MINUTES SENATE FINANCE COMMITTEE April 17, 2000 6:21 PM TAPES SFC-00 # 95, Side A and Side B CALL TO ORDER Co-Chair John Torgerson convened the meeting at approximately 6:21 PM. PRESENT Co-Chair John Torgerson, Senator Al Adams, Senator Lyda Green, Senator Loren Leman, Senator Randy Phillips, Senator Gary Wilken Also Attending: REPRESENTATIVE JOHN COGHILL, JR.; REPRESENTATIVE LISA MURKOWSKI; REPRESENTATIVE NORM ROKEBERG; REMOND HENDERSON, Director, Division of Administrative Services, Department of Labor and Workforce Development; PAUL GROSSI, Director, Division of Worker's Compensation, Department of Labor and Workforce Development; BRAD THOMPSON, Director, Division of Risk Management, Department of Administration; JEFF BUSH, Deputy Commissioner, Department of Community and Economic Development; JIM NORDLAND, Director, Division of Public Assistance, Department of Health and Social Services; Attending via Teleconference: From Seattle: JERRY KURTZ SUMMARY INFORMATION HB 105-LICENSING SPEECH PATHOLOGY/AUDIOLOGY The bill moved from Committee. HB 378-FEES FOR WORKERS COMP AND WORKER SAFETY The Committee heard testimony from the Department of Labor and Workforce Development and the Department of Administration. Two amendments were considered and adopted. The bill was held in Committee. HB 259-PUBLIC DEFENDER CHILDREN'S PROCEEDINGS The Committee heard testimony from the sponsor and reported the bill from Committee. HB 239-UCC SECURED TRANSACTIONS The Committee heard testimony from the sponsor. An amendment was considered and adopted. The bill moved from Committee. HB 418-PROGRAM RECEIPTS/ADMIN COST CHARGE The Committee heard testimony from the sponsor, the Department of Fish and Game and the Department of Community and Economic Development. A committee substitute was adopted. Four amendments were considered and three were adopted. The bill moved from Committee. HB 98-PUB.ASSISTANCE:PROGRAMS/GRANTS/CONTRACTS The Committee heard testimony from the Department of Health and Social Services. A committee substitute was adopted and three amendments were considered and adopted. The bill moved from Committee. SB 310-G.O.BONDS: SCHOOLS & UNIVERSITY This bill was scheduled but not heard. [Tape malfunction during introduction of meeting.] SENATE COMMITTEE SUBSTITUTE FOR COMMITTEE SUBSTITUTE FOR HOUSE BILL NO. 105(L&C) "An Act providing for the licensing of speech-language pathologists; relating to fees paid by audiologists and speech-language pathologists; and providing for an effective date." This was the second hearing for this bill in the Senate Finance Committee. Co-Chair Torgerson noted he had questions during in the earlier hearing regarding contracts for school officials. He said that he read the applicable Department of Education and Early Development regulations, which answered those questions. [Copy on file.] Senator Green offered a motion to from Committee, SCS CS HB 105 (L&C) and accompanying $7,500 fiscal note from the Department of Community and Economic Development. There was no objection and the bill MOVED from Committee. COMMITTEE SUBSTITUTE FOR HOUSE BILL NO. 378(RLS) "An Act relating to the establishment of, assessment of, collection of, and accounting for service fees for state administration of workers' compensation and workers' safety programs; establishing civil penalties and sanctions for late payment or nonpayment of the service fee; and providing for an effective date." This was the second hearing for this bill in the Senate Finance Committee. AT EASE 6:25 PM / 6:33 PM Amendment #1: This amendment deletes "or interpret" from page 7, line 8 and line again on line 9. The amended language reads as follows. TRANSITION: REGULATIONS. The director of the division of insurance in the Department of Community and Economic Development, and the Department of Labor and Workforce Development, may proceed to adopt regulations necessary to implement this Act. Regulations to implement a provision of this Act take effect under AS 44.62 (Administrative procedure Act), but not before the effective date of secs. 1 - 6 of this Act. Senator Leman moved for adoption. Without objection the amendment was ADOPTED. Amendment #2: This amendment reads as follows. CSHB 378 (RLS) Workers Compensation Safety Fee Suggested Language Changes by Department of Community & Economic Development Change 1: Sec. 3. Sec. 23.05.067 (a) (2) (page 2, lines 26 through page 3, line 8) is replaced by the following: (2) For each insurer, the director of the division of insurance shall deposit under (e) of this section from funds received from the insurer under AS 21.09.210, the service fee of 1.82 percent of the direct premium income for workers compensation insurance received by the insurer during the year ending on the preceding December 31, subject to all the deductions specified in AS 21.09.210(b). Current language requires the Division of Insurance to deposits a portion of premium tax collected as opposed to premium reported. Otherwise, deposits may be required greater than the amounts collected. Change 2: Delete Section 2 and renumber Sections 3-11. Unlike previous versions, the rules CS does not, contain the "in lieu of all taxes..." sentence found on page 2, lines 25-28 of the previous (CSHB 378 (L&C)) version. The provision amending AS 21.09.270 should be removed. This change maintains the long-standing statutory status quo regarding retaliatory fees. This will keep Alaska's retaliatory calculation in line with other states and will promote a level playing field between companies from this state and other states. Senator Leman moved for adoption and explained these were two technical changes suggested by the Division of Insurance. He referred to an April 14, 2000 letter on the subject by Bob Lohr the division's director. [Copy on file.] The amendment was ADOPTED without objection. REMOND HENDERSON, Director, Division of Administrative Services, Department of Labor and Workforce Development listed the four updated fiscal notes that accompany the committee substitute. Mr. Henderson addressed the changes to the Occupational Health and Safety component fiscal note to reflect that in the second year of the program, it would still be reliant on some general funds. This, he explained is because the committee substitute increased the phase-in time of the program to three years. He noted that $1 million, of which $315,000 is from the Occupational Safety and Health Administration (OSHA) and the balance from the Workers Compensation component, would replace general funds in the second year. PAUL GROSSI, Director, Division of Worker's Compensation, Department of Labor and Workforce Development noted the amendment that lengthened the phase-in time by one year was done by the House Rules Committee so there would not be a "double charge" for those entities paying a tax then a service fee. Co-Chair Torgerson noted the current version of this fiscal note is $300,000 less than previous versions and asked if the program is losing money because of the phase-in change. Mr. Grossi replied that the program would not lose money, however funds would not be available for deposit into the program's account until the following year. This was because of the collection period, he said. Mr. Grossi confirmed that the increased phase-in period of the program is the reason for the changes in the Workers Compensation component fiscal note dated April 17, 2000. Mr. Henderson explained that the changes to the Department of Labor and Workforce Development, Office of Commissioner component April 17, 2000 fiscal note reflect the reduction of revenues received in the first year from $3.5 million to $2.5 million. BRAD THOMPSON, Director, Division of Risk Management, Department of Administration, explained the increased Risk Management component fiscal note. He stated that the State Of Alaska, as an authorized self-insured employer, would pay according to the fee assessment stipulated in the bill. He pointed out that the fiscal note reflects the increased costs estimated for all state agencies. The Division of Risk Management, Mr. Thompson noted allocates these costs based on experience and exposure of claims based on a historical five-year average. He continued that the accompanying Office of Management and Budget information shows the inter-agency funding source of the increased amounts. Senator Green mentioned the potential impact of this legislation on local governments. She said she was uncomfortable tying worker's compensation to OSHA for budgeting purposes saying that any revenue shortfalls would require reductions to worker's compensation due to OSHA minimum funding requirements. No motion to move the bill was offered by any member of the Committee. Co-Chair Torgerson ordered the bill HELD in Committee. COMMITTEE SUBSTITUTE FOR HOUSE BILL NO. 259(JUD) "An Act relating to a parent's eligibility to be represented by the public defender before and during the probable cause and temporary placement hearing that is held after the state takes emergency custody of a child." This was the first hearing for this bill in the Senate Finance Committee. REPRESENTATIVE JOHN COGHILL JR. shared that this legislation is borne out of a meeting held in Fairbanks with agency representatives and the Interior legislative delegation. He expressed that the need to have good information available to parents who find themselves in a situation where their children have been taken into protective custody and are facing a 48-hour hearing to determine temporary placement. He stated that this bill would give the Public Defender's Agency (PDA) the ability to represent these parents or to declare a conflict of interest if also representing another parent who may have been accused as the abuser in the same case. Representative Coghill continued the bill also provides for those parents to reimburse the PDA for services performed if indigence is not determined. Representative Coghill shared that the PDA is already providing this service and that this legislation would put the practice into statute. He therefore did not anticipate an increased workload for the agency and noted the subsequent zero fiscal note. Co-Chair Torgerson commented that he had heard the bill in the Senate Judiciary Committee and had his questions concerning this legislation answered at that time. Senator Donley offered a motion to move CS HB 259 (JUD) from Committee with zero fiscal note from the Department of Administration, Public Defender's Agency. There was no objection and the bill MOVED from Committee. COMMITTEE SUBSTITUTE FOR HOUSE BILL NO. 239(FIN) "An Act relating to the Uniform Commercial Code; relating to secured transactions; amending Rule 79, Alaska Rules of Civil Procedure; and providing for an effective date." This was the third hearing for this bill in the Senate Finance Committee. Co-Chair Torgerson noted earlier discussion about a letter from bond council expressing concerns on the impact this bill would have on outstanding and future revenue and bond issues, particularly relating to municipalities. [Copy on file.] REPRESENTATIVE LISA MURKOWSKI told the Committee she had recently spoken to experts on the matter and was not given a good reason to change the status quo, which is to provide an exemption for federal governments and governmental agencies. As a result of these conversations, she proposed an amendment that would provide the same exemptions. She believed this amendment addressed the concerns voiced by the bond council. JERRY KURTZ testified via teleconference from Seattle that the problems have been taken care of with the proposed amendment. Amendment #1: This amendment makes the following changes to the committee substitute. Page 14, lines 7 through 15: Delete: "(84) "public finance transaction" means a secured transaction in connection with which (A) debt securities are issued; (B) all or a portion of the securities issued have an initial stated maturity of at least 20 years; and (C) the debtor, obligor, secured party, account debtor or other person obligated on collateral, assignor or assignee of a secured obligation, or assignor or assignee of a security interest is a state or a governmental unit of a state;" Page 23, following line 8, Insert: "(14) not withstanding (c)(2) of this section, does not apply to a transfer by a government or governmental subdivision or agency" Page 82, line 13 and line 15: Delete: "public finance transaction or" [Amended language reads as follows.] "(b) Except as otherwise provided in (e) - (g) of this section, an initial financing statement filed in connection with a manufactured home transaction is effective for a period of 30 years after the date of filing if it indicates that is filed in connection with a manufactured home transaction." Senator Donley moved for adoption. The amendment was ADOPTED without objection. Senator Leman offered a motion to report from Committee, CS HB 239 (FIN) with accompanying zero fiscal note from the Department of Natural Resources. Without objection the bill MOVED from Committee. AT EASE 6:50 PM / 8:32 PM COMMITTEE SUBSTITUTE FOR HOUSE BILL NO. 418(RLS) "An Act designating certain receipts as program receipts, appropriations of which are not made from the unrestricted general fund; relating to the establishment of an administrative cost charge for the state's role in the community development quota program; and providing for an effective date." This was the first hearing for this bill in the Senate Finance Committee. Co-Chair Torgerson directed member's attention to a proposed committee substitute, SCS CS HB 418, 1-LS1500\V. He noted that the language on page two of this committee substitute, relating to use of program receipts, is new. He added that a proposed amendment makes technical corrections and adds more programs to the list. REPRESENTATIVE NORM ROKEBERG, Chair, House Labor and Commerce Committee, testified to the bill. He stated that the bill is a result of his and other members of the House committee's frustrations with occupational licensing. He explained that many of the state's licensing boards and commissions want broader authority. However, he said the finance committees of both houses prohibit this because of the impact of any increase in activities of these boards and commissions would have on the state's fiscal gap. This he shared is because increased costs would have to be paid for from the general fund. Representative Rokeberg gave an example of the Board of Nursing that received a $150,000 federal grant to establish an outreach program for children. This grant expired, he said because the state was unable to provide additional necessary funds. Representative Rokeberg gave another example of the members of the Board of Architects who wish to participate in committees on the national level. However, he said that because of the inability for the board to raise its fees, the board is unable to secure funds for travel costs. Representative Rokeberg stressed that the legislature's attempts to reduce general fund spending should not reflect on the boards and commissions and those professional licensees that operate in the state. He asserted that the boards and commissions must be self-supported by the licensing fees. Therefore, he said, they need the ability to increase the fees as necessary. Representative Rokeberg noted the House Finance Committee added provisions to the bill to include the Alaska Seafood Marketing Institute (ASMI), the dive fishery and Department of Community and Economic Development programs. He stated he supported these additions. Representative Rokeberg pointed out that this bill passed through the House of Representatives with no objection. Representative Rokeberg assured that fee support services (FSS) are not removed from the budget, but just relocated to another category. Senator P. Kelly moved to adopt SCS CS HB 418, 1-LS1500\V as a workdraft. There was no objection and the committee substitute was ADOPTED. Amendment #1: This amendment inserts "receipts of" on page 2, lines 6 and 19 of the committee substitute. The amended language reads as follows. "(DD) receipts of the Alaska Vocational Technical Center; . (KK) receipts of the Alaska Police Standards Council;" The amendment also adds two subsections to Section 1. "(QQ) receipts of the Department of Corrections from the inmate telephone system; (RR) receipts of the Department of Public Safety from the Alaska automated fingerprint system under AS 44.41.025(b);" Co-Chair Parnell moved for adoption. Co-Chair Torgerson explained the first two changes are technical and proposed at the recommendation of the Division of Legislative Finance. Without objection the amendment was ADOPTED. Senator Phillips asked if the Division of Lands program receipts were considered for inclusion on this list. Co-Chair Torgerson responded that program was addressed in SB 283. He noted the proposed Amendments #2 and #3 were addressed in other legislation. Co-Chair Torgerson stressed that this committee substitute has nothing to do with the Majority's goal to reduce $30 million in general fund spending and is just a fund source change. He assured that this is not a "smoke and mirrors change". Senator Phillips asked if a representative from Department of Transportation and Public Facilities was present to tell him if any highway facilities other than the soon to be completed, Whittier tunnel charge tolls. Co-Chair Torgerson replied that the Whittier Tunnel is the only toll-operated facility in the state and that this passage is expected to be self-sustained. [Note: The following amendment was considered out of numerical order.] Amendment #4: This amendment deletes the language on page 1 lines 9-11. The language reads as follows. "(Y) receipts from the seafood marketing assessment under AS 16.51.120 - 16.51.170, the salmon marketing tax under AS 43.76.110 - 43.76.130, and other receipts of the Alaska Seafood Marketing Institute;" Senator Donley moved for adoption and expressed concern about Outside interests governing ASMI that have not been sufficiently responsive or forthcoming with the legislature. He wanted the legislature to maintain scrutiny over this board's operations especially because so much of the board's activities occur out of state. Co-Chair Torgerson pointed out that each of the boards and commissions are subject to annual appropriation and therefore, the appropriation process is not circumvented by this legislation. Senator Leman objected to the amendment, saying ASMI is fully supported by a tax that the fishermen agreed upon for the purpose of marketing their product. He stressed that whether or not the legislature is convinced the board's actions are entirely appropriate, is a matter that should be addressed separately. Co-Chair Torgerson added that he has seen ASMI's budget jump from $3 million to $10 million, but noted this is due primarily to federal funds. He said he also opposes the amendment. Senator P. Kelly expressed that he did not think the legislature could force ASMI to be any more responsive by removing it from this legislation. The only result, he said is the state is "still punished by their success" since the legislature is faced with increased general fund spending to support the board's growth. A roll call was taken on the motion. IN FAVOR: Senator Green, Senator Phillips and Senator Donley OPPOSED: Senator Adams, Senator Wilken, Senator P. Kelly, Senator Leman, Co-Chair Parnell and Co-Chair Torgerson The motion FAILED (3-6) The amendment FAILED to be adopted. Amendment #2: This amendment inserts a new subsection to Section 1 of the House Rules committee substitute as follows. "(BB) receipts of the Department of Public Safety under AS 44.41.025(b);" This amendment was NOT OFFERED since the changes were contained in the committee substitute. Amendment #3: This amendment inserts a new subsection to Section 4 of the House Rules committee substitute as follows. (f) The department shall not assess nor collect administrative charges under this section from new CDQ groups, representing communities not eligible for the CDQ program as of the effective date of this Act, for a period of two years from the actual award of fishery quota to that newly formed CDQ group." Senator Adams moved for adoption. Co-Chair Torgerson objected for an explanation. Senator Adams stated that this amendment incurs no cost to the state. He spoke of attempts to establish a CDQ in the area from Kotzebue to Point Hope, which this amendment addresses, but that federal approval is still required. Co-Chair Torgerson asked if this provision was adopted in earlier Committee action. Senator Adams replied that he presented the issue but no action was yet taken. Representative Rokeberg shared that the House Labor and Commerce Committee had adopted a similar amendment but the House Finance Committee removed the language. He thought the matter has merit and saw no reason to oppose this amendment. KEVIN BROOKS, Director, Division of Administrative Services, Department of Fish and Game stated the department does not oppose the amendment. [Statement was made out of the range of the recording equipment.] JEFF BUSH, Deputy Commissioner, Department of Community and Economic Development testified that the department's position on the amendment is neutral. He clarified that the Department of Community and Economic Development oversees the CDQ program rather than the Department of Fish and Game. There was no objection and the amendment was ADOPTED. Co-Chair Parnell offered a motion to move from Committee, SCS CS HB 418, 1-LS1500\V as amended with accompanying zero fiscal notes from the Department of Revenue and the Department of Health and Social Services. AT EASE 8:49 PM / 8:50 PM Co-Chair Parnell moved to withdraw his motion to report the bill from Committee. By unanimous consent, the motion was WITHDRAWN. Co-Chair Parnell moved to give the Division of Legal and Research Services technical direction to insert the appropriate department names to "(QQ)" and "(RR)" as added to the bill by Amendment #1. [Amendment language shown above contains these changes.] There was no objection and the motion was ADOPTED. Co-Chair Parnell re-offered his motion to move from Committee, SCS CS HB 418, 1-LS1500\V as amended with accompanying zero fiscal notes from the Department of Community and Economic Development, Occupational Licensing component and ASMI plus new zero fiscal note from the Department of Fish and Game. Without objection the bill MOVED from Committee. COMMITTEE SUBSTITUTE FOR HOUSE BILL NO. 98(HES) am "An Act relating to contracts for the provision of state public assistance to certain recipients in the state; providing for regional public assistance plans and programs in the state; relating to grants for Alaska Native family assistance programs; relating to assignment of child support by Alaska Native family assistance recipients; to paternity determinations and genetic testing involving recipients of assistance under Alaska Native family assistance programs; and providing for an effective date." This was the second hearing for this bill in the Senate Finance Committee. Co-Chair Torgerson noted the proposed SCS CS HB 98, 1- GH1011\I. He explained the committee substitute establishes a pilot program to accommodate the three Native organizations that have shown interest in operating public assistance programs. He listed the Association of Village Council Presidents, the Tanana Chiefs Conference and the Tlingit-Haida Central Council as the aforementioned organizations. Co-Chair Torgerson drew the Committee's attention to language requiring status reports to the legislature and the governor, plus audits of the overseeing Native organizations' financial information. JIM NORDLAND, Director, Division of Public Assistance, Department of Health and Social Services, testified that although the department's staff has only had a short time to review the new language, there did not seem to be any conflict. Co-Chair Torgerson relayed conversations he had with the witness indicating that technical changes could be made to this committee substitute if any errors are discovered. Mr. Nordland stated that the original intent of the legislation was to make it possible for all eligible Native organizations to participate in public assistance delivery. However, he understood that the legislature wants to move cautiously in the form of a pilot program. Co-Chair Torgerson added that this legislation does not sunset and that other organizations could be included later if interest were shown. Senator P. Kelly clarified that the general funds currently used are not matching funds but are passed on to a non- profit organization that would carry out the same duties. Mr. Nordland explained that TCC currently is required to provide the exact service as the state would provide. What the organization wants to do, he said is to run a slightly different program that is still comparable to the state's program. He stated that this legislation allows the organization to receive state funds and have more flexibility. Tape: SFC - 00 #95, Side B 8:59 PM Senator Adams moved to adopt SCS CS HB 98, 1-GH1011\I as a workdraft. There was no objection and the committee substitute was ADOPTED. Amendment #1: This amendment inserts a new subparagraph on page 5, lines 30 and 31 of the committee substitute to read as follows. "(4) establish the same maximum number of months of benefits as is established for the state program under AS 47.27.015 (a)(1); and" Senator Adams moved for adoption. Senator Donley objected. Senator Adams explained this amendment provides that Native-operated programs could not apply to the federal government for extension of the 60-month maximum benefit provision. He said this applies uniform standards to all public assistance programs. Mr. Nordland repeated his explanation of the amendment given at a previous meeting, saying this item was missed when the comparability standards were established. He shared that federal regulations allow Native-operated programs to negotiate to exempt that program from the 60- month limit. Co-Chair Torgerson clarified that this amendment keeps all participants of public assistance equal in the amount of months they may receive benefits. Senator Green remarked that this is not necessarily the case in other parts of Alaska where the public assistance program is not administered by a Native organization. Mr. Nordland detailed that those exemptions are separate from the allowances offered to Native organizations. He explained that federal law also provides that anyone, Native or non-Native, living in a Native village with an unemployment rate higher than 50 percent is exempt from the 60-month limit. Mr. Nordland cautioned that without this amendment, a recipient living in Fairbanks who receives benefits through a Native-operated program could potentially go beyond the 60-month limit if that program had received the exemption. He expressed that it is not fair to allow a Native living in an urban area to receive benefits longer than a non- Native living in the same community does. Senator Green expressed concern with the comparability standard required of any Native-operated public assistance programs. Mr. Nordland referred to the legal opinion written by the Division of Legal and Research Services regarding the equal protection problem, which stated that there could be a conflict without this comparability standard. Senator Donley removed his objection and the amendment was ADOPTED. Co-Chair Torgerson is #2 still necessary Amendment #2: This amendment deletes, "a compelling interest" and inserts, "that special circumstances exist that support the request" from page 8, line 3 of the committee substitute. The amended language reads, "The department shall approve the application if the department finds that the applicant has shown that special circumstances exist that support the request to use the state program." KRISTEN BOMENGEN, Assistant Attorney General, Human Services Section, Civil Division, Department of Law spoke to the concern about the "compelling interest requirement" being imposed on someone who is seeking services from either program. She stated the proposed language addresses this problem and is more appropriate. Senator Green moved for adoption and asked if "special circumstances" is a lesser standard than "compelling interest" in legal terms. It was determined to be so. Senator Donley asked if this language applies to individuals or groups. [Senator Leman explained to Senator Donley out of range of the recording equipment.] Senator Green asked if the bill contained any language to specify that nothing in the legislation is to be construed as recognition of tribes' sovereign immunity. It was determined there is no such specific language. Without objection the amendment was ADOPTED. Amendment #3: This amendment deletes, "interpret," from page 3 line 20 of the committee substitute. The amended language reads as follows. "(8) adopt regulations and take action to implement and administer the provisions of this chapter." Senator Leman moved for adoption. Without objection the amendment was ADOPTED. Senator Adams offered a motion to report from Committee CS HB 98, 1-GH1011\K, as amended and with accompanying zero fiscal notes from the Department of Revenue and the Department of Health and Social Services. There was no objection and the bill MOVED from Committee. ADJOURNED Senator Torgerson adjourned the meeting at 9:12 PM. SFC-00 (1) 04/17/00