HOUSE FINANCE COMMITTEE April 10, 2000 2:15 P.M. TAPE HFC 00 - 111, Side 1. TAPE HFC 00 - 111, Side 2. CALL TO ORDER Co-Chair Therriault called the House Finance Committee meeting to order at 2:15 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 Eric Croft; Senator Mike Miller; Lauree Hugonin, Director, Alaska Network on Domestic Violence and Sexual Assault (ANDVSA), Juneau; Trisha Gentle, Director, Council on Domestic Violence and Sexual Assault (CDVSA), Juneau; Deirdre O'Connor, Division of Family and Youth Services, Department of Health and Social Services; Del Smith, Deputy Commissioner, Department of Public Safety; Carol Carroll, Director, Division of Administrative Services, Department of Natural Resources; Tina Kobayashi, Assistant Attorney General, Oil, Gas and Mining Section, Department of Law; Juli Lucky, Staff, Senator Rick Halford; Diane Barrans, Executive Director, Alaska Postsecondary Education, Department of Education. TESTIFIED VIA TELECONFERENCE Bob Leoffler, Director, Division of Mining, Land and Water, Department of Natural Resources, Anchorage; Kevin Banks, Division of Oil and Gas, Department of Natural Resources, Anchorage; Steve Borell, Executive Director, Alaska Miners Association, Anchorage; Milton Byrd, Anchorage; James Hanson, Lease Sale Manager, Division of Oil and Gas, Department of Natural Resources. SUMMARY HB 58 An Act relating to certain audits regarding oil and gas royalty and net profits and to audits regarding costs relating to exploration incentive credits and oil and gas exploration licenses; and providing for an effective date. HB 58 was HEARD and HELD in Committee for further consideration. HB 270 An Act relating to sexual assault and sexual abuse and to payment for certain medical costs and examinations in cases of alleged sexual assault or sexual abuse. CS HB 270 (HES) was reported out of Committee with a "do pass" recommendation and with a zero fiscal note by the Department of Public Safety dated 3/15/00. SB 175 An Act relating to state mining law, to methods of locating mining claims, to the granting of larger mining claims using a legal subdivision based on rectangular survey descriptions, and to mandatory rental payments for prospecting rights. SB 175 was reported out of Committee with a "do pass" recommendation and with a fiscal note by Department of Natural Resources dated 2/29/00. SB 275 An Act relating to the school year for purposes of the postsecondary student loan program; and providing for an effective date. SB 275 was HEARD and HELD in Committee for further consideration. SENATE BILL NO. 175 An Act relating to state mining law, to methods of locating mining claims, to the granting of larger mining claims using a legal subdivision based on rectangular survey descriptions, and to mandatory rental payments for prospecting rights. JULI LUCKY, STAFF, SENATOR RICK HALFORD, stated that SB 175 proposes changes to the Alaska State Mining Law that would reduce the mining claim processing time and cost for the State, while improving the accuracy and accessibility of the claim location data. The changes affect methods of locating mining claims, rental payments and other related items. They would have no effect on the rights established by claims. Ms. Lucky noted that the Department of Natural Resources currently has a substantial backlog of claims that have been filed but are not yet on the land status plats. Changes proposed by SB 175 would improve the situation by allowing the Department to use a format, whereby, mining claim corners conform to an aliquot part legal description and can then be electronically entered onto (or removed from) the State land status plats. Ms. Lucky stated that the changes proposed by SB 175 would incorporate several years of work between the mining industry and the Alaska Department of Natural Resources. The primary concern for DNR is the amount of manpower, time and cost that are now required to process the paperwork for mining claims. Ms. Lucky pointed out that from the viewpoint of the mining industry, the changes would simplify the process of staking mining claims and reduce errors during the staking, recording and filing process. One change would make it simpler and more feasible to utilize the Global Positioning Systems (GPS) to establish claim corners in the field. Another change would allow the location of a larger size of mining claim, which would decrease the number of stakes in the field and reduce the amount of paperwork by 75%. The existing claim location system will continue to be available for those situations where the new positioning method is not practical. Ms. Lucky concluded that other changes proposed regard prospecting sites including the establishment of a rental charge, repeal of the limitation of the number of sites that can be held, and clarification of the terms. Ms. Lucky stated that SB 175 is supported by the Alaska Miners Association and the Department of Natural Resources. Representative Phillips emphasized that the mining industry would be very happy with the change proposed in the legislation. Representative J. Davies asked for more information regarding the rental aspects. Ms. Lucky explained that the labor rate would remain in place. There would be a change in the rental rates dealing with the prospecting sites. BOB LEOFFLER, (TESTIFIED VIA TELECONFERENCE), DIRECTOR, DIVISION LAND, MINING AND WATER, DEPARTMENT OF NATURAL RESOURCES, stated the SB 175 is a solution to a problem that the Department has had. He pointed out that over the last few years, the mining claims have been expanding. New mining claims average about ten thousand a year and have for the past five years. As a result, the Department has had a difficult time keeping up. It takes four to six months to process a mining claim. He noted that SB 175 would provide for some automation. The bill will not change the relationship between the mining industry and the State but would allow for better service. Mr. Leoffler addressed the fiscal note. He stated that the bill could make it more efficient for the State and the locator. It applies to renting the processing sites. The Department believes that would result in $150 thousand dollars, new income from the mining industry. Approximately half of that would go to the permanent fund. The fiscal note attempts to capture the other half, so the Department could decrease the time to process a claim to a six-week period. The bill recommends using funding, which the industry pays, to bring the service level to a more agreeable time. Representative J. Davies asked if there would be less incentive to develop the lands by making the system more efficient. STEVE BORELL, (TESTIFIED VIA TELECONFERENCE), EXECUTIVE DIRECTION, ALASKA MINERS ASSOCIATION, ANCHORAGE, voiced support for the legislation. He stated that the provision of the bill affects the process of location, which would not decrease the rights established by the claims. Mr. Borell noted that the provisions of the legislation would provide for more rapid distribution of information to the public. He urged enactment of the legislation at the earliest possible date. Representative Foster inquired about the existing system claims. Mr. Borell replied that they would remain the same. Representative Foster wanted a guarantee that the small village people would not be required to purchase a GPS system. Mr. Borell acknowledged that they would not. Representative Foster MOVED to report SB 175 out of Committee with individual recommendations and with the accompanying fiscal note. There being NO OBJECTION, it was so ordered. SB 175 was reported out of Committee with a "do pass" recommendation and with a fiscal note by the Department of Natural Resources dated 2/29/00. HOUSE BILL NO. 270 An Act relating to sexual assault and sexual abuse and to payment for certain medical costs and examinations in cases of alleged sexual assault or sexual abuse. REPRESENTATIVE ERIC CROFT stated that HB 270 would guarantee that adult victims of sexual assault are not charged for the costs of evidentiary forensic exams. He noted that a victim of sexual assault has by definition been victimized once. In order to facilitate investigation of the crime and prosecution of the criminal, a victim is often asked to submit to a forensic exam to gather evidence. The forensic exams often involve taking physical samples and photographs. While it is the ordinary police practice to pay for these evidence-gathering exams, some victims now report that they have been asked to pay for the cost of the forensic exam through their medical insurance. To victims of sexual assault, this is a third victimization. Representative Croft explained that when a house is burglarized and law enforcement takes photos or fingerprints of evidence, the victim is never sent the bill, directly or indirectly, or asked to have their homeowners' insurance billed. There is faith that most law enforcement agencies take responsibility for victims' needs and appropriately pay for evidentiary exams as needed. Representative Croft concluded that with the passage of HB 270, victims would be assured that they could not be required to pay for evidentiary forensic exams. Representative Foster questioned how widespread the problem is. Representative Croft replied that it is not widespread but that it does exist. He noted that the majority of police agencies do the right thing in this regard. However, some agencies do try to transfer this concern to the individual's insurance. That type action can result from tight budget times. Representative G. Davis inquired the average cost for the service. Representative Croft advised that it costs approximately $300-$500 dollars. Co-Chair Therriault questioned if there was any legitimate payment which could be cut off through passage of this legislation. Representative Croft commented that some places have indicated that they do not charge families out of pocket expense. If a child was eligible for Medicaid or health insurance, they may attempt to tap that source. He reiterated that the family should not be liable. Representative Austerman asked the ratio of children versus adult cases. Representative Croft did not know the answer. LAUREE HUGONIN, DIRECTOR, ALASKA NETWORD ON DOMESTIC VIOLENCE AND SEXUAL ASSAULT (ANDVSA), JUNEAU, commented that these charges occur as a result of hospital accounting procedures. The range of costs can be from between $300- $1000 dollars. The direct charges usually result from the accounting procedures at the hospitals and not the law enforcement agencies. She noted that there has been some difficulty in Mat-Su, Anchorage, Kenai and Sitka and possibly in Bethel. She was not aware of other parts of the State where there was a problem. Ms. Hugonin advised that this problem is not on going and pervasive, but that it does occur more than sporadically. Ms. Hugonin testified on the actual exam process that a person must go through after the assault. She urged the Committee to seriously consider passing the legislation so that the victim does not have to go through the pain of the ordeal again. Vice Chair Bunde asked the advantage to the hospital in requesting the exam money. He questioned if the police agencies were slow in processing these claims. Ms. Hugonin acknowledged that the hospitals are concerned with having timely payments. Originally, there was concern that law enforcement would not bring forward all the cases because they would not be able to pay for the exams. Representative Austerman asked if the object of the legislation is that no one individual would be responsible to pay for this type service. Ms. Hugonin replied that it is the intention that no "victim" pay for the examine. She noted that it clarifies that the State Troopers and/or the local law enforcement would pay for the exam. TRISHA GENTLE, DIRECTOR, COUNCIL ON DOMESTIC VIOLENCE AND SEXAUL ASSAULT (CDVSA), JUNEAU, voiced support for the legislation. She reiterated that the actual "receiving of the bill" again reminds the victim of the trauma that they experienced. She emphasized that the bill would help protect the rape victim from further trauma. DEL SMITH, DEPUTY COMMISSIONER, DEPARTMENT OF PUBLIC SAFETY, noted that the Department supports the legislation. He clarified that the cost of collection of forensic evidence and the prosecution of the crime is the responsibility of the agency that is investigating and collecting that evidence. The legislation guarantees that the victim does not pay. The Anchorage Police Department was concerned that there were certain parties that could pay for the service. Mr. Smith agreed that placing the stipulation in statute would guarantee that the victim does not receive the bill. Mr. Smith speculated that hospitals are not set up to administer a third party billing. He noted that his Department currently pays out approximately $50 thousand dollars per year for this type service. Representative Phillips read for the record, a statement from a woman in Juneau who had experienced the charges as indicated. The letter states that the medical costs should not become a deterrent for a woman to seek out the care that they need after a rape experience. Representative Foster MOVED to report CS HB 270 (HES) out of Committee with individual recommendations and with the accompanying fiscal note. There being NO OBJECTION, it was so ordered. CS HB 270(HES) was reported out of Committee with a "do pass" recommendation and with a fiscal note by the Department of Public Safety dated 3/15/00. (TAPE CHANGE, HFC 00 - 111, Side 2). CS FOR SENATE BILL NO. 275(HES) An Act relating to the school year for purposes of the postsecondary student loan program; and providing for an effective date. SENATOR MIKE MILLER stated that currently, AS 14.43, Subsection (5), Section 160, "definitions" reads: "School year", means a period from September 1st of one year through August 31st of the following year. The bill would amend the definition to read that an academic period could be a minimum of 30 weeks of instructional time to begin between September 1st of one year and August 31st of the following year. Senator Miller noted that the current definition of "school year" assumes an agricultural society, such as existed when public education in America began in earnest in the 1820's and 1830's. Then the vast majority, perhaps 85%-90% of Americans lived on family farms. The school year was designed to begin after fall harvest and end before spring planting. Senator Miller continued, today, hardly more than one- percent of our population lives on family farms. The school calendar is obsolete, especially for higher education in urban America. The U. S. Department of Education defines an academic year as thirty weeks of instruction, and virtually all colleges and universities follow that pattern, either offering two fifteen-week semesters or three ten-week quarters. However, most continue to use the agriculture calendar, making it difficult to offer a fast-track program for urban individuals who want to get on with their education in a vigorous fashion. The U. S. Department of Education will offer a full loan to a full-time student who completes successfully a thirty-week academic year and will offer another loan as soon as that student begins another similar period of full-time study. Senator Miller pointed out that Charter College in Anchorage has experimented with offering five ten-week quarters in one calendar year or one and two-thirds academic years in one calendar year. That has proven popular because it allows a student to complete a two-year associate degree in just fifteen months. Charter is now in the planning stage of a four-year bachelor degree program, which will allow ambitious and hard-working students to complete their degrees in as little as thirty consecutive months. Unlike students in other programs following the slower and more traditional calendar, these students cannot obtain four State loans for their degrees, given the current definition of a school year. They deserve the option of taking on the challenge of a fast-track baccalaureate degree. Senator Miller advised that under that circumstance, the sum total of their loans for their education would be no more than that for their counterparts following traditional calendars. However, the cost of their education will have been reduced because they will have yielded less foregone income during their college years when they were in no position to hold full-time jobs. Co-Chair Therriault asked about the structure of the language on Page 1, Line 6-7. Senator Miller explained that language was left in for accounting purposes at the Student Loan Division. Representative J. Davies suggested that a period could be placed after "time". Senator Miller reiterated that the Student Loan Division wanted that language left as is for accounting purposes. Vice Chair Bunde asked if this would create a large change to the current semester system. He suggested that the language as currently written implies that a person can only apply for one student loan in the 12-month period. Senator Miller explained that the time would be "compressed" so that the student could receive a four-year degree in a three-year period. DIANE BARRANS, EXECUTIVE DIRECTOR, ALASKA COMMISSION ON POSTSECONDARY EDUCATION, DEPARTMENT OF EDUCATION, spoke to the Postsecondary Commission's support for the legislation. Ms. Barrans stated that there would be zero fiscal impact to the Commission while at the same time offering more opportunities to the Alaska College students. Ms. Barrans spoke to her concern. She pointed out that the objective was twofold: ? Providing an opportunity under an excellerated program to borrow more than one loan per year; and ? Doing so without changing anymore needed related statutes. Ms. Barrans commented that the intent was to keep the bill short, pointed out that it had been reviewed by the Attorney General. She reiterated that the legislation would allow the Commission to offer more than one loan per year with set terms of conditions. Co-Chair Therriault asked what would happen to a student that was not able to finish the program according to the proposed schedule. He asked if they would be precluded from receiving a loan for the following year. Ms. Barrons replied that would be a different issue in terms of completing the term at the required enrollment level. If the student were to complete that academic year in another loan year, under the terms of the new loan, they would be able to continue to borrow. Co-Chair Therriault clarified that a student would actually be able to draw three years worth of loans in a two-year period of time. Ms. Barrans acknowledged that was correct. Representative J. Davies asked the current restrictions on borrowing. Ms. Barrans explained that currently, an undergraduate could borrow $8500 dollars in a 12-month period. Representative J. Davies believed that the legislation would limit the 12-month period. Ms. Barrans stated that there would be a number of factors used to determine if they qualify for a second loan. The first criteria is if they had completed the entire academic period for the previous loan. If they did and had made good progress, they could apply for and receive a second loan. Representative J. Davies believed that by formulating the proposed change, there would be no limit on the number of loans that a person could receive in a two-year period. He proposed an amendment which would clarify that language. Co-Chair Therriault stated that rather than moving a conceptual amendment at this time, the bill would be held in Committee in order to confer with the drafters. MILTON BYRD, (TESTIFIED VIA TELECONFERENCE), ANCHORAGE, added that the U.S. Department of Education defines an academic period as 30 weeks of instruction. Most colleges in the country, pursue that by offering two 15 or 16 week semesters or three 10 or 11 week quarters. Mr. Byrd noted that a school can offer a compressed program, but they must offer the same amount of class time. He stressed that one could not compress the amount of time that it would take to complete a four-year degree by cutting out the "pauses" between terms. However, you can compress the amount of time taken to complete a degree. Representative J. Davies asked if there was language which stipulates that a student must complete the one 30-week period before receiving the next loan. Mr. Byrd referred that to Ms. Barrans. HB 275 was heard and HELD in Committee for further consideration. HOUSE BILL NO. 58 An Act relating to certain audits regarding oil and gas royalty and net profits and to audits regarding costs relating to exploration incentive credits and oil and gas exploration licenses; and providing for an effective date. KEVIN BANKS, (TESTIFIED VIA TELECONFERENCE), DIVISION OF OIL AND GAS, DEPARTMENT OF NATURAL RESOURCES, ANCHORAGE, stated that the bill would transfer oil and gas royalty audit functions from the Department of Revenue (DOR) to the Department of Natural Resources (DNR). He noted that it would make sense to put tile audit duties in the same department that administers, enforces, and is most knowledgeable with the oil and gas-leasing program. Mr. Banks pointed out that the audit functions previously rested with the Department of Natural Resources, but was switched to Department of Revenue in 1980 based on a legislative audit report. That recommendation stated that cost savings would be achieved by having one staff of auditors review both tax and royalty compliance information. Since 1980, however, the State has entered into royalty settlements with the North Slope producers and have made changes to tax regulations. As a result, there is no longer as much overlap between royalty and tax audits. Separating Department of Natural Resources duties to administer and enforce oil and gas contracts, agreements, and leases from the Department's ability to conduct audits leading to possible enforcement actions, has resulted in inefficiencies and other problems. Mr. Banks noted that HB 58 would authorize DNR to audit reports and costs relating to exploration incentive credits and oil and gas licenses. It also grants the Department audit powers commensurate to those of DOR currently, including the right to subpoena information for audit purposes. The two departments would be allowed to exchange confidential information obtained in the course of their respective audits. Mr. Banks pointed out that language on Page 2, Section 2, "by an agreement with the department or by AS38.05.035(a)(9), AS 41,09.010(d)" was inadvertently deleted in the proposed version of the legislation. Co-Chair Therriault MOVED to ADOPT Amendment #1, which would insert after "required" on Page 2, Line 9, "by an agreement with the department or by AS38.05.035(a)(9), AS 41,09.010(d)". There being NO OBJECTION, it was so ordered. CAROL CARROLL, DIRECTOR, DIVISION OF SUPPORT SERVICES, DEPARTMENT OF NATURAL RESOURCES, observed that the Department had submitted Amendment #2. Ms. Carroll explained that the amendment would correct a law in the public notice law section by removing the notice requirement for final decisions in oil and gas lease sales. The amendment would correct a problem by removing a separate requirement for notice for the final decision. JAMES HANSON, (TESTIFIED VIA TELECONFERENCE), LEASE SALE MANAGER, DIVISION OF OIL AND GAS, DEPARTMENT OF NATURAL RESOURCES, pointed out that the notice requirement is redundant. He explained that 180 days before the sale, the Department issues a preliminary finding. There is a public comment period following that. When the finding is noticed, the public is informed when the final finding will be issued. At the time the final finding is issued, the notice of sale lets the pubic know that the appeal process is not agreeing with the decision to go forward with the sale. The 30-day notice prior to that finding is simply restating what was already said when the preliminary finding came out. Representative J. Davies asked if that was a current requirement in statute to be done. Mr. Hanson replied that the requirement is that they issue a notice of the preliminary finding and included in that notice is when the final notice would become available. Representative J. Davies did not understand the redundancy. He asked what language would the Department be comfortable including. Representative Phillips requested further testimony to address any changes which the language could cause. Representative Grussendorf commented that the language of the preliminary findings might not affect the final findings. Co-Chair Therriault agreed that the change could cause confusion. Mr. Hanson pointed out that the notice which the Division is trying to eliminate, would be after the comment period. The public comment period lasts from 60-90 days after the preliminary findings. He stressed that it would be "way beyond" the public comment period and serves no purpose in the bill. Co-Chair Therriault advised that it was his intent to hold the bill in Committee to address the proposed language change. Ms. Carroll interjected that if the amendment were going to delay the bill, the Department would request to withdraw the proposal to change that language. HB 58 was HELD in Committee for further consideration. ADJOURNMENT The meeting adjourned at 3:45 P.M. H.F.C. 12 4/10/00