MINUTES  SENATE FINANCE COMMITTEE  April 14, 2000  9:08 AM TAPES SFC-00 # 88, Side A and Side B CALL TO ORDER Co-Chair John Torgerson convened the meeting at approximately 9:08 AM PRESENT Co-Chair John Torgerson, Co-Chair Sean Parnell, Senator Al Adams, Senator Dave Donley, Senator Lyda Green, Senator Pete Kelly, Senator Loren Leman, Senator Gary Wilken, Senator Phillips. Also Attending: SENATOR KIM ELTON; REPRESENTATIVE FRED DYSON; DAVE GREY, Staff, Senator Jerry Mackie; DARWIN PETERSON, Staff, Senator John Torgerson; KEN FREEMAN, Director, Resource Development Council (RDC), Anchorage; CATHERINE REARDON, Director, Occupational Licensing, Department of Community & Economic Development; PATTI SWENSON, Staff, Representative Con Bunde; AMY ERICKSON, Staff, Representative Lisa Murkowski. Attending via Teleconference: DOUG GRIFFIN, Alcohol Beverage Control Board (ABC), Anchorage; JANICE ADAIR, Director, Division of Environmental Health, Department of Environmental Conservation, Anchorage; KIT ROBERTS, Speech Language Pathologist, Anchorage; MARY ELLEN BEARDSLEY, Assistant Attorney General, Department of Law; JERRY KURTZ, Alaska's Representative to the National Conference of Commissioners on Uniform State Laws, Anchorage; SHARON YOUNG, State Recorders Office, Department of Natural Resources, Anchorage; JOHN MCCABE, Legislative Director/Legal Counsel, National Conference of Commissioners on Uniform State Laws, Chicago; CYNTHIA WEED, Representative for Preston Gates & Ellis LLP, Seattle SUMMARY INFORMATION  SB 261-PREVENTION OF NEEDLE & SHARPS INJURIES CS SB 261 (FIN) was reported out of Committee with a "do pass recommendation and with a zero fiscal note by the Department of Health and Social Services. SB 280-COMMON CARRIER LIQUOR LICENSE The bill was SCHEDULED and not HEARD in Committee. HB 105-LICENSING SPEECH PATHOLOGY/AUDIOLOGY The Committee heard from the sponsor's office, the Department of Community & Economic Development and an Anchorage speech pathologist. The bill was HELD in Committee for further considerations. HB 239-UCC SECURED TRANSACTIONS The Committee heard testimony from the bill's sponsor, various members nationally from the National Conference of Commissioners on Uniform State Laws. The bill was HELD in Committee for further consideration. HB 255-HOME RULE COMMUNITIES The Committee heard testimony from the bill's sponsor. Following discussion, the bill was HELD in Committee for further consideration. HB 361-FEES FOR STATE SERVICES Following discussion with the director of the Resource Development Council, the Committee passed CS HB 361 (FIN) out of Committee with a "no recommendation" and with a fiscal note by Department of Environmental Conservation. CS FOR SENATE BILL NO. 261(HES) "An Act relating to needle stick and sharps injury protections and the use of safe needles by health care facilities and health care professionals; relating to the vaccination of health care workers against diseases transmitted by bloodborne pathogens; and providing for an effective date." Co-Chair Torgerson introduced the new committee substitute for SB 261, work draft #1-LS175\K, Cramer, 4/14/00. SENATOR KIM ELTON explained the changes made to the work draft, providing a definition of "work practice controls" and a "front line health care worker". Additionally, the work draft provides further detail regarding the exceptions. The details have been taken mostly from California regulations. Senator Elton noted that he had worked in collaboration with Senator Pete Kelly and that the changes would enhance the bill and provide some assurances for health care workers. He pointed out that the bill would establish a protocol in how the State handles federal mandates. In response to Senator P. Kelly, Senator Elton explained the federal compliance directive. He advised that the U.S. Congress is currently working on similar legislation as before the Committee. A compliance directive could be amended since there is further work provided by Occupational Safety and Health Administration (OSHA). Senator Adams MOVED that the work draft version "K" be the document before the Committee. There being NO OBJECTION, it was adopted. Senator Leman voiced concern with the impacts of the legislation on health care facilities throughout the State. He questioned if the legislation would create further burdens in attempting to meet OSHA requirements. Senator P. Kelly interjected that some hospitals and clinics already have these procedures in place. The legislation clarifies that if you do have it already in effect, the legislative requirements would not need to be adopted. Co-Chair Torgerson questioned the fiscal impact. Senator Elton commented that the changes made would not effect the fiscal impact. The money note should have been updated to a zero fiscal note. Senator Adams MOVED to report CS SB 261 (FIN) out of Committee. Senator P. Kelly OBJECTED for a brief at-ease. Senator Phillips noted a conflict of interest and asked to refrain from voting. Senator Adams WITHDREW the MOTION to move the bill from Committee. There being NO OJBECTION, the bill was before the Committee for discussion. Senator Leman stated that the small clinics would be required to meet the OSHA requirements. He MOVED an amendment to Page 6, deleting Line #21; Line #24, the title would be "Exemption for Small Employers" and Line #27, would delete "until January 1, 2003". That action would guarantee that it would take a positive move from a future legislature to reinstate the requirements. Co-Chair Torgerson recommended that Section 2, Line #21 be left in the bill. Senator Elton pointed out that the net effect of the amendment would not exempt the smaller clinics from using sharp needle devices. However, the effect would exempt smaller clinics from having a front line health worker involved in the process determing what devices would work best for each patient. It would exempt the small clinics from maintaining a sharp needle used by health care workers. He emphasized that under the proposed requirement, the small clinics would be have the same requirements as a hospital, however, the only difference would be that the front line health care worker would not be involved in determining which device should be used. Senator Leman stated that the small clinic could still do that, however, the mandate would be removed. Senator Adams OBJECTED to the proposed language change. A roll call vote was taken on the motion. IN FAVOR: Leman, Wilken, Kelly, Green, Donley, Parnell, Torgerson OPPOSED: Adams Senator Phillips abstained from voting. The MOTION PASSED (7-1). Senator Adams MOVED to report the amended CS SB 261 (FIN) out of Committee with individual recommendations and with the accompanying fiscal notes. There being NO OBJECTION, it was so ordered. CS SB 261 (FIN) was reported out of Committee with a "do pass" recommendation and with a zero fiscal note by the Department of Health and Social Services. SENATE BILL NO. 280 "An Act relating to licensing common carriers to dispense alcoholic beverages; and providing for an effective date." DAVE GREY, Staff, Senator Jerry Mackie, stated that the SB 280 speaks to the common carriers beverage dispensary licenses being modified as requested by Alaska Airlines. He noted that each of the 89 carriers in the Alaska Airlines fleet are required to purchase a liquor license. Alaska Airlines has requested that the Legislature review the issue and offer legislation to reduce the fees which they suffer in the public interest. If the proposed bill becomes law, Alaska Airlines will still pay more in fees to Alaska than it pays in any other state. DOUG GRIFFIN, (Testified via Teleconference), Director, Alcohol Beverage Control Board (ABC), Anchorage, testified that Alaska Airlines had approached the ABC Board last summer regarding the issue. Alaska Airlines has shown that they want to be responsible and not caught up in any kind of non-licensing bind. The Board recognizes that only a ¼ of Alaska Airlines fleet is operating in the State of Alaska at any given time. The ABC Board does not have a position on the concern at this time. The Board has worked with the airlines regarding the concern. Mr. Griffin recommended providing an average of the number of aircraft flying in the State and using that as the applicable number. He added that the ABC Board has done everything that they could do administratively to ease the paper work burden. Mr. Griffin pointed out that the fiscal note does indicate a loss of revenue. In terms of fairness, the Board believes that the loss of revenue would level the playing field in this situation. Co-Chair Torgerson stated that he supported taking a "higher" number average, perhaps taking from a determination of the summer flights. He asked if any cruise ship lines would fall under the guidelines of the bill. Mr. Griffin replied that current drafting of the bill would not affect any of the cruise ships. Co-Chair Torgerson stated that the bill would be HELD in Committee for further consideration and determination of the high number. CS FOR HOUSE BILL NO. 361(FIN) "An Act relating to charges for state services; requiring that fees levied by resource agencies for designated regulatory services be based on the actual and reasonable direct cost of providing the services, except in the case of certain negotiated or fixed fees; relating to negotiated and fixed fees of resource agencies; relating to invoices for designated regulatory services; establishing a petition process regarding fees charged by resource agencies for regulatory services; and providing for an effective date." TWO AT EASES: 9:15 and 9:50 - both for five minutes. DARWIN PETERSON, Staff, Senator John Torgerson, explained the changes between version "K" and the new version "M", #1-LS1299\M, Kurtz, 4/13/00 of the bill. On Page 5, Lines 11-18 of version "K", the language was deleted in version "M"; Page 6 of version "K", subsection "B" was deleted in version "M". He added that on Page 6, subsections "C" and "D" would go into effect July 1, 2001, however, subsection "A" would go into effect July 1, 2002. Mr. Peterson continued, Page 8, subsection 3, Line 14, will not include travel. Mr. Peterson commented on how the changes would decrease the fiscal note. Senator Adams asked why license fee costs were increased through the legislation. KEN FREEMAN, Director, Resource Development Council (RDC), Anchorage, noted that the fiscal note incorporates a permanent invoicing system necessary for the agency to trim costs. That would be a one-time expenditure. The fiscal note also provides funding for Department of Environmental Conservation to write regulations in conjunction with the water program. Additionally, there will be a slight reduction in the amount of money collected from program receipts. Co-Chair Torgerson asked if RDC supported the committee substitute. Mr. Freeman replied that they did support the committee substitute. He interjected that the elimination of invoicing to the Office of Management and Budget (OMB) was a change that RDC "could live with". He added that the "delayed implementation" would work well for the agency, as it would focus them to deal with only one program at a time. Senator Adams MOVED to adopt the work draft version "M" as the document before the Committee. There being NO OBJECTION, it was adopted. JANICE ADAIR, (Testified via Teleconference), Director, Division of Environmental Health, Department of Environmental Conservation, Anchorage, offered to answer questions of the Committee. Senator P. Kelly MOVED to report CS HB 361 (FIN) out of Committee with individual recommendations and the accompanying fiscal notes. There being NO OBJECTION, it was so ordered. CS HB 361 (FIN) was reported out of Committee with a "no recommendation" and with a fiscal note by Department of Environmental Conservation. CS FOR HOUSE BILL NO. 255(CRA) "An Act relating to cities incorporated under state aw that are home rule communities." REPRESENTATIVE FRED DYSON advised that HB 255 was intended to allow an existing second class city, or unincorporated area, to form a "home rule community" government structure under State law. The city or area would be allowed, through the charter system, to flexibly define its scope of governing powers and services to meet specific area needs. Currently, all home rule governments are required to meet strict financial auditing requirements, provide land-use, zoning and platting services and constitute their own school district. The proposed bill would remove these requirements allowing smaller communities to share in the strength and flexibility of the charter system while avoiding some of the red tape. The goal would be greater self-determination and a more locally relevant government structure. Senator Wilken stated that it was a puzzle to him why there are so many options for State government. He acknowledged that the framers of the State Constitution intended for the State to organized. However, Senator Wilken pointed out that most of the State does not want organized government but still wants funding for their school district education needs. If the people in the second class cities and unorganized areas want to govern themselves, they should be responsible for picking up their educational funding costs. Senator Wilken recommended that the bill not pass from Committee until discussion regarding that concern had been undertaken. Senator Adams observed that there are some places in the State that cannot pay for their educational needs, as they do not have a tax base. One of the things that the Legislature could do would be to determine if there is natural resource money earned in rural Alaska which could be given to those areas in the State to pay for education costs. The Alaska Constitution indicates that the State of Alaska must provide education. All people need to be taken care of even when they are not organized. Co-Chair Torgerson advised that the legislation would be HELD in Committee for further consideration. Tape: SFC - 00 #88, Side B 8:32 AM SENATE CS FOR CS 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." PATTI SWENSON, Staff, Representative Con Bunde, explained that Alaska was one of six states that does set out requirements for licensure of State Language Pathologists (SLP). HB 105 would establish requirements for that licensure. She indicated that the legislation would protect consumers from fraudulent practitioners, who could emotionally and financially harm a client due to improper service delivery. Also, licensure would make it easier to obtain reimbursement from insurance companies. Co-Chair Torgerson asked the reference made on Page 2, Section 3. CATHERINE REARDON, Director, Occupational Licensing, Department of Community & Economic Development, replied that section was written in order to define that audiologists and speech pathologists would be considered the same for the purposes of fee setting. In response to Co-Chair Torgerson, Ms. Swenson explained that persons contracted who come to Alaska have been licensed in another State. The legislation would allow the Department of Education and Early Development to establish the standard. That standard is usually set at a master's level. KIT ROBERTS, (Testified via Teleconference), Speech Language Pathologist, Anchorage, noted that it was her understanding that when contract Speech Pathologists work for the schools that the standards established by the Department of Education and Early Development must be followed, which means at least a masters degree. Since the State Board of Education has already set the standard for the schools, the contracted SLP's would fall under the regulations established by the Board of Education. Ms. Roberts understood that while under contract, the "law of the land" must be followed. Co-Chair Torgerson foresaw a "loop hole" in the legislation. He voiced his hesitation. Ms. Roberts reiterated that the standard for the Department of Education and Early Development is a masters degree. Most of the districts that contract are the Bush areas. She believed that the Bush areas would be required to follow the same rules as the cities. Co-Chair Torgerson stated that the bill would be HELD in Committee for further consideration. CS 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." AMY ERICKSON, Staff, Representative Lisa Murkowski, commented that HB 239 was first introduced in Alaska in 1962 and was then revised again in 1972. The draft before Committee members represents the first comprehensive draft in over 25 years. She advised that those times and technology have changed. She noted that there are many reasons that Revised Article 9 should be adopted in Alaska: · Technology · Volume · New Collateral · Certainty of perfection · New Liens · Clarification of Rules · Consumer Impact · Commitment to Uniformity Ms. Erickson emphasized that the legislation would bring st Alaska into the 21 century in how it handles consumer credit transactions. There is an effective date of July st 1, 2001, which would give the agency time to educate itself to determine how it will work. The attempt to standardize transactions by Article 9 is imperative for business in Alaska. Senator Phillips stated that he was leery of the proposed legislation and requested names and address of those that support it. MARY ELLEN BEARDSLEY, (Testified via Teleconference), Assistant Attorney General, Department of Law, Anchorage, stated that she liked the bill and would answer any questions of the Committee. She emphasized that the st legislation would bring Article 9 into the 21 Century and would help both lenders and debtors. Co-Chair Torgerson asked if any substantial changes would be made to the way that business is currently being done. SHARON YOUNG, (Testified via Teleconference), State Recorders Office, Department of Natural Resources, Anchorage, offered to answer any questions of the Committee. Co-Chair Torgerson requested further explanation of the fiscal note, which indicates a loss of revenue for the State. Ms. Young commented that the concept of the legislation was to centralize the filing in the Uniform Commercial Code (UCC) office in Alaska. Under the current code, there is UCC Central filing and also UCC filing throughout all the recording districts around the State. At this time, the spread is about 50/50. The declining revenues shown, represent the decrease attributable to the gradual elimination of dual filings over the transitional period. Decreasing revenues are expected until all filings have been transitioned to UCC Central, or lapsed. JOHN MCCABE, (Testified via Teleconference), Legislative Director/Legal Counsel, National Conference of Commissioners on Uniform State Laws, Chicago, remarked that his company was the origin of the proposed legislation, revision of Article 9. Current Alaska law is based on the last version of Article 9, put forth in 1972. The effort is to prepare Alaska business and financial institutions to do a better job of dealing with secured financing in Alaska and the rest of the country. Secured financing is very important economically. The bill addresses the economic function within the United States and the economic lack of function throughout the rest of the world. He noted that a secure transaction would not be changed, however, would address personal properties. Most of Article 9 is not engaged in determining that relationship but rather by agreement between the parties. Secured creditors have priority over unsecured creditors. For the most part, with most collateral, security interest occurs when that financing base is filed in the Central office in Alaska. Mr. McCabe testified that the legislation would expand the scope for new kinds of collateral for secured financing. It would provide a better and simpler filing system that would be electronically friendly. It would provide better remedies for secured creditors and secured debtors throughout the transactions. He admitted that the secured financing area was complicated, however, reiterated that much of the bill provides for simplification of current practices. He urged passage of the legislation. Senator Leman asked the impact on small business. Mr. McCabe replied that many representatives had been involved in the study process of creating these guidelines. There were representatives from many small businesses and financial institutions. Small business in the United States already has the benefit of secured financing. That is one of the reasons that we have an economy which generates spontaneous economic activity. The bill will not injure small business in any way. It will enhance credit opportunities for everyone. CYNTHIA WEED, (Testified via Teleconference), Preston Gates & Ellis LLP, Seattle, spoke to the unintentional consequences of the legislation. She noted that as a firm, Preston Gates and Ellis, had participated in the drafting and the implementation of the legislation. She agreed that it would add substantial benefit in the area of consumer credit. However, one of the unintended consequences would be the transfer by governmental organizations. Under the existing Article 9, transfers by the State in local government organizations were exempted out of the coverage. Most loans to general government are unsecured loans. When the State or Municipality of Anchorage borrows money, they do that from a general obligation pledge as unsecured loans. Co-Chair Torgerson recommended that Ms. Weed submit a draft of the language that her office would like to see reinserted. Ms. Weed replied that they would like to see the current language with the exempt transfers by State and local government. Under existing law, adding language would qualify for a transfer under AS 45.09.104, subsection 12. In the existing statute, there is an exemption for transfers by a government or governmental subdivision or agency. She stressed that they would like to see that language replaced in the new draft. Co-Chair Torgerson noted that his office would work on that request. Ms. Weed confirmed that her company would support passage of the legislation with that modification. Co-Chair Torgerson referenced Page 121, Line 18. Ms. Weed agreed that language could cause consternation in the municipal bond market. It would be monumental to go back and find all the outstanding bonds and refile those. She agreed that would be a clause which could provide a substantial problem for the Alaskan municipalities. If not excluded, there would be many outstanding bondholders who could be at-risk with no longer having secured revenue bonds. JERRY KURTZ, (Testified via Teleconference), Alaska's Representative to the National Conference of Commissioners on Uniform State Laws, Anchorage, acknowledged that this is a good bill and would improve everyone's position. In regard to reduction of State revenue, Mr. Kurtz stated that it is important to undertake dual filing given the uncertainties of the existing law. The lost funds are revenue that both large and small business will not have to pay. It is important to recognize that the bill will protect bank money and the power of small business who sell credit and take the secured interest back. Mr. Kurtz pointed out that the law firm represented by Ms. Weed is the only party that has voiced any concerns with the proposed legislation. He noted that the Alaska State Bond Counsel does not object to the legislation. He questioned what portion of the State Ms. Weed was representing. Co-Chair Torgerson stated that the bill would be HELD in Committee for further consideration. ADJOURNED Senator Torgerson recessed the Senate Finance Committee meeting at 3:47 AM.