HOUSE STANDING COMMITTEE ON HEALTH, EDUCATION AND SOCIAL SERVICES February 13, 1997 3:03 p.m. MEMBERS PRESENT Representative Con Bunde, Chairman Representative Joe Green, Vice Chairman Representative Al Vezey Representative Brian Porter Representative Fred Dyson Representative J. Allen Kemplen Representative Tom Brice MEMBERS ABSENT All members present COMMITTEE CALENDAR *HOUSE BILL NO. 45 "An Act relating to runaway and missing minors." - MOVED CSHB 45(HES) OUT OF COMMITTEE HOUSE BILL NO. 1 "An Act relating to taxes on cigarettes and tobacco products; and providing for an effective date." - MOVED CSHB 1(HES) OUT OF COMMITTEE HOUSE BILL NO. 54 "An Act establishing the Alaska education technology program; and providing for an effective date." - MOVED CSHB 54(HES) OUT OF COMMITTEE (* First public hearing) PREVIOUS ACTION BILL: HB 45 SHORT TITLE: RUNAWAY AND MISSING MINORS SPONSOR(S): REPRESENTATIVE(S) KELLY JRN-DATE JRN-DATE ACTION 01/13/97 39 (H) PREFILE RELEASED 1/3/97 01/13/97 39 (H) READ THE FIRST TIME - REFERRAL(S) 01/13/97 39 (H) HES 02/13/97 (H) HES AT 3:00 PM CAPITOL 106 BILL: HB 1 SHORT TITLE: CIGARETTE AND TOBACCO TAX SPONSOR(S): REPRESENTATIVE(S) BUNDE,Ivan,Croft,Porter,Hudson JRN-DATE JRN-DATE ACTION 01/13/97 26 (H) PREFILE RELEASED 1/3/97 01/13/97 26 (H) READ THE FIRST TIME - REFERRAL(S) 01/13/97 27 (H) STATE AFFAIRS, HES, FINANCE 01/21/97 (H) STA AT 8:00 AM CAPITOL 102 01/21/97 (H) MINUTE(STA) 01/28/97 (H) STA AT 8:00 AM CAPITOL 102 01/28/97 (H) MINUTE(STA) 01/30/97 (H) STA AT 8:00 AM CAPITOL 102 01/30/97 (H) MINUTE(STA) 02/04/97 (H) STA AT 8:00 AM CAPITOL 102 02/04/97 (H) MINUTE(STA) 02/05/97 237 (H) STA RPT CS(STA) 4DP 1DNP 02/05/97 237 (H) DP: JAMES, ELTON, BERKOWITZ, IVAN 02/05/97 237 (H) DNP: VEZEY 02/05/97 237 (H) FISCAL NOTE (STA CMTE/REV) 02/07/97 276 (H) COSPONSOR(S): HUDSON 02/11/97 (H) HES AT 3:00 PM CAPITOL 106 02/11/97 (H) MINUTE(HES) 02/13/97 (H) HES AT 3:00 PM CAPITOL 106 BILL: HB 54 SHORT TITLE: EDUCATION TECHNOLOGY PROGRAM SPONSOR(S): REPRESENTATIVE(S) KOTT,Grussendorf,Kemplen JRN-DATE JRN-DATE ACTION date." 01/13/97 42 (H) PREFILE RELEASED 1/10/97 01/13/97 42 (H) READ THE FIRST TIME - REFERRAL(S) 01/13/97 42 (H) HEALTH, EDUCATION & SOCIAL SERVICES 01/30/97 (H) HES AT 3:00 PM CAPITOL 106 01/30/97 (H) MINUTE(HES) 01/31/97 206 (H) COSPONSOR(S): KEMPLEN 02/05/97 (H) HES AT 4:00 PM CAPITOL 120 02/05/97 (H) MINUTE(HES) 02/07/97 (H) HES AT 4:00 PM CAPITOL 120 02/07/97 (H) MINUTE(HES) 02/11/97 (H) HES AT 3:00 PM CAPITOL 106 02/11/97 (H) MINUTE(HES) 02/13/97 (H) HES AT 3:00 PM CAPITOL 106 WITNESS REGISTER REPRESENTATIVE PETE KELLY Alaska State Legislature Capitol Building, Room 411 Juneau, Alaska 99801 Telephone: (907) 465-2327 POSITION STATEMENT: Sponsor of HB 45 SCOTT CALDER P.O. Box 75011 Fairbanks, Alaska 99707 Telephone: (907) 474-0174 POSITION STATEMENT: Testified in support of HB 45 and testified against CSHB 1(STA) AL NEAR P.O. Box 80847 Fairbanks, Alaska 99708 Telephone: (907) 479-4090 POSITION STATEMENT: Testified in support of HB 45 STEVE GRUNSTEIN, Representing Guardians of Family Justice P.O. Box 32604 Juneau, Alaska 99803 Telephone: (907) 789-7131 POSITION STATEMENT: Testified in support of HB 45 ANGELA SALERNO, Executive Director National Association of Social Workers, Alaska Chapter 525 Main Street Juneau, Alaska 99801 Telephone: (907) 586-4438 POSITION STATEMENT: Testified on HB 45 CAM CARLSON P.O. Box 80234 College, Alaska 99708 Telephone: (907) 479-2348 POSITION STATEMENT: Testified in support of HB 45 DAVE PETERS P.O. Box 2774 Valdez, Alaska 99686 Telephone: (907) 835-2254 POSITION STATEMENT: Testified against CSHB 1(STA) MARLENE LEAK 771 Eighth Avenue Fairbanks, Alaska 99701 Telephone: (907) 452-1015 POSITION STATEMENT: Testified against CSHB 1(STA) BETTY ROLLINS P.O. Box 55163 North Pole, Alaska 99705 Telephone: (907) 488-6614 POSITION STATEMENT: Testified against CSHB 1(STA) DOUG YATES P.O. Box 221 Ester, Alaska 99725 Telephone: (907) 479-8300 POSITION STATEMENT: Testified on CSHB 1(STA) DON DAPCEVICH, Executive Director Advisory Board on Alcoholism and Drug Abuse P.O. Box 0608 Juneau, Alaska 99811 Telephone: (907) 465-4667 POSITION STATEMENT: Testified in support of CSHB 1(STA) JACK CHENOWETH, Attorney Legislative Legal Counsel Legislative Affairs Agency 130 Seward Street, Suite 409 Juneau, Alaska 99801-2105 Telephone: (907) 465-2450 POSITION STATEMENT: Testified on CSHB 1(STA) BOB BARTHOLOMEW, Deputy Director Income and Excise Audit Division Department of Revenue P.O. Box 110420 Juneau, Alaska 99811-0420 Telephone: (907) 465-2320 POSITION STATEMENT: Testified on CSHB 54(HES) GEORGE SMITH, Deputy Director Libraries, Archives and Museums Department of Education P.O. Box 110571 Juneau, Alaska 99811-0571 Telephone: (907) 465-2910 POSITION STATEMENT: Testified on CSHB 54(HES) REPRESENTATIVE PETE KOTT Alaska State Legislature Capitol Building, Room 204 Juneau, Alaska 99801 Telephone: (907) 465-3777 POSITION STATEMENT: Sponsor of HB 54 ACTION NARRATIVE TAPE 97-10, SIDE A Number 0000 CHAIRMAN CON BUNDE called the House Health, Education and Social Services Committee meeting to order at 3:03 p.m. Members present at the call to order were Representatives Bunde, Porter, Dyson, and Kemplen. Representative Brice arrived at 3:11 p.m., Representative Vezey arrived at 3:17 p.m. and Representative Green arrived at 3:52 p.m. This meeting was teleconferenced to Valdez and Fairbanks. HB 45 - RUNAWAY AND MISSING MINORS Number 0047 REPRESENTATIVE PETE KELLY, sponsor of HB 45, "An Act relating to runaway and missing minors." was first to testify. He said HB 45 provides a technical correction to an error which occurred when his comprehensive rewrite of the juvenile code was combined with Senator Steve Frank's legislation on runaways. When the two bills were combined after the legislative session, a core piece of Senator Frank's legislation was lost and the revisor of the bills needs legislation to fix the problem. REPRESENTATIVE KELLY said HB 45 returns to a parent or guardian the decision to allow an unemancipated minor to remain on the streets or to require the minor to return home. A runaway minor should not have the right of refusal as to where the minor should live, this decision should lie with the minor's parent, legal guardian or in remote cases with a peace officer. Number 0121 REPRESENTATIVE KELLY referred to the bill, page 1, line 11, and read, "where the minor was found and if the minor and the minor's parent or guardian consent". He said that "minor" was left in when the two bills were combined. He stated again that it was just a technical glitch and said he doesn't understand all the workings of the revisor of statutes but clarified that it certainly wasn't their intent last year to leave that section in there. He said Senator Frank's bill, SB 289, was voted on and passed near unanimously last year. He said HB 45 will bring us back to the original intent. Number 0194 REPRESENTATIVE FRED DYSON asked if provision (c), page 2, provided an option of the minor being taken to a secure facility. Number 0242 REPRESENTATIVE KELLY said the minor can be taken to a semi-secure facility. Number 0246 REPRESENTATIVE DYSON asked if the minor still has the option to leave if the minor chooses to do so. Number 0254 REPRESENTATIVE KELLY said according to the original bill, SB 289, when the minor left the semi-secure facility he became a Child in Need of Aid (CINA). He said it corrected a lot of problems with minors being able to leave a facility with complete impunity. When the minor became a CINA, the state could take further action, whereas before there was nothing in statute to address this issue. Number 0297 REPRESENTATIVE DYSON asked if HB 45 could be amended so that it compels the state to take further action if the minor leaves the facility where they have been deposited. Number 0316 REPRESENTATIVE KELLY said this was addressed in SB 289, the state was compelled to take further action. Number 0332 CHAIRMAN BUNDE said in HB 45 they are taken to a semi-secure facility and if the minor leaves, then they fall under provisions of the previous bill, SB 289, which says they are now a CINA and then those provisions would kick in. The minor would be picked up as a CINA and are no longer allowed the flexibility that they are allowed under this bill. Number 0359 REPRESENTATIVE KELLY said it appeared that Representative Dyson was proposing something other than the intent of the legislation that HB 45 attempts to fix. He said it was just a mistake on the revisor and we want to go back to what the intent was. He said he would buy into some of the suggestions, but he thought they would be more appropriate in a different bill. He said there is a time problem on HB 45 because the statutes won't agree. When the department deals with this now, they worry about legal problems. People are interpreting the statutes differently because it says two things in the statutes. He said HB 45 is a housekeeping bill and said Representative Dyson is talking more about an intent that was already addressed in SB 289. Number 0421 REPRESENTATIVE DYSON said he understood that HB 45 is making a correction to the original intent. He said he is absolutely confused between what Representative Kelly and Representative Bunde said about whether or not the child has a chance to get out of the parent's and the state's jurisdiction if they choose to run away. He said he would pursue this in a different place and away from this committee. Number 0443 CHAIRMAN BUNDE said if a minor runs again after being put in a semi-secure facility, they are then picked up and treated under SB 289 which then puts them under the category of CINA and then the minor is no longer allowed to run again. He said the minor can then go to a secure facility. Number 0480 REPRESENTATIVE KELLY said, "it doesn't necessarily follow, what you were saying is correct, it doesn't necessarily follow that they would go to a secure facility. It does necessarily follow that they would become a matter for the court." CHAIRMAN BUNDE added, "if it is appropriate." Number 0504 SCOTT CALDER testified next via teleconference from Fairbanks. He said HB 45 makes sense. He said, "It seems odd that in the process of correcting problems with the state's juvenile social service industry that we would omit to correct the problem of asking for the minor's permission to return home." He said this harkens back to the old days when there were problems in that regard. He referred to the other issue raised about what will happen when the minor returns or if the minor runs again and added that there are probably miles to go before we succeed in correcting those problems in the system. He said it would probably be a good idea to keep this one aspect fairly simple. Number 0579 AL NEAR testified next via teleconference from Fairbanks. He said he also favored HB 45 and it should pass as it corrects a little technical error. He said he wanted to make some comments about secure placement because he did not feel the existing laws provide for this possibility. He commented that despite our best efforts this runaway youth problem continues to plague the state. Responsible parents are trying to instill traditional values, but they encounter legal roadblocks. If a kid chooses to leave home as a runaway, there is little a parent can do and kids know this. He said laws are designed to protect abused and neglected children, but rebellious kids exploit these laws. MR. NEAR said that young people, who at an earlier time would have been held accountable for these misdeeds, can now exercise adult freedoms unencumbered by responsibility. Alaska needs the option of secure treatment facilities. At present families have few choices and some families are sending their children to programs outside the state. He said this situation could have occurred because of mandates, from federal legislation occurring in the 1970s, requiring least restrictive settings. He said we assume that some kids running away are fleeing abusive homes. In some cases this is true, but it overlooks the merely rebellious kids who would exploit these laws and manipulate the system. Kids who know the law enforcement agencies don't aggressively pursue them as runaways. He urged the legislature and the Administration to consider lifting this ban against secure placement for habitual runaways. Number 0755 STEVE GRUNSTEIN, Representative, Guardians of Family Justice an organization out of North Pole, said he supports the change proposed in HB 45. As a father of a teenage son here in Juneau a few years ago, he experienced the amalgamation of laws concerning juveniles. The current laws that have been on the books for the past number of years are non-functional. If we are serious about dealing with this juvenile problem, making some headway with it and stopping situations like people being shot at in Lemon Creek. He said we all know juveniles are putting gangs together left and right around the state. He said it all falls back to the early laws of the 1970s, the federal mandates, "you will not restrict your child." He supports HB 45's provision that the juvenile in question should not have the authority to veto or over-ride his parent's decision. MR. GRUNSTEIN said his organization supports the change proposed in HB 45. It is a technical, typographical error and because of it juveniles are given extreme authority over the parents. This is frustrating to the parents and everyone else. He said if a child goes out and does something wrong the state tends to come down on the parents, asking them why they aren't controlling their child. If any of the committee has had children out of control and had to face the law like a brick wall, you would know what it's like. MR. GRUNSTEIN said federal funding keeps the state from having secured environments for these children and said they can keep their federal funding. He said parents want to have control and authority over raising their children without living in fear of the Gestapo. He said when you run into the Division of Family and Youth Services (DFYS) where they suspect you have abused your child because you grounded him, you are dealing with something similar to the Gestapo the way you can be treated. Number 0893 ANGELA SALERNO, Executive Director, National Association of Social Workers, Alaska Chapter, said she is here as an advocate for vulnerable groups. She said she understood the history of HB 45 and what has been done or what has been attempted to be done around successfully addressing the problem issue of runaway youth. She said she was here specifically to speak to the issue of sexual and physical abuse of youth in the home. Her concern is that the provisions of HB 45 might increase the incidence of sexual, physical and emotional abuse in the home. This measure proposed in HB 45 would require a police officer to forcibly return a youth to his or her home against their will, without their consent. She said they may be returned to a home that is unsafe. MS. SALERNO said concerned parents, engaged parents do feel out of control. She said their testimony and their involvement shows their concern. She said she is more concerned about those families in which the parents are not engaged, in which the parents are abusive. She said she is fearful that we could increase the incidence of abuse and (indisc.) severe or fatal injuries to children. This bill's exception to forcible return when the officer might have reasonable cause to believe that there is sexual abuse does not take into account the fact that police officers are not trained to access sexual abuse and must rely on reports from the youth. She did not feel that all youth will be able to reveal abuse to a police officer or to anyone they have just met, especially an authority figure. She said this was a concern of hers. MS. SALERNO said forcing runaway youth to return home is not going to get the state where we want to go with this. She expressed concern that it will not deter youth from running away, it could drive them underground where we would be unable to help them. Life on the street is not fun and she said kids are not running away just for the fun of it. Most kids who run away probably have good reason to do it. MS. SALERNO said, in Alaska, 1,900 adolescents are homeless annually. In HB 45, the parent can consent to not having their child brought home which brings up concerns about what we are calling "throw away youth". She thought that if more options, more resources or more services were made available to youth the great majority of runaway youth would access them. She said she is talking specifically about such things as independent living and transitional living programs. Education, job training, counseling and other things that would help these minors become self- sustaining. What we all want is responsible youth. We need to help them learn and obtain those skills that can make them more responsible. Number 1082 REPRESENTATIVE DYSON said in the political subdivision where he lives all the police officers have pretty good training in these areas. He suspected that this training was pretty good all the way around the state. He said any child who is abused, or even wants to abuse the process by accusing his parents of abusing him, only has to pick up the phone and call. There are a number of agencies including the 911 service which can be called. He said he was almost shocked by her accusation that HB 45 is going to increase the number of abused children and make life worse for them. Number 1120 MS. SALERNO said the assessment of sexual abuse victims is controversial, even in social work. Some feel that even social workers aren't equipped to assess these situations. She apologized for not knowing what training police officers get, she is relying on her knowledge of the specialized training that social workers get about sexual abuse. MS. SALERNO said there is a problem with some youth, who erroneously accuse their parents of sexual abuse. She said she is sure it happens in an attempt to manipulate the system, but clarified that she is talking about the kid who has been abused, intimidated and in a diminished capacity to advocate for themselves. Number 1178 REPRESENTATIVE DYSON said he never meant to suggest that police officers are capable of doing an assessment on sexual abuse victims. He said the officers are qualified to make at least a preliminary judgement about whether or not there is a possibility that the child is in danger and then refer it to another agency where there is an escalating level of training and capacity to do an assessment. Number 1200 CAM CARLSON testified next via teleconference from Fairbanks. She said she was absolutely in favor of the amendment to this piece of legislation and added that minors are not in the position to make this decision. She said she is thankful that social workers were not around when she was growing up because it could have really screwed her up. She said, as a headstrong kid, she would have used the system like kids are using it now. She is glad her parents were there and were telling her what was what. MS. CARLSON said she became involved in this issue as a result of knowing friends and neighbors, who had been destroyed by the system. She said letting a minor decide what is good, what is best and where he is going to live is ludicrous. She said there are rules and laws that provide for children who are sexually or physically abused. She said she would not have put up with the kinds of things her friends and neighbors put up with in trying to raise their kids and the interference that the state put in their way. She strongly encouraged the committee to pass HB 45 and take away "minor choice." Number 1294 REPRESENTATIVE BRIAN PORTER said it wasn't Senator Frank's bill that made this specific change, it was a bill sponsored the year before, in 1994, by Senator Phillips that came to the House Judiciary Standing Committee. He said the judiciary committee put this provision into Senator Phillip's bill as a result of the kinds of problems that you have heard about today. He questioned how this language remained in statute as it was changed in 1994. He said police officers do get very good training in making initial evaluations as to whether a child has been abused or is the subject of abuse. He said there are literally scores of children who are manipulating the system with this "blackjack" that they have over parents to be able to say, "I get my way or I don't come home." He said this intimidation should not be allowed. He thought this issue was corrected in 1994. REPRESENTATIVE PORTER said the last juvenile runaway case that he remembered handling, as a police officer, was a 16-year-old girl who ran away from home because her mother wouldn't let her smoke and the teenager wasn't going to return until her mother let her smoke. He offered that this is the more typical case than the abused case. Number 1383 REPRESENTATIVE PORTER made a motion to move proposed Amendment 1 to HB 45. Hearing no objection it was adopted. Number 1396 REPRESENTATIVE KELLY said Amendment 1 sets an effective date. He said because this issue was supposed to be addressed in 1994 and survived 1996, they are worried about the backlog. Number 1405 REPRESENTATIVE AL VEZEY made a motion to move CSHB 45(HES). CHAIRMAN BUNDE asked if there was an objection. Hearing none, CSHB 45(HES) was moved out of the House Health, Education and Social Services Standing Committee with individual recommendations and attached zero fiscal notes. HB - 1 CIGARETTE AND TOBACCO TAX Number 1486 CHAIRMAN BUNDE announced that the next item on the agenda was CSHB 1(HES), "An Act relating to taxes on cigarettes and tobacco products; and providing for an effective date." Number 1489 DAVE PETERS testified next via teleconference from Valdez. He said he was against CSHB 1(STA) as he did not see how raising the taxes on cigarettes was going to keep kids from smoking. He said it would just make them be able to steal cigarettes a little easier. He said maybe if a tax was imposed on alcohol, or a tax to boost the situation where people get fined for selling kids the cigarettes, would work. He said kids will still have the access, they will just steal more from their parents. He said CSHB 1(STA) will hurt him as he is a smoker. Number 1590 CHAIRMAN BUNDE referred to the evidence supporting the increase in tobacco costs with a drop in underage smoking. He also cited the costs to the state because of tobacco related illnesses. MARLENE LEAK testified next via teleconference from Fairbanks. She said state government wants more money and is using pious platitudes that the solution to any problem is more tax money. She went on to say that some health related non-profit organizations have found that being anti-tobacco is a veritable gold mine in contributions and government grants. These organizations, for public relations purposes, need a little moral victory for their cause, without threatening a ban on tobacco, and the tax increase does look good there. MS. LEAK asked the committee to recall that the March of Dimes was almost wiped out when Dr. Salk discovered a vaccine for polio, but with quick thinking a new cause was picked. The cause they chose was birth defects which has a myriad of causes and is unlikely to be cured. She asked if tobacco would be as easy to replace. She said non-profit organizations, profiting from tobacco, can't take that chance. MS. LEAK said about a year ago, a front page article in the Wall Street Journal detailed how a massive increase in tobacco tax in Canada began a giant black market for cigarettes. Later in 1996, Canada lowered the tobacco tax. A federal luxury tax increase was reversed a few years ago due to a loss of ship building jobs when sales of yachts went overseas or to the used yacht market. As the Boston Tea Party showed, the public will not respect a greedy, arrogant government. Even when we get sanctimonious sermons that it is worth the tax to discourage teenagers from smoking. MS. LEAK said if the correlation studies which tell us that tobacco kills several hundred thousand U.S. citizens per year were true, it would be murder for the legislature to leave this substance legal. Assuming that you believe the numbers to be true, the tax would be blood money for the state. She suggested that states, such as Alaska, might be sued by victim's families who might claim that the state knew that tobacco was a killer, but was left legal for short term tax increase gain. She asked if this showed compassion on behalf of the legislators. She asked the legislators to admit that they want more tax money and that they would do and say anything to get it. She said she is against CSHB 1(STA). Number 1745 BETTY ROLLINS testified next via teleconference from Fairbanks. She said she is a non-smoker, but CSHB 1(STA) allows the state to hide behind the bad guy. We have 3,000 contaminated sites in the state of Alaska, and many contaminated sites in the NorthStar Borough. She said there has been no action by the legislature or by any government entity to assist with this problem. MS. ROLLINS said she talked with the Michigan DOR where bootlegging is a very serious problem. She said the state of Michigan raised their tax 200 percent, but only received 28 percent in additional tax revenues from the tobacco tax. She asked Mr. Vesley [Ph] of DHSS if he had any statistics on any of the programs designed to discourage underage smoking, how many children did not smoke because of those programs. She was told that DHSS did not have the ability to go out and find these figures. She was faxed a 2-year- old supposition by DHSS to tell people that a tax increase will stop teen smoking. She said it is the same supposition that is being used today. MS. ROLLINS said she has a letter from the Department of Public Health signed by state troopers and the Michigan Department of Public Health. The letter says that even though they are getting more money in tobacco tax, it will start interfering with the private lives of people. Highly trained officers are following up on tests and making arrests when illegal activity occurs such as when people cross state borders to buy two or three cartons of cigarettes. She said there is a special force to take care of this in Michigan. She asked if we wanted to do this in Alaska. Number 1848 DOUG YATES testified next via teleconference from Fairbanks. He said the tobacco industry is big business, spending billions to advertise their products. He said most of that advertising money is used to convince children that the glamour of using their products outweighs long term health consequences. As a result of the industry's power and their vested interest, tobacco will never be outlawed. Society will never place it in the same arena as marijuana, it is too strongly established as part of this culture's accepted addictions. The only avenue to free thinking men and women who recognize its cost to our people is to employ a level of taxation that begins to address these costs. MR. YATES said he was astounded that there was so much opposition to this measure since Republicans pride themselves on fiscal responsibility. He asked what better way to ease the financial burden of raising a family in Alaska then to reduce the cost of health care. According to reliable estimates, significant money can be saved if we work to eliminate health care costs associated with tobacco addiction. He said the tobacco industry relishes the ideological morass spawned by the issue of taxation. In each state where taxation is an issue, there are guys who stand and point at tax proponents. He urged all legislators to set aside ideological differences and realize that increased taxation will begin to tilt the scales for the long term advantage of the state. Number 1938 SCOTT CALDER testified next via teleconference from Fairbanks. He wanted to reflect on the assertion that is being made that the reason to tax tobacco is to prevent children from smoking, or to deter children from smoking. In connection with his experiences with the state's juvenile authorities, he wanted to tell the committee why this is a false perspective. He said we want to tax tobacco so that we can pay for government. He said the state of Alaska pays specialized foster parents $90 a day and that the foster parent who took care of his son was buying cigarettes for his son. He questioned why the legislature was raising taxes and accruing more funds to pay for services for which there is no oversight or recourse to a parent like himself, who is faced with a specialized foster parent providing cigarettes to his child. He said he did not want any more taxes or any more liabilities to the people in the state of Alaska until those problems are corrected. He suggested that every man, woman and child in the state of Alaska would be better off if they smoked a pack a day than if they had to put up with that type of government. Number 2066 CHAIRMAN BUNDE said there is no indication that any monies raised from this tobacco tax would go to the Division of Family and Youth Services (DFYS). He said CSHB 1(STA) dedicates the money to a school construction fund. His other point was that a vast majority of people in the state of Alaska asked the legislature to address this issue. He referred to a letter by the Federation of Independent Businesses which had 62 percent of their members in favor of supporting this tax. He said this is not some plot from government, it is simply government responding to the requests of their constituents. Number 2097 CAM CARLSON testified next via teleconference from Fairbanks. She said she is a non-smoker, but is adamantly opposed to the tobacco tax. The purpose of taxes is not social, behavior modification or social engineering and added that it is being used as an excuse for increased revenues. She said saying the money will be used for schools is just kind of facetious and added that if we think so little of schools that the only way we can get money for them is to tax and bite, then it is a pretty sad state of affairs. She referred to the previous testimony regarding foster parents letting kids smoke and the problems that need to be corrected in this area. Number 2149 CHAIRMAN BUNDE said if CSHB 1(STA) works and is a barrier, then these children won't begin to smoke and maybe that will solve that problem. He said this is a totally voluntary tax, no one has to pay this tax. They simply don't smoke and they won't pay for the tax. He reminded those people concerned over taxation that smokers cost the state of Alaska nearly $200 million a year. He asked if those people would rather pay an income tax to take care of those expenses or if they think a user fee is more appropriate. TAPE 97-10, SIDE B Number 0000 DON DAPCEVICH, Executive Director, Advisory Board on Alcoholism and Drug Abuse, said the legislative committee spent the major part of this morning meeting telephonically to speak about the tobacco tax. He said they wanted him to convey to the committee that those members from Fort Yukon, Palmer, Fairbanks, Anchorage and Ketchikan have gone into their communities and talked with people and have made up their minds that they want to support this initiative. He said they want to congratulate the committee on bringing it forward. He said the committee hopes the state doesn't collect a dime on these taxes, they would prefer that people not smoke. MR. DAPCEVICH said there is no question that cigarettes are a gateway drug. He said this does not suggest that there is a causal relationship between smoking tobacco and smoking marijuana or using heroin, but it is well established that tobacco is certainly a gateway drug. He said it is also well established that as price goes up, use goes down especially among the most price sensitive group which is youth. He said his committee urged the legislature to pass CSHB 1(STA) with one cautionary note. He said they felt that education efforts, for tobacco and other drugs, should be redoubled in the schools. He said, as price goes up and accessibility goes down, we need to make some measures for smoking cessation programs for youth and adults. He said CSHB 1(STA) will improve the health of people in the state and only requires that users of tobacco pay the tax. Number 0163 REPRESENTATIVE PORTER made a motion to move proposed Amendment 1 to CSHB 1(STA). Number 0182 REPRESENTATIVE VEZEY objected to the motion. Number 0187 CHAIRMAN BUNDE said the purpose of proposed Amendment 1 is to discourage prolonged litigation. He said HB 1, as amended, contains the dedication to the school fund and there is a severability clause in the bill that said if there were litigation that found this dedication to be unconstitutional, then the money would go into the general fund. He said the proposed Amendment 1 is a provision to discourage prolonged litigation which might be filed in hopes of tying this issue up for a number of years before the tax becomes effective. Number 0239 JACK CHENOWETH, Attorney, Legislative Legal Counsel, Legislative Legal and Research Services, Legislative Affairs Agency, clarified that the proposed Amendment 1 was E.2. He said, "E.2 as I understand it is in response to an Assistant Attorney General's concern that because the main bill, the increase in the taxes in the main bill are set to take effect October 1, 1997, that there needs to be a retroactive feature for the provisions in the bill that deal with .090 and .190(a), .090(a) in Section 2 and .190(a) in Section 4 and a means by which the levy, the amount raised by the levy, by the increased levy is directed properly for the cigarettes that are sold after October 1. I think it has to do with the concern that there be some mechanism in place to protect the state, the school fund in the event there is protracted litigation and some means by which the revenue can be accounted for and followed through in the event litigation eventually works out to be contrary to the position that this money go into the, into the school fund." Number 0354 A roll call vote was taken on the proposed Amendment 1. Representatives Bunde, Porter, Brice, Kemplen and Dyson voted yea. Representative Vezey voted nay. Representative Green was absent for the vote. Amendment 1 was adopted to CSHB 1(HES). CHAIRMAN BUNDE called for an at ease at 3:53 p.m. The committee meeting resumed at 3:54 p.m. Number 0415 REPRESENTATIVE PORTER made a motion to move CSHB 1(HES) with individual recommendations and attached fiscal notes. REPRESENTATIVE VEZEY objected to the motion. A roll call vote was taken on CSHB 1(HES). Representatives Bunde, Dyson, Kemplen, Brice, Green and Porter voted yea. Representative Vezey voted nay. CHAIRMAN BUNDE declared that CSHB 1(HES) was moved from the House Health, Education and Social Services Standing Committee with individual recommendations and attached fiscal notes. HB - 54 EDUCATION TECHNOLOGY PROGRAM Number 0523 BOB BARTHOLOMEW, Deputy Director, Income and Excise Audit Division, Department of Revenue, said DOR would provide a fiscal note for CSHB 54(HES) after today's meeting. He said there is not currently an official fiscal note, but one could be generated to go with CSHB 54(HES). Number 0591 CHAIRMAN BUNDE said there is some concern about the size of the fiscal note and asked if this project could be launched without a fiscal note. He said CSHB 54(HES) is asking folks in the community, businesses, to basically set up this technology grant and asked if the effort could go forward without state seed money. Number 0613 MR. BARTHOLOMEW said the fiscal note he is referring to would be the loss of revenue from the tax deduction which is around $114,000. As far as the cost of the staff positions, the Department of Education could provide an answer to that suggestion. Number 0636 REPRESENTATIVE GREEN said there was a question regarding the subcommittee report and the chart that the DOR provided. Number 0658 MR. BARTHOLOMEW said DOR tried to look at what happened in other tax credits which provide more of an incentive to give than just allowing a business deduction. Two scenarios were provided that were pretty close to a linear relationship. He said the lower option scenario is more realistic. He said you could try to guess the risk of a higher one based on your perceived conception of private business support. He said there is a growing competition for private companies to contribute to various charitable organizations and funds. Number 0699 REPRESENTATIVE VEZEY said he had trouble understanding the table. He said he accepted the assumptions from DOR. He said if you look at the first table, the deductions for corporations with $100,000 or more in the state of Alaska corporate income tax liability, there are 15 taxpayers in that category. If those taxpayers participated in this fund, he believed that the statute limited the contribution to a $100,000 deduction for this corporation. He asked for verification that at 9.5 percent of 15 taxpayers owing $100,000 equals $141,000 in lost tax revenue. Number 0742 MR. BARTHOLOMEW said this was correct. Number 0743 REPRESENTATIVE VEZEY said we are saying for $220,000 of potential tax savings, we can get the corporate tax payers in the state to contribute $3.7 million. Number 0759 MR. BARTHOLOMEW said these are the assumptions based in Scenario A. Number 0775 REPRESENTATIVE VEZEY asked why we need CSHB 54(HES). He said this fund can be done under existing law. Number 0780 MR. BARTHOLOMEW said, under existing law, you are allowed to take a limited deduction for charitable contributions but he did not think that schools qualified as a 501-C(3), which is what allows you to deduct contributions from your taxes. He said CSHB 54(HES) amends the Alaska tax statutes to allow a general business deduction. Number 0801 REPRESENTATIVE VEZEY said his opinion differed. He said an educational organization is capable of getting a 501-C(3) tax, it is one of the functions, educational purposes, that is recognized by the Internal Revenue Service (IRS). He said there are limits on the amount of charitable contributions that a corporation can make, they are fairly generous based on gross earnings not on tax liability. He said the main factor here is that the biggest credit is the federal income tax. He said any entity, including the state of Alaska if we pass CSHB 54(HES), would still have to address it on their income tax and get recognized by the IRS. He said any entity that we set up would still have to apply for the 501-C(3) status, you do not need to pass a statute to create a 501-C(3) corporation. He asked what the committee was doing, other than creating a new bureaucracy. Number 0872 MR. BARTHOLOMEW said he could not say today whether schools can apply and become a 501-C(3), but it makes sense within the guidelines. He said there are limitations that apply to how much of a charitable contribution you can deduct. He said it was correct that if CSHB 54(HES) passed and a business gave a contribution to the technology fund, they would get a general business deduction for state tax purposes which would not be deductible on their federal income tax unless you went through the route and became a recognized 501-C(3) corporation which would subject you to limitations. He said it is strictly a state tax code amendment. Number 0925 REPRESENTATIVE VEZEY said if we create this new bureaucracy is it their intent to go out and get qualified as a 501-C(3) corporation or association. Number 0944 GEORGE SMITH, Deputy Director, Libraries, Archives and Museums, Department of Education (DOE), referred to the fiscal note submitted by the DOE which was originally zero. He said it was assumed that, at least initially, there would not be a large amount of money in the program and that his division could handle training in the public library and the school libraries with the existing library development staff. He said he had a note that said, if the fund received a large grant or an endowment, a staff would need to be hired for additional training. He said you cannot put computers and technology into small communities and expect them to bring it up and know how to use it without some good training. MR. SMITH said the initial fiscal note, in one of the other divisions, Teaching and Learning Support, was that there would be a need for staffing to handle this fund. He said if the provision were made that some of the endowment money could be used for training purposes to hire a staff, then a zero fiscal note could be submitted. He clarified that this issue was discussed in the subcommittee meeting. He said his division, Libraries, Archives and Museums could handle their fiscal note in the same way. If that provision were included in CSHB 54(HES), the libraries division would not need a fiscal note. Number 1032 CHAIRMAN BUNDE clarified that Mr. Smith was referring to the DOE fiscal note, the $121,000. MR. SMITH said, "yes, actually for both of us. With that provision both of us could handle it and I discussed that issue with the other division." CHAIRMAN BUNDE said if it doesn't work, you won't take any money but if it does work you may need it. MR. SMITH said, even if there were small amounts of money, his division could handle it with existing staff. Number 1055 REPRESENTATIVE PETE KOTT, sponsor of HB 54, said he did not feel that CSHB 54(HES) would create a growing bureaucracy. He said, as indicated, there might be one or two individuals put on staff to allocate the grants, monies to the individual school districts and libraries. The staff will be responsible for insuring that the requirements for the application are met. He said he did not think that a great bureaucracy would be growing here. REPRESENTATIVE KOTT said, currently, the DOE has a $1 million grant. He said there is a provision in that federal grant that gives them up to 5 percent for administrative costs. He said passage of CSHB 54(HES) will assist in the state's ability to obtain future grants by getting a program that shows that the state is interested and committed to providing education technology. He said it is his understanding after talking to potential recipients of grants that one of the first questions asked is what the state's interest is and what is their level of commitment. He said having this structure in place sends a message out there. He said the U.S. Office of Education has an annual challenge grant that is available and said the state of Alaska has not received it for three years because we don't have the interest or intent out there. He said this fund would resolve that particular issue. Number 1154 REPRESENTATIVE PORTER asked if CSHB 54(HES) gave DOE the ability to utilize the fund for necessary training or would that have to be something that would be added. REPRESENTATIVE KOTT said he believed that the subcommittee addressed this issue. Number 1173 REPRESENTATIVE GREEN said the subcommittee actually found two references; an early reference was of the opinion that no you couldn't and then later there was a legal reference that said yes you can. Ms. Cook said as long as you don't preclude it within the bill itself stating that it cannot be used, then it can be used. Number 1195 REPRESENTATIVE PORTER said the chairman of the committee that has the bill, by the executive branch's policy, is the one who has to order the fiscal notes. He would suggest that if it is the intent to move CSHB 54(HES) today, we move it with a qualification on the fiscal notes, that the chairman be allowed to get fiscal notes from the department reflecting (indisc.--coughing) testimony we've heard which he thought would then be a zero fiscal note for the DOE. Number 1220 REPRESENTATIVE J. ALLEN KEMPLEN said the possibility of allowing community centers, recreational centers to receive or apply for these grants from the education technology fund was discussed at the subcommittee meeting. He asked if there was a discussion with the federal government about this possibility. Number 1248 REPRESENTATIVE KOTT said no, not to that particular issue. Some of these grants do come with strings attached and would prohibit the money from being allocated down to community centers. He said, after giving it some additional thought, it was his opinion that this particular area of appropriating, allocating grant money goes beyond the scope of his intent in CSHB 54(HES). Number 1278 CHAIRMAN BUNDE called an at ease at 4:13 p.m. and the committee meeting resumed at 4:14 p.m. He said he is hesitant to pass CSHB 54(HES) with a fiscal note that is inaccurate. He asked Mr. Smith if he could provide a fiscal note that would be a zero fiscal note. Number 1294 MR. SMITH said his division's fiscal note was zero. He said the other division's fiscal note, the Division of Teaching and Learning Support was originally $120,000. He has discussed this issue with the director of the division. He said as long as DOE knows that administrative costs can come out of the grant or endowment, they could provide a zero fiscal note. Number 1327 CHAIRMAN BUNDE said it is the chair's intent to write a zero fiscal note for the Department of Education including the Division of Teaching and Learning Support and the Division of Libraries, Archives and Museums. Number 1332 REPRESENTATIVE TOM BRICE made a motion to move CSHB 54(HES) with attached zero fiscal note or fiscal note as corrected by this committee. Number 1340 REPRESENTATIVE VEZEY objected to the motion. He said his objection is no comment on the role of technology in our society and in our educational process. He said he has some interest in organizational structure, particularly in business organization, and said he believes that we are going, completely, in the wrong direction. He said the state of Alaska and the United States government have spent considerable time and effort, over the last 200 years in the case of the federal government, creating institutions that can provide public service. He said by trying to create an organization within the state of Alaska, we are creating a government entity that can do, with all the efficiency of government, that which can be currently be done under our non- profit corporation statutes. He said we recognize that our civic organizations provide the community greater efficiency. He said he did not feel that the organization of this fund has been thought out. He said he could not help but think that the idea is to create a bureaucracy that can request more funding. Number 1418 REPRESENTATIVE PORTER said he did not disagree with a lot of what Representative Vezey said. He said he was particularly encouraged by hearing the DOE's comments that if it was necessary to increase the volume of personnel needed to implement, not maintain, they would contract for those kinds of services. He said he would not support CSHB 54(HES) thinking that we would be adding permanent, long-term state employees. He said if it turns out that a year or two down the road that is the case, then he would hope it would be revisited. Number 1446 REPRESENTATIVE DYSON said he felt that making technology available in the education process was inordinately important, but the other problem with the issue is the idea that government can come from the people in the sense of being supported by it, such as trust funds. He said he has a problem with trust funds on the government side of it. He said he would pass CSHB 54(HES) out and would spend time weighing the issues before it was voted on the House floor. A roll call vote was taken on CSHB 54(HES). Representatives Bunde, Green, Porter, Brice, Kemplen and Dyson voted yea. Representative Vezey voted nay. CHAIRMAN BUNDE announced that CSHB 54(HES) was moved with zero fiscal notes from the House Health, Education and Social Services Standing Committee. ADJOURNMENT There being no further business to conduct, CHAIRMAN BUNDE adjourned the meeting of the House Health, Education and Social Services Standing Committee at 4:17 p.m.