Legislature(2017 - 2018)HOUSE FINANCE 519

03/13/2017 01:30 PM FINANCE

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Audio Topic
01:49:57 PM Start
01:50:29 PM SB30
02:28:06 PM HB90 HOUSE BILL NO. 90
03:10:36 PM HB6
03:33:09 PM HB31
03:37:05 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
-- Delayed to 1:45 PM --
+ HB 31 SEXUAL ASSAULT EXAMINATION KITS TELECONFERENCED
Heard & Held
+ HB 90 OCC. LICENSING FEES; INVESTIGATION COSTS TELECONFERENCED
Heard & Held
+ SB 30 APPROVAL: ROYALTY OIL SALE TO PETRO STAR TELECONFERENCED
Heard & Held
+ HB 6 JONESVILLE PUBLIC USE AREA TELECONFERENCED
Heard & Held
+ Bills Previously Heard/Scheduled TELECONFERENCED
HOUSE BILL NO. 90                                                                                                             
                                                                                                                                
     "An Act relating to occupational licensing fees;                                                                           
     relating to an occupational investigation surcharge;                                                                       
     and providing for an effective date."                                                                                      
                                                                                                                                
2:28:06 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  SAM KITO,  SPONSOR,  introduced himself  and                                                                    
the bill.                                                                                                                       
                                                                                                                                
CRYSTAL KOENEMAN, STAFF,  REPRESENTATIVE SAM KITO, explained                                                                    
that  HB  90  eased  the  burden  of  regulatory  costs  for                                                                    
licensees  governed under  Title  8 regarding  corporations,                                                                    
business   and  professional   licensing.  The   legislation                                                                    
would  remove investigative  fees  out  of regulatory  costs                                                                    
paid  by  each  licensee  and   spread  the  total  cost  of                                                                    
investigation  charges across  all  licensees regardless  of                                                                    
profession. The  investigative surcharge was in  lieu of the                                                                    
current amount that licensees paid  in their overall license                                                                    
fee. The  licensee would pay a  licensing and administrative                                                                    
fee   and  in   addition,  pay   a  separate   investigative                                                                    
surcharge.  The   Department  of  Commerce,   Community  and                                                                    
Economic   Development   (DCCED)  estimated   the   separate                                                                    
surcharge at  $55 for  all licensees  every two  years. Some                                                                    
boards would  benefit greatly  and conversely,  others might                                                                    
experience a  slight increase. She  knew that  the licensing                                                                    
issues pertained to  working people that had  an interest in                                                                    
avoiding  large  fee increases  and  a  level playing  field                                                                    
without  barriers to  entering a  profession. She  felt that                                                                    
licensees  wanted  assurances  from   DCCED  that  it  would                                                                    
stabilize  licensing fees.  She elaborated  that one  of the                                                                    
reasons  for  large  fee spikes  was  due  to  investigative                                                                    
costs, which  were difficult to  contain. If  a professional                                                                    
licensing program received a complaint  leading to a complex                                                                    
investigation, an enforcement  action could exceed $100,000.                                                                    
The  scenario  would  cause  devastating  fee  increases  in                                                                    
licensing  programs  with  fewer licensees.  She  summarized                                                                    
that  the  bill   would  spread  investigative  expenditures                                                                    
across all 74,000 licensees.                                                                                                    
                                                                                                                                
2:32:33 PM                                                                                                                    
                                                                                                                                
Representative Wilson appreciated the  effort to resolve the                                                                    
issue,  but  she  wondered  if the  bill  solved  the  issue                                                                    
related to  investigations. She  wondered what  really drove                                                                    
the   high  cost   of  investigations   Representative  Kito                                                                    
identified that  the yearly  total investigative  costs were                                                                    
relatively  consistent at  roughly $4  million. He  recapped                                                                    
that for  smaller boards an investigation  can significantly                                                                    
increase   their   fees.   Some  boards   were   large   and                                                                    
investigative  fees  were  spread  out  across  members.  He                                                                    
commented  that   some  boards   with  fewer   members  that                                                                    
developed a large debt were  at risk of losing their ability                                                                    
to  perform   statutory  board  functions;  one   board  did                                                                    
temporarily shut down. Some of  the boards with higher costs                                                                    
caused  fee increases  to the  point of  being a  barrier to                                                                    
entry  into   the  professions.   He  surmised   that  since                                                                    
investigative  costs were  fairly consistent  and the  state                                                                    
had a  large number  of licensees,  spreading the  costs out                                                                    
was  a small  burden  to  the larger  boards  and eased  the                                                                    
burden  on smaller  boards. He  reported that  one challenge                                                                    
that remained  was how to  ensure the state  was maintaining                                                                    
efficient use  of the fee  revenue while still  carrying out                                                                    
effective  investigations. The  issue was  not addressed  in                                                                    
the  bill.  Currently,  individual boards  identified  which                                                                    
cases to consider and certain  board members decided whether                                                                    
to  pursue further  action. Subsequently,  the investigative                                                                    
result was  communicated to  the boards.  He noted  that the                                                                    
solution in the bill was  similar to an insurance model. The                                                                    
goal was to protect public  safety and have reasonable fees.                                                                    
He learned  that some of the  large boards ran a  surplus in                                                                    
anticipation of  an investigation, so the  fees would remain                                                                    
consistent. However, if the  investigation costs were spread                                                                    
out  over  all boards,  the  larger  boards' fees  may  also                                                                    
decrease. The  larger pool  for investigative  costs created                                                                    
fee  stability that  averaged out  over years  and prevented                                                                    
large  fee spikes.  He  felt that  the  larger boards  could                                                                    
eliminate their practice of maintaining a surplus.                                                                              
                                                                                                                                
2:37:28 PM                                                                                                                    
                                                                                                                                
Representative Wilson  questioned whether each  board should                                                                    
be responsible for its own costs  and felt the issue was the                                                                    
larger policy  call. She wondered whether  another issue was                                                                    
whether the  state decided to pursue  investigations instead                                                                    
of  the  board. She  mentioned  hearing  from the  Board  of                                                                    
Nursing, relaying  that the  board worked  hard to  keep its                                                                    
costs   down.  Representative   Kito   responded  that   the                                                                    
investigative process  would not change. He  offered that an                                                                    
investigation  was  initiated by  the  public  or through  a                                                                    
board member  complaint. The exact  same processes  would be                                                                    
used to implement investigations.  The provision was related                                                                    
to how  costs were attributed  to boards. He used  the Board                                                                    
of Midwifery  as an example.  A single  investigation caused                                                                    
fees  to possibly  skyrocket  to  $4.8 thousand  biennially,                                                                    
which  was  identified   as  a  barrier  to   entry  by  the                                                                    
Legislative  Audit agency.  An audit  recommendation was  to                                                                    
merge  the midwifery  board with  a  larger board.  However,                                                                    
merging boards created members that  lacked expertise in the                                                                    
other profession and engaged  members in professional issues                                                                    
and  functions  they were  not  familiar  with and  possibly                                                                    
involved them  in the decision  on whether  an investigation                                                                    
was warranted for  a profession they did not  belong to. How                                                                    
professions were licensed was a  big question, but he wanted                                                                    
to  ensure the  professions were  protecting public  safety.                                                                    
Representative Wilson agreed the  issue had existed for many                                                                    
years and  appreciated the sponsor's effort.  She was trying                                                                    
to  determine if  the proposed  bill was  the solution.  She                                                                    
asked whether  the boards were  notified of  the legislation                                                                    
and   how   the   provisions  would   impact   each   board.                                                                    
Representative  Kito  responded  that his  office  had  been                                                                    
communicating   with  some   of   the   boards.  Some   were                                                                    
supportive,   and  others   had   expressed  concern   about                                                                    
increasing fees.  He noted that information  was included in                                                                    
the  member's bill  packets regarding  the new  fee schedule                                                                    
["Division  of   Corporations,  Business   and  Professional                                                                    
Licensing  Professional Licensing  Fee  Changes and  Program                                                                    
Investigation  Costs Comparisons"  (as of  January 1,  2017)                                                                    
(copy on file).]                                                                                                                
                                                                                                                                
Representative  Wilson  hoped  to  hear  feedback  from  the                                                                    
boards. She  observed that the  bill was a big  policy shift                                                                    
that affected  the boards. Ms.  Koeneman relayed  that DCCED                                                                    
was engaged in  discussions with the boards  regarding HB 90                                                                    
and boards were meeting and proposing action.                                                                                   
                                                                                                                                
2:43:19 PM                                                                                                                    
                                                                                                                                
Co-Chair  Foster suggested  Representative Wilson  work with                                                                    
Representative Kito's office on the issue.                                                                                      
                                                                                                                                
Co-Chair Seaton  was concerned about  investigations related                                                                    
to  non-licensed individuals,  which resulted  in a  cost to                                                                    
law  abiding licensed  individuals. He  asked how  the issue                                                                    
was handled within the  system. Representative Kito answered                                                                    
that  the  question  pertained to  unlicensed  practice  and                                                                    
whether   the   board   should   have   to   pay   for   the                                                                    
investigations.  He  elaborated  that   if  the  state  made                                                                    
unlicensed  practice a  crime, the  Department of  Law would                                                                    
investigate,  but  it  was likely  the  DCCED  investigators                                                                    
would still be  drawn in because of their  expertise. He had                                                                    
not  collected  information  identifying  how  many  of  the                                                                    
complaints  were a  result of  unlicensed practice  or other                                                                    
activities  related  to a  licensed  practice.  He hoped  to                                                                    
pursue unlicensed  practice as  a separate issue  next year.                                                                    
Co-Chair  Seaton voiced  that  one board  the committee  had                                                                    
heard from  had high fees  due to investigations  related to                                                                    
unlicensed  individuals. He  suggested that  the legislature                                                                    
consider  a  remedy that  included  cost  recovery from  the                                                                    
unlicensed individuals. He thought  the scenario could lower                                                                    
licensing fees.  Representative Kito answered he  would keep                                                                    
the issue at the forefront of their work.                                                                                       
                                                                                                                                
Vice-Chair Gara  asked whether  the cost  impact of  the one                                                                    
fee  proposal  on  all  the   boards  was  accessed  by  the                                                                    
department.   Representative   Kito    answered   that   the                                                                    
information  was  included  in members'  packets.  [Document                                                                    
cited earlier.]                                                                                                                 
                                                                                                                                
Ms.  Koeneman added  that DCCED  performed the  analysis and                                                                    
the fee was  $55 every two years. Vice-Chair  Gara asked for                                                                    
the number  of boards.  Ms. Koeneman  replied there  were 43                                                                    
boards.  Vice-Chair Gara  did not  believe that  the sponsor                                                                    
should  perform an  analysis on  every  board. Ms.  Koeneman                                                                    
answered that  if board  action was  required to  proceed, a                                                                    
board  meeting was  necessary,  which  could add  additional                                                                    
costs  for the  boards. Vice-Chair  Gara spoke  to a  recent                                                                    
committee  hearing on  a midwifery  bill. He  referred to  a                                                                    
conversation  regarding penalties  for violations.  He asked                                                                    
whether there  was a uniform  penalty structure  for boards.                                                                    
Ms.  Koeneman   replied  that  AS  08.01.075   outlined  the                                                                    
disciplinary powers  of a board  and subsection  8 specified                                                                    
that the fine  not exceed $5,000. In  addition, AS 08.01.102                                                                    
authorized that DCCED could issue  a citation for unlicensed                                                                    
practice or  activity but did  not specify a  dollar amount.                                                                    
Vice-Chair  Gara asked  whether the  penalty structure  also                                                                    
included cost recovery for the  state.  Ms. Koeneman replied                                                                    
in the negative.                                                                                                                
                                                                                                                                
2:50:03 PM                                                                                                                    
                                                                                                                                
Representative  Kito interjected  that  one issue  involving                                                                    
cost recovery  for investigations was that  penalty proceeds                                                                    
were  deposited  into  the  general   fund  (GF),  which  he                                                                    
preferred. He  worried that collecting penalties  to support                                                                    
the   licensing   program   opened  the   possibility   that                                                                    
investigations could be used to  fund the licensing program.                                                                    
He favored  using the licensing  fees to fund  the programs.                                                                    
Vice-Chair Gara clarified that he  had only inquired whether                                                                    
the  costs were  recovered in  general. Representative  Kito                                                                    
replied that he would examine the issue over the interim.                                                                       
                                                                                                                                
Ms. Koeneman added  that DOL raised concerns  with the issue                                                                    
of raising penalties to cover the full investigative costs.                                                                     
Representative Guttenberg spoke  to investigations of people                                                                    
practicing without  a license and  how it impacted  the cost                                                                    
to a  specific board. He  suggested parity for a  board when                                                                    
the  investigative cost  were recovered  and deposited  into                                                                    
GF. He  asked whether  the sponsor  considered some  type of                                                                    
cost recovery allocation from GF  to a board. He stated that                                                                    
the  system was  broken and  believed the  bill contained  a                                                                    
decent solution.                                                                                                                
                                                                                                                                
2:54:01 PM                                                                                                                    
                                                                                                                                
Ms. Koeneman replied that if  there was a mechanism in place                                                                    
for the  fines to reimburse  the board, more than  likely it                                                                    
would  come through  the operating  budget  process and  the                                                                    
legislature could  possibly allocate some funds  back to the                                                                    
boards.                                                                                                                         
Representative Thompson  relayed hearing  about incompetence                                                                    
by state  board investigators  that resulted in  longer than                                                                    
necessary   investigations  which   added  costs   onto  the                                                                    
profession.  He  favored a  cost  recovery  process for  the                                                                    
boards. He  believed HB 90  was a good solution.  He worried                                                                    
about boards  currently with  large defaults  that increased                                                                    
its  fees. He  asked whether  the  one fee  system would  be                                                                    
charged in  concert with  fees related  to a  large deficit.                                                                    
Ms. Koeneman answered in the  affirmative and added that the                                                                    
boards  with deficits  were required  to pay  their deficits                                                                    
before participating in  the bill. She agreed  it would hurt                                                                    
to  pay off  the  deficits,  but it  would  be  in the  best                                                                    
interest  in the  long-term. She  reported that  the Medical                                                                    
Board accrued investigative costs  of $632 thousand over the                                                                    
biennium.   The  Nursing   Board   had   $909  thousand   in                                                                    
investigative  costs for  FY  14  and FY  15.  The Big  Game                                                                    
Commercial  Service  Board  accrued investigative  costs  of                                                                    
$559 thousand. She  surmised that in the long  run the costs                                                                    
would  level   off  and  create  a   more  predictable  cost                                                                    
structure for all boards.                                                                                                       
                                                                                                                                
2:58:18 PM                                                                                                                    
                                                                                                                                
Representative  Pruitt  spoke  to a  handout  ["Division  of                                                                    
Corporations,    Business   and    Professional   Licensing,                                                                    
Professional    Licensing    Fee   Changes    and    Program                                                                    
Investigation  Costs  Comparisons  as of  January  1,  2017"                                                                    
(copy on file)].  He remarked on the  large income disparity                                                                    
among the different professions.  He identified the Board of                                                                    
Barbers  and  Hairdressers  and  cited  the  professions  as                                                                    
examples  of  lower  income occupations.  He  asked  how  to                                                                    
justify increasing fees for some  boards and penalizing them                                                                    
for  mistakes and  incompetence by  the state  when managing                                                                    
boards'  fees. He  agreed  that a  solution  was needed  but                                                                    
disagreed with the provisions in  HB 90. Representative Kito                                                                    
answered  that at  first glance  the solution  seemed unfair                                                                    
due  to  the  income  inequities. However,  he  likened  the                                                                    
solution  to   an  insurance  policy  and   pointed  to  how                                                                    
automobile insurance works as an  example of the benefits of                                                                    
HB  90.   He  offered   that  the   Board  of   Barbers  and                                                                    
Hairdressers may not receive a  benefit in the current year,                                                                    
but perhaps  there would be  an investigation in  the future                                                                    
that  would  have  significantly increased  their  fees.  He                                                                    
communicated  that rather  than  every board  paying for  30                                                                    
percent  to   over  50  percent  of   their  investigations,                                                                    
everyone  paid  a  smaller percentage  and  all  boards  had                                                                    
access to the investigative services.                                                                                           
Ms. Koeneman  added that  in FY  12 and FY  13 the  Board of                                                                    
Barbers  and Hairdressers  had only  paid  $59 thousand  for                                                                    
investigations but  the amount rose  to $131 thousand  in FY                                                                    
14 and FY 15. The  board's surplus was diminishing; one more                                                                    
large investigation  would likely  increase their  fees. She                                                                    
expected that the bill would level off fees.                                                                                    
                                                                                                                                
Representative Pruitt  countered that  if the  provision was                                                                    
likened  to  insurance, a  person  paid  less if  they  were                                                                    
accident free.  He surmised that  there should  be different                                                                    
levels  of payment  versus one  fee, for  boards with  lower                                                                    
costs; lower  cost boards  should pay  less. He  stated that                                                                    
currently there  was pressure on  the legislature  and DCCED                                                                    
for  prudent  use of  investigations  to  contain costs.  He                                                                    
opined  that   the  pressure  was  necessary   to  keep  the                                                                    
investigatory  process in  check. He  wondered how  the bill                                                                    
ensured the efficient use of investigations.                                                                                    
                                                                                                                                
3:06:01 PM                                                                                                                    
                                                                                                                                
Ms. Koeneman  answered that there  would be  74,000 licensed                                                                    
individuals  to collectively  weigh in  on the  department's                                                                    
regulatory process  and the amount  of the  surcharge, which                                                                    
would maintain pressure on the department.                                                                                      
                                                                                                                                
Representative  Kito interjected  that one  of his  concerns                                                                    
was  a  board  that  made  decisions  regarding  whether  to                                                                    
proceed with  an investigation based on  fees increasing. He                                                                    
believed  the  scenario  was  an  example  of  inappropriate                                                                    
pressure;  if  the  state  did   not  investigate  a  person                                                                    
practicing  inappropriately   the  state  was   failing  its                                                                    
mission. He  related that investigators were  overworked and                                                                    
responded  to  public or  licensee  complaints.  He had  not                                                                    
heard  of   investigators  "trying  to  drum   up  work  for                                                                    
investigations."  He   reiterated  that   the  investigatory                                                                    
process  would remain  the  same. He  did  not believe  that                                                                    
currently  boards  made  investigatory  decisions  based  on                                                                    
possible fee increases.                                                                                                         
                                                                                                                                
Co-Chair Seaton OPENED public testimony.                                                                                        
                                                                                                                                
SUSAN  TERWILLIGER,   PRESIDENT,  MIDWIVES   ASSOCIATION  OF                                                                    
ALASKA,  ANCHORAGE  (via  teleconference), spoke  in  strong                                                                    
support of  the legislation.  She voiced  that the  bill was                                                                    
beneficial for  the consumers of midwifery  care. She shared                                                                    
that  midwifes   attended  the  births  of   people  in  all                                                                    
different occupations. She hoped the bill would pass.                                                                           
Co-Chair Seaton CLOSED public testimony.                                                                                        
                                                                                                                                
HB  90  was   HEARD  and  HELD  in   committee  for  further                                                                    
consideration.                                                                                                                  
                                                                                                                                

Document Name Date/Time Subjects
HB 31 Support Documents PKT.pdf HFIN 3/13/2017 1:30:00 PM
HB 31
HB31 - CSHB 31 Workdraft version J.pdf HFIN 3/13/2017 1:30:00 PM
HB 31
HB31 Additional Document ADN Crimes & Reports 2.13.17.PDF HFIN 3/13/2017 1:30:00 PM
HB 31
HB31 Additional Document Tracking Kit Software 2.13.17.PDF HFIN 3/13/2017 1:30:00 PM
HB 31
HB 006 MSB Assembly Jim Sykes Draft Resolution.pdf HFIN 3/13/2017 1:30:00 PM
HB 6
HB 006 Supporing Document MSB Support Resolution.pdf HFIN 3/13/2017 1:30:00 PM
HB 6
HB 6 sponsor statement.pdf HFIN 3/13/2017 1:30:00 PM
HB 6
HB006 Supporting Document-ADN Article.pdf HFIN 3/13/2017 1:30:00 PM
HB 6
HB006 Supporting Document-DNR Petition.pdf HFIN 3/13/2017 1:30:00 PM
HB 6
HB006 Supporting Document-Frontiersman Editorial.pdf HFIN 3/13/2017 1:30:00 PM
HB 6
HB006 Supporting Document-Jonesville Action Plan.pdf HFIN 3/13/2017 1:30:00 PM
HB 6
HB006 Supporting Document-KTUU Article.pdf HFIN 3/13/2017 1:30:00 PM
HB 6
HB006 Supporting Document-Lynne Woods letter.pdf HFIN 3/13/2017 1:30:00 PM
HB 6
HB006 Supporting Document-Map of Area.pdf HFIN 3/13/2017 1:30:00 PM
HB 6
HB006 Supporting Document-MSB Letter.pdf HFIN 3/13/2017 1:30:00 PM
HB 6
HB006 Supporting Document-Sutton Resolution.pdf HFIN 3/13/2017 1:30:00 PM
HB 6
SB 30 Best Interest Finding.pdf HFIN 3/13/2017 1:30:00 PM
SB 30
SB 30 PSI Letter of Support for RIK Bill.pdf HFIN 3/13/2017 1:30:00 PM
SB 30
SB 30 Report from Royalty Board.pdf HFIN 3/13/2017 1:30:00 PM
SB 30
SB 30 Royalty Board Resolution.PDF HFIN 3/13/2017 1:30:00 PM
SB 30
SB 30 Transmittal Letter.pdf HFIN 3/13/2017 1:30:00 PM
SB 30
SB30 PPT to HFIN - 03.13.2017.pdf HFIN 3/13/2017 1:30:00 PM
SB 30
HB090 Sectional Analysis 020817.pdf HFIN 3/13/2017 1:30:00 PM
HB 90
HB090 Sponsor Statement 020817.pdf HFIN 3/13/2017 1:30:00 PM
HB 90
HB090 Supporting Document - Board License Action Options 020817.pdf HFIN 3/13/2017 1:30:00 PM
HB 90
HB090 Supporting Document - CBPL Investigative Process 020817.pdf HFIN 3/13/2017 1:30:00 PM
HB 90
HB090 Supporting Document - CBPL Program Fees and Investigation Cost Comparison 022817.pdf HFIN 3/13/2017 1:30:00 PM
HB 90
HB090 Supporting Document - Licensing Statistics 020817.pdf HFIN 3/13/2017 1:30:00 PM
HB 90
HB090 Supporting Document - Summary of All Professional Licensing 020817.pdf HFIN 3/13/2017 1:30:00 PM
HB 90
HB090 Supporting Documents - Letters of Opposition 022817.pdf HFIN 3/13/2017 1:30:00 PM
HB 90
HB090 Supporting Documents - Letters of Support 022817.pdf HFIN 3/13/2017 1:30:00 PM
HB 90
HB31 Sponsor Statement.pdf HFIN 3/13/2017 1:30:00 PM
HB 31
HB31- Explaination of Changes.pdf HFIN 3/13/2017 1:30:00 PM
HB 31
HB 6 Explanation of Changes.pdf HFIN 3/13/2017 1:30:00 PM
HB 6
HB90 Opposition Document - Letter 3.14.17.pdf HFIN 3/13/2017 1:30:00 PM
HB 90
HB 6 - Administration Letter of Support-signed.pdf HFIN 3/13/2017 1:30:00 PM
HB 6