HOUSE LABOR AND COMMERCE STANDING COMMITTEE March 27, 1998 3:28 p.m. MEMBERS PRESENT Representative Norman Rokeberg, Chairman Representative John Cowdery, Vice Chairman Representative Bill Hudson Representative Joe Ryan Representative Gene Kubina MEMBERS ABSENT Representative Jerry Sanders Representative Tom Brice COMMITTEE CALENDAR HOUSE BILL NO. 324 "An Act relating to liens for municipal assessments for certain utility improvements." - MOVED CSHB 324(L&C) OUT OF COMMITTEE SPONSOR SUBSTITUTE FOR HOUSE BILL NO. 349 "An Act prohibiting the use of the title 'social worker' without a license; relating to social workers, licensure of social workers, and the Board of Clinical Social Work Examiners; and providing for an effective date." - MOVED CSSSHB 349(L&C) OUT OF COMMITTEE * HOUSE BILL NO. 438 "An Act establishing an exemption for investment clubs from the business license requirement." - MOVED CSHB 438(L&C) OUT OF COMMITTEE * HOUSE BILL NO. 424 "An Act relating to civil liability for activities of volunteer school crossing guards; and providing for an effective date." - SCHEDULED BUT NOT HEARD HOUSE BILL NO. 400 "An Act combining parts of the Department of Commerce and Economic Development and parts of the Department of Community and Regional Affairs by transferring some of their duties to a new Department of Commerce and Rural Development; transferring some of the duties of the Department of Commerce and Economic Development and the Department of Community and Regional Affairs to other existing agencies; eliminating the Department of Commerce and Economic Development and the Department of Community and Regional Affairs; relating to the Department of Commerce and Rural Development; adjusting the membership of certain multi-member bodies to reflect the transfer of duties among departments and the elimination of departments; and providing for an effective date." - SCHEDULED BUT NOT HEARD (* First public hearing) PREVIOUS ACTION BILL: HB 324 SHORT TITLE: MUNICIPAL LIEN FOR UTILITY IMPROVEMENTS SPONSOR(S): REPRESENTATIVES(S) OGAN, Kohring Jrn-Date Jrn-Page Action 01/16/98 2061 (H) READ THE FIRST TIME - REFERRAL(S) 01/16/98 2061 (H) L&C, JUDICIARY 02/04/98 2223 (H) COSPONSOR(S): KOHRING 02/09/98 (H) L&C AT 3:15 PM CAPITOL 17 02/09/98 (H) MINUTE(L&C) BILL: HB 349 SHORT TITLE: REGULATION OF SOCIAL WORKERS SPONSOR(S): REPRESENTATIVES(S) JAMES, Kelly, Elton, Croft Jrn-Date Jrn-Page Action 01/23/98 2120 (H) READ THE FIRST TIME - REFERRAL(S) 01/23/98 2120 (H) LABOR & COMMERCE 02/04/98 2223 (H) COSPONSOR(S): ELTON 03/04/98 2499 (H) SPONSOR SUBSTITUTE INTRODUCED - REFERRALS 03/04/98 2499 (H) LABOR & COMMERCE 03/18/98 (H) L&C AT 3:15 PM CAPITOL 17 03/18/98 (H) MINUTE(L&C) 03/26/98 2761 (H) COSPONSOR(S): CROFT BILL: HB 438 SHORT TITLE: INVESTMENT CLUB LICENSE EXEMPTION SPONSOR(S): REPRESENTATIVES(S) RYAN Jrn-Date Jrn-Page Action 02/18/98 2355 (H) READ THE FIRST TIME - REFERRAL(S) 02/18/98 2355 (H) L&C, FINANCE 03/25/98 (H) L&C AT 3:15 PM CAPITOL 17 03/25/98 (H) MINUTE(L&C) 03/27/98 (H) L&C AT 3:15 PM CAPITOL 17 WITNESS REGISTER DAVE STANCLIFF, Legislative Assistant to Representative Scott Ogan Alaska State Legislature Capitol Building, Room 128 Juneau, Alaska 99801 Telephone: (907) 465-2338 POSITION STATEMENT: Presented committee substitute for HB 324. REPRESENTATIVE JEANNETTE JAMES Alaska State Legislature Capitol Building, Room 102 Juneau, Alaska 99801 Telephone: (907) 465-3743 POSITION STATEMENT: Sponsor of SSHB 349. ANGELA SALERNO, Executive Director Alaska Chapter National Association of Social Workers 318 Fourth Street Juneau, Alaska 99801 Telephone: (907) 586-4438 POSITION STATEMENT: Testified on committee substitute for SSHB 349. DAVID PREE, Legislative Assistant to Representative Joe Ryan Alaska State Legislature Capitol Building, Room 420 Juneau, Alaska 99801 Telephone: (907) 465-3875 POSITION STATEMENT: Presented HB 438. FLOYD DAMRON, Co-President Alaska Regional Council National Association of Investors Corporation P.O. BOX 141503 Anchorage, Alaska 99514-1503 Telephone: (907) 278-2551 POSITION STATEMENT: Testified in support of HB 438. CATHERINE REARDON, Director Division of Occupational Licensing Department of Commerce and Economic Development P.O. Box 110806 Juneau, Alaska 99811-0806 Telephone: (907) 465-2534 POSITION STATEMENT: Testified on HB 438. ACTION NARRATIVE TAPE 98-39, SIDE A Number 0001 CHAIRMAN NORMAN ROKEBERG called the House Labor and Commerce Standing Committee meeting to order at 3:28 p.m. Members present at the call to order were Representatives Rokeberg, Cowdery, Hudson and Ryan. Representative Kubina arrived at approximately 3:30 p.m. Chairman Rokeberg noted the excused absences of Representatives Sanders and Brice. HB 324 - MUNICIPAL LIEN FOR UTILITY IMPROVEMENTS Number 0257 CHAIRMAN ROKEBERG announced the committee's first item of business was HB 324, "An Act relating to liens for municipal assessments for certain utility improvements." He asked the sponsor's representative to briefly explain the differences between HB 324 and the proposed committee substitute. Number 0260 DAVE STANCLIFF, Legislative Assistant to Representative Scott Ogan, came forward to testify. Mr. Stancliff said it was the sponsor's original intent to provide relief for people who could not afford to hook-up to a utility for various reasons. He said it had been discovered in the last committee meeting [House Labor and Commerce Standing Committee meeting February 9, 1998], and after conversations with municipal officials, that requiring municipalities to grant complete exemptions could jeopardize the financing package and cause problems for the local improvement district (LID) process. He stated the proposed committee substitute has been changed to simply grant, and make it clear in statute, that local governments can provide a deferment according to their terms and conditions for people who are elderly, economically disadvantaged or otherwise unable to meet this cost. Mr. Stancliff emphasized that the deferment does not mean the debt goes unpaid. It can be deferred as long as municipalities wish and that debt would still be liable when the property changed hands. He said the bill was much more friendly toward the municipal governments. The proposed committee substitute for HB 324, labeled 0-LS1150\B, Cook, dated 3/25/98, read: * Section 1. AS 29.46.020 is amended by adding a new subsection to read: (d) A municipality may by ordinance provide for deferral of payment of all or part of the assessments on real property owned and occupied as the primary residence and permanent place of abode by a resident who is elderly or economically disadvantaged as determined under criteria established in the ordinance. The assessment becomes due when the property ceases to be owned by the resident who qualified for the deferral. Number 0380 CHAIRMAN ROKEBERG confirmed the deferred amount would attach to the title of the land and have to be satisfied upon the transfer of title. MR. STANCLIFF agreed that was correct. Number 0398 REPRESENTATIVE JOHN COWDERY asked if the deferment had to be until the transfer of title, questioning whether this would work in a situation he knew of, where the wage earner had been in an accident and was "pretty stretched for a dollar" for a couple of years. Number 0323 MR. STANCLIFF indicated the municipalities could set up any systems they wanted to work with people who might be economically disadvantaged for a couple of years in the situation Representative Cowdery described. He added the examples of a single mother or elderly person. Number 0458 REPRESENTATIVE BILL HUDSON said the state of Oregon has "sort of" a senior property tax deferral, asking if this was similar. He commented he was thinking a lot of seniors in Alaska could be in situations where what they had always considered to be their retirement homes had become such valuable pieces of property that they could not afford the tax loads. He gave the example of seniors with beach-front homesteads on Fritz Cove Road in Juneau, mentioning changes in property value and tax mechanism. Representative Hudson noted this could possibly solve some of these peoples' problems because the municipality could give them an option to defer the taxes until their death. He indicated this would allow them to stay in their homes, with the taxes due from any heirs. Representative Hudson asked if that was what Mr. Stancliff saw the proposed committee substitute for HB 324 doing. Number 0530 MR. STANCLIFF replied, "Very much." He said they had been offered some language from either Washington or Oregon, he believed, to do exactly that. He said they used that generic approach here, and the drafter, Tamara Cook, put it into her style. Mr. Stancliff indicated the problem in statute is a difference in interpretation of assessment for equal use, noting the Matanuska-Susitna (Mat-Su) Borough's attorney said the borough felt it needed something a little clearer in statute to give the borough the ability. Number 0566 REPRESENTATIVE JOE RYAN asked the chairman, noting the chairman's real estate background, if the assessment would come due on transfer of inherited property to the beneficiary or if they would have to wait for the sale of the property. Number 0595 CHAIRMAN ROKEBERG said it was a very good question. He indicated he thought it would come due on inheritance, based on his reading of the last sentence of the bill ["The assessment becomes due when the property ceases to be owned by the resident who qualified for the deferral."]. He commented on the wording, "ceases to own", noting he thinks there is a reason for that use of the words; it would account for various changes or transfer of title. Therefore, he said, whoever came into title would assume that obligation, which is normally a payment amortized over a period of years with accrued interest. He stated, "So, I - I think that that would be the case. It's like a - a covenant that attaches itself to the land ... and it goes with the land until it's satisfied. It's a lien, actually, on the property and would show up on the title report as a lien on the property." Number 0648 REPRESENTATIVE RYAN said, "My only concern is that some sharper attorney may put a clause in there that the property would escheat to the governmental unit at the time." Number 0663 CHAIRMAN ROKEBERG said he thinks this is a permissive type of ordinance. It grants an election to a municipal government and allows the government to make its decision; he thinks the municipal government could develop a construct around that. He commented, "And we don't want to have no attorneys screwing with our laws that we make, how's that?" With that, Chairman Rokeberg stated he would accept a motion to adopt the proposed committee substitute. Number 0693 REPRESENTATIVE HUDSON made a motion to adopt the proposed committee substitute for HB 324, Version B, for consideration. There being no objections, Version B of HB 324 was adopted. Number 0764 REPRESENTATIVE HUDSON made a motion to move the proposed committee substitute for HB 324, Version B, out of committee with zero fiscal note and individual recommendations, asking unanimous consent. There being no objections, CSHB 324(L&C) was so moved. SSHB 349 - REGULATION OF SOCIAL WORKERS Number 0787 CHAIRMAN ROKEBERG announced the committee's next order of business was SSHB 349, "An Act prohibiting the use of the title 'social worker' without a license; relating to social workers, licensure of social workers, and the Board of Clinical Social Work Examiners; and providing for an effective date." Number 0800 REPRESENTATIVE JAMES came forward to present the proposed committee substitute, Version P, for SSHB 349, labeled 0-LS1304\P, Lauterbach, dated 3/25/98. She reviewed the concerns raised by the committee that Version P addresses. Representative James stated on page 2, lines 18 and 19, AS 08.01.070 (10) has been repealed [Lines 15, 15, 18 and 19 read: "* Sec. 7. As 08.95.030 is amended to read: Sec. 08.95.030. Duties. The board shall ... (2) [SUBMIT AN ANNUAL REPORT OF ITS PROCEEDINGS TO THE DEPARTMENT;"]. On page 4, line 16, "licensed to practice clinical social work" has been added so that subsection (11) reads, "(11) while licensed to practice clinical social work, engaged in sexual contact with a person during the time period that the person was a client or within two years after termination of the licensee's professional relationship with the client.". This amends that provision so it applies only to LCSWs, while professional social workers practice under the guidance of the National Association of Social Workers (NASW) code of ethics which prohibits sexual contact with clients. This addresses concerns that those social workers employed by the Division of Family and Youth Services (DFYS) as licensed bachelor's social workers (LBSWs) or licensed master's social workers (LMSWs) would be cited for entering into sexual relationships with individuals who were not their direct clients. On page 7, line 22, the text "satisfactorily completed" has been substituted for "not failed" so that subsection (3) now reads, "(3) has satisfactorily completed the examination for a license to practice clinical social work in this state;". This addresses the concern that an applicant may never repeat the licensing exam if once failed. On page 7, line 31, the wording "or surrendered in lieu of disciplinary action" has been added so that subsection (5) now reads, "(5) has not had a license to practice clinical social work revoked, suspended, or surrendered in lieu of disciplinary action in this state or another jurisdiction;". This clarifies the conditions which must be met before the licensing board may award a license by credentials. Number 0893 REPRESENTATIVE JAMES continued that the wording "has not failed the master or baccalaureate social work examination, as applicable, in this state;", which occurred on page 8, lines 15 and 16, of SSHB 349, has been deleted in the proposed committee substitute. This also addresses the concern that an applicant may never complete the licensing examination if once failed. On page 8, line 21, of the proposed committee substitute, the wording "or surrendered in lieu of disciplinary action" has been added so that subsection (5) now reads, "(5) has not had a license to practice social work or to use the title "social worker" revoked, suspended, or surrendered in lieu of disciplinary action in this state or another jurisdiction;". This clarifies the conditions which must be met before the licensing board may award a LBSW or LMSW license. On page 9, line 2 and lines 20 to 21, the wording "health care or mental health professionals" occurring in SSHB 349 has been replaced by "practitioners of the healing arts". "Health care or mental health professional" is not defined in law; use of the term "practitioners of the healing arts" reduces ambiguity because that term is defined in law. Representative James referred to previous discussion regarding the fiscal note, stating she had not wanted to have a fiscal note attached to this bill but there was a $25,000 fiscal note from the Division of Occupational Licensing. Representative James stated she argued with the division and it presented her another note for $13,200, but she is still not satisfied; she believes this should be able to be done with existing staff. Therefore, she has prepared a zero fiscal note dated that day as the sponsor of HB 349, since this is the first committee of referral, and she wishes the committee to take her zero fiscal note rather than the Division of Occupational Licensing's fiscal note. Number 1000 CHAIRMAN ROKEBERG thanked Representative James for her explanation. REPRESENTATIVE HUDSON made a motion to adopt the proposed committee substitute Version P for SSHB 349, asking unanimous consent. There being no objections, Version P, labeled 0-LS1304\P, Lauterbach, dated 3/25/98, was adopted. CHAIRMAN ROKEBERG commented to Representative James that Sections 24 and 25 were still in the bill, indicating social workers were being made practitioners of the healing arts, and he asked for the explanation of that again. Sections 24 and 25 read: *Sec. 24. AS 47.17.020(a) is amended to read: (a) The following persons who, in the performance of their occupational duties, have reasonable cause to suspect that a child has suffered from harm as a result of child abuse or neglect shall immediately report the harm to the nearest office of the department: (1) practitioners of the healing arts; (2) school teachers and school administrative staff members of public and private schools; (3) [SOCIAL WORKERS; (4)] peace officers[,] and officers of the Department of Corrections; (4) [(5)] administrative officers of institutions; (5) [(6)] child care providers; (6) [(7)] paid employees of domestic violence and sexual assault programs, and crisis intervention and prevention programs as defined in AS 18.66.990; (7) [(8)] paid employees of an organization that provides counseling or treatment to individuals seeking to control their use of drugs or alcohol. * Sec. 25. AS 47.17.290(13) is amended to read: (13) "practitioner of the healing arts" includes chiropractors, mental health counselors, social workers, dental hygienists, dentists, health aides, nurses, nurse practitioners, occupational therapists, occupational therapy assistants, optometrists, osteopaths, naturopaths, physical therapists, physical therapy assistants, physicians, physician's assistants, psychiatrists, psychologists, psychological associates, audiologists licensed under AS 08.11, hearing aid dealers licensed under AS 08.55, marital and family therapists licensed under AS 08.63, religious healing practitioners, acupuncturists, and surgeons; Number 1070 REPRESENTATIVE JAMES deferred the explanation to Ms. Salerno, noting it has to do with reporting child abuse. Number 1079 ANGELA SALERNO, Executive Director, Alaska Chapter, National Association of Social Workers, came forward to testify. She stated this was inserted at the request of the Board of Clinical Social Work Examiners. Practitioners of the healing arts are mandatory reporters of child abuse and they also have the ability, without parental consent, to send a child for a medical exam or x-ray, or to take a picture of a child. She reiterated that this is concerned with the issue of child abuse. Section 24 takes social workers out of the list of mandatory reporters, avoiding redundancy in Section 25 when social workers are added as practitioners of the healing arts. Number 1135 CHAIRMAN ROKEBERG called an at ease at 3:45 p.m. The committee came back to order at 3:54 p.m. Number 1146 CHAIRMAN ROKEBERG noted for the record that the committee adjourned momentarily to look at the statutory foundations of those bill sections as they relate to the definition of practitioner of the healing arts and its impact on: 1) Any insurance legislation. He stated it is the committee's review that this will not have any impact on insurance. 2) The committee has reviewed the Title 47 area of Medicaid reimbursements in terms of (indisc.); he said the committee found no indication that a social worker would be anywhere on the list under the current statutory scheme. Chairman Rokeberg indicated that therefore the committee believes there will not be any negative (indisc.) financial impacts on passage of this bill because of the use of the term "practitioner of the healing arts" ["practitioner of medical arts" stated on tape]. Number 1225 REPRESENTATIVE HUDSON made a motion to move Version P, the proposed committee substitute for SSHB 349, with the March 27, 1998, zero fiscal note, asking unanimous consent. There being no objections, CSSSHB 349(L&C) moved out of the House Labor and Commerce Standing Committee. HB 438 - INVESTMENT CLUB LICENSE EXEMPTION Number 1252 CHAIRMAN ROKEBERG announced the committee's next order of business was HB 438, "An Act establishing an exemption for investment clubs from the business license requirement." He asked Representative Ryan, the bill sponsor, how he wished to proceed. Number 1276 CHAIRMAN ROKEBERG called a brief at ease at 3:57 p.m. The committee came back to order at 4:00 p.m. Number 1297 REPRESENTATIVE HUDSON made motion to adopt the proposed committee substitute for HB 438, Version E, labeled 0-LS1607\E, Bannister, dated 3/23/98, for discussion. There being no objections, Version E of HB 438 was adopted. Number 1304 DAVID PREE, Legislative Assistant to Representative Joe Ryan, came forward to present HB 438. He stated HB 438 was generated at the request of a constituent, noting the presence in the committee members' bill packets of a letter from Floyd Damron requesting this legislation and an explanatory letter from the president and chief executive officer (CEO) of the national organization [Kenneth S. Janke, President and CEO, National Association of Investors Corporation (NAIC)]. Mr. Pree stated, "You'll find an A version of this bill in your packet that simply took the statute AS 43.70.110(1) and added, businesses do not include the activities of investment club and so forth. That proved problematic in a companion bill on the Senate side, and consequently they were asked to define business and make a couple of other changes. And due to the drafting style of our 'leg' legal department [Legislative Legal and Research Services], it appears as though the E version of this bill is a completely different bill, when, in fact, it really isn't. The Section 1 of this bill ... deletes the language 'Commerce and Economic Development may suspend or revoke a business license under AS 43.70.020 and the commissioner of' ...." MR. PREE continued, "Inasmuch as ... the people down here in the rest of this paragraph, buying raw fish and so forth, were never required to have a business license, it was never the purview of the Commerce and Economic Development to suspend a license, so this is rather a housekeeping measure. The change in Section 2 is the word 'implement'. It's the understanding of our office, and the Senate office that was handling this, that 'determine and collect the fees imposed by' was not sufficient enough for them to conduct their daily business and they needed the verbiage, 'implement', because they ran into trouble interpreting what the ... rules meant and meant for them to do. And Section 3 of Version E is simply a simplified version of the exemptions from the chapter. ... If you will look at AS 43.71.010, which is Section 1 of Version A, you see a huge paragraph (indisc.) quite clumsy in a number of places, and it makes it fairly simple ... it lists these people, and you see that under (8)(A) 'investment club' is listed so that that investment club would be exempted from the business licensing requirement, and then Section 4 of this bill endeavors to define, specify what a business is." Version A of HB 438 read: * Section 1. AS 43.70.110(1) is amended to read: (1) "business" includes all activities or acts, personal, professional, or corporate, engaged in or caused to be engaged in, or following or engaging in a trade, profession, or business, including receipts from advertising services, rental of personal or real property, construction, processing, or manufacturing, but excluding fisheries businesses, fishermen, liquor licenses, insurance businesses, mining, and coin-operated amusement and gaming machines, calling or vocation, with the object of financial or pecuniary gain, profit or benefit, either direct or indirect, and not exempting subactivities producing marketable commodities or services used or consumed in the main business activity, each of which subactivities shall be considered business; the giving or supplying of services as an employee and the furnishing of property, services, substances, or things, by a person who does not represent to be regularly engaging in those transactions, does not constitute business under the meaning of this chapter; "business" does not include the activities of an investment club; in this paragraph, "investment club" means a group of individuals, incorporated or otherwise organized, that engages primarily in investing in securities, that does not sell investment services to another person, and the primary purpose of which is educational; and in this paragraph, "security" has the meaning given in AS 45.55.990; Number 1495 FLOYD DAMRON, Co-President, Alaska Regional Council, National Association of Investors Corporation, testified next via teleconference from Anchorage. Mr. Damron said the national organization has approximately 600,000 members with about 36,000 clubs. Many clubs in Alaska belong to this organization; he said approximately 110 clubs with about 1,500 total members. Mr. Damron stated they have requested that their clubs not be required to have Alaska business licenses because these clubs are primarily educational in nature and each member is personally responsible for his or her own actions with the Internal Revenue Service (IRS); and because the Security and Exchange Commission does not regard small investment clubs as being security dealers, brokers or even businesses. Number 1589 CHAIRMAN ROKEBERG asked why having a business license created a burden for an investment club. MR. DAMRON replied that many of the investment clubs are fairly new in Alaska, and may have only six to ten members and assets of a few hundred dollars. He said requiring these clubs to purchase $50 business licenses impacts the return the members would have on any investments. He also noted they feel clubs are not truly businesses because the clubs are not selling services, there is no real trade, and no one outside the club has transactions. Number 1633 CHAIRMAN ROKEBERG asked if any of the clubs had purchased or been forced to purchase a business license. MR. DAMRON responded he is involved in two clubs, and he was told at the licensing office approximately 1 1/2 years ago that he must purchase a business license, so he did so. He stated, "We've heard testimony (indisc.) previous meeting for a Senate committee that the licensing office is giving conflicting answers, and telling some clubs, yes, they do have to have [a] license and telling other clubs they don't. And I think it's because of the confusion of the definition of a business." Number 1665 CHAIRMAN ROKEBERG said that was certainly understandable, commenting that issue is before the committee that day. He made a humorous reference to the Beardstown Ladies investment club, noting there is nothing in the bill "that the calculations of rates of return and success of investment clubs is going to mandated, outlawed or any other way proscribed by Alaska state statute." Chairman Rokeberg told Mr. Damron that he is particularly interested in the formation and education of people in investment clubs, and he commented, "Ownership of equity in this country makes us ... strong, and underlines the fact that we are a capitalistic economy and society .... I think it's an important and wonderful thing, and we're willing to help you out here." Number 1728 CATHERINE REARDON, Director, Division of Occupational Licensing, Department of Commerce and Economic Development, came forward to testify. Ms. Reardon stated she administers business licensing for the state as well as professional licensing. She noted the request to clean up the business licensing statute might not seem very pressing, but she said it is actually is an activity impacting a lot of the committee members' constituents. She reported in fiscal year (FY) 1997 the division issued 17,000 new business licenses; received 30,000 phone calls concerning business licensing; and received 14,000 visits to the division's counter. Number 1761 CHAIRMAN ROKEBERG asked the total number of business licenses for the calendar year. He also asked if the licenses were now biennial. Number 1763 MS. REARDON replied the licenses are biennial with a $50 fee; approximately half expire each calendar year. For FY 1997 there were 72,646 current business licenses. Of those, 17,715 were newly issued in 1997; there were 30,900 telephone inquiries; and 12,784 in-person inquiries. Ms. Reardon noted the 1997 revenue was $1,922,505. REPRESENTATIVE GENE KUBINA stated he had no problem whatsoever with exempting these people from business licenses, noting he doesn't think they should have to have one. He asked for a brief explanation for the addition of all this other "stuff," commenting that these aren't new people being exempted. He said he is assuming the law is just being cleaned up. Number 1830 MS. REARDON stated that was her goal. She said, "The current definition of business is about 12 lines long, and we and the public have a very great deal of difficulty understanding it -- all these people who walk up to the counter. So my hope was that if we pulled out those exemptions, [the] same exemptions that already exist except for the added investment club one, and made a simpler definition of business, that it would be easier for us all to interact in collecting these $50 payments." Number 1853 CHAIRMAN ROKEBERG directed Representative Kubina's attention to the original bill version. REPRESENTATIVE KUBINA asked why Section 1 was then needed. Section 1 of Version E, proposed committee substitute for HB 438, read: * Section 1. AS 16.10.265(d) is amended to read: (d) The commissioner of [COMMERCE AND ECONOMIC DEVELOPMENT MAY SUSPEND OR REVOKE A BUSINESS LICENSE ISSUED UNDER AS 43.70.020 AND THE COMMISSIONER OF] revenue may suspend or revoke a license to engage in the business of processing or buying raw fish if the licensee or an officer, director, or employee in a policy-making position of the licensee has been convicted of three offenses under this section. Proceedings to suspend or revoke a license are governed by AS 44.62 (Administrative Procedure Act). MS. REARDON said this was something added by the legislative drafters, indicating the drafters thought of it as clean-up, and she stated she had not brought it forward at all. CHAIRMAN ROKEBERG said, "Thanks for piling on a bill ..." REPRESENTATIVE KUBINA said, "I was just wondering how they figured Title 16 need amended ... when we're ... in Title (indisc.)." Number 1873 REPRESENTATIVE RYAN said, "As the sponsor ... sometimes it's nice to be consulted by these people that want to use your bill to clean their act so that they could owe you a little bit in the future, but I - I feel kind of ..." He indicated he had not been consulted about this addition to the bill. CHAIRMAN ROKEBERG indicated Representative Ryan might want to say something because it confused the reader of the bill. REPRESENTATIVE KUBINA asked if the chairman wanted a motion to move the bill. Number 1890 CHAIRMAN ROKEBERG answered in the negative, indicating he at first thought a motion to delete Section 1 had been requested. He stated there was a problem with the bill, with the new definition of "business," noting Ms. Reardon had provided some materials to the committee. He commented he had some questions with that, indicating Version A of HB 438 contained the AS 43.70.110(1) definition of business and Sections 3 and 4 of the Version E, the proposed committee substitute contained a whole new one. He referred to Ms. Reardon's hand-outs, indicating one was a copy from Black's Law Dictionary, noting that then in Section 4 there were different ways to look at this. He stated, "I guess what's important here is that there's like 72,000 businesses here that have an obligation to get a license if it's properly defined here, and I mean that's why this is really kind of important ... and I don't want to just 'slam dunk it' ...." He noted Representative Kubina had to leave. Sections 3 and 4 of Version E, the proposed committee substitute for HB 438 read: * Sec. 3. AS 43.70 is amended by adding a new section to read: Sec. 43.70.105. Exemptions. This chapter does not apply to (1) a fisheries business; (2) the sale of liquor under a license issued under AS 04.11; (3) an insurance business; (4) a mining business; (5) sales through coin-operated amusement and gaming machines; (6) supplying services as an employee; (7) furnishing goods or services by a person who does not represent to be regularly engaged in furnishing goods or services; (8) the activities of an investment club; in this paragraph, (A) "investment club" means a group of individuals, incorporated or otherwise organized, that engages primarily in investing in securities, that does not sell investment services to another person, and the primary purpose of which is educational; (B) "security" has the meaning given in AS 45.55.990. * Sec. 4. AS 43.70.110(1) is repealed and reenacted to read: (1) "business" means engaging or offering to engage in a trade, a profession, or an activity with the goal of receiving a financial benefit in exchange for the provision of services or goods or other property; Note: There was a copy with three handwritten definitions Ms. Reardon indicated she had written in further testimony. It read: 1) "business" means the exchange of goods, services or other property 2) "business" means an activity, profession or enterprise engaged in or offered to be engaged in for pecuniary benefit or livelihood. 3) Delete definition and leave it to department regulation Number 1949 REPRESENTATIVE KUBINA said he understood the chairman, indicating he did not want the chairman to rush through this either. Number 1951 REPRESENTATIVE RYAN stated, "I don't really have any problem with these folks being able to clean stuff up a little, make the code simpler. They can use this." CHAIRMAN ROKEBERG indicated this "laundry list" would also make it much easier for future legislators to amend the bill. Number 1965 REPRESENTATIVE RYAN referred to the definition of "business" from Black's Law Dictionary, which reads: "Business. Employment, occupation, profession, or commercial activity engaged in for gain, benefit, advantage or livelihood. Activity or enterprise for gain, benefit, advantage or livelihood." He noted the first definition seemed pretty comprehensive and the committee might want to consider it, asking if the other members had anything better. Number 1987 CHAIRMAN ROKEBERG noted that definition did not contain the word "service" which he said was in the other. He indicated he thought the definition presented by the department was not really that bad but he had not had the change to closely examine it. He stated, "The financial benefit -- I mean you could add 'or pecuniary benefit or livelihood' in there without -- make sure ... you could word-smith this thing all day long ...." Number 2015 MS. REARDON indicated the three handwritten definitions were hers, and explained the reason she eliminated employment from the Black's law definition. She said, "Since we've exempted being an employee, I thought maybe get rid of the word 'employment', and the reason I took out the word 'commercial' from in front of 'activity' was to make it a little bit broader. One thing you might want to think about, just to further confuse you all, is whether you want nonprofits to have to get business licenses or not. Right now, correctly or incorrectly, we do ask them to get business licenses, the theory being they receive grants and then they do work, but ..." Number 2052 CHAIRMAN ROKEBERG commented that this definition would exclude nonprofits. MS. REARDON stated, "Except that it says 'activity for livelihood', so I thought ..." CHAIRMAN ROKEBERG said that was not a nonprofit, unless those were employees making livelihood not the organization. Number 2060 MS. REARDON said she does not have a strong opinion about the definition. She noted there isn't really any policy impact in terms of public health or safety, it is just who will pay $50. She said it is a tax system, and her goal is to ensure that it is something relatively easy to understand. CHAIRMAN ROKEBERG said he agreed with the goal, stating, "But then you just throw in a ringer in here I didn't even think about." He said there was a policy call there if nonprofits are being charged, and he indicated he did not feel the definition as drafted included nonprofits. Number 2085 REPRESENTATIVE RYAN indicated he had not been aware nonprofits were required to have business licenses. CHAIRMAN ROKEBERG noted that was what Ms. Reardon had just said. MS. REARDON said, "We've been telling them to, maybe improperly ..." Number 2095 CHAIRMAN ROKEBERG asked if there were any other requirements in state law for nonprofits. He indicated there were federal requirements for nonprofits to be recognized by the IRS, and noted he thought there were some requirements under the corporate statutes for incorporated nonprofits. He stated, "I think there are under the corporate statutes, if they're incorporated. I know they have to be registered, but if they're a non-corporate nonprofit organization, do they have any other registration are you aware of?" MS. REARDON replied if an organization is a nonprofit partnership or sole proprietorship, not a nonprofit corporation, she does not know. She stated that generally other laws say, "You have to be properly licensed by the state." CHAIRMAN ROKEBERG commented, "This can of worms just got wider." MS. REARDON apologized. Number 2126 REPRESENTATIVE RYAN commented, "I think that we would be wise ... having been a past practice of the government even though it may be a little fuzzy -- for the purpose of the demographics of government of knowing who's doing business in the state under what circumstances, the attorney general's, consumer protection, so forth (indisc.) wise to continue (indisc.) expand this definition to include those people, put it in the statute, so that everybody knows who's playing the game, that way we can keep track of 'em." Number 2146 CHAIRMAN ROKEBERG said he had no problem with that but said the bill was not drafted like that. Number 2156 REPRESENTATIVE RYAN noted his aide had just brought it to his attention that the Senate Labor and Commerce Standing Committee was also hearing the bill, having probably the same concerns this committee was having, and he said the Senate committee was going to have some input into what this committee does. He said, "So, if you wouldn't mind, I don't really care if you'd like to hold this over [a] little bit and I'll be happy to talk to the sponsor on the other ... side, and see if they have some good ideas and perhaps we can solve this (indisc.) everybody's benefit." Number 2172 CHAIRMAN ROKEBERG said, all things considered, he preferred Representative Ryan's bill over the Senate's. He asked if the Senate's bill had moved from the Senate Judiciary Standing Committee to the Senate Labor and Commerce Standing Committee. MS. REARDON said the Senate's bill had moved out of the labor and commerce committee and she indicated it would be heard in the Senate Judiciary Standing Committee on March 30, 1998. She stated the bill moved out in its original form. Number 2194 CHAIRMAN ROKEBERG called an at ease at 4:20 p.m. The committee came back to order at 4:37 p.m. [IT APPEARS THE COMMITTEE CAME BACK TO ORDER BEFORE RECORDING BEGAN] CHAIRMAN ROKEBERG said, "... go into consideration of House Bill 438, and the chair would recognize a motion to remove Section 1." Number 2211 REPRESENTATIVE HUDSON made a motion to amend Version E of HB 438 by deleting Section 1, lines 4 through 11 [page 1]. There being no objections, Version E of HB 438 was so amended. Number 2226 CHAIRMAN ROKEBERG made a motion to amend Section 4, lines 19 through 21 [page 2], subsection (1), of HB 438, Version E, to read: (1) "business" means a profit or nonprofit entity engaging or offering to engage in a trade, a service, a profession, or an activity with the goal of receiving a pecuniary benefit in exchange for the provision of services, or goods or other real or personal property and nonprofit activity. [Note: only final punctuation is specified on tape] There being no objections, the amendment to Version E was adopted. Number 2260 REPRESENTATIVE HUDSON made a motion to move the proposed committee substitute for HB 438, Version E, with the attached zero fiscal note and individual recommendations, out of committee, asking unanimous consent. There being no objections, CSHB 438(L&C) moved out of the House Labor and Commerce Standing Committee. ADJOURNMENT Number 2275 CHAIRMAN ROKEBERG adjourned the House Labor and Commerce Standing Committee meeting at 4:39 p.m.