HOUSE FINANCE COMMITTEE April 6, 2000 1:50 P.M. TAPE HFC 00 - 105, Side 1. TAPE HFC 00 - 105, Side 2. TAPE HFC 00 - 107, Side 1. TAPE HFC 00 - 107, Side 2. TAPE HFC 00 - 108, Side 1. CALL TO ORDER Co-Chair Therriault called the House Finance Committee meeting to order at 1:50 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 Representative Fred Dyson; Representative Lisa Murkowski; Representative Norman Rokeberg; Peter Torkelson, Staff, Representative Fred Dyson; Amy Erickson, Staff, Representative Lisa Murkowski; Anne Carpeneti, Assistant Attorney General, Criminal Division, Department of Law; John Bitney, Legislative Liaison, Alaska Housing Finance Corporation (AHFC), Anchorage; Dave Stewart, Personnel Manager, Department of Administration; Wendy Lindskoog, Director of External Affairs, Alaska Railroad Corporation (ARRC), Anchorage; Mark Hamilton, President, Statewide Programs and Services, University of Alaska, Fairbanks; Catherine Reardon, Director, Division of Occupational Licensing, Department of Community & Economic Development; Bob Condon, President, Alaska Federation of Teachers for Community Colleges; Dave Lewis, Operations Manager, Alaska Fiberstar, Eagle. TESTIFIED VIA TELECONFERENCE Phyllis Johnson, Alaska Railroad Corporation, Anchorage; Sherry Buretta, Chairman of the Board, Chugach Alaska Corporation, Chugach; Ron Johnson, Real Estate Commission, Kenai; Deave Feeken, Alaskan Association of Realtors, Kenai; Bruno Rehbein, Mat-Su; Bill Bruu, Mat-Su; David Owens, Owens Inspection Services, Mat-Su; Blair McCune, Deputy Director, Alaska Public Defenders Agency, Department of Administration, Anchorage. SUMMARY HB 207 An Act relating to the registration of persons who perform home inspections; and providing for an effective date. HB 207 was HEARD and HELD in Committee for further consideration. HB 317 An Act relating to recruitment, selection, appointment, and promotion of state employees and the duties of the Department of Administration concerning those and other related functions; and providing for an effective date. HB 317 was POSTPONDED for consideration to a latter date. HB 320 An Act approving the application for and acceptance of a grant of certain federal land by the Alaska Railroad Corporation; approving the conveyance of the entire interest in the Whittier DeLong Dock and associated uplands, tidelands, and submerged lands by the Alaska Railroad Corporation; relating to use and disposition of the Whittier DeLong Dock and associated land; and providing for an effective date. CS HB 320 (FIN) was reported out of Committee with a "do pass" consideration and with a zero fiscal note by the House Transportation Committee dated 3/29/00. HB 362 An Act authorizing the exchange of land between the Alaska Railroad Corporation and Eklutna, Inc., between the Alaska Railroad Corporation and the United States Department of the Army and the United States Department of the Air Force, between the Alaska Railroad Corporation and Chugach Alaska Corporation, and between the Alaska Railroad Corporation and the Municipality of Anchorage; and providing for an effective date. CS HB 362 (FIN) was reported out of Committee with a "do pass" recommendation and with a zero fiscal noted by the Department of Community & Economic Development dated 3/3/00. HB 368 An Act relating to release of persons before trial and before sentencing or service of sentence; relating to custodians of persons released, to security posted on behalf of persons released, and to the offense of violation of conditions of release; amending Rule 41(f), Alaska Rules of Criminal Procedure; and providing for an effective date. CS HB 368 (JUD) was reported out of Committee with a "no recommendation" and with fiscal notes by the Department of Corrections dated 2/11/00, the Department of Administration dated 2/11/00 and a zero note by the Department of Law dated 2/11/00. HB 372 An Act relating to criminal sentencing and restitution. CS HB 372 (FIN) was reported out of Committee with a "do pass" recommendation and with a fiscal note by Department of Corrections dated 3/30/00. HB 426 An Act relating to transfers of public land or grants or conveyances of interest in public land among the Alaska Railroad Corporation, the Department of Transportation and Public Facilities, and the Department of Natural Resources to relocate or widen the Seward Highway, to relocate railroad facilities, and to relocate adjacent utility facilities; and providing for an effective date. HB 426 was POSTPONED for hearing at a latter date. HB 441 An Act making appropriations for the operating expenses of the University of Alaska; making appropriations under art. IX, sec. 17c, Constitution of the State of Alaska, from the constitutional budget reserve fund; and providing for an effective date. HB 441 was HEARD and HELD in Committee for consideration at a latter date. HOUSE BILL NO. 372 An Act relating to criminal sentencing and restitution. Co-Chair Therriault MOVED to adopt Amendment #1. [Copy on File]. The amendment would provide oversight to the Court System and would exempt out arson if a person had been put at risk. There being NO OBJECTION, it was adopted. Co-Chair Therriault suggested that with current language, the Court would be able to define what "community" is. Representative J. Davies noted that he wanted to preclude any argument over that concern by including a definition. He reiterated that it is important that it is clarified. Representative J. Davies MOVED a change to Page 1, Line 13, adding, "In this section, community should be defined by the Court." REPRESENTATIVE FRED DYSON agreed that the Court would be able to define who is a "community" which would allow both sides, the perpetrator and the victim, the opportunity for input regarding the definition of community. That action would place the Court in the approving role. Co-Chair Therriault asked if there would be an expense incurred with the inclusion of "approved". Representative J. Davies acknowledged that both sides would have to agree to the process in order to move forward. Discussion followed among Committee members regarding the definition of what "community". there being NO further OBJECTION, Amendment #2 was adopted. Representative Foster MOVED to report CS HB 372 (FIN) out of Committee with individual recommendations and the accompanying fiscal note. There being NO OBJECTION, it was so ordered. CS HB 372 (FIN) was reported out of Committee with a "do pass" recommendation and with a fiscal note by Department of Corrections dated 3/30/00. HOUSE BILL NO. 362 An Act authorizing the exchange of land between the Alaska Railroad Corporation and Eklutna, Inc., between the Alaska Railroad Corporation and the United States Department of the Army and the United States Department of the Air Force, between the Alaska Railroad Corporation and Chugach Alaska Corporation, and between the Alaska Railroad Corporation and the Municipality of Anchorage; and providing for an effective date. Co-Chair Therriault stated that the committee substitute, 1- LS1455\H, Utermohle, 4/3/00, would combine HB 320, HB 362 and HB 426. [Copy on File]. He pointed out that Representative Bunde had submitted an amendment to HB 320 bill which would address the Whittier DeLong Dock and the Alaska Railroad Corporation. [Copy on File]. Vice Chair Bunde MOVED to ADOPT the version (H) committee substitute as the document before the Committee. Representative Phillips OBJECTED. Representative J. Davies MOVED to ADOPT the (H) version without the Whittier DeLong Dock. Representative Phillips OBJECTED. She stated that she did not oppose combining the three bills, however, noted that there is opposition from the Railroad on putting the DeLong Dock concept into the legislation. She stated that she had spoken with Senator Leman and that he had expressed his concern no to include the DeLong Dock. REPRESENTATIVE LISA MURKOWSKI stated that the intent is to guarantee that the straightening of the tracks between Anchorage and Wasilla is accomplished with legislation this year. She emphasized that it is very important that this is not held up and that nothing jeopardizes the success of the legislation. WENDY LINDSKOOG, DIRECTOR OF EXTERNAL AFFAIRS, ALASKA RAILROAD CORPORATION, ANCHORAGE, echoed sentiments expressed by Representative Murkowski. She noted that if the bills were combined in the proposed fashion, there could be a possibility that all three could die and that the track alignment bill would not go forward. She stated for the record that the Alaska Railroad does support the DeLong Dock bill passing this session. Representative Phillips requested that Ms. Lindskoog restate the Railroad's intention in regard to the DeLong Dock. Ms. Lindskoog clarified that the Alaska Railroad is "completely" in support of the DeLong Dock bill. Passage of that bill would help economic development in Whittier. A roll call vote was taken on the motion to delete the DeLong Dock portion. IN FAVOR: Grussendorf, Moses, Phillips, Williams, Austerman, J. Davies, G. Davis OPPOSED: Foster, Bunde, Therriault, Mulder The MOTION PASSED (7-4). There being NO OBJECTION, the (H) version was adopted as amended. Co-Chair Therriault noted that Representative Bunde would not be offering his amendment to the committee substitute. Co-Chair Mulder MOVED to report CS HB 362 (FIN) out of Committee with individual recommendations and with the accompanying fiscal note. CS HB 362 (FIN) was reported out of Committee with a "do pass" recommendation and with a fiscal note by Department of Community & Economic Development dated 3/3/00. HOUSE BILL NO. 320 An Act approving the application for and acceptance of a grant of certain federal land by the Alaska Railroad Corporation; approving the conveyance of the entire interest in the Whittier DeLong Dock and associated uplands, tidelands, and submerged lands by the Alaska Railroad Corporation; relating to use and disposition of the Whittier DeLong Dock and associated land; and providing for an effective date. Vice Chair Bunde MOVED to ADOPT Amendment #1, which would insert language indicating that neither the corporation nor the City of Whittier may grant any special rights to a third party to provide management services at the dock. [Copy on File]. Representative J. Davies OJBECTED. He asked how that would affect Page 2, Line 18. He understood that language would instruct it to go into effect. He questioned how the amendment would relate. WENDY LINDSKOOG, ALASKA RAILROAD CORPORATION, ANCHORAGE, replied that the amendment would supercede the management term agreement. Representative J. Davies questioned if there should be a reference to that document. Ms. Lindskoog explained that it would supercede the part that mentions the Chugach Alaska Corporation. All other aspects of that document would be pertaining to how the City of Whittier and the Alaska Railroad Corporation (ARRC) would set up a management or operating agreement. Vice Chair Bunde stated that the amendment would only affect a portion of the management agreement that addresses the first right of refusal. He recommended that the remainder of the agreement not be changed. Representative Williams pointed out that Chugach is in favor of the way the language currently is written in the bill. He asked if that was part of the negotiated settlement or the right of refusal. Ms. Lindskoog responded that all parties had been attempted to be included in the bill. She noted that reference to the terms in the bill is how management relates. She pointed out that it would directly conflict with AARC procurement codes. To make the bill legal, that reference should be deleted. Representative Williams asked if that had been negotiated. Co-Chair Therriault explained that it was part of an negotiation that went on with Chugach and ARRC. He added that they did not have the power to negotiate on behalf of the Legislature to make a sole source contract. Representative Williams suggested that their code allowed them the right to do that. Co-Chair Therriault noted that since the Railroad operates under their own procurement code, there is some question if they can go to a sole source contract without violating the rule procedures. Representative Phillips pointed out that previous testimony indicates that it would be in violation of their procurement codes. Representative Williams voiced concern that if it had already been negotiated with Chugach, how would the change work affect them. Ms. Lindskoog reiterated that the bill would be following the procurement codes. She stated that ARRC would have to negotiate separately with Chugach. Representative Williams understood that the Railroad had already negotiated with Chugach the intent of the proposal. Representative G. Davis asked about the management terms of the DeLong Dock. He inquired if Chugach had signed on to it. Ms. Lindskoog stated that they had not and that there had been negotiations but no signatures. At this time, the signatures included on that document are the City of Whittier and the ARRC. Representative J. Davies advised that in that document, it does grant Chugach Corporation first refusal on the management plan. Ms. Lindskoog acknowledged that was correct. However, she added that option goes directly against the procurement rules. Vice Chair Bunde pointed out that there was a legal opinion from Terry Bannister, Legal Services, indicating that the first right of refusal in not consistent with the procurement code. Representative J. Davies proposed another amendment to the one proposed by Representative Bunde. He believed that the inconsistency could be fixed. Vice Chair Bunde MOVED to WITHDREW Amendment #1. Representative J. Davies MOVED to ADOPT an amendment to Page 2, Line 18, deleting "consistent" and inserting "to the extent possible". There being NO OBJECTION, it was adopted. Vice Chair Bunde MOVED to ADOPT Amendment #2. [Previously adopted. Co-Chair Therriault questioned language on Page 2, Line 15, "not with standing". Representative J. Davies explained that portion explains the terms of what occurs if it does not go into effect. SHERRY BURETTA, (TESTIFIED VIA TELECONFERENCE), CHAIRMAN OF THE BOARD, CHUGACH ALASKA CORPORATION, CHUGACH, commented that the negotiations that had taken place between Chugach and the ARRC. The negotiations were consistent with their right to utilize that dock. The negotiation and agreement which was arrived at, allowed Chugach to have their interest addressed. She stated that this was a "slap in the face" as far as Chugach's willingness to withdraw their attempt at securing the property due to the federal acquisition process. Ms. Buretta added that the language is inconsistent with other issues that have passed through the Legislature. She reiterated that she was opposed to the language as it stands. Co-Chair Therriault agreed that the Legislature does have that power, however, the Legislature will not exercise that power on this piece of legislation. Representative J. Davies stated that the language of the bill indicates that the Legislature expects the Railroad and the City of Whittier to execute that management agreement to the fullest extent possible. He understood that both of these entities would try to honor whatever previous understandings they had with Chugach. Co-Chair Mulder MOVED to report CS HB 320 (FIN) out of Committee with individual recommendations and with the accompanying fiscal note. There being NO OBJECTION, it was so ordered. CS HB 320 (FIN) was reported out of Committee with a "do pass" recommendation and with a zero fiscal note by the House Transportation Committee dated 3/29/00. HOUSE BILL NO. 368 An Act relating to release of persons before trial and before sentencing or service of sentence; relating to custodians of persons released, to security posted on behalf of persons released, and to the offense of violation of conditions of release; amending Rule 41(f), Alaska Rules of Criminal Procedure; and providing for an effective date. ANNE CARPENETI. ASSISTANT ATTORNEY GENERAL, CRINIMAL DIVISION, DEPARTMENT OF LAW, stated that the proposed legislation would address four areas: Establishes the crime of violating conditions of release; Authorizes courts to order performance bonds; Charges contempt of court for third-party custodian's failure to report condition violations; and Authorizes delayed reporting date for jail time. Ms. Carpeneti continued: Violation and Conditions of Release. In criminal cases, an accused has a constitutional right to be released on bail before trial. Persons who have been found guilty may be released before sentence is imposed or before ordered to serve a sentence. When releasing a person, the court may impose both general conditions, such as requiring that the accused violate no laws, and conditions specific to the particular case or defendant, such as forbidding an accused in a domestic violence case from contacting the victim. The safety of the victim often depends on the enforcement of release conditions. Currently, although it is a crime to willfully fail to appear as ordered by the court, there are few options for violation of other release conditions except for incarcerating the person. The legislation provides that it is a Class A misdemeanor for a person to violate release conditions if the person is charged with a felony and a Class B misdemeanor to violate conditions for a person charged with a misdemeanor. Performance Bonds. The bill clarifies the law by specifically authorizing the court to order the accused to post a performance bond, and requires that the court forfeit the security if the person violates a condition of no contact with the victim or witness in a proceeding. The court may forfeit the security if the accused violates other conditions. The standard for forfeiture of security in Rule 41(f), Alaska Rules of Criminal Procedure, is amended to require that security be forfeited unless the defendant could not comply due to circumstances beyond the control of the defendant. An example of such circumstances includes weather conditions that prevent airplane transportation, if there is no alternative way to travel to court. Third Party Custodians. Courts often release a defendant to the custody of a third party either an individual or an organization. Custodians are required to report to the court or the police if the defendant violates release conditions, but often do not. The bill provides that a third-party custodian can be found in contempt for failing to report immediately a defendant's violations of conditions of release ordered by the court, and requires the court to inform the custodian of the possible consequences of ignoring the duty to report. Delayed Reporting Date. The bill specifically gives the court the authority to order a person sentenced to a period of incarceration to begin serving the sentence at a date sometime after it was imposed. With overcrowded correctional facilities, this is useful to help avoid "bottlenecks" in admissions b proper scheduling. Representative Austerman asked the amount of discussion the bill had had on the third party provision. Ms. Carpeneti advised that if the person did not know that a violation had occurred, they would not be responsible to report it. Most custodians take their responsibly seriously. If the court takes the risk to release someone and they are not to contact the victim, that would require the custodian to notify the police if the defendant does contact the victim. It is important that they take that responsibility seriously. Representative Austerman asked if forfeiture of security would be a separate bond for being released. Ms. Carpeneti explained that there would be two types of security if the bill were passed: there would be the performance bond and the appearance bonds. The appearance bonds are similar to the traditional bail bonds. Representative J. Davies pointed out that bail bond people are concerned with how much they would need to charge to provide the "insurance" and the collateral requirements. He noted that Ms. Carpeneti had indicated that these would be discretionary. He asked how the legislation would impact a person's ability to get a bond. Ms. Carpeneti responded that it would be discretionary to lose the bond. She added that the bail bondsman could write appearance bonds or performance bonds. A bondsman could post a bond for a person who failed to appear. Ms. Carpeneti stated that judges could tailor the amount of the performance bond to an amount that a person could personally come up with. That would give the individual incentive to abide to the conditions of release. Representative J. Davies asked if there was a distinguishment between the mandatory and discretionary amounts. Representative J. Davies noted that he was more interested in the "no contact" portion of the legislation. Ms. Carpeneti explained that the bill provides that if a convicted person does contact the victim in violation of a performance bond, then the security would be forfeited. (TAPE CHANGE, HFC 00 - 105, Side 2) Co-Chair Mulder noted that currently, when person signs on as a third party custodian, they assume some responsibilities. Under the proposed legislation, the only penalties placed upon a third party would be in the event that the party disappears. They are then required to report it. Ms. Carpeneti noted that the bill stipulates that they must report it immediately. Co-Chair Mulder asked if the only change from current practice was that there would be enforcement. Ms. Carpeneti agreed and added that they could be found in contempt of court. Co-Chair Mulder wanted to guarantee that this would not be a "discouragement" to parties contemplating becoming the third party custodians. BLAIR MCCUNE, (TESTIFIED VIA TELECONFERENCE), DEPUTY DIRECTOR, ALASKA PUBIC DEFENDERS AGENCY, DEPARTMENT OF ADMINISTRATION, ANCHORAGE, commented that the Public Defender's agency is concerned with the legislation. He stated that prisoner overcrowding is a big problem in Alaska. If the number of prisoners increases, there will be serious consequences for overcrowding. Mr. McCune noted that the main concern is with performance bonds and the added offense of violation of prison release. He disagreed with Ms. Carpeneti's statement that there would not be any additional consequences for someone who had violated their conditions of release. Mr. McCune emphasized that there would be consequences and that those persons would not be considered for probation. He added that going back to jail would be a major consequence. Mr. McCune advised that there are bondsmen that write appearance bonds in many other areas of the State outside of Juneau, especially in Anchorage. The bondsmen write these because they are fairly predictable. Bondsmen have "ways of persuading" these folks to come to court quickly. He did not see the private bondsmen writing any of the performance bonds which would be a business risk. Mr. McCune acknowledged that the Public Defenders Agency is concerned that performance bonds would be prevalent and would add additional work and barriers to having people released. He reminded members that people in jail and facing bail are not in a good arguing position. Mr. McCune pointed out that there are so many conditions of release. He added that the bonding issue would place hardships on families that can not afford it. Another consequence is the violation and conditions of release. These consequences are real and the agency is concerned that these would become a plea bargaining tool, making it a Class A misdemeanor. Mr. McCune stressed that the current system is a fair system. People are being released from the jails, whereas, within the proposed law, unwarranted difficulties will continue to surface. Representative Phillips asked if the Public Defenders Agency supports penalties when there has been a violation of their conditions of release. Mr. McCune interjected that they do not support Section #3, the new law which makes it a misdemeanor to violate conditions. Mr. McCune added that these people generally do not go unpenalized. If it is a minor violation, they might not be penalized. If it were a serious violation, they would be put back in jail. If they were found guilty, they would have to go before the same judge that sentenced them and he would again determine the probation conditions. Mr. McCune emphasized that these are consequences when you are in jail. Ms. Carpeneti clarified that there would be no additional consequences outside of what there is on the original charge. She countered statements made by Mr. McCune. She noted that the bill provides that if a person is charged with a felony and conditions of release are violated, and then convicted, that would then be considered a Class A misdemeanor. However, if the person is charged with the underlying charge, and they violate the conditions of release and are convicted of that violation, it would then become a Class B misdemeanor. Representative J. Davies asked if there would be an additional consequence if the bond procedure were established. Ms. Carpeneti explained that the legislation would encourage people to provide for the conditions of release in two ways, which are the possibility of being charged for another crime and monetary consequences if conditions are violated. Representative J. Davies asked why the Department would need both civil penalties. Ms. Carpeneti replied that it is important for public safety that people released, abide by the conditions of their release. Representative G. Davis asked if there were statistics regarding the economic status of a person and how bonding would be determined for that person. He asked about the conditions for the very poorest of people. Ms. Carpeneti responded that judges are capable of looking at a person's resources and then making the bond appropriate. Vice Chair Bunde MOVE to report CS HB 368 (JUD) out of Committee with individual recommendations and with the accompanying fiscal note. There being NO OBJECTION, it was so ordered. CS HB 368 (JUD) was reported out of Committee with a "no recommendation" and with a fiscal note by Department of Corrections dated 2/11/00, the Department of Administration dated 2/11/00 and a zero note by the Department of Law dated 2/11/00. HOUSE BILL NO. 441 An Act making appropriations for the operating expenses of the University of Alaska; making appropriations under art. IX, sec. 17c, Constitution of the State of Alaska, from the constitutional budget reserve fund; and providing for an effective date. MARK HAMILTON, PRESIDENT, STATEWIDE PROGRAMS AND SERVICES, UNIVERSITY OF ALASKA, FAIRBANKS, stated that House Bill 441 invests a one-time, state funded $34,000,000 appropriation to the University of Alaska with a two-year lapse date. In total, it would invest $532,654,800 in operations to the University of Alaska. The bill responds to the University's Board of Regents request to help the University by making a significant and multi-year commitment to a new direction. President Hamilton pointed out that House Bill 441, in an innovative fashion, would address the needs of the University of Alaska. The bill invests a total of $532,654,800 for operation of the University of Alaska. That would include $66,284,700 ($34,000,000 in state funds) with a two-year lapse date so the University could retool to meet Alaska's changing needs. President Hamilton noted that HB 441 would provide $466,370,100 (including $172,143,300 in state funds) as basic funding for FY 01. Funds 6/30/01 Lapse 6/30/O2 Lapse State Funds 172,143,300 34,000,000 Other funds 294,226,800 32,284,700 Total funds 466,370,100 66,284,700 The separate, two-year allocation to the University budget would allow the Board of Regents stability in funding for new programs and additional flexibility in meeting the evolving needs of the students and the State. The University would be able to begin programs with the assurance that second year funding would be available. The two year time span would allow new and modified programs to begin functioning so that they can be reasonably measured as the FY 03 budget is being considered. President Hamilton stated that HB 441 would establish goals for the University to meet, including providing more Alaska trained teachers, helping diversify our economy, providing education and training for jobs and professions that are developing in Alaska. The Legislature expects the University to offer quality education to its students and retain students through graduation. It also expects the University forge partnerships with the private sector. To accomplish these goals, the University will need to review all its programs and facilities and eliminate or revamp those not contributing to these new goals. President Hamilton urged a change to the existing document. He stated that it was his intent, to pay from that same sum, the salary increase agreed to through the contracts. He noted that the faculty deserves those raises and that it would not require extra dollars. He reiterated that the legislation is innovative and enlightened. Co-Chair Mulder asked for more information regarding the new programs which would be coming on line. President Hamilton explained that there would be programs in some direct service areas, addressing long-term existing requirements for the production of quality teachers in the State. Additionally, there would be a two-year nursing graduate program, several allied health fields, heavy equipment operator program, additional opportunities in logistics as well as informatics, and a degree in financing. Co-Chair Mulder asked for further discussion on the continuation of the four-year program and how that would "fit" with the five-year program system. President Hamilton noted that a State University is directed to do a four-year program. He stated that the University was faced with a dilemma three years ago which was either to do "quality" or "quantity". The quality piece tried to get in consort with the Alaska quality schools initiative. At that time, it was assumed that the University would produce another year of graduate level participation. He hoped that there was a potential to merge those two programs and save a couple faculty positions. President Hamilton stated that the University would now offer a four-year program and wanted to keep the five-year program. Representative Williams questioned investment of teacher qualifications and expertise of the faculty and training of the students. President Hamilton responded that the system is improving and the programs are being revamped. Representative Williams advised that "something is currently broken" in the University system as it now exists. President Hamilton assured members that many changes need to happen which the University is now attempting. Funding this legislation will enable these things to be addressed. President Hamilton stated that there has been a significant loss of confidence from loosing the accreditation by the University of Alaska-Fairbanks. He believed that there was great failure on the part of the University not to have dealt with that publicly. The report that removed the accreditation, at the same time, praised the quality of the faculty and the quality of the students. He emphasized that a university needs to produce the majority of the teachers in that state. That is fundamental to the long-term support of the community in terms of recruitment. President Hamilton pointed out that only 15% of the faculty of the Alaska school system come from residents within the State. Most other states have 40% of their teachers having been trained in their state. He reiterated that this is not a broken system, however, it does have a bad reputation. Co-Chair Mulder asked about the logistics program and the vision for that program in the future. President Hamilton advised that logistics at large has an enormous potential in the State of Alaska. He noted that Anchorage is #2 in the global exchange with the airport and that Fairbanks is #9. It appears that the free market believes that this is a good place (Alaska) to undertake this "stuff". He added that many industries within the State have indicated their commitment by donating approximately $1 million dollars to the University to expand that program. President Hamilton noted that through discussions with the military installations, there is a great deal of interest in the possibility of out-sourcing the logistics schools. President Hamilton stressed that the State would be hard pressed to understand the impact this. Representative Williams questioned what the extra funding would be used for. President Hamilton offered to outline prioritized programs. (TAPE CHANGE, HFC 00 - 105, Side 1). **Tape out of place** Co-Chair Mulder spoke to the contracts and recognized President Hamilton's desire to treat all his employees equally. Co-Chair Mulder commented that the Legislature is trying to treat all the contracts consistently. President Hamilton stated that was fair. He added that it is his intent to construct a "contract continuation" which would not change the financial terms of the previous contract. This was constructed in time so that it could be considered along with everything else. He indicated that this is not a small point and urged that be reconsidered. Representative G. Davis asked if the amount of the new contract was known. (TAPE CHANGE, HFC 00 - 107, Side 1). DAVE LEWIS, OPERATIONS MANAGER, ALASKA FIBERSTAR, EAGLE RIVER, ALASKA, spoke on behalf and in support of greater funding for the University of Alaska. He stressed that the State needs the University for the State's economy. He advised that it is difficult to hire from within the State when all the children of the State move out of state for training. Ultimately, they end up living where they graduate from college. BOB CONDON, PRESIDENT, ALASKA FEDERATION OF TEACHERS FOR COMMUNITY COLLEGES, testified in support of HB 441. He noted that their union was not included on the list proposed by the University. He emphasized that the amount of money needed would not change regardless of whether they were on the list or not. Mr. Condon provided a history of their contract. He urged that they be placed on the list. Vice Chair Bunde questioned how many people were in that union. Mr. Condon replied that he represented about 260 employees. There are 1,000 or more of non-represented members and 1,000 with the United Academics. In response to a question by Vice Chair Bunde, Mr. Condon pointed out that their union has historically led the fight for better working conditions and salaries. Representative Bunde MOVED a conceptual amendment. Co-Chair Mulder interjected that it was his intention to hold the bill until tomorrow to discuss these issues. Representative Bunde WITHDREW the conceptual amendment. Co-Chair Mulder commented that it was his intent to treat all new contracts as a "separate package". Mr. Condon recognized that the legislation appears to have a two-year prohibition. HB 441 was heard and HELD in Committee for further consideration. HOUSE BILL NO. 207 An Act relating to the registration of persons who perform home inspections; and providing for an effective date. REPRESENTATIVE NORMAN ROKEBERG stated that HB 207 would protect consumers and the home inspection industry by licensing home inspectors in Alaska. He noted that consumers deserve assurance that the home inspector that they hire is competent and that they have recourse against inspectors that are not. HB 207 would accomplish that by establishing licensing qualifications such as registration, insurance, and proof of competency via a written and practical examination. Home inspectors will also be required to provide consumers with an inspection report, using a standardized checklist comprised of elements deemed necessary by the industry for a thorough home inspection. Representative Rokeberg commented that a faulty inspection could have serious consequences for consumers, particularly when they are buying or selling a home. Common sense dictates that home inspectors must be held accountable for their work. The legislation would limit legal actions against a licensed and registered home inspector to a written home inspection report not more than one year old and/or lawfully disclosed. Also, the penalty the court may impose is not more than $500 for each violation. Co-Chair Mulder noted the language shifts between the various committee substitutes. He questioned why the State should create another board. Representative Rokeberg responded that there would be more enforcement while protecting the consumer. Additionally, it was not the intent, to write the regulations into the statute. He believed that to draft the regulations is warranted, as it would specify an examination. He stated that they would have failed in the effort to provide the sounding board without a board. Representative Austerman voiced concern with the qualifications outlined for the inspectors. Representative Rokeberg replied that the home inspectors would not be inspecting the new homes. Additionally, those home inspectors should be providing nothing more than a "visual inspection" of the home. He noted that there would be a liability associated with the inspection. Representative Austerman asked if the liability would be terminated after a one-year inspection. Representative Austerman disagreed with that concept. Representative Rokeberg replied that it would not be shifted. Representative Austerman questioned how much liability would need to be purchased. Representative Rokeberg replied. (Testimony inaudible). Representative G. Davis questioned the reason for the legislation. Representative Rokeberg spoke about the reporting fee. (Testimony inaudible). He noted that there could be a limitation to that damage. He added that people are reluctant to break their word by signing an agreement. Representative Rokeberg commented on the typical routine of an inspection. The State disclosure law "kicks" in and then it is bargained; however, he acknowledged that there are instances, when there are errors made in the report. He expounded that the idea of the bill was to relieve the liability of the real estate inspector. (Testimony inaudible). Co-Chair Mulder voiced concern when determining the home inspection business. Representative Rokeberg stated that in the statute, there are requirements for the examination. He stated that there would be a "flushing out". Co-Chair Mulder asked the amount of experience required. Representative Rokeberg responded that list was included in the legislation on Page 3, Line 11. Co-Chair Mulder voiced concern that this would create a "good old boy club" and would be very difficult for a new person to break into. He advised that he was reluctant to make rules that contain admission and exclusion. Home inspection is a very important function and qualified home inspectors are necessary. Representative Rokeberg replied that there are specific provisions listed on Page 2. Co- Chair Mulder argued that those provisions specify what is needed to become an associate inspector is that the person must work under an existing inspector. He reiterated that it would be difficult for a new person to get in. He emphasized that there would have to be an existing entity who would be willing to take you on. Co-Chair Mulder agreed that there would be too much power in the hands of the board. Representative G. Davis pointed out that engineers are also home inspectors. Those people could get out from under the "thumb" of the proposed board. Representative Rokeberg interjected that State law currently indicates that a person has to work two years as an engineer's assistant before they can take the examination. He suggested that any kind of professional license could be classified as a professional "guild". Co-Chair Mulder acknowledged that home inspection is not "rocket science". He noted that he would create a Letter of Intent to accompany the bill, to clarify that this should remain an open profession. Representative J. Davies asked if there was a sunset clause. Representative Austerman voiced his support of a sunset clause. (TAPE CHANGE, HFC 00 - 107, Side 2). Representative Austerman inquired the types of liability a realtor had which would be given up to the inspector. Representative Rokeberg spoke to the shifting around of the responsibility and the liability for a realtor. He noted that the standards are based on what you "should have known" given a reasonable basis. He added that most real estate brokers are not trained in inspecting. Co-Chair Therriault questioned language on Page 6, Line 5, "alleging & proving". CATHERINE REARDON, DIRECTOR, DIVISION OF LISCENSING, DEPARTMENT OF COMMUNITY & ECONOMIC DEVELOPMENT, explained that language was a quote from the contractor's statute. Co-Chair Therriault questioned the exemptions listed on Page 7. He asked if all those persons would be excluded. Representative Rokeberg explained that was correct. Co-Chair Therriault pointed out the amendment proposed by Representative Rokeberg. [Copy on File]. Representative J. Davies commented that it "did not make sense" the way it was drafted. RON JOHNSON, (TESTIFIED VIA TELECONFERENCE), REAL ESTATE COMMISSION, KENAI, addressed a concern on Page 4, the identification requirements. He asked the reason for using the license number. He stated that appraisers are not now required to use their license numbers for advertising. He asked about using the title "license home inspector" even if the person was an engineer. Mr. Johnson noted that the major concern rests on Page 5, listing the types of insurance. He pointed out that there is no consumer protection in that language and he urged that section be removed from the bill. Mr. Johnson listed additional concerns with the proposed legislation. Mr. Johnson concluded, stating that in the fiscal note, most of money would be used for developing education material. He pointed out that there already exists a "wealth" of education material available on line. He recommended that inclusion should be reconsidered. In response to Mr. Johnson, Representative Rokeberg stated that the bill would not address his liability, but rather the one-year life of the report. DEAVE FEEKEN, (TESTIFIED VIA TELECONFERENCE), ALASKAN ASSOCIATION OF REALATORS, KENAI, observed that the concept for this legislation originated from complaints of buyers and sellers in the real estate industry from the home inspectors being used. He echoed concerns voiced by Mr. Johnson. BRUNO REHBEIN, (TESTIFIED VIA TELECONFERENCE), MAT-SU, stated that most of his concerns had been previously addressed. He observed that the legislation is going to cover new and pre-existing homes and that the costs would go up. He asked why the homebuilder was not being represented on the board. Mr. Rehbein inquired who was being protected through the legislation. BILL BRUU, (TESTIFIED VIA TELECONFERENCE), MAT-SU, commented that the purpose of the amendment is to assure that the home inspector's liability would not go on forever. Representative J. Davies questioned why the home inspector would have to give himself permission to do the repairs. Mr. Bruu responded that there is no other place in statute that addressees that concern. The home inspector needs to have control over the report and to be covered for long term liability. Representative J. Davies asked if it was the intent that the information received from the inspection be used without the written consent from the person who ordered it. Mr. Bruu explained that the intent was not to release it to anyone, subsequent other than those listed in Sections (A) & (B). The problem which has arisen, is that once the report is released by the home inspector to the buyer, a number of party's call for an interpretation of that document. He observed that they could receive as many as 6 to 8 calls with requests for information. He stressed the liability attached to the reports. DAVID OWENS, (TESTIFIED VIA TELECONFERENCE), OWENS INSPECTION SERVICES, PALMER, testified in opposition to the legislation. He added that the Mat-Su Homebuilders Association also opposes the legislation and that they would forward a letter stating their views on the concern. Ms. Reardon stated that the original version was modeled after the Construction Contractor statute, AS 08.18.151. She added that public liability insurance could have come from the Construction Contractor statute. Ms. Reardon referred to the fiscal note. She observed that the original note has $25 thousand dollars included for an examination. The current note removes the exam money. There continues to be a fiscal note that estimates an $800 dollar fee if there are 100 inspectors. She observed that it would be less if there were more inspectors. Ms. Reardon noted that there is a sunset date of 2004, established in Section #3, Page 9. JOHN BITNEY, LEGISLATIVE LIAISON, ALASKA HOUSING FINANCE CORPORATION (AHFC), ANCHORAGE, testified in support of the legislation. The current practice for AHFC would be changed under Sections 4 and 5. Currently, in all new construction, there is a standard for qualification of purchase with a home mortgage with AHFC. He pointed out that there is a five-step process that has to be signed off on. The bill would guarantee that these people are able to certify homes to qualify for purchase by AHFC. During the transition period, International Conference of Building Officials (ICBO) would be eliminated and only state home inspectors, on behalf of AHFC, would be recognized. Mr. Bitney continued that there are a number of circumstances where people have purchased homes. They have been told that the home had been inspected. In Alaska, that can mean different things depending on the individual sale. When something goes wrong with the home, the case is that the homebuyer is out a substantial investment and they want to sue everyone. He observed that AHFC has been called on for assistance and is concerned over the liability associated with that. The legislation would create a "level playing field" and would establish a more identifiable State standard. Representative J. Davies asked if the legislation would apply to energy raters. Mr. Bitney responded that it would not apply to energy raters. He noted that further on in the AHFC statutes, the energy efficiency standards are established. The bill does not address that statute. Co-Chair Therriault stated that HB 207 would be HELD in Committee for further consideration. HOUSE BILL NO. 317 An Act relating to recruitment, selection, appointment, and promotion of state employees and the duties of the Department of Administration concerning those and other related functions; and providing for an effective date. DAVE STEWART, PERSONNEL MANAGER, DEPARTMENT OF ADMINISTRATION, stated that HB 317 would refresh Title 39 with respect to improvement and hiring State employees in order to make the process more streamline. Representative J. Davies asked if the legislation would get rid of the register system. Mr. Stewart replied that it would. Representative J. Davies believed that would be good. Representative Phillips asked if people would still have the ability to go to the local job centers to obtain the information if they do not have home computers. Mr. Stewart replied that they would. Representative J. Davies pointed out that computers are also available at all the job centers. Representative Foster MOVED to report CS HB 317 (STA) out of Committee with individual recommendations and with the accompanying fiscal note. (TAPE CHANGE, HFC 00 - 108, Side 1) There being NO OBJECTION, it was so ordered. CS HB 317 (STA) was reported out of Committee with a "no recommendation" and with a zero fiscal note by the Department of Administration. ADJOURNMENT The meeting adjourned at 5:05 P.M. H.F.C. 23 4/06/00