MINUTES SENATE FINANCE COMMITTEE April 12, 1995 9:40 a.m. TAPES SFC-95, #30, Side 1, (000-575) SFC-95, #30, Side 2, (575-end) CALL TO ORDER Senator Rick Halford, Co-chair, convened the meeting at approximately 9:40 a.m. PRESENT Co-chair Halford and Senators Phillips, Sharp, Donley and Rieger were present. Co-chair Frank arrived shortly after the meeting began. Senator Zharoff was not in attendance. Also Attending: Stan Ridgeway, Deputy Director, Vocational Rehabilitation, Dept. of Education; Dean Guaneli, Criminal Division, Dept. of Law; Kathy Tibble, Division of Family and Youth Services, Dept. of Health & Social Services; Dave Hutchens, Executive Director of the Alaska Rural Electric Cooperative Association; and Willie Anderson, Representing the National Education Assoc. Teleconference: Victor Gunn, Deputy Chief of Police, Dept. of Public Safety, Fairbanks; Don Schroer, Alaska Public Utilities Commission, Anchorage; Bob Lohr, Executive Director, Alaska Public Utilities Commission, Anchorage, and Janey Winnegar, Representing the National Rifle Association, Palmer. SUMMARY INFORMATION SB 117 STATEWIDE INDEPENDENT LIVING COUNCIL Stan Ridgeway gave testimony in support of SB 117. SB 117 (HES) was REPORTED OUT of committee recommending "do pass" with a fiscal note from the Dept. of Education of $142.6. SB 64 CONVERT AK RR TO PRIVATE CORPORATION Senator Rieger moved Amendment #1, and it was ADOPTED. The bill is being held pending further discussion. SB 26 OFFENSES BY JUVENILE USING FIREARMS Discussion was had by Victor Gunn of Fairbanks; Dave Hutcheson and Willie Anderson of the National Education Association; and Dean Guaneli, Dept. of Law. A Conceptual Amendment changing "criminal offense" to "crimes against a person" and "firearms" to "deadly weapon" was ADOPTED. CSSB 26 (FIN) was REPORTED OUT of committee with 6 zero fiscal notes (see page 7 in minutes for details), and a "do pass" recommendation. SB 54 ELECTRIC UTIL & SOLID WASTE REMOVAL Don Schroer and Bob Lohr of the APUC testified against the bill, but endorsed the two amendments presented by Senator Sharp. Amendment #1 and #2 was ADOPTED. CSSB 54 (L&C) is being held for further discussion. SENATE BILL NO. 117 "An Act establishing a statewide independent living council and clarifying its relationship with existing agencies; and providing for an effective date." Stan Ridgeway, Deputy Director, Vocational Rehabilitation testified that SB 117, the establishment of a Statewide Independent Living Council, was introduced by Senator Halford at the request of the Dept. of Health & Social Services. In order for Alaska to continue receiving federal funds for independent living services, the state must establish in statute a Statewide Independent Living Council. At the present time, the state receives approximately $900.0 in federal money, along with $602.0 in state money for a total of $1.5 million used to fund independent living centers throughout the state. As part of the rehabilitation act of 1992, there was a requirement that a Statewide Independent Living Council be appointed by the governor. In order to receive those funds, the Independent Living Council and the Division of Vocational Rehabilitation had to jointly develop a state plan for independent living services. That was accomplished in 1993 when Governor Hickel appointed the first council in October of 1993. Because it was a federal law, there was an assumption that it would not need to be in state statute. However, that was challenged later that year, and in 1994 Governor Hickel reappointed the council. It is our understanding that it must be established in statute by the end of this legislative session for the Independent Living Council to continue operation. Senator Sharp MOVED to adopt CSSB 117 with accompanying fiscal note and individual recommendations. No objection being heard, CSSB 117 was REPORTED OUT of committee with a $142.6 fiscal note from the Dept of Education and a "do pass" recommendation from the Committee. SENATE BILL NO. 64 "An Act relating to the dissolution of the Alaska Railroad Corporation and providing for a successor corporation; and providing for an effective date." Senator Rieger testified that this legislation is a step towards the privatization of the Alaska Railroad. This will reshape the corporation into a form, the ownership of which, is represented by shares of stock. This will enable the transfer to private ownership, either through: the sale of the entire corporation, through the sale of individual shares, or appropriations of individual shares of stock. This bill directs the railroad to form a successor corporation represented by shares of stock. Senator Rieger testified that the Board of Directors have been paralyzed by the actions of the legislation imposed over the past years. He feels this has been a detriment to economic development in the state. The Alaska State Library has contacted the legislature asking if there could be help in securing the railroad historical records. He offered an amendment which would transfer the historical records of the Alaska Railroad to the Library, except those records which the railroad should appropriately keep in their own archives. The railroad has recommended an amendment to the amendment which is technical. Senator Rieger MOVED amendment #1 for adoption. No objection being heard, amendment #1 was ADOPTED. Senator Phillips made reference to a position paper from the railroad, dated March 10, 1995. He asked for the formal position by the Alaska Railroad. Senator Rieger responded that they did not have a formal position. The Railroad had concerns in some areas of the original bill. Those areas of concern have been addressed. One of the ideas that the railroad offered for the legislature's consideration, was putting the shares into a trust to be administered by a trustee, rather than voted by the governor as the owner of the shares. This bill is crafted to allow the legislature to appropriate the shares to a trust. Co-chair Halford supports moving the railroad towards the private sector. As long as it is in the public sector, there is not much control, and expanding their independence should only be towards privatization. Senator Rieger stated that the legislation should be accepted only as an interim measure. The legislature is going to have to appropriate the shares subsequently, or force the sale of the shares to consummate the transaction. The only thing that is gained is avoiding a mandated distress sale, which is the other alternative that has been offered from time to time. He feels that this will help to get the maximum proceeds when the railroad is sold. Co-chair Halford wanted to know if this legislation weakens the ability to interact with the railroad on various issues? Senator Rieger said that it does reduce the legislature's strength. There was considerable discussion regarding language cleanup. It was agreed to hold the bill for a later date. SENATE BILL NO. 26 "An Act providing for automatic waiver of juvenile jurisdiction and prosecution of minors as adults for certain violations of laws by minors who use firearms to commit criminal offenses and relating to the sealing of the records of those minors." Senator Donley explained that SB 26 would waive juvenile's over the age of 14 who commit a second crime, utilizing a firearm, to adult court. The legislation has the support of police associations, national rifle association, and the organization representing pubic safety employees of the state. At the current time, there is no mandatory waiver of juveniles. His intent to send a message that abuse of firearms is not condoned by society and to take it very seriously. This has been brought to his attention by educators in his community who have said that after passage of the laws that forbid firearms from being brought to schools, the police were frustrated, because when they did apprehend individuals who carried firearms to school there was no consequence. Co-chair Halford supports the legislation and asked that there be an amendment to include deadly weapons and defensive weapons. Senator Rieger asked if the waiver into adult court would mean the individual is subject to the laws of the adult? Senator Donley responded that it was correct, except if incarcerated, then different rules apply. He asked if the results of being waived include juvenile consequences, as well as adult consequences to the crime? Senator Donley responded that both consequences apply. There was a discussion regarding other forms of weapons. Firearms are deadly. The purpose of this legislation is to stop the firearm abuse before there are serious consequences. Kathy Tibble, Division of Family and Youth Services, Dept of Health & Social Services testified that the department is opposed to this legislation with the age being lowered to 14, and because of the broadening of the type of offenses. There is a concern that a juvenile could be adjudicated for a misdemeanor offense with use of a firearm, and then if involved in a more serious offense, be waived to adult jails. At this point, a waiver to an adult court means a waiver to adult prisons. The department believes that most 14 year olds still are amenable to treatment, therefore they support continuing with the statute that allows for a waiver to adult court for heinous crimes rather than to mandate an automatic waiver on all 14 year olds for this broad category of offense. Senator Phillips asked if the governor is opposed to this bill. Ms. Tibble responded that it was her understanding. Co-chair Halford asked if the governor would be opposed to the bill if it dealt with felony offenses instead of felony and misdemeanor offenses? Ms. Tibble referred the question. He asked if the language read, "offense against the person"? There was considerable discussion regarding deadly and defensive weapons. Senator Donley read the definition of deadly and defensive from the statute. Co-chair Halford wants an amendment that puts into adds language referring to deadly weapons. Senator Donley pointed out that the argument that the minor would go to adult prison presumes that the second offense that the minor commits is somehow subject to mandatory sentencing. It would have to be a major offense, to commit the minor to prison if convicted. Willie Anderson, National Education Association testified that NEA supports the legislation because of the crime in the public school system. There is an increase of harm as a result of firearms. Victor Gunn, Deputy Chief of Police, Dept of Public Safety in Fairbanks spoke to supporting the bill. He felt that adding the words "deadly weapons" to the bill, it would make it more of a deterrent to crimes, versus just "firearms". The message to students regarding the use of firearms has been conveyed through other laws. The message of adding deadly weapons would make it much stronger, and limiting it to felonies would make the bill more palatable. He stated that there are already penalties attached to the possession of and the threatened use of a firearm. He emphasized sending an overall message of deterrents to the youth, which he is in favor of. The addition of deadly weapons and limiting it to felonies would be highly supported by the department. Co-chair Halford suggested that instead of applying it to felonies only, it could be applied to "crimes against the person," which would eliminate some misdemeanors, but not all, such as the highest class of misdemeanors, which is assault. Mr. Gunn suggested that it would not be restrictive to limit the legislation to felonies. Co-chair Halford reminded the committee that this legislation is not applying the penalty, but rather that they will be tried as adults. Only after there is a confirmation of guilt do the penalties go forward, which rests with the judge. Senator Donley suggested moving to the format of the second offense with a deadly weapon or a crime against the person. The distinction should not be between a felony and a misdemeanor, as whether there was an injury, or a threat of an injury to an other person. End Tape #30, Side 1 Begin Tape #30, Side 2 Dean Guaneli, Criminal Division, Dept of Law, stated that he understood that the committee was interested in hearing testimony when, and under what circumstances, force can be used in self defense. If the question is expanding this bill to have additional juveniles waived to adult jurisdiction, these are policy questions to be determined by the department. In responding to Co-chair Halford, he stated that from a prosecution standpoint, the more flexibility that the prosecution has to resolve a case, the better. If additional penalties or options available under the law, send a particular juvenile one way or the other, the preference is to have that discretion. However, it then becomes necessary to decide what is best for that particular juvenile for that case, and that becomes largely a question of what sorts of resources does the Dept. of Health & Social Services have to treat any particular individual, what sorts of resources would the Dept. of Corrections have to treat that individual if they are handled as an adult. Those kinds of allocations resource questions need to be discussed with those departments. There is a difficulty in dealing with young offenders. The departments do not have the flexibility within the system to create separate units for young offenders. It is one thing to deal with a 16 of 17 year old who has committed a murder, they have over the years dealt with a number of those individuals. It is another matter to deal with a 15 year old, whose only crime is having a firearm or handling firearms. Senator Halford asked if there is a status offense that is minor in possession of a firearm? Mr. Guaneli stated that there is, under 16 without parental permission is a misdemeanor offense. There was discussion regarding various scenarios. Co-chair Halford asked if the waivers in this proposed bill mandatory, or can the Dept of Law within the prosecutors office, really determine whether there will be a consideration for the waiver? Mr. Guaneli stated that if someone is charged with an offense, then the statute will dictate whether that person goes to juvenile court or adult court. Prosecutors always have the discretion to charge a lower level of offense. That power exists currently with the juvenile law. Co-chair Halford noted the opposition of the administration. If the bill were amended to include only felonies would the administration's position change? Mr. Guaneli responded that there would be a greater comfort level, but without consulting the various departments involved, he would not commit. Co-chair Halford again asked about "crimes against the person". Mr. Guaneli stated that decisions from the executive branch come from resource considerations as much as what is best for the public and the individual. Senator Sharp recommended a conceptual amendment to broaden the definition to deadly weapon, make it a crime against the person only, and apply to the second offense. Janey Winnegar, Representing the National Rifle Association in Palmer testified that their concern is that all crimes against a person should be covered in this legislation. It is felt that any weapon should be considered a felony. She stated that in talking with the law enforcement agencies, they support crime strike recommendations. Senator Donley offered the conceptual amendment to change the terminology to "crimes against the person"; change the word "firearms" to "deadly weapon". No objection being heard the conceptual amendment was ADOPTED. Senator Donley MOVED to adopt SB 26 (FIN) with accompanying zero fiscal notes, with individual recommendations. No objection being heard CSSB 26 (FIN) was REPORTED OUT of committee with 6 zero fiscal notes from Dept of Health & Social Services, Dept of Administration, Dept of Public Safety, and Dept of Law, with a "do pass" recommendation by the committee. SENATE BILL NO. 54 "An Act relating to exclusive service areas for utilities certificated to provide electric utility service and to the definition of 'general public' for utilities furnishing electric service." Senator Sharp offered amendment #1 which changes the title to, "relating to employees of the Alaska Public Utilities Commission;", he explained the rest of the change of the amendment which would allow two special assistants, though there are no funds available until next year. Senator Sharp MOVED amendment #1. No objections being heard it was ADOPTED. Amendment #2 was offered which is a language change to coincide with the title change. Also there was a new expiration of Feb. 1 put into place. Senator Sharp MOVED to adopt amendment #2. No objections being heard it was ADOPTED. Co-chair Halford explained that the remaining portion of the bill is the exclusive areas for electric utilities only. The exemption provision except for refuse collection is what needs to be addressed, along with a change to the definition section. Dave Hutchens, Executive Director of the Alaska Rural Electric Coop Assoc. stated that he was in strong support of the bill. Section 4 is a conforming amendment in the statute conforming to Section 2 which is the operative policy statement. The background is that a number of years ago, there was retail competition among the utilities. Utilities were running lines up and down the same streets, and it was a misallocation of resources. In order to stop the border wars, a Board was created. In Section 2, the PUC gave the commission the directive and instructions to separate the electric utilities services. The job is now complete. The purpose of this legislation is to enable the commission to keep the utilities services separate. He explained that the attached fiscal note of $100.0 a year to keep from making changes and asked that there be in its place, a zero fiscal note. Mr. Hutchens explained Section 4 changes which strikes out lines 6 and 7, on page 2. The change is proposed as a compromise to legislation previously introduced in the 1980's that concerned gas and oil companies. Since that situation is long gone, the language suggests that any new customer coming into a service area was up for grabs. The second change on line 7 is a language change. Co-chair Frank asked if the bill was introduced at his request. Mr. Hutchens explained that it had originally be requested to be included in the APUC sunset extension bill. Senator Kelly has introduced this as a new bill. Co-chair Frank inquired about the refuse portion of the bill. Mr. Hutchens stated that was not at his request, that was added in Labor and Commerce Committee, and he has no interest in that area. The exemption does apply to electrical utilities. Co-chair Halford inquired if a municipal government can regulate an electric or telephone utility that is exempted under the APUC? Mr. Hutchens indicated that they can not. He inquired about refuse, stating that if it is deregulated, then it needs to be backed up with a exemption from the municipal regulation as well. Otherwise, it ends up being a battle at the municipal level, leading to the take over of a company, because the municipality may want to provide the service on a government level. Co-chair Frank feels the garbage deregulation is inappropriate in this section and offered an amendment to remove it. Senator Rieger spoke to the provisions of electric service from the refinery in Valdez and how that might have an effect on the Intertie. Would this prohibit the refinery from providing surplus electric power to the CVEA region. Mr. Hutchens assured Senator Rieger that it would not. This deals only with the retail sales of the electricity, and the provision of the wholesale service is protected under federal law. Competition is encouraged and protected under federal law. Under Alaska law, anyone has the right to serve themselves, to provide their own generation. Under federal law, they have the right to sell their surplus to the utility in that area. Don Schroer, Alaska Public Utilities Commission in Anchorage offered testimony against this legislation because it is contrary to the public interest and would take the state backwards. The Alaska Supreme Court has concluded that under current law, a certificate issued by the Alaska Public Utilities Commission does not confer in exclusive service area in a public utility. Chugach Electric Association v City of Anchorage, 426 P2d 1001 (1967). This has been the law in Alaska for 28 years. This bill would overturn that decision for electric utilities. They already have de facto monopoly status, because the APUC has not authorized more than one provider in a given area. This makes sense in the vast majority of cases. But conditions change and technology evolves. What if, in the future, competition makes sense to the legislature, benefits the customer and is in the public interest? By the way, these decisions are best left to the legislature, because inevitably they involve political as well as regulatory questions. How would exclusionary jurisdiction be reversed to allow the customer these benefits? It may very well require significant compensation to the electric utilities for their loss of monopoly rights. To my knowledge there has been no legal or economic analysis of this potentially massive transfer of wealth. However, if despite these concerns, you do decide to move the bill, the Commission supports Senator Sharp's two proposed amendments, one to Classify two vacant Commission positions as partially exempt; and the other to change the appointment date for commissioners from November 1 to February 1. We ask that you consider one other amendment: to create an exemption to the Procurement Act for commission hiring of expert witnesses. The commission recommends adding an exemption to the Procurement Act, 36.30.850 to allow it to hire its expert witnesses for cases in a timely manner. A new subsection could be added to read: "contracts for professional services or testimony related to proceedings before the Alaska Public Utilities Commission, including procurement pursuant to AS 42.05.111(b)." This is modelled after an existing exemption provided to the Dept of Law. The commission has been unable to procure the professional services of expert witnesses in a timely fashion. The deadlines established in proceedings do not permit the procurement process to operate to produce a successful bidder in time for the contractor to properly prepare the case. Other parties to the proceedings utilizing private sector procurement procedures are able to hire their expert witnesses on a timely basis, the commission is not. This either delays the processing of cases, or forces the commission's witness to rush through the preparation of a case, thus affecting the accuracy and credibility of the work, as well as costing the state more for overtime. He stated that the commission supported Senator Sharp's two amendments. He reported that there are still language problems with the section, and he will fax down suggested changes to the section. Senator Sharp asked why bureaucrats think they have the right to regulate. Mr. Schroer stated that the basis comes from lack of funds and not having the ability to serve the public as intended. Bob Lohr, Executive Director, Alaska Public Utilities Commission stated that the intent of the testimony was the decision ought to be made by the legislature, not by the commission with respect to whether competition is appropriate. It would not be a bureaucrat's decision under that proposal, rather it would be a legislative decision. Co-chair Halford stated that Co-chair Frank is interested in pursuing this bill further, and with the fax information coming from the APUC, the bill will be taken up at a later time. The meeting was RECESSED at approximately 11:10 a.m.