HOUSE FINANCE COMMITTEE May 6, 1999 1:55 P.M. TAPE HFC 99 - 119, Side 1. TAPE HFC 99 - 119, Side 2. CALL TO ORDER Co-Chair Therriault called the House Finance Committee meeting to order at 1:55 P.M. PRESENT Co-Chair Therriault Representative Foster Co-Chair Mulder Representative Grussendorf Vice Chair Bunde Representative Kohring Representative Austerman Representative Moses Representative J. Davies Representative Williams Representative G. Davis ALSO PRESENT Sheila Peterson, Staff, Senator Gary Wilken; Llewelyn Lutchansky, Staff, Senator John Torgerson; Jerry McCune, Lobbyist, United Fishermen Association, Juneau; Kevin Brooks, Director, Division of Administrative Services, Department of Fish and Game; James Baldwin, Assistant Attorney General, Department of Law; Jay Lively, Deputy Commissioner, Department of Health and Social Services; Rick Solie, (Testified via Teleconference), Fairbanks Memorial Hospital, Fairbanks; Lisa Wolf, (Testified via Teleconference), Director of Planning, Providence Medical Center, Anchorage. SUMMARY HB 187 An Act relating to the certificate of need program for nursing care facilities and other facilities; and providing for an effective date. CS HB 187 (FIN) was reported out of Committee with "no recommendation" with a fiscal note by the Department of Health and Social Services dated 4/26/99. SB 146 An Act relating to the amount and disposition of the commercial fishing license fee and to the fishermen's fund; and providing for an effective date. HCS CS SB 146 (FIN) was reported out of Committee with "no recommendation" and with a fiscal note by the Department of Labor and the Department of Fish and Game. HOUSE BILL NO. 187 An Act relating to the certificate of need program for nursing care facilities and other facilities; and providing for an effective date. Co-Chair Therriault advised that the committee substitute would provide for a "tighter" title. Representative Bunde MOVED to adopt work draft, 1-LS0708\D, Lauterbach, 5/6/99, as the version before the Committee. There being NO OBJECTION, it was adopted. Representative Bunde noted that he had been involved with the Long Term Health Care Task Force which spent much time discussing nursing concerns and costs related to nursing home facilities. He pointed out that the legislation would address the State's need for a nursing home facility. SHEILA PETERSON, STAFF, SENATOR GARY WILKEN, stated that Alaska has had a Certificate of Need (CON) law since 1976. The purpose of that law is to insure the development of an accessible, cost-effective health care system with quality service. Currently, the Department of Health and Social Services reviews all nursing home expansion projects with an estimated cost of over $1 million dollars. The review of each request is limited to factors of accessibility and quality in order to determine if the service is available and could be provided in a quality manner. Under the proposed legislation, a new standard of need would be adopted for nursing home CON requests. The revised standard allows decisions to be made based on additional criteria such as need, financial feasibility and availability of alternatives. Under the change, a new nursing home project would need to demonstrate cost effectiveness and appropriateness of the service. Ms. Peterson advised that the Department of Health and Social Services estimates that on the average, ten new nursing home beds would increase the Medicaid budget by about $1 million dollars annually. The decision to expand existing nursing home facilities has long-term implications to both the State treasury, senior citizens and those with disabilities. The legislation will give the Department of Health and Social Services the tools necessary to make informed decisions. Co-Chair Therriault pointed out that a primary concern is that the beds are eligible for Medicaid participation. If a facility over bills and has fixed costs, those costs are passed on to the State through Medicaid billings. The proposed method allows front-end participation. Representative Bunde recommended that it is financially advisable to limit the number of nursing home beds. The legislation would encourage more home and community care. Co-Chair Therriault referenced Page 4, asking if CON would continue to be in place for other medical facilities. Representative G. Davis asked how the proposed legislation would apply to HB 161. Co-Chair Therriault explained that Medicaid considerations are exempt from HB 161 because they are exempt from statute mechanisms addressing costs and the options list. JAY LIVELY, DEPUTY COMMISSIONER, DEPARTMENT OF HEALTH AND SOCIAL SERVICESS pointed out that language had been included to clarify that existing standards would apply to acute care and that new standards will only apply to long term care. Mr. Lively commented that the Department strongly supports the legislation. In response to Representative J. Davies, Mr. Lively stipulated that some home care provided for individuals who would have been eligible through the nursing home component, would now be eligible through home and community based services. Waiver costs are considerably less than nursing home costs. The legislation provides for alternative use to the most expensive care. Representative Bunde pointed out that in order to be Medicaid eligible, a person would need to be impoverished. Representative J. Davies elaborated that it would ultimately be cheaper for those people to stay in their own homes. Representative Bunde noted that group would still require State payment. RICK SOLIE, (TESTIFIED VIA TELECONFERENCE), FAIRBANKS MEMORIAL HOSPITAL, FAIRBANKS, spoke in support of the legislation. He reiterated that this bill is the product of the Long-Term Care Task Force recommendations and would also represent a good effort on the part of providers and users, to address future problems of a growing elderly population. LISA WOLF, (TESTIFIED VIA TELECONFERENCE), DIRECTOR OF PLANNING, PRIVIDENCE MEDICAL CENTER, ANCHORAGE, voiced support of the proposed legislation. Representative Kohring asked if a certificate would be required of all nursing care facilities which receive Medicaid funds. Mr. Lively replied that would be a portion of any nursing home cost. He added that the nursing homes in Alaska are primarily funded (about 85%-90%) by Medicaid. Care in this State is so expensive that most people can not afford to pay for it privately. Representative Foster MOVED to report CS HB 187 (FIN) out of Committee with individual recommendations and with the accompanying fiscal note. There being NO OBJECTION, it was so ordered. CS HB 187 (FIN) was reported out of Committee with "no recommendation" and with a fiscal note by Department of Health and Social Services dated 4/26/99. SENATE BILL NO. 146 An Act relating to the amount and disposition of the commercial fishing license fee and to the fishermen's fund; and providing for an effective date. LLEWELYN LUTCHANSKY, STAFF, SENATOR JOHN TORGERSON, stated that SB 146 would increase the cost of a crew member's fishing license from $30 dollars per resident and $90 per non-resident to $60 dollars for a resident and $125 dollars for a non-resident. At present time, 60% of the crewmember license fees goes into the Fisherman's Fund. SB 146 would reduce the percentage of license fees that goes into the fund from 60% to 39%. At the 39% level, the Fisherman's Fund will have the same amount of funding it receives now. The current balance of the fund is over $9 million dollars. Ms. Lutchansky noted that SB 146 would direct 61% of the crew license fee to the Fish and Game Fund to be made available for appropriation in FY00 for the Commercial Fisheries Management budget. In conclusion, Ms. Lutchansky pointed out that the intent of the legislation is to direct crew license fees so to benefit the commercial fisheries industry. JAMES BALDWIN, ASSISTANT ATTORNEY GENERAL, DEPARTMENT OF LAW, stated that the Administration supports the legislation, however, there is concern with the proposed amendment and asked the Committee to consider possible measures to eliviate a potential legal problem. The bill changes the rate on dedicated funds that existed before statehood. Under legal opinion, when that occurs, it could have the potential of destroying the dedication of funds. Mr. Baldwin pointed out that there is an opinion split between the Department of Law and the Legislative Council. He requested Committee members to consider measures as taken in the tobacco tax bill, in which certain contingent provisions were formed. Co-Chair Therriault asked if the Department had testified to the issue in previous committee hearings. Mr. Baldwin replied that he had sent a letter to the Senate Finance Committee explaining the issue. He added that he had discussed the concern with Senator Torgerson and his staff and had testified regarding the concern in the House Labor and Commerce Committee. Mr. Baldwin believed that Senator Torgerson understood the problem, however, he believes that the concern is that "lawyers disagree with one another". Representative J. Davies asked if adding a surcharge rather than changing the fees would eliminate the concern. Mr. Baldwin explained in essence that is what had been done with the tobacco tax until it was increased in 1998. Representative Austerman voiced support for the concept of the legislation, however, he advised that adjusting the rules of a dedicated fund including the addition of a surcharge could raise questions. Ms. Lutchansky spoke to the dedicated fund issue. She noted that the sponsor understands that there is a small risk that this could be challenged, but thinks there would be time to address the concern before it gets to court. Senator Torgerson requests that the bill pass from Committee as is. Representative J. Davies asked if the sponsor of the bill had considered the surcharge. Ms. Lutchansky replied that route would be risky. Co-Chair Therriault MOVED to adopt Amendment #1. [Copy on File]. Representative Austerman OBJECTED. SHEILA PETERSON, STAFF, SENATOR GARY WILKEN, spoke to the amendment. She pointed out that when SB 146 was before the Senate Finance Committee (SFC), it came to Senator Wilken's attention, that regardless of their age, any individual should purchase a crew member license if they are on a boat touching fish. Ms. Peterson stated that when the crewmembers license fee was raised from $30 dollars to $60 dollars, the Senator was concerned about young children on boats fishing with their parents in the "mom and pop" operation. Senator Wilken drafted the amendment with the idea that a youngster 10 years or younger would only need to purchase a $5 dollar license. Last year, there were 325 total residents involved in this category. She understood that both the Department of Fish and Game and the Department of Labor do not oppose the legislation or the amendment. This would impact those individuals that need to purchase a commercial fishing license because they are engaged in the business of fishing. Co-Chair Therriault stated it is not legal to hire children to work on a boat because of child labor laws. Representative J. Davies replied that is an exception to that in the fishing industry. JERRY MCCUNE, LOBBYIST, UNITED FISHERMAN ASSOCIATION, JUNEAU, stated that a minor can be taken fishing as long as they do not work on the machinery. He added that many families work with their children and neighbors. Representative Austerman spoke to his objection. He pointed out that currently the charge is $30 dollars and questioned why the State should reduce it. Ms. Peterson stated that it could stay the same, however, Senator Wilken believes that fishermen currently receive minimal assistance and that children should never have had to buy a $30 dollar license. KEVIN BROOKS, DIRECTOR, DIVISION OF ADMINISTRATIVE SERVICES, DEPARTMENT OF FISH AND GAME, commented that the amendment addresses 350 licenses out of 25 thousand, of which vendors sell most of those licenses. Representative Grussendorf pointed out that there are many "fishing" families in which the fishing boat is their home. He acknowledged that the amendment would address the concern adequately. Representative Austerman MOVED to AMEND the amendment, deleting "$5" and inserting "$30". Representative Foster OBJECTED. Representative Austerman advised that is the amount currently being paid. Representative Bunde inquired the cost to issue a license. Mr. Brooks replied that the Department pays 15% commission for issuance of a license and the other costs have not been broken down. He observed that $5 would be above the Department's cost. A roll call vote was taken on the motion. IN FAVOR: G. Davis, Austerman OPPOSED: Bunde, J. Davies, Foster, Grussendorf, Kohring, Moses, Williams, Therriault. Co-Chair Mulder was not present for the vote. The MOTION FAILED (2-8). (Tape Change HFC 99 - 119, Side 2). There being NO further OBJECTION to Amendment #1, it was adopted. Co-Chair Therriault questioned why the 3:1 ratio was not incorporated into the raise of license fees. Ms. Lutchansky replied that there had historically been a case that challenged the non-resident fees. Mr. Brooks added that it was a very complex formula used to determine the per capita costs of commercial fishing invested by the State which places a limitation on the differential. Representative Bunde asked if the same ratio applied to sport fishing. Mr. Brooks replied that the license fee is closer to a 3:1 ratio, which results from the dollar difference rather than the ratio. He pointed out that concern had been discussed in previous committee hearings and always came back to the proposed formula. Representative J. Davies MOVED to ADOPT conceptual Amendment 2, which would apply to the constitutional concern from the Department of Law. He recommended changing language on Page 1, Line 10, deleting "10" inserting "15"; Page 2, Line 5, delete "$60" inserting "$30"; Page 2, Line 5 delete "$125" and insert "$90". He continued, Page 2, Line 6, adding language: "There is a surcharge of $30 for a resident license fee and $35 dollars for the non residence license fee". Page 2, Line 13, after "fee" add the language "and surcharges"; Page 2, Line 19, deleting "39" and inserting "60". He stated that the language of the amendment would place the same amount of money into the fisherman's fund and into the fish and game fund and which would separate more cleanly the existing dedication. Representative Austerman OBJECTED. Representative Grussendorf noted that his intention was to preserve the fisherman's fund and that future legislators do not look to that fund as a revenue source. If the amendment is adopted, it will clarify the intent of that fund. Ms. Lutchansky voiced concern that 40% would possibly go to the general fund rather than to the fish and game fund. Representative J. Davies noted that his intent was not to change that amount. Co-Chair Therriault pointed out that the amendment could "trigger" a title change. Ms. Lutchansky commented that the sponsor would not favor that approach. Representative J. Davies responded that the approach suggested by the amendment would create less of a court challenge. Representative Austerman observed that each year the Legislature seems to indicate that commercial fishing industry is not paying it's way in the State. He emphasized that fish and game are the renewal resources of this State and recommended that the proposed legislation is one of the "brighter spots" in legislation proposed this session. It provides a creative way to generate funds for the Department of Fish and Game to continue their work of protecting our natural resources. His voiced concern that the amendment could possibly destroy the bill. Representative J. Davies replied that the amendment could protect the intent of the bill from the future risk. Representative Bunde observed that the amendment would change the amount of collected fees resulting in a fiscal impact. Mr. Brooks understood Representative J. Davies' intent that the 15% commission would apply to the original fee. Representative Bunde noted that he was uncomfortable with a major rewrite of the bill. Mr. Brooks explained that the amendment was largely the approach recommended by Mr. Baldwin, Department of Law. Representative Austerman reminded members that Mr. Baldwin stated that there is a split opinion on the possible action of the legislation. Representative G. Davis agreed that the amendment would create a title change. Representative J. Davies disagreed that there would be a need for a title change and that the surcharge would be part of a consolidated fee. He stated that the amendment would preserve the intent of the bill, not changing the disposition of the funds. A roll call vote was taken on the motion to adopt Amendment IN FAVOR: J. Davies, Grussendorf OPPOSED: G. Davis, Foster, Kohring, Moses, Williams, Austerman, Bunde, Therriault Co-Chair Mulder was not present for the vote. The MOTION FAILED (2-8). Mr. Brooks advised that the bill will generated enhanced revenue. He addressed the Department of Fish and Game's fiscal note. The commission will be changed from 15% to 10% in the assumption that the expenditure will remain where it currently is. The Department's budget is built on this legislation moving as there is a $100 thousand dollar impact where the general fund has been cut. Co-Chair Therriault questioned if a new fiscal note would be necessary from Committee action taken. Mr. Brooks responded that there should be a change to the note, not to the expenditure but rather a revenue estimate. Representative Foster MOVED to report HCS CS SB 146 (FIN) out of Committee with individual recommendations and with the accompanying fiscal notes. Representative Williams OBJECTED. Representative Williams commented that with the fishing disaster, fishermen can not pay more than they already are paying. Many fishermen do not take money "out of State" as strongly believed. He pointed out that the fishing industry is the largest employer in the State of Alaska and adds a lot of money to our economy. Representative Grussendorf agreed with the comments of Representative Williams, however, pointed out that the Department is relying on this funding source to balance their budget. Representative Austerman echoed the comments of Representative Williams, however, reflected that it is essential to have the legislation then not have it. Representative Kohring associated his remarks with those made by Representative Williams. Representative Bunde commented that he was pleased that the commercial fishing industry was breaking even, which has not always been the case. He emphasized that commercial fishing is not a "State religion" and that industry must pay its way. Representative Austerman disagreed with Representative Bunde's statement that commercial fishing has not paid it's own way. The issue is that the taxes collected from fishermen and then how those funds are disbursed is a decision made by the Legislature, and that those funds often do not make it back into the general fund. . A roll call vote was taken on the motion to move the bill from Committee. IN FAVOR: G. Davis, Foster, Grussendorf, Austerman, Bunde, J. Davis, Therriault, Mulder OPPOSED: Kohring, Moses, Williams The MOTION PASSED (8-3). HCS CS SB 146 (FIN) was reported out of Committee with "no recommendation" and with fiscal notes by the Department of Labor and the Department of Fish and Game. ADJOURNMENT The meeting adjourned at 3:05 P.M. H.F.C. 10 5/06/99