HOUSE FINANCE COMMITTEE April 4, 2000 2:00 P.M. TAPE HFC 00 - 99, Side 1. TAPE HFC 00 - 99, Side 2. TAPE HFC 00 - 100, Side 1. TAPE HFC 00 - 100, Side 2. TAPE HFC 00 - 101, Side 1. CALL TO ORDER Co-Chair Therriault called the House Finance Committee meeting to order at 2:00 P.M. PRESENT Co-Chair Therriault Representative Foster Co-Chair Mulder Representative Grussendorf Representative Austerman Representative Moses Representative Bunde Representative Phillips Representative J. Davies Representative Williams Representative G. Davis ALSO PRESENT John Barnett, Board of Storage Tanks, Juneau; Edward Crane, President, Alaska Commercial Fishing and Agriculture Bank (CFAB), Anchorage; Lisa Kirsch, Assistant Attorney General, Department of Law; Lorraine Derr, Alaska State Hospital and Nursing Association, Juneau; Wendy Redman, Vice President, Statewide Programs, University of Alaska-Fairbanks; Lorali Meier, Staff, Representative Beverly Masek; Jon Sherwood, Division of Medical Assistance, Department of Health and Social Services; Bob Labbe, Director, Division of Medical Assistance, Department of Health and Social Services. TESTIFIED VIA TELECONFERENCE Susan Springer, Seldovia; Robert Gilfilian, Anchorage; Leonard Anderson, State of Alaska Third Party Recovery in Medicaid Matters, Anchorage; John Cook, Anchorage; Gary Weber, Secretary Treasurer, Alaska Underground Tank Owners (AUTO), Mat-Su; Charles Parker, Mat-Su. SUMMARY HB 265 An Act extending the termination date of the Alaska regional economic assistance program; and providing for an effective date. HB 265 was reported out of Committee with a "do pass" recommendation and with a fiscal note by Department of Community & Economic Development dated 3/1/00. HB 325 An Act relating to priorities, claims, and liens for payment for certain medical services provided to medical assistance recipients; and providing for an effective date. CS HB 325 (JUD) was reported out of Committee with a "do pass" recommendation and with a fiscal note by Department of Health and Social Services dated 2/2/00. HB 339 An Act authorizing the Alaska Commercial Fishing and Agriculture Bank to make loans relating to tourism and development or exploitation of natural resources. CS HB 339 (FIN) was reported out of Committee with a "do pass" recommendation and with a zero fiscal note by the Department of Community & Economic Development dated 4/3/00. HB 349 An Act relating to powers of the Board of Game, means of access for hunting, trapping, and fishing, the definition of `means' and `methods,' and hunting safety education and game conservation education programs; relating to the purposes of game refuges, fish and game critical habitat areas, and public use areas. HB 349 was POSTPONED for hearing to a latter date. HB 432 An Act extending the termination date of the Board of Storage Tank Assistance; expanding the authority of the board to issue recommendations concerning cleanup decisions; and providing for an effective date. CS HB 432 (FIN) was reported out of Committee with a "do pass" recommendation and with a fiscal note by the Department of Environmental Conservation dated 3/2/00. SB 281 An Act relating to missions and measures to be applied to certain expenditures by the executive branch of state government and the University of Alaska from the state operating budget for the fiscal year ending June 30, 2001; and providing for an effective date. HCS CS SB 281 (FIN) was reported out of Committee with a "do pass" recommendation and with a zero fiscal note by the Office of the Governor dated 3/17/00. HOUSE BILL NO. 339 An Act authorizing the Alaska Commercial Fishing and Agriculture Bank to make loans relating to tourism and development or exploitation of natural resources. Co-Chair Mulder explained that the legislation would expand the lending authority of the Commercial Fishing and Agriculture Bank (CFAB) and would enable it to make loans to Alaskan small business enterprises involved in natural resource development and tourism. Presently, CFAB makes loans to Alaska residents engaged only in commercial agriculture or fishing. The bank seeks expanded authority to provide financing opportunities to small Alaskan business entrepreneurs who generally have trouble obtaining commercial loans because of their relative small size and lack of financial experience. Co-Chair Mulder noted that currently, CFAB's loan portfolio is very narrow and susceptible to ups and downs of the market. The bill would allow CFAB to make loans to natural resource development and also tourism. Co-Chair Therriault MOVED to adopt the committee substitute, 1-LS1285\I, Utermohle, 4/1/00, as the version of the legislation before the Committee. [Copy on File]. There being NO OBJECTION, it was adopted. ED CRANE, PRESIDENT, COMMERCIAL FISHING AND AGRICULTURAL BANK (CFAB), ANCHORAGE, stated that when the bill was originally drafted, "general" language was used to provide as much flexibility as possible. Some of that language has been found to be unacceptable. Consequently, loan limits were added. Mr. Crane noted that the House Finance Committee substitute changes some of the original language. He outlined changes made to the proposed committee substitute that would make the bill more specific. Mr. Crane explained that the Alaska State Legislature created CFAB in AS 44.81 in 1980. The statute governs CFAB's operation and provided for its accountability to the Legislature and Administration. Because CFAB is incorporated under that statute, it requires legislative approval for any changes in operational authority. Twenty years ago, limited access to commercial financing by resident Alaska commercial seafood harvesters, processors and farmers, stimulated the need for CFAB as a private cooperative. The State of Alaska responded by providing initial capital through the purchase of $32 million dollars of special preferred stock in 1980. CFAB began making monthly payments in 1991 to the State, repurchasing increments of the stock. In September of 1998, the stock repurchase agreement was completed as specified in statute and today CFAB is owned solely by its past and present borrowing members. Mr. Crane continued, in 1986, the Alaska Supreme Court identified CFAB as a private entity. AS 44.81 states that it is not subject to the Alaska Cooperative Corporation Code or the Alaska Banking Code. It pays federal and state corporate income tax, state auditing fees and is subject to legislative audits. In short, CFAB is now a private lender operating within the free enterprise system with limited ties to the State of Alaska. CFAB's auditors, from both the public and private sector, give the bank favorable reviews but consistently note the concentration in agricultural and fishing industry loans resulting in an unusual level of risk exposure and vulnerability to the ups and downs of the industries. Representative Grussendorf asked if the only new ability granted in the proposed legislation was that to loan to tourism. Mr. Crane replied that it would be to either tourism and/or operators in the natural resources. Representative Grussendorf asked if there would be a limit on how each company could borrow. Mr. Crane pointed out that there are no statutory limits on the size of a loan that can be made for fish and agriculture purposes. Representative J. Davies observed that this would be a lending operation chartered by the State. He asked the requirements to become a member of the bank to qualify for borrowing. Mr. Crane explained that CFAB is operated as a cooperative with the customers as owners. "Member" is defined as one of the stockholders of the board. Any Alaska resident who is engaged in commercial fishing or agriculture can become a member by purchasing one share of stock. Representative J. Davies interjected that CFAB is a cooperative lending organization. Co-Chair Therriault reminded member's from where the entity originally came from. The limited entry system had just started and it was important that the State guarantees that Alaskans had access to capital so that they could get the permits and keep them in Alaska's hands. Co-Chair Therriault suggested that the original concerns have been diminished at this time. There is no shortage of loan programs in State government. He did not see the compelling reason to implement the proposed legislation. Mr. Crane commented that it has not been a problem in recent years. He agreed that the same circumstances do not appear to exist in relationship to tourism. The bill is a defensive effort by CFAB. The limited entry system does not have the same concerns as it did 25 years ago. Today, it has greater concerns. Many of the individuals in rural Alaska who were initial recipients of the loan are now reaching an age where they want to retire. Many of them now want to sell their permit. The needs have changed. He believed that there is a need to continue the support for Alaska resident's ability to buy limited entry permits. Co- Chair Therriault agreed that it is important to keep them in Alaskan's hands. He voiced concern with expansion of the operation. Mr. Crane clarified that CFAB must build diversification. Co-Chair Mulder spoke to the State's compelling interest. He commented that CFAB has taken on a new life of economic expansion and opportunity. He noted that there is a lot of frustration among the Alaskan people who are attempting to get the smaller loans. The loans that CFAB is proposing are low-level loans which are not in the best interest of most banks. Co-Chair Mulder pointed out currently, only CFAB can loan on the limited entry permits. He pointed out that there is a compelling reason, as the State interests are at stake. Mr. Crane added that CFAB is acting as an agent for the State. There is no way to limit that privilege to one class of private lender. Co-Chair Mulder pointed out that limited entry and CFAB won the case with the Internal Revenue Service (IRS) to retain control of the permits. To open that up to outside lenders would jeopardize the direction which the State intended to go. Vice Chair Bunde agreed that this is a unique Alaskan program. He asked if there were similar programs like this available through other states. Mr. Crane replied that the only one he was aware of was through a lending institution in Canada. (TAPE CHANGE, HFC 00 - 99, Side 2). Mr. Crane stated that the proposed bill would provide that CFAB continue to be a viable entity. Vice Chair Bunde suggested if it would be more accurate to change CFAB from a "bank" to a "revolving loan fund". Mr. Crane replied that would not be a move that CFAB would make hastily. He noted that CFAB has not yet fully considered all the legal documentation such a transition would require. Vice Chair Bunde commented if supporting the legislation would be "questionable" given the Legislature's commitment to encouraging privatization. Representative Foster inquired if there was a mechanism included in the proposal to cover concerns for bed and breakfast associations. He asked if the board membership would change. Mr. Crane thought that the legislation would address that concern. Currently, the board consists of seven people; two members appointed by the Governor and the other five elected from the membership. In response to Representative Williams, Mr. Crane reiterated the original purpose of CFAB to insure that Alaska resident fishermen had sufficient access to capital to maintain participation in Alaska's fisheries. Representative Williams inquired if the banking community supported CFAB at this time. Mr. Crane replied those entities are "waving their arms" with concern about the legislation. However, at the same time, there are joint ventures happening with the State. Representative Austerman pointed out that there are many commercial fishermen now considering the charter boat tourism industry. SUSAN SPRINGER, (TESTIFIED VIA TELECONFERENCE), HERRING BAY MERCANTILE, TOURIST BUSINESS, SELDOVIA, spoke in support of the legislation and urged Committee support to extend the lending authority of CFAB to include resource development and tourism. She suggested that the legislation was the most important thing that Alaska could do to help small businesses so to have greater access to low interest business loans. The existing loan process needs to be streamlined. She noted that the conventional banking institutions in Alaska are not serving the small business people. Ms. Springer addressed her impressions of CFAB: ? CFAB is well respected for its support of small business development through the Fisheries Business Assistance Program; ? Not many of the state-funded small business assistance programs work as effectively as CFAB; and ? Access to start-up and operating capital is one of the primary challenges facing small Alaskan entrepreneurs trying to establish themselves in business. Ms. Springer pointed out that CFAB serves a "niche" to a specific clientele. It will not pose a threat to the banking institutions. She noted that CFAB shareholders are all Alaskan's and will continue to be Alaskan and that they have Alaska's interest at stake. She emphasized that passage of HB 339 would give entrepreneurs a "shot in the arm". Representative J. Davies MOVED an amendment to Page 4, Line 28, deleting "tourism" and inserting "tourists". Representative Moses commented that if the bill passes, it would allow CFAB the authority to move more into the rural areas to provide loan financing for tourism facilities. He noted at present, CFAB could not finance a loan for a charter boat. He stated that 99% of the financing undertaken in the commercial fishing business is done in the Seattle area. Representative Moses added that the majority of the fishing industry is done in Seattle because Seattle is where most of the head business are located such as processor parent companies. He interjected that definitely will not change with the Wells Fargo Bank take-over. Representative Foster reiterated his concern about the composition of the Board's makeup. Mr. Crane explained that the Board would also be expanded. Currently, the Board functions with an oversight role. The Board takes no part in the loan decisions; it only approves basic policy and standards. CFAB will acquire additional expertise and that the Board is 100% behind the expansion. Co-Chair Mulder MOVED to report CS HB 399 (FIN) out of Committee with individual recommendations and with the accompanying fiscal note. Representative Williams OBJECTED stating that the bill would compete with the private sector. Following further comments, Representative Williams WITHDREW his OBJECTION. There being NO further OBJECTION, it was so ordered. CS HB 399 (FIN) was reported out of Committee with a "do pass" and with a new zero fiscal note by Department of Community & Economic Development dated 4/3/00. HOUSE BILL NO. 432 An Act extending the termination date of the Board of Storage Tank Assistance; expanding the authority of the board to issue recommendations concerning cleanup decisions; and providing for an effective date. LORALI MEIER, STAFF, REPRESENTATIVE BEVERLY MASEK, commented that the Board of Storage Tank Assistance was created in 1990 in response to a clean up program initiated by increased federal regulations and aggressive Environmental Protection Agency (EPA) enforcement actions. Many Alaskan underground storage tank owners were forced out of business because they could not afford the high cost of clean up of contamination from their leaking tanks. Ms. Meier stated that the Storage Tank Assistance Program was established to protect Alaska's drinking water supplies and to help Alaska's regulated underground storage tank owners and operators meet EPA's tough new environmental laws and regulations pertaining to underground petroleum storage tanks. The goals of the program were simple: ? Cleanup existing leaks, ? Prevent future leaks, and ? Help Alaska's tank owners and operators through educational, technical, and financial assistance. Although originally established as a financial assistance grant program, the program was restructured in 1999 as predominately a loan program. Ms. Meier noted that HB 432 extends the termination date of the Board of Storage Tank Assistance to June 30, 2003. It is necessary to extend the termination date because many sites have just initiated cleanup or are in the midst of a long term cleanup process which are not expected to be completed for a few years. Furthermore, as the new loan program is expected to be implemented this upcoming construction season, it is imperative that the Board remain available to mediate and resolve disputes between the Department of Environmental Conservation (DEC) and Alaska's underground storage tank owners. Ms. Meier stated that HB 432 also expands the authority of the Board. Historically, there has been a delay by DEC in sending final cleanup decisions to businesses. Clean-up decisions, provide evidence that the contaminated site has been cleaned up. Many sites are pending sale or are waiting on bank financing. The transactions cannot proceed until final cleanup decision letters are distributed by DEC. By expanding the Board's authority to issue recommendations concerning cleanup decisions, it is expected that many new cleanup decisions will be issued that in the past have been delayed or simply overlooked. The expansion of authority will not be binding authority; it will simply provide a forum for the Board, businesses, and DEC to discuss final decision letters. Representative Phillips asked for more detail regarding the additional responsibility of the Board and the expansion of that authority. Ms. Meier replied that it would not be a binding authority; they would provide a form and recommendations concerning the clean up decisions. She noted that last session, SB 128 dealt with the Board of Storage Tank program and transferred it from a grant program to a loan program. It did not extend the Board. JOHN BARNETT, PRIVATE CONTRACTOR PROVIDING SERVICES TO THE BOARD OF STORAGE TANKS, JUNEAU, responded to queries from Representative Phillips. He noted that there has been discussion over the past few years regarding "no further action" letters and delays associated with that. These are essentially "clean-up" decisions with the owner clarifying that their property is free of contamination which frees up their property for resale. Mr. Barnett pointed out that the problem which has occurred in the last few years, is that the backlog of sites that need to have the clean-up decisions, have created tremendous delays. Many times, it is an over site by the Department or some type of communication break down. A lot of the disputes and appeals are resolved at the table. Given the proposed legislation, the Board could make recommendations either to the Department or to the tank owner to undertake a certain amount of activities. Such action could resolve 90% of the problems. Co-Chair Therriault asked for comments on the amendments. Mr. Barnett noted that the Board was in full support of the amendment submitted by Co-Chair Mulder, 1-LS1539\A.1, Lauterbach, 4/4/00. [Copy on File]. He pointed out that the list had been closed since 1994 and that the amendment would only affect entities on that list. Co-Chair Therriault asked about impact of Amendment #2, which would change the date. [Copy on File]. Mr. Barnett replied that amendment would be acceptable. Representative Phillips asked why the date extension had not been added last year. Ms. Meier replied that there had not been support on the Senate side. She added, this year, there appears to be more support from the Senate if the date was "2002". Representative J. Davies asked if the list included non- profits. Mr. Barnett stated that there are two on the current list. They are currently not eligible for a grant. GARY WEBER, (TESTIFIED VIA TELECONFERENCE), SECRETARY TREASURER, ALASKA UNDERGROUND TANK OWNERS (AUTO), WASILLA, noted that the under ground tank owners totally support the proposed legislation. Co-Chair Mulder MOVED to adopt Amendment #1. There being NO OBJECTION, it was adopted. (TAPE CHANGE, HFC 00 - 100, Side 1) Co-Chair Mulder MOVED to adopt Amendment #2 which would shorten the extension date. Representative J. Davies OBJECTED. He stated that if the amendment was adopted, it would need to be placed in the title. Co-Chair Mulder WITHDREW Amendment #2. Co-Chair Therriault asked if the fiscal note proposed continuation of the existing funding. Mr. Barnett replied that the fiscal note covers travel costs for the Board members and a contract to be placed out for competitive bid this spring. He pointed out that the Board was privatized last year and that costs associated with the Board has dramatically dropped. The revenue source would be registration receipts received from the tank owners. Representative Foster MOVED to report CS HB 432 (FIN) out of Committee with individual recommendations and with the accompanying note. There being NO OBJECTION, it was so ordered. CS HB 432 (FIN) was reported out of Committee with a "do pass" recommendation and with a fiscal note by Department of Environmental Conservation dated 3/21/00. HOUSE BILL NO. 325 An Act relating to priorities, claims, and liens for payment for certain medical services provided to medical assistance recipients; and providing for an effective date. JON SHERWOOD, DIVISION OF MEDICAL ASSISTANCE, DEPARTMENT OF HEALTH AND SOCIAL SERVICES, testified in support of the legislation. He noted that HB 325 would: ? Provide the Department of Health and Social Services with unambiguous authority to recover medical costs incurred by the Division of Medical Assistance when a legal settlement making a monetary award to cover injuries has been made; and ? Allow providers to bill the Division for services up to twelve months from the date of service. The current period is six months. Mr. Sherwood stated that the Department would like to provide an exemption for good cause. If there was good cause for missing a deadline, then the services that have been provided should be paid for by the Department. Co-Chair Therriault noted that the members were provided with a proposed committee substitute, 1-GH2058\H, Lauterbach, 4/4/00. [Copy on File]. He noted that the proposed committee substitute would separate the two issues. The draft contains the provisions of the bill going after the third party payments. He noted that he was attempting to determine a way to cover the assisted living aspect of the bill. In response to a question by Representative Phillips, Mr. Sherwood explained that the legislation would apply to Medicaid and chronic and acute medical assistance recipients. Co-Chair Therriault inquired if a third party claim could go beyond the six months. Mr. Sherwood responded that at present time, you could. If you have private insurance, the provider bills insurance and then bills the Division for the balance of the claims. The proposed legislation does not change that provision. Co-Chair Therriault noted that the committee substitute drops off the blanket extension to twelve months from payments of providers. He referenced the fiscal note, pointing out that the committee substitute would capture additional revenue. In response to concerns voiced by Representative J. Davies, Mr. Sherwood noted that in the portion being deleted, the Division had proposed to extend the filing deadline for providers. If there was no insurance to provide service, the third party providers would then have six months. Under the proposed change, the period would be extended to twelve months; the committee substitute would keep it at six months. Mr. Sherwood added that the committee substitute would also eliminate exemptions for cause. He observed that twelve months is the national standard practice for the industry. Co-Chair Therriault questioned the fiscal impact of allowing exemptions for "good cause". Mr. Sherwood did not know the amount. Representative J. Davies questioned the intent of the committee substitute. He recommended that providers should have the opportunity to collect. Co-Chair Mulder pointed out that most claims would be made by doctors and hospitals and that it would be "reasonable" to expect billing within six months. He added, that is standard practice in Alaska. BOB LABBE, DIRECTOR, DIVISION OF MEDICAL ASSISTANCE, DEPARTMENT OF HEALTH AND SOCIAL SERVICES, provided information on the legislation. He stated that there is not a lot of business that comes this way, but emphasized that there are some small providers with late filings. Mr. Labbe noted that the federal government allows twelve months to file a claim. Alaska has a six-month filing time. He stressed that the cost of longer filings is minimal and it would help the "provider community". Co-Chair Mulder asked if passage of the legislation would provide an "incentive" for companies to be late in their submissions. Mr. Labbe responded that 90% percent is received within the first 30 days. He stated that it is the anomalies that come in later. He admitted that the Department would have changed it in regulation if it had been possible. Co-Chair Mulder suggested that it would take longer to close out the State's accounting books. Mr. Labbe explained that the Medicaid process runs on a cash basis and he did not foresee a problem in the Department's bookkeeping. Representative J. Davies pointed out that the incentive to file timely exists in order to receive payment. LEONARD ANDERSON, (TESTIFIED VIA TELECONFERENCE), REPRESENATIVE FOR THE STATE OF ALASKA THIRD PARTY RECOVERY FOR MEDICAID MATTERS, ANCHORAGE, stated that the current bill contains a "notice" problem and recognition in the State's right to recover Medicaid payments from a liable third party. Currently, when cases are made and payments are paid, the State finds out about third party recipients through the third party. The State Medicaid portion is included in any recovery. Mr. Anderson found that the State is receiving notice of a potentially liable third party well into the case, possibly during settlement or after. The bill would allow absolute notice of a third party earlier in the process. Mr. Anderson continued, the second problem is that current statute is based on segregation principles. The new legislation gives the State the opportunity to get a better bargaining position and would allow them to have an opportunity to affect what is liable. LISA KIRSCH, ASSISTANT ATTORNEY GENERAL, DEPARTMENT OF LAW, offered to answer questions of the Committee members. LORRAINE DERR, ALASKA STATE HOSPITAL AND NURSING HOME ASSOCIATION (ASHANHA), JUNEAU, testified in support of the legislation as originally written. Co-Chair Therriault advised that he would not offer the committee substitute. He noted that the Legislature would continue to work with the Department on the expenditure side of the fiscal note through the Conference Committee. Co-Chair Mulder MOVED to report CS HB 325 (JUD) out of Committee with individual recommendations and with the accompanying fiscal note. CS HB 325 (JUD) was reported out of Committee with a "do pass" recommendation and with a fiscal note by Department of Health and Social Services dated 2/2/00. (TAPE CHANGE, HFC 00 - 100, Side 2). CS FOR SENATE BILL NO. 281(FIN) am An Act relating to missions and measures to be applied to certain expenditures by the executive branch of state government and the University of Alaska from the state operating budget for the fiscal year ending June 30, 2001; and providing for an effective date. Representative Phillips MOVED to adopt Amendment #2, 1- LS1392\GA.1, Cramer, 4/4/00. [Copy on File]. Co-Chair Therriault OBJECTED. Representative Phillips stated that the amendment would address all concerns of the House and of the Senate to become briefer. Co-Chair Therriault noted that he objected for the purpose of an amendment to the amendment. The change offers a compromise of new language as suggested by the University in regards to the mission. Representative Phillips spoke against the change. She noted that training has nothing to do with vocational education. She added that she had cleared the language of the amendment through the University and that they supported it. Representative Phillips stated that if vocational education were not included, it would be lost at the University level. Representative Phillips stated that she was not willing to let the University do away with vocational education. Co-Chair Therriault WITHDREW the amendment to the amendment. He stated that he would propose a technical change to Line 2, adding "vocational". Co-Chair Therriault MOVED the new amendment to the amendment. [Copy on File]. Co-Chair Mulder noted that in conversations with President Hamilton, he was a "big" supporter of the vocational training. Vice Chair Bunde noted that he would be more comfortable including it in the mission statement. Representative J. Davies pointed out there are other concerns and that it would not limit it to post-secondary education. He stated that there are two types of research not being recognized, both basic and applied. It is important to acknowledge both of these types of research. In context of the University, the Representative Phillips' amendment is important because it shows that research driven needs are crucial to the program. He did not understand the argument being proposed regarding the mission statement. Representative Phillips added that Co-Chair Therriault's amendment does not take into consideration the impact that the University has on the State economy as a whole. She believed that the language of the amendment was more inclusive. A roll call vote was taken on the motion to adopt the amendment to Amendment #2. IN FAVOR: Bunde, G. Davis, Therriault, Mulder OPPOSED: Austerman, J. Davies, Foster, Grussendorf, Moses, Phillips, Williams The MOTION FAILED (4-7). Co-Chair Mulder commented that there remains a couple areas in Amendment #2 which are "flowery". Representative J. Davies MOVED a "friendly" change to Amendment #2 on Page 1, Line 4, deleting "ensure education opportunities to meet the" and inserting "respond to the educational". Additionally, a change to Page 1, Line 6, deleting "the highest" and replacing it with "high". WENDY REDMAN, VICE PRESIDENT, UNIVERSITY OF ALASKA, FAIRBANKS, noted support for the change. There being NO OBJECTION, the change was adopted. There being NO OBJECTION to the amended Amendment #2, it was adopted. Representative Austerman explained Amendment #3. [Copy on File]. He commented that there are no guidelines for the Alaska Regional Development Organization (ARDOR) program. He believed that it would be a good idea to address through the legislation. Co-Chair Therriault referenced sub-Section (3). He recommended a change, which would clarify an increase in non-State funds being leveraged by the ARDOR's. Representative Austerman noted that the sentence would read: "(3) the increase of non-state funds leveraged by ARDOR grants". Representative J. Davies recommended changing "increase" to "amount". Committee members agreed. Representative Austerman MOVED Amendment #3 with the language change. There being NO OBJECTION, it was adopted. Vice Chair Bunde MOVED to report HCS CS SB 281 (FIN) out of Committee with individual recommendations and with the accompanying fiscal note. HCS CS SB 281 (FIN) was reported out of Committee with a "do pass" recommendation and with a zero fiscal note by the Office of the Governor dated 3/17/00. HOUSE BILL NO. 265 An Act extending the termination date of the Alaska regional economic assistance program; and providing for an effective date. CHARLES PARKER, (TESTIFIED VIA TELECONFERENCE), MATSU, spoke in support of the ARDOR program and offered to answer questions of the Committee. Representative Austerman noted that last year, the Legislature passed HB 40 which contained a number of changes identified in Section #1. Co-Chair Therriault noted that there were two fiscal notes in member's packets. The House Finance Committee fiscal note proposes phasing out State funding over a three-year period. The Department of Community & Economic Development fiscal note proposes action to happen within a five-year period. (TAPE CHANGE HFC 00 - 101, Side 1). Co-Chair Therriault commented that adoption of the fiscal note would send a message regarding the fund during the out years. Representative Austerman advised that there has been several discussions regarding the need for the State of Alaska to become a player in the economic development of the State. He noted that the "small" amount placed into the ARDOR's budget is something that the State should be doing. Representative Austerman stated that he would not support the new note. Representative J. Davies echoed concerns registered by Representative Austerman. He addressed the need of diversifying the economy within the State. He agreed that the State should determine if these dollars spent are being effective and recommended that the mechanism that the bill be determined by the measures. Co-Chair Therriault stated that for the next year, it is important to begin the weaning process from State monies. Co-Chair Therriault noted that he would not oppose the original fiscal note submitted by the Department. Representative Austerman MOVED to report HB 265 out of Committee with individual recommendations and with the accompanying fiscal note. There being NO OBJECTION, it was so ordered. HB 265 was reported out of Committee with a "do pass" recommendation and with a fiscal note by Department of Community & Economic Development dated 3/1/00. ADJOURNMENT The meeting adjourned at 4:30 P.M. H.F.C. 17 4/04/00