide a non-judicial "safety valve". He observed that a statewide elected official that is answerable to the public would not make the appointments. Mr. Baldwin reiterated that language on page 5, lines 21 - 24 is a direct incentive for litigation. He stressed that a new plan would at least provide for one-person one vote. Operation of the old plan would perpetuate a mal-apportioned state for another two years. He stated that the Administration does not support the legislation. Representative Martin disagreed with the proposal to allow the Board to do a military census. He noted that the next census would count those on base. The US Supreme Court has upheld counting of military personnel. In response to a question by Representative Davies, Mr. Baldwin stated that the language regarding military census taking is ambiguous. He acknowledged that the discussion in the House Judiciary Committee placed on the record that the intention is that the language would not allow the taking of a military census. He observed that the intent is to remove individuals that do not vote in Alaska. He noted that the military population is concentrated in urban areas of the State. He observed that there would be more representatives for urban areas of the State. He asserted that the section creates a voting rights issue. He noted that the Department's fiscal note is in response to this issue. If the military population is removed there is a smaller ideal number per district. He asserted that if military personnel are counted there will be a heavier representation in Fairbanks and Anchorage made up of people who don't vote. Representative Davies observed that the current provision does not allow public officials or employees to be members of the Board. Mr. Baldwin clarified that this prohibition pertains to state, federal and municipal employees. He observed that the intent is that recommendations not be made by anyone with a stake in the process. Mr. Baldwin expressed concern with the removal of "shall be made without regard to political affiliation. CHRIS CHRISTENSEN, GENERAL COUNSEL, ALASKA COURT SYSTEM discussed the legislation. He observed that the Court has concern with section 8 on page 3. He emphasized that the people need to believe that the justice system is fair and impartial and that it produces a just result. He noted that the framers of the Constitution created a unique judicial system. He observed that the system was created to be free from the influence of partisan politics. The Supreme Court is concerned that section 8 will involve the Court in partisan politics. (Tape Change, HFC 98 - 50, Side 2) Co-Chair Therriault pointed out that the Court has been involved in the current process. Mr. Christensen acknowledged that the Supreme Court is the final arbiter of legal matters. When the Court is called to review political matters it is acting judicially to settle a case. He maintained that the appointment process is a different case. In response to a question by Co-Chair Therriault, Mr. Christensen observed that judges frequently appoint masters to look at and evaluate evidence and make recommendations. The master is serving as the judge's agent in evaluating evidence and looking at a case. He emphasized that this process is different than the process of appointing a reapportionment board. Co-Chair Therriault noted that a judge would refrain from discussing subjects that they would be asked to adjudicate. Mr. Christensen pointed out that the appearance of impropriety is as important as actual impropriety. Representative Davies noted that masters tend to follow the basic pattern set out by the underlying reapportionment plan and make the minimum changes necessary to bring the plan into compliance. Co-Chair Therriault asked if a board appointed by the judiciary made a recommendation that was challenged by the court, would the court be precluded from setting up a master to refine the recommendation before final judgement. Mr. Christensen could not answer the question. In response to a question by Representative Grussendorf, Mr. Christensen stated that he is not aware of anything outside the judicial branch that the court appoints. He thought that there were other states that involved their supreme courts in the reapportionment process. He observed that judges are elected in many other states. HJR 44 was HELD in Committee for further consideration. HOUSE JOINT RESOLUTION NO. 36 Proposing amendments to the Constitution of the State of Alaska relating to redistricting of the legislature, and repealing as obsolete language in the article setting out the apportionment schedule used to elect the members of the first state legislature. JEFF LOGAN, STAFF, REPRESENTATIVE GREEN discussed HJR 36. He noted that the sponsor concurs with proposed changes to HJR 36 with on exception. He referred to section 10, page 4. This section deals with the effective date and applicability. He observed that it is the sponsor's intention that the provisions of HJR 36 apply to the next reapportionment cycle. He proposed that "2001" be amended to read "2000" and "December 31, 2000" be replaced with March 25, 1994". March 25, 1994 is the effective date of the current reapportionment plan. Co-Chair Therriault observed that appointments are made between January 1st and 16th of the year following the census. Mr. Logan noted that this language does not appear in HJR 36. He maintained that the reapportionment board could be appointed anytime after receipt of the census. He observed that the census shall be completed within 9 months after the census date. He observed that the census could be completed in the year 2000. He stressed that it is the sponsor's intention that the legislation applies to the next reapportionment. Representative Mulder MOVED to ADOPT proposed committee substitute for HJR 36, Work Draft 0-LS0939\P, dated 3/3/98. HJR 36 was HELD in Committee for further consideration. ADJOURNMENT The meeting adjourned at 4:20 p.m. House Finance Committee 13 3/4/98pm