MINUTES SENATE FINANCE COMMITTEE February 5, 1997 9:07 A.M. TAPES SFC-97, # 30, Sides 1 & 2 (000-589) SFC-97, # 31, Side 1 (000-085) CALL TO ORDER Senator Drue Pearce, Co-chair, convened the meeting at approximately 9:07 A.M. PRESENT In addition to Co-chair Pearce, Senators Donley, Torgerson, Phillips and Adams were present when the meeting was convened. Co-chair Sharp and Senator Parnell arrived as the meeting was in progress. Also Attending: Senator Green; Bill Rolfzen, Program Administrator, Department of Community and Regional Affairs; Vernon Voss, Treasury Division, Department of Revenue; Boyd Brownfield, Deputy Commissioner, Department of Transportation and Public Facilities; Sam Kito, III, Special Assistant, DOTPF; Frank Sauser, Director, Division of Institutions, Department of Corrections; Dean Guaneli, Chief Assistant Attorney General, Criminal Division, Department of Law; Mike Greany, Director, Legislative Finance Division; fiscal analysts and aides to committee members. Also Attending Via Teleconference: Jerome Selby, Mayor, Kodiak Island Borough. SUMMARY INFORMATION SB 29 - STATE AID TO MUNICIPALITIES & UNORG. BOR. Senator Torgerson MOVED Amendment #4 and Senator Adams objected. After discussion between committee members, Bill Rolfzen and Jerome Selby, the committee ADOPTED Amendment #4 by a vote of 5 to 1. Lengthy discussion was had between committee members and Vernon Voss concerning the accompanying fiscal note. Senator Torgerson MOVED for adoption of CSSB 29(FIN) with individual recommendations then withdrew his motion. He then MOVED for adoption of CSSB 29(FIN) with individual recommendations accompanied by a Senate Finance Committee fiscal note reflecting a loss of revenue for FY 98 only. Without objection, CSSB 29(FIN) was REPORTED OUT of committee with individual recommendations and a Senate Finance Committee fiscal note of 1,005.4. SB 56 - BUSINESS SIGNS/OUTDOOR ADVERTISING Senator Green testified on behalf of the bill. Boyd Brownfield and Sam Kito III explained the administration's opposition to the bill. Senator Donley MOVED for passage of SB 56 with the previous fiscal note. Without objection, SB 56 was REPORTED OUT of committee with individual recommendations and a $21.5 fiscal note from Department of Transportation and Public Facilities. SB 1 - "NO FRILLS" PRISON ACT Senator Donley testified on behalf of the bill. Also speaking in favor of the bill was Frank Sauser. Senator Donley MOVED Amendment #1, Senator Adams objected, then withdrew his objection. Without further objection, Amendment #1 was ADOPTED. Amendment #2 was not offered. Senator Donley MOVED Amendment #3. Senator Adams objected. Dean Guaneli spoke in opposition to the amendment. Senator Donley withdrew Amendment #3. Senator Adams MOVED Amendment vote of 1 to 6. Co-chair Sharp MOVED for adoption of CSSB 1(FIN). Senator Adams objected. On a vote of 6 to 1 in favor, CSSB 1(FIN) was REPORTED OUT of committee with individual recommendations accompanied by zero fiscal notes from Department of Public Safety and Department of Law and a $20.0 fiscal note from Department of Corrections. SENATE BILL NO. 29 "An Act relating to certain programs of state aid to municipalities and recipients in the unorganized borough; and providing for an effective date." Co-chair Pearce noted that SB 29 had been heard earlier and that there was an additional proposed amendment along with a spreadsheet of three specific examples relating to the bill (copy in bill file). Senator Torgerson MOVED the amendment. After objection by Senator Adams, a discussion of action on previous amendments and a reading of previous minutes, it was determined that the proposed amendment was Amendment #4. Senator Adams maintained his objection to the amendment. Senator Torgerson explained that Amendment #4 would treat all municipalities equally if there were reductions in the Safe Community Fund. The bill is intended to raise the minimum entitlement to $40,000 and Amendment #4 would insure that reductions were taken equitably. Senator Adams expressed doubt that communities across the state were in agreement with the provision. He requested that the department address what the effect would be if, instead of putting a monetary figure in the bill, the appropriation to the Safe Community Fund for a fiscal year was less than the FY98 amount. BILL ROLFZEN, Program Administrator, Department of Community and Regional Affairs, explained that the municipalities would be held harmless from a cut to their minimum entitlement for one year and after that all communities would be cut according to the illustration in the spreadsheet. JEROME SELBY, Mayor, Kodiak Island Borough, testified via teleconference that the proposed amendment was debated heavily among the municipalities and it became clear that in order to maintain unanimity among the communities they would have to agree that cuts would be equitably distributed. Alaska Municipal League supports the amendment. Other changes being made by SB 29 brings more accountability to the entire use of the funds thereby justifying continued funding at the current level. Senator Adams maintained his objection. By a VOTE of 5 to 1, Amendment #4 was ADOPTED. Voting in favor were Co-chair Pearce, Senators Phillips, Parnell, Donley and Torgerson. Senator Adams was opposed. The presence of Co-chair Sharp was noted. Co-chair Pearce asked for clarification of the accompanying fiscal note regarding an interest loss from choosing to make a single lump payment to municipalities earlier in the year. She understood there would be some loss in the Constitutional Budget Reserve (CBR) fund if the interest wasn't paid back, but the money would earn interest for twelve months as it builds back up. She did not believe interest would be lost every succeeding year. VERNON VOSS, Treasury Division, Department of Revenue, explained that unless an additional $29 million was added as borrowed by the general fund from the CBR fund, the CBR fund would have $29 million less to earn interest on. The general fund, in that it is borrowing, is not gaining or losing interest, because it does not pay interest to the CBR. The following year the same scenario takes place because each year money is borrowed to replace what is paid out early, so there continues to be a loss of interest to the CBR fund. A new amount gets borrowed each year. Co- chair Pearce commented that it is a paper transaction, but in a virtual sense the money is sitting in one fund or another and earning interest for twelve months before the transfer. Once it is done one time, the next twelve months of interest earnings begins in July rather than November. Mr. Voss said that would be true if $29 million was only being paid out one time, but it is being paid each year. He gave the example of a person continuing to borrow from their interest-earning savings account into their checking account so each year there is an incremental loss of interest income in the savings account. Even though the general fund is earning interest, there is no excess money and if money is paid out early, the state must in turn borrow from the CBR, so there is a net borrowing for the entire fiscal year. Co- chair Pearce pointed out that receipts come in all year and earn interest. Mr. Voss stated that was incorrect because they are used to pay out funds. He noted the significant cash outflow that occurs in July because of seasonality of capital expenditure projects and that requires borrowing because cash inflow doesn't offset the outflow during the summer months. Money that would come in later in the year is being moved forward in the year when there is already a deficit on a monthly basis. Co-chair Pearce said part of the reason there is a deficit is because of the sweep-back to the CBR and the money is earning interest after it is received. Mr. Voss added that it was only if there was an excess in the general fund, but the fiscal note reflects that there is no excess in the general fund because it's paid back to the CBR fund. Co-chair Pearce stated the CBR fund is making interest on the money and that only half of the picture was being shown. There was additional explanation by Mr. Voss and Co-chair Pearce restated her position that it was only a one-year loss. Senator Torgerson MOVED for adoption of CSSB 29(FIN) with individual recommendations. Co-chair Sharp opposed the fiscal note, believing it was in error. Senator Torgerson then withdrew his motion. He then MOVED for adoption of CSSB 29(FIN) with individual recommendations accompanied by a Senate Finance Committee fiscal note reflecting a loss of revenue for FY 98 only. Without objection, CSSB 29(FIN) was REPORTED OUT of committee with individual recommendations and a Senate Finance Committee fiscal note of $1,005.4. SENATE BILL NO. 56 "An Act relating to tourist oriented directional signs that are 90 inches in width and 18 inches in height, relating to penalties for violations related to outdoor advertising, and annulling a regulation of the Department of Transportation and Public Facilities." Co-chair Pearce invited Senator Lyda Green, sponsor of SB 56, to address the committee. She noted the bill had passed the legislature last year and was vetoed. SENATOR LYDA GREEN pointed out that SB 56 is identical to last year's legislation. The size parameters are similar to or smaller than the types of signs in the Tourist Oriented Directional Sign (TODS) program. If the experimental program that oversees the TODS program were challenged, there is a possibility that those with TODS might have to remove the signs, or that the program would go away. The legislation instructs Department of Transportation and Public Facilities to use information gathered by their task force, develop a program, a permitting application process, write the regulations and direct installation. There is ample oversight to protect scenic views. Senator Green concluded her remarks by requesting the committee's support of the bill. Senator Adams inquired about the uniformity of signs depending on whether it was a logo type sign or a TODS. Senator Green responded that it would be the same or similar to the types of signs on highways now. Co-chair Pearce asked the governor's reasoning for the veto. Senator Green recalled that the legislation was a threat to the proliferation of signs. Senator Phillips requested to hear from the department. BOYD BROWNFIELD, Deputy Commissioner, Department of Transportation and Public Facilities, informed the committee that the administration objected to a change in signage laws which would significantly perpetuate an increase of signs and affect the scenic beauty of Alaska highways. The objections were twofold. One was a concern about establishing a category of signs on land over which the state does not have jurisdictional control because it would be difficult to enforce and cost the state for additional legal administrative burden. It was not in the best interest of the state. The other issue was that SB 56 reduces the penalty for an offense relating to an outdoor advertising sign from a misdemeanor to a simple violation. A misdemeanor carries an accumulation of increased seriousness to multi-offenses, whereas a violation has no added effect. Presently, the department is able to enforce a stretch of highway every two to four years. Reducing the penalty reduces the issue to a business expense for those that intend to violate the regulation because they can just pay a fine every few years. Mr. Brownfield summarized that at the governor's direction, the department and others had been working on a draft regulation that would better accommodate various businesses along the highway. He directed Mr. Kito to address that subject. SAM KITO, III, Special Assistant to the Commissioner, Department of Transportation and Public Facilities, explained that as a result of the task force on signage, they were putting together a schedule to prepare regulations that would take care of concerns over outdoor advertising and signage. After allowing an adequate public comment period, they expect regulations to be ready for transmittal to the Lieutenant Governor by mid-September. The regulations would include three components of signs beyond what is currently being done: programs for TODS, logo and kiosks. Those would not be ready before the end of the calendar year. Senator Phillips questioned why this was not done last July. Mr. Kito replied that a task force was assembled, held public meetings to gather information, and just completed their report the first week of January. Senator Donley clarified that the fine for a penalty can range between $50 to $1000 and therefore could escalate with repeat offenses. Mr. Brownfield concurred but reiterated that reducing the penalty doesn't carry the weight of enforcement and sends the wrong message. In response to a different query, Mr. Brownfield expanded on his opinion of the penalty being seen as a "business expense" by some. Senator Donley commented that the IRS would not allow it as a business expense. Senator Adams questioned why the sponsor wouldn't want to help with enforcement and implementation, referring to the reduction of the penalty. Senator Green informed him that the misdemeanor provides for imprisonment for the owner of an illegal sign, yet only simple fines had been enforced. She also noted, based on letters and complaints, that enforcement was more vigorous than two to four years. Co- chair Sharp supported that observation, referring to complaints he also received and knowledge of DOTPF storage lots of illegal signs. He commented that although no other states allow placement of official directional signs on private property due to the difficulties, Interstate 10, which crosses the desert in California, has signs that are "4 stories high and 100 yards wide" along that federal highway. Mr. Brownfield remarked that was exactly the proliferation the administration objects to. He noted the bill calls for federal guidance standards and mentioned 650 square-foot signs in Orlando. Co-chair Pearce reminded Mr. Brownfield of the 18" by 90" measurement set out in the bill. Co-chair Sharp had a concern the signs may be too small and didn't think they would blight the countryside. He considered it a public service. Senator Green elaborated that the Federal Highway Administration language in SB 56 had to do with the fact that they had become the scapegoat for the reason this legislation couldn't be done in Alaska. The FHA commented favorably on the acceptability of the bill in committee last year. Senator Parnell asked the purpose of statutory or regulatory permitting fees. Mr. Brownfield explained that fees have been routinely collected as the cost of doing business, but there was no public process to establish fees. End Side 1 (000-590), Begin Side 2 (590-000) Mr. Brownfield continued that it was a regulatory matter that needed correction. He confirmed Senator Parnell's next comment that the department currently charges fees for signs in the right-of-way and there is no authorization for signs to be put outside of the right-of-way. Mr. Kito interjected that he didn't think they would have the authority to charge a fee for erecting or maintaining a sign on private property, but through the regulations may charge an application fee. They would not have the authority to charge a yearly permit fee for signs on private property. Senator Donley MOVED for passage of SB 56 with the previous fiscal note. Co-chair Pearce objected for the purpose of two questions. One had to do with whether there had been any public opposition to the bill in the previous committee. Senator Green replied there had only been support. The other question concerned the fiscal note. She agreed on the need for a technical engineer to spend a month to review, administer, write regulations, but didn't see the need in following years. Mr. Kito explained that the figure of $11.5 was related to the costs of administering a sign program outside of state right-of-way rather than the regulation paperwork in later years. He was unsure that costs could be adequately recovered through application fees without making them onerous for those outside of the right-of-way. Co-chair Pearce asked about the process for businesses to erect signs on private land. She found it objectional that the department suggested they might have to set fees onerously high without the additional $11.5 per year in the fiscal note. Mr. Brownfield further explained the administrative and personnel costs. He noted that the primary job of personnel used for sign enforcement was for right-of-way business. Sign enforcement takes them away from other business related to capital highway projects. He noted the current permit fee of $300 is less than the actual cost of administering the sign program. Senator Parnell suggested there would be added enforcement but questioned the need for a permit process for signs on private property, inferring there would then be no administrative costs, only enforcement costs. Co-chair Pearce agreed that the only costs should be for enforcement and the violation process, noting that there would likely be adequate self-policing among the private sector. Mr. Brownfield clarified that there was an enforcement zone within 660 feet of the right-of-way, even on private property and that it was a FHA regulation. Senator Donley directed attention to his motion pending before the committee. Co-chair Pearce asked for further objection to the MOTION to report SB 56 from committee. There being none, SB 56 was REPORTED OUT of committee with individual recommendations and a $21.5 fiscal note from Department of Transportation and Public Facilities. Co- chair Pearce directed Senator Torgerson (DOTPF subcommittee Chair) to look carefully at the department's signage budget. SENATE BILL NO. 1 "An Act relating to living and working conditions of prisoners in correctional facilities operated by the state, and authorizing the commissioner of corrections to negotiate with providers of detention and confinement services under contract to apply those conditions and limitations on services to persons held under authority of state law at facilities operated under contract or agreement; relating to services provided to prisoners; amending the definition of 'severely medically disabled' applicable to prisoners seeking special medical parole; amending provisions of the correctional industries program; and extending the termination date of the Correctional Industries Commission and the program." Co-chair Pearce brought the bill before committee, noted there were amendments, and invited Senator Donley to address the committee. SENATOR DONLEY, sponsor of SB 1, reminded the committee that this legislation passed both houses last year and was within a few minutes from being finalized. It follows up on the constitutional amendment adopted in 1994 regarding victims' rights and principles for administration of prisons. The amendment added additional factors for dealing with the prison system in Alaska: community condemnation for the offender, restitution for victims and victims' rights, making a total of five principles. 1) SB 1 protects the public safety provision by banning participation in martial arts. 2) It enhances rehabilitation by increasing vocational training. 3) It fulfills the mandate for community condemnation by limiting luxuries including VCR's and computers in prisoners' living space, premium cable TV, possession of pornographic materials and cassette tape players. He noted particular problems with cassettes being a source of contraband concealment and the mechanisms being used for other purposes. Compact disc players would be allowed. 4) A cost saving provision institutes a fee for use of electrical utilities, not more than $2 per month. Additional costs such as health care services can be significantly reduced by the ability to parole wheelchair- laden or terminally ill prisoners that present no future danger to the public. Medical bills for those individuals tend to be very high. 5) The most controversial section of the bill relates to TV in private cells. An incentive program has been created for prisoners to comply with court orders to continue their education and comply with restitution. Those in minimal or medium security facilities that met the standards would be allowed to have a TV in their cell. It was a powerful inducement and motivator. Basic cable would be allowed, but premium cable was not consistent with the principle of community condemnation when the vast majority of Alaskans cannot afford it themselves. Senator Donley summarized his remarks by pointing to key revisions. One allows the department two years to implement the changes, which also gives the inmates notice. Another bans only free weights, a national movement in prisons. Another revision calls for a total ban on smoking. He noted that Texas adopted a similar policy in 1994 and experienced no significant problems. A smoking ban was appropriate since the state is responsible for prisoners' health care. Frank Sauser, Director, Division of Institutions, Department of Corrections; responded to a query by Senator Phillips on the reason for allowing premium cable TV in certain facilities by explaining that it was an incentive for good behavior. Although he was personally against premium TV for prisoners, there was no statewide policy and it was a facility director's decision. The rationale for TV in cells was that there were not enough programs and jobs to go around and if "guys wanted to spend the next 99 years staying in their cell not aggravating people" that was okay. Senator Adams reiterated that premium TV was a management tool to reward prisoners for their good time. Senator Phillips asked about exercise equipment at facilities. Mr. Sauser described some of the various machines and confirmed that no one was being denied the right to use the equipment. Co-chair Pearce asked for further questions. There being none, she requested Senator Donley to launch into the amendments. Senator Donley informed the committee that Amendment #1 was requested by the Department of Law. The bill provides that officials have the ability to view into living quarters. The concern to the department was over existing facilities with doors lacking that capability. The amendment would allow an exemption if the department acquired a built facility. Senator Donley MOVED Amendment #1, Senator Adams objected for the purpose of seeking the department's recommendation. Mr. Sauser verified the department's support of the amendment. Senator Adams then withdrew his objection. Without further objection, Amendment #1 was ADOPTED. Amendment #2 was not offered. Senator Donley brought up Amendment #3. He referred to discussion during the Department of Corrections budget overview (1-22-97, Tape SFC-97 #9) regarding the level of state participation in medical treatment of prisoners being tied to statutory requirement. He explained Amendment #3 would remove the statutory references to the existing standard so that the constitutional standard established by the court would be the guideline. It would allow greater flexibility to the state to save money if the constitutional standard changed. Senator Donley was unsure of the department's position. Senator Donley MOVED Amendment #3. Senator Adams objected. Mr. Sauser indicated the amendment was new to him and he was not prepared to speak to it. DEAN GUANELI, Chief Assistant Attorney General, Criminal Division, Department of Law, spoke in opposition to the amendment. He thought it was a mistake because it makes no substantive change in the current obligation of the department. Ninety percent [of the statutory language] is from a constitutional standard set by the Alaska Supreme Court in a 1978 opinion that was incorporated into the statutes. The amendment would not change the department's obligation, nor would it significantly affect costs. Having language in statute makes it easier for the department to deal with medical care providers because care can be limited to serious medical needs if it is clearly set out in statute. The present standard is a good one. The department gets more complaints about lack of medical treatment than anything else. Many prisoners feel they are not getting adequate treatment because the department is trying to limit medical costs and cut corners based on the legislature's direction. Mr. Guaneli summarized, stating "we're probably better off leaving the statute work the way it is." Senator Donley withdrew Amendment #3. Co-chair Pearce noted there was no objection to withdrawing the amendment. Senator Adams MOVED Amendment #4. Senator Phillips objected. Senator Adams explained the amendment in two parts. The first deletes a portion of the bill he deemed unnecessary. He questioned having the department monitor the food expenses of the Army when the information was available on an annual basis from Budget and Audit. He said the second part relates to fees for utilities, noting that it could bring in $20,000, yet there is authorization for people to work 600 hours of overtime, so it is a wash. He questioned whether creating more work for corrections was what was needed and suggested the $20,000 be paid to victims or court fines. He also noted prisoners could get around the fee by getting a classification on their mental state. Senator Phillips requested the department's position and whether there was additional administrative burden related to the provisions in Section 5. Mr. Sauser said it created some burden in that the department calculates food costs differently than the Army and it would have to be monitored and altered accordingly to coincide. Senator Donley explained that the Army costs are easy to get and was a good established standard of what it costs to feed large groups in Alaska. The percentage was reasonable and there was also a desire to create an upper level to the cost of meals in prisons. Senator Parnell asked what fees were being collected by the department currently. End SFC-97 # 30, Side 2 (590-000) Begin SFC-97 #, Side 1 (000) Mr. Sauser replied that the department passes on as much of the costs as possible, described some costs that were reimbursable and mentioned the exception for prisoners who are legally indigent. Co-chair Pearce asked for further discussion on Amendment FAILED by a tally of 1 to 6. Co-chair Pearce asked for the amount of a judgement against the state relating to the mail bombing case. Mr. Guaneli recollected the state's portion was around $1.2 million. Co-chair Pearce expressed surprise that even after that case there was no monitoring of phone calls in state correctional facilities. She then referred to the Cleary decision regarding free phone calls, noted the department's claim that it would cost about $750,000 to install monitoring equipment, and asked if the administration expected to propose some plan to monitor phone calls. Mr. Sauser specified there was monitoring capability at the Spring Creek facility and all prisoner calls are recorded there. He further stated they had been working a number of years for a contractual arrangement for a system-wide phone monitoring system that would be no cost to the state. Co-chair Pearce asked what monitoring meant to the department and if someone listens to the calls to make sure no one is talking about bombs. Mr. Sauser answered negatively. He explained that individual lines can be monitored, but more frequently someone listens to the recording because up to twenty different phones can be accessed during the day and it would take that many staff members to monitor each line. There was additional discussion and explanation by Mr. Guaneli about the Cleary case regarding free phone calls and a statewide prison phone monitoring system. Senator Adams commented on a previous fiscal note to the bill. Co-chair Pearce explained that the Judiciary Committee substitute dropped the portion of the bill that carried the fiscal note. She indicated her interest in pursuing the phone call situation, but didn't want to hold up the bill. She asked Senator Donley to continue to work toward finding a solution that may be added later to the bill. He responded affirmatively and pointed out the previous fiscal note related to the original version of bill which mandated phone monitoring. Co-chair Sharp MOVED for adoption of CSSB 1(FIN). Senator Adams objected. He stated that instead of the bill getting tough on prisoners it actually gets tough on management and could be a riot initiative because it upsets prisoners' rights. On a vote of 6 to 1, CSSB 1(FIN) was REPORTED OUT of committee with individual recommendations accompanied by zero fiscal notes from Department of Public Safety and Department of Law and a $20.0 fiscal note from Department of Corrections. There was no additional business before the committee. Co- chair Pearce reminded the members of upcoming subcommittee and committee schedules. ADJOURNMENT The meeting was adjourned at approximately 11:00 A.M.