ARIZONA HOUSE OF REPRESENTATIVES
Forty-ninth Legislature – First Regular Session
Minutes of Meeting
House Hearing Room 4 -- 2:00 p.m.
Chairman Crump called the meeting to order at 2:07 p.m. and attendance was noted by the secretary.
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Mr. Antenori |
Mr. Driggs |
Mrs. Tovar |
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Mr. Campbell CH |
Mr. Gowan |
Mr. Montenegro, Vice-Chairman |
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Mr. Chabin |
Mr. Nichols |
Mr. Crump, Chairman |
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None |
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HB2049 – DPA – S/E (9-0-0-0) |
HB2378 – DPA (9-0-0-0) |
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HB2101 – DPA – S/E (5-3-0-1) |
HB2426 – DP (9-0-0-0) |
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HB2103 – DP (6-3-0-0) |
HB2430 – DP (8-0-0-1) |
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HB2201 – DPA (9-0-0-0) |
HB2458 – DP (8-0-0-1) |
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HB2253 – DPA – S/E ON RECON. (9-0-0-0) |
HB2509 – |
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HB2270 – DP (8-1-0-0) |
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CONSIDERATION OF BILLS
HB2270 – state capitol restoration recapture district – DO PASS
Vice-Chairman Montenegro moved that HB2270 do pass.
Chairman Crump said this is a creative proposal to develop a source of funding for capitol restoration and additional projects by allowing special districts to be formed at various locations throughout the state. A portion of the tax revenue will remain with the municipality and a portion will go into a fund for capitol restoration. This bill was heard last week.
Kitty Decker, Majority Research Analyst/Senior Economist, pointed out that once the baseline is established, which happens when the district is created, part of the revenues will go to the district and part to the State Capitol Restoration Fund, but the state will also retain a share. The bill establishes the State Capitol and Economic Recapture Oversight Commission (SCEROC) to oversee the districts. The purposes of the districts would be for tourism, sporting, cultural, civic meeting, trade show or convention events or activities or public facilities, and any related parking garages and lots, transportation, infrastructure, utilities, wastewater, public parks and plazas. Districts can be formed between October 1, 2009 and June 30, 2016, and all districts would terminate by June 30, 2050 (Attachment 1).
Barry Aarons, Lobbyist, Arizona Tourism Alliance, in favor of the bill, noted that the Capitol Mall design was delivered to the Members’ offices last week and offered to answer questions.
Vice-Chairman Montenegro announced the names of those who signed up in opposition to HB2270 but did not speak:
Bryan Ginter, representing self
Kevin McCarthy, President, Arizona Tax Research Association
Vice-Chairman Montenegro announced the names of those who signed up in support of HB2270 but did not speak:
Steve Gervais, Senior Government Affairs Representative, Pinnacle West/Phoenix Community Alliance
Jeffrey Kros, Legislative Director, League of Cities & Towns
Mark Young, Sr. Management Assistant - Intergovernmental Liaison, Town of Queen Creek
Farrell Quinlan, Arizona Contractors Association
Vice-Chairman Montenegro announced the names of those who signed up as neutral on HB2270 but did not speak:
Dean Martin, Arizona State Treasurer
Sean Laux, Legislative Liaison, Department of Revenue
Question was called on the motion that HB2270 do pass. The motion carried by a roll call vote of 8-1-0-0 (Attachment 2).
HB2201 – chiropractic board; fees – DO PASS AMENDED
Vice-Chairman Montenegro moved that HB2201 do pass.
Vice-Chairman Montenegro moved that the Antenori nine-line amendment to HB2201 dated 2/20/09 (Attachment 3) be adopted.
Chairman Crump stated that without objection, he will allow the Antenori nine-line amendment to HB2201 to be considered.
Zach Tretton, Majority Assistant Research Analyst, explained that HB2201 allows the Arizona Board of Chiropractic Examiners to set fees by rule (Attachment 4). The amendment (Attachment 3) requires the Board to create a rule to limit, by percentage, the amount a fee may be increased above the amount of a fee previously prescribed by the Board.
Representative Nancy McLain, Sponsor, stated that this is a 90-10 board that obtains money to operate from the people it regulates. The fees are set in statute so a bill has to be passed to allow a fee increase, which is cumbersome. Due to fund sweeps, the Board will be out of money before the end of the year if the fees cannot be increased through the rulemaking process instead of statute, which is the reason for the emergency clause. She said the amendment is an attempt to placate people who believe that providing this authority in rulemaking will dramatically increase fees, so it allows the Board to set a percentage increase.
Mr. Nichols noted that the Board’s sunset review will occur in 2011 and asked if it would be feasible at that time to review whether or not the ability to raise fees through rulemaking should continue. Representative McLain surmised that the Board would be reluctant to go through this process and then return to the way it is now in a few years. She said several other 90-10 boards would like to do the same. She added that the Board has been judicious in fee increases, and even if the fees were raised to an exorbitant amount, the money could not be spent.
Kristin Greene, Associate Director, Arizona Board of Chiropractic Examiners, in favor of HB2201, pointed out that the bill does not ask to do anything different than the Board has done in the past with fees, except to preclude the first step, which is to set a cap in statute. Once that cap is set in statute, the Board still has to go through the rulemaking process to set the actual fee, which is a somewhat lengthy process in which the Board must prove that the need outweighs the cost. Also, the Board can only spend what it needs, so there is no incentive to raise fees.
Mr. Nichols said he is concerned about allowing this to be done in the rulemaking process and the fact that other agencies want to do this as well.
Barry Aarons, Lobbyist, Arizona Association of Chiropractic, neutral on HB2201, stated that it is important to have an effective and efficient Chiropractic Board of Examiners, but there is a cash flow problem, exacerbated by the sweeps, in relation to the timing of when licenses are renewed, etc., and he does not object to allowing the Board to increase fees to overcome that problem; however, he is deeply concerned with an unfettered ability to raise fees, despite efforts to place a limitation that is not enforceable because it is open-ended. The Board has been judicious because there is a cap in statute, and this bill creates no cap. He said he recommended resetting the cap, which raised concern about Proposition 108 even though the emergency clause also requires a two-thirds majority vote, or a sunset review of the entire fee structure. He added that he opposes the bill until there is something in law to give practitioners comfort that they will not inadvertently be used for the application of an occupation tax by an unlimited ability to set fees.
Representative McLain stated that she feared the amendment requested by Mr. Aarons would trigger Proposition 108 and legislators who signed a no new taxes pledge would not support the bill. She was informed that even imposing a time period would trigger Proposition 108.
Vice-Chairman Montenegro announced the names of those who signed up in opposition to HB2201 but did not speak:
Bryan Ginter, representing self
Vice-Chairman Montenegro announced the names of those who signed up in support of HB2201 but did not speak:
Pat Pritzl, Director, Board of Chiropractic Examiners
Question was called on the motion that the Antenori nine-line amendment to HB2201 dated 2/20/09 (Attachment 3) be adopted. The motion carried.
Vice-Chairman Montenegro moved that HB2201 as amended do pass. The motion carried by a roll call vote of 9-0-0-0 (Attachment 5).
HB2378 – construction contracting; cities; rates – DO PASS AMENDED
Vice-Chairman Montenegro moved that HB2378 do pass.
Vice-Chairman Montenegro moved that the Crump two-line amendment to HB2378 dated 2/23/09 (Attachment 6) be adopted.
Laurel Johnson,
Majority Intern, explained that HB2378 prohibits cities and towns from
imposing a tax rate increase on construction contracting if the increases are
higher than the majority of other city and town imposed tax rates (Attachment
7). The amendment
(Attachment 6) strikes the definition of construction contracting in the
bill.
Spencer Kamps, Deputy Director, Home Builders Association of Central Arizona, spoke in favor of HB2378. He said the business community is looking for certainty on when the construction sales tax is raised in a city or town. The typical implementation time is about 60 days, but this bill extends the time to 120 days. The amendment is due to the hearing in the Ways and Means Committee where Legislative Council attempted to define construction sales tax, which caused some confusion, but it is defined in the Model City Tax Code.
Vice-Chairman Montenegro announced the names of those who signed up in opposition to HB2378 but did not speak:
Bryan Ginter, representing self
Vice-Chairman Montenegro announced the names of those who signed up in support of HB2378 but did not speak:
Farrell Quinlan, Arizona Contractors Association
Vice-Chairman Montenegro announced the names of those who signed up as neutral on HB2378 but did not speak:
Jeffrey Kros, Legislative Director, League of Cities & Towns
Question was called on the motion that the Crump two-line amendment to HB2378 dated 2/23/09 (Attachment 6) be adopted. The motion carried.
Vice-Chairman Montenegro moved that HB2378 as amended do pass. The motion carried by a roll call vote of 9-0-0-0 (Attachment 8).
HB2426 – enhanced driver licenses; prohibition – DO PASS
Vice-Chairman Montenegro moved that HB2426 do pass.
Laurel Johnson, Majority Intern, explained that HB2426 prohibits Arizona from participating in the implementation of an Enhanced Driver License (EDL) program to comply with the Western Hemisphere Travel Initiative (WHTI) or the REAL ID Act of 2005 (Attachment 9).
Rene Guillen, Majority Research Analyst, Water & Energy Committee, related that the EDL program is part of the WHTI, which is for international travel, and separate from the REAL ID, which applies to boarding commercial aircraft, accessing federal facilities or entering nuclear power plants. He acknowledged that if Arizona opts out of both programs, a passport would be needed for air travel.
Representative Judy Burges, Sponsor, conveyed that one of the reasons she sponsored this bill other than the cost, which will be about $200 million, is the way the REAL ID Act was passed in 2005. It was sponsored by U.S. Representative James Sensenbrenner, heard in Committee, and then the bill died; however, a deal was made with leadership to attach it to an Iraqi War humanitarian relief bill, which people voted for so their voting record did not reflect a vote against humanitarian relief in war, and therefore, according to the American Civil Liberties Union, the bill did not pass the democratic process. She noted that about 27 states have house concurrent resolutions or have opted out of the program, which she believes sends the federal government the message that unfunded mandates placed upon the states are not appreciated.
Mr. Campbell said he is concerned about cost and convenience for citizens if Arizona does not comply with these options because many people do not have passports, which would be needed for domestic travel on an airline, and passports cost more than the typical driver license. He asked if there have been discussions with the federal government on how to allow for more ease of travel domestically without meeting these requirements. Representative Burges responded that the federal government is backing off on pushing this issue, but if it happens, this can always be repealed if there is money to pay for the system. She does not believe personal information would be protected with the way the system would be set up within the Motor Vehicle Division.
Vice-Chairman Montenegro announced the names of those who signed up in support of HB2426 but did not speak:
Bryan Ginter, representing self
Seth Apfel, Volunteer, representing self
Dave Kopp, President, Arizona Citizens Defense League, Incorporated
Fred Streeter, representing self
Rauni Marsh, representing self
Alessandra Meetze, Executive Director, American Civil Liberties Union of Arizona
John Wentling, Vice President, Arizona Citizens Defense League, Incorporated
Question was called on the motion that HB2426 do pass. The motion carried by a roll call vote of 9-0-0-0 (Attachment 10).
HB2430 – homeowners’ associations; registration; disclosure – DO PASS
Vice-Chairman Montenegro moved that HB2430 do pass.
Rene Guillen, Majority Research Analyst, Water & Energy Committee, explained that HB2430 requires homeowners’ associations (HOA) to register with the Secretary of State (SOS) and disclose specified information (Attachment 11).
Mr. Campbell, Sponsor, said there seems to be information on HOAs, but it is scattered all over the state, so this is an effort to organize the information in one place, make the information easily available to the public and create more transparency for the public on finance information. In response to a question, he said he cannot speak for HOAs but he does not believe this will cause HOAs to raise fees. The information is already provided to a different entity, so he does not believe it will create an immense cost that is not already incurred for current activities.
Ken Bennett, representing self, neutral on HB2430, offered to provide the central location for the information, noting that the intent is not clear, and it would need to be clarified that the information is available on the Secretary of State’s website instead of the individual counties. He said if a database that is searchable is intended, the Chief Information Officer estimates that there will be a one-time expense for set up, and a partial full-time equivalent (FTE) may be needed to maintain the website ongoing, which could be discussed. Additionally, there are no enforcement provisions or language relating to minor items such as the forms to be used, which he would be glad to meet about.
Mr. Campbell stated that the bill was introduced last year, but did not pass. Those issues were brought up and the conclusion was reached that the financial impact would be very minimal. He would be glad to meet and discuss the issues.
Vice-Chairman Montenegro announced the names of those who signed up in support of HB2430 but did not speak:
Mary Arnold, representing self
Bryan Ginter, representing self
Roland Kelly, representing self
Jacqueline Kelly, representing self
Pat Haruff, Coalition of HomeOwners for Rights and Education
Anne Stewart, Spokesperson, The Sun City Formula Registry; self
N. Kasper, representing self
Question was called on the motion that HB2430 do pass. The motion carried by a roll call vote of 8-0-0-1 (Attachment 12).
HB2103 – state treasurer; independent legal counsel – DO PASS
Vice-Chairman Montenegro moved that HB2103 do pass.
Zach Tretton, Majority Assistant Research Analyst, explained that HB2103 adds the State Treasurer’s Office to a list of agencies exempted from employing the State Attorney General’s Office (AG) as legal counsel (Attachment 13).
Dean Martin, Arizona State Treasurer, in favor of HB2103, noted that no changes were made since the last time the bill was heard. He said this bill will save the General Fund a few million dollars, if not more. In response to questions, he stated that the Treasurer’s Office is currently required to use the AGs Office, which charges 35 percent for the recovery of any debts, in addition to any outside costs. The Treasurer’s Office is the only state agency that deals with securities that has to use the AGs Office, and he would like to be able to put someone on retainer who is an expert in securities law so questions can be answered quickly and easily. The bill only eliminates the exclusivity arrangement with the AG’s Office. He said the AG’s Office will still provide opinions and interpret the law. The assigned AG has a background in administrative law, but not securities law, so it takes longer to obtain answers.
Mr. Campbell asked why this bill provides a blanket exemption when the intention is to obtain legal advisors for a very specific purpose. Mr. Martin responded that under current statute, it is not possible to go out to bid and hire someone else so the bill eliminates the exclusivity agreement, and Section 35-318 provides an equitable way to pay for it, spreading the cost across customers who benefit rather than the General Fund picking up the tab. The bid process will be used and he expects that the AG will try to participate, so the bill does not eliminate the AG, but eliminates the exclusivity agreement.
Greg Stanton, Deputy Attorney General, Legislative Affairs, Arizona Attorney General’s Office, opposed HB2103. He said regarding whether or not the Treasurer could obtain less expensive help from hiring private outside counsel on bankruptcy or collection matters, the Legislature created the Collection Enforcement Revolving Fund (CERF) within the AG’s Office, which is self-sustaining, so it is not necessary to ask the Legislature for an appropriation each year, to pay for collection and bankruptcy lawyers to aggressively go after people who lost the public’s money through poor management, etc. If cases are allowed to be cherry picked away from that system, there will ultimately not be a revolving fund.
He stated that if the State Treasurer asks for specialized legal service that cannot be provided by the AG’s Office, the AG’s Office will hire someone from outside. There are 82 cases in which outside counsel was hired on behalf of state agencies. Another remedy is for the State Treasurer to enter into an Interagency Service Agreement (ISA) to have attorneys with specialized legal service on staff at their beck and call, which would be more expensive than regular attorneys at the AG’s Office, but cheaper than outside law firms. He added that the AG is the Department of Law for the state, and it is good public policy to have a singular outlet of giving advice on state statute and rules. He reviewed the current exemptions in statute and related that 35 percent of successful collections go to the CERF and 65 percent go elsewhere.
Mr. Campbell asked if conflict of interest is a concern when private counsel is used. Mr. Stanton responded that conflict of interest can be regulated at the AG’s Office as requests are made; however, agencies independent of the AG’s Office have to make their own determination of conflict of interest. Positional conflict, however, is a concern, for example, if counsel for the State Treasurer’s Office asserts a legal position relative to a state statute or rule in a court of law and the Governor’s Office with separate counsel, and it may be on a separate case, asserts a different interpretation of the same. As more and more agencies are independent of the Attorney General’s Office, there are opportunities for those types of conflicts of interest.
Mr. Martin advised that the CERF statute was set up as a collections agency for the state. If a state agency receives a bad check or someone does not follow through on a contract agreement, the agency turns the collection over to the AG’s Office. If the amount is small, 35 percent is appropriate, but not in dealing with very large amounts. Regarding conflict of interest, he said the AG is the only one who makes that determination. In fact, his predecessor, David Petersen, is currently under criminal investigation regarding a payment that was made under the CERF statute in June 2006, but the Attorney General denied a request for independent counsel with no explanation. As to Mr. Stanton’s example of differing opinions by the Treasurer and Governor, he said he was represented by the AG a few weeks ago in the League of Cities case regarding the budget. The Governor’s Office had another interpretation, but everything worked out fine because the court made the final determination in the Treasurer’s Office’s favor.
Mr. Campbell remarked that perhaps there is a need to look at overall reform, but he does not like this piecemeal approach to solving a problem, if there is a problem at all.
Chairman Crump indicated that he does not understand why some agencies are exempt and others are not.
Mr. Martin stated that apart from this bill, he would love to work with Mr. Campbell on the conflict of interest portion and requesting outside counsel so not only the AG makes those decisions. He is aware of other agency directors with the same problem who are not willing to take on the AG’s Office.
Mr. Chabin submitted that the staff he has encountered at the AG’s Office are true professionals who can render professional opinions on conflict of interest. Mr. Martin agreed, but commented that the problem is getting access to the AGs. On two occasions, he was told the request was put in the process, but he never heard back again.
Vice-Chairman Montenegro announced the names of those who signed up in opposition to HB2103 but did not speak:
Bryan Ginter, representing self
Question was called on the motion that HB2103 do pass. The motion carried by a roll call vote of 6-3-0-0 (Attachment 14).
HB2458 - dogs; cats; release from pound – DO PASS
Vice-Chairman Montenegro moved that HB2458 do pass.
Laurel Johnson, Majority Intern, explained that HB2458 prescribes conditions that must be met before a dog or cat held at a pound or animal shelter, or a dog or cat impounded for biting, can be released to its owner (Attachment 15).
Mr. Court, Sponsor, said this was brought to him by people from Animal Control who are concerned about controlling animals that bite and those that are picked up and impounded.
Dr. Rodrigo Silva, Director, Maricopa County Animal Care and Control, spoke in favor of HB2458. He said this bill provides relief to the needless euthanasia of pets in Arizona. About 150,000 animals are received in nonprofit and government shelters in Arizona each year, and more than half of those are killed every year. This bill will allow government entities and nonprofit organizations to sterilize those animals before being returned to the owner and animals that have bitten someone and are quarantined in the shelters. Sterilization reduces and sometimes eliminates aggression in animals. He said this bill is very important to public and animal health.
Chairman Crump noted that Seth Apfel made a comment on the kiosk that he is opposed to the bill unless it is amended because there is no provision to protect the owner of a dog that is defending the owner against attack. Dr. Silva noted that in order for a dog to be properly licensed, the dog has to be properly vaccinated against rabies, so both would be required to avoid the sterilization. If an animal is vaccinated, but not licensed, the animal could be sterilized. He added that it is common practice when a dog bites someone in defense in the owner’s home or yard (which would include while walking) and the dog is vaccinated against rabies, the dog is usually quarantined at home, not at a veterinarian’s office or pound, to determine if the dog is rabid. He clarified that the bill does not require the animal to have tags, but to be licensed. If a dog bites someone in defense but not on the owner’s property and the animal is on a leash, the dog would be quarantined at home.
Jack Lasota, Maricopa County, spoke in favor of HB2458. He stated that this would only come into play if the animal is not vaccinated because there is no need for quarantine when an animal that is vaccinated for rabies bites someone. If an animal is running loose and impounded, current statute that governs adoption of animals already provides for sterilization; this bill states that if a dog bites someone in a friendly situation or self defense, if the dog is not vaccinated and the owner cannot prove that the dog is vaccinated, licensing is an easy way to determine vaccination. If an animal is unlicensed, unvaccinated and bites someone, and the owner does not pay to have the dog released or there are special circumstances where veterinary neutering of the animal is not possible, it is a good idea to sterilize the dog and prevent it from adding to the dog population in the county.
In response to questions, Dr. Silva related that the owner is usually given the opportunity to show proof of rabies shots, and agencies throughout the state will go to the extent of calling the veterinarian to obtain the records. By law, all veterinarians are required to send rabies vaccination records to the enforcement agent. There are exceptions in Subsections B(6) and F(5), which state that even if the dog is unlicensed, the owner can pay the $250 fee to get out of the requirement to sterilize the pet in the event the license lapsed, etc.
Vice-Chairman Montenegro announced the names of those who signed up in opposition to HB2458 but did not speak:
Bryan Ginter, representing self
Seth Apfel, Volunteer, representing self
Vice-Chairman Montenegro announced the names of those who signed up in support of HB2458 but did not speak:
Kari Nienstedt, Arizona State Director, The Humane Society of the United States
Stephanie Nichols-Young, Animal Defense League of Arizona
Kathleen Mayer, Deputy Pima County Attorney, representing self
Yvonne Anderson, Lobbyist, Arizona Humane Society
Elizabeth Hegedus-Berthold, Research Analyst, County Supervisors Association of Arizona
Question was called on the motion that HB2458 do pass. The motion carried by a roll call vote of 8-0-0-1 (Attachment 16).
HB2253 – publication of notices; websites – DO PASS AMENDED – S/E (ON RECONSIDERATION)
Vice-Chairman Montenegro moved that HB2253 do pass.
Vice-Chairman Montenegro moved that the Crump two-page strike-everything amendment to HB2253 dated 2/20/09 (Attachment 17) be adopted.
Zach Tretton, Majority Assistant Research Analyst, explained that the strike-everything amendment to HB2253 (Attachment 17) establishes the Committee on Published Public Legal Notices for the purpose of examining existing statutes requiring newspaper publication of legal or public notices applicable to cities, towns and counties (Attachment 18).
Representative Russ Jones,
Sponsor, stated that he considered the comments made by
Mr. Chabin, the Chairman and Ms. Tovar when the bill was previously heard. He
held meetings with stakeholders where a consensus was reached that the
ramifications and implications of this type of change should be studied more
thoroughly, so the strike-everything amendment establishes a Study Committee
for that purpose.
Jeffrey Kros, Legislative Director, League of Cities & Towns, in favor of the strike-everything amendment to HB2253, stated that this is very complex and thanked Ms. Hindman for helping with the language.
Question was called on the motion that the Crump two-page strike-everything amendment to HB2253 dated 2/20/09 (Attachment 17) be adopted. The motion carried.
Vice-Chairman Montenegro moved that HB2253 as amended do pass.
Vice-Chairman Montenegro announced the names of those who signed up in support of HB2253 but did not speak:
Richard Bohan, Legislative Liaison, Maricopa County Board of Supervisors
Amber Wakeman, Government Relations, City of Tempe
David Johnson, Intergovernmental Affairs Analyst, Town of Buckeye
Charlie Cassens, ICA Manager, Lake Havasu City
Todd Madeksza, Director of Education and Licensing, County Supervisors Association
Vice-Chairman Montenegro announced the names of those who signed up in opposition to HB2253 but did not speak:
Bryan Ginter, representing self
Sandy Bahr, Conservation Director, Sierra Club - Grand Canyon Chapter
David Martin, Lobbyist, Arizona Chapter, Associated General Contractors
Question was called on the motion that HB2253 as amended do pass. The motion carried by a roll call vote of 9-0-0-0 (Attachment 19).
HB2049 - exchange teachers; technical correction – DO PASS AMENDED – S/E
Vice-Chairman Montenegro moved that HB2049 do pass.
Vice-Chairman Montenegro moved that the Montenegro two-page strike-everything amendment to HB2049 dated 2/19/09 (Attachment 20) be adopted.
Michelle Hindman, Majority Research Analyst, explained that the strike-everything amendment to HB2049 requires the Arizona Department of Administration (ADOA) to contract for performance management software on or before December 1, 2009 (Attachment 21). In response to a question, she indicated that she does not know how many companies have the capacity to meet this requirement, but a joint report issued by the ADOA and the Government Information Technology Agency (GITA) on December 15, 2008 conducted a survey of the ability of agencies to do this and about 14 vendors responded to the questionnaire.
Representative Carl Seel, Sponsor, said the strike-everything amendment allows advanced software to be used to read multiple databases so state government can operate more efficiently and identify fraud situations. This type of technology has been used in other states like Ohio where $1 billion worth of fraud was found. He indicated that there may be funds in the federal stimulus package to address any potential costs, but many vendors indicated willingness to have a proof of concept or front end pilot program to demonstrate the savings that can be obtained if this technology is used across the state. In response to questions, he advised that Cognos is one of several vendors recently acquired by International Business Machines (IBM) that is responsible for the tremendous savings realized in Ohio. There is provider fraud and applicant fraud, and studies show Arizona could gain upwards of $300 million this year with this technology.
In response to further questions, Representative Seel stated that state agencies could continue to use the software that is currently used, but this will introduce a new type of software if an agency wants to move in this direction. Many vendors indicated willingness to obtain compensation from the savings obtained during the pilot program; however, with the way in which Medicaid reimbursements happen, the vendor cannot be paid from those funds, so the procurement process will be used so vendors with potential contracts can work with the ADOA in a way that makes sense. Also, he intends to incorporate this language into the budget process in relation to anticipated funds from the federal stimulus package. He said there is intense interest in using this technology and he is sure GITA will be able to deal with it. Cognos’ quote, for example, includes Information Technology support to bring any and all staffers up to speed.
Dean Martin, Arizona State Treasurer, spoke in support of HB2049. He said his agency would be interested in using this technology. During his first year, he asked for and received funding for an internal audit, but the money was taken away in budget cuts. During that time, a six-month review was done of billing to the State Treasurer’s Office and numerous duplicates were found. If the process could be automated with intelligence software, substantially more than what it would cost could be saved. Also, more data could be aggregated for cash flow modeling if this was implemented throughout state government.
Ms. Hindman advised that there is no appropriation in the bill. ADOA is required to enter into a contract for the purchase of software so it would have to be done with the existing budget appropriation. She understands ADOA can obtain software like this through the procurement process. She agreed that it is a mandate to enter into a contract by the end of the year.
Gretchen Jacobs, Attorney, International
Business Machines (IBM), neutral on HB2049, explained that the bill started
last year as HB2600 with the Child Protective Services (CPS) hearings because
Speaker Kirk Adams was interested in helping the Department of Economic
Security (DES) better manage caseloads. One of the concerns was the database
and
Speaker Adams realized that this would enable CPS, in particular, to work
better. She added that she does not want to be responsible for working with
anything that is an unfunded mandate on an agency, so she has assurances that if
there is no funding, this will not be pushed onto the agency, and the bill will
not move forward.
Vice-Chairman Montenegro announced the names of those who signed up in opposition to HB2049 but did not speak:
Bryan Ginter, representing self
Vice-Chairman Montenegro announced the names of those who signed up in support of HB2049 but did not speak:
Marcus Osborn, Manager of Government and Public Affairs, Reed Elesvier
Vice-Chairman Montenegro announced the names of those who signed up as neutral on HB2049 but did not speak:
David Taylor, International Business Machines
Mr. Campbell expressed concern about the financial aspect and the December 1, 2009 date in terms of mandating that ADOA enter into a contract. He hopes more information will be provided about implementation costs as the bill moves forward and perhaps the date can be changed.
Vice-Chairman Montenegro stated that the objective of the bill is to save taxpayers more money than what the software will cost.
Mr. Campbell indicated that he did not hear from any agencies about this bill. Ms. Jacobs conveyed that a number of agencies are enthusiastic about this, but do not want to come forward because they are interim directors that do not know what is going to happen. She pointed out that the bill requires ADOA to enter into a contract by December 1, 2009; it does not have to be implemented by then. This is meant as a supportive tool and not something that will be forced on the agencies.
Representative Seel remarked that he had several conversations with high-level people at the Arizona Health Care Cost Containment System (AHCCCS) and DES who were very supportive of this concept.
Question was called on the motion that the Montenegro two-page strike-everything amendment to HB2049 dated 2/19/09 (Attachment 20) be adopted. The motion carried.
Vice-Chairman Montenegro moved that HB2049 as amended do pass. The motion carried by a roll call vote of 9-0-0-0 (Attachment 22).
HB2509 – intergovernmental
agreements; separate legal entities – DO PASS FAILED
Vice-Chairman Montenegro moved that HB2509 do pass.
Michelle Hindman, Majority Research Analyst, explained that HB2509 modifies statutes relating to separate legal entities that manage intergovernmental agreements, allowing them to issue revenue bonds and generate and transmit electricity (Attachment 23).
Representative Franklin Pratt, Sponsor, said he believes HB2509 will benefit his district and county. The bill allows organizations to band together for the purpose of construction of a power plant and transmission lines.
Jim Hartdegen, Electrical
District (ED) # 3; Maricopa Stanfield Irrigation District (ID), spoke in
support of HB2509. He stated that there is a mechanism in statute to create a
third entity to administer intergovernmental agreements, and this bill allows
that third entity to have revenue bonding capabilities to build a power plant
and transmission lines. He said ED #3 is a small utility that was originally
formed years ago for agricultural purposes, but because of tremendous growth in
Arizona, rural areas are urbanizing. On its own, the district does not have
the capability to sell revenue bonds to build a power plant, so this mechanism
not only allows EDs, but IDs, cities, counties, etc., to create this entity to
sell bonds. If the bill passes and the Governor signs it, there is no
guarantee that the bonds will be sold because the bonding people will look at
the validity of the organization and go from there. He said the first part of
the bill is relatively easy to understand, but the bonding section was drafted
by bonding counsel,
Fred Rosenfeld, and is more difficult to understand.
In response to questions, Mr. Hartdegen advised that most of the EDs are in Pinal and Maricopa counties. The districts buy power through long-term agreements with Salt River Project (SRP) or Arizona Public Service Company (APS), but with this mechanism, the districts would like to have more say in their destiny. If a power plant is built, power would still be purchased from SRP or APS at the best price possible for the customers.
Martin Shultz, Vice President, Government Affairs, Pinnacle West Capital Corporation/Arizona Public Service Company, opposed HB2509. He related that this small district was established in the 1920s for the purpose of agriculture and this is an effort to create another SRP, or another major public power entity in Pinal County. It is a broad expansion of government because the few electrical and irrigation districts that are still left are “wildcat” entities that are attempting to create service for not only agriculture, but also commercial, industrial and other customers, even though they are not regulated by the Arizona Corporation Commission (ACC), they do not pay any income tax or property tax, nor are they subject to any of the laws that regulated entities are subject to. He noted that the bonding authority gives government unlimited abilities to do generation, transmission and subject customers to all kinds of revenue obligations and future obligations that are unreasonable. The power plant that is proposed is a natural gas power plant, which is very volatile in terms of cost, and there are no plans to integrate solar applications or modern technology or approaches that other utilities in the state use. He said this bill is not timely and bad policy, but if there is interest on the part of the EDs to work with the utilities and cooperatives in terms of being regulated, he would be glad to begin that discussion.
In response to questions, Mr. Shultz indicated that SRP was originally established for irrigation and pumping; but the laws were changed after SRP was established for in lieu taxation and other responsibilities, including the responsibility to go to the ACC for power plant and transmission siting and financing. SRP is not regulated by the ACC, but has a board of directors. The major objection to this bill is that these “wildcat” EDs are not regulated by the ACC.
In response to questions, Representative Pratt related that he does not like to characterize this group of entities as “wildcats” as they have been providing power for many years. These are legitimate entities that want to generate power and control their own destiny. He does not know who would set the rates, but some of the districts already deliver power and have a market rate; the districts probably compete to service certain areas.
Mr. Hartdegen clarified that there will be no property or sales taxation by the districts, but in lieu tax is another story. The bonds that would be sold are revenue bonds that the generation plant would repay from profits.
Mr. Shultz related that APS recently filed a complete plan with the ACC for generation for the next 25 years for Arizona in their territory, which includes Casa Grande and many of the areas that would be affected by this bill. He implied that the districts have been poaching by establishing lines to subdivisions, etc., in the middle of the night. He submitted that ED #3 will not pay any property tax, and the statute would have to be changed to charge in lieu taxes, nor would the district pay income tax, and there was no testimony about how the terms and conditions of service will be set. He added that if revenue bonds are established, sold and default, a burden would be placed on individuals in that district, and ultimately, the county and state. He reiterated the offer to meet with Mr. Pratt, IDs, EDs and others on this issue.
Doug Cole, Electrical District
#2, Pinal County, spoke in favor of HB2509. He said the district’s service
territory includes Coolidge and Casa Grande. He was born and raised on a farm in
Pinal County, which was served by IDs and EDs, which are not “wildcat”
entities. These EDs made rural Arizona viable, which is why people want to move
there. He said it is not true that this entity wants to create another SRP;
the intent is generate and distribute power for customers. In relation to
poaching on APS’ territory, he related that the Hohokam Irrigation District
v. APS went all the way to the Supreme Court and APS lost. Mr. Shultz said
the districts want to build a natural gas generated facility, but APS just
purchased a power plant across the street from
ED #2’s operating headquarters called the Sundance Plant, which is fired by
natural gas. SRP is looking at building two more plants in Pinal
County, and a Canadian company is considering a plant in Pinal County.
He added that the district is regulated by an elected board of directors, and
if a plant or transmission lines are built, they would have to go to the ACC
like everybody else; if they get above a 69 kilovolt line, they will be
regulated by the Federal Energy Regulatory Commission. The district wants an
opportunity in government construction to get together with other longstanding entities
to obtain the best deal for customers and have reliable power.
In response to questions, Mr. Cole related that this has been an ongoing process, and under current Intergovernmental Agreement (IGA) laws, there has already been movement to acquire property to move forward. This would allow for a better product at a better price for customers, and the market will tell if it will be utilized.
Mr. Chabin remarked that there are certain circumstances in rural Arizona where these organizations serve the public purpose.
Vice-Chairman Montenegro announced the names of those who signed up in support of HB2509 but did not speak:
Bryan Ginter, representing self
Tom Jones, Chief Executive Officer, Grand Canyon State Electric Cooperative Association Robert Lynch, Attorney, Irrigation & Electrical Districts' Association of Arizona
Paul Orme, Attorney, ED #3 & 4 - CAIDD & MSIDD
Grant Ward, representing self
Cliff Cauthen, General Manager, Hohokam Irrigation & Drainage District
Vice-Chairman Montenegro announced the names of those who signed up as neutral on HB2509 but did not speak:
Seth Apfel, Volunteer, representing self
Vice-Chairman Montenegro announced the names of those who signed up in opposition to HB2509 but did not speak:
Gretchen Kitchel, Senior Public Affairs Representative, Pinnacle West Capital Corporation
Steve Gervais, Senior Government Affairs Representative, Pinnacle West/ APS/ Sun Cor
Larry Lucero, Manager, Governmental Affairs, Tucson Electric Power Company
Question was called on the motion that HB2509 do pass. The motion failed by a roll call vote of 2-6-0-1 (Attachment 24).
HB2101 – county supervisors; membership; number – DO PASS AMENDED – S/E
Vice-Chairman Montenegro moved that HB2101 do pass.
Vice-Chairman Montenegro moved that the Antenori two-page strike-everything amendment to HB2101 dated 2/20/09 (Attachment 25) be adopted.
Michelle Hindman, Majority Research Analyst, explained that the strike-everything amendment to HB2101 (Attachment 25) lowers the population threshold for when a county is required to have a five-member Board of Supervisors from 200,000 to 175,000 people (Attachment 26).
Representative Vic Williams, Sponsor, stated that this legislation is needed in Pinal County where the growth rate is the second or fastest-growing in the United States. This bill will hasten the process of providing Pinal County with proper representation.
Todd Madeksza, Director of Education and Licensing, County Supervisors Association (CSA), opposed HB2101. He said the CSA is opposed to additional cost shifts to the counties during this time of financial crisis and this will increase costs to Pinal County. Raising the threshold to 175,000, which limits the impact, is appreciated, but the CSA is opposed to the bill. In response to questions, he indicated that there was legislation in the last few years to expand the boards, which applied to Santa Cruz County last year.
Mark Barnes, Pinal County Board of Supervisors, opposed HB2101. He said he is not opposed to going to a five-member board of supervisors, which will happen under current law and current population statistics in the 2012 election. He related that the county is divided into three supervisory seats, and this measure proposes that the community college districts be overlaid on top of that, which breaks the county up into five pieces and would cause some problems due to the reconfiguring. Approval must be obtained by the Department of Justice (DOJ) or it will not happen. If the bill passes and the DOJ does not approve it, there is no certainty what happens. If it is approved and redistricting is done for the 2010 election, redistricting will be done again when the census data comes out for the 2012 election, which is confusing on how the district is reconfigured again. He added that for two new supervisors, the county must pay the salary for two years and provide staff and offices, which would amount to about $1 million when there is a current budget deficit of about $10 million and the county is heading toward layoffs. He added that there has been a lot of growth that has been dealt with in a very responsible manner.
Bill Bridwell, business owner, representing self, testified in support of HB2101. He provided a DOJ-approved map of five supervisorial districts that divided Pinal County into five districts using the same census data and the same set of rules under which the three supervisorial districts were created (Attachment 27). He stated that Pinal County experienced substantial growth and has a three-member board of supervisors that has been overwhelmed by the growth. He reviewed the fiscal implications, contending that the amount is not significant in terms of the overall budget (Attachment 28). This is an appeal to give Pinal County the same abilities as the larger counties now have.
Ms. Hindman related that the bill is silent about requiring any change to an election or voter district to go through DOJ, but that would have to be done.
Mr. Bridwell advised that the community college district was presented along with the Board of Supervisors district and approved by DOJ at the same time under the same rules, in the year 2000.
Tommy Tucker, representing self, spoke in favor of HB2101. He stated that he is from a community called Saddlebrook where there are over 5,000 homes, and many people are frustrated because supervisors do not travel to the area, which is understandable since it is a two-hour round trip drive. Also, when rapid growth occurs in a county, the county supervisors are overloaded and do not get to places like Saddlebrook. He added that when there are three supervisors, if two go anywhere, it is considered a public meeting.
Vice-Chairman Montenegro announced the names of those who signed up in opposition to HB2101 but did not speak:
Bryan Ginter, representing self
Vice-Chairman Montenegro announced the names of those who signed up in support of HB2101 but did not speak:
Ray Churay, Deputy Director, Maricopa County Sheriff's Office
Rayna Palmer, Resident, Pinal County, representing self
Cheryl Chase, Mother, Grandmother, Nurse, State Representative, representing self
T.J. Shope, representing self
Harold Vangilder, retired citizen, representing self
Teresa Martinez, representing self
Paul Babeu, Pinal County Sheriff, representing self
Danielle Tomerlin, San Tan Chamber of Commerce
Scot Mussi, Deputy Director of Legislative Affairs, Home Builders Association of Central Arizona
Mr. Chabin remarked that there is a petition process to expand to a five-member board.
Charles Evans, representing self, spoke in favor of HB2101. He stated that before he moved to Arizona eight years ago, he spent 20 years in elected office and found Arizona to be different. He was amazed that two people could make a decision unchallengable as a supermajority for 300,000 people. He said he and Mr. Tucker and another gentleman went to see Dr. Griffith to discuss the issue of changing from three to five board members and found themselves sandbagged, but Dr. Griffith is no longer with Pinal County since he now resides in prison after pleading guilty to embezzlement of county funds; however, in the plea agreement he was allowed to continue to collect over $100,000 per year in retirement. He submitted that three people are insufficient to watch the Pinal County store.
Vice-Chairman Montenegro thanked everyone who drove a long way to make a difference.
Representative Franklin Pratt, Co-Sponsor, said this is a bill whose time has come. He would like to see it move forward so two more supervisors can be elected to ease the transition into the time when Pinal County will probably fill up the empty houses that are there and grow at a rapid rate. As the county grew, judges, police officers, etc., were added, and now it is time to add supervisors.
Question was called on the motion that the Antenori two-page strike-everything amendment to HB2101 dated 2/20/09 (Attachment 25) be adopted. The motion carried.
Vice-Chairman Montenegro moved that HB2101 as amended do pass. The motion carried by a roll call vote of 5-3-0-1 (Attachment 29).
Without objection, the meeting adjourned at 6:55 p.m.
_______________________________
Linda Taylor, Committee Secretary
March 12, 2009
(Original minutes, attachments and audio on file in the Chief Clerk’s Office; video archives available at http://www.azleg.gov)
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COMMITTEE ON GOVERNMENT
16
February 24, 2009
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