ALASKA STATE LEGISLATURE
SENATE LABOR AND COMMERCE STANDING COMMITTEE
February 8, 2018
1:32 p.m.
MEMBERS PRESENT
Senator Mia Costello, Chair
Senator Kevin Meyer
Senator Gary Stevens
Senator Berta Gardner
Senator Peter Micciche
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
SENATE BILL NO. 105
"An Act relating to the licensure of marital and family
therapists; relating to professional liability insurance for
marital and family therapists; relating to medical assistance
for marital and family therapy services; and providing for an
effective date."
- MOVED CSSB 105(L&C) OUT OF COMMITTEE
SENATE BILL NO. 155
"An Act relating to the registration and regulation of real
estate appraisal management companies; relating to the
establishment of fees by the Department of Commerce, Community,
and Economic Development; relating to the Board of Certified
Real Estate Appraisers; and relating to real estate appraisers."
- MOVED SB 155 OUT OF COMMITTEE
SENATE BILL NO. 116
"An Act relating to the insurance tax education credit, the
income tax education credit, the oil or gas producer education
credit, the property tax education credit, the mining business
education credit, the fisheries business education credit, and
the fisheries resource landing tax education credit; providing
for an effective date by repealing the effective dates of secs.
3, 5, 7, 10, 14, 16, 18, 21, 23, 25, 28, 30, 32, 35, 37, 39, 42,
44, 46, 49, 51, 53, and 55, ch. 92, SLA 2010, sec. 14, ch. 7,
FSSLA 2011, secs. 15, 17, 19, 21, 23, and 25, ch. 74, SLA 2012,
sec. 49, ch. 14, SLA 2014, secs. 37, 40, 43, and 46, ch. 15, SLA
2014, and secs. 26 and 31, ch. 61, SLA 2014; providing for an
effective date by amending the effective date of secs. 1, 2, and
21, ch. 61, SLA 2014; and providing for an effective date."
- MOVED SB 116 OUT OF COMMITTEE
COMMITTEE SUBSTITUTE FOR HOUSE BILL NO. 126(MLV)
"An Act relating to workers' compensation benefits for members
of the organized militia."
- MOVED CSHB 126(MLV) OUT OF COMMITTEE
SENATE JOINT RESOLUTION NO. 12
Urging the United States Congress to overturn the Federal
Communication Commission's order ending net neutrality.
- MOVED SJR 12 OUT OF COMMITTEE
PREVIOUS COMMITTEE ACTION
BILL: SB 105
SHORT TITLE: MARITAL & FAMILY THERAPY LIC. & SERVICES
SPONSOR(s): SENATOR(s) WILSON
04/04/17 (S) READ THE FIRST TIME - REFERRALS
04/04/17 (S) HSS, FIN
04/05/17 (S) L&C REPLACES HSS REFERRAL
02/06/18 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
02/06/18 (S) Scheduled but Not Heard
02/08/18 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
BILL: SB 155
SHORT TITLE: REAL ESTATE APPRAISAL MNGMT. COMPANIES
SPONSOR(s): SENATOR(s) MEYER
01/24/18 (S) READ THE FIRST TIME - REFERRALS
01/24/18 (S) L&C, FIN
02/08/18 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
BILL: SB 116
SHORT TITLE: EDUCATION TAX CREDITS;SUNSET;REPEALS
SPONSOR(s): SENATOR(s) COGHILL
04/19/17 (S) READ THE FIRST TIME - REFERRALS
04/19/17 (S) L&C, FIN
02/08/18 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
BILL: HB 126
SHORT TITLE: ORGANIZED MILITIA: WORKERS COMPENSATION
SPONSOR(s): MILITARY & VETERANS' AFFAIRS
02/15/17 (H) READ THE FIRST TIME - REFERRALS
02/15/17 (H) MLV, L&C
02/21/17 (H) MLV AT 1:30 PM GRUENBERG 120
02/21/17 (H) Heard & Held
02/21/17 (H) MINUTE(MLV)
02/23/17 (H) MLV AT 1:00 PM GRUENBERG 120
02/23/17 (H) Moved CSHB 126(MLV) Out of Committee
02/23/17 (H) MINUTE(MLV)
02/24/17 (H) MLV RPT CS(MLV) 5DP 1NR
02/24/17 (H) DP: LEDOUX, SADDLER, RAUSCHER,
SPOHNHOLZ, TUCK
02/24/17 (H) NR: REINBOLD
03/29/17 (H) L&C AT 3:15 PM BARNES 124
03/29/17 (H) Heard & Held
03/29/17 (H) MINUTE(L&C)
04/03/17 (H) L&C AT 3:15 PM BARNES 124
04/03/17 (H) Moved CSHB 126(MLV) Out of Committee
04/03/17 (H) MINUTE(L&C)
04/05/17 (H) L&C RPT CS(MLV) 5DP 1NR
04/05/17 (H) DP: SULLIVAN-LEONARD, WOOL, JOSEPHSON,
BIRCH, KITO
04/05/17 (H) NR: KNOPP
04/08/17 (H) NOT TAKEN UP 4/8 - ON 4/9 CALENDAR
04/10/17 (H) TRANSMITTED TO (S)
04/10/17 (H) VERSION: CSHB 126(MLV)
04/11/17 (S) READ THE FIRST TIME - REFERRALS
04/11/17 (S) L&C
02/08/18 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
BILL: SJR 12
SHORT TITLE: CONGRESS REVERSE FCC ON NET NEUTRALITY
SPONSOR(s): WIELECHOWSKI
01/24/18 (S) READ THE FIRST TIME - REFERRALS
01/24/18 (S) L&C, STA
02/08/18 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
WITNESS REGISTER
SENATOR DAVID WILSON
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Sponsor of SB 105.
GARY ZEPP, Staff
Senator David Wilson
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Reviewed the fiscal notes and delivered the
sectional analysis for SB 105.
EDRA MORLEDGE, Staff
Senator Kevin Meyer
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Provided supporting information for SB 155
on behalf of the sponsor.
SARAH CHAMBERS, Deputy Director
Division of Corporations, Business and Professional Licensing
Department of Commerce, Community and Economic Development
Juneau, Alaska
POSITION STATEMENT: Answered questions related to SB 155.
DAVID DERRY, Chair
Alaska Board of Certified Real Estate Appraisers
Kenai, Alaska
POSITION STATEMENT: Stated support for SB 155.
GREG DEAL, President
Wells Fargo Bank of Alaska
Anchorage, Alaska
POSITION STATEMENT: Stated support for SB 155.
WILLIAM SCOGGIN, Counsel
Real Estate Valuation Advocacy Association (REVAA)
Raleigh, North Carolina
POSITION STATEMENT: Stated strong support for SB 155.
SENATOR JOHN COGHILL
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Sponsor of SB 116.
CHAD HUTCHINSON, Staff
Senator John Coghill
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Introduced SB 116 on behalf of the sponsor.
KEN ALPER, Director
Tax Division
Department of Revenue (DOR)
POSITION STATEMENT: Answered questions related to SB 116.
ROBERT ONDERS, Interim President
Alaska Pacific University, Anchorage, Alaska
POSITION STATEMENT: Testified in strong support of SB 116.
SHERI BURRETTA, Board Chair
Chugach Alaska Corporation (CAC)
Anchorage, Alaska
POSITION STATEMENT: Testified in support of SB 116.
BRAD HARRIS, Professor
POSITION STATEMENT: Alaska Pacific University
Anchorage, Alaska
POSITION STATEMENT: Testified in support of SB 116.
REPRESENTATIVE CHRIS TUCK
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Sponsor of HB 126
KENDRA KLOSTER, Staff
Representative Chris Tuck
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Answered questions related to HB 126.
BOB DOEHL, Deputy Director
Department of Military & Veterans Affairs (DMVA)
JBER, Alaska
POSITION STATEMENT: Answered questions related to HB 126.
SENATOR BILL WIELECHOWSKI
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Sponsor of SJR 12
NATE GRAHAM, Staff
Senator Bill Wielechowski
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Answered questions related to SJR 12.
ACTION NARRATIVE
1:32:06 PM
CHAIR MIA COSTELLO called the Senate Labor and Commerce Standing
Committee meeting to order at 1:32 p.m. Present at the call to
order were Senators Stevens, Gardner, Micciche, Vice Chair
Meyer, and Chair Costello.
SB 105-MARITAL & FAMILY THERAPY LIC. & SERVICES
1:33:38 PM
CHAIR COSTELLO announced the consideration of SB 105. She noted
the proposed amendment and stated her intention to take public
testimony and move the bill from committee.
SENATOR DAVID WILSON, Alaska State Legislature Juneau, Alaska
sponsor of SB 105, introduced the legislation paraphrasing the
following sponsor statement:
If enacted, Senate Bill 105 would add licensed marital
and family therapists to the list of independent
licensed practitioners, in order to address the
shortage of Medicaid-eligible behavioral health
providers in the state, afford more options for
beneficiaries, and increase access to care.
Currently, licensed marital and family therapists
(MFTs) are only allowed to provide services in
community health clinics or physician mental health
clinics, which limits the number of willing providers
in the mental health care arena. SB 105 expands
medical assistance reimbursement services to cover
those services provided by MFTs.
Specifically, SB 105
• Designates LMFTs as providers eligible to render
and bill for Medicaid-funded services as
independent practitioners under Alaska Statute
47.07.030(b)
• Clarifies supervisory requirements for marital
family therapist licensees
• Requires marital family therapist licensees to
carry liability insurance for regulatory
investigation fees of at least $30,000.
In 2016, the Alaska Board of Marital and Family
Therapy unanimously recommended the statute changes
contained in SB 105.
SENATOR WILSON said his understanding is that the foregoing
recommendations were discussed during the hearings for Senate
Bill 74 but weren't included in the final bill. The board has
requested these changes and the regulations have been written
but won't be promulgated until SB 105 is enacted.
1:36:43 PM
GARY ZEPP, Staff, Senator Wilson, Alaska State Legislature,
Juneau, Alaska, reviewed the two fiscal notes attached to SB
105. The fiscal note from the Department of Commerce, Community
and Economic Development (DCCED) appropriation is for
Corporations, Business and Professional Licensing. The total is
$1,300 for the services line in FY 2019 and with no expenditures
in outlying years. The revenue collection is receipt supported
and totals $1,300 for FY 2019 with no revenues reflected in the
outlying years. The summary states that the funding is needed
for regulation review, advertising, printing, and postage.
The fiscal note from the Department of Health and Social
Services (DHSS) appropriation is for Medicaid services. The
total is $50 thousand for the services line in FY 2019 and $1.8
million in the grants & benefits line for FY 2020 and beyond.
The revenue supporting the fiscal note is a blend of 66 percent
federal receipts and general fund match of 34 percent. The FY
2019 revenue shows $25 thousand of federal receipts and $25
thousand of general fund match totaling $50 thousand. Annual
revenue thereafter shows $660.5 thousand in federal receipts and
$340.3 thousand in general fund match totaling $1.8 million. The
summary states that in FY 2019 the $50 thousand general fund
match is for the development of business rules in the Medicaid
Management Information System detailing the parameters for
services and reimbursement. FY 2020 and annually thereafter
reflect $1.8 million. It's the average annual per recipient cost
times the estimated number of recipients. DHSS estimates $1,581
annually per recipient times 6,330 recipients for a total of
$1,000,773.
1:39:28 PM
MR. ZEPP provided the following sectional analysis for SB 105.
Section 1: Amends AS 08.63.100(a). Provides that 1,500
hours of clinical contact with couples, individuals,
and families required for licensure of marital and
family therapy must be supervised. Clarifies that
1,500 hours of clinical contact must include at least
100 hours of individual supervision and 100 hours of
group supervision. Provides that the required hours of
individual and group supervision may be conducted by
one or more supervisors. Requires that an applicant
for a license to practice marital and family therapy
must have professional liability insurance including
coverage of at least $30,000 for the applicant's
regulatory investigation fees.
Section 2: Provides the qualification for a person to
perform individual supervision of a licensee under AS
08.63 and the qualifications for a person to perform
group supervision of a licensee under AS 08.63.
Section 3: Adds marital and family therapy services to
the optional services that the Department of Health
and Social Services may provide medical assistance for
under AS 40.07.030(b).
Section 4: Adds a new subsection (g) that defines
"direct supervision," "mental health [physician
clinic]," and "psychiatrist" for AS 47.07.030.
Section 5 Adds a new subsection (h) that provides that
the department may reimburse a mental health physician
clinic for certain services if the services are
provided by a psychiatrist or an individual who works
under the direct supervision of a psychiatrist and is
licensed to practice as a professional counselor, a
marital and family therapist, a physician assistant,
an adult or family psychiatric mental health nurse
practitioner, psychologist, psychological associate,
or clinical social worker.
Section 6: Authorizes the department and the Board of
Marital and Family Therapy to adopt regulations
necessary to implement this act.
Section 7: Provides an immediate effective date for
Section 6 of this act.
Section 8: Provides a January 1, 2018 effective date
for Sections 1-5 of this act.
1:43:12 PM
CHAIR COSTELLO informed members of a friendly amendment to
change the effective date to January 1, 2019.
SENATOR MEYER moved Amendment 1.
AMENDMENT 1
OFFERED IN THE SENATE
Page 5, line 9:
Delete "2018"
Insert "2019"
CHAIR COSTELLO asked if there was objection to Amendment 1.
SENATOR GARDNER asked if the amendment addresses the DHSS fiscal
note that twice references a July 1, 2018 effective date in the
analysis.
CHAIR COSTELLO asked if the sponsor or staff could answer
1:45:14 PM
At ease
1:45:41 PM
CHAIR COSTELLO reconvened the meeting and clarified that the
fiscal note was updated to reflect the legislation.
SENATOR GARDNER withdrew her objection.
CHAIR COSTELLO found no further objection and Amendment 1 was
adopted. She noted who was available to answer questions.
SENATOR GARDNER asked if the bill would allow LMFTs to bill
Medicaid directly as an independent provider if they choose to
do so.
SENATOR WILSON clarified that the bill would allow LMFTs to bill
Medicaid both under supervision and as a private entity.
SENATOR GARDNER questioned the statement on the bottom of page 2
of the DHSS fiscal note that says:
Therefore, we are unsure of the number of LMFTs who
will be interested in beginning to independently bill
Medicaid, subjecting their practices to the
documentation and audit requirements that follow on
enrollment in Medicaid as an independent provider.
She said she was trying to anticipate the beneficial impact of
being able to bill independently when there are just under 100
LMFTs in the state with an active license.
SENATOR WILSON said that's their decision; this is intended more
for the nonprofit agencies or grantees that didn't benefit as
intended from the Medicaid expansion. The bill also seeks to
increase capacity to meet the demand for behavioral health
services.
CHAIR COSTELLO asked if marital and family therapist services
could be delivered through telemedicine.
SENATOR WILSON deferred to Ms. McCarthy.
CHAIR COSTELLO asked if there was any opposition to the bill.
SENATOR WILSON said no.
1:51:01 PM
CHAIR COSTELLO determined no one wished to comment and close
public testimony on SB 105.
1:51:31 PM
SENATOR MEYER moved to report SB 105, as amended, from committee
with individual recommendations and attached fiscal note(s).
1:51:49 PM
CHAIR COSTELLO announced that without objection, CSSB 105(L&C)
moves from the Senate Labor and Commerce Standing Committee.
1:51:51 PM
At ease
SB 155-REAL ESTATE APPRAISAL MNGMT. COMPANIES
1:53:43 PM
CHAIR COSTELLO reconvened the meeting and announced the
consideration of SB 155.
SENATOR KEVIN MEYER, Alaska State Legislature, Juneau, Alaska,
sponsor of SB 155, said he introduced SB 155 after it was
brought to his attention that the Dodd-Frank Wall Street Reform
and Consumer Protection Act of 2010 imposed a federal deadline
for states to adopt comprehensive regulations regarding
appraisal management companies. That deadline is August 2018.
He explained that an appraisal management company (AMC) is an
independent entity through which mortgage lenders order
residential real estate valuation services for properties on
which they are considering extending loans to homebuyers. Unless
this or similar legislation passes, these companies will not be
able to do residential appraisals in Alaska after August 20,
2018. Alaska is one of four states that have not passed this
legislation.
SENATOR MEYER said SB 155 seeks to promote public trust and
consumer protection and establish oversight and enforcement
where there is none today.
1:55:55 PM
EDRA MORLEDGE, Staff, Senator Kevin Meyer, Alaska State
Legislature Juneau, Alaska, directed attention to a letter from
Sara Chambers, Deputy Director of the Department of Commerce,
Community and Economic Development (DCCED) requesting an
extension of the implementation period to establish an appraisal
management company (AMC) program until August 10, 2019. She said
the federal government also established minimum standards for
appraisal management companies and those are contained in the
bill.
1:57:23 PM
MS. MORLEDGE provided the following sectional analysis for SB
155:
Section 1: Adds a new subsection (j) to allow the
Department of Commerce, Community and Economic
Development to establish a fee for regulatory costs
and a mechanism for reporting those fees.
Section 2: Requires the department to establish a
registry fee as required by the federal government and
permits the department to remit those fees to the
federal government.
Section 3: Amends the powers and duties of the Board
of Certified Real Estate Appraisers to require
regulations for Appraisal Management Companies.
Section 4: Authorizes the Board to examine records of
AMCs, requires those companies to submit information
to the Board, and allows investigations of alleged
violations.
Sections 5 and 6: Adds a new section to the statute
regarding Appraisal Management Companies including
provisions for registration, reporting records
retention, and inspection requirements, exemptions,
prohibited practices, and disciplinary proceedings.
Section 7: Definitions "appraisal management
services," "appraisal panel," "company, controlling
person," and "principal dwelling."
Section 8: Allows for fingerprinting of a controlling
person of an Appraisal Management Company through the
Department of Public Safety.
Section 9: Allows real estate Appraisal Management
Company registry fees to be included in the definition
of program receipts and non-general fund program
receipts.
Section 10: Applicability clause this act applies to
a person offering or providing appraisal management
services on or after the effective date of this Act.
1:59:30 PM
SENATOR STEVENS asked if there was any indication that the
requested extension would be granted.
MS. MORLEDGE deferred the question to Ms. Chambers.
2:00:12 PM
SARAH CHAMBERS, Deputy Director, Division of Corporations,
Business and Professional Licensing, Department of Commerce,
Community and Economic Development (DCCED), Juneau, Alaska, said
she sent the letter to Mr. Parks this morning and believes it is
likely to be approved. The state meets the threshold for
receiving an extension and the Alaska Board of Certified Real
Estate Appraisers knows about the situation and agrees with the
extension request.
CHAIR COSTELLO asked if the extension would be needed if the
bill were to pass.
MS. CHAMBERS said yes. There isn't time to promulgate and
implement the required regulations by August.
SENATOR MEYER asked why the department or governor didn't bring
the bill forward if the looming deadline was known.
MS. CHAMBERS said she didn't know but it's fairly typically and
healthy for boards to identify their own needs and seek their
own legislation. She offered to follow up and provide a more
definitive answer.
SENATOR MEYER questioned whether it was healthy since Alaska is
one of the last states to pass the enabling legislation. He
referenced the fiscal note and questioned the need to hire a
full time occupational licensing examiner.
MS. CHAMBERS said she hoped that Mr. Derry, Chair of the Alaska
Board of Certified Real Estate Appraisers was online and could
speak to the timeliness. The department does not anticipate the
need for a fulltime examiner but is unable to request half a
person through a fiscal note. The request reflects the
anticipated time needed and any work the examiner does outside
this program will be billed to any of the other receipt-
supported program they might work on.
2:04:56 PM
SENATOR MEYER said he wouldn't quibble over the fiscal note.
2:05:17 PM
CHAIR COSTELLO opened public testimony on SB 155.
DAVID DERRY, Chair, Alaska Board of Certified Real Estate
Appraisers, Kenai, Alaska, said the board supports SB 155 and is
ready to assume oversight of appraisal management companies.
Speaking to the timeline, he said that in 2014 the Alaska
Chapter of the Appraisal Institute proposed legislation similar
to SB 155 but was unable to get support from the legislature to
introduce the bill. The matter died at that point but since 2016
the board has been working to get this legislation introduced.
He said he recently became aware of the extension to 2019 and
the legislation is important to show the state is working toward
that deadline.
He offered suggestions to change the bill in several areas. Page
5, lines [20-21] states that an appraisal management company
will post a surety bond of not more than $25,000 as required by
the board. He said the board recommends a surety bond of
$150,000 because $25,000 is inadequate in light of the cost of
appraisal reports, particularly in rural areas. Some states
establish the bond at not less than 150 percent of the AMC's
annual billings over the previous 12 months. This board believes
that is more complex than necessary, thus the $150,000 proposal.
The second suggestion relates to fingerprinting on page 6, lines
4-9. The board has received a determination from the federal
Appraisal Subcommittee that the current process for background
checks for appraisers is adequate without fingerprinting and
background checks. That would carry over to appraisal management
companies so that provision is not necessary.
2:11:22 PM
SENATOR GARDNER said she didn't understand how the fingerprint
and background check got in the bill if it's not required by
Dodd-Frank or some other act.
MR. DERRY said fingerprinting was originally part of the
requirements under Dodd-Frank and subsequently became a state-
by-state determination. The process the Alaska Board of
Certified Real Estate Appraisers uses for appraiser
qualifications is satisfactory without fingerprinting.
SENATOR GARDNER asked if real estate appraisers are currently
required to undergo background checks.
MR. DERRY answered no; the process the board is using and had
established in the application process for new certified
appraisers is adequate to meet the requirement without doing a
background check.
SENATOR MEYER asked for confirmation that fingerprinting and the
criminal history check were not required under Dodd-Frank.
MR. DERRY clarified that there was a determination by the
federal Appraisal Subcommittee that those were not required
under Dodd-Frank
SENATOR MEYER asked what other states require as a surety bond.
MR. DERRY said he didn't know the fixed bond amounts for other
states.
2:14:56 PM
GREG DEAL, President, Wells Fargo Bank of Alaska, Anchorage,
Alaska, stated support for SB 155. He agreed with the sponsor
that if the state does not set up a regulatory system for
Appraisal Management Companies by the deadline, home lenders
like Wells Fargo will not be able to use AMCs for federally
related mortgage loan transactions. This includes government
sponsored enterprises (GSEs) such as Fannie Mae and Freddie Mac.
Wells Fargo values the services of AMCs to ensure that there is
no direct contact between a loan officer and appraiser. This
eliminates even the perception of a conflict of interest and
ensures an independent evaluation process. Customers are also
assured that they are receiving an accurate valuation on their
homes.
SENATOR MICCICHE asked for clarification that this is only for
federally-regulated mortgage loan transactions.
MR. DEAL said that's correct.
SENATOR MICCICHE asked what percentage of Wells Fargo home loans
that represents.
MR. DEAL said in Alaska Wells Fargo has just 10 of 1,471 loans
that do not fall under the government sponsored enterprise rule.
2:17:25 PM
WILLIAM SCOGGIN, Counsel, Real Estate Valuation Advocacy
Association (REVAA), Raleigh, North Carolina, stated strong
support for SB 155. He described the legislation as important to
everyone in the residential real estate industry. He advised
that REVAA has worked carefully to get this legislation passed
in all states. Just four states and Washington, D.C. have yet to
pass the legislation.
SENATOR MEYER asked if the $150,000 surety bond the Alaska board
requested is standard.
MR. SCOGGIN said he didn't recall the surety provisions in all
other states but $150,000 would be on the high side. REVAA
believes the current drafting is probably adequate. What is
important is to pass the bill this legislative session.
SENATOR MEYER asked if it's his understanding that criminal
background checks and fingerprinting are unnecessary.
MR. SCOGGIN said it depends on whether the licensing board in
the state is able to satisfy the requirements of the federal
Appraisal Subcommittee. REVAA is comfortable with whatever is
established, he said.
2:19:39 PM
CHAIR COSTELLO closed public testimony on SB 155 and voiced
support for moving the bill. She said the finance committee
could address the surety bond issue and she's comfortable with
the fingerprinting as written in the bill.
SENATOR MICCICHE asked Ms. Chambers about the possibility of
managing the additional workload through contract instead of
adding a new state position.
MS. CHAMBERS said that would be precedent setting and may be
opposed by employment unions. She explained that the protocol
typically used is to request a receipt-supported position (no
UGF involved) to fulfill the requirements of the bill and then
allocate time to the other licensing programs. Because the
component level is at the division and not each board, the
appraisal board would not see the entire $80,000 plus increase
listed in the fiscal note. It is her hope that the other half of
the position could assist with applications for massage
therapist licenses because the division has seen twice the
number applications as anticipated since the program was added
in 2015.
CHAIR COSTELLO suggested that as a member of the finance
committee Senator Micciche could look into the hurtle that
prevents the department from asking for a part-time position.
SENATOR MEYER agreed and expressed hope that the finance
committee closely analyze the request for an additional
position.
2:23:18 PM
SENATOR MEYER moved to report SB 155 from committee with
individual recommendations and attached fiscal note(s).
2:23:24 PM
CHAIR COSTELLO found no objection and announced that SB 155
moves from the Senate Labor and Commerce Standing Committee.
2:23:31 PM
At ease
SB 116-EDUCATION TAX CREDITS;SUNSET;REPEALS
2:25:33 PM
CHAIR COSTELLO reconvened the meeting and announced the
consideration of SB 116.
2:26:01 PM
SENATOR JOHN COGHILL, Alaska State Legislature, Juneau, Alaska,
sponsor of SB 116, stated that this is a tax credit bill and an
effort to get industry and educational programs to work
together. The legislation does two primary things. It extends
the effective date of the repeal of the education tax credits to
January 1, 2025, and it ensures that the existing credits will
maintain until January 1, 2025 instead of narrowing in scope on
January 1, 2021.
2:28:53 PM
CHAD HUTCHINSON, Staff, Senator John Coghill, Alaska State
Legislature, Juneau, Alaska, introduced SB 116 speaking to the
following sponsor statement:
This bill does the following:
1. Extends the effective date for the repeal of
the education tax credits from December 31,
2018 to January 1, 2025.
2. Ensures that the credits that exist in statute
today, will maintain until January 1, 2025
(instead of narrowing in scope and decreasing
in value on January 1, 2021).
Education tax credits encourage private businesses to
make charitable contributions to certain educational
institutions and programs in Alaska, including
contributions to the University of Alaska. In total,
eligible recipient entities include: non-profit,
public or private accredited Alaska two-year or four-
year colleges; non-profit elementary or secondary
schools and school districts; state operated
vocational education and training schools; non-profit
regional vocational training centers; apprenticeship
programs; Alaska Native cultural programs; the Alaska
higher education investment fund; and postsecondary
institutions providing dual-credit courses.
The credits are non-transferable and non-refundable
and can be used against the following taxes: corporate
income tax; fisheries business tax/fisheries resource
landing tax; insurance premium tax/title insurance
premium tax; mining license tax; oil and gas
production tax; and the oil and gas property tax.
Currently, the credit provision allows for 50 percent
of the annual contributions up to $100,000, 100
percent of the next $200,000, and 50 percent of annual
contributions beyond $300,000. The total credit per
taxpayer, across all tax types, may not exceed $5
million [per year].
Historically, well over two dozen companies have used
this benefit. The contributions are good for the
companies, and good for the recipient institutions.
Passage of SB 116 is a great benefit for Alaska.
MR. HUTCHINSON said a recent example of the credit provision
being used to fill a specific need is the UAF engineering
building that received private contributions from BP,
ConocoPhillips, and Usibelli. This potentially increases the
opportunity for future engineers which helps the Alaska
workforce, the mining community and the state.
He advised that the Department of Revenue (DOR) submitted a zero
fiscal note.
MR. HUTCHINSON provided an overview of the sectional analysis
for SB 116.
Section 1 has legislative findings and intent. It clarifies that
the legislature is extending the effective date for the repeal
of the education tax credits from December 31, 2018 to January
1, 2025. It also ensures that the education tax credits in
statute today will be carried forward to January 1, 2025.
Currently the credits are on course to decline in dollar value
and narrow in scope on January 1, 2021, even if the effective
date of repeal was extended to 2025.
Section 2 is the nuts and bolts of the bill. It repeals multiple
statutory provisions pursuant to legislative drafting
guidelines. The full sectional talks about each statute twice to
show what happens with the 2021 reduction if there is no
legislative action.
Section 3 repeals the narrowing of scope that is anticipated to
occur in 2021.
SENATOR GARDNER asked him to talk about the statutes that were
expected to drop out with the narrowing of scope but will not
under this provision.
MR. HUTCHINSON explained that in 2010 the maximum cap for the
tax credit increased from [$150,000] to $5 million. In 2011 and
2014 the entities to which industry can contribute and receive a
tax credit was expanded to include facilities, Native cultural
programs, and the Coastal America Partnership. Without this
legislation those broader beneficiaries go away, and the
contributing party will no longer receive a credit for those
contributions.
SENATOR MICCICHE asked why there is a change in revenue before
2021 if the narrowing occurs after that time.
MR. HUTCHINSON deferred to the Department of Revenue.
2:36:35 PM
KEN ALPER, Director, Tax Division, Department of Revenue (DOR),
said Mr. Hutchinson explained that the program is set to sunset
on December 31, 2018. If no bill passes, the tax credit would be
zero beginning January 2019. Because there have been multiple
changes to the statute in the last six or so years, there is a
lot of overlap in language and effective dates, he said. The
narrowing of scope although it takes place in 2021 would be sort
of moot if the underlying program wasn't extended because there
would be nothing for which the scope would reduce.
He clarified that while the cost of administering the program is
zero, the fiscal note reflects a reduction in revenue that is
tied to the extension of the program. The calculation is the
average amount of the tax credit claimed for the last three
years projected forward for future years. The donor subtracts
the contribution from their taxes and DOR sees it in the form of
reduced revenue.
SENATOR GARDNER commented that it's a nice deal for the donor.
They receive a charitable credit on their federal taxes and a
reduction on their tax bill to the state. Hopefully they'll also
get a workforce that's trained in a relevant area.
MR. ALPER said he couldn't speak to the federal tax impact but
that's his expectation.
SENATOR MEYER asked if DOR knows the total contributions and
which organization has contributed the bulk thus far.
MR. ALPER said the analysis section of the fiscal note
identifies the amount of credit claimed to average $6.84
million. The donations leading to that credit are between $10
million and $11 million per year. The rate at which the credit
is applied is currently $250,000 of the first $300,000 of a
donation. DOR's experience is that a lot of the donations come
in at that rate because the company receives the maximum
benefit.
SENATOR MEYER asked which recipient receives the bulk of the
donations.
MR. ALPER said the University of Alaska is the largest recipient
and about 40 percent is going to vocational education
organizations.
2:41:21 PM
SENATOR COGHILL said the university is the primary beneficiary
when compared to the mining and fishing industries. He reminded
the members that a tax credit means some reduction to the state
but there's a 50 percent increase of new money that is a
positive to the state generally.
CHAIR COSTELLO asked what is considered vocational education
because she wanted to make sure that programs like Project Lead
the Way at Dimond High School and the nursing program at Service
High School would qualify to receive contributions under the
education tax credit program. These are programs that train
young people to have jobs upon graduation.
2:43:24 PM
MR. ALPER said job training programs at a public secondary
school should qualify but he couldn't make a predetermination on
a specific donation. He suggested the committee feel free to
clear up any ambiguities it sees in the qualification sections
because there are a lot of gray areas.
SENATOR MICCICHE referenced the report from DOR that shows the
total contributions reported by the different tax types and the
total education tax credits claimed. He asked if the list of
secondary vocational and "other" entities listed on the second
attachment were recipients of the contributions.
SENATOR COGHILL suggested that public testimony would be a
better measure of advocacy than looking back.
2:45:48 PM
CHAIR COSTELLO opened public testimony on SB 116.
2:46:17 PM
ROBERT ONDERS, Interim President, Alaska Pacific University,
Anchorage, Alaska, said he strongly agrees with the sponsor's
initial comments that it's critical that education and industry
work together. The education tax credit program is mutually
beneficial, and it facilitates the connection between education,
research, and workforce development. The resources and
partnership generated by the education tax credits support rural
and tribal communities in generating community-based research as
well as academic curriculum. He encouraged the committee to pass
SB 116.
2:47:19 PM
SHERI BURRETTA, Board Chair, Chugach Alaska Corporation (CAC),
Anchorage, Alaska, said she is speaking in support of SB 116.
Chugach Alaska Corporation has been using the education tax
credit program since 2011. About one-third of their
contributions go to the Alaska Pacific University and the
University of Alaska and another third goes to vocational
programs such as the Kenai Peninsula Borough School District
Project GRAD and to fund cultural camps and education for
villages. Using this tool CAC has been able to fund its
education endowment to $30 million and generate scholarships of
more than $1 million a year. CAC has been focused on
collaboration and creating pathways and links (particularly to
remote rural villages) to get through high school and access
higher education.
This has been an excellent link for the corporation and has
allowed CAC to work with the university through the Alaska
Native Science and Engineering Program (ANSEP) School of
Business to integrate Alaska Native history and contemporary
Alaska Native corporations to change the perspective about what
Alaska Native corporations can do in partnership with the
university to develop economic opportunities moving forward.
MS. BURRETTA said she became a University of Alaska Regent in
2015 and it's been a challenge that funding has been declining
since then. Thus, tools such as the education tax credit are
essential to the future of the university.
2:50:10 PM
BRAD HARRIS, Professor, Alaska Pacific University, Anchorage,
Alaska said he was speaking in support of SB 116 from the
perspective of an educator. He teaches fisheries ecology and
directs the research laboratory that works closely with the
commercial fishing industry as well as state and federal
agencies to produce information that is needed to deal with the
resource challenges that Alaska faces. He said the education tax
credit program is working the way it's designed to work. It is
providing opportunities for students in Alaska to receive a
high-quality education that is applied directly to the needs of
the state.
PROFESSOR HARRIS explained that the money he receives from the
education tax credit program allows him to recruit excellent
students. Some come to Alaska from different places and Alaska
benefits from that. Students are also recruited from rural
communities that face challenges. Once those students are in the
university system they receive support through applied projects
and assistantships to help offset their tuition costs. The
program also allows him to invest in strategically important
research areas. He serves on the Scientific and Statistical
Committee of the North Pacific Fisheries Management Council
which allows him to connect students to areas of applied
research and to develop robust synergistic partnerships.
Because of the resources through the education tax credit
program and the opportunity to work in ecosystems like the
Bering Sea, partners are attracted to UA from universities
around the world. Faculty from Cornell University and
Northeastern University and researchers from the Smithsonian are
working with Alaska students on applied questions, largely
facilitated by the education tax credit. Finally, the program is
expanding the university's internal research capacity. The
opportunity for students to work with these world-class
researchers brings them skills and abilities that map through to
the careers the students end up taking. He noted his letter in
the packets that includes information about students from the
fisheries and natural resources program. It demonstrates that
students who receive this support end up working for Alaska
state agencies, federal agencies, consulting companies, and
universities. They are providing benefit back to the state.
PROFESSOR HARRIS urged the committee to continue the program in
recognition that it provides a level of stability that has
become a critical part of the future.
2:54:19 PM
SENATOR STEVENS asked how the program is marketed.
PROFESSOR HARRIS said the university does what it has to do to
see its research programs evolve. His team applies to the North
Pacific Research Board, seeks other funds, and talks about ways
to leverage the education tax credit program.
2:55:34 PM
CHAIR COSTELLO found no further questions or testimony and
closed public testimony on SB 116.
2:55:51 PM
SENATOR MEYER moved to report SB 116 from committee with
individual recommendations and attached fiscal note(s).
2:56:10 PM
CHAIR COSTELLO announced that without objection, SB 116 moved
from the Senate Labor and Commerce Standing Committee.
2:56:19 PM
At ease
HB 126-ORGANIZED MILITIA: WORKERS COMPENSATION
2:59:29 PM
CHAIR COSTELLO reconvened the meeting and announced the
consideration of HB 126. [CSHB 126 (MLV) was before the
committee.]
2:59:49 PM
REPRESENTATIVE CHRIS TUCK, Alaska State Legislature, Juneau,
Alaska, sponsor of HB 126, introduced the legislation speaking
to the following sponsor statement:
The Alaska State Legislature and Department of
Military and Veterans' Affairs have been working
together to modernize the 1955 Alaska Military Code by
providing statutory changes that will better serve our
Alaska organized militia. House Bill 126 would expand
workers' compensation coverage to the organized
militia while they are participating training
exercises. Currently, Alaska statutes already provides
workers' compensation coverage during active state
service, but not during training. By expending this
protection, we could potentially provide a fiscally
significant coverage and save the state money in the
future. This issue came to light during an incident
when a member of the Alaska State Defense Force
suffered an injury during a training exercise that led
to his inability to work. Since workers' compensation
was not available, this injury ultimately cost the
state twice the amount of the entire annual budget of
the Alaska State Defense Force. The Risk Management
Division of the Alaska Department of Administration
estimates there would be little to no additional cost
to cover the Alaska State Defense Force members under
existing state workers' compensation policies. As we
face tight fiscal times, it is important that we are
taking steps to ensure cost savings where we can and
pass responsible legislation that will protect
Alaskans.
3:01:42 PM
SENATOR STEVENS asked who other than the National Guard would be
involved in the Alaska militia.
REPRESENTATIVE TUCK said it's primarily the Alaska State Defense
Force. The National Guard doesn't do any training that needs to
be done by the state.
SENATOR STEVENS asked for an explanation of the Alaska State
Defense Force.
REPRESENTATIVE TUCK said the group has about 11 members under
the authority of the adjutant general who can be called in for
disasters or safety of a community. They're not necessarily
being called in by the president.
SENATOR STEVENS requested follow up on the question of the cost
[to cover injuries during training compared to coverage under]
workers' compensation.
3:03:01 PM
KENDRA KLOSTER, Staff, Representative Tuck, Alaska State
Legislature, Juneau, Alaska, explained that the state settled
the case of the member injured during training and paid double
what it would have been under workers' compensation. She
deferred any further explanation of cost related to the State
Defense Force budget to Mr. Doehl.
3:04:29 PM
BOB DOEHL, Deputy Director, Department of Military & Veterans
Affairs (DMVA), JBER, Alaska, explained that when litigation
ensues the plaintiff can get money for things he/she cannot get
in a workers' compensation proceeding, which causes costs to
spike exponentially.
SENATOR MICCICHE asked if there have been cases in addition to
the one the sponsor mentioned.
MR. DOEHL said that case is the only reportable Alaska State
Defense Force case that resulted in a claim. However, up until
about two years ago there were only about 50 members of the ASDF
who were actively participating. With increased numbers there is
increased exposure for injuries during training.
SENATOR MICCICHE summarized that less than 100 members train two
days a month and run exercises four days a year.
MR. DOEHLE said that's generally the case. When members are
called up for active duty they are under workers compensation.
SENATOR MEYER asked how often members have been called to active
duty.
MR. DOEHL said up until this year just small groups were called
up to do things like shelter relief management during wildland
fires. This year a team was called up for active duty and
deployed to Puerto Rico to provide communications support after
the hurricane. They were state employees, but FEMA is providing
reimbursement for their wages and benefits.
SENATOR MEYER asked if there are close to 120 members currently.
MR. DOEHL said he understood the force is closer to 120 members
than 111. He was confident it was more than 110.
SENATOR MEYER said he mentioned it because the fiscal note
identifies 76 members.
MR. DOEHL said the force has been growing since the bill was
introduced last year.
3:09:22 PM
CHAIR COSTELLO found no one who wished to comment on HB 126 and
closed public testimony. She looked to the will of the
committee.
3:09:49 PM
SENATOR MEYER moved to report HB 126 from committee with
individual recommendations and attached fiscal note(s).
CHAIR COSTELLO announced that without objection, CSHB 126(MLV)
moves from the Senate Labor and Commerce Standing Committee.
3:10:35 PM
At ease
SJR 12-CONGRESS REVERSE FCC ON NET NEUTRALITY
3:11:53 PM
CHAIR COSTELLO reconvened the meeting and announced the
consideration of SJR 12.
3:12:06 PM
SENATOR BILL WIELECHOWSKI, Alaska State Legislature, Juneau,
Alaska, sponsor of SJR 12, introduced the legislation speaking
to the following sponsor statement:
In December 2017, the Federal Communication Commission
(FCC) adopted an order to reverse regulations that had
established a federal broadband policy of net
neutrality and to preempt states from imposing
regulations on internet service providers.
Net neutrality protects an individual's ability to
access and transmit information on the internet,
requiring internet service providers (ISPs) to treat
all websites equally, regardless of their content or
business relationships. Without net neutrality ISPs
can lawfully charge customers higher rates to access
certain websites, download music, and watch videos,
and the ISPs would be able to slow down or block
access to sites altogether.
The FCCs decision was extremely unpopular with the
American public and a survey conducted by the
University of Maryland found that 83 percent of
Americans opposed repealing net neutrality.
Furthermore, the FCCs public commenting process was
flawed. Of the more than 22 million comments that were
received, 2 Million were linked to stolen identities
and nearly 500,000 were generated from Russian email
address.
Alaska's isolation from the lower 48 means our
citizens rely heavily on the internet to connect to
one another, keep in touch with family, work, and for
educational purposes. Many Alaskan communities already
struggle to obtain stable, affordable internet access.
Alaskans' First Amendment rights of free speech, free
press, and free association are also at risk without a
net neutral environment enabling the free flow of
thoughts, ideas, and concerns over the internet.
The Congressional Review Act, which grants Congress
authority to nullify any regulatory rules issued by
federal agencies with a simple majority vote, is the
best chance at reversing the FCCs decision on net
neutrality and must be submitted within 60 legislative
days of finalization of the agency's action.
Upon approval, this resolution would urge the United
States Congress to exercise its authority under the
Congressional Review Act to overturn the Federal
Communication Commission's regulatory decision to end
net neutrality protections.
SENATOR WIELECHOWSKI emphasized that this repeal is a grave
threat to free speech. Verizon once blocked text messages from a
prochoice advocacy group deeming them to be too controversial.
Religious groups also oppose the repeal. Pat Roberts' Christian
Coalition website states, "If net neutrality dies, the internet
as we know it today will cease to exist."
He said the arguments for repealing net neutrality don't have
much merit. Some say that ISPs won't slow speeds, but Comcast
cut Netflix speeds drastically until Netflix agreed to pay more.
Some say competition will prevent providers from abusing the
system, but half of all U.S. households have no choice of
access. Alaska is in a similar situation with limited and
expensive options. Some say this will hurt investment, but
capital investment increased after the original net neutrality
regulations passed. Some say there will be transparency with the
Federal Trade Commission overseeing the internet, but all the
FTC will look for is whether the companies say how they are
blocking or slowing or censoring.
SENATOR WIELECHOWSKI said the public comment on the reversal of
net neutrality was flawed. Of the 21 million comments that were
received, up to 2 million were linked to stolen identities,
nearly 500,000 were likely generated from Russian email
addresses, 94 percent were submitted multiple times, 57 percent
came from duplicate or temporary addresses, and 75,000 identical
or similar comments were posted at the same second on nine
occasions.
SENATOR WIELECHOWSKI said the Congressional Review Act grants
Congress the authority to overturn this order with a simple
majority vote. Just one more vote is needed in the U.S. Senate.
3:17:51 PM
CHAIR COSTELLO asked the source of the list of technology
organizations on page 3, lines 6-9, that oppose the end of net
neutrality protections.
SENATOR WIELECHOWSKI deferred to his staff.
3:18:34 PM
NATE GRAHAM, Staff, Senator Bill Wielechowski, Alaska State
Legislature, Juneau, Alaska, said it came from an article in
Business Insider. A copy is in the supporting documents.
SENATOR MICCICHE commented that the case is strong and
convincing without some of the references such as the University
of Maryland poll. The issue is about whether you believe the
internet is a utility and his personal belief is that it is a
utility.
3:20:21 PM
SENATOR STEVENS said it seems that Alaska would be more impacted
than other states.
SENATOR WIELECHOWSKI agreed; his understanding is that a higher
percentage of Alaskans use the internet for work and
entertainment than other states, particularly in rural areas.
It's used for social media, access to news, for work, and
telemedicine.
SENATOR STEVENS commented that telemedicine great future could
be damaged by rolling back net neutrality.
SENATOR GARDNER observed that Alaska is different because there
is just one provider in many areas. She noted that one of her
staff found his name on three comments regarding closing down
net neutrality even though he hadn't submitted any comment. He
agreed with two of the comments and disagreed with one.
CHAIR COSTELLO said it's fitting that the only committee with a
Facebook page should move this legislation along.
3:22:16 PM
SENATOR MEYER moved to report SJR 12 from committee with
individual recommendations and attached fiscal note(s).
3:22:27 PM
CHAIR COSTELLO found no one who wished to comment on SJR 12 and
closed public testimony.
3:22:52 PM
SENATOR MEYER restated the motion to report SJR 12 from
committee with individual recommendations and attached zero
fiscal note(s).
3:23:06 PM
CHAIR COSTELLO announced that without objection, SJR 12 moves
from the Senate Labor and Commerce Standing Committee.
3:23:15 PM
There being no further business to come before the committee,
Chair Costello adjourned the Senate Labor and Commerce Standing
Committee meeting at 3:23 p.m.