HOUSE LABOR AND COMMERCE STANDING COMMITTEE March 4, 1998 3:27 p.m. MEMBERS PRESENT Representative Norman Rokeberg, Chairman Representative John Cowdery, Vice Chairman Representative Bill Hudson Representative Jerry Sanders Representative Joe Ryan Representative Tom Brice Representative Gene Kubina MEMBERS ABSENT All members present COMMITTEE CALENDAR CONFIRMATION HEARING: COMMISSIONER OF DCED Deborah B. Sedwick - CONFIRMATION ADVANCED PREVIOUS ACTION No previous action to record WITNESS REGISTER DEBORAH B. SEDWICK, Commissioner-designee Department of Commerce and Economic Development P.O. Box 110800 Juneau, Alaska 99811-0800 Telephone: (907) 465-2500 ACTION NARRATIVE TAPE 98-24, SIDE A Number 0001 CHAIRMAN NORMAN ROKEBERG called the House Labor and Commerce Standing Committee meeting to order at 3:27 p.m. Members present at the call to order were Representatives Rokeberg, Cowdery, Hudson, Sanders, Ryan and Kubina. Representative Brice arrived at 3:30 p.m. CONFIRMATION HEARING: COMMISSIONER OF DCED Number 0045 CHAIRMAN ROKEBERG announced the committee would consider the nomination of Deborah B. Sedwick as Commissioner of the Department of Commerce and Economic Development. They would not vote on the nomination but would pass it out of committee for the full consideration of the House and Senate. (Ms. Sedwick's resume was provided to the committee.) Number 0106 DEBORAH SEDWICK, Commissioner-designee, Department of Commerce and Economic Development (DCED), came forward to testify. She noted she was delighted to be there with the committee and looked forward to working with all of the members. She stated: The Commerce Department is a generator of revenue to the state directly through program receipts and indirectly through business investment and economic expansion, as you well know. Commerce is the only department whose primary function is to advocate for business in Alaska. And we do that with a budget that has shrunk over the last couple of years by nearly 50 percent. Small business is the backbone of Alaska and my department will work closely with Alaska's ... small businesses to grow our ... economy and create jobs for Alaskans. Because we are a resource-based state we need to promote these industries in a fiercely competitive global marketplace. My job is about jobs, working with the private sector so they have the business and regulatory climate to create those jobs. The Knowles Administration has made economic development a very high priority. Unfortunately, all of our efforts could come to a stop. Under the current House Bill 400, DCED and DCRA [Department of Community and Regional Affairs] would be combined. It is similar to what we looked at two years ago, and without savings, and we believe it is very harmful to our smaller rural communities, and it mixes our messages between what Commerce and Economic Development does and what DCRA does. Number 0211 My philosophy about my job as commissioner is very hands- on, while giving due respect to the professionals over which I am responsible. As you know, I came in initially to combine international trade, economic development and tourism. I have been very involved in those areas and I feel like that is the economic development driver, and I ... continue to be very involved in those areas. I have a strong commitment to ensure that the good things that have been started, such as outreach to the business community to help "Alaskanize" jobs and encourage employers to hire welfare recipients, will continue. I have many plans on how we can continue this momentum. Everything we do is in partnership with others, our private sector and our small businesses through Alaska, you in the legislature, and the list goes on and on. It is my desire to work closely with you on this committee to keep you informed about our programs and our progress. I look forward to the opportunities and challenges that lay ahead for all of us. Number 0296 CHAIRMAN ROKEBERG opened the hearing up for questions. Number 0345 REPRESENTATIVE BILL HUDSON stated he thought Commissioner-designee Sedwick was an outstanding choice, noting he liked what she said about small business. He said over the years he has been involved in government, they have tried a number of times to develop some advocacy for regulatory reform. He indicated he hasn't seen as much of a commitment to working on the behalf of small business coming from DCED as he would like to see. He asked for some expression from Commissioner-designee Sedwick as to whether or not she saw her role, not only in economic development, expansion of business and attracting business to Alaska; but also in this special advocacy for small business. He asked her if she had followed that over the years and did she have a statement to convince him she would be a strong advocate on behalf of small business, noting he was now speaking about ADEC (ph) and some of her sister agencies. He said he sees her and her role as sort of business's advocate. Number 0438 COMMISSIONER-DESIGNEE SEDWICK said she is very serious in her comments about small business as the backbone of Alaska. She referred to her private-sector background as a small businesswoman, noting she believes that one, two or five jobs are very valuable for most of the communities in Alaska because these communities are small. For Alaska's bigger industries, she thinks it is important to have a fair and reasonable regulatory climate so that Alaska's industries know the rules are not going to be changed in midstream. She commented, however, there are a lot of things outside what state government can do in terms of what these companies do, giving the examples of oil companies and major mining companies in Alaska. Commissioner-designee Sedwick noted it is the regulatory climate, adding, "And having - having them have access to us and Commerce being the advocate for those businesses with ... our other sister agencies." Although they are certainly respectful in the DCED to the other departments, they recognize that sometimes their opinions are a bit different in terms of how to go about the things they need to do. She said she is certainly ready and willing to talk to DCED's sister agencies when the DCED feels like the regulatory climate needs to be examined or changed. She thinks that, by and large, the kind of work they can do with small businesses in Alaska is really what is going to make a difference in terms of their community. She gave an example on the tourism side, noting that even though tourism marketing is growing in Alaska on the whole, it is mostly tied to the cruise ship industry and the people on the road systems are having some difficulties. She said they looked at this mid-year and realized they needed to make some changes. Number 0589 COMMISSIONER-DESIGNEE SEDWICK complimented her group for recognizing a problem, trying to aggressively examine that situation and figure out what they can do. They went to the communities in Southeast Alaska, people along the Alaska Marine Highway System and along the road system. She noted there was, therefore, a lot of private sector involvement - gathering funds, making a real push in terms of the marketing of the Marine Highway System and the road system - to disburse those dollars that come in to Alaska to the communities. She said she thought they needed to be aggressively looking on behalf of Alaska's small businesses where ever they can. She thinks that it is going to be very important to herself and her group to be out and about in the state as much as possible. She indicated DCED is still working hard with Governor's Marketing Alaska initiative, noting there was a small business sector. She said they evaluated the small business programs during the last year and are doing much better coordination. She said they are currently working on a business matrix so that a small businessperson could go access the Internet and go directly to the his or her area of interest, which would show, across department lines, what is available to help that business person. Obviously, she said, there's a lot of work to do, noting they are trying to cut down on the amount of paperwork and forms people have to fill out. She stated she could certainly commit to Representative Hudson that she and DCED would be very aggressive in terms of Alaska's small business people. Number 0724 REPRESENTATIVE HUDSON indicated Representative Jeannette James has become very involved in this area of regulatory reform, noting it has been an ongoing issue. He recommended Commissioner-designee Sedwick make an early contact to Representative James to find out Representative James' direction and how Commissioner-designee Sedwick might be able to aggressively advocate with her. Number 0765 REPRESENTATIVE JOHN COWDERY said he met Commissioner-designee Sedwick last year, lunched with her once this year, and noted he gone over to DCED she had been kind enough to brief them about the whole department. He said they spent the major part of an afternoon there. He stated he also thinks Commissioner-designee Sedwick is a good choice and asked her how many layers of management were there between her and the "front line." Number 0814 COMMISSIONER-DESIGNEE SEDWICK indicated the sequence went herself, Deputy Commissioner Jeff Bush, the division directors, then the people in the front line. She stated, in reality, she thinks she has worked very closely with her former divisions of tourism, trade and development, and is now closely learning the other divisions she did not previously have responsibility for. Number 0854 REPRESENTATIVE COWDERY asked what the ratio was between managers and the people who were actually doing the work. Number 0873 COMMISSIONER-DESIGNEE SEDWICK used the Division of Tourism as an example, noting there was a secretary; two or three people working for tourism, trade and development, who were partially working for tourism as well; the two professionals; and the director, Tom Garret. She noted it would be five people, then Deputy Commissioner Bush, then herself. She said the Division of Tourism and the Division of Trade and Development are both very small, stating they were DCED's advocacy marketing arm for Alaska. She pointed to the economic development side, noting there was one fisheries expert and two mining people, one in Southeast Alaska and one in Fairbanks. Number 0964 REPRESENTATIVE COWDERY he asked her if she knew what percentage of her budget was spent on administration. Number 0960 COMMISSIONER-DESIGNEE SEDWICK stated she did not know, but could certainly find out. Number 0964 REPRESENTATIVE COWDERY asked if she had performance or accountability mechanisms in place in DCED. Number 0979 COMMISSIONER-DESIGNEE SEDWICK replied she was not happy with the current system, indicating they have been researching what their counterparts in other states use over the last couple of years. She indicated this is difficult to measure in economic development and trade because things they have been involved in might not happen until three or four years down the road. She also indicated that many things happen as the result of the efforts of a group of entities, mentioning in Anchorage it would be Anchorage Economic Development Corporation, Anchorage International Airport, for example. Commissioner-designee Sedwick said one of the things she thinks happened this year was that DCED received funds from the folding of the Alaska Center for International Business at the University of Alaska Anchorage and she said DCED now has a research arm in its shop. She said one of the three major functions of the research arm is the internal evaluation of DCED's programs. By the end of this fiscal year (FY), she stated DCED will have those systems in place. She commented that for about 2 1/2 years DCED has had a database which will allow them to track the activity of tourism, trade and development, finding out if the kinds of things they have been doing in Alaska and oversees were of benefit to the people they were working with. She said she thinks they have made headway, but said it is certainly something DCED would like to do better, and is a personal priority of hers. Number 1094 REPRESENTATIVE COWDERY commented that he had phoned Commissioner- designee Sedwick that morning regarding HB 412 [HB 412 - Transfer Railroad Land to Whittier]. He noted he called to ask if DCED's tourism group had been involved, or was planning to be involved, because there was going to be 1.5 million or more people visiting that "facility" when the road was done, indicating the number of cars would be 5,000 to 8,000 a day, mostly tourists. He indicated they were trying to get facilities in Whittier to accommodate these visitors. Representative Cowdery asked, "In your departments -- if you've looked into this or the aspects or preparing for how you could help this accommodate the tourism industry (indisc.) the state." Number 1178 COMMISSIONER-DESIGNEE SEDWICK replied that she and Mr. Garret have both met with the Whittier people, and in terms of DCED's work with them, they are meeting with the other communities and the other people individually who have gone through something similar in the last five years. She indicated she asked the Whittier people to get in touch with communities like Seward and Valdez which have been impacted heavily by cruise ships, et cetera, so that the Whittier people could get an idea of what they might want to begin with. She noted DCED would be meeting with the Whittier people after the legislative session. She noted the Division of Tourism lost its planner last year and she said she finds over and over again that it is very difficult for them not to have that person. She noted she had been speaking that morning with a Representative about the Wrangell-St. Elias National Park and Preserve and the number of people going there, noting that the Department of Transportation and Public Facilities (DOT/PF) has done an incredible amount of work on that, but she thinks the tourism planner looks at those same issues in a very different light in terms of the community as a whole. She said, in answer to Representative Cowdery's question, that yes, DCED is working with the Whittier people, and will continue to do what it can. Number 1253 REPRESENTATIVE COWDERY asked Commissioner-designee Sedwick for her position on HB 412, the issue raised in the House Transportation Standing Committee that day, which would have worked out some arrangement taking land from the Alaska Railroad Corporation (ARRC) and giving it to the City of Whittier so that the city could put in some facilities like restrooms and parking. Number 1302 COMMISSIONER-DESIGNEE SEDWICK replied she would prefer not to comment on the specifics since she had not seen the bill, but she does think it is important that they work with the community. Obviously there will be very big changes there, she knows that some people are very happy about those changes and some people aren't. She noted she is happy the road is going through; she thinks it is an area of the country she would like to see be more accessible, but she also thinks they need to be sensitive to the locals. Number 1332 REPRESENTATIVE COWDERY commented that his concern was they don't have the impact statements or anything there, indicating the road will be open in 2000. He stated he is fearful there will be another lawsuit to stop the project until they get some of those questions answered, and said that was the reason for his call that morning. Number 1377 CHAIRMAN ROKEBERG commented that DCED has responsibility for a number of independent agencies, one of which is nominally ARRC. He asked, "I was going to ask you about how you perceive your relationship as the department leader with these independent agencies, many of which are quasi-(indisc.) in nature. And so how do you perceive your ability to either influence and/or guide those departments properly?" Number 1425 COMMISSIONER-DESIGNEE SEDWICK stated she was on the boards of ARRC, Alaska Industrial and Export Authority (AIDEA), Aerospace Development Corporation (AADC), noting it was 16 or 19 boards and commissions total. She indicated her place on ARRC's board is designated in statute, and she is sitting on AIDEA's board because she thinks it is a very serious responsibility for the commissioner of DCED, although it is not specified in statute. She said she also thinks AADC is very important, and Mr. Bush, her deputy commissioner, is sitting on that board. She indicated it is important to recognize that these entities have their own boards, but it should be kept in mind that DCED is the marketing and advocacy arm for Alaska and that she is going to "weigh in" on issues important to Alaska. Commissioner-designee Sedwick used the example of the Alaska Seafood Marketing Institute (ASMI); she feels fish is a resource that belongs to everyone in the state of Alaska, commenting, "And so as the main cheerleader for Alaska, those resources belong to us." She said once the fish get out of the water and go into private hands, they go all over the world but they are still Alaska's natural resource. Therefore, she indicated she is going to weigh in on issues which she thinks belong in the public domain as it relates to natural resources. She commented that in those areas such as Alaska Public Utilities Commission (APUC), the executive director meets with DCED every week in their directors' meetings, indicating she recognizes APUC has a board which deals with its internal situation but that there might be issues where APUC might come to the commissioner for final determination or something similar. She noted DCED is available, but she is not afraid to get out there and weigh in. Number 1556 CHAIRMAN ROKEBERG confirmed that there were directors' meetings where the directors of these independent agencies get together with Commissioner-designee Sedwick's entire executive committee (indisc.). Number 1561 COMMISSIONER-DESIGNEE SEDWICK responded in the affirmative, noting they met once a week and those entities were "at the table" with them. Number 1568 CHAIRMAN ROKEBERG commented that Commissioner-designee Sedwick, due to the uniqueness of her position, had an extraordinary opportunity to provide some leadership between what the community of Whittier needs in terms of its tourism development, on one hand, and ARRC, which holds the land in question, on the other hand. He noted this is in Representative Kubina's district and said he is sure the minority leader would want to follow up on that with Commissioner- designee Sedwick. Chairman Rokeberg stated she was uniquely situated to solve some of these major problems in a very rapid manner, noting this was a "golden opportunity" for her. Number 1604 REPRESENTATIVE JOE RYAN congratulated Commissioner-designee Sedwick, noting he and the Governor absolutely agree on one thing. He said he thinks she is a marvelous choice for the job, indicating he had worked with her while she was the assistant commissioner of DCED and was working with international trade. He stated she has his confidence. He commented that legislators, being elected and representing a certain amount of people, work within an organization but still have a lot of autonomy to do and say what they choose. He said that she, on the other hand, works for an elected official who sets a policy for the state, indicating that the Administration's side was a lot different from the legislature's in these board meetings. He asked if she had much autonomy to move a board in the direction she thought was best for it, or did she basically try to follow in the direction of the Governor's plans. Number 1650 COMMISSIONER-DESIGNEE SEDWICK gave the example of the AIDEA board, indicating she has been on that board for most of her 2 1/2 year tenure with DCED, commenting that she has only been to one ARRC board meeting and that was about a month previously. Commissioner- designee Sedwick stated she does not remember talking specifically to the Governor about any issues. She said she and the Governor are very much in sync, from a philosophy standpoint, in terms of business and their opinions about business, noting she feels she has a lot of autonomy and authority to do what she thinks is right. She recognizes that Governor Knowles is her boss, and guesses that if she was concerned about an issue she might discuss it with him, but has not been in that position in the last 2 1/2 years. She indicated the issues concerning AIDEA have been fairly straightforward. Commissioner-designee Sedwick said she would not hesitate to forcefully express her opinion if she disagreed with the Governor, and she thinks he expects her to weigh in on issues where they disagree; he wants to hear what DCED's issues are from DCED's perspective, but she noted he has been a small businessman and she thinks their philosophies are very similar as it relates these issues. Number 1736 REPRESENTATIVE RYAN commented that he and Representative Cowdery took a business trip that year to the Pacific Rim, noting he thinks they filled her in on this when she was running the "Division of International Trade." As an issue of protocol, he said, they were treated extraordinarily well for "visiting firemen" and he commented on the prestige attached in other countries to elected officials. He noted DCED's office of international trade has in- country people hired to represent the state of Alaska and he commented that this office used to be under the Office of the Governor. Representative Ryan said being under the governor's office, or representing the governor per se, would possibly give these people much more ability to reach more influential people. He asked for her feelings as commissioner on restructuring this office so it did represent the governor's office so the representatives would be able to represent the governor of Alaska rather than the commissioner of DCED, indicating these representatives would benefit from that protocol. Number 1814 COMMISSIONER-DESIGNEE SEDWICK replied that she understood the office of international trade to have been more protocol-and policy-driven when it was under the Office of the Governor than today, where she said it is much more business-driven and driven by the state's private sector in terms of what the private sector wants to do. She said that makes more sense to her from a business standpoint. Also, she said she has spent the last 2 1/2 years combining tourism, trade and development; she thinks it is working very well and that it is really important to have those advocacy and marketing arms together, noting it is a combined group in every sense of the word. When they go overseas they don't think about trade and at some other time about economic development and tourism, it's all "at the table" at the same time. She stated she thinks it works very well and she would like it to stay the same. She indicated she certainly respected Representative Cowdery's and Ryan's thoughts about the departmental location of the office of international trade and development, and stated she appreciated the dialog. Commissioner-designee Sedwick commented that if changes were to be made in the future, she feels like the right people would be at the table together making that decision, as opposed to what was happening with HB 400. Number 1885 COMMISSIONER-DESIGNEE SEDWICK related that when she came to her job, the program manager on the trade side told her having the Office of the Governor on his business cards did give the cachet Representative Ryan and Representative Cowdery said was important. She said her response to the program manager was to tell him to put the Office of the Governor on his card. She noted they work very closely with the governor's office on a regular basis and she did not think it was inappropriate for that extra cachet to be there, so the cards for DCED's trade people have said "Office of the Governor." She said, however, in terms of management and structure, she thinks having the office in DCED is wonderful. She noted, again, that she was grateful for the kind of dialog which is inclusive of the department because it was really valuable that if changes were made they craft them together, indicating the people in DCED feel like they are in the trenches, and she said she values the fact that they are talking about these issues more than she can tell them. Number 1940 REPRESENTATIVE RYAN stated, "You can't make a silk purse out of a sow's ear but you can dress up an old dog." He said that cachet is of a great deal of importance in the Far East, stating, "Perception is everything, and people are very cognizant of the fact of what power structure you fall under, you represent the governor ... it opens a lot more doors than otherwise," and he indicated he approved of Commissioner-designee Sedwick's solution to this situation. Number 1970 CHAIRMAN ROKEBERG noted Representative Cowdery's and Ryan's trip referred to was personally paid for by the Representatives, not the state of Alaska. Number 1976 REPRESENTATIVE GENE KUBINA stated he was encouraged to hear the positive comments about one of the Governor's actions, and he appreciated hearing that bipartisan support for DCED. He indicated DCED has a number of boards that are very important to Alaska. Representative Kubina commented on a fish symposium in Anchorage that had occurred the previous week, mentioning an interesting newspaper article he had read. He related that a Norwegian speaker at the symposium had been applauded, although Representative Kubina indicated Norway was almost Alaska's sworn enemy in this area and has taken a lot of Alaska's market share. He related the people applauded this speaker because he told the audience that Alaska wasn't doing what it needed to do; the speaker commented that Norway had probably spent something over $4 million this year to market its fish while Alaska was declining in its marketing ability. Representative Kubina said Alaska was doing the same thing in its tourism marketing budget, commenting that the majority of the legislature was elected on cutting the budget, and he indicated that those of them who think they should be spending money in other places don't have the votes to carry. He asked Commissioner-designee Sedwick how she dealt with the challenge and how did they "get back on top" with the declining budgets, indicating he assumes she would like to spend more money in both of those marketing areas. Number 2053 COMMISSIONER-DESIGNEE SEDWICK replied she said it was very difficult for her to understand. She recognized that the legislature feels like it has responsibilities. She noted she feels like DCED is the seed planters and she equates seed planters with her college education: she assumed by spending that money and becoming better educated that her opportunities in life would be far greater. She thinks they are just seeing "the edge of the sword" in terms of not spending the money needed for seafood marketing and tourism, commenting on the discussion of the work needed in Whittier. Commissioner-designee Sedwick stated the Governor's philosophy about doing development, doing right, is very important, and she thinks they all agree that is what they want to do. She said one reason she is in this job is because she would like her children who are in college and graduate school to come back to Alaska, indicating she doesn't think the same opportunities exist for them that existed for her when she came back from college. She stated they have to balance creating an environment they are still happy with, yet allowing development so that there will be jobs for others. Number 2132 COMMISSIONER-DESIGNEE SEDWICK indicated there was a problem with eliminating some of the budgets which would help Alaska's economy grow in the long run, commenting that it was already starting to be seen with tourism. She noted Princess Cruises and Holland America Line spent $25 million dollars last year, which, she said, is why the cruise industry is growing, and if the numbers for these companies are down, the companies can just spend more money. She said spending more money wasn't the only answer, but because Alaska was facing global competition, she stated, "If we don't market our fish, if we don't market Alaska as a destination, in two or three years -- I mean we all travel outside and see not only are - are states and countries advertising, but we see cities and regions advertising." She said she understands the legislature's job is very difficult, but she feels like, as the seed planters, the money DCED spends will come back over time. She indicated DCED also needs the money to be able to have the planners for tourism so that DCED can look at, and be involved in, some of these areas in advance. She said it is not enough that DOT/PF, for example, is going forward with Whittier. She said they have a responsibility to the community and the state as a whole, so it is difficult and challenging. Number 2188 REPRESENTATIVE KUBINA commented he just hoped that Commissioner- designee Sedwick, as commissioner, has the credibility with the body so that she can help guide them where they need to go. Number 2203 CHAIRMAN ROKEBERG commented that the Division of Insurance was under Commissioner-designee Sedwick's auspices, noting the committee dealt with a lot of insurance legislation. He said there have been a number of health insurance bills in the last three or four years which he believes have impacted, or could impact, the availability of health insurance for the individual and small businessperson in Alaska. Chairman Rokeberg commented that this is because most Alaskans' health insurance is currently provided through either self-insurance plans such as the state of Alaska's, and/or large corporate group plans or union plans which include devices such as the preferred provider option (PPO) style of insurance underwriting, with what he would call modified managed care principles, et cetera. He indicated the committee has heard testimony stating that insurance legislation moving through the committee covers as few as 30 to 35 percent of Alaskans in terms of health insurance because of the self-insurance provisions of ERISA (Employee Retirement and Income Security Act). He said, therefore, it is his personal policy for this committee to do everything possible to encourage the entry of underwriters into the state of Alaska and not discourage them. He asked Commissioner-designee Sedwick if she had any comments on the availability of health insurance, and the relationship of DCED and the Division of Insurance. Number 2266 COMMISSIONER-DESIGNEE SEDWICK stated she did not feel qualified to answer that question at this point, but she agreed it was a problem. She indicated insurance is one of the major problems she hears about on a regular basis from small business people, and she thinks that ties with DCED really focusing on the small businessperson. She stated she has a great deal of confidence in Marianne Burke, the director of the Division of Insurance, who she said agrees that this is an issue to be examined. She indicated she would need to get back to the chairman with a response to that specific question. Number 2298 CHAIRMAN ROKEBERG noted his question was more rhetorical and instructive than anything else. Mentioning independent agencies, he noted she has been on AIDEA's board for the last couple of years. He commented he had written a letter this January to Randy Simmons, AIDEA's executive director, with some concerns he had about AIDEA's policies and activities in the last few years. One question to Mr. Simmons was, "Does the agency policy for not allowing an equity extraction by a business limit loan underwriting?" He said Mr. Simmons responded, "Equity extraction is allowed if the purpose of the extraction is for funds going back into the primary business and will enhance economic development and job creation. We believe this policy adds flexibility to the loan underwriting process." Chairman Rokeberg commented that this was "all well and good" but he indicated it has been brought to his attention by individuals in the banking industry, particularly in the commercial areas of the state, that AIDEA has not allowed some of those equity extractions. He clarified that he meant use of funds for down payment for business expansion. He noted this seemed to be at cross purposes, commenting, "If you have to expand, you need to ... purchase an asset - for example, real property - which would be the security for the loan and if you're not allowed to use some of your assets to make a down payment, how on earth are you supposed to make a deal unless AIDEA's got a 100 percent loan program, which I don't think they do?" He asked Commissioner- designee Sedwick if she had any comments or if she was familiar with this particular issue. Number 2369 COMMISSIONER-DESIGNEE SEDWICK said she guessed she would have to know more of the details specifically. Number 2375 CHAIRMAN ROKEBERG commented it was a policy thing in terms of the equity extraction. He asked if this issue had come up during her tenure on the board. COMMISSIONER-DESIGNEE SEDWICK said she had not dealt with it. Number 2380 CHAIRMAN ROKEBERG said he was also concerned about the loan production, noting according to his information, he thought only 12 loans had been underwritten in 1997, He said Mr. Simmons responded was that there had been 25 loans totaling $48 million. Chairman Rokeberg noted he was glad to hear this because he had been concerned that the loan portion of the asset portfolio of AIDEA is seemingly shrinking, stating, "And therefore we need to place more loans to generate the income, if you will, our quasi-public net profit issue -- annual amount of - of net to the corporation, so it's available for expenditure and reinvestment by the corporation and also to provide an additional dividend to the general fund now." He asked Commissioner-designee Sedwick if there had been any changes in the marketplace and/or from AIDEA policy in the last year or so that could influence the number or the style of loan underwriting in the state. Number 2423 COMMISSIONER-DESIGNEE SEDWICK stated she thought some of the lending institutions have been a little more active, noting the loans come through the local lenders. She added also that as they mature as an entity, they are now going back to those lenders, examining ways they have done business in the past and looking at how they can do better, and work more closely with those lenders. She stated there are some things currently "in the works" the board has been discussing as a result of the workgroup formed with the lenders. Number 2472 CHAIRMAN ROKEBERG said, "Now Commissioner, I'd like (indisc.) you to ... [TESTIMONY INTERRUPTED BY TAPE CHANGE] TAPE 98-24, SIDE B Number 0001 CHAIRMAN ROKEBERG continued, "... what you see as, or what would - what would be the obstacle between merging the economic development activities in your current department and the Department of Community and Regional Affairs?" He said it seems to him there is a certain amount of duplication, or more frankly, noting he did not think he had truly adequate knowledge, he thinks DCRA takes a whole different approach and he said its definitions of economic development are certainly different from DCED's. He commented he thought DCRA was actually "missing the boat," indicating he thought those functions should be merged because DCED has more expertise and also a different attitude. He said he had asked the commissioner of DCRA for an example of economic development in Bush Alaska and the commissioner told him it was like building a teen center in Kotzebue. Chairman Rokeberg commented that that was not economic development by his definition. The chairman also noted substantial funds are funneled through DCRA, including federal funds, and he indicated it seemed to him that it would be a much more efficient, better use of assets if the economic development function was in one department of state government. Number 0064 COMMISSIONER-DESIGNEE SEDWICK indicated she thought the missions of the two departments were very different and that both missions were valid. She stated DCED is economic development for the state as a whole. She noted they all want to consolidate where they can, cutting costs so that they're more efficient, but she said the consolidation just takes two entities and brings them together without looking at programs. She indicated that if they were going to consolidate, there were programs that they were just not going to be able to do the way the consolidation was currently written, noting, "There's the elimination of a commissioner, a deputy commissioner ..." Number 0103 CHAIRMAN ROKEBERG stated his question was posited without going into HB 400, and he asked her if she could restrict her comments to any potential merger between the functions of economic development in those two departments on a stand-alone basis. He stated, "Whether it's something you would want to do, or be more efficient at doing it or - or how those two functions blend or should be separated, that's the issue I'm getting without talking about the larger issue." Number 0124 COMMISSIONER-DESIGNEE SEDWICK indicated she had really focused on DCED in the past couple of years and is not familiar with all of DCRA's programs, but she would certainly welcome the bipartisan effort examining these two departments, noting she doesn't see the overlap in terms of programs at this point. She said, for example, even though the ARDORs (Alaska Regional Development Organizations) belong to DCRA, DCED works very closely with the ARDORs. She thinks the ARDORs' emphasis on the rural areas, the local people and the capacity building that goes on in the rural areas, is really valuable for DCED, because DCED knows, she said, "What we hope to have happen ... and what potentially could happen, but we also need to know that the capacity is there in the rural areas for that to happen, because it's got to come from both directions, or probably nothing is going to happen." Therefore, she thinks the economic development programs that potentially could be merged are very different in scope at this point. She said she would hope that in a merger "the players would be sitting at the table together looking at programs." She stated she does not see how they can merge and do everything they are currently doing; if that is what is going to happen, she thinks they have to make some of those tough decisions in terms of programs, and she would like to be able to do it together. Number 0196 REPRESENTATIVE COWDERY said he thought DCED's deputy commissioner, Jeff Bush, had testified very strongly against a merger bill before the committee. Representative Cowdery noted the price of oil was down about $6 a barrel, commenting that there were going to be some budget cuts, and he indicated a group of legislators thought a merger might be the best way to save some money without impacting DCED's programs as much. He said if there was a merger, could she be commissioner of the new department; did she think she was capable of doing that and working out any possible problems in that area. Number 0239 COMMISSIONER-DESIGNEE SEDWICK replied that if the merger was completed as currently written, she did not know how she could do that job; she did not know how one person could do that job. She noted the deputy commissioner would be eliminated, stating she thought that meant there would be one commissioner and one deputy commissioner. She asked if there was one special assistant in that configuration. REPRESENTATIVE COWDERY indicated he did not know. CHAIRMAN ROKEBERG commented that the committee had not reached that point in the testimony and did not know any more than she did. Number 0259 COMMISSIONER-DESIGNEE SEDWICK said she thought it would be very difficult, and most critically, she thinks it would really dilute what DCED wants to do. She commented that DCED has many various serious things to accomplish in the next couple of years in the areas of international trade, tourism, seafood and minerals. She stated, "We need to let the world know that we're open for business and we have these areas that are worth pursuing, and I think we've come a long way in the last couple of years, and I think to dilute that at this point ... would be very detrimental, because, again, I think we're the seed planters." She said, on a personal level, she thinks they have divided up the state for a lot of different reasons, mentioning the Venetie case and the subsistence issue. She noted she had heard so many comments in the last year or two about Natives and whites, rural and urban, stating they haven't had those conversations in a very long time and she thinks a lot of people are feeling disenfranchised. She stated, "I feel like, in answer to your question, Representative Cowdery, I think it would be darn near impossible. I know that the savings aren't there and I think that's what ... you were alluding to, that there are a substantial amount of savings, a million dollars within the commissioner's office -- I'm the highest paid commissioner -- I'm the highest paid employee in Commerce and I'm making $84,000 a year, I can guarantee you that there's not a million dollars in savings there. But I - I also understand the issue at hand in terms of crafting a budget, and I feel like ... having the players ... sit down is where those savings are going to be realized, without compromising the programs that DCRA has and Commerce has that we all recognize are important." Number 0344 REPRESENTATIVE COWDERY indicated that the total cost to the state for Commissioner-designee Sedwick's position was more than $84,000 per year. Number 0350 COMMISSIONER-DESIGNEE SEDWICK replied she thought it was $110,000, noting that still did not get them to $1 million in her department, in her commissioner's office. Number 0358 REPRESENTATIVE COWDERY, returning to the budget situation, indicated her suggestions would be very helpful when the legislature came to the budget decisions. He asked her what they should cut in lieu of merging, noting that would probably come up and she should be prepared to answer. Representative Cowdery indicated Commissioner-designee Sedwick had been with DCED a couple of years, and asked if he was correct in thinking that about 12 people had left trade and tourism in the last year or so. Number 0410 COMMISSIONER-DESIGNEE SEDWICK replied that, on the trade side, there were 3 people, and there had been a 100 percent turnover in the past 12 months. She said the manager of the trade program, as well as the two trade specialists, changed in the last year. Number 0427 REPRESENTATIVE COWDERY confirmed that only three people had left, not a dozen or so. Number 0430 COMMISSIONER-DESIGNEE SEDWICK said, in terms of the total program, she did not think there had been 12 but she did not know the exact number. She noted they have lost people through the budget every year since she took over tourism, trade and development, in each of those areas but she did not think the number was 12. Number 0446 REPRESENTATIVE COWDERY asked why those people left, questioning whether it was for greener pastures or because of morale problems. Number 0454 COMMISSIONER-DESIGNEE SEDWICK said she thought it was a combination of many things. She noted morale was low, referring to an effort the previous year to balance budget in which every job but one was cut out of the budget, although she indicated the jobs were restored. Mentioning her almost three years in state government, she said she thinks it is very difficult for professionals doing a very good job to face the potential disappearance of that job, even though what they are doing is very valuable. Commissioner-designee Sedwick also noted circumstances were very different when she first came to that job. She said Max Hodel was the director of the Office of International Trade and Development, and he was overseas; she indicated the staff was basically operating independently on a day to day basis and the role of acting program manager was being rotated between people. She said then she came in and made these big wholesale changes. She broke down the walls, put the budget units together, wanted people to be communicating well, and she said there was some internal agreement between these three people, indicating she thought the people in question left because of a combination of all of those things. She said the manager left for California for personal reasons, and the other two people retired. Commissioner-designee Sedwick stated she was very sorry to lose all three of them because they were incredibly talented, she thinks they did a great deal for the program and brought it a long way, but she said she thinks it was inevitable, noting sometimes change is inevitable. This is a new day and time, they have to deal with budget realities, and now it is time for her to grow a new program under her management. Number 0555 REPRESENTATIVE COWDERY asked her if she thought she had replaced some of the people who left. Number 0560 COMMISSIONER-DESIGNEE SEDWICK replied they had replaced two of the three and there would be one more person. Number 0564 REPRESENTATIVE COWDERY asked if the replacements were as qualified as the originals. Number 0567 COMMISSIONER-DESIGNEE SEDWICK responded that the replacements were qualified in a lot of ways, indicating she thinks it is always tough to lose someone who is smart, working hard and who has a lot of institutional knowledge specifically about Alaska issues. She stated, "The people that we have hired, I think are smart and hardworking, and although not as knowledgeable because they haven't been in ... the department and the division, bring those same kind of skills that those other people had, that, frankly, when they started, I'm sure, didn't have those skills either." She commented that, while she was very sorry to lose those other people, she is very happy with the people they have found, noting she feels like it is an opportunity for them to move forward. Number 0602 REPRESENTATIVE COWDERY commented that she had been the director of the trade and development section and had recently taken over as commissioner. He asked her if she thought, before she became the commissioner, that DCED had been running in good shape, and did she plan to do anything differently in her tenure from the two previous years. Number 0635 COMMISSIONER-DESIGNEE SEDWICK answered in the affirmative, commenting she thought every commissioner put his or her own stamp on a department and she planned to do that as well. She indicated she previously mentioned she was a hands-on person and stated she planned to be very involved in tourism, trade and development. She said, "I believe that our business advocacy arm has very good directors and it's my responsibility to make sure the world knows that these departments are running well, but I think that the ... marketing and the advocacy arm is really what Commerce is all about." She gave the example of a current project, noting it is the kind of thing she hopes to do in the future. She called it "marketing Alaska through the permanent fund," although she said that would not be the formal name because "it would scare everyone to death." Commissioner-designee Sedwick indicated the project was an attempt to use the stock Alaska owns in many different companies as way to gain access to those companies. She said this would get them "in the door" with opportunities to talk to major mining companies, oil service field companies, et cetera; she indicated these are the companies doing business in Alaska that the state would like to see increase their business, and the companies outside Alaska who need to be doing business in the state, and she said she thinks the state needs to be leveraging that. Number 0700 COMMISSIONER-DESIGNEE SEDWICK also noted Alaska owns hundreds of apartment complexes all over the country and they need to do some marketing, using the example of the welcome bags these complexes put out. She stated it might be as simple initially as a vacation planner with a can of salmon, indicating she did not know what it would lead to. She noted the state also owns many interests in many major malls through out the country, naming Tysons Corner Center as a well-known example. She indicated DCED is currently working with managers in those malls to discuss leveraging the dollars they have for Alaska promotions. She said they are also discussing potentially going across the country from mall to mall, stating, "It may be that Eddie Bauer, for example, is in each of these major malls, so maybe we think about an Alaska promotion with them using the kinds of things that we have." She noted she thinks the permanent fund is a good example of that, and obviously she wants to be very sensitive. She said the permanent fund liked the idea, the permanent fund's board liked it, and a memorandum of understanding was now being done. She indicated the purpose of this memorandum of understanding was so that the permanent fund was convinced DCED understood the sanctity of the permanent fund. She noted DCED certainly does not want the citizens of Alaska to be uncomfortable or to think the department is doing anything inappropriate. Commissioner-designee Sedwick stated, "We need to leverage to our advantage in terms of marketing Alaska, so those are the kinds of things I'd like to get involved in and that's one of the things that we're pursuing." She noted that is the area she is particularly interested in, as well as small businesses across the state. Number 0784 REPRESENTATIVE COWDERY, commenting that he was shifting directions, said that he has always been interested in international trade, and a few years ago he visited the Taiwanese office. He met Ms. Lu Chin (ph) and he thought she was very good. COMMISSIONER-DESIGNEE SEDWICK suggested the name Ida Yao. Number 0806 REPRESENTATIVE COWDERY stated the person he was referring to was before Ms. Yao, noting they had the opportunity and pleasure to meet Ms. Yao on their last trip. He said he found Ms. Yao very knowledgeable and very well-received in the business community. When they said they wanted to do something, Ms. Yao knew exactly who to put them in contact with, and he said she has been very responsive to questions that they have sent. He indicated that the state is receiving all of this for approximately $75,000 a year without extra charges for office space, facsimile machines, et cetera; he thinks it is a great deal. He said Ms. Yao does a great job and whoever chose her made an good choice. He asked Commissioner-designee Sedwick if she had considered doing something similar in Japan and Korea, noting it was something that would be discussed. He indicated he was asking Commissioner-designee Sedwick if she had considered contracting out for that type of arrangement or agreement if things had to be done in budget areas. Number 0883 COMMISSIONER-DESIGNEE SEDWICK said she took credit for hiring Ms. Yao, stating it was one of the first things she did when she "came on board," so she is glad Representative Cowdery is delighted. She said they think Ms. Yao is "swell" in DCED as well. She indicated that if DCED opened offices in the future, the department would clearly use independent contractors. Commenting on the financial situation in Japan and Korea, Alaska's current top trading partners, she indicated she thinks it is very important Alaska maintains those relationships and continues to grow those markets, while it looks at the opportunities in the emerging markets of countries like Taiwan and the People's Republic of China. She noted those markets are very important to them and DCED realizes it can do more with less in an independent contractor situation. Commissioner-designee Sedwick said that because Japan and Korea are Alaska's top trading partners at about $2 billion a year, because these countries are having financial difficulties, and because they are Alaska's economic drivers in terms of oil exports, she thinks they need to be very careful in the next 12 months with those programs. She said the Alaska Seafood Marketing Institute (ASMI) currently has representation in Japan, Taiwan and China, noting ASMI has not been able to have representatives in those countries before because of its federal program. She said that because of this, DCED will be looking at ways ASMI can do some of the things DCED has done in the area of fisheries to improve efficiencies, noting there would be changes this year in the programs. However, Commissioner-designee Sedwick indicated she is very worried about those markets and maintaining Alaska's export market to those countries. Number 0980 COMMISSIONER-DESIGNEE SEDWICK also commented that DCED has an EDA (economic development agency) grant, and is working with CDQs (community development quotas) and the ARDORs in rural Alaska in the area of fisheries. She indicated they are trying to identify fish species, the times of year those species are available, and, from Alaska's overseas markets, researching whether or not there are markets for those fish. She said DCED is hoping to have some things developed there, which she thinks is pretty exciting. She said she thinks this is really the first year of the full workings of tourism, trade and development with most of the "bugs" worked out. She added, however, she thinks it is an evolving program, with everyone working together for the common good, and she thinks they are going to have big changes, providing those markets don't continue to deteriorate. Commissioner-designee Sedwick related that just last week they had a "fresh and live mission" consisting of seven importers and the chef of the Seoul Hilton visiting from Korea. She said the Koreans only like king crab, but St. Paul Island CDQ provided opilio, snow, crab which she indicated the chef at the Anchorage Hilton Hotel prepared and the visiting Koreans fell in love with. She noted the visitors also traveled to Kenai, Homer and Kodiak. Commissioner-designee Sedwick said she had commented earlier that DCED does not do anything by itself and she noted Korean Air, Anchorage Economic Development Corporation, the communities of Anchorage, Homer, Kodiak and Kenai all played a role in this visit. She said DCED believes it was a very successful mission, and even though the Korean market is currently soft because of what's going on in that country's economy, DCED recognizes there are 65 to 70 Korean Air cargo flights a week, and it would be very helpful if they can create or grow some of those markets. Number 1083 REPRESENTATIVE COWDERY indicated he had been told that the Korean consul general had some problems with DCED or with trade, mentioning that possibly the Korean president was going to be in Alaska in the near future. Representative Cowdery indicated he heard the Koreans did not want DCED to be involved in this visit, which was distressing, and he suggested that perhaps Commissioner- designee Sedwick could contact the consul general about this. Number 1136 COMMISSIONER-DESIGNEE SEDWICK thanked Representative Cowdery, stating it was news to her. She said she talks to Consul General Cha on a fairly regular basis; she would find out what was going on and let Representative Cowdery know. Number 1147 REPRESENTATIVE COWDERY said he appreciated that. He noted he thought she would make an excellent commissioner. He said that even though he said he didn't like her answer regarding the merge, he still has confidence she could take a hold of it and make it work, noting, if she inherited that, he hoped she would stay with the department and not move on to other things. Number 1175 COMMISSIONER-DESIGNEE SEDWICK said she appreciated his confidence and would look forward to working with him not only in the House Labor and Commerce Standing Committee, but also in his position as chair of the House Special Committee on International Trade and Tourism ["world trade committee" misstated on tape]. Number 1183 REPRESENTATIVE COWDERY said he had asked Commissioner Irwin of DCRA the same question the other day, noting that Commissioner Irwin had said he would not be interested in staying. Representative Cowdery indicated his impression was that the commissioner was not interested in taking a salary cut. Representative Cowdery indicated he thought she could handle the job. Number 1205 COMMISSIONER-DESIGNEE SEDWICK responded that if someone had told her 2 1/2 years ago that she would have been in state government that would have been a surprise, and finding herself before this committee as a commissioner nominee surprises her as well. Number 1246 CHAIRMAN ROKEBERG asked Commissioner-designee Sedwick, for the record, how long she had lived in Alaska. COMMISSIONER-DESIGNEE SEDWICK said almost 51 years. CHAIRMAN ROKEBERG asked her if she was born in Alaska. COMMISSIONER-DESIGNEE SEDWICK replied she had been born in Anchorage and was proud of that. She noted her father had been born in Fairbanks. Number 1283 REPRESENTATIVE RYAN mentioned there was an entire shelf full of bound reports at DCRA of community development block grants which were put out for business plans, feasibility studies, et cetera. He commented that millions of dollars were spent and a lot of consultants made a lot of money, but these rural communities never went anywhere with those business plans and feasibility studies, indicating he thought DCED would have probably spent that money better. Representative Ryan related that in 1985 he went to the Epcott Center with his young daughter, indicating he saw exhibits at a huge pavilion there representing many different countries. He said he was most struck by the People's Republic of China, indicating they went into a 360 degree theater showing a scenic movie and then were taken into a restaurant staffed with educated Chinese nationals speaking impeccable English. He commented that the food was magnificent, and it was an experience. He noted he had thought to himself, "Why doesn't the state of Alaska have a venue there with our crab and our salmon? We could make a fortune just selling the stuff in a restaurant and giving that exposure -- a huge theater like that with all the mountains of Alaska and the lakes and the rivers and so forth -- why are we remiss?" He said he has talked to a couple of governors since that time, noting he felt they didn't seem to see the opportunity; he commented, "And I've tried to get some interest in that here." He said this was a venue he found exceeding attractive for someone in the tourism business. He thought 80,000-some people a day had been going through there back at that time, and he said he thought it couldn't really be that expensive compared to a lot of the money they have thrown away on various projects. He indicated he wanted to hear her thoughts on that, if and when the price [of oil] ever went back up and there was some extra revenue. Number 1435 COMMISSIONER-DESIGNEE SEDWICK stated she was game for anything that exposes Alaska to the rest of the world, and she thinks they need to be as creative about that as possible. She said it is hard for her to imagine doing anything like that in the current financial climate, simply because she wonders, as she looks around the table at staff meetings, who is not going to be there. She said she knows there will be two or three fewer people in terms of each of those disciplines. However, she thinks that they have to continue to leverage where the opportunity exists, which she said is why leveraging the permanent fund is a good idea. She commented she is hoping for $75,000 to run the Taiwanese program because she knows there's a lot of potential there, and she wants the $300,000 to continue to run the Japanese program, noting Japan brings $1.5 billion into Alaska a year. She said she is really focused on those kinds of things, indicating she knows it is important to think bigger but it is difficult for her to do that at this time. Number 1521 REPRESENTATIVE JERRY SANDERS commented Commissioner-designee Sedwick was his first choice too. Number 1563 CHAIRMAN ROKEBERG stated his next question would probably be the most interesting question of the entire afternoon. He asked Commissioner-designee Sedwick if she was aware that the Governor, through his personnel at the Department of Revenue, was promulgating and drafting regulations to raise taxes on businesses in the state of Alaska. Chairman Rokeberg clarified, "These regulations are the implementation of the results of a recent Alaska Supreme Court case of the USG (ph) bulk shipping company versus the Department of Revenue, which overturned a heretofore accounting and tax procedure under the Alaska net income tax law [Alaska Net Income Tax Act] which did not allow international shipping companies, including water vessels, aircraft, and the like from under the Internal Revenue Code. We're not sure exactly what the scope of this is, but I think this would be the most disastrous hit on business in the state, if this were allowed to be received, so this committee going to be taking that up. I just wanted to know if you were aware of this, this is a recent case and I wouldn't be surprised if you weren't even aware of it ...." Number 1663 COMMISSIONER-DESIGNEE SEDWICK replied she had not been aware of it but would check it out. Number 1670 CHAIRMAN ROKEBERG said he hoped she did and that she carried the message this committee and this legislature were not interested in new taxes on business in the state, particularly as it relates to: 1) the air cargo industry going through Anchorage International Airport and other airports in the state; and 2) the importation of consumer goods to the people of Alaska in putting an additional burden on those shippers coming into the state. He noted that is a particularly troublesome side. He commended Commissioner- designee Sedwick to look into that, checking with the Department of Revenue and the attorney general. Additionally, he referred to the October 3, 1997 audit report of Legislative Budget and Audit Committee relating to what is called the "division indirect pool expenditures for the occupational licensing costs in the state of Alaska." He said the audit made a number of recommendations to DCED and the Division of Occupational Licensing, quoting from page (indisc.) of the report, "The cost charge to the OccLicensing [Division of Occupational Licensing] from the commissioner's office appeared to be a disproportion allocation since not all Department of Commerce and Economic Development divisions are required to participate in funding services from the commissioner's office." Number 1771 CHAIRMAN ROKEBERG said the report goes to say, however, "Occlicense has 20 percent of the department's ["apartment" stated on tape] full-time positions but they are assessed 28 percent of the commissioner's allocable costs." He said the report continued to say that in the indirect cost pool there were some questions relating to the attendance at conferences and training sessions. He indicated the report didn't question whether those costs were appropriate but whether they should have been in the indirect cost pool or should have been allocated to direct costs. Chairman Rokeberg informed the committee that there was also a legislative budget audit on the Real Estate Commission, which he indicated had not been completed. He stated, "Specifically ... between the Real Estate Commission's licensing fees which went up substantially this year and the surety fund. And because the questioned use of some of the personnel costs in the commission that are - are actually taken out of the surety fund to cover some of the overhead costs there and how all that works," noting he and Representative Ryan also have a bill on that which is currently pending that audit. He asked Commissioner-designee Sedwick, "Were you aware of any of these problems that related to the allocation of costs from the commissioner's office to the OccLicensing people and how that works?" Number 1856 COMMISSIONER-DESIGNEE SEDWICK replied she knew that the audit was done. She said, "It's my understanding that one person that was dealing with the floaters which ... we weren't aware of the - the percentage of expense that was being used, and that has been corrected, and it's my understanding that that was the recommendation of the audit and we certainly don't disagree with that." Number 1887 CHAIRMAN ROKEBERG stated, "There was over $100,000 in FY 96-97 that ... went into the indirect cost pool that was allocated out to ... all the OccLicensing, and then ... including that, if I'm not mistaken, there was about $70,000 (indisc.) hearing officers which were unallocated charges to agencies outside Occupational Licensing that might have got in the pool or weren't properly allocated or something like that," noting they didn't need to get into the specifics right then. However, he indicated the committee was the "gatekeeper of all the occupational boards and commissions and so forth" and so this was something the committee was very sensitive to because it heard a lot of criticism when fees for licenses increased. He said it was something she needed to be very aware of, noting he thought the Division of Occupational Licensing probably directly affects more citizens in Alaska on a one-on-one basis than any other segment of her department. Number 1960 COMMISSIONER-DESIGNEE SEDWICK stated she agreed with him and she thinks DCED recognizes the validity of the audit and is making those recommended changes. Number 1979 REPRESENTATIVE RYAN said this same topic would be discussed in the budget subcommittee, stating, "The structure is such as it's very tempting inasmuch as there's no upper limit on (indisc.--other noise) and leave a pool of money and/or pick-up some additional expense that wasn't budgeted for by sliding it over to Occupational Licensing who can just raise their fees to - to handle that, is too tempting, perhaps, to -- in times of budget crunches and so forth, and we want to ... look at that carefully and - and perhaps remove that temptation somewhere or (indisc.) some kind of constraints around it so it can't happen again." Number 2032 COMMISSIONER-DESIGNEE SEDWICK stated it was certainly DCED's intent to do the right thing. She noted she doesn't have all the details, and said, "What I would like to be able to do is understand it more fully myself and then come back to you." Number 2049 REPRESENTATIVE RYAN indicated they would discuss it. Number 2052 CHAIRMAN ROKEBERG noted he would just remind Representative Ryan that the state statutes require each occupational license to be self-sufficient, and, therefore, there is not a lot they can do about cutting the budget in there unless they want to make some structural changes. Number 2072 REPRESENTATIVE RYAN noted he was going to have to leave for another committee meeting. Number 2079 CHAIRMAN ROKEBERG indicated the meeting was close to adjournment. He said he understood that before the session began there was a plan afoot attempting to work with the private sector of the tourism business, reorganizing the tourism part of DCED, and working with a more private sector-oriented type plan. He asked her what the status of that situation was. Number 2122 COMMISSIONER-DESIGNEE SEDWICK stated the Alaska Visitors Association (AVA) has been working for months on a plan, noting both the Division of Tourism and the Alaska Tourism Marketing Council (ATMC) have given the AVA advice over that period of time but it is AVA's plan. She indicated she has not come out with any official approval or disapproval because there is a lot of dissension within the local communities about this plan. She congratulated the AVA for all of its hard work and effort, and she indicated the plan is certainly a topic for discussion. She indicated, as the plan relates to these two areas in DCED, she thinks they need to take a look at the Division of Tourism and ATMC, noting ATMC quasi-private status, to make sure that there is no overlap or duplication and whether their mission is legitimate in 1998 with remaining funding. She said she really wants to find out more from the local communities about their feelings for this plan, noting she does have some concern about its funding from the private sector, and how that would work. She said she also feels like Alaska has a responsibility as a state to do some tourism marketing and "be at that table." She referred to the previous discussion about the communities on the road system and the Marine Highway System who feel the impact of these tourism dollars. She said she didn't think anybody was going to market those areas if they didn't, stating, "So I feel like the state, as part of their total marketing efforts, has a responsibility to be at the table." Number 2253 REPRESENTATIVE TOM BRICE said that was the only question he had wanted to ask. He asked Commissioner-designee Sedwick if there was any reason why they should not support her for commissioner. Number 2268 COMMISSIONER-DESIGNEE SEDWICK indicated she did not think there were any reasons. Number 2275 REPRESENTATIVE COWDERY indicated he would like to know at some point how much DCED spent on travel in the last year, broken down into in-state, Lower 48, and international. He also commented that he first returned there seemed to be some adversarial relations with groups like the World Trade Center Alaska. He noted that had changed, hopefully, he said, because of Commissioner-designee Sedwick. He indicated the World Trade Center Alaska seemed to be working quite well and he hoped she would continue a good relationship. Number 2357 COMMISSIONER-DESIGNEE SEDWICK indicated she thinks they have all worked hard attempting to get the major trading partners together and getting along, noting it was an effort by all three entities. She said the United States Department of Commerce's Alaska Export Assistance Center has been moved in with DCED, so DCED is co- locating with a federal agency, and she said that over time she would like to co-locate with the World Trade Center Alaska as well. She said housing the "three legs of the stool of international trade" together would be the best thing and she is hoping it will happen, noting it depends on whether the World Trade Center Alaska builds their (indisc.) building. She commented, "We're not married yet but we're working closely together and we've come a long way and it's only going to get better." Number 2437 CHAIRMAN ROKEBERG asked if there were further questions of Commissioner-designee Sedwick. Hearing no response from the committee, he noted there were many more questions but the committee was running out of time. He said he had one comment before there was a motion, stating, "You indicated that the Governor was your boss, but I'd only ..." [TESTIMONY INTERRUPTED BY TAPE CHANGE] TAPE 98-25, SIDE A Number 0001 CHAIRMAN ROKEBERG continued, "... Representative Cowdery." Number 0009 REPRESENTATIVE COWDERY stated the committee had reviewed the qualifications of the commissioner. He made a motion to move the name forward for consideration of the full body. Number 0036 CHAIRMAN ROKEBERG stated he believed any signature of this paper did not reflect any intent of the members to vote for or against the individual (indisc.). There being no objections to the motion, it was so ordered. ADJOURNMENT Number 0060 CHAIRMAN ROKEBERG adjourned the House Labor and Commerce Standing Committee meeting at 5:05 p.m.