HOUSE FINANCE COMMITTEE May 5, 1998 2:00 P.M. TAPE HFC 98 - 153, Side 1 TAPE HFC 98 - 153, Side 2 TAPE HFC 98 - 154, Side 1 TAPE HFC 98 - 154, Side 2 TAPE HFC 98 - 155, Side 1 CALL TO ORDER Co-Chair Gene Therriault called the House Finance Committee meeting to order at 2:00 p.m. PRESENT Co-Chair Therriault Representative Kohring Representative Davies Representative Martin Representative Davis Representative Moses Representative Grussendorf Representative Mulder Representative Kelly Co-Chair Hanley and Representative Foster were absent from the meeting. ALSO PRESENT Senator Jerry Mackie; Representative Joe Ryan; Jim Hornaday, Staff, Representative Kott; Jerry Reinwand, Lobbyist, Blue Cross Blue Shield, Juneau; Marianne Burke, Director, Division of Insurance, Department of Commerce and Economic Development; Dean Guaneli, Chief Assistant Attorney General, Criminal Division, Department of Law; Brett Huber, Staff, Senator Halford; Barbara Huff Tuckness, Teamsters Union; Wendy Redman, Vice President, Statewide Programs, University of Alaska; Dwight Perkins, Special Assistant, Department of Labor; Robert Pearson, Intern, Senator Leman; Barbara Miklos, Child Support Enforcement Division, Department of Health and Social Services; Paul Fuhs, Lobbyist, City of Yakatat; Ben Brown, Staff, Senator Kelly; Brook Mils, Alaska Public Officers Commission; Dan Branch, Human Services Section, Assistant Attorney General, Department of Law; Neil Slotnick, Assistant Attorney General, Commercial Section, Department of Law. The following testified via the teleconference network: Jennifer Taylor, Fairbanks; Ed Linguist, Anchorage School District, Anchorage; Dick Mylius, Division of Land, Anchorage. SUMMARY HB 344 "An Act relating to paternity establishment and child support; relating to the crimes of criminal nonsupport and aiding the nonpayment of child support; and amending Rule 37(b)(2)(D), Alaska Rules of Civil Procedure; and providing for an effective date." CSHB 344 (FIN) was REPORTED out of Committee with "no recommendation" and with five zero fiscal notes, three by the Department of Administration, one by the Department of Revenue, one by the Department of Community and Regional Affairs; and one fiscal impact note by the Department of Administration. HB 490 "An Act relating to insurance premium taxes." CSHB 490 (FIN) was REPORTED out of Committee with "no recommendation" and with a fiscal impact note by the Department of Commerce and Economic Development. SB 105 "An Act relating to legislative ethics; relating to the filing of disclosures by certain legislative employees and officials; and providing for an effective date." SB 105 was HELD in Committee for further consideration. SB 218 "An Act relating to the crime of murder and to murder of children." HCS CSSB 218 (FIN) was REPORTED out of Committee with a "do pass" recommendation and with two zero fiscal notes, one by the Department of Corrections, dated 2/12/98 and one by the Department of Labor, dated 2/12/98; and one fiscal impact note by the Department of Administration, dated 2/12/98. SB 281 "An Act relating to general grant land entitlements for the City and Borough of Yakutat; and providing for an effective date." HCS CSSB 281 (CRA) was REPORTED out of Committee with a "do pass" recommendation and with a fiscal impact note by the Department of Natural Resources. SB 336 "An Act relating to excluding professional hockey team members from worker's compensation coverage." CSSB 336 (L&C) was REPORTED out of Committee with "no recommendation" and with a Department of Labor. HOUSE BILL NO. 490 "An Act relating to insurance premium taxes." JAMES HORNADAY, STAFF, REPRESENTATIVE PETE KOTT testified in support of HB 490. He explained that Representative Kott sponsored the legislation by request. The legislation exempts premiums paid by employers who participate in the Public Employees' Retirement System (PERS) or in the Teachers' Retirement System (TRS) and premiums paid under contracts purchased under AS 39.30 from the tax levied on insurers in AS 21.09.310. He maintained that the legislation would encourage participation in these programs and assist individual employees. REPRESENTATIVE JOE RYAN addressed section 3. He noted that the state of Alaska charges a 2.7 percent yearly premium tax. No premiums are written in Alaska with a value of $100 hundred thousand dollars or more. There are approximately 12,000 premiums written offshore. Insurance polices are written for $500 million to several billion dollars with premiums as high as $200 million dollars a year. The principle is put into a trust for the beneficiary at the death of the policyholder. This is considered a gift. The 55 percent state tax is not applicable on the trust. He noted that the legislation would allow Alaska to be competitive by reducing the premium tax on policies greater than $100 thousand dollars a year to one-tenth of one percent. He noted that offshore jurisdictions have no premium tax. JERRY REINWAND, LOBBYIST, BLUE CROSS BLUE SHIELD, JUNEAU explained in response to a question by Representative Kelly, that the basic question is whether public entities should be subject to the tax. He noted that the state of Washington passed legislation in 1994, which raised their tax to 2 percent. The retaliatory tax was implemented in response to the state of Washington's tax. The state of Alaska exempted itself from the tax. The statute remained silent in regards to the University of Alaska. He believes that the University is a state entity and is covered by the exemption. He questioned if school districts and municipalities would fall under the law. He noted that there would be a loss in revenue from the repeal of the retaliatory tax. He noted that Blue Cross is the only company that is subject to the retaliatory tax, since it is the only company that sells insurance in the state of Washington and the state of Alaska. He estimated that the loss in income would be $250 thousand dollars. Co-Chair Therriault expressed concern that another state's legislature is impacting the premiums charged in the state of Alaska. Mr. Reinwand noted that there is a question in regards to the state's taxing authority and taxing of political subdivisions. Representative Martin asked if the law should be repealed. Representative Ryan noted that there are no Alaskan based health insurance companies. Representative Davies referred to page 2, line 16. He questioned if other taxation issues would be affected by the change from section to chapter. Co-Chair Therriault noted that both the retaliatory and premium taxes would be affected. He stated that he would offer an amendment to make reference specifically to the retaliatory section AS 21.09.027. Representative Ryan noted that New York Life recently sold NYLCare. New York Life is considering opening a full owned subsidiary in Alaska to sell life insurance. Co-Chair Therriault noted that section 3 pertains to the retaliatory tax. He observed that there are municipalities and school districts that would benefit from sections 1 and 2. ED LINGUIST, ANCHORAGE SCHOOL DISTRICT, ANCHORAGE spoke in support of the legislation. He noted that the District is paying the retaliatory tax. Each employee pays approximately $120 dollars a year. He observed that state employees do not have to pay the tax. BARBARA HUFF TUCKNESS, TEAMSTERS UNION spoke in support of HB 490. She noted that teamster members working for the Anchorage School District would be impacted by the legislation. In response to a question by Representative Martin, Ms. Huff explained that the tax is charged based on the company's place of domicile. MARIANNE BURKE, DIRECTOR, DIVISION OF INSURANCE, DEPARTMENT OF COMMERCE AND ECONOMIC DEVELOPMENT spoke in support of the legislation. She observed that there is an exemption for the state of Alaska and insurance purchased under Title 9. She observed that there are differing attorney general decisions regarding whom is covered under Title 9. Some governmental entities and political subdivisions are paying premium tax. The premium tax is 2.7 percent charged on the gross. She stressed that it is difficult to enforce. An attempt has been made to identify who would qualify. Some political subdivisions cannot afford to belong to PERS. She noted that the state of Washington changed the tax on companies headquartered in that state. As a result the premiums collected under Washington law was higher. The retaliatory tax was created to protect health insurance companies headquarter in Alaska. She noted that there are no health insurance companies domiciled in Alaska. Premiums collected in the state of Alaska were approximately $1 million dollars in 1995. Blue Cross is the only company affected since it is the only carrier domiciled in the state of Washington that is doing business in Alaska. She noted that Aetna is domiciled in the state of Connecticut. Blue Cross is at a competitive disadvantage. She urged the Committee to identify the definition of political subdivision. Co-Chair Therriault questioned if the retaliatory tax should be repealed. Ms. Burke noted that if a company was domiciled in Alaska that the retaliatory tax may need to be revisited. In response to a question by Representative Martin, Ms. Burke stated that any change would have to be initiated by the state of Alaska. She emphasized that the "playing field" is uneven and stated that the appropriate place to address the problem is in the Alaskan legislature. Representative Mulder asked the fiscal cost of sections 1 and 3. Ms. Burke noted that the fiscal impact for sections 1 and 3 is unknown. The 2.65 million-dollar fiscal note only pertains to section 2. She explained that some governmental entities are being taxed that were not intended to be taxed. She suggested that the tax be evenly applied. She pointed out that there is no data to quantify the amount of retaliatory tax being collected on school districts, municipalities, REAA's and other political subdivisions. The fiscal note is based on attached assumptions. (Tape Change, HFC 98 - 153, Side 2) Ms. Burke explained that the retaliatory tax was first collected in 1996. Blue Cross filed for a refund based on the ambiguity of the law. The refund is still pending. Representative Davies questioned if political subdivision needs to be clarified. Ms. Burke observed that political subdivision is defined in AS 01.10.060. However, it includes municipalities but not boroughs and school districts. Case law has held that boroughs and school districts are political subdivisions. Ms. Burke noted that it is questionable if the Public Employees Retirement System (PERS) is a political subdivision. Representative Davies asked if employers that participate in PERS and TRS would be exempt under this section. Ms. Burke expressed concern that their exemption would lead other entities to request exemptions. She noted that there are governmental entities that are not included under PERS and TRS. In response to a question by Representative Davies, Ms. Burke noted that AS 39.30 is the statute that exempts the state of Alaska from collecting premium tax on itself. Representative Davies questioned if the intent is to exempt political subdivisions. Ms. Burke suggested that political subdivisions include a city, municipality, borough, public school district, Rural Education Attendance Area (REAA), public school, university or community college. Representative Davies noted that "municipality" is defined under AS 29.71.800 as a political subdivision incorporated under state law. Co-Chair Therriault suggested that the Committee not try to distinguish between the municipality of Anchorage and the Parking Authority in regards to the exemption. He thought that the retaliatory tax should be repealed. He emphasized that the decision of charging a premium tax on political subdivisions and the definition of political subdivision should be held for further discussion. He noted that sections 1 and 3, which would reduce tax on life insurance policies could be positive for the state of Alaska. Co-Chair Therriault proposed that section 2 be deleted and a new section be added to repeal AS 21.09.270. Representative Davies suggested that the retaliatory tax in section 2 would be beneficial if an Alaskan insurance business were in operation. Co-Chair Therriault noted that the retaliatory tax has been in existence since 1966. There have been no Alaskan insurance companies during this time. In response to a question by Co-Chair Therriault, Ms. Burke explained that sections 1 and 3 would attract policies written in the state of Alaska. The insurance companies do not have to be domiciled in Alaska. Representative Davies noted that Blue Cross has already paid the retaliatory tax. Ms. Burke observed that Blue Cross is one of the largest insurance writers for municipalities, boroughs, and school districts. She observed that the state of Alaska pays and collects the tax for these political subdivisions. Co-Chair Therriault noted that other private businesses and individuals are also paying the retaliatory tax. He questioned the cost to the State of repealing the tax. Ms. Burke observed that Blue Cross pays approximately $1 million dollars a year. She observed that Blue Cross requested the legislation. The Division of Insurance agrees that the retaliatory tax is unfair. Co-Chair Therriault MOVED to delete section 2 and add a section repealing AS 21.09.270. There being NO OBJECTION, it was so ordered. He noted that there would be a revised fiscal note. Representative Mulder MOVED to report CSHB 490 (FIN) out of Committee with the accompanying fiscal note. Co-Chair Therriault clarified that the immediate effective date would remain. There being NO OBJECTION, it was so ordered. CSHB 490 (FIN) was REPORTED out of Committee with "no recommendation" and with a fiscal impact note by the Department of Commerce and Economic Development. SENATE BILL NO. 218 "An Act relating to the crime of murder and to murder of children." BRETT HUBER, STAFF, SENATOR HALFORD, testified in support of SB 218. He noted that the death of a child is always among the gravest of situations. He asserted that when a child's death results from the commission of a crime, the consequences should be certain and the punishment severe. Senator Halford introduced this legislation to give law enforcement, prosecutors and the courts additional tools to address crime involving the murder of children. HCS CSSB 218(JUD) makes the following changes to criminal statutes: ? amends current law by adding a new form of first degree murder when the death of a child results from the commission or attempted commission of kidnapping, or of a sexual offense, ? expands the list of offenses constituting felony murder to include sexual abuse of a minor in the first and second degrees, ? elevates criminally negligent homicide from a class C to a class B felony, ? establishes a twenty year mandatory minimum sentence for a person convicted of a murder of a child under the age of sixteen, ? increases the mandatory minimum sentence (from five to seven years) for manslaughter, when the victim is a child under the age of sixteen, ? establishes a new sentencing provision, which allows for a term of unsuspended imprisonment that exceeds the presumptive term, for certain felony offenses if the victim is a child under the age of 16, ? establishes the crime of custodial interference in the first degree if a person violates AS 11.41.330 and causes a child or incompetent person to be removed or kept outside the state. Mr. Huber maintained that children, society's most vulnerable members, deserve a responsible level of care when entrusted to an adult. The legislation is intended to establish a level of punishment more commensurate with the crime and send the clear message of deterrence that if you kill a child, you're going to jail for a very long time. Mr. Huber provided members with Amendment 1 (copy on file). He observed that the amendment would correct a drafting error. "Natural parent, step parent, adopted parent," would be added on page 3, line 27. The Department of Law suggested the language. He observed that the Anchorage Police Department brought the legislation to Senator Halford's attention. Representative Mulder questioned if there have been cases that would have been affected by the legislation. DEAN GUANELI, CHIEF ASSISTANT ATTORNEY GENERAL, CRIMINAL DIVISION, DEPARTMENT OF LAW observed that the Anchorage Police Department did compile a list of cases involving manslaughter, criminal negligent homicide, and second degree murder. He noted that sentences ranged from 18 months to 10 years. An 18-month sentence would be raised to a 3 to 4 year sentence for criminal negligent homicide. Manslaughter sentences of 5 years would be increased to 7 years. Second- degree murder sentences of 10 years would be increased to 20 years. He noted that the intent is to provide uniformity and to eliminate some of the variability of cases around the state of Alaska. He noted that there would only be a few cases affected by the legislation. In response to a question by Representative Grussendorf, Mr. Guaneli explained that criminal negligent homicide would be elevated from a class C felony to class B felony. He estimated that some borderline cases of criminal negligence and manslaughter might be plea-bargained down. Representative Mulder MOVED to ADOPT Amendment 1. There being NO OBJECTION, it was so ordered. Representative Kohring MOVED to report HCS CSSB 218 (FIN) out of Committee with the accompanying fiscal note. There being NO OBJECTION, it was so ordered. HCS CSSB 218 (FIN) was REPORTED out of Committee with a "do pass" recommendation and with two zero fiscal notes, one by the Department of Corrections, dated 2/12/98 and one by the Department of Labor, dated 2/12/98; and one fiscal impact note by the Department of Administration, dated 2/12/98. SENATE BILL NO. 336 "An Act relating to excluding professional hockey team members from worker's compensation coverage." ROBERT PEARSON, INTERN, SENATOR LEMAN testified in support of SB 336. He observed that the bill amends Worker's Compensation provisions by adding professional hockey teams to the list of persons not covered under AS 23.30.230. In exchange for this exemption, a team owner would have to provide a medical and disability program to cover the players. Coaches and others associated with the team in the same Worker's Comp risk category would also be covered. They would not be required to cover office personnel. Players would be covered 24 hours a day, whether on duty, travel or their own time. The owner is responsible for the cost of the premiums. The idea was taken from Florida's approach to this problem. The committee was asked to introduce this legislation by the sole professional hockey team in the state, the Anchorage Aces. The Department of Labor, Division of Worker's Compensation has reviewed the legislation and is neutral on the bill. Representative Grussendorf asked if the players support the legislation. Mr. Pearson stated that the players were not in objection to the legislation. Co-Chair Therriault observed that players are required to have other coverage on or off the ice. Representative Martin expressed concern that the legislation is exclusive. Representative Davies did not think that the legislation would fall under special interest legislation. Co-Chair Therriault observed that the legislation could be written to include any hockey teams anywhere in the state of Alaska. Representative Davies questioned if the bill could be written to allow a second professional hockey team in Alaska to be covered. Co-Chair Therriault noted that if a second team did not meet the criteria that they would not have the exemption granted. DWIGHT PERKINS, SPECIAL ASSISTANT, DEPARTMENT OF LABOR responded to questions by Committee members. He explained that where there is compensation by an employer there must be workers' compensation. This concern was alleviated by subsection (9), which provides that they must have workers' coverage. He noted that another team could be covered by the exemption. The legislation does not alleviate the employer's responsibility for injury during the performance of their duties. Representative Mulder noted that workers' compensation provides a shield for the employer from being sued, as well as protection the employee. The exemption would remove the employer's shield. He noted that players have testified in support of the legislation. (Tape Change, HFC 98 -154, Side 1) Mr. Perkins noted that sports officials would be included under the exemption. He explained that the legislation does not require mandatory participation. Representative Davies observed that a second hockey team could opt to participate under workers' compensation. If they do not have insurance for the worker's protection they would have to participate in workers' compensation. Representative Martin reiterated constitutional concerns regarding the legislation's exclusive nature. Mr. Perkins estimated that 4 or 5 other states have similar exemptions. He noted that coverage would be the same as the coverage offered under workers' compensation. The premiums may be less than the premium for workers' compensation. He did not think the Department would support expansion of the legislation to include any professional team. In response to a question by Representative Kohring regarding coverage for semi-professional hockey teams, Mr. Perkins clarified that if there is wage compensation they must be covered under the Workers' Compensation Act. Representative Mulder MOVED to report CSSB 336 (L&C) out of Committee with the accompanying fiscal note. There being NO OBJECTION, it was so ordered. CSSB 336 (L&C) was REPORTED out of Committee with "no recommendation" and with a Department of Labor. SENATE BILL NO. 281 "An Act relating to general grant land entitlements for the City and Borough of Yakutat; and providing for an effective date." SENATOR JERRY MACKIE, SPONSOR, testified in support of SB 281. Senator Mackie read the sponsor statement. He noted that SB 281 was introduced to complete the formation of the Yakutat Borough and the land entitlements that the state grants to support local government. Yakutat's petition to incorporate as a borough in 1992 was considerably reduced in size by the Local Boundary Commission. The land entitlement for the new borough by the formula of 10% of "vacant, unappropriated, and unreserved" (vuu) state lands was a mere 138 acres. The City and Borough of Yakutat subsequently petitioned the Local Boundary Commission to reclaim much of the area on its northern boarder. In a reversal of its earlier decision, the Local Boundary Commission approved the annexation, which contains a substantial amount of state "vuu" lands. It is estimated that if the annexed area had been included for the original borough formation, the municipal land entitlement would have amounted to 33,000 acres. Senator Mackie observed that it has been a long established policy for the state to assist the formation and operation of local governments with generous grants of state land. He maintained that SB 281 corrects the defects in the borough formation process that resulted in such a small land entitlement for the City and Borough of Yakutat by increasing its entitlement to 21,500 acres. The bill also gives additional authority to the Director of the Division of Lands in the Department of Natural Resources to condition and restrict any of the municipality's selections made under this increased grant. Senator Mackie reiterated that the City and Borough of Yakutat only received 138 acres of land as an entitlement. The original legislation would have granted a 30,000-acre entitlement. This was reduced to 21,500 in the Senate Community and Regional Affairs Committee. The Senate Resource Committee reduced the entitlement to 8,552 acres. The entitlement was increased back to 21,500 in the House Community and Regional Affairs Committee. He emphasized that the University of Alaska, Department of Natural Resources, Department of Fish and Game and the regional native corporation supported an entitlement of 21,500 acres. He reviewed the selection process through the Division of Land in the Department of Natural Resources. Co-Chair Therriault questioned if the Borough anticipates selecting the log transfer site. PAUL FUHS, LOBBYIST, CITY OF YAKATAT stated that the community does plan to ask for the log transfer site. He observed that there is no guarantee that the City's request would be approved. He explained that no fee would be charged to the agencies, University or to the Mental Health Lands Trust during the lifetime of their cut. He stressed that there would be reasonable fees for the University if they receive more land. In response to a question by Representative Martin, Mr. Fuhs noted that there are approximately 800 individuals in the Borough. Representative Martin compared entitlements to other Boroughs. Senator Mackie emphasized that every community is different and availability of state land must be considered. Representative Martin felt that the grant was too large. Mr. Fuhs spoke in support of the entitlement. He observed that Yakutat is no longer a single site school district. He added that fishing and timber receipts are down. Representative Davies spoke in support of the legislation. He noted language allowing stipulations. Mr. Fuhs explained that stipulations would be applied to alleviate concerns by the Department of Fish and Game regarding habitat. Representative Davis spoke in support of the legislation. Co-Chair Therriault asked if the community's memorandum of understanding with the Mental Health Trust differs from the current one with the University of Alaska. Mr. Fuhs stated that the memorandum with the Mental Health Trust is different than the memorandum with the University of Alaska. He explained that the Mental Health Trust is a fee simple title owner. The University would have to renegotiate for additional property. Mr. Fuhs clarified that the City would charge a reasonable rate on future operations. The City's agreement with the Mental Health Trust is for free access during the current period. A lease fee would be charged on future cuttings based on an accessed value. WENDY REDMAN, VICE PRESIDENT, STATEWIDE PROGRAMS, UNIVERSITY OF ALASKA spoke in support of the legislation. She noted that the University is working on a memorandum of agreement with the Borough. She estimated that they would reach agreement in the next couple of days. Senator Mackie stressed that the Borough wants to maintain a good relationship with the University. In response to a question by Representative Kohring, Mr. Fuhs stated that the community supports land sale to private holders. Representative Mulder MOVED to report HCS CSSB 281 (CRA) out of Committee with the accompanying fiscal note. There being NO OBJECTION, it was so ordered. HCS CSSB 281 (CRA) was REPORTED out of Committee with a "do pass" recommendation and with a fiscal impact note by the Department of Natural Resources. HOUSE BILL NO. 344 "An Act relating to paternity establishment and child support; relating to the crimes of criminal nonsupport and aiding the nonpayment of child support; and amending Rule 37(b)(2)(D), Alaska Rules of Civil Procedure; and providing for an effective date." BARBARA MIKLOS, CHILD SUPPORT ENFORCEMENT DIVISION, DEPARTMENT OF HEALTH AND SOCIAL SERVICES reviewed the proposed committee substitute, work draft # 0-GH2007\F, 5/4/98. She observed that 4 sections were removed after the Division learned that the federal government did not require them. She referred to a memorandum by Terri Lauterbach, Legislative Council, dated 5/4/98 (copy on file). She agreed with Ms. Lauterbach's interpretation. Section 5 was removed. This section made aiding the nonpayment of child support punishable by the loss of hunting and sport fishing licenses. Section 11 was removed. Sections pertaining to court rule changes were also removed. She stressed that the legislation fulfills federal requirements without doing more then is required by the federal government. Co-Chair Therriault observed that section 37 would delete the sunset. He spoke in support of retaining the sunset. Ms. Mikolos explained that section 36 accompanies section 2. Representative Martin questioned if the biological parents are pursued once a child is placed in a foster home. Ms. Mikolos clarified that both biological parents are pursued, either jointly or individually, based on income. Ms. Mikolos observed that if the sunset provision is retained the Division would be before the Legislature in 1999. In response to a question by Representative Martin, Ms. Mikolos noted that the Division has three investigators. She noted that other employees assist on some investigations. Investigators only do the most serious cases. There is one halftime district attorney assisting the Division. JENNIFER TAYLOR, FAIRBANKS expressed concern with the use of social security numbers. Co-Chair Therriault noted that social security information would be available to the Department, but not to the general public. She emphasized the need to provide for the survival of children born to single poor mothers. She stressed that statutes should be written for general comprehension. She maintained that culpability should be the same regardless of income. She spoke in support of state statutes that are serious enough to provide absolute enforcement. (Tape Change, HFC 98 - 154, Side 2) In response to a question by Co-Chair Therriault, Ms. Mikolos explained that language contained in the previous version was found to be over reaching. The Division consulted with the federal government and they agreed. She added that section 24 might still be too broad. DAN BRANCH, HUMAN SERVICES SECTION, ASSISTANT ATTORNEY GENERAL, DEPARTMENT OF LAW suggested that "has a" and "obligated" be deleted and replaced with "owes overdue." He explained that this change would provide that the only persons that could have their fish and game licenses affected by failure to comply with a child support subpoena or warrant are those that owe overdue child support. Co-Chair Therriault MOVED to delete "has a" and "obligated" and insert "owes overdue." There being NO OBJECTION, it was so ordered. Co-Chair Therriault MOVED to delete section 37. He explained that this would retain the sunset review. Representative Davies suggested that the sunset date be extend to the year 2001. Ms. Mikolos spoke in support of a 2001-year sunset review. Co-Chair Therriault WITHDREW the MOTION to delete section 37. Representative Davies MOVED to amend section 37 to provide a sunset date of 2001. There being NO OBJECTION, it was so ordered. Representative Davies questioned what provisions would be taken to keep social security numbers confidential. Ms. Mikolos noted that there is a federal felony penalty for failure to maintain confidentiality. She noted that they have an agreement with the Department of Fish and Game to black out social security numbers on licenses. Representative Davies MOVED to ADOPT work draft # 0- GH2007\F, 5/4/98. There being NO OBJECTION, it was so ordered. Representative Davies MOVED to report CSHB 344 (FIN) out of Committee with the accompanying fiscal notes. Representative Kohring OBJECTED. He expressed concern that too much control is being given to the Child Support Enforcement Division. He also expressed concern with the inclusion of social security numbers and federal mandates. A roll call vote was taken on the motion. IN FAVOR: Davies, Grussendorf, Moses, Davis, Foster, Kelly, Martin, Therriault OPPOSED: Kohring Co-Chair Hanley and Representative Mulder were absent for the vote. The MOTION PASSED (8-1). CSHB 344 (FIN) was REPORTED out of Committee with "no recommendation" and with five zero fiscal notes, three by the Department of Administration, one by the Department of Revenue, one by the Department of Community and Regional Affairs; and one fiscal impact note by the Department of Administration. SENATE BILL NO. 105 "An Act relating to legislative ethics; relating to the filing of disclosures by certain legislative employees and officials; and providing for an effective date." Representative Kelly MOVED to ADOPT work draft #0-LS0074\J, dated 5/4/98. There being NO OBJECTION, it was so ordered. BEN BROWN, STAFF, SENATOR KELLY reviewed the sectional analysis for HCS CSSB 105 (FIN), #0-LS0074\J. SECTION 1: AS 15.13.040(i) DONATION OF SPACE NOT CONSIDERED A CONTRIBUTION This section adds a new subsection which allows donation of space for the posting of political signs, for storage, or for an event without consideration of the donation as a campaign contribution. SECTION 2: AS 15.13.070(e) LIMITED USE OF CAMPAIGN FUNDS FOR PARTY-RELATED EXPENSES This section adds a new subsection which allows a candidate to expend up to $1000 annually from a campaign account to pay for attendance at political party events, for party membership, or to sponsor party functions. SECTION 3: AS 15.13.072(d) PROHIBITED SOLICITATION & ACCEPTANCE OF CONTRIBUTIONS This section prohibits legislative candidates from soliciting or accepting contributions while the Legislature is convened in regular or special session, unless the candidate's election is within 90 days and the solicitation or acceptance takes place somewhere other than the capital city. SECTION 4: AS 15.13.072(g) PROHIBITED SOLICITATION & ACCEPTANCE OF CONTRIBUTIONS This section adds a new subsection which prohibits candidates for governor and lieutenant-governor from soliciting or accepting contributions in the capital city while the Legislature is convened in regular or special session. SECTION 5: AS 15.13.074(c) PROHIBITED CONTRIBUTIONS This section prohibits a person or group from contributing to a candidate for governor or lieutenant- governor before the 1st of January of a general election year or before the date of a proclamation calling for a special election. It prohibits a person or group from contributing to a legislative candidate while the legislature is convened in regular or special session, unless the candidate's election is within 90 days and the solicitation or acceptance takes place somewhere other than the capital city. Section 5 lengthens the period of time after an election in which a candidate may continue to raise money to the earlier of either 60 days after the election or the end of the calendar year. Sections 6 - 27 were not changed in work draft J. SECTION 28: AS 24.60.080(c) GIFT RESTRICTION EXEMPTIONS A new subsection 8 was added on page 20. It clarifies that a stay in a vacation home located outside Alaska is not an exempted gift. It allows legislators and legislative employees to accept discounts while on State business if the discount benefits the State. It allows legislators and their personal staff (but not other legislative employees) to accept discounts and welcoming gifts in the capital city during session. Section 28 allows receipt of a gift worth more than $250 of legal services related to a matter of legislative concern. SECTION 29: AS 24.60.080(d) GIFT REPORTING This section increases the reference to the maximum cumulative annual gift limit from $100 to $250. It mandates reporting of gifts of travel or legal services within 30 days of receipt. It changes the reporting deadline for gifts not related to legislative status to the 15th of March of the following year, and specifies that the disclosure need include only a description of the gift and the giver's identity (not the actual value). Section 29 also calls for the Ethics Committee to forward gift disclosures by legislators and legislative directors to the Alaska Public Offices Commission (APOC). Sections 30 through 43 were not changed by the committee substitute. SECTION 44: AS 24.60.170(a) INITIATION OF COMPLAINTS Section 44 removes the committee's ability to initiate complaints on its own aggregate motion, but does not remove any individual committee member's right to initiate a complaint. Sections 45 through 47 remained the same. SECTION 48: AS 24.60.170(g) CORRECTIVE ACTIONS New language was added on lines 8 - 13, on page 30. This section allows the ethics committee to issue an opinion (which must go to both the complainant and the subject) recommending corrective action after finding probable cause that a violation occurred. It lets the subject request a confidential meeting with the committee within 20 days of receipt of the opinion, at which the committee must explain its reasons for recommending corrective action. It then allows the subject to comply with the opinion or request a hearing under subsection (j), and lets the committee amend or affirm the opinion after this hearing. Section 48 sets out that if a subject agrees to comply with an opinion but fails to do so in a timely manner, the committee may formally charge the person under subsection (h) or refer the matter to a supervisory authority. It empowers the supervisory authority to enforce corrective actions, or decline to do so and refer the matter back to the committee, which retains the power formally to charge the person. Sections 49 and 50 remain the same. SECTION 51: AS 24.60.170(l) CONFIDENTIALITY New language that was added to the end of Section 51 was deleted by the committee substitute. The Department of Law advised that the new language was unnecessary. This section provides that ethics committee proceedings are confidential until the determination of probable cause, and that complaints and all documents produced or disclosed in the course of an investigation are confidential as well. It mandates that the committee transmit information obtained in the course of an investigation to appropriate enforcement authorities. Section 51 clarifies that all meetings of the committee concerning complaints are closed to the public and non- members of the committee, though the committee may permit the subject of a complaint to attend a meeting other than deliberation on probable cause. It allows the subject to waive the confidentiality provisions of this section. Sections 52 through 58 were not changed. SECTION 59: AS 24.60.210 DEADLINES FOR FILING This section changes the deadline for filing an LFD from the 15th of April to the 15th of March. SECTION 60: AS 24.60.240 CIVIL PENALTY FOR LATE FILING This section changes the reference to who must file an LFD to include public members of the ethics committee as well as legislative directors and legislators. SECTION 61: AS 24.60.250(a), (b) & (c) EFFECTS OF FAILURE TO FILE This section sets out what APOC must do if an incumbent legislator fails to file an LFD by the 15th of March. It establishes that APOC notifies the candidate that the report is late, and if the candidate still refuses to file within 30 days, APOC informs the Lieutenant Governor of the failure to file. The candidate then forfeits nomination to office and may not be seated. The lieutenant governor may not certify the person's nomination, and the results of the person's election are certified according to 39.50.060(b). Subsection (b) sets out that if a public member fails to file, APOC must notify the appropriate presiding officer. Subsection (c) sets out that APOC must notify Leg Council or LB&A if a legislative director fails to file. In response to a question by Representative Mulder, Mr. Brown explained that if a disclosure is not made by the 15th of March there is a civil fine of $10 dollars a day. If disclosure is not made within 30 days of the 15th of March the penalty would be the inability to run for office or a lose of office. In response to a question by Representative Martin, Mr. Brown noted that a subject might ask that confidentiality be waived. Representative Mulder noted that the end of year financial report is due on February 15th. Close economic relationships and LFD's are due on March 15th. Mr. Brown observed that two reports are being consolidated. Representative Martin emphasized that the public should have the proper information before a person is elected. He stated that he supported an amendment to require candidates to disclose relationships of themselves, spouse or spousal equivalent with lobbyists. Mr. Brown noted that candidates file public official disclosure forms under AS 39.50. Sections 62 through 68 were not changed by the committee substitute. SECTION 69: AS 39.50.020 REPORT OF FINANCIAL AND BUSINESS INTERESTS This section changes the requirements for Public Official Financial Disclosure reports, setting out that public officials listed in 39.50.200 must file reports within 30 days after taking office and in each following year. It changes the annual filing deadline to the 15th of March, and specifies that all non-municipal officials file with APOC, while municipal officials file with appropriate local authorities. References to spouse in AS 39.50 have been amended to include the spousal equivalent. The definition of "immediate family" has been changed to include the parent, child, or sibling that resides with the person, is financially dependent on the person or shares a substantial financial interest with the person who is filing. Sections 70 through 72 were not changed. SECTION 73: AS 39.50.060 THIRTY DAY PERIOD AFTER FILING DEADLINE This section establishes that APOC must notify a candidate that the report is late. If the candidate does not within 30 days, APOC informs the Lieutenant Governor of the failure to file. The candidate then forfeits nomination to office and may not be seated. The lieutenant governor may not certify the person's nomination, and the results of the person's election are certified according to 39.50.060(b). Subsection (b) sets out that if a public member fails to file, APOC must notify the appropriate presiding officer. Subsection (c) sets out that APOC must notify the Legislative Council or the Legislative Budget and Audit Committee if a legislative director fails to file. New language was added to clarify that a person is considered to have complied if they comply within 30 days after the due date. Section 74 remains the same. SECTION 75: AS 39.50.090(a) PROHIBITION ON USE OF OFFICIAL POSITION This section disallows the use of official position to obtain financial gain for a spousal equivalent. Sections 76 and 77 were not changed in the committee substitute. SECTION 78: AS 39.50.200(a)(9) DEFINITIONS This section expands the definition of 'source of income' to include spousal equivalents. SECTION 79: AS 39.50.200(a)(10) DEFINITIONS This section adds a new definition of 'spousal equivalent' for the purposes of 39.50. Statutes relating to the Executive Branch Ethics Act begin in section 80. Sections 80 through 98 were not changed in the committee substitute. SECTION 99: AS 39.52.960(2) DEFINITION OF AGENCY This section adds the Alaska Railroad Corporation to the definition of 'agency' for the purposes of the Executive Branch Ethics Act. Audits by the Legislative Budget and Audit Committee recommended this change. SECTION 100: AS 39.52.960(4) DEFINITION OF BOARD OR COMMISSION This section adds the Alaska Railroad Corporation Board of Directors to the definition of board or commission for the purposes of the Executive Branch Ethics Act. SECTION 101: AS 39.52.960(11) DEFINITION OF IMMEDIATE FAMILY This section changes the general definition of immediate family member for the purposes of the Executive Branch Ethics Act. SECTION 102: 42.40.710 ALASKA RAILROAD EMPLOYEES This section specifies that the Executive Branch Ethics Act applies to Railroad employees, although the remaining provisions of Title 39 do not. (Tape Change, HFC 98 - 155, Side 1) SECTION 103: AS 42.40.230 ALASKA RAILROAD ETHICS CODE REPEALER This section repeals 42.40.230, which is no longer needed as the Railroad is brought under the Executive Branch Ethics Act by the bill. The remaining sections were not changed by the committee substitute. NEIL SLOTNICK, ASSISTANT ATTORNEY GENERAL, COMMERCIAL SECTION, DEPARTMENT OF LAW stated that he had not discussed the addition of the Alaska Railroad with the Attorney General or the Alaska Railroad Corporation. He anticipated that a memorandum of agreement would be reached that would allow the Corporation's general counsel to advise them on legal issues. He anticipated that complaints would be handled through the Attorney General's Office. He emphasized that the Department of Law would charge attorney time through an RSA from the Alaska Railroad Corporation. Representatives Mulder and Martin spoke in support of the addition. Representative Davies suggested that a contractual relationship be arranged to allow for statutory designated receipts instead of program receipts. In response to a question by Representative Mulder, Mr. Slotnick stated that the Department is supportive of the amendments made to the Executive Branch Ethics Act. SB 105 was HELD in Committee for further consideration. ADJOURNMENT The meeting adjourned at 5:35 p.m. House Finance Committee 20