HOUSE LABOR AND COMMERCE STANDING COMMITTEE April 9, 1999 3:24 p.m. MEMBERS PRESENT Representative Norman Rokeberg, Chairman Representative Andrew Halcro, Vice Chairman Representative Lisa Murkowski Representative John Harris Representative Sharon Cissna MEMBERS ABSENT Representative Jerry Sanders Representative Tom Brice COMMITTEE CALENDAR GOVERNOR'S APPOINTMENT: Alaska Workers' Compensation Board Andrew J. "Bear" Piekarski - Anchorage - CONFIRMATION ADVANCED HOUSE BILL NO. 143 "An Act relating to the executive officer employed for the Real Estate Commission, to educational materials published by the Real Estate Commission, to the Real Estate Surety Fund, to contracts by the Real Estate Commission, and to disclosures in real property transactions." - MOVED CSHB 143(L&C) OUT OF COMMITTEE HOUSE BILL NO. 62 "An Act relating to the Alaska Public Utilities Commission; and providing for an effective date." - MOVED CSHB 62(URS) OUT OF COMMITTEE HOUSE BILL NO. 158 "An Act relating to the annual report of the director of the division of insurance and to notice of cancellation of personal insurance." - HEARD AND HELD HOUSE BILL NO. 136 "An Act relating to tourism and tourism marketing; eliminating the Alaska Tourism Marketing Council; and providing for an effective date." - HEARD AND HELD (* First public hearing) PREVIOUS ACTION BILL: HB 143 SHORT TITLE: REAL ESTATE:SURETY FUND & DISCLOSURES SPONSOR(S): REPRESENTATIVES(S) ROKEBERG Jrn-Date Jrn-Page Action 3/19/99 514 (H) READ THE FIRST TIME - REFERRAL(S) 3/19/99 515 (H) L&C, JUD, FIN 3/24/99 (H) L&C AT 3:15 PM CAPITOL 17 3/24/99 (H) HEARD AND HELD 3/24/99 (H) MINUTE(L&C) 4/09/99 (H) L&C AT 3:15 PM CAPITOL 17 BILL: HB 62 SHORT TITLE: ALASKA PUBLIC UTILITIES COMMISSION SPONSOR(S): REPRESENTATIVES(S) THERRIAULT Jrn-Date Jrn-Page Action 1/22/99 68 (H) READ THE FIRST TIME - REFERRAL(S) 1/22/99 69 (H) URS, L&C 2/08/99 172 (H) FIN REFERRAL ADDED 2/17/99 (H) URS AT 8:00 AM CAPITOL 120 2/17/99 (H) HEARD AND HELD 2/17/99 (H) MINUTE(URS) 3/10/99 (H) URS AT 8:00 AM CAPITOL 120 3/10/99 (H) HEARD AND HELD 3/10/99 (H) MINUTE(URS) 3/17/99 (H) URS AT 8:00 AM CAPITOL 120 3/17/99 (H) MOVED CSHB 62(URS) OUT OF COMMITTEE 3/17/99 (H) MINUTE(URS) 3/19/99 511 (H) URS RPT CS(URS) NT 5DP 1NR 3/19/99 512 (H) DP: DAVIES, COWDERY, HUDSON, KOTT, 3/19/99 512 (H) PORTER; NR: BERKOWITZ 3/19/99 512 (H) ZERO FISCAL NOTE (DCED) 3/19/99 512 (H) REFERRED TO LABOR & COMMERCE 4/09/99 (H) L&C AT 3:15 PM CAPITOL 17 BILL: HB 158 SHORT TITLE: NOTICE OF INS. CANCELLATION TO ELDERLY SPONSOR(S): REPRESENTATIVES(S) ROKEBERG Jrn-Date Jrn-Page Action 3/24/99 556 (H) READ THE FIRST TIME - REFERRAL(S) 3/24/99 556 (H) L&C, JUD 4/07/99 (H) L&C AT 3:15 PM CAPITOL 17 4/07/99 (H) HEARD AND HELD 4/07/99 (H) MINUTE(L&C) 4/09/99 (H) L&C AT 3:15 PM CAPITOL 17 BILL: HB 136 SHORT TITLE: ABOLISH TOURISM MARKETING COUNCIL SPONSOR(S): REPRESENTATIVES(S) THERRIAULT Jrn-Date Jrn-Page Action 3/12/99 438 (H) READ THE FIRST TIME - REFERRAL(S) 3/12/99 438 (H) EDT, L&C, FIN 3/29/99 (H) EDT AT 5:00 PM CAPITOL 106 3/29/99 (H) HEARD AND HELD SUBCMTE APPOINTED 4/06/99 (H) EDT AT 4:30 PM CAPITOL 408 4/06/99 (H) 4/09/99 (H) L&C AT 3:15 PM CAPITOL 17 4/09/99 712 (H) EDT REFERRAL WAIVED 4/09/99 712 (H) REFERRED TO LABOR & COMMERCE WITNESS REGISTER ED FLANAGAN, Commissioner-designee Department of Labor P.O. Box 21149 Juneau, Alaska 99802-1149 Telephone: (907) 465-2700 POSITION STATEMENT: Available for assistance during the committee's consideration of Andrew J. "Bear" Piekarski for the Alaska Workers' Compensation Board. LARRY SPENCER Real Estate Commission 175 South Franklin Street, Suite 330 Telephone: (907) 463-4111 POSITION STATEMENT: Testified in support of HB 143. TOM MARTIN 1216 Madsen Avenue Kodiak, Alaska 99615 Telephone: (907) 486-5421 POSITION STATEMENT: Testified in support of HB 143 as a licensed real estate agent. MICHAEL HUGHES, Board of Directors Alaskan AIDS Assistance Association P.O. Box 230523 Anchorage, Alaska 99523-0523 Telephone: (907) 345-3635 POSITION STATEMENT: The language he had been concerned about was not present in the Version G committee substitute for HB 143. CHARLES SANDBERG, President Alaska Association of REALTORS 741 Sesame Street, Number 110 Anchorage, Alaska 99503 Telephone: (907) 277-4372 POSITION STATEMENT: Testified in support of HB 143. ART CLARK, Chairman Industry Issues Working Group Alaska Association of REALTORS; Member, Legislative Committee Anchorage Board of REALTORS 7740 McHenry Circle Anchorage, Alaska 99502 Telephone: (907) 345-4116 POSITION STATEMENT: Testified in support of HB 143 on behalf of the Alaska Association of REALTORS. RON JOHNSON P.O. Box 529 Kenai, Alaska 99611 Telephone: (907) 283-7755 POSITION STATEMENT: Testified on HB 143 as a licensed real estate broker and former member of the Real Estate Commission. DAVE FEEKEN Kenai Peninsula Association of REALTORS 100 Trading Bay Drive, Number 6 Kenai, Alaska 99611 Telephone: (907) 283-5888 POSITION STATEMENT: Testified in support of HB 143. CATHERINE REARDON, Director Division of Occupational Licensing Department of Commerce and Economic Development P.O. Box 110806 Juneau, Alaska 99811-0806 Telephone: (907) 465-2536 POSITION STATEMENT: Testified in support of HB 143. WILDA RODMAN, Legislative Administrative Assistant to Representative Gene Therriault Alaska State Legislature Capitol Building, Room 511 Juneau, Alaska 99801 Telephone: (907) 465-2812 POSITION STATEMENT: Presented HB 62 on behalf of the bill sponsor; testified that the sponsor prefers the original bill title as opposed to the title of CSHB 62(URS), but is in favor of the two-year extension period rather than the original bill's four-year period. JIM ROWE, Director Alaska Telephone Association 201 East 56th Street Anchorage, Alaska 99518 Telephone: (907) 345-8760 POSITION STATEMENT: Testified in support of CSHB 62(URS). MARK VASCONI, Director of Regulatory Affairs AT&T Alascom 210 East Bluff Drive Anchorage, Alaska 99515 Telephone: (907) 264-7308 POSITION STATEMENT: Testified in support of CSHB 62(URS) JANET SEITZ, Legislative Assistant to Representative Norman Rokeberg Alaska State Legislature Capitol Building, Room 24 Juneau, Alaska 99801 Telephone: (907) 465-4968 POSITION STATEMENT: Explained changes to current statute in HB 158 regarding notification of insurance cancellation as aide to the House Labor and Commerce Standing Committee. ROSEMARY HAGEVIG, Executive Director Catholic Community Services 419 Sixth Street Juneau, Alaska 99801 Telephone: (907) 463-6151 POSITION STATEMENT: Testified in support of HB 158, particularly the section dealing with insurance notification, on behalf of Catholic Community Services, parent organization to Southeast Senior Services. JOHN FERENCE, Deputy Director Division of Insurance Department of Commerce and Economic Development P.O. Box 110805 Juneau, Alaska 99811-0805 Telephone: (907) 465-2560 POSITION STATEMENT: Answered questions regarding HB 158. JOHN GEORGE, Lobbyist for the National Association of Independent Insurers 3328 Fritz Cove Road Juneau, Alaska 99801 Telephone: (907) 789-0172 POSITION STATEMENT: Testified on industry concerns regarding HB 158. KEVIN HAND, Legislative Administrative Assistant to Representative Andrew Halcro Alaska State Legislature Capitol Building, Room 418 Juneau, Alaska 99801 Telephone: (907) 465-4939 POSITION STATEMENT: Provided cost of certified mail during hearing on HB 158. JOE BALASH, Legislative Secretary to Representative Gene Therriault Alaska State Legislature Capitol Building, Room 511 Juneau, Alaska 99801 Telephone: (907) 465-4797 POSITION STATEMENT: Presented HB 136 on behalf of the bill sponsor. LISA VonBARGEN, Executive Director Valdez Convention and Visitors Bureau P.O. Box 1603 Valdez, Alaska 99686 Telephone: (907) 835-2984 POSITION STATEMENT: Commented briefly on the gradual tourism marketing funding reduction contained in the Version K committee substitute for HB 136. NANCY LETHCOE P.O. Box 1313 Valdez, Alaska 99686 Telephone: (907) 835-5175 POSITION STATEMENT: Testified in support of the Version K committee substitute for HB 136 but encouraged the committee to consider alternative funding sources such as those proposed in SB 122. GINNY FAY, Legislative Liaison and Acting Director of the Division of Tourism Department of Commerce and Economic Development P.O. Box 110800 Juneau, Alaska 99811-0800 Telephone: (907) 465-2503 POSITION STATEMENT: Explained changes in the Version K committee substitute for HB 136, answered questions. TINA LINDGREN, Executive Director Alaska Visitors Association 2525 "C" Street, Number 400 Anchorage, Alaska 99515 Telephone: (907) 561-5733 POSITION STATEMENT: Answered questions and testified on the Version K committee substitute for HB 136. PHIL GREENEY 1801 Old Glacier Highway Juneau, Alaska 99801 Telephone: (907) 463-5855 POSITION STATEMENT: Testified as a bed and breakfast owner with concerns, especially regarding secure funding, on the Version K committee substitute for HB 136. REPRESENTATIVE BETH KERTTULA Alaska State Legislature Capitol Building, Room 430 Juneau, Alaska 99801 Telephone: (907) 465-4766 POSITION STATEMENT: Asked questions during HB 136 hearing. ACTION NARRATIVE TAPE 99-35, SIDE A Number 0001 CHAIRMAN NORMAN ROKEBERG called the House Labor and Commerce Standing Committee meeting to order at 3:24 p.m. Members present at the call to order were Representatives Rokeberg, Halcro, Harris and Cissna. Representative Murkowski arrived at 3:30 p.m. GOVERNOR'S APPOINTMENT: AK WORKERS' COMPENSATION BOARD Number 0118 CHAIRMAN ROKEBERG announced the committee's first order of business is the Governor's appointment of Andrew J. "Bear" Piekarski of Anchorage to the Alaska Workers' Compensation Board. The chairman questioned whether Commissioner-designee Flanagan of the Department of Labor wished to provide any testimony. Number 0133 ED FLANAGAN, Commissioner-designee, Department of Labor, stated he is available if Mr. Piekarski needs assistance. CHAIRMAN ROKEBERG noted the record should reflect Commissioner-designee Flanagan is present for moral encouragement. The chairman confirmed Mr. Piekarski's resume was made available to the committee. The chairman has known Mr. Piekarski for a number of years as the business manager for the Alaska State District Council of Laborers. He indicated he thought Mr. Piekarski would make a very fine member of the Alaska Worker's Compensation Board. Alluding to his involvement with Mr. Piekarski through hockey, the chairman declared a conflict of interest. He commented a vote to move the Governor's recommendation from the committee does not reflect any intent on the part of the members to vote for or against an individual during further consideration before the joint body of the legislature. Number 0255 REPRESENTATIVE HALCRO moved the name of Andrew J. "Bear" Piekarski to the Alaska Workers' Compensation Board. There being no objections, it was so ordered. HB 143 - REAL ESTATE:SURETY FUND & DISCLOSURES Number 0279 CHAIRMAN ROKEBERG announced the committee's next order of business is HB 143, "An Act relating to the executive officer employed for the Real Estate Commission, to educational materials published by the Real Estate Commission, to the Real Estate Surety Fund, to contracts by the Real Estate Commission, and to disclosures in real property transactions." The chairman noted the presence of a possible committee substitute (CS), Version G, and a possible amendment G.1. Number 0379 REPRESENTATIVE HALCRO moved that the committee adopt the proposed Version G CS for HB 143 as a working document. Version G is labeled 1-LS0150\G, Bannister, 4/6/99. There being no objection, it was so ordered. CHAIRMAN ROKEBERG stated Version G is before the committee and proceeded to explain the changes in the proposed CS. The chairman noted he had spent several hours in two meetings with the Real Estate Commission during the break and recognized that Larry Spencer of the commission was present. The chairman indicated the original bill had been reviewed and modified based on recommendations from the commission, the chairman, and industry members. The bill packet contains a number of letters in support, including an endorsement of Version G from the Alaska Association of REALTORS. Number 0463 CHAIRMAN ROKEBERG pointed out that Section 1 had been changed slightly in Version G: "executive secretary" remains the formal title of the executive secretary of the commission, but use of the title "executive director" is allowed during performance of duties. The use of this title would be allowed to provide title parity when the executive secretary has dealings with directors of other states' real estate commissions, but it is clearly not intended to result in a pay increase. Section 2 of Version G allows the commission to adopt regulations regarding disclosure of information on real estate transactions; this section replaces the original bill's entire section regarding psychological impairment, HIV [Human Immunodeficiency Virus], ghosts, and so forth. The chairman indicated he thought it would be best to allow the commission to address this issue through regulation rather than including specific information in the legislation. The chairman further indicated he has a legal opinion that the commission might not even need this section. Number 0598 CHAIRMAN ROKEBERG explained the core of the legislation begins in Section 3 of Version G. The surety fund maximum is $500,000. Beginning on page 2, line 6, the legislation provides that the interest income earned by the surety fund returns to the fund - to the licensees. The chairman reminded the committee the surety fund was established in lieu of a bonding situation. It was done for the convenience of the real estate industry, but, more importantly, for protection of Alaskan consumers. Page 2, line 7, specifies that the money appropriated to the fund does not lapse. The chairman stated, "Currently it's been necessary to make the (indisc.) appropriation in the front section of the budget to move the lapse of the fund, so this would prohibit that, any potential excess monies in the fund, for example, right now because ... the publications specialist position is not funded, the ... monies are not being used up so it could be potentially under future surpluses in the fund and that that should not lapse into the general fund, ... this prohibits that." The chairman indicated the added language on lines 9 through 11, "for claims against the fund, for hearing and legal expenses directly related to fund operations and claims, and", ensures that any other expenses concerning a claim can be addressed. However, this would be relatively unusual because there is no legal counsel involved with hearings before the fund: the claimant and claimee bring their own cases. Number 0741 CHAIRMAN ROKEBERG continued. Section 4 provides for an accounting of fund balances to the Real Estate Commission by the Department of Commerce and Economic Development (DCED). This allows the commission to be aware if the fund is near the ceiling or floor amounts; this was part of the original legislation. Section 5 provides for the averaging of the surety fund balance, which can vary, over the two-year licensing cycle. The fund has a $250,000 floor and a $500,000 cap. Averaging the fund balance allows the commission to make adjustments accordingly when setting the two-year surety fund fee along with the licensing fee. One significant difference in the proposed CS is that the legislation would no longer affect the educational purposes of the surety fund. The chairman indicated his original idea of transferring these purposes to the licensing fee would have subjected the Real Estate Commission and the administration of this area to the whim of the House Finance Standing Committee regarding funding because of the budgetary statute regarding program receipts. The chairman commented on the entire Real Estate Commission staff turnover occurring in Anchorage - executive secretary, the publication position under the surety fund, and the licensing examiner - and indicated this lack of continuity was the reason to avoid jeopardizing the commission's operating ability. Chairman Rokeberg noted they have taken a different approach, referring to page 3, subsection (d) of Version G. Subsection (d) read: (d) If the salary of an employee is entirely or partially paid for from money in the real estate surety fund, the employee may perform administrative duties for the commission in addition to any duties the employee performs that are related to the real estate surety fund. AS 08.88.910 does not apply to this subsection. CHAIRMAN ROKEBERG indicated the industry complaint has been the alleged misuse of surety fund monies for educational purposes. However, one existing problem is that the publication specialist funded out of the surety fund has not been allowed to perform administrative duties and assist the executive secretary because of the statutory construction. The chairman noted the executive secretary also receives some allocation from the surety fund. Subsection (d) would allow the publication specialist to perform administrative duties for the commission in addition to duties relating to the surety fund, which is the education. This approach has been discussed with the legislative committee of the Alaska Association of REALTORS and they are in agreement at the current juncture. Number 0956 CHAIRMAN ROKEBERG referred to the possible G.1 amendment before the committee. This amendment would provide for the insertion of a new subsection (b) on page 2 [later discussion amends the lettering of this subsection to (c)]. The chairman declared a conflict of interest, noting he is a licensed real estate broker and does not wish to be excused. Chairman Rokeberg indicated the original bill had sought to remove the responsibility for publication of the landlord-tenant booklet from the Real Estate Commission. From the chairman's discussions with the commission and the legislative committee of the Alaska Board of REALTORS, the licensees are willing to pay the approximately $6,000 publication cost of this booklet for both the public benefit and the education of the industry members [testimony is unclear as to whether the cost is annual or for the two-year licensing period]. However, there is no statutory authority allowing the $6,000 removed for publication from the surety fund to be replaced into the fund. The commission charges $1 per booklet, but that $1 has to go into the general fund. In addition, there are sometimes surplus funds from entry fees for educational seminars the commission might hold. This amendment provides that program receipts from any type of activity funded by the surety fund go back into the surety fund, not into the general fund. The chairman designated this G.1 amendment as Amendment 1. Number 1118 REPRESENTATIVE HALCRO moved Amendment 1. Amendment 1, labeled 1-LS0150\G.1, Bannister, 4/9/99 read: Page 2, line 6: Delete "and" Page 2, line 7, following "in the fund": Insert ", and money deposited in the fund under (b) of this section" Page 2, line 12: Delete "a new subsection" Insert "new subsections" Page 2, following line 12: Insert a new subsection to read: "(b) If money from the real estate surety fund is expended to prepare, print, manufacture, sponsor, produce, or otherwise provide an item or a service to a member of the public, to a real estate licensee, to a potential real estate licensee, or to another person, any money paid by the person to the commission, either directly or through an agent or contractor of the commission, to receive the item or service shall be deposited in the fund. In this subsection, "an item or a service" includes an information pamphlet, an examination preparation packet, an educational course, the certification of a real estate education course, and the approval of a real estate education instructor." Reletter the following subsection accordingly. CHAIRMAN ROKEBERG asked if there was any discussion of Amendment 1. REPRESENTATIVE MURKOWSKI questioned if the existing subsection (b) in Version G, beginning on line 13, page 2, was being deleted to insert Amendment 1's language, or if the existing (b) remained and was just relettered. The existing subsection (b) in Version G read: (b) The Department of Commerce and Economic Development shall provide the commission every three months with a statement of the activities of, balances in, interest earned on, and interest returned to the real estate surety fund." CHAIRMAN ROKEBERG initially responded that Amendment 1 was simply deleting the words "a new subsection" and inserting "new subsections". However, he also questioned why the new subsection was designated (b). He discussed this briefly with Janet Seitz, aide to the House Labor and Commerce Committee and legislative assistant to the chairman. Number 1196 CHAIRMAN ROKEBERG called an at-ease at 3:42 p.m. The committee came back to order in less than a minute. CHAIRMAN ROKEBERG announced the committee would make a technical amendment to line 10 of Amendment 1, the G.1 amendment, relettering the subsection lowercase "(b)" to lowercase "(c)". The chairman clarified that Amendment 1 is only intended to add that new subsection. There being no objection to Amendment 1 as technically amended, Amendment 1 was adopted as amended. Number 1244 LARRY SPENCER, Real Estate Commission, came forward at the chairman's invitation. He stated the commission appreciated the opportunity to have input through the chairman's office and is in support of the legislation. Number 1279 TOM MARTIN testified next via teleconference from Kodiak in support of HB 143. He testified as a private citizen, stating he is a licensed real estate agent. Mr. Martin noted Linda Freed had also been present, but had to leave. He conveyed that Ms. Freed is in support of HB 143 and had said she would be sending a POM [public opinion message]. Mr. Martin thanked the chairman for the bill's introduction; he indicated he thinks it corrects some long-standing problems with money going out of the surety fund inappropriately. Number 1332 MICHAEL HUGHES, Board of Directors, Alaskan AIDS Assistance Association, testified next via teleconference from Anchorage. Mr. Hughes confirmed from the chairman that the committee was dropping the miscellaneous provision specifying people exposed to HIV [Section 8, original bill, 1-LS0150\D]. He indicated that provision had been his reason for participating. CHAIRMAN ROKEBERG questioned whether Mr. Hughes was aware that provision is currently a matter of federal law under HUD [U.S. Department of Housing and Urban Development]. MR. HUGHES replied he had not been aware. CHAIRMAN ROKEBERG indicated the legislation's former provision had basically been redundant, and was more or less included for the information of Alaska licensees. The chairman noted Mr. Hughes should be aware that currently any licensee is forbidden from making that disclosure. The chairman added that Dr. Middaugh, the chief state epidemiologist, had indicated his support for broadening that provision to all infectious diseases, if the provision had been retained, because there is no need to do so [disclose]. MR. HUGHES said they had just been concerned with specifying one disease versus any others. Number 1413 CHARLES SANDBERG, President, Alaska Association of REALTORS, testified next via teleconference from Anchorage in support of HB 143. He thanked the chairman for allowing the association's input on this issue and expressed the support for this legislation by the Alaska Association of REALTORS, representing over 1,100 members statewide. CHAIRMAN ROKEBERG questioned Mr. Sandberg regarding the importance of passing the legislation this year because of the two-year [licensing] cycle. MR. SANDBERG replied they are ending their current licensing cycle. The legislation affects how the Division of Occupational Licensing and the Real Estate Commission calculate the license fees. If this legislation is passed, it puts some finality on how that calculation is made. Number 1485 ART CLARK, Chairman, Industry Issues Working Group, Alaska Association of REALTORS; Member, Legislative Committee, Anchorage Board of REALTORS, testified next via teleconference from Anchorage in support of HB 143 on behalf of the Alaska Association of REALTORS. Mr. Clark indicated the issue of how the surety fund monies were allocated has caused quite a bit of controversy industry-wide in the past. He thinks the legislation goes a long way toward clearing up some of those issues in an equitable manner. REPRESENTATIVE HALCRO mentioned that airport noise is a huge concern "out in our area," as Mr. Clark knows. Section 2 of the legislation [misstated as "8"] gives the commission the power to adopt disclosure information. Representative Halcro questioned if Mr. Clark's committee has examined or addressed anything about disclosures, or plans to do so, when someone buys or sells homes within a certain noise corridor of the Anchorage International Airport. MR. CLARK indicated the issue has just recently come to the legislative committee's attention and no formal position has been adopted. Mr. Clark urged caution in this area. The Real Estate Commission has the ability to pass regulations concerning this matter; he would recommend that be the avenue addressed in seeking any kind of noise level disclosure, rather than addressing it in statute. Mr. Clark indicates there are difficulties with regards to this information for both real estate agents and homeowners. He thinks the noise level data are generated through the airport; he is not aware how those calculations are made and where any problems are. REPRESENTATIVE HALCRO agreed that the commission would be best suited to handle this. He stated, "My concern is - I'm not quite sure if you remember - a year ago when the local assembly tried to free zoning out in a certain corridor out by the airport, which would have affected a number of subdivisions in our area and a number of vacant lots." Representative Halcro indicated the concern is for the commission to address the issue preemptively so there would be something in place "versus ... kind of tying folks' hands when it comes to zoning changes." MR. CLARK replied he thinks that is probably a good way to handle things. He expressed concern regarding anything "stuck in stone" regarding zoning regulations or statute. He thinks it is better to make the information available to people and let them decide whether they wish to live there or not. CHAIRMAN ROKEBERG thanked Representative Halcro for bringing the issue up. Proceeding to further teleconference testimony, the chairman invited Ron Johnson in Kenai to speak. He noted there is a communication in the committee packet from Mr. Johnson. Number 1671 RON JOHNSON testified next via teleconference from Kenai. He is a licensed real estate broker and former member of the Real Estate Commission. Mr. Johnson indicated his faxed comments to the committee provide his views but he would like to reiterate somewhat. He indicated he might be able to offer the committee some insight as a commission member during the change from executive director to executive secretary. His concern is that the statute specifically precludes a licensee from misrepresenting designations [from Mr. Johnson's fax, AS 08.88.401(a)]. He has not seen that the "executive secretary" position is of less importance than "executive director" in his attendance at industry meetings. Mr. Johnson sees this as a potential step in the wrong direction: the reason for allowing this title use might be forgotten in the future and the position might be funded as an executive director position. Per statute, the duties of the executive secretary of the Real Estate Commission are specifically duties that would be assigned to a secretary. In some states where there is actually a director and/or a real estate commissioner, it is a different position totally. Mr. Johnson indicated he does not see the logic or reasoning behind allowing the executive secretary to use the title of executive director. CHAIRMAN ROKEBERG noted, though, the current executive secretary [Grayce Oakley] is retiring. The commission is attempting to fill the position and the chairman commented it is not an especially high-paying job. The chairman questioned whether Mr. Johnson didn't think that could be helpful in recruiting, or if Mr. Johnson thought that was not important. Number 1762 MR. JOHNSON indicated he didn't think it was at all important. He thinks the position pays well enough to the duties. He indicated the only place where he sees the duties being somewhat different from the duties of a secretary is when the executive secretary, at times, during surety fund or license hearings, acts as a representative of the commission. Mr. Johnson noted that is part of the surety fund travel budget he had planned to address a little later - that is one of the reasons the executive secretary will have to be allowed some money for travel. Mr. Johnson reiterated his disagreement with allowing the executive secretary to use the title of executive director; he sees it as a "pitfall down the pike." He commented Governor Cowper perceived the only way to regain control of the Real Estate Commission, forcing the board itself to control the real estate business, was to eliminate the director position and put it into a secretarial position. CHAIRMAN ROKEBERG noted he appreciated Mr. Johnson's testimony. The chairman indicated Mr. Johnson's suggested additional wording in his fax, "into the general fund but is returned to the surety fund.", to be placed after "does not lapse." on page 2, line 7 of Version G, was not necessary from a statutory or drafting stand point. Number 1845 MR. JOHNSON explained he suggested the additional language for clarity. Mr. Johnson also indicated he thinks the portion of the legislation allowing the Real Estate Commission to adopt regulations concerning disclosure should cite the enabling statute [from Mr. Johnson's fax, AS 08.88.071(H)(7)]. Mr. Johnson expressed his view of the importance of the newsletter, which gives the commission the ability to communicate with the membership. He further expressed his opinion that the budget, travel fund, et cetera, should be controlled by the commission, and that the director position should be vacant so the real estate commission is able to direct the secretary. CHAIRMAN ROKEBERG confirmed there were no questions for Mr. Johnson and noted he thought Mr. Johnson had made some excellent comments. Number 1917 DAVE FEEKEN, Kenai Peninsula Association of REALTORS, testified next via teleconference from Kenai in support of HB 143. The Kenai Peninsula board's legislative committee has met and is in total agreement with the other witnesses who have testified, including Mr. Johnson, in support of this issue. Number 1959 CATHERINE REARDON, Director, Division of Occupational Licensing, Department of Commerce and Economic Development, came forward to testify in support of HB 143. The division employs the Real Estate Commission's staff. Ms. Reardon appreciates the work done on the draft CS and anticipates the fiscal note will be zero. CHAIRMAN ROKEBERG asked if Ms. Reardon had a comment on the issue Mr. Johnson raised concerning the executive director/executive secretary title change. MS. REARDON appreciated the change from the original bill because of her expressed concern about it triggering a salary change. Currently, the executive secretary is authorized by Ms. Reardon to use the working title "executive administrator" when useful. Ms. Reardon indicated she had not heard a lot of concern about negative effects resulting from use of the "executive secretary" title, but it is not a big issue to her either way. REPRESENTATIVE HALCRO sought clarification on the committee's positive fiscal note of $104,000. Number 2020 MS. REARDON explained that fiscal note from the original bill had been created with the intention of showing $104,000 less being spent from the surety fund, with the money being moved straight over as a "wash" to the general fund, but had not looked that way as was pointed out at the previous hearing. In the proposed CS, that shift from the surety fund no longer occurs and the issue becomes moot. Ms. Reardon indicated the original bill's fiscal note could have been presented differently to show the intended zero wash, but a new zero note would be required to go with the CS once it is adopted. In response to the chairman's comment, she explained the department is not allowed to present fiscal notes until committee substitutes are formally adopted. REPRESENTATIVE CISSNA questioned if Ms. Reardon thought there might possibly be a good reason to change the title since Ms. Reardon had informed the executive secretary there was another title which could be used if needed. MS. REARDON indicated she has informed the three people in the executive secretary job class that they may use the title "executive administrator." Besides the executive secretary to the Real Estate Commission, there is the executive secretary to the State Medical Board and the executive secretary to the Board of Nursing. Ms. Reardon further indicated at times one or the other had mentioned it might be helpful to use a different title when signing correspondence to avoid confusion that the executive secretary was a clerical position rather than the top staff person for the profession. They had arrived at "executive administrator" or "administrator" as a working title. Ms. Reardon noted that since "executive director" is another job class in the state system, she did not switch to "executive director" at that time. "Executive director" goes with autonomous commissions such as the Alaska Public Utilities Commission. Ms. Reardon agreed she had heard it might be useful to not always require the "executive secretary" title be used, but indicated she has not heard of any ongoing problem since that time. Number 2142 CHAIRMAN ROKEBERG requested Mr. Spencer of the Real Estate Commission rejoin the committee at the table. The chairman indicated he wished to hear what Mr. Spencer thinks the commission's position would be. MR. SPENCER replied the idea did not originate with the commission but it was brought to their attention in the drafting of this legislation. He thinks the commission felt that it would useful to provide the incoming secretary with possibly somewhat more of a position of authority in dealing with the public, with licensees, and people outside the state. If more respect for the position could be engendered without necessarily increasing the pay, that might be desirable. CHAIRMAN ROKEBERG questioned the use of "executive administrator" to be consistent with the directive of the division director. MR. SPENCER thought either of those languages would assist. CHAIRMAN ROKEBERG asked if Ms. Reardon had an opinion. MS. REARDON answered she is very happy with the bill so it is a minor detail to her. She supposes she prefers "executive administrator," but does not want hinder the legislation in any way. Number 2219 CHAIRMAN ROKEBERG questioned if anyone else wished to testify on HB 143. He noted the committee's dilemma regarding what this position would be called and requested input. REPRESENTATIVE HALCRO indicated he would recommend the committee adopt the language currently in the bill. MR. JOHNSON commented the National Association of REALTORS has been endorsing the "executive administrator" title for some time now, moving away from the executive officers and that sort of thing. He thinks it would really have a significant impact if they put the "executive director" back. CHAIRMAN ROKEBERG closed the public testimony on HB 143. REPRESENTATIVE MURKOWSKI referred to the language in Section 2 of the proposed CS which would be added to AS 08.88.081, "The commission may adopt regulations concerning the disclosure of information in real estate transactions.". She sought clarification on the change from the specific language in the original bill to this language which would allow the commission to do the disclosure simply through regulation. Representative Murkowski apologized if the chairman had made the explanation already. She noted Mr. Johnson had touched on it briefly when he said it might be wise to include the enabling statute. Number 2322 CHAIRMAN ROKEBERG moved an amendment to remove Section 2 from Version G. He indicated his reason for the amendment is that the Real Estate Commission already has the authority to make regulations and that he has a legal opinion supporting this. The chairman noted, "The records of the Real Estate Commission will show the discussion at which I requested them (indisc.) request the Attorney General ask whether or not they have authority to make regulations on any of the issues that were covered in the first portion (indisc.) first draft of the bill. They have agreed to do that. They also request[ed] to me that I request legal counsel, our legal affairs, to do the same and I have done so. I have in hand an opinion that says that the Real Estate Commission does have the authority to draft regulations on those issues currently. This is consistent with what the committee staff has found to be the case in the state of New York where, relying on a real estate opinion from the attorney general of the state of New York, the New York Real Estate Commission has promulgated regulations as to psychological impairment." He commented the form of disclosure statement is AS 34.70.050 and there is an additional specific portion of the chapter that allows the commission to draft regulations to implement the chapter. He asked Ms. Reardon for confirmation. MS. REARDON indicated it looked like the existing language in AS 08.88.081 allows this. Sec. 08.88.081. Commission regulations. The commission shall adopt regulations necessary to carry out the purposes of this chapter. REPRESENTATIVE MURKOWSKI confirmed the chairman only intended to remove the language which was to be added, not to remove the existing statutory language. Number 2425 CHAIRMAN ROKEBERG noted with that he would move Amendment 2: that conceptually Section 2 be removed from the bill. There being no objection, Conceptual Amendment 2 was adopted. Number 2442 REPRESENTATIVE HALCRO moved Amendment 3 on page 1, line 10, after "executive" to delete "director" and insert "administrator". CHAIRMAN ROKEBERG asked if there were any questions or objections to Conceptual Amendment 3. There being none, Conceptual Amendment 3 was adopted. REPRESENTATIVE MURKOWSKI indicated the bill title would need to be changed because of the wording "executive officer". CHAIRMAN ROKEBERG indicated the amendment should include the appropriate title change, noting that was the reason it was conceptual. TAPE 99-35, SIDE B Number 0001 There was brief discussion regarding "executive officer" in the bill title and whether another amendment was necessary. No additional amendment was deemed necessary. Number 0053 REPRESENTATIVE HALCRO made a motion to move CSHB 143, Version G as amended, out of committee with individual recommendations and the attached "zero" fiscal note. There being no objection, CSHB(L&C) moved out of the House Labor and Commerce Standing Committee. HB 62 - ALASKA PUBLIC UTILITIES COMMISSION Number 0083 CHAIRMAN ROKEBERG announced the committee's next order of business is HB 62, "An Act relating to the Alaska Public Utilities Commission; and providing for an effective date." The chairman pointed out the committee has before it CSHB 62(URS), Version H. Number 0094 WILDA RODMAN, Legislative Administrative Assistant to Representative Gene Therriault, Alaska State Legislature, came forward to present HB 62 on behalf of the bill sponsor. She noted Representative Therriault apologizes for his absence; he has a House Finance Standing Committee commitment. Ms. Rodman summarized the sponsor statement. Under AS 42.05 and AS 42.06, the Alaska Public Utilities Commission (APUC) regulates public utilities by certifying qualified providers of public utility and pipeline services. The commission is designed to ensure utilities provide safe and adequate services and facilities at reasonable rates. Under AS 44.66.010, termination of state boards and commissions, APUC will expire June 30, 1999. If the legislature does not act to extend the commission, APUC would have one year, until June 30, 2000, to conclude its affairs. The CS for HB 62 was amended to extend the commission for two years, instead of four, to allow the legislature to revisit the commission's progress toward addressing several problems identified through the public hearing process. MS. RODMAN explained HB 62 was intentionally introduced with a broad title because Representative Therriault believes the reason the legislature specifies the sunset date is to address possible commission shortcomings. Representative Therriault believes shortcomings have been identified through the hearing process. Ms. Rodman indicated the sponsor prefers the legislation's original title but, because of the short time remaining in the legislative session, does not object to passage of the current version in a timely manner. Number 0199 REPRESENTATIVE MURKOWSKI asked for clarification regarding the sponsor's non-support of the title change. [HB 62's original title was, "An Act relating to the Alaska Public Utilities Commission; and providing for an effective date." CSHB 62(URS)'s title is, "An Act extending the termination date of the Alaska Public Utilities Commission until June 30, 2001; and providing for an effective date."] MS. RODMAN related the title was changed over the sponsor's objections. The sponsor wished the title to remain broad and to address some structural problems with the commission. She noted many of the structural problems have been identified, and some are being addressed in another bill. In response to Representative Murkowski's request for further clarification, Ms. Rodman confirmed the sponsor supports the commission's extension, but not the current title change. She added the sponsor supports the two-year extension, as opposed to the four-year extension contained in the original bill. Ms. Rodman clarified for Representative Cissna that the title change contained more than just the change in extension period. She indicated the much narrower new title means many other issues relating to the commission cannot be dealt with. Ms. Rodman noted the sponsor would like the record to reflect that he thinks it is not good public policy to usher the sunset through without dealing with the problems; the reason for the sunset is to deal with shortcomings in the commission. However, the sponsor wishes to see the bill move. Number 0247 CHAIRMAN ROKEBERG said he is also a member of the House Special Committee on Utility Restructuring (URS). This particular legislation received significant hearing in that committee. As the sponsor's staff indicates, the original bill contained additions beyond the sunset. The chairman noted the audit had not been completed when the bill came to URS; that audit is now complete. From the testimony before it, URS determined restructuring of APUC is necessary. Chairman Rokeberg indicated the House Labor and Commerce Standing Committee would be receiving the legislation dealing with this restructuring and would have ample opportunity to take up the issues surrounding the commission at that time. The chairman further indicated, noting he had been part of the decision-making process, that the prior committee determined it would be cleaner to do this with a shorter horizon. He emphasized the need for the APUC to be extended because of the effect of a sunset on industry, the existing dockets, and business before the commission. CHAIRMAN ROKEBERG commented the testimony was that the commission is dysfunctional enough without the threat of a "wind-down" year, and the resulting cost of that to the utilities. The chairman noted, therefore, the bill sponsor has agreed to allow this bill to move forward, although the sponsor had wished to do further restructuring with his legislation. Chairman Rokeberg stated his intention to move CSHB 62(URS) as rapidly as possible. In response to Representative Halcro's question about whether the National Regulatory Research Institute's (NRRI) report ["audit"] on APUC in the bill packet was done in lieu of LB&A's [Joint Committee on Legislative Budget and Audit] audit, the chairman answered in the negative. He indicated the LB&A audit picked up a great deal of the NRRI report and the committee would be dealing extensively with that report unless URS did more work by the following week. Chairman Rokeberg noted the presence of Walter Wilcox, Sr., aide to the House Special Committee on Utility Restructuring. Number 0379 JIM ROWE, Director, Alaska Telephone Association (ATA), testified via teleconference from Anchorage in support of CSHB 62(URS). Noting he appreciated the chairman's remarks, Mr. Rowe said the ATA is very much in support of passage of this reauthorization and they look forward to working on APUC restructuring issues in another bill. In response the chairman's question, Mr. Rowe confirmed ATA is in support of this bill. Number 0402 MARK VASCONI, Director of Regulatory Affairs, AT&T Alascom, came forward to testify in support of CSHB 62(URS). He thinks the chairman's comments were accurate; if the commission went into a "wind-down" period, more problems might arise from that. Mr. Vasconi believes industry wants at least the assurance of some continuity. He noted other possible structural changes are being addressed in another bill, expressing that they would all probably have an opportunity to comment on those changes in the near future. CHAIRMAN ROKEBERG closed the public hearing on HB 62 after confirming no one else wished to testify. The chairman confirmed the committee had no further questions or discussion regarding the legislation. Number 0455 REPRESENTATIVE HALCRO made a motion to move CSHB 62(URS) out of committee with individual recommendations and the attached zero fiscal note. There being no objection, CSHB 62(URS) moved out of the House Labor and Commerce Standing Committee. Number 0477 CHAIRMAN ROKEBERG called an at-ease at 4:22 p.m. The committee came back to order at 4:29 p.m. HB 158 - NOTICE OF INS. CANCELLATION TO ELDERLY Number 0484 CHAIRMAN ROKEBERG announced the committee's next order of business is HB 158, "An Act relating to the annual report of the director of the division of insurance and to notice of cancellation of personal insurance." Chairman Rokeberg explained the legislation as the bill sponsor. He indicated the first portion of the bill would amend AS 21.06.110 by adding a new subsection with the language, "statistical information regarding health insurance, including the number of individual and group policies sold in the state; and". This information would be provided to the Division of Insurance, Department of Commerce and Economic Development, to assist the division by mandating insurance companies doing business in the state to determine the number of people covered under individual group policies or non-ERISA policies [ERISA, Employee Retirement and Security Act]. The chairman noted this has been after a five-year quest for information from the department. Number 0524 CHAIRMAN ROKEBERG explained the second portion of the legislation results from the experience of his neighbor. The neighbor is in his 80s, with an invalid wife. The neighbor was involved in an automobile accident and afterwards discovered his insurance had expired about four months previously; he hadn't realized he had failed to pay his bill. The chairman indicated his neighbor is quite lucid but might be suffering from mild forms of dementia, which is not unusual at that age. As a result, the gentleman was able to make a settlement of some $25,000 against an actual $80,000 damage amount. [Chairman Rokeberg indicated this settlement information is in a letter in the bill packet from Reverend Ronald Martinson of the Central Lutheran Church in Anchorage. There is an April 7, 1999, letter from Reverend Martinson on this issue in the bill packet but it does not contain information regarding settlement.] Number 0577 CHAIRMAN ROKEBERG emphasized the need to verify that senior and elderly Alaskans receive proper notice their insurance is going to be canceled. The legislation only covers personal insurance - property and casualty - excluding life and health. Currently, the insurance companies only have to register a notice of mailing within their own records; they do not have to have a return receipt. The legislation gives Alaskans over 67 years old a longer period of notification and a letter mailed return receipt ten days prior to cancellation. Commenting that this is like an unfunded mandate to the insurance industry, the chairman noted the insurance industry would incur some costs because the timing would begin at 60 days, rather than the current 30 days, and the return receipt would be required. The chairman requested that Janet Seitz, aide to the House Labor and Commerce Standing Committee, explain the current statutory requirements for notification and the changes the legislation would make for older Alaskans. Number 0665 JANET SEITZ, Legislative Assistant to Representative Norman, Alaska State Legislature came forward. As aide to the House Labor and Commerce Standing Committee (Labor and Commerce), she explained the changes. Ms. Seitz indicated the current basic scheme for everyone is shown on page 2, line 17 through 23, of the bill: written notice of cancellation at least 30 days before the effective date, a 20-day notice, and a 10-day notice. House Bill 158 would require a different notice schedule if a person is 67 or older: first notice at least 60 days before the effective date of cancellation, second notice at least 30 days, and a third written notice at least 10 days before sent by certified mail. CHAIRMAN ROKEBERG questioned if the committee understands what the legislation does. He confirmed for Representative Harris that only the last mailing is by certified mail. Number 0720 REPRESENTATIVE HALCRO confirmed from the chairman that the incident mentioned in the sponsor statement and in the letter on the Central Lutheran Church letterhead concern the same individual. Representative Halcro commented the letter says the couple had a caregiver who confessed to taking advantage of the couple's finances for over $40,000. CHAIRMAN ROKEBERG said that is a different incident not spoken to in the bill; he indicated it simply makes this couple's situation that much worse. REPRESENTATIVE HALCRO questioned whether the caregiver could have thrown away the notice of cancellation. CHAIRMAN ROKEBERG agreed it was possible. REPRESENTATIVE HALCRO questioned how this legislation would prevent this situation if someone keeps throwing the notice away or if someone moves. CHAIRMAN ROKEBERG answered he thinks it protects the insurance company because it would have the return receipt, being able to prove the notice was sent. He thinks it helps both the recipient and the insurer. REPRESENTATIVE HALCRO asked if any other cases like this have occurred, indicating he is trying to understand the reason for changing the notice structure. CHAIRMAN ROKEBERG commented the witness testimony might be helpful. Number 0804 REPRESENTATIVE MURKOWSKI questioned why the legislation is requesting statistical information on health insurance but no other types of insurance. CHAIRMAN ROKEBERG replied that is the figure they have been seeking for five years. The department does an excellent job obtaining all kinds of other statistics but that one has been elusive. This legislation is something of a statutory mandate to obtain that statistical information. It gives the Division of Insurance justification if there is a cost involved in obtaining the information and provides justification to the insurance companies for the division's request. Number 0856 ROSEMARY HAGEVIG, Executive Director, Catholic Community Services, came forward to testify in support of HB 158. Ms. Hagevig noted Catholic Community Services is the parent organization to Southeast Senior Services; they serve 2,200 seniors in 15 Southeast Alaska communities. They support the legislation, particularly the section dealing with insurance notification for Alaska's elderly citizens. The efforts to provide an extra safety net for probably some of the most vulnerable members of the state's population are appreciated. Ms. Hagevig shared that she speaks from personal experience as a distant caregiver for an aging parent. Her sibling living close to the parent tries to intercept the mail every day to make sure something important does not go astray. Ms. Hagevig indicated this legislation would be of great assistance to those seniors, many of whom might be afflicted with dementia or Alzheimer's disease, who are trying very hard to maintain independent living for as long as possible outside of institutional situations. She understands there would be some complications with the insurance industry but is confident they could be resolved. REPRESENTATIVE MURKOWSKI noted this applied to personal insurance and questioned whether Ms. Hagevig thought it should be broadened. MS. HAGEVIG thinks it is a step in the right direction, and she is sure there was a good reason for beginning this process with personal insurance. She related a recent situation she had heard firsthand from a woman in Ketchikan. The woman's husband had died, had apparently forgotten to pay his life insurance premiums, and the wife was unable to collect anything. Ms. Hagevig noted these are very serious situations in people's lives as they become older, and she commented on the growth of this segment of the population. Number 0993 CHAIRMAN ROKEBERG pointed out to the committee there is a statutory grace period for life insurance, mentioning 30 days, but no mandated grace period for personal insurance. The chairman indicated he has had some discussion with members of the industry regarding notifications to relatives or other caregivers; he thinks it is difficult to do that statutorily. MS. HAGEVIG said in her personal situation her sibling has made every effort to change the [mailing] address when these situations come to light; this is another solution but it is not always effective. Also, not all senior citizens have family members close enough to be able to do that for them. CHAIRMAN ROKEBERG commented that having a change of address is probably the best advice to anyone in the circumstance; hopefully they will generate some publicity with this legislation and pass that information on. Number 1094 JOHN FERENCE, Deputy Director, Division of Insurance, Department of Commerce and Economic Development, came forward to answer the committee's questions on HB 158 from a technical standpoint. REPRESENTATIVE MURKOWSKI referred to an April 7, 1999, letter in the bill packet from the Alliance of American Insurers which states that this is going to be very problematic because there is nothing currently in place for them to monitor when someone turns 67. Representative Murkowski commented regular notices would be sent out to 70 percent of the public but it would then be necessary to monitor everyone's birthday. She asked Mr. Ference how the division would monitor the industry's compliance with this legislation, if passed. MR. FERENCE replied they monitor in two fashions: through consumer complaints and a periodic random audit process addressed to both insurance agents and companies. The division looks at producer files to see if the notices are copied there and it examines insurance companies to see if the companies have issued proper notices. In addition, the division responds to individual consumer complaints. REPRESENTATIVE MURKOWSKI questioned whether the division has received complaints regarding the notification situations this legislation would address. Number 1198 MR. FERENCE replied the division receives consumer complaints on a regular basis about inadequate or missing notices. Investigation results show that more often than not the notices were sent and are missing in transit or were received and ignored. Mr. Ference indicated the complaints come from no particular concentration of the population. CHAIRMAN ROKEBERG indicated an amendment to the effect that nothing in this paragraph would authorize the director to require the insurer to release proprietary information had been suggested regarding the statistical information. The chairman questioned whether Mr. Ference objected to an amendment of this type. MR. FERENCE replied he is not really in a position to offer an opinion because he does not know if the carrier they would request this information from would view it as proprietary. However, if the provision is not in the legislation, it is not a question. CHAIRMAN ROKEBERG asked if a distinction would be made between covered lives and policies, questioning if the committee needed to be specific in law or if the division could handle that. Number 1297 MR. FERENCE confirmed the division could handle that itself. CHAIRMAN ROKEBERG emphasized the objective is the amount of non-ERISA-covered. MR. FERENCE questioned that the information desired is the number of people who are beneficiaries of health insurance. CHAIRMAN ROKEBERG noted they wanted to make the distinction between non-ERISA and ERISA-covered. REPRESENTATIVE HALCRO questioned whether there is similar legislation in other states regarding the amount of notice as well as the statistical mandate. MR. FERENCE replied that, to the best of his knowledge, this would be a longer notice period than is required in any other jurisdiction. In response to chairman's question, Mr. Ference confirmed this is a new idea, to the best of his knowledge, and has not been directly looked at in other states. CHAIRMAN ROKEBERG expressed his approval. Number 1367 JOHN GEORGE, Lobbyist for the National Association of Independent Insurers (NAII), came forward. Among the members of NAII are Allstate [Allstate Insurance Company], GEICO [GEICO Corporation], USAA, Progressive [The Progressive Corporation] - major writers of automobile insurance in the state of Alaska. The notice required by this legislation would be a real problem for insurers. Mr. George said he had spoken this afternoon with an Allstate representative who had been an underwriter in the pre-computer days. This representative commented the company did not have age information for some of its clients because the original applications were taken manually. Unless the client applied for a senior citizen discount, the company might not know who its 67-year-olds are. The NAII believes that there are thousands or possibly even hundreds of thousands of cancellation notices issued every year in the state of Alaska. Mr. George questioned how many people even pay their insurance 60 days before it is due, commenting it is due just prior to cancellation. He indicated there would also be problems with people who pay their insurance on a monthly basis. Mr. George further indicated they are working on these logistical concerns with the chairman. Number 1453 MR. GEORGE expressed that his foremost concern, however, is the approaching year 2000 (Y2K). The NAII and other trade associations have lobbied the National Association of Insurance Commissioners (NAIC), the National Conference of Insurance Legislators (NCOIL), and the National Conference of State Legislators (NCSL) who have all passed resolutions urging state legislators not to pass legislation which could require insurance company programmers to concentrate on issues other than meeting Y2K compliance. Even if this legislation were to progress, NAII would urge the legislature for an effective date after Y2K so the insurance company programmers can continue their compliance efforts to ensure that the entire system doesn't crash. Mr. George indicated his clients have some serious problems with the legislation but the intent is appreciated. He thinks there are some solutions and these are being discussed with the companies. He noted it has occurred to him that the more a person suffers from dementia, the less likely the person is to need an automobile. Mr. George added there is an additional fail-safe with automobiles or homes that are financed: there is a lender ensuring that that insurance stays in force as well. He admitted, however, the older a person is, the less likely there is to be a lender involved. Number 1558 REPRESENTATIVE HARRIS questioned if the insurance companies would be a lot happier if the notification series remained as it is currently - 30, 20, 10 - and the last letter had to been sent by certified mail no matter the person's age. It seems to him the certified part is the point here, that someone signed for the letter verifying that it was actually picked up. MR. GEORGE replied that would make it more palatable. He thinks anytime something has to be done differently, such as the certified mail, it is less than optimal, but that is certainly one of the alternatives being examined. He referred to a previous comment of the chairman's regarding this being an unfunded mandate; Mr. George noted that is actually not true. Insurance premiums are largely based on age categories. It might be discovered that this could result in a premium increase for whatever age group it applies to because insurers can add the extra notice requirement into their rate structure. Mr. George noted this aspect is being worked on as well. He reminded the committee that insurers don't like canceling insurance and would much rather keep it on the books if it is good, solid business. Number 1681 REPRESENTATIVE HARRIS commented it seems from Mr. George's testimony that if the certified cost is spread out over all the age categories for health insurance, the 67-plus Alaskans would not be hit any more than the lower age brackets. MR. GEORGE clarified that this would apply to automobile and homeowners' insurance, not health insurance. Mr. George said he did not know why it would be spread out over everyone if they were speaking of a specific notice for a specific group, indicating he had misunderstood Representative Harris's comment about a certified final mailing for all policy cancellations, no matter the person's age. Mr. George made a few additional statements under this misunderstanding. Number 1797 REPRESENTATIVE MURKOWSKI questioned which would be more expensive for the insurance companies: determining and monitoring the age of all of a company's insureds to identify incoming 67-year-olds or Representative Harris's idea that all final 10-day cancellation notices would be automatically sent via certified mail. MR. GEORGE replied that uniformity would be nice. He reminded the committee that Alaska is a very small market and these are national companies. Almost anything the legislature does would probably be a minor exception to these companies. Mr. George commented that sending out a certified notice to every Alaskan would still be somewhat of a thorn in the companies' side. Even in Alaska they are speaking of thousands and thousands of these notices. A lot of people pay their insurance within 10 days of the expiration date. He indicated sending 20,000 certified letters out per month could be a significant expense and even the physical process of certifying the letters would be inconvenient. Mr. George also noted from his previous experience as director of the Division of Insurance, when the division was "served" for an insurance company, the division, in turn, had to send that summons/complaint to the insurance company certified return request, and about a third of the cards never came back. Mr. George related he became so frustrated he called the office of Senator Ted Stevens. He received a call back from the Postmaster General informing him the postal service did not know what was happening but could not fix it. Mr. George said the situation was never resolved and he indicated certified return receipt was not a fail-safe. Number 2000 CHAIRMAN ROKEBERG asked how much certified mail costs. KEVIN HAND, Legislative Administrative Assistant to Representative Andrew Halcro, Alaska State Legislature, answered $2.90. CHAIRMAN ROKEBERG indicated a business could also apply and fill out their own certified mail if the mail is picked up at the place of business. MR. GEORGE noted that is a manual step and indicated the companies' current mailing processes are completely automated. Mr. George reiterated the companies do think there are some solutions here and they are continuing to work on them. He mentioned Florida and Arizona both have aged populations; he commented someone has probably thought of this there as well. CHAIRMAN ROKEBERG questioned Mr. George's indicated testimony regarding concern for the upcoming year 2000 date change and the programmers' ability to program. The chairman noted Mr. George had also testified that the underwriters are looking at age groups when doing actuarial calculations to assess rates. The chairman commented he was not sure if he could buy into the Y2K problem Mr. George had mentioned; it seems to the chairman that if actuarial calculations are going to be done for a policy rate quote to an individual, that person's age already has to be in the calculation. Number 2170 MR. GEORGE responded that the major changes are for young drivers versus anyone over 25 or so. They are speaking about a fair number of people who have been insured for the last 30 or 40 years who did not get into the computer system. Mr. George emphasized his concern about Y2K is that any changes which require a programmer to change the program to give a different notice to a certain group of people, or other action, takes a programmer's time. Currently, that programmer is concentrating on generically beating the Y2K problem. The companies would like to let the programmers continue to concentrate on that. Mr. George noted it would be a significant problem for some companies, and would not be as big a deal for others. CHAIRMAN ROKEBERG noted he looked forward to Mr. George's letter endorsing HB 82 [HB 82 - IMMUNITY: CLAIMS ARISING FROM Y2K PROBLEMS]. Number 2263 REPRESENTATIVE CISSNA commented regarding health insurance and expressed that she could see a significant advantage in having an extended time to make sure people received something. She questioned if older policy holders didn't usually pay more because of their age. MR. GEORGE answered there is actually a senior citizen discount on automobile policies. REPRESENTATIVE CISSNA questioned if this discount was often given because the senior citizens had been policy holders for many years, had helped support the company, and helped support other policy holders. MR. GEORGE replied he doesn't know that they are required to have been longtime policy holders. He believes the theory is that people probably drive less as they reach a more mature age and probably are statistically involved in fewer accidents because of fewer miles. He noted, though, the rate of accident per mile might actually be higher. Mr. George qualified that he was speaking off the top of his head and really does not know how that comes out statistically. Number 2435 REPRESENTATIVE CISSNA noted her father had had an insurance company; the thought had been to always try and provide service. She commented she was sure all of the companies Mr. George represents do that. MR. GEORGE reminded the committee that insurance companies make money by writing insurance, not by canceling it. It is expensive to cancel a policy then reinstate it or lose it altogether. The companies pay commissions to agents to make sure those things don't happen. REPRESENTATIVE HALCRO said he had a couple of questions. He stated, "The way the bill is written, you have to give 60 days first notice, then 30 and then..." [TESTIMONY INTERRUPTED BY TAPE CHANGE] [From tape log notes: 'If my policy'] TAPE 99-36, SIDE A Number 0001 REPRESENTATIVE HALCRO continued, "...and send out three notices before you can cancel me, is that the way you're reading ... the legislation?" MR. GEORGE replied, "I'm not sure that carrying someone would be the (indisc.) - you would - if the policy expired August 1, 60 days prior to that you would send out the notice, so that on the day the policy expired it could be canceled. You wouldn't wait until close to the end and then cancel it and have to extend it beyond." REPRESENTATIVE HALCRO agreed, noting Mr. George had said some people do pay their insurance on a monthly basis. Therefore, there is no way this time period would fit within that 60-day window. MR. GEORGE replied it would be "putting a round peg in a square hole," indicating it created some logistical problems. Number 0089 REPRESENTATIVE HALCRO questioned if the company would have to continue to carry the person if the certified mail was returned, asking what the intent was. CHAIRMAN ROKEBERG noted the company could cancel the policy. REPRESENTATIVE HALCRO said that is where his problem lies. In the case the chairman had cited, if the caregiver had thrown away the certified letter it would not have made any difference. CHAIRMAN ROKEBERG agreed that is true. REPRESENTATIVE HALCRO stated, "With all due respect, I think this is a solution looking for a problem." MR. GEORGE pointed out Ms. Hagevig had described that her sibling tries to intercept the parent's mail: a notice to another person might be a simple solution. A person could designate themselves or someone else to receive notices of cancellation. Mr. George indicated that perhaps information to this effect could be included with the person's premium billing when he/she hits the specific age. Mr. George further indicated the industry is examining all of these things to find workable solution. Number 0218 CHAIRMAN ROKEBERG reminded Representative Halcro the present statutory policy is that the insurance company makes and files a note to itself that the cancellation notice has been sent. The company does not have to account to anyone regarding this. To the chairman, requiring the return receipt ensures there was an intent to make notice by mail to the insured. The return receipt also gives the insurance company proof it did make the notice. REPRESENTATIVE HALCRO noted the current statutes state that they shall obtain a certificate of mailing from the United States Postal Service, so that is already required under AS 21.36.260. MR. GEORGE explained, as he understands it, an insurance company will have a computer printout with the list of names and the stack of envelopes. This list is signed by a postal employee. Mr. George indicated there is also is a certification by the insurance company employee that he/she actually mailed those notices. He expressed doubt about certified mailing. Number 0337 CHAIRMAN ROKEBERG indicated the company would receive the return receipt verifying the letter had been delivered. MR. GEORGE answered, "Or not." CHAIRMAN ROKEBERG commented that perhaps the committee should mandate that if the return receipt was not received, the company should give the individual a grace period. MR. GEORGE referred to the return receipt, indicating that piece of paper would have to be dealt with manually, rather than by computer, and there would be some matching problems because it is a fixed post office form. CHAIRMAN ROKEBERG noted he appreciates Mr. George's comments and has indicated to the industry that he is happy to work with them on solutions. Chairman Rokeberg commented some of the possible solutions might be increasing the age and examining other forms. He explained the intent of the 60-day period was to allow sufficient time if a caregiver or someone else was paying the bills for the individual. However, the chairman does understand that probably would be a programming change and probably a larger cost than the certified return receipt. Number 0501 REPRESENTATIVE MURKOWSKI asked why statutory grace periods are allowed with a cancellation or termination of a life insurance policy, but not with any other form of insurance. MR. GEORGE answered that life and health have very different types of products and grace periods do exist. He noted he had been surprised on examining the statute that a person has two or three years after a life insurance policy lapses to be able to pay the premium and have the policy reinstated. Mr. George indicated this might affect the Ketchikan woman whose situation Ms. Hagevig described. REPRESENTATIVE MURKOWSKI said it makes one wonder if a grace period couldn't just be allowed for certain individuals above a certain age. MR. GEORGE noted that was one of the possibilities being considered, even if there were a fee for that. For example, the person receives the notice on the day the policy actually cancels but if he/she sends payment in within 15 days for an extra $25 dollars, the person could possibly be reinstated. Number 0599 CHAIRMAN ROKEBERG commented, "Option to extend prepayment," noting it could be inserted in the initial billing. He indicated possibly the person could be sold 30 or 60 days worth of grace for a prepaid premium. He confirmed no one else wished to testify on the legislation and expressed his desire to see HB 158 move out of committee to the next committee of referral, the House Judiciary Standing Committee (Judiciary). The chairman noted he has agreed to work with industry and make some adjustments to the legislation as it moves through the process. He commented the chairman of Judiciary formerly chaired Labor and Commerce and has been an active legislative participant with NAIC and NCOIL. Chairman Rokeberg thinks the required age needs to be raised somewhat and the time frames need to be examined, along with any suggestions the industry can make that might reduce the cost and serve these people better. Confirming no one else wished to testify, the chairman closed the public testimony on HB 158. He pointed to the D.1 amendment before the committee, explaining it was requested by some members of the insurance industry and he thinks it is valid. The chairman designated this proposed amendment as Amendment 1. Amendment 1, labeled 1-LS0128\D.1, Ford, 4/7/99, read: Page 2, line 11 Following "sold": Insert "or terminated" Following "state;": Insert "this paragraph does not authorize the director to require an insurer to release proprietary information;" CHAIRMAN ROKEBERG moved Amendment 1, questioning if everyone had an understanding of it. He asked if there were any objections to the amendment. There being none, Amendment 1 was adopted. With that, the chairman requested the committee's indulgence to move the legislation to Judiciary for further activity. Number 0786 REPRESENTATIVE HALCRO objected to moving the legislation out of committee. CHAIRMAN ROKEBERG asked Representative Halcro to speak to his objection. REPRESENTATIVE HALCRO said he thinks the bill has a lot of logistical problems; since he does not sit on Judiciary, he does not feel comfortable moving the legislation until these problems are addressed in the current committee. REPRESENTATIVE MURKOWSKI noted she sits on Judiciary and she would prefer that the work on this legislation be done in this committee, rather than Judiciary. She thinks Labor and Commerce will produce a good product and then Judiciary can do the final review. Number 0881 REPRESENTATIVE CISSNA commented on the references to the committee members as freshmen legislators, noting many of the new members are younger members. She indicated the issue the bill addresses is something that becomes a more significant problem as one approaches her own age and she expressed the hope that if the legislation is heard again in Labor and Commerce, the committee would hear from other witnesses. CHAIRMAN ROKEBERG indicated he is concerned about the lateness of the session and the "bottleneck" in Judiciary. REPRESENTATIVE HARRIS suggested the committee take an at-ease. REPRESENTATIVE MURKOWSKI noted, "And Mr. Chairman, if I may speak to that bottleneck I think that we could address..." Number 0945 CHAIRMAN ROKEBERG called a brief at-ease at 5:19 p.m. The committee came back to order at approximately 5:21 p.m. Number 0947 CHAIRMAN ROKEBERG announced that HB 158 would be held over until Monday [April 12, 1999]. Number 0997 CHAIRMAN ROKEBERG called an at-ease at 5:22 p.m. The committee came back to order at 5:26 p.m. HB 136 - ABOLISH TOURISM MARKETING COUNCIL Number 1004 CHAIRMAN ROKEBERG announced the committee's next order of business is HB 136, "An Act relating to tourism and tourism marketing; eliminating the Alaska Tourism Marketing Council; and providing for an effective date." Representative Beth Kerttula joined the committee just prior to the chairman's announcement. The chairman indicated there was a Version K committee substitute for HB 136. Number 1015 REPRESENTATIVE HALCRO moved that the committee adopt the proposed Version K CS for HB 136 as a working document. Version K is labeled 1-LS0616\K, Cook, 4/9/99. There being no objection, Version K was before the committee. Number 1044 JOE BALASH, Legislative Secretary to Representative Gene Therriault, Alaska State Legislature, came forward to present HB 136 on behalf of the bill sponsor. Mr. Balash read the sponsor statement into the record: "House Bill 136 is based on a plan brought forward by the tourism industry and is similar to legislation sponsored last session by the House and Senate Finance Committees. It consolidates the state's tourism marketing efforts, reduces the size and functions of the Division of Tourism, and allows the state to reduce its contribution to tourism marketing over time. "Currently, Alaska's statewide tourism marketing efforts are carried out by three organizations - the Alaska Tourism Marketing Council, the Alaska Visitors Association, and the Division of Tourism in the Department of Commerce and Economic Development. These efforts, under our bill, will be consolidated into a single marketing function that is broadly representative of the various sectors of the visitor industry in the state. This organization will put together a marketing program to address media advertising, visitor inquiries, publishing and distributing ["distribution"] information regarding vacation planning, and establishing and maintaining Internet sites that provide tourism information. "The Division of Tourism will continue to provide inquiry assistance, administer visitor information centers, and plan and advocate for tourism and tourism development in coordination with the private sector, ... municipalities, and state and federal agencies. They will enter into a contract with a single, qualified trade organization for the purpose of planning and executing the state's destination tourism marketing campaign. The contract may include promotion of distinct segments of tourism, such as highway, seasonal, cultural, regional, rural, and ecotourism. This will take the state out of the business of marketing and reduce the number of employees required to carry out the functions of the Division of Tourism. "A central feature of the contract is that the organization awarded it will be required to match the state's effort with 30 percent of its own money in the initial year. It is expected that the organization will grow and its membership collections increase. Therefore, the match will rise to 60 percent in 2002. The benefits of this are twofold: first, the state will be able to reduce its contribution without extreme harm to the industry; second, the private sector will contribute more of its own funds towards the marketing ["marketed"] efforts they benefit from. "The industry is coming forward with more of its own dollars. Coupled with efficiencies provided by consolidation, the marketing efforts to bring more visitors to the state will be more effective. This is a responsible approach to reduce the state's monetary contribution without harming the growth of this vital industry." Number 1222 REPRESENTATIVE HARRIS questioned where they are currently at as far as tourism marketing funding goes if this bill becomes law. MR. BALASH answered that the state will continue the status quo in the fiscal year (FY) 2000 beginning July 1, 1999, as it transitions to this new effort. The total funds spent by the state are approaching $6,700,000. In the year 2000 initial year, the contract from the state is expected to be $5 million, with the industry matching at 30 percent. REPRESENTATIVE HARRIS asked if the New Millennium Plan people have given fair assurance they will be able to raise that much money at that period of time. MR. BALASH answered in the affirmative. He believes cards went out this week or the past week for the initial charter memberships to create a board that will begin the fund-raising efforts. REPRESENTATIVE HARRIS questioned if there is any fall-back plan on the state's part if the amount of money needed in the following years is not raised, or if it will be up to that legislature to decide whether it wishes to provide additional funding. Number 1323 MR. BALASH replied the match rate will be set in statute. This will require the organization to come up with a suitable amount of money if it wishes to retain the full amount appropriated by the legislature. If the organization does not do this, there are provisions allowing the division to enter into an additional or further contract which would not require that same match. REPRESENTATIVE CISSNA indicated the legislation has come before the committee suddenly and close examination would be necessary to find out the differences in the proposed CS from the earlier versions. She indicated there were some questions already in terms of the organization to be created. She asked if Mr. Balash had any explanatory literature or a copy of the card that was sent out. MR. BALASH pointed to the copies in the bill packets of "The New Millennium Plan, A Concept for the Future of Tourism in Alaska," [Alaska Travel Industry Association Organizational Outline, revised December 1998] put together by the Alaska Visitors Association (AVA). Mr. Balash did not have an example of the card. He indicated he would happy to explain further if Representative Cissna wished, noting there are industry representatives available to testify to that as well. Number 1430 CHAIRMAN ROKEBERG indicated the committee would proceed to teleconference testimony. He confirmed Allen LeMaster (ph), Gakona, was no longer on teleconference. The chairman confirmed Valdez was still participating via teleconference and requested Lisa VonBargen's testimony. Number 1462 LISA VonBARGEN, Executive Director, Valdez Convention and Visitors Bureau (VCVB), stated via teleconference from Valdez that she did not have comment at this time. Number 1472 NANCY LETHCOE testified next via teleconference from Valdez. She spoke from a statement faxed to the committee: "My name is Nancy Lethcoe. My husband and I are celebrating 25 years in the Alaskan tourism industry. ... I'm past President of the Alaskan Wilderness Recreation and Tourism Association [AWRTA], and a member of the Valdez and Anchorage CVB. However, I am speaking as a private person. "I support the work draft of 4/9/99 ["4/4/9"] ... although I have some reservations about the funding. Here in Valdez, because of budget constraints, we are facing the loss of our community hospital. I'm sure you can appreciate the potential significance of this upon the community and visitors. "So, though I would appreciate (indisc.) state funding tourism as proposed by HB 136, I think as public policy, the state should fund medical services before allocating funds to tourism marketing. "Therefore, I encourage you to consider alternative sources of funding - such as proposed in Senator Elton's bill [SB 122] - even though this means our business would incur increased expenses." CHAIRMAN ROKEBERG confirmed Valdez had copies of Version K. Number 1548 MS. VonBARGEN asked to briefly add one item. Mentioning the existence of legislation which suggested all tourism marketing funding should cease at the end of this fiscal year, Ms. VonBargen emphasized the need to have reduction in state funding come at a graduated level. She indicated complete sudden elimination of funding could be seriously detrimental to the state's efforts to gain momentum in tourism marketing and she noted the necessity of a backup plan. The proposed New Millennium Plan would go through three fiscal years before the goal of $10 million in terms of funding is reached. Ms. VonBargen indicated the gradual funding reduction she thinks is important is represented in the legislation and was outlined after Representative Harris's comments. CHAIRMAN ROKEBERG confirmed there were no other witnesses on teleconference. The chairman indicated Ms. Fay should come forward to explain the changes in the very recent Version K. Number 1642 GINNY FAY, Legislative Liaison and Acting Director of the Division of Tourism, Department of Commerce and Economic Development(DCED), came forward. She highlighted the most significant changes in Version K from the original bill, as introduced. Ms. Fay indicated there have been some change in section order from the original bill; this could make it difficult to compare the two versions. Section 1, findings and intent, has been simplified to say the intent is that the private and public sectors cooperate and condense it into one marketing effort. Section 2 is unchanged. Section 3 is an exemption from procurement. In the original bill this exemption was only extended to the contract with the qualified trade association (QTA). So that it would be clearer to all the contracted parties, it was decided that even if the QTA chooses not take a portion of the contract with the state and DCED contracts elsewhere, those other contracts would also be exempt from procurement. CHAIRMAN ROKEBERG asked, "Has the ATMC [Alaska Tourism Marketing Council] exempt -- (indisc.) exempt (indisc.)?" MS. FAY replied it is her understanding that they are. CHAIRMAN ROKEBERG questioned if that was in the repealer. MS. FAY responded that all the ATMC statute is repealed. She questioned in an aside if ATMC is exempted. TINA LINDGREN, Executive Director, Alaska Visitors Association, answered that ATMC is not exempted; ASMI [Alaska Seafood Marketing Institute] is exempt. Number 1756 MS. FAY referred to Section 4, purposes. She indicated the original bill had deleted purposes (2), (3) and the current (5) from the existing statute, but these have been returned in Version K. These were primarily concerning the purposes to retain benefits in Alaska and to residents of the state. In Section 5, Ms. Fay indicated the primary change was to ensure that research for tourism development, and also assessing the contract, could be done. Section 6 has been the most difficult to reach agreement on. Section 6 of Version K read: * Sec. 6. AS 44.33.120 is amended by adding a new subsection to read: (d) During the term of a contract with a qualified trade association under AS 44.33.125(a), the Department of Commerce and Economic Development may not execute another tourism marketing campaign except as provided under AS 44.33.125(b), (c), or (d). MS. FAY indicated this section was changed from the original bill by adding (b), (c) and (d) to allow the exceptions in the statute for other contracting provisions. Ms. Fay further indicated the portion of this section in the original bill prohibiting promotion of Alaska travel by the department was deleted; the department would be able to continue activities with the contract in place like encouraging "Iceland Air" [Air Iceland?] to land in Anchorage. Number 1833 MS. FAY noted the main changes in Section 7 of Version K. If a contract is to be awarded, the department can review and has to approve the marketing plan before the contract is executed. The department can indicate important components of the contract; those are contained in subsections (a) and (b). If the QTA does not want to do a portion of the contract the department feels is essential, the department can contract with another entity as long as the terms of that contract are essentially the same as what was offered to the QTA. Subsection (c) allows the QTA to have first right of refusal on all subsequent contracts while the contract is in place. The only change here is that this applies to marketing contracts, not to all of the division's contracts. Subsection (c) also basically requires that the terms not be materially different. Subsection (e) is essentially unchanged. Number 1927 MS. FAY explained that subsection (f) relates to use of the materials that would be the joint property of the QTA and the state. If these materials are sold or leased, they have to be used for the promotion of Alaska. Subsection (i) requires the contracted QTA to provide notice of availability and consider the responses when it goes to subcontract. This new subsection was requested by the House Special Committee on Economic Development and Tourism (EDT) subcommittee. Ms. Fay indicated the list of major sectors of the visitor industry had been expanded to include some of the smaller operations. This was by the addition of "bed and breakfast enterprises, wilderness lodges and outfitters, and charter operations" in subsection (j), which was subsection (h) in the original bill. Ms. Fay indicated Section 8 is the same as Section 7, subsection (a), but the percentage has been increased to 60 percent. Ms. Fay continued, "Section 9 adds an amendment that was agreed upon by the parties but did not get addressed earlier in Senate Labor and Commerce that makes it so in the granting provisions that the Division of Tourism has, that those grants cannot be used for tourism marketing." CHAIRMAN ROKEBERG asked for clarification on the effects of Section 9. MS. FAY answered that the repealer section, now Section 10, had originally repealed AS 44.33.135 because of AVA's concern that the matching grant provision would be used a means to provide tourism marketing money to competing entities. However, that repeal would have removed the department's ability to provide its matching grant to the Rural Tourism Center. Ms. Fay indicated AVA realized it wanted to restrict the Division of Tourism from providing marketing grants, not delete the division's granting ability. Number 2067 REPRESENTATIVE CISSNA questioned that there is no specific entity which would really supervise, monitor and evaluate this. MS. FAY explained, "Currently what happens with our contract with the AVA that is used to - for the matching grants for the matching - the required match for the ATMC program, is the contract is between the department and the AVA. In this situation, ... the Division of Tourism would be involved in administering this but the actual contract would be between the department through the commissioner and the qualified trade association." REPRESENTATIVE BETH KERTTULA questioned if they were currently going out under competitive bid, under contract, and if they still had procurement code requirements in that contract. MS. FAY replied their contract with the AVA is not covered under procurement. REPRESENTATIVE KERTTULA indicated that was something the special committee had been concerned about. Referring to subsection (i) on page 6 of Version K, Representative Kerttula asked if that is the same as a competitive bid or in what way does the department envision that working. Subsection (i) read: (i) A qualified trade association may, pursuant to the performance of a tourism marketing contract awarded under (a) or (c) of this section, award a subcontract only on a competitive basis after providing adequate notice of the availability of the subcontract and considering all responses. MS. FAY answered that this entity would not fall under state procurement. She thinks a private right of action would occur if someone protested this; the probable remedy would be legal action if they did not feel there was adequate notice. Ms. Fay indicated it would be the responsibility of the qualified trade association to set a standard it felt reflected the legislature's intent in requesting this. CHAIRMAN ROKEBERG confirmed Ms. Lindgren had to leave soon. REPRESENTATIVE HALCRO expressed the wish to have Ms. Lindgren join the committee at the table, noting this might assist Representative Kerttula. Representative Halcro indicated there are certain functions the QTA would perform, as does the current organization now, that would be difficult to bid. He indicated it was the subcommittee's intent with subsection (i) to require the QTA to provide notice of subcontracts and have a competitive format criteria so that subcontracts would be open to more than one bidding party, without tying the QTA's hands with regards to weighing proposals differently for creativity. Representative Halcro provided an example concerning advertising. Advertising agency A's proposal for a television commercial using a star would be more expensive than advertising agency B's proposal using an unknown actor. He indicated Ms. Lindgren should comment where she felt necessary. Number 2249 TINA LINDGREN, Executive Director, Alaska Visitors Association, answered that Representative Halcro is exactly right. She indicated "bid" was interpreted to mean that the only weighting would be for price. In the marketing field there are some things where price is not the only consideration. However, the subcommittee had wished to make sure it was done competitively and that that was spelled out in the legislation. REPRESENTATIVE KERTTULA asked if this is the only place in the statute where competitive basis and adequate notice is discussed. She questioned if there is any attempt to "flesh it out at all," noting she did not recall if there is any discussion in the New Millennium Plan itself about how that would work. Her underlying concern is still the large amount of state money coming in and ensuring that it is monitored. MS. LINDGREN responded that "competitive basis" does not appear anywhere else in the statute. Ms. Lindgren indicated another way to achieve this monitoring is through the contract. The department's responsibility to oversee the contract and terms gives it a lot of leeway to examine how the QTA is operating. However, it is necessary to keep in mind the entire attempt was to privatize this effort and work with the private sector, as opposed to it remaining a state agency. She understands the concern. CHAIRMAN ROKEBERG asked Ms. Lindgren if she wished to make any general comments at this juncture. Number 2342 MS. LINDGREN indicated many of the members present were on the EDT subcommittee which reviewed the legislation on April 6, 1999. She emphasized the years' worth of work that has gone into bringing the plan forward at the request of the legislature, and the approximately two years it took to bring the legislation itself forward. Ms. Lindgren noted Version K is supported by the AVA and the Administration. She added she believes AWRTA [Alaska Wilderness Recreation and Tourism Association] has not seen the competitive bid clause but, with that exception, supports the bill as written. Ms. Lindgren, therefore, does not think they will ever be able to do much better than this. She hopes the committee will pass the legislation out as written to the House Finance Standing Committee, indicating it is the result of serious effort and has been closely examined. The legislation sets up a mechanism for the new organization to contract with the state; it does not contain other items that are part of what the new organization will have to create. In addition, there are funding challenges ahead for that organization. REPRESENTATIVE HALCRO thanked Ms. Fay and Ms. Lindgren for their patience and efforts on this. REPRESENTATIVE MURKOWSKI indicated she understands the legislation provides a right of first refusal for every other tourism marketing contract offered by the department. However, she believed Ms. Fay had commented this would not include something like encouraging Air Iceland to come in. Representative Murkowski sought clarification on what the QTA has the full right of refusal to. Number 2434 MS. FAY answered that the QTA would have had the first right of refusal on every other tourism contract offered by the department in the earlier draft, in what is now subsection 125(c) [Section 7]. She noted, for example, the organization would have had to be offered first right of refusal for printing letterhead. Ms. Fay said, "We requested and they accepted changing it to marketing because the idea behind the bill is to consolidate tourism marketing, not to consolidate all the tourism-related functions..." [TESTIMONY INTERRUPTED BY TAPE CHANGE] [From tape log notes: 'government to government' 'in terms of airline routes'] TAPE 99-36, SIDE B Number 0001 MS. FAY continued, "...(indisc.) things of that nature that are not marketing, but they're maintaining sort of the foundation of the tourism industry and tourism development, especially on public lands in Alaska, and we wanted to be able to maintain our ability to do that." CHAIRMAN ROKEBERG commented it was approaching 6:00 p.m., inviting the last witness forward. The chairman announced the committee would not be moving the legislation at this hearing because the fiscal note has not been received and because of the chairman's commitment to Representative Kerttula. The committee will take up HB 136 as the first order of business at the next meeting. Number 0048 PHIL GREENEY came forward to testify. He is a bed and breakfast (B&B) operator in Juneau and his wife is past president of the Alaska Bed and Breakfast Association, chair of the INNside Passage Chapter. He is present on his own behalf, indicating he also speaks for some of the many people in his business who are extremely concerned with the effects of the most current version of HB 136. Mr. Greeney stated, "Mr. Chairman, if you're going to completely change the process of destination marketing for the state of Alaska, I suggest you must do so only with a concrete plan, and certainly with secure funding. And so far, with HB 136, it appears you cannot guarantee the level of funding, if any at all from the state. ... What then happens to marketing if all the funding's coming from the industry? Doesn't this then invite the question of why the industry should allow any controls under that scenario? And please ask yourselves where that then leaves the thousands upon thousands of smaller tourism businesses. B&Bs were mentioned frequently in earlier testimony as representative of one end of the economic scale in the tourism industry." MR. GREENEY continued, "As a representative of that component, I can confirm that it appears that AVA has already begun to march away from small businesses and their needs and concerns, pricing themselves, perhaps out of necessity, out of our market. There are signs that JCVB [Juneau Convention and Visitors Bureau] is following, and, according to a spreadsheet I believe compiled by JCVB, we can see some of the reasons for that concern. They're projecting some near future increases in the participation, say from Anchorage CVB [Anchorage Convention and Visitors Bureau] - that would increase, I believe, 830 percent. Juneau's increase is projected at 541 percent, and Homer's increase ... will be 4,445 percent." CHAIRMAN ROKEBERG confirmed this was from the spreadsheet in front of the committee and he asked if Mr. Greeney was referring to the figure of $135,000 from Homer. Number 0141 MR. GREENEY indicated the bottom of the spreadsheet gives the dollar amounts and the percentage increases they represent. Mr. Greeney further indicated all of the increases are substantial - in the three and four digit range - with the possible exception of Wrangell at 9 percent. CHAIRMAN ROKEBERG noted the spreadsheet is from the Alaska Society of Convention and Visitors Bureaus. He sought clarification as to whether these percentage increases are the budget projections to meet the commitment. MR. GREENEY replied he believes so. CHAIRMAN ROKEBERG requested assistance from Ms. Lindgren. MS. LINDGREN indicated this spreadsheet was prepared by all of the convention and visitors bureaus at the AVA's request. It was prepared for a board meeting where the CVBs could discuss current programs, expenditures, and the relationship of this to some of the budget numbers in the plan. Homer is in support of the plan; it has mentioned it knows the city has been receiving a "free ride" for a long time and is very willing to come to the table with more money. Ms. Lindgren indicated the amounts on the spreadsheet are not necessarily reflective of what these organizations will end up paying; it was against one set of numbers. She explained this was an informational piece and there were problems with some of the information because different CVBs reported differently. Ms. Lindgren noted many of these organizations currently use the statewide program and marketing to fulfill their own information: in other words, these organizations receive names generated by the statewide program and base their own entire programs on this. She indicated the lack of a statewide program puts some of these organizations in serious trouble because, with the possible exception of Anchorage, they cannot generate visitors on their own. Ms. Lindgren noted, therefore, this is very useful information in speaking with the CVBs but it is ongoing discussion. Number 0253 MR. GREENEY continued his testimony, commenting that their concern with these figures is higher convention and visitor bureau fees because of the increased necessity for participation from these organizations. CHAIRMAN ROKEBERG questioned if that means bed tax. MR. GREENEY answered not necessarily, indicating he was speaking of the fees to belong to these organizations. He related he had recently had a conversation with two other small business operators, one the operator of a flying service and the other a guide service operator. Mr. Greeney commented all three of them had had to drop out of AVA because AVA had priced itself out of their market. He noted advertising in the state planner has become prohibitively expensive as well. Mr. Greeney said, "These things are very, very difficult, and we're looking at a time when only big business will be able to afford these organizations, and receive the benefits of these organizations." CHAIRMAN ROKEBERG asked how the JCVB is funded, questioning if it is a bed tax, a percentage of sale tax, or what. Number 0306 MR. GREENEY answered that Juneau has a 7 percent bed tax in addition to a 5 percent sales tax, equaling 12 percent on every room night they sell. In response to the chairman's further question, Mr. Greeney confirmed the 7 percent goes into the CVB, noting he believes much of that goes to finance Centennial Hall and the other JCVB functions. CHAIRMAN ROKEBERG noted, then, it is an allocation formula. MR. GREENEY replied to the best of his knowledge, commenting he is not fairly versed in that. REPRESENTATIVE HALCRO indicated the breakdown shows none of the sales tax Mr. Greeney's customers pay goes to support the JCVB. MR. GREENEY noted he does not believe that is the case. REPRESENTATIVE HALCRO indicated the spreadsheet shows 70 percent of JCVB's budget comes from the bed tax and 0 percent comes from sales tax. He asked if the 7 percent bed tax all went into JCVB and some to Centennial Hall. MR. GREENEY replied to the best of his knowledge. REPRESENTATIVE HALCRO noted, then, the 5 percent would go to the city for roads, tourism, (indisc.). Number 0368 MR. GREENEY continued his testimony, stating, "Our fears [are] that if HB 136 passes without a secure funding source, we can anticipate that within a relatively short time funding may well dry up due to lack of matched industry funds or state funding, and we'll be back to square one, leaving Alaska with no tourism marketing for a few years while those involved try to put something else in place ... Meanwhile, the state's second largest industry will be left with no destination marketing. The impact would be devastating. And, on a personal note, I mean I have to struggle to comprehend the reasoning of those who want to take the state out of the business of tourism marketing, marketing the cleanest industry we could have. ... Whether or not we like the idea, we must compete with states and nations who have the foresight to vigorously promote their own tourist industries, and in view of that, I have to ask you, Mr. Chairman and the committee, to please put the brakes on HB 136. ... At least give us time to review the different committee substitutes, which I believe we're now up to Version K, and put the brakes on long enough to firm up a stable and secure funding source. I have to ask, 'What is the rush?' I mean, true, the New Millennium Plan has been discussed for years, but HB 136 has not and I - and certainly the committee revisions have not. And I ask you to allow this bill to follow due process, take it off the fast track, and let the system work. And again, I thank you for your time." Number 0438 REPRESENTATIVE HALCRO commented HB 136 does have another committee of referral so he would not say the legislation is rushed. However, he explained the reason for the legislation's pace is that tourism funding has been zeroed out, and the only funding the state is going to provide for tourism is with a fiscal note attached to this bill. To Representative Halcro's knowledge, if this legislation does not pass, there will not be any tourism dollars for FY 2000. He indicated the legislation's intent is to reduce the state's contribution to tourism marketing in the next three years while gaining contributions from the private sector. Representative Halcro asked Mr. Greeney to expand on the request to slow HB 136's progress to shore up funding sources. He commented, "If you're a company and I'm going to come to you say I have this plan, you're going to need to make an investment, that to my knowledge that would be how you'd shore up funds, but it sounds like it's a concern to you and I just wanted to know..." MR. GREENEY noted it was a concern, certainly in his own thought and in what he heard expressed at, he believes, the previous meeting. Mr. Greeney indicated there are two current pieces of legislation on this topic, HB 136 and SB 122. He commented, "We need some solid funding and certainly Senator Elton's bill provides some mechanism for that." CHAIRMAN ROKEBERG commented, "On top of your 12 percent?" Number 0528 REPRESENTATIVE HALCRO requested to follow up. Noting he is in the tourism industry, he said, "When I saw SB 122, I immediately started crunching the numbers in ... the estimates - and I know that's not the bill we're discussing here - but his revenue estimates are way out of line. ... His forecasts for tax revenue are so overly optimistic there is no way you're gonna achieve 14 and a 1/2 million dollars in three years. (Indisc.) there's just no way. I come from Anchorage, we have an 8 percent bed tax. Last year ... there was $100 million in room and bed revenue in 12 months, so 8 percent of that was split 50/50 between the ACVB and the city, out of 100 million. With his projections you'd have to do - I think it is - it came out to like $280 million in 6 months. I mean, there's absolutely no way that those figures would work. And what his bill does, is his bill simply shifts the costs to the larger hotels and larger operators, so they're gonna be paying ... more of the share. And so, it's not a pay as you play, it's if you're a big hotel with 600 rooms, you pay more. And to me, ... that seems unfair rather than going out and saying, if your - if you want to invest in tourism, you're gonna have to invest in tourism. So I mean, and I've heard a lot of testimony on this ... and a lot of comments over two public hearings over this SB 122, and I'm gonna tell you, I've run the numbers and they don't work out at all." CHAIRMAN ROKEBERG confirmed that concluded Mr. Greeney's testimony and thanked him for his patience. The chairman indicated to both Ms. Fay and Ms. Lindgren that he is concerned over the concept of the first right of refusal. He has used this concept in business for many years and it is not a favorite of his. He mentioned another method, a first right of offer. The chairman expressed that his concern with the first right of refusal is it requires a bonafide third party. He commented, "Because when you have a first right of refusal, you have to have a bonafide third party that's standing in place. (Indisc.) which -- in this instant, the department would say to the qualified trade association, 'If you want to do this,' and I'm not sure they would do that - they'd have to go out and find a third party, do an RFP [request for proposal] and then go back to the qualified trade association to say (indisc.) give you the first right of refusal after they have already made the deal out over here, and then you have to say yes or no. So, ... under a first right of offer, they would just offer, 'Do you want to do this deal?' and you say, 'No,' and then they go get somebody else. ... That may be a problem because of the concern about what the substantially similar terms are, and that may have been part of the history of the problems of reaching an agreement, so, I'm just kind of curious about some feedback from both of you around the concept of what you mean and how the first right of refusal would operate." Number 0664 MS. LINDGREN responded she believes their intent is to consolidate marketing, as Ms. Fay had said. The reason that was added was in the event of a serious disagreement about what should be done to promote Alaska. It is the hope that clause never "kicks in." However, Ms. Lindgren indicated this would, if there is a disagreement, provide another option besides complete refusal of the contract by the QTA or complete refusal to contract by the department. Ms. Lindgren further indicated the concern and part of the difficulty with the previous year's bill had been that if it was offered to other organizations, these organizations were not on the same terms - there wasn't a level playing field. Therefore, that language was added so that if there was a component and there was a disagreement, the department had the latitude of contracting elsewhere as long as the terms were the same, so that one organization wasn't penalized compared to others. CHAIRMAN ROKEBERG indicated he wanted the record to reflect that if one goes through a traditional first right of refusal, there has to be a bonafide third party. He noted there is an avenue (indisc.) that but he thinks in this instance using the traditional interpretation of first right of refusal may be most beneficial. He noted, "Because it would smoke out the basic terms that you'd have to live with, and I think that was part of point of contention ... in the previous negotiations, is that not correct? That's what you just testified to, so rather than try to tweak with this ... I think we should leave the first right of refusal in there, but ... I want to make sure everybody understands what that means in having the bonafide third party. " He asked Ms. Fay if that was her understanding of Ms. Lindgren's comments. Number 0753 MS. FAY answered in the affirmative. She indicated she thinks the department was actually the one that came up with the notion of first right of refusal. Ms. Fay commented on the recognition that the industry has to raise funds if it is to receive this match and that it is not a very homogeneous industry. It is probably worse than the fishing industry in terms of different sizes and interests. Ms. Fay indicated the department understood the industry's concern about splinter groups that would not want to contribute to the whole well-being. She further indicated giving the qualified trade association the first opportunity on a contract offered by the department was intended to be an encouragement, an incentive for all the players to work together in their industry to reach an agreement on things that satisfied everyone's needs. Number 0815 CHAIRMAN ROKEBERG requested that Ms. Lindgren and Ms. Fay each explain what Section 6 means to them. [Both Ms. Fay's and Ms. Lindgren's responses were transcribed verbatim per the chairman's request.] MS. FAY answered, "What Section 6 means, okay. I think this is -- I think throughout - throughout the bill in almost every single section that you have in here is the intent that tourism marketing be consolidated and conducted primarily by - or entirely by one contract that the department has with a single qualified trade association. I think that's in the findings and intent, and as you work through, every - all signs are pointing you to Rome, and I think this is one more place where it's basically saying that while this contract is in effect, you cannot execute any other tourism marketing campaign except for these exceptions that we've allowed for you. And that's our understanding of it, and so if we want to do tourism marketing, we will contract with the qualified trade association in order to do it, unless there's something they don't want to do." CHAIRMAN ROKEBERG addressed the question to Ms. Lindgren. MS. LINDGREN responded, "Our intent in this section is that while there is a contract in place for tourism marketing - if there's no contract the department does it - but while there is a contract, the department is not doing tourism marketing." CHAIRMAN ROKEBERG requested both responses and the follow-up questions on this issue be transcribed verbatim for the record. He asked, "If I might then - to both of you - one of the points of contention as I understand it, has been the fear that if you do go out, or if the department's allowed to go out after the (indisc.) right of refusal provision is denied by the qualified trade association and the department awards another contract which requires the contractor to - the contractee to go out and get additional funding from various other tourism-related businesses in that particular niche, let's say, it's been my understand that was one of the fears, that there'd be competition for funding outside of the depart[ment] -- in other words, non-state funds. Is - is that a fear? And I direct this question to Ms. Lindgren. Was that - was that one of your fears (indisc.)?" Number 0961 MS. LINDGREN replied, "Mr. Chairman, I'm not maybe - I'm not following quite the way you're stating it, but one of the fears was that in an effort to consolidate what we didn't want to do was start breaking it up into lots of pieces and many contracts. The intent language now still reads a tourism contract with the ability if there's a disagreement to have some other contracts, but, as Ginny said, the intent is to have a single contract. There is a fear that if - exactly as you stated - that if it's split up into multiple contracts, this new organization will not be able to raise these kinds of funds because many people will be out there trying to raise funds for different purposes, and also, rather than having a cohesive tourism marketing program for the state, we'll have different people doing different things, so that is a concern that we both have, I think." CHAIRMAN ROKEBERG noted, "And Ms. Fay, do you think the department on July first of this coming year will go out - assuming this bill passes - and be interested in expanding beyond the single contractor out of the get-go?" MS. FAY questioned, "I'm not sure I understand (indisc.) - would we [be] interested in expanding beyond a single contractor?" CHAIRMAN ROKEBERG replied, "Right, initially. In other words - in other words we're - you're going - the department will generate the actual contract with the specific discrete elements of it - of different marketing goals, and if - if I take it correctly, the qualified trade association would then bid on it and then if they refused to do or did not want to do a certain provision of that contract, could they turn down a portion of that contract?" Number 1060 MS. FAY answered, "That's correct, the - if - if there was an element that the department perceived to be essential in marketing Alaska as a destination, and the qualified trade association did not want to do that portion of it, or did not want to provide match for that portion of it, then we would have the option of going out and letting a contract for that component. I think, though, it is still, when you -- as an example, if there was a group of sportfishing lodges in Western Alaska who thought there should be more marketing towards rural sportfishing in Alaska and they were ready - they were willing to put up match for it, then it would still probably work better for them to work through this new trade association to let them know that this is an area of niche marketing that's critical for the industry, and work with them to get this money leverage, and have it be part of an overall coordinated package. In a sense though this - this bill contains a safety valve that if - if they - if it was really considered to be important, people were willing to pay for it and the qualified trade association was not willing to be responsive to the needs of those businesses, then we could potentially contract with them. I think our interest as a department, though, is when this legislation passes is to - is to encourage every single business in Alaska to become a member of this organization because every single business will have a vote on who the - who the - will be on the board of directors and how the marketing plan will unfold and so it would be -- if we want it to be truly representative of all the needs in Alaska, the best thing that could happen is all the businesses who are - who stand to benefit from this organization would join and become involved in it." Number 1183 Chairman Rokeberg asked, "And then, if you'll allow me, if - if this contract and this bill had passed last year and it was already in place, and we had a circumstance like we have with the unfortunate situation in the Mediterranean, which to me seems to be a - a marketing opportunity here, where you wanted to appeal to Mediterranean cruise passengers who are canceling their trips and the potentiality of the cruise lines to relocate vessels that were going to Mediterranean cruises into the Alaska traffic, how would you be able to generate any funding? Or how would that work? Would you have a - an additional addendum to the contract with the qualified group or would you go out your own or how would you handle it under this bill?" MS. FAY answered, "Well, my understanding that the - the bill allows for us under section d to be - to be able to allocate additional funds for that kind of special situation - this is page 5, d, - and that we could amend the contract and specify the work that would be done, but that we would not have to have the matching requirements be identical to the original contract. In the case in point that you're talking about now, I'm not sure there would be any problem getting the cruise industry to put in extra money to take advantage of the situation, there -- we wanted to have this be flexible because there may be circumstances like similar to when the Malaspina blockade occurred, that it might not be possible for the - for those funds to be immediately generated because the people who see the most benefit from that might not be able to - to put in - raise that additional funds on - on that quick a basis." Number 1290 CHAIRMAN ROKEBERG noted, "And finally from the Chair, one of the key problems, or one of the key things that always seems to (indisc.) have been control of the - the finances and the whole process. Is the department satisfied with their level of control over this legislation, and I'll ask the same question to the - to Miss Lindgren. Miss Fay?" MS. FAY responded, "Well, I think that throughout our whole negotiations we have been doing a very balancing act between -- I mean I think some of our obstacles have been in balancing out that - that level of control because both parties will come to the table with substantial investments of resources and want to have - each of us want to make sure that the other side can't, you know, blow the money, (indisc.) sense. I think I feel fairly comfortable now with - with the - the terms that we recently worked out, where even though we're limited to only having one contract, being able to approve the marketing plan and to be able to specify what needs to be in it is helpful for us because we didn't feel - without those provisions we didn't feel that we really could -- if you can only negotiate with one party and you can't say what's the terms of the contract, then you aren't really negotiating a contract, but now that we have a little more leeway about being able to specify some of the terms of the contract we feel fairly comfortable with that." CHAIRMAN ROKEBERG asked, "Tina?" Number 1382 MS. LINDGREN answered, "Mr. Chairman, I - I would have to believe that the - the members of the tourism industry have the most to gain or lose by what happens, I don't think that - that the Department of Commerce probably has any more at stake than members do of the industry, and so there's a - there is a concern that they have enough control over their destiny to use the funds that they see fit and that they not be regulated as to how those funds are used, but they also recognize that there are substantial state dollars involved, and that that money comes with strings and that what you see in the bill are the strings that are attached to those." REPRESENTATIVE MURKOWSKI asked, "... The qualified trade association has the right to refuse - or not - not the right to refuse, but if there's a component in the contract that they don't want to do -- let's say we (indisc.) are handling it, they can opt out of that and the state goes somewhere else. Is there any provision that the state could say, 'We don't want you as the qualified trade association to do this aspect of it.'" MS. LINDGREN replied, "Yes there is because they approved the marketing plan in advance." REPRESENTATIVE MURKOWSKI noted, "So that's where it is at the very get-go. And then, let's see what else was I going to ask you?" Number 1472 REPRESENTATIVE KERTTULA commented, "Could - could I ask a question about that, though in my mind it kind of raises - but they can't then..." CHAIRMAN ROKEBERG recognized Representative Kerttula. REPRESENTATIVE KERTTULA replied, "Pardon me, thank you, yeah, just on that point. But if they don't have it in the plan to begin with they can't just go out to another group to do something, right? I mean, it's either in the plan or it's not, and if it's not in the plan, they can't go to another group to market, it has -- all the marketing has to be through this one group unless you refuse it, is that right?" AN UNIDENTIFIED SPEAKER responded very softly, "Correct." REPRESENTATIVE MURKOWSKI commented, "And then, if in fact..." CHAIRMAN ROKEBERG recognized Representative Murkowski REPRESENTATIVE MURKOWSKI continued, "Thank you - and this is my last question - if in fact your - your - your QTA says, 'I don't want this component, I don't want this component, I don't want this component,' at what point do you say, 'Wait a minute, this contract isn't working because we're having to look elsewhere to handle all these aspects of what we had agreed to be our - our plan. I - I don't know enough about this to say how do you get out of it if it - if it's not working." Number 1532 MS. FAY confirmed Representative Murkowski was referring to either party and answered, "Well, I think the way this whole system is set up - and I think it's a good thing - is that we both have a great deal of incentive to work these things out with each other. I mean, ultimately, both of our objectives is to support and promote tourism in Alaska. Where - I would guess that where our differences might come in is that our mission at the Department of Commerce is especially directed towards Alaska-based businesses, Alaska jobs and protecting small businesses in Alaska. So, I think from our standpoint, as long as their marketing plan addresses those basic elements and missions that Department of Commerce has, we probably should - we probably won't have very many disagreements. That's - that's where we see our - sort of our oversight role (indisc.)." CHAIRMAN ROKEBERG asked if there were further questions from committee, recognizing Representative Cissna. REPRESENTATIVE CISSNA responded, "Thank you, Mr. Chair. And I guess that - for either of you - there is, in at least what I saw, was no specified time of the contract. Is there a standard time period that contracts are normally let for with the state, or how does that work?" MS. FAY replied, "Through the Chair, Representative Cissna, (indisc.) basically the - the legislation states that on August 1 of each year, so we - there would be one-year contracts." Number 1646 CHAIRMAN ROKEBERG confirmed there were no more questions from the committee. He complimented the department, the industry members, and the House Special Committee on Economic Development and Tourism subcommittee for their work on the legislation. He personally is much more comfortable with this now. The chairman indicated the public hearing would be kept open and the legislation taken up as the first item of business on April 12, with the intention being to move the legislation at that time. ADJOURNMENT Number 1727 CHAIRMAN ROKEBERG adjourned the House Labor and Commerce Standing Committee meeting at 6:36 p.m.