ALASKA STATE LEGISLATURE
HOUSE STATE AFFAIRS STANDING COMMITTEE
February 28, 2002
8:08 a.m.
MEMBERS PRESENT
Representative John Coghill, Chair
Representative Jeannette James
Representative Hugh Fate
Representative Gary Stevens
Representative Peggy Wilson
Representative Harry Crawford
Representative Joe Hayes
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
HOUSE BILL NO. 314
"An Act relating to service in the peace corps as an allowable
absence from the state for purposes of eligibility for permanent
fund dividends; and providing for an effective date."
- MOVED CSHB 314(STA) OUT OF COMMITTEE
HOUSE BILL NO. 331
"An Act relating to appointment of persons to positions that
require confirmation by the legislature; and providing for an
effective date."
- HEARD AND HELD
HOUSE BILL NO. 498
"An Act expressing legislative intent regarding privately
operated correctional facility space and services; relating to
the development and financing of privately operated correctional
facility space and services; authorizing the Department of
Corrections to enter into an agreement for the confinement and
care of prisoners in privately operated correctional facility
space; and providing for an effective date."
- HEARD AND HELD
HOUSE BILL NO. 223
"An Act relating to the voluntary deduction of the amount of
certain annual dues from retirement benefits."
- SCHEDULED BUT NOT HEARD
HOUSE BILL NO. 380
"An Act relating to reimbursement for certain Medicare premium
charges for persons receiving benefits from the teachers'
retirement system, the judicial retirement system, the elected
public officers retirement system, and the public employees'
retirement system."
- SCHEDULED BUT NOT HEARD
PREVIOUS ACTION
BILL: HB 314
SHORT TITLE:PFD ELIGIBILITY FOR PEACE CORP VOLUNTEERS
SPONSOR(S): REPRESENTATIVE(S)MCGUIRE, DAVIES
Jrn-Date Jrn-Page Action
01/14/02 1957 (H) PREFILE RELEASED 1/11/02
01/14/02 1957 (H) READ THE FIRST TIME -
REFERRALS
01/14/02 1957 (H) STA, FIN
01/28/02 2086 (H) JOINT PRIME SPONSOR ADDED:
DAVIES
02/07/02 (H) STA AT 8:00 AM CAPITOL 102
02/07/02 (H) Heard & Held
02/07/02 (H) MINUTE(STA)
02/21/02 (H) STA AT 8:00 AM CAPITOL 102
02/21/02 (H) <Bill Postponed to 2/28/02>
02/22/02 2369 (H) COSPONSOR(S): CROFT
02/28/02 (H) STA AT 8:00 AM CAPITOL 102
BILL: HB 331
SHORT TITLE:PRESENTMENT OF GOVERNOR'S APPOINTEES
SPONSOR(S): REPRESENTATIVE(S)KOTT
Jrn-Date Jrn-Page Action
01/16/02 1981 (H) READ THE FIRST TIME -
REFERRALS
01/16/02 1981 (H) STA
01/16/02 1981 (H) REFERRED TO STATE AFFAIRS
02/05/02 (H) STA AT 8:00 AM CAPITOL 102
02/05/02 (H) <Bill Postponed to 2/12/02>
02/12/02 (H) STA AT 8:00 AM BUTROVICH 205
02/12/02 (H) <Bill Postponed to 2/19/02> -
- Location Change --
02/19/02 (H) STA AT 8:00 AM CAPITOL 102
02/19/02 (H) Bill Postponed To 2/28/02
02/28/02 (H) STA AT 8:00 AM CAPITOL 102
BILL: HB 498
SHORT TITLE:WHITTIER PRIVATE PRISON
SPONSOR(S): FINANCE
Jrn-Date Jrn-Page Action
02/20/02 2342 (H) READ THE FIRST TIME -
REFERRALS
02/20/02 2342 (H) STA, FIN
02/20/02 2342 (H) REFERRED TO STATE AFFAIRS
02/28/02 (H) STA AT 8:00 AM CAPITOL 102
WITNESS REGISTER
REPRESENTATIVE LESIL McGUIRE
Alaska State Legislature
Capitol Building, Room 418
Juneau, Alaska 99801
POSITION STATEMENT: Testified as one of the joint sponsors of
HB 314.
REPRESENTATIVE JOHN DAVIES
Alaska State Legislature
Capitol Building, Room 415
Juneau, Alaska 99801
POSITION STATEMENT: Testified as one of the joint sponsors of
HB 314.
LINDA WELLS
1261 Viewpoint Drive
Fairbanks, Alaska 99709
POSITION STATEMENT: Testified as the mother of a Peace Corps
volunteer in support of the right of her son and his wife to
receive a permanent fund dividend, a provision of HB 314.
TRACEY TOWNSEND
120 Pepperdine
Fairbanks, Alaska 99709
POSITION STATEMENT: Testified as a former Peace Corps volunteer
in favor of HB 314.
RUSSELL WALKER
9730 Arlene Drive
Anchorage Alaska 99502
POSITION STATEMENT: Testified in favor of HB 314.
KAREN MASKARINEC
20030 Upper Greatland Drive
Chugiak, Alaska 99567
POSITION STATEMENT: Testified in favor of HB 314 on behalf of
her daughter in the Peace Corps.
ANN HARRISON
3270 Rosie Creek Road
Fairbanks Alaska 99709
POSITION STATEMENT: Testified in favor of HB 314.
JOE SULLIVAN, Peace Corps Volunteer
12300 Audubon Drive
Anchorage, Alaska 99516
POSITION STATEMENT: Testified in favor of HB 314.
NANCI JONES, Director
Permanent Fund Dividend Division
Department of Revenue
P.O. Box 114060
Juneau, Alaska 99811-0460
POSITION STATEMENT: Answered questions relating to HB 314.
DAN BRANCH, Assistant Attorney General
Commercial Section
Civil Division (Juneau)
Department of Law
P.O. Box 110300
Juneau, Alaska 99811-0300
POSITION STATEMENT: Testified on HB 314 on behalf of the
department.
LINDA SYLVESTER, Staff
to Representative Pete Kott
Alaska State Legislature
Capitol Building, Room 204
Juneau, Alaska 99801
POSITION STATEMENT: Presented HB 331 on behalf of
Representative Kott, sponsor.
REPRESENTATIVE JOHN HARRIS
Alaska State Legislature
Capitol Building, Room 513
Juneau, Alaska 99801
POSITION STATEMENT: Testified as a member of the House Finance
Committee, the sponsor of HB 498.
BEN BUTLER, Mayor
City of Whittier
P.O. Box 741
Whittier, Alaska 99693
POSITION STATEMENT: Testified on HB 498; discussed steps the
City of Whittier has taken towards having a prison and answered
questions.
CAROLYN ALLEN, Member
Whittier City Council
P.O. Box 741
Whittier, Alaska 99693
POSITION STATEMENT: Encouraged the committee's support of HB
498.
FRANK SMITH, Citizen Activist
(No address provided)
POSITION STATEMENT: During the hearing on HB 498, testified
regarding the infeasibility of the proposed private prison in
Whittier.
MARION DYE, Member
Whittier City Council
P.O. Box 741
Whittier, Alaska 99693
POSITION STATEMENT: During the hearing on HB 498, testified
regarding the economic state of the City of Whittier and asked
for "favorable decisions" from the committee.
MAKO HAGGERTY
P.O. Box 2001
Homer, Alaska 99603
POSITION STATEMENT: Testified in opposition to HB 498.
MATT ROWLEY, City Manager
City of Whittier
P.O. Box 608
Whittier, Alaska 99693
POSITION STATEMENT: Testified regarding HB 498 and described
how a prison in Whittier would benefit both the state and the
economy of Whittier.
MARGOT KNUTH, Strategic Planning Coordinator
Office of the Commissioner - Juneau
Department of Corrections
431 North Franklin Street, Suite 400
Juneau, Alaska 99801
POSITION STATEMENT: Testified on behalf of the department
regarding HB 498; compared the proposed legislation to similar
bills and talked about what would be good for the state.
ACTION NARRATIVE
TAPE 02-20, SIDE A
Number 0001
CHAIR JOHN COGHILL called the House State Affairs Standing
Committee meeting to order at 8:08 a.m. Members present at the
call to order were Representatives James, Fate, Stevens, Wilson,
Crawford, Hayes, and Coghill.
HB 314-PFD ELIGIBILITY FOR PEACE CORP VOLUNTEERS
CHAIR COGHILL announced that the first matter before the
committee would be HOUSE BILL NO. 314, "An Act relating to
service in the peace corps as an allowable absence from the
state for purposes of eligibility for permanent fund dividends;
and providing for an effective date."
Number 0195
REPRESENTATIVE LESIL McGUIRE, Alaska State Legislature, one of
joint sponsors of HB 314, explained that she and Representative
Davies had had similar ideas and decided to merge their bills
for the sake of efficiency. She said Peace Corps volunteers
provide a valuable contribution to society and to peacekeeping
efforts. Representative McGuire explained that much like the
military, the Peace Corps is fighting, but fighting to stabilize
water systems and economies and to accommodate stable
democracies. She made reference to President Bush's call for
citizens to contribute 4,000 hours of volunteer time to
community service. She suggested that Peace Corps volunteers
fall "right in line" with the current list of exemptions for
being out of state [and still receiving the permanent fund
dividend (PFD)].
Number 0428
REPRESENTATIVE McGUIRE referred to a proposed committee
substitute (CS) [version 22-LS1129\C, Cook, 2/5/02]. She
proffered that if the pool of applicants is expanded, it would
be logical to talk about antifraud enforcement mechanisms. She
noted that she was told by Larry Persily, Deputy Commissioner of
the Department of Revenue, that there have been cases of fraud,
and that right now there is no real deterrent to fraudulent
application for a dividend. She said it is cost-prohibitive to
bring cases to court. She offered her belief that the proposed
CS would give the department an administrative remedy to that
situation: the standard and finding would still be the same,
but the department would be able to issue a forfeiture order
regarding a dividend or a civil penalty itself, without going
through the courts.
Number 0547
REPRESENTATIVE McGUIRE explained that an individual would still
have the right to an appeal under the new design.
Representative McGuire expressed her appreciation of those
volunteers who live "in abject poverty in order to try to help
people who are less fortunate than us." She said the bill would
make a statement that Alaska appreciates that its Peace Corps
volunteers are Alaskans who want to come back and stay in
Alaska.
Number 0654
REPRESENTATIVE JOHN DAVIES, Alaska State Legislature, testified
before the committee as the other prime sponsor of HB 314. He
said he only wanted to add two points: First, the bill re-
establishes an exemption that was in the law before. Second,
Alaska should encourage Peace Corps service because of the
educational and self-improvement aspects that volunteers bring
back to Alaska after they serve.
Number 0722
REPRESENTATIVE FATE asked why the civil fine for fraud was
reduced from $5,000 to $3,000. He also asked why the exemption
was removed in the first place.
REPRESENTATIVE McGUIRE answered that she thought the reduction
in the fine was so that the fine would not rise to the level of
small claims court.
REPRESENTATIVE DAVIES said he didn't know why the exemption had
been removed from statute. He said the House had a "separate
bill on this topic that dealt with a whole other issue," but
that when that bill went to [the Senate], many of the exemptions
were eliminated at the end of the session, with very little
comment.
Number 0843
REPRESENTATIVE JAMES said she'd read something at the national
level requesting another group of volunteers. She asked the
sponsors if they had more insight on the matter.
REPRESENTATIVE DAVIES said President George W. Bush was trying
to encourage volunteerism in general and had cited the Peace
Corps as an example. He said the President then was expanding
the AmeriCorps operation - with a slightly different name -
within the United States.
REPRESENTATIVE JAMES asked if the language would have to be
changed in the near future in order to include participants in
other volunteer programs.
REPRESENTATIVE McGUIRE made the point that volunteers in the
AmeriCorps program "don't have to go outside for their service."
REPRESENTATIVE DAVIES said there was the intention of
encouraging people interested in AmeriCorps to do their work in
Alaska.
REPRESENTATIVE McGUIRE told the committee that in the Peace
Corps, a person is required to leave the country for two years
and there is not the option of maintaining a physical residency.
She said it was her intent to "keep it really limited."
Number 1036
LINDA WELLS testified via teleconference. She said her son and
daughter-in-law are currently in Thailand with the Peace Corps;
they make $139 a month as a stipend. She told the committee
that the couple plan to return to Alaska and use their PFD
checks as a down payment on a house. She said not allowing them
to receive their checks "really puts a crimp in their plans for
their future." Ms. Wells reported that the couple just finished
their first year in Thailand, where they train teachers to teach
English. She said the people in Thailand love her son and
daughter-in-law, as well as what they are doing. She
characterized their work as an excellent representation of
America and Alaska. She said she could not understand why they
were not being supported.
Number 1185
TRACY TOWNSEND testified via teleconference. He told the
committee he was in the Peace Corps from 1965 to 1967 in
Malaysia. He assured the committee that people don't go into
the Peace Corps to make money. He agreed with earlier testimony
and added that [Peace Corps volunteers] should be put back on
the [exemption] list.
Number 1252
RUSSELL WALKER testified via teleconference. He said he has
lived in Alaska for 23 years and raised his two children here.
He said he had just returned from serving in Africa for two
years and six months, but it was more like two and a half years
of service when all the training and travel is included. He
said he'd lost four dividend checks during his service in the
Peace Corps. Mr. Walker gave several examples of how the Peace
Corps places people directly in the everyday life of another
culture and country.
MR. WALKER told the committee it was still unclear to him why
Peace Corps service was dropped as an allowable absence for a
dividend check. He said members of the military as well as
members of their families are entitled to their checks, and it
isn't fair that Peace Corps people straight out of college, with
all of their educational debt, are denied a dividend check. He
said the Peace Corps is a great representation of the United
States and that it is in the best interest of Alaska and the
United States to reinstate the exemption.
Number 1600
KAREN MASKARINEC testified via teleconference. She told the
committee that her daughter, Gwyneth Crabtree (ph), is a Peace
Corps Volunteer in Moldova. Ms. Maskarinec told of her
daughter's long-held dream of joining the Peace Corps, and told
how her daughter had helped to establish a connection between
some people in Moldova and their counterparts in Alaska through
establishing pen pals. She quoted President Bush, in his
appointment of the most recent head of the Peace Corps two weeks
prior:
America has a new kind of force today. ... We are not
only a great country, a great economic engine, and
obviously a great military - we are a great idea. The
greatness of the country is in the values we believe
in: freedom and hope and opportunity. I believe that
Americans are still willing to sacrifice for causes
greater than themselves, and the Peace Corps offers
such a fantastic opportunity to do so.
MS. MASKARINEC said this bill would give Alaska a chance to
support its Peace Corps volunteers.
Number 1893
ANN HARRISON testified via teleconference. She urged the
committee to reinstate the exemption for Peace Corps volunteers,
who enrich the communities they go to and the communities they
come home to, here in Alaska.
Number 1878
JOE SULLIVAN, Peace Corps Volunteer, testified via
teleconference. He said he had volunteered in Zambia after
working for the Alaska Department of Fish & Game (ADF&G). He
said he has a Ph.D. in fisheries, and that teaching people to
raise fish was a lifelong dream of his. He recounted that when
he was in Zambia, he lost a portion of his retirement from ADF&G
as well as his permanent fund [dividend].
MR. SULLIVAN agreed with a previous speaker that volunteers
represent the U.S. and Alaska as well. He said Alaska should
not punish its citizens who go overseas to help others, which
taking their PFDs away does. He said there are Alaskans in
Zambia right now, like Adrienne Score (ph), who will continue to
do what is right, whether they get their dividend checks or not.
Mr. Sullivan concluded by saying he didn't know why the
exclusion was taken away in the first place and that he supports
the bill.
Number 2086
REPRESENTATIVE FATE noted that it was brought to his attention
that a claim under small claims court can be up to $7,500. He
asked why the penalty for dividend application fraud should be
reduced to $3,000.
Number 2152
NANCI JONES, Director, Permanent Fund Dividend Division,
Department of Revenue, answered that the reason was not about
small claims court. Rather, it was to make a delineation
between a civil and criminal action. She said criminal actions
begin from a $5,000 floor. This was lowered to $3,000 to be
sure that it was a civil action.
Number 2173
DAN BRANCH, Assistant Attorney General, Commercial Section,
Civil Division (Juneau), Department of Law, added, "We're trying
to avoid a situation where a court finds that we have to provide
a public defender and a jury trial for somebody who wants to
fight the penalties imposed under this section."
REPRESENTATIVE FATE said he appreciated the explanation in times
when the state is trying to save money.
Number 2205
CHAIR COGHILL asked why, in Section 3, the language was changed
from January 2 to January 1.
MS. JONES said this change relates to when a person dies during
the qualifying year, January 2 through March 31. [Currently] if
someone dies on the first, that individual isn't eligible. She
explained that [the division] was trying to make it so that if a
person dies in the new year - January 1 through the application
period - then that person's estate would be able to file for his
or her dividend. Therefore, the desire is to move the date to
January 1.
REPRESENTATIVE WILSON returned to the $3,000 penalty for
dividend application fraud. She asked: If the concern is to
not have [the penalty] be over $5,000, then why didn't the
language specify $4,500? She suggested the message that should
be sent is that [dividend application fraud] is serious.
MS. JONES replied that $3,000 was merely the number that was
chosen. She acknowledged that the number could have been
$4999.99, but said [the division] didn't want to be that close
[to $5,000].
MR. BRANCH pointed out that an individual [who attempts dividend
application fraud] would face the $3,000 fine and run the risk
of losing the next five dividends, plus the current dividend.
Therefore, the $3,000 penalty is quite significant.
Furthermore, if the court feels the overall penalties are
criminal in nature, the court will specify that the individual
has a right to a jury trial, and to a public defender at the
state's expense if the defendant can't afford an attorney. Mr.
Branch explained, "It's not a magic number that the court does;
[it's] just that they apply a test. And in the past, ...
sometimes things ... $5,000 and above have been found to be
criminal."
REPRESENTATIVE WILSON inquired as to whether the court would
question $4,000.
MR. BRANCH noted that in the past, the court has found less than
$3,000 to be criminal. He commented that [the division feels]
it would be easier at $3,000. "The higher [the penalty] goes,
the greater the risk," he pointed out.
Number 2455
REPRESENTATIVE JAMES asked if the court's determination
regarding whether the individual should have a public defender
or the opportunity for a jury trial is based on the facts of the
case rather than on the fines.
MR. BRANCH answered that it is a matter of the penalty itself.
If the court views the penalty as criminal in nature, then the
constitutional right to a jury trial and to a public defender
would apply.
REPRESENTATIVE JAMES asked if that level is usually $5,000.
MR. BRANCH said in the past the courts have used $5,000 as a
cutoff, although the courts have found lesser [penalties] to be
criminal. He noted that adding six PFDs to $3,000 could add up
to more than $10,000 in punishment. He said it was felt that
$3,000 "would be more defensible."
REPRESENTATIVE JAMES said she understood that argument and could
support the $3,000 as rational, based on collection expenses.
Number 2564
REPRESENTATIVE FATE moved to report CSHB 314 out of committee
with individual recommendations and the accompanying fiscal
note.
CHAIR COGHILL acknowledged that the committee had not yet
adopted Version C as the working document. He asked whether
there was any objection to adopting Version C [22-LS1129\C,
Cook, 2/5/02]. There being no objection, it was so ordered.
CHAIR COGHILL asked if there was any objection to reporting CSHB
314, version 22-LS1129\C, Cook, 2/5/02, from committee. There
being no objection, CSHB 314(STA) was moved out of the House
State Affairs Standing Committee.
CHAIR COGHILL called a brief at-ease at 8:47 a.m. He called the
meeting back to order at 8:49 a.m.
HB 331-PRESENTMENT OF GOVERNOR'S APPOINTEES
Number 2609
CHAIR COGHILL announced the next order of business, HOUSE BILL
NO. 331, "An Act relating to appointment of persons to positions
that require confirmation by the legislature; and providing for
an effective date."
Number 2648
LINDA SYLVESTER, Staff to Representative Pete Kott, Alaska State
Legislature, presented HB 331 on behalf of Representative Kott,
sponsor. She explained that it would eliminate ambiguities in
statute that address when the governor presents an appointment
to the legislature. She brought attention to a handout supplied
for purposes of clarification. She noted that the amended
procedures for appointment come from Article III, Section 26, of
the [state] constitution.
MS. SYLVESTER paraphrased the sponsor's sectional analysis
[included in the committee packet] and added comments, as
follows:
First of all, in paragraph one, it directs the
governor to present the ... appointed individuals to
the legislature, and it stipulates that presentments
can only occur while the legislature is in a regular
session. ... It also ... makes it clear that this is
the only time that an effective presentment can
happen.
Within the first 30 days after the legislature
convenes in its regular session, the governor presents
the names of people that ... have been appointed
during the interim, or else positions that are going
to expire on, or before, March 1.
The paragraph reflects the elimination of the five-day
period of time in which the governor had to present
the individual to the legislature following the
appointment. The five-day presentment requirement in
paragraph one is problematic, because the fifth day
could ... fall outside of the regular session, even if
the appointment was made during the regular session.
Number 2727
Moving on to paragraph two, it mandates the
legislature to act on the governor's appointment, and
the word "regular" is added throughout this paragraph
so that it is perfectly clear that the confirmation
hearings can only occur during the regular session,
not during the special session.
And then paragraph three: the 20-day provision from
the governor's presentment, following the initial
failed confirmation, is deleted. [A] ... situation
arose last session with the game board: the
legislature failed to confirm a nominee, and the
confirmation hearings happened toward the end of the
legislative session. So, the statute authorizes the
governor 20 days, but that 20-day period to come up
with another appointee fell outside of the end of the
legislative session. So, the statute ... becomes
unclear as to whether that person is rejected or
whether or not the legislature is forced to hold
confirmation hearings during the interim, if it holds
a special session. ... So, eliminating these two
provisions make it clear that the ... governor must do
this during the ... regular legislative session.
MS. SYLVESTER noted that one issue involves the word
["simultaneously"]. She referred to page 2, lines 4-8, which
read:
If an appointment is made after the first 30 days of
the convening of the regular session but while the
legislature is in regular session, the governor shall,
simultaneously with making [WITHIN FIVE CALENDAR DAYS
AFTER] the appointment [IS MADE], present to the
legislature for confirmation the name of the person
appointed.
MS. SYLVESTER said [Governor Knowles] had expressed his thought
that the word "simultaneously" was too confusing and instead had
suggested the following wording: "the governor will refrain
from making a presentation or appointment to the legislature
within the last fourteen days of the ... regular legislative
session." She said [the sponsor] prefers to keep the word
"simultaneously", however, because the intention is to clearly
state that confirmations, presentments, and "filling" boards and
commissions will take place during the regular legislative
session.
Number 2849
CHAIR COGHILL stated his appreciation of [the sponsor's intent].
He clarified that the issue is that when [the legislature] gets
to the last hours of the session, if an appointment is to be
made, the legislature would be notified immediately. He asked
Ms. Sylvester to confirm that when she says "simultaneously",
she interprets that to mean immediately after the announcement
of the appointment.
MS. SYLVESTER answered in the affirmative. She noted that this
portion of the statute dates back to territorial days, when the
five-day provision would have served as a practical necessity
for the time and cost involved in overland transportation.
CHAIR COGHILL considered what might be wrong about saying "by
the next working day". He noted that if [the governor] made an
appointment on a Friday, that appointment would have to be
reported by Monday; however, if a 24-hour limit were placed,
that would create a problem with a Friday appointment.
Number 2905
REPRESENTATIVE FATE said the use of the word "simultaneously" in
that sentence was confusing.
REPRESENTATIVE JAMES offered the following definition of
"simultaneous" [source unspecified]: "A word of comparison,
meaning that two or more occurrences are happening that are
identical in time." She mentioned [the appointment and the
report of it]. She said she assumed that when an appointment
was made there would have to be an agreement. She indicated it
wouldn't be when the decision was made, but when the person was
notified.
TAPE 02-20, SIDE B
Number 2958
REPRESENTATIVE JAMES said a legislative person would have to be
at a telephone, or [at the appointment] in person, in order to
get that information [simultaneously], which she believed was
problematic.
Number 2928
REPRESENTATIVE HAYES remarked that he thought Chair Coghill had
made a good argument regarding the "next working day", but asked
Ms. Sylvester what the rationale was behind not wanting to use
the language proposed by the governor.
MS. SYLVESTER indicated there was no need to restrict a governor
in the period of time in which he or she could make
appointments; furthermore, the constitution does not vest the
legislature with the authority to limit the governor. She noted
that [the legislature] has the authority to confirm and, by law,
to remove a commissioner. She asked why the legislature would
want to restrict the governor. She noted that in the last 14
days [of regular session], it is possible for the legislature to
bring together the confirmation hearings and act upon an
appointment.
MS. SYLVESTER mentioned 5-day and 20-day periods and a problem
in the original [draft] of the bill regarding the timing of
appointments falling outside of the time of a regular session.
She added that [the sponsor] had chosen to bring this problem to
the House State Affairs Standing Committee for resolution. She
said other options regarding the 5-day period might be "the same
day" or "concurrently".
Number 2814
CHAIR COGHILL suggested the following amendment: On line 5,
after the word "shall", insert the word "immediately" and delete
everything up to the word "present". He read the change, as
follows: "the governor shall immediately present to the
legislature for confirmation the name of the person appointed".
Chair Coghill referred to the definition of "immediate" found in
Black's Law Dictionary, which read:
Present; at once; without delay; not deferred by any
interval of time. In this sense, the word, without
any very precise signification, denotes that action is
or must be taken either instantly or without any
considerable loss of time.
CHAIR COGHILL added his belief that the legislature would be
within the legal definition [of the word] to ask [the governor]
to immediately "do that." He said he thought that in the
possible case of a court battle, it would have to be determined
whether [the governor] did delay. He added that it would be
defensible.
REPRESENTATIVE JAMES said if that is the case, it would limit
[the governor] somewhat regarding when he can make an
appointment. She surmised it would need to be done in person;
if that weren't the case, perhaps [the governor and the
appointee] would already have an agreement, and then [the
governor] would make the appointment. She indicated a possible
difficulty adhering to this for an appointment made on a Sunday,
for instance. Representative James noted that she was simply
trying to figure out how this would work.
Number 2740
MS. SYLVESTER offered her understanding that the appointment
happens with a hand-delivered letter to the individual; although
that is the procedure, nothing in statute dictates how it
actually happens. She expressed her belief that "immediate"
implies that if [an appointment] happens on a Sunday night, the
next practicable moment to present it to the legislature and
have it read across [the floor] would be "the next opportunity".
MS. SYLVESTER brought attention to the preamble to the procedure
for all appointments. She said the intent of "this course" in
the statute is to provide procedural uniformity in the exercise
of appointed powers conferred by the legislature to eliminate,
insofar as possible, interim appointments, except in the event
of death or resignation, for example. She summarized that the
intent is to "keep this in a tight timeframe, keep it orderly,
and to speed it up." She offered her belief that "immediately"
would serve that intent.
CHAIR COGHILL suggested the issue could be challenged by both
sides, one saying the other didn't [perform the function
immediately], and the other asserting the opposite.
Number 2677
REPRESENTATIVE STEVENS remarked that Representative James's
previous question had clarified that an appointment had been
made when both parties agree that a letter has been transmitted.
Number 2645
REPRESENTATIVE HAYES offered that he had no issue with the word
"immediately"; however, he suggested that if Chair Coghill's
amendment did not pass as a conceptual amendment, the committee
could ask the drafters to design legal language to clarify the
matter. He expressed a desire to have a "clean version" by
moving the bill out of committee and having the drafters insert
the appropriate language.
CHAIR COGHILL noted that the House State Affairs Standing
Committee was the only committee of referral for this bill. He
said he would have the amendment drafted with the word
"immediate" in it, take a look at it, get a legal opinion, and
bring it back to the committee. [HB 331 was held over.]
HB 498-WHITTIER PRIVATE PRISON
[Contains discussion of HB 497, SB 336, and SB 231]
Number 2595
CHAIR COGHILL announced the final order of business, HOUSE BILL
NO. 498, "An Act expressing legislative intent regarding
privately operated correctional facility space and services;
relating to the development and financing of privately operated
correctional facility space and services; authorizing the
Department of Corrections to enter into an agreement for the
confinement and care of prisoners in privately operated
correctional facility space; and providing for an effective
date."
Number 2580
REPRESENTATIVE JOHN HARRIS, Alaska State Legislature, explained
that the House Finance Committee is the sponsor of HB 498,
carrying the bill for the City of Whittier, and that he, as a
House Finance Committee member, was presenting the bill. He
told members that the City of Whittier seems to be "pretty
unanimously in support of the private prison in Whittier." He
said this bill is similar to one the legislature took up last
year involving the [proposed] Kenai facility and also pertaining
to Delta Junction. He noted that both those communities had
voted not to support the concept.
REPRESENTATIVE HARRIS informed members that his staff member,
John Manly, and the City of Whittier's mayor, Ben Butler, were
present to testify and answer technical questions. He also
indicated representatives were present from Cornell [Companies].
Number 2472
CHAIR COGHILL said the discussion between private versus public
[facilities] was necessary. He told the sponsor that he would
like to move the bill out at this hearing, but would allow time
for "what happens in the course of discussion."
Number 2458
REPRESENTATIVE HAYES asked Representative Harris if this was a
"single-site/source" contract bid, similar to that used in the
past.
REPRESENTATIVE HARRIS answered that this bill would authorize
the City of Whittier to enter into a competitive bid situation;
his understanding was that the city has begun that process
already, through its local city council.
REPRESENTATIVE HAYES asked whom the competitive bid is against.
Kenai entered into a competitive bid process, he noted, before
the law was changed for it to be a single site. He said that
again a competitive situation has been initiated [in the case of
Whittier] before a law has been passed, to his belief, to allow
it.
REPRESENTATIVE HARRIS responded by clarifying his previous
statement. He indicated other communities had been given the
opportunity to show interest, or disinterest, regarding having a
privately operated prison facility. The city council of
Whittier adopted an ordinance that authorized them to negotiate
with the State of Alaska, and the legislature has "paid
attention and listened to what they have to say."
Representative Harris said the competitive part of this is being
dealt with at the local level, rather than the state level. He
suggested that perhaps the [testifiers from] the City of
Whittier or Cornell [Companies] could better answer the
question.
Number 2283
BEN BUTLER, Mayor, City of Whittier, testified that the City of
Whittier began by following the Kenai prison issue fairly
closely. When Kenai voted against having a prison, Mr. Butler
said, "we" thought it was an excellent opportunity for Whittier
to have economic development and, at that point, made phone
calls inquiring what steps to take. Public hearings were held
and mailings were sent out to inform the residents of Whittier,
he told members. He mentioned a resolution made at the
beginning, stating that [the city] wanted to do this. He also
mentioned an ordinance and entering into negotiations with "an
outfit."
MR. BUTLER, regarding the competitive bid process, said four
RFQs [requests for qualifications] were sent out; two of them
were sent back. He continued as follows:
Instead of the City of Whittier doing it itself, we
actually had an outside building consultant look at
it, an auditor look at it, and one Whittier resident
look at it. And so that kept it out of the council's
hands. They reviewed the two responses that we got,
and they actually rated one higher than the other one,
and the council agreed with them and took that
proposal from there.
Number 2215
MR. BUTLER told the committee the City of Whittier had sent
around a petition or letter of interest so that the state would
know [its residents wanted the prison]. He said there were "110
ballpark votes" in the city's last election, September 2001.
Furthermore, he told the committee that he had before them 85
signatures in support of the prison. The previous Tuesday, Mr.
Butler said, the city council had adopted an ordinance to enter
into a contract with Cornell [Companies], by a vote of 7-0.
MR. BUTLER remarked, "The town is behind this. We need jobs in
Whittier. Whittier is slowly drying up. The road has been a
nice thing, but the road has allowed access in and out, and some
people have moved out." He stated his feeling that having a
prison in Whittier would add value back to the road, thereby
alleviating Whittier's present economic problems.
CHAIR COGHILL mentioned doing some preliminary reading regarding
the number of beds, starting - to his belief - at 820 to 850
beds and jumping to 1,200. He asked how that happened, if there
was an economic consideration involved.
MR. BUTLER explained that the lower number of beds was cost-
prohibitive; the higher number made more economic sense to
justify the project.
CHAIR COGHILL asked Mr. Butler if he felt the process that he'd
describe to [the committee] "kind of answers this whole source
question."
MR. BUTLER said yes.
CHAIR COGHILL clarified that he had just asked for an answer
that would come from Mr. Butler's perspective. He acknowledged
Representative Hayes's previous question and said he would
address it as well, because "we have to look at it from the
state's perspective."
MR. BUTLER continued:
Part of the things that we were very concerned about
in the City of Whittier is the fact that this had
already been done twice, in two different communities
in the state. So we wanted to make sure that
everything was above the board, that it was a clean
process, and that there was nothing that might concern
the state as far as the process we went through.
Number 2082
REPRESENTATIVE HAYES offered his concern that this legislature
has tried a single-source bid process twice. He stated that he
did not understand how [the City of Whittier] could go through
any type of process when the only community authorized to do
anything at that time was Kenai.
Number 2063
REPRESENTATIVE JAMES responded that she has looked at "what the
plans are." She said it appears to her that whether or not [the
prison] is constructed, and who will construct it, is the
business of Whittier. She continued:
They're going to sell the bonds to do this, and it
will be contingent upon whether they get [an]
opportunity for the state to contract, to use it once
you have it. And, of course, it won't go forward, if
the state doesn't agree to use that.
I would hesitate to say, from what Representative
Hayes's concern is, that we - the state - should
initiate this, necessarily, and say, "Does anybody
want to build a private prison anyplace in this state?
Please come forward and give us your opportunity." I
think that if there were someone, they would be here.
And this is really Whittier asking us, ... "If we do
this, will you do that?" That's just my personal
understanding of that.
But there's one thing I wanted to say here that
impresses me: ... the writing that I've read, it's
even better than Kenai, in the fact that the
management of the culturally appropriate treatment of
the prisoners - which many will be Alaska Natives -
and the support for the Alaska Natives for this
facility is very impressive to me. And it was
impressive to me in Kenai, but I can understand why
they lost that one with the large, boroughwide vote.
So I have no discomfort with this process going
forward.
I do also share just a little bit of concern. I have
a question on this, and my question to you is: Have
you considered that or seen any evidence ... that the
larger it is, the more or less effective it might be
in accomplishing the goals, which we had hoped to do?
And I really believe the goal is mostly the culturally
sensitive management of this facility, when probably
the bulk of these people will be Alaska Natives.
Number 1918
MR. BUTLER indicated he doesn't foresee any problems with a
larger facility of 1,200 [beds]. The available land is away
from the populated area of town, he noted.
CHAIR COGHILL offered that some of the language is very specific
about "culturally sensitive."
Number 1896
REPRESENTATIVE FATE said he, too, had a concern. He explained
that he has been questioned about this by other development
authorities who felt that there would be no legislation because
of the "noncompetitiveness" - that it didn't go out to bid.
They were under the impression the Department of [Public] Safety
was going to do an expansion program, he said, and expected that
if there were going to be any private prisons in the area, there
would be some RFPs [requests for proposals]. Representative
Fate said he is not against this [bill], but wants it understood
that there may be other [communities] in the state that may have
the same interest, but that are under a different impression as
to what the process and procedure is.
Number 1838
REPRESENTATIVE WILSON told [Mr. Butler] she appreciated the
process that [Whittier] went through, including the amount of
information given to everyone in the community. She indicated
Ketchikan and Wrangell had been interested in a prison, although
the process they went through was "the opposite" of the one
Whittier followed. She said [Wrangell] wanted economic
development; its process started with the mayor and proceeded
before getting input from the community. She said she
appreciated the bidding process as well.
REPRESENTATIVE WILSON said she feels strongly that everyone in
the state has watched what has happened, and if other
communities wanted to step forward, they had sufficient time to
do so. She mentioned that both Ketchikan and Wrangell decided
against having a prison. She described as "difficult" the
process of getting the community involved and supplying it with
the pros and cons. She expressed appreciation that [the City of
Whittier] had done that before coming before [the legislature].
MR. BUTLER responded that [the City of Whittier] wanted to be
sure it had full community support, which he'd understood was
one of the major concerns of the state. He specified that [the
City of Whittier] did not want it to be an issue that only the
council approved of, and that would have to come up to a vote.
Number 1705
REPRESENTATIVE CRAWFORD remarked that he is an ironworker by
trade and is interested in construction. He noted that he has
been to Whittier a number of times and doesn't think there is
much infrastructure there regarding electrical generation and
water and sewer systems. Consequently, he said, the city would
have to add to its capacity considerably; he asked who would pay
for that. He asked Mr. Butler if [the city] was planning to do
a project labor agreement in that regard.
MR. BUTLER answered as follows:
As far as the infrastructure needs of the town goes,
we have, of course, [Chugach] Electric that goes to
Whittier, so we have plenty of power coming through
the tunnel. And I'm more than happy to sell the
power, so that's not an issue.
As far as the water and sewer goes, though, ...
entering in the contract with Cornell, they will have
onsite sanitation and onsite water. We, of course,
have plenty of water around Whittier; we have our
wells in Whittier that produce more water than we
could ever use. They're only at 80 feet deep. And,
of course, on the property that's being bought -
[that] the prison will be built on - it has the
ability to have well water there, too. So it would
not be the city paying the bill for that; it would
actually come out of the total cost of building the
project.
REPRESENTATIVE CRAWFORD said he'd worked on the tunnel and was
not aware that [Chugach Electric] had that capacity without
having to add to [the existing infrastructure]. He asked,
"What's been the discussion?"
MR. BUTLER answered that there hasn't been a lot of discussion
with [Chugach Electric] on that note. He mentioned the tunnel
being open and the other tunnel attached to "the road to
Whittier, ... where the pipelines used to go through for the
U.S. government." He said "we" don't foresee that there would
be any problem getting more power into Whittier if there were
insufficient power.
Number 1555
REPRESENTATIVE CRAWFORD asked about medical care and places for
families to stay when they come to visit [prisoners].
MR. BUTLER replied that [the City of Whittier] acknowledges that
although there is some housing available, it is probably
insufficient; however the city is located close to Girdwood and
as close to Anchorage as Wasilla and Eagle River. He also said
[a prison] would give Whittier the chance to build additional
housing if there is a need for it. He indicated currently
Whittier's housing is a 14-story building that has vacancies
because of a decrease in population, from approximately 300 in
the 1990 [U.S. Census] to 182, according to the state.
Number 1484
REPRESENTATIVE STEVENS noted that he was in favor of HB 498 but
would have to leave this committee hearing, because of another
commitment, before a vote was taken. He clarified that he
appreciated the efforts of the community of Whittier, saying he
believed that it had done "everything right," including
attaining the signatures of its residents. He asked about
Whittier's prospects for economic development, jobs, and "the
impact on keeping that tunnel open."
Number 1405
MR. BUTLER responded as follows:
Right now, with the tunnel opening up, the railroad
pulling out, with the government tank farm that we
used to have in Whittier that probably supplied 35
family-type jobs, Whittier doesn't really have any
jobs besides a tourism-related economy. Of course,
during construction it will be union, and so if
there's people in there that belong to a [labor]
union, ... or other crafts, they'll be able to get
onto that - and maybe general laborers.
And as far as once it's actually built and up for
operations, of course, there'll be correction officers
there that will have to be certified through a state
level. ... But there will also be janitorial jobs,
... kitchen jobs, laundry jobs, and things like this.
But as long as the citizens of Whittier can qualify
for [them], they'll have the opportunity to get those
jobs. Truly, Representative [Stevens], that's what we
are looking for: we are looking for jobs.
Once the tunnel was open, we kind of thought that that
might help spur things on. Actually, it's kind of
slowed things down for us over there. The year that
we had the free road, we had our best year ever. And
the way that the city can gauge that is through the
sales tax. The next year, when the road was actually
tolled - when we went back down to, basically, pre-
tunnel days, train days - ... it really affected us.
... Unfortunately, the gains that we got from the
tunnel were just short-lived: they were for one year.
And, hopefully, right now, for example, there's not
the justification of [the Department of Transportation
& Public Facilities] to keep the tunnel open for seven
months out of the year, more than 68 hours a week. So
it's less than 10 hours a day. It's actually hurt us:
... the restaurants have closed this winter; there's
no dinner traffic; the people are not coming in
because of the hours of operation of the tunnel.
And so we anticipate that with the opening of a
privately [run] prison in Whittier, ... that would
give the ability to the state to open it longer. In
fact, we've been in conversations with Commissioner
Joseph L. Perkins of the Department of Transportation
& Public Facilities, who stated that we could probably
-- right now, during the summertime, it's open 17
hours a day, and he would not see any reason why we
could not do the same with the prisoners there, in
order to accommodate the three shifts that would work
at the prison.
Number 1220
CAROLYN ALLEN, Member, Whittier City Council, testifying via
teleconference, told the committee the attitude of the residents
and the city council towards building a private prison in
Whittier is a positive one. She indicated residents have stated
that they depend upon the income generated from Whittier's
limited tourist season of approximately 110 days. For example,
because of the [terrorist attacks on the East Coast on September
11, 2001], the tourist industry is expecting a decline [in
visitors], which does not bode well for Whittier.
MS. ALLEN said the tunnel's opening has not generated the
economic stimulus that was projected. She said she believes the
citizens of Whittier, as a whole, are excited about the proposal
of the prison, which would provide year-round stimulus for
Whittier's depressed economy. She explained that it would
create year-round employment opportunities, which would provide
incentive for new businesses to come to Whittier. Furthermore,
Ms. Allen said she believes it would also provide better access
to businesses and the homes of Whittier's residents, because of
the extended tunnel hours.
MS. ALLEN told the committee she has never seen a community as
united on a project as Whittier is regarding [the proposed
prison]. She concluded by saying, "I would encourage your
positive attitude toward the approval of House Bill 498."
Number 1055
FRANK SMITH, Citizen Activist, testifying via teleconference,
said he found the previously stated testimony to be
enlightening. He indicated he had spoken to some committee
members the previous week and to the City of Wrangell Chamber of
Commerce, which had invited him to speak. Mr. Smith stated that
he has been involved in criminal justice issues for about 30
years. He explained that he is an Alaskan who is presently
living in Kansas because of "elder care issues," but will be
back in Juneau "next week."
Number 0968
MR. SMITH mentioned previous testimony [that day on HB 314]
regarding permanent fund dividends (PFDs) and the Peace Corps.
He said 414 people are registered to vote in Whittier, even
though there are only 192 residents, with dozens of those being
school children. Mr. Smith stated his concern that [Whittier]
is a welfare community. According to the city's web site, he
noted, the state has given [Whittier] $100 million to build a
tunnel to draw business to the city.
MS. SMITH said the state, not the city, will be liable for the
bonds [necessary to build a prison]. He mentioned "another $100
million to build this prison - a prison which is logistically
infeasible." He opined that it would be impossible to staff the
facility. He said prison wages are barely above fast-food
wages, and the notion that people would drive all the way from
Anchorage or Girdwood to work [in a prison located in Whittier]
is ludicrous. He remarked, "The state can't supply workers from
Seward, in a much larger and more accessible community."
MR. SMITH reiterated that the big issue is "more welfare." He
said the city residents don't want to pay tunnel fare and are
comforted by the assumption that if the prison is built, they
won't have to pay tolls. Mr. Smith depicted [Whittier] as a
small community where everyone lives in the same building.
MR. SMITH suggested the only reason the committee was
considering [HB 498] at this hearing was because Cornell
[Companies] had "massaged this in many ways," through
[Whittier's] city council as well as other city councils. He
referred to Representative Wilson's mention of Wrangell's
previous consideration of a prison. He noted that 72 percent of
the people in Wrangell voted against it, and 74 percent of
people in Kenai voted against one as well. He reiterated that
it was not a feasible project. He referred to Mr. Butler's
testimony about involving the community and said:
In fact, this wasn't a competitive bid process. On a
Freedom of Information Act request, I got documents
that indicated Frank Pruitt [consultant for Cornell
Companies] massaged this thing all the way from the
start, from early October, when Kenai turned it down,
to the extent that he even told them on October 30 who
they should send their bid proposals to.
MR. SMITH concluded that "this is just immense welfare," worse
than the [failed] Delta barley [project], the Point MacKenzie
dairy, and the MarkAir air terminals. He stated, "There's no
justification for spending this kind of money when, in fact, it
costs half as much to keep [Alaskan] people in Arizona [in
prisons], and we're about to open 400 beds in Anchorage." He
said this is a "take or pay" proposition: if the prison sits
empty, without a single prisoner ever being in it, the state is
going to "be on the hook for 1,200 beds, for at least five
years."
CHAIR COGHILL suggested that Mr. Smith send in written
testimony.
Number 0758
MARION DYE, Member, Whittier City Council, testifying via
teleconference, said she has lived [in Whittier] for the past
several years and has witnessed a steady decline in population,
revenues, and economic growth. She said she believes that the
building of the private prison would be a stimulus for economic
development there. She indicated the opening of the tunnel did
not give [Whittier] what it had expected, but has added to the
problem of economic growth. She said she hoped for "favorable
decisions" from [committee members].
Number 0630
MAKO HAGGERTY, testifying via teleconference, told the committee
that he did not have any financial interest in this issue, but
has been "watching the private-prison industry for a number of
years." He issued a warning to the City of Whittier that
inviting Cornell [Companies] into its community is not a prudent
idea. He stated his opposition to HB 498 and to private, for-
profit prisons. Mr. Haggerty said the issue was taken to vote
in the Kenai area last October, and the private, for-profit
prison project was defeated by approximately 3-1. He said he
wondered what it would take to get "these guys" [Cornell
Companies] out of [Alaska].
MR. HAGGERTY cautioned that this project would be extremely
expensive. He agreed with Mr. Smith that there are "too many
red flags," such as transportation to Whittier, housing for
those working at the prison, and the number of beds for which
the state would be responsible. He recommended that the state
take a look at the governor's proposal. He also mentioned a
proposal by Senator Lyda Green. Both proposals, he said,
deserve a fair hearing.
Number 0351
MATT ROWLEY, City Manager, City of Whittier, testifying via
teleconference, characterized Whittier as "the gateway of Prince
William Sound." He said, "We were afforded a wonderful
opportunity with the opening of the Anton Anderson Memorial
Tunnel." Regarding the tunnel, he referred to the testimony of
Mr. Butler and said tolls and scheduling, for example, have
hindered, rather than enhanced, Whittier's ability to develop
economically.
MR. ROWLEY said Whittier realizes the importance of bringing
Alaska's inmates back into the state, as well as the dollars
currently leaving the state to support [those prisoners]. He
said "we" see the Whittier prison as being a "win-win" situation
because it would benefit both the state and the economy of
Whittier. He noted that the City of Whittier is looking at the
prison to provide a "stable, long-term anchor tenant of
Whittier." He mentioned that employment, increased sales tax
and property tax, and development of support industries are
benefits that Whittier expects to see over time.
Number 0170
MARGOT KNUTH, Strategic Planning Coordinator, Office of the
Commissioner - Juneau, Department of Corrections, pointed out to
the committee that the bill would authorize the single largest
contract in the State of Alaska's history, with a cost of $985
million, not including an adjustment for inflation; therefore,
she said, it should be carefully considered.
MS. KNUTH stated her appreciation of the legislature's interest
and recognition that Alaska needs more prison beds within the
state - a message that the administration has been trying to
bring forward for several years. She said the recognition this
year is timely, because 1,200 beds are needed in Alaska. She
noted that the governor has a five-part plan to address
corrections issues, which includes whether a measure provides
for safety, comprehensibly meets statewide and regional needs,
is consistent with best correctional practices, involves
community participation, and is cost-effective.
TAPE 02-21, SIDE A
Number 0011
MS. KNUTH, [in regard to expansion of] jails and prisons within
the state, mentioned that HB 497 and SB 336 are the governor's
bills. She explained, "The big difference between this bill and
the governor's proposal is that the governor's proposal
recognizes that we need beds regionally, as well as prison
beds." She stated that a private or public prison in Whittier
that provides 1,200 beds would not alleviate the need for jail
beds, especially in Fairbanks and Bethel - both overcrowded
facilities. She explained that people need to be close to the
court where their judicial proceedings are held; just as inmates
can't be transported from Arizona to court hearings in Fairbanks
or Bethel, prisoners cannot be transported from Whittier to
Fairbanks or Bethel.
Number 0155
MS. KNUTH noted that in addition to the aforementioned bills,
Senator Lyda Green [had introduced] SB 231, and a similar bill
[introduced by] Representative Harry Crawford recognizes
statewide needs. Ms. Knuth encouraged the committee to consider
those pieces of legislation. She noted that the Department of
Corrections had compiled a new portfolio indicating its needs
statewide, which she would make available to committee members.
MS. KNUTH mentioned factors considered by the Department of
Corrections when choosing a location for a prison or facility.
She distributed a handout to the committee members that included
factors shared with all of the communities that have expressed
interest in having a prison built. She said Representative
Crawford previously "touched on some of the concerns that the
Department of Corrections is going to have." The main
[concern], she said, is whether the infrastructure of the
community is able to provide the services necessary for the
facility.
Number 0348
MS. KNUTH noted that there is a special concern that certain
areas of Whittier are within avalanche zones, which should be
considered when picking a site. She said she had heard that one
area under consideration was within an avalanche zone. She said
a feasibility study needs to be done. She told the committee
that it took the community of Delta Junction over two years
after it had the authorizing legislation to conduct a
feasibility study and conclude that [the project] was not
financially feasible. She remarked, "The upshot of what
happened in Delta Junction was, they were sued by the private
provider that they had contracted with, and they finally settled
that litigation, and they owe $1 million because they did not, I
think, do their homework upfront." She continued:
Whittier has done some of the first steps in their
homework assignments, but they have not gone far
enough to know whether it is a feasible site. One
needs to know whether it can be done at all, and then
whether it can be done cost-effectively. And the
state would suggest that that should be done before
the authorization is given, because of the amount of
money that then gets to be expended after the
authorization is granted.
My heart goes out to the citizens of Delta Junction
for the amount of pain that they went through and for
the amount of expenses that they incurred, only to
discover that it wasn't going to happen in their
community. The state would just as soon not see that
happen to Whittier.
Number 0575
MS. KNUTH cautioned that there are a couple of problems with the
legislation, the most pervasive being a lack of specificity.
Normally, when proposals are put forward asking to spend
millions of dollars, Ms. Knuth explained, a degree of
specificity regarding the cost is set out in legislation. She
continued as follows:
This bill - as did the Kenai bill and as did the Delta
Junction bill - only has an expression of legislative
intent that the daily cost of care that the state will
pay to the City of Whittier [will] be approximately
$89-91, in current dollars. There's no expression of
how much the facility should cost, what the capital
costs are. And the idea of this prison has been with
us for ... at least four years, and in that time, we
still don't know what the proposed capital cost is.
MS. KNUTH noted that HB 53 was the legislation that authorized
both a private prison in Delta Junction and the construction of
a new jail in Anchorage. She continued:
That new jail in Anchorage is going to open 31 days
from today. It's a $56-million facility. It was
planned, it was developed, it was constructed, [and]
it's going to open. And we still don't know what the
specifics are for this proposal for the private
prison. I find that a matter for some concern.
Reality depends upon knowing what the various steps
are - what the plan is. And I think ... before the
legislature authorizes $985 million of the state's
money to be given to a project that it should know
what it's getting for the money.
Number 0705
MS. KNUTH pointed to Section 2, paragraph (b) of [HB 498]. She
suggested that the following language be deleted [beginning on
line 23, through line 27]:
The procurement requirements of this subsection are
satisfied if the City of Whittier in exercising its
powers under AS 29.35.010(15) for procurement of land,
design, construction, and operation of a facility,
follows its municipal ordinances and resolutions and
procurement procedures.
MS. KNUTH explained:
If this were a project that the City of Whittier is
undertaking at its own financial risk, then I believe
it would be appropriate for this body to grant it the
freedom and the discretion to select the party that
will be performing the work, in whatever way meets its
local needs.
When, however, the State of Alaska is asked to enter
into a 25-year contract that secures the payments of
all of the bonds and will provide the cost-of-care
figure for 25 years, then I think the State of Alaska
and the people of ... Alaska have an interest in how
that contract is entered into.
Number 0765
And we have a state procurement code that this body
has given a great deal of thought to, and has decided
is the best way to ensure that the state is getting
good value for its money. And so, it would be
appropriate for that state procurement code to apply
in this situation.
The only alternative that seems viable to me would be
to not require the state to enter into that 25-year
lease and, instead, as we do in Arizona now with CCA
[Corrections Corporation of America] -- we are
essentially month-to-month tenants there, and if an
issue comes up that we have a concern about how our
inmates are treated, we have the freedom to move to a
different facility and to go to a different provider.
That freedom is what gives the State of Alaska the
power to make sure that our prisoners are taken well
care of, and that we have oversight of how things are
being done.
Number 0923
So, I believe that either one or the other is
appropriate: either the state gets to leave and put
its prisoners elsewhere - and that gives the private
prison the motivation for satisfying our needs and
performing at the standards that we need - or else let
the state's procurement process, which goes to the
value for the money, be abided by.
I think that any inquiry would show that what the City
of Whittier has done in its procurement process is, it
has satisfied itself that it's found a partner it is
happy doing business with. And I support that; I
think that's their purview and that's appropriate.
But it doesn't tell us whether it's a partner that
will be good for the State of Alaska, and that's the
next step. And both of those need to be satisfied:
they need to be happy, and the State of Alaska needs
to be happy.
Number 0949
CHAIR COGHILL told Ms. Knuth she had given the committee "a lot
to chew on." He said Cornell [Companies] had been "raked over
the coals" and was a "player working with Whittier," and that he
wanted to give them time to testify. He asked if anyone present
in the room would be unable to come back to testify at the next
hearing to be scheduled for HB 498; there was no response.
Number 1042
SUSAN BURKE, Lawyer, Gross and Burke, told the committee that
she was representing Cornell Companies. She indicated Frank
Prewitt [a consultant for Cornell Companies] was also in the
room to answer questions.
CHAIR COGHILL, in consideration of time, asked Ms. Burke if she
would be able to return for the next hearing [on HB 498]. As a
follow-up to Ms. Burke's affirmative response, he said he
thought it would be good to have a comparison of "what the state
said and how Whittier and you have had that discussion."
Number 1126
MS. BURKE addressed Representative Hayes's question regarding
how Whittier can do this, when only Kenai is authorized under
the existing legislation. She said there are two levels of
contracting: the first would be a 25-year contract between the
state and the City of Whittier, by which the state would procure
a prison facility and operating services from the City of
Whittier; the second would be between the City of Whittier and
the private prison operator. Ms. Burke remarked, "And those
would be for a period of maybe five years each." She explained,
"After the first five years, they would have to go out [to]
another competitive process to procure the operating services."
That contract, she noted, is governed by the City of Whittier's
procurement procedures, whereas the first contract is governed
by the state's procurement code, which doesn't apply to
contracts that the state enters into with municipalities.
Therefore, there is no current prohibition against a sole-source
contract between the state and any municipality in the state.
REPRESENTATIVE HAYES said he appreciated [Ms. Burke's answer].
Number 1237
MS. BURKE disagreed with testimony regarding the state's being
obligated to pay the bonds:
That is absolutely not the case. These are revenue
bonds. The statute is absolute on issuing revenue
bonds by municipalities. It's crystal clear: the
full faith and credit of the State of Alaska is not
pledged to repay those bonds. The only source of
revenue to pay the bonds off is the revenues that
would come to Whittier from the State of Alaska under
the contract. But it's not a question of the state
being obligated to pay the bonds. And the prospective
bondholders are absolutely made aware of this, and
they take the risk that something could happen and
those revenues might not be forthcoming.
Number 1298
MS. BURKE referred to Ms. Knuth's comment regarding the
inability of the state to move to a different provider because
there would be a 25-year contract between the state and the City
of Whittier. Ms. Burke said there is no question that the state
would be obligated to the City of Whittier to use that facility;
however, she noted that there is a specific provision in [HB
498] that would provide that if the Department of Corrections is
not satisfied with the service of the City of Whittier's
provider, at any time during the 25 years, no matter who that
provider is at the time, the state can direct the City of
Whittier to terminate that contract. The City of Whittier would
then have to find a replacement [provider].
Number 1379
REPRESENTATIVE WILSON recalled previous testimony suggesting
that pay for the guards would be low. She indicated she had
"asked that question the other day," and that the answer was
they would start at the same pay [rate] that the regular guards
currently starting out receive.
[Because of the lateness of the hour, the testifiers available
to answer questions were asked to return at the next scheduled
hearing on HB 498. HB 498 was held over.]
ADJOURNMENT
There being no further business before the committee, the House
State Affairs Standing Committee meeting was adjourned at 10:04
a.m.