Administrative Rules Review Committee
MINUTES OF THE
ADMINISTRATIVE RULES REVIEW COMMITTEE
January 12, 1998 - 9:00 a.m. - Room 305 State Capitol
Members Present:
Sen. Howard A. Stephenson, Cochair
Sen. David L. Buhler
Sen. Mike Dmitrich
Sen. Craig A. Peterson
Rep. John B. Arrington
Rep. James R. Gowans
Rep. Martin R. Stephens
Rep. David Ure
Members Absent:
Sen. Robert C. Steiner
Staff Present:
Mr. Arthur L. Hunsaker,
Research Analyst
Ms. Esther D. Chelsea-McCarty,
Associate General Counsel
Ms. Barbara A. Teuscher,
Secretary
Note: A list of others present and copies of materials distributed in the meeting are on file in the Office of Legislative Research and General Counsel.
1. Call to Order and Approval of Minutes of Meeting Held November 24, 1997
Chair Stephenson called the meeting to order at 9:10 a.m.
MOTION: Rep. Gowans moved to approve the minutes of November 24, 1997. The motion passed unanimously.
2. R865-19S-79 Tourist Home, Hotel, Motel, or Trailer Court Accommodations and Services Defined Pursuant to Sections 59-12-103 and 59-12-103 and 59-12-1; R85- 19S-96 Transient Room Tax Collection Pursuant to Sections 59-12-103 and 59-12- 301 (Sen. Stephenson) (Existing Rule)
Mr. Gary Thorup, Attorney, distributed hard copies of his slide presentation from which he gave his presentation. He indicated the issues to be presented have been raised before the Tax Commission. Mr. Thorup discussed R865-19S - Statutory History of Sales Tax on Hotels, and explained the regulations. It specifically deals with the imposition of sales tax. He then presented the history of sales tax, term residency, taxing statutes versus tax exemption statutes, statutory history of sales tax on hotels, and a history of regulatory sales tax on hotels. Mr. Thorup explained the construction of administrative rules, the statutory history of the transient room tax, and the regulatory history.
Mr. Thorup urged the committee to not reauthorize the rule and explained his concerns. Mr. Thorup said his firm believes the State Tax Commission has exceeded the state statute by imposing requirements and restrictions upon taxpayers by rules which have no statutory basis. He summarized the contents of the Tax Commission's requirements in the rule.
Administrative Rules Review Committee
January 15, 1998
Page 2
Committee discussion and public comment followed.
Note: A copy of Mr. Thorup's presentation is on file in the Office of Legislative Research and General Counsel.
Commissioners Val Oveson and Pam Hendrickson, Utah State Tax Commission, said this matter is currently under litigation within the Tax Commission and to comment would be inappropriate. Mr. Oveson said the commission's position on this issue is in opposition to Mr. Thorup's position. If the committee seeks to change the statute or not reauthorize the administrative rule as of May 1, it is their decision to do so. The key issue is the statute that has been passed reflecting that transient room tax and sales tax applies unless the individual has been there for 30 days. Without a rule, Commissioner Oveson said the commission would have voted the same way as on similar cases. The commission does not believe the rules exceed their statutory authorization.
Chair Stephenson commented on the Administrative Rules Review Committee's charge of reviewing rules promulgated by the executive branch. In the case of Tax Commission rules, the Tax Commission is not only an executive branch body but it is a quasi-judicial body as well. He said the committee should be able to hear complaints on rules that are currently before the commission. Commissioner Oveson responded to Chair Stephenson's comment stating that he is not suggesting that it is not appropriate to ask the commission to come and listen to the presentation that has been made, but the problem is that the committee did not hear the other side of the argument. Commissioner Overson said his concern is if this becomes a precedent, taxpayers will come and try their cases before the Administrative Rules Review Committee.
Sen. Buhler stated that the committee's only issue is if the rule exceeds the statute. Commissioner Oveson indicated that the evaluation of this is dealing with taxpayer creativity.
Commissioner Oveson said if Mr. Thorup's position is taken to its logical conclusion, he could write a prescriptive provision which would allow many individuals who are now paying the transference tax to avoid it.
Rep. Stephens said that there is a loophole in the law and the Tax Commission has tried to close that loophole. There are three options: (1) do nothing, (2) rescind the rule, or (3) repeal the rule. He said the committee should let the courts work it out or repeal the rule and support a piece of legislation to change the law.
Mr. Thorup indicated that there may not be a resolution in court because of the economics of the matter and other individuals affected by the rule.
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January 12, 1998
Page 3
Mr. Kent Bishop, Governor's Office of Planning and Budget, stated that it would be judicious for the Tax Commission to take charge of this issue.
Commissioner Oveson suggested the Legislature change the statute.
MOTION: Sen. Buhler moved for this item to be put on the agenda when the committee meets in the spring of '98 and formally request the Tax Review Commission and the Revenue and Taxation Interim Committee to review this issue. The motion passed unanimously.
3. Committee Legislation
a. Draft bill, "Administrative Rules Amendments"
b. Draft bill, "Reauthorization of Administrative Rules"
MOTION: Rep. Stephens moved to approve the "Administrative Rules Amendments" and the "Reauthorization of Administrative Rules" legislation and allow staff to make the committee's requested technical changes. The motion passed unanimously.
MOTION: Rep. Stephens moved to limit the debate on the next agenda item to 16 minutes. The motion passed unanimously.
4. R430, -3, -5, -6, -30 and -10 Child Care Licensing Rules (Rep. Stephens)
Ms. Debra Wynkoop-Green, Director, Bureau of Health Facility Licensure, introduced Ms. Paula McGibbon, Pediatric Nurse Practioner and member of the Child Care Licensing Advisory Committee; Ms. Tracy Halverson, former family child care provider; and Ms. Iona Thraen, Division Director of Health Systems Improvement. A handout was distributed to committee members.
Rep. Stephens' concerns with the child care licensing rules included the agency's projected cost impact of the rules, construction requirements, child discipline, and provider training.
Sen. Buhler also expressed concern with the rules.
Ms. Wynkoop-Green said more time needs to be spent with the Child Care Advisory Committee going through the rule notice form and more time will be spent going through the form making sure the cost issues are addressed. Other clarifying changes could also be made.
Administrative Rules Review Committee
January 12, 1998
Page 4
MOTION: Rep. Ure moved to put this issue on the April agenda for further input and discussion by the committee. The motion passed unanimously.
MOTION: Rep. Stephens moved to repeal R100 due to its inaccurate fiscal note.
Mr. Ken Hansen, Director, Division of Administrative Rules, said agencies can produce a revised cost impact statement and have it published in a future bulletin. He added that the rule cannot be repealed because it will not effective until after the statutory deadline of January 1.
Rep. Stephens withdrew his motion and said when this issue comes up on the House floor his amendment will be to sunset child care licensing rules that do no have a proper fiscal note.
5. a. Fiscal Impact of Rules_Kent Bishop, Office of Planning and Budget
b. Proposed Rule_Mr. Ken Hansen, Director, Division of Administrative Rules
Chair Stephenson reminded committee members that the committee had been working on how to ensure the fiscal impact of rules is noted with the publication of the rule, and that it accurately reflects the fiscal note to the state, local governments, and to citizens.
Ms. Lynne Koga, Director of the Governor's Office of Planning and Budget and Mr. Kent
Bishop distributed a handout which defined rulemaking and a flow chart of the process. She said if agencies cannot arrive at a dollar figure, they could prepare a narrative for clarification.
Chair Stephenson reminded the committee of past discussions on the parallel nature of enacting statutes and administrative rules. When the Legislature proposes a statute, it does not have the prerogative of determining the fiscal note. It is done by a staff office of the Legislature independently. It is removed from a committee's ability or a legislators ability to influence that fiscal note. He then explained how the executive branch functions.
Ms. Koga indicated that she would like to start out with something more manageable and target it to where the problem lies.
Sen. Peterson explained if there is a department that wants to implement a rule, and a subordinate staff member determines it will have a high implementation cost, there is no
incentive for the staff person, even with proper training, to stand up against a system that presses for a lower cost estimate. Ms. Koga discussed the consequences that are involved. Sen. Peterson asked Ms. Koga how she proposes to achieve a healthy adversarial relationship? She said the legislative balance is the rules committee because it is not only reviewing if the cost seems
reasonable, but if the rule is reasonable. Sen. Peterson said the proper costing of the rule
is what we all want yet the committee routinely finds examples of underestimated cost impacts.
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January 12, 1998
Page 5
Sen. Buhler indicated almost always the fiscal note is looking at what the cost is going to be to government. With rules, usually costs are also incurred by the public who in most cases are probably not aware the rule has been imposed. It is easy to underestimate, but there needs to be a watchdog in the Executive Branch. Sen. Buhler urged Ms. Koga to take a serious look at the issue.
Mr. Kent Bishop, Office of Planning and Budget and Mr. Ken Hansen, Director, Division of Administrative Rules, addressed the committee.
Mr. Bishop distributed a draft rule dealing with costs and indicated it is the rule that the division would propose in lieu of drafting a bill to deal with cost issues. He then explained the
intent of the rule.
Mr. Ken Hansen said the rule will originate from his office. He stated there has not been an opportunity to circulate the draft among others. He focused the committee's attention on R15-4- 10 and explained the purpose of this section and highlighted specific areas of the draft rule.
For the committee's information, Mr. Bishop said some states require their agencies to deal with fiscal issues over a certain amount.
Committee discussion followed.
Chair Stephenson stated the committee has three options: encourage Mr. Hansen and Mr. Bishop to move forward with the proposed rule with the understanding that it doesn't go far enough; declare the proposed rule does not go far enough and suggest an independent entity in the executive branch should review fiscal notes; or do nothing.
Sen. Peterson expressed the need for an independent mechanism in the executive branch to provide a check and balance in the determination of a rule's fiscal impact.
Mr. Lyle Odendahl, Department of Health counsel, said the issue can be worked through.
Ms. Thraen expressed her concerns with the constraints her agency has to work with.
Rep. Stephens pointed out that the Legislature is currently unable to address concerns with 120-day emergency rules in a timely manner because their effective dates can be extended through a second or third emergency rule filing, making them ineligible for nonreauthorization.
6. Adjourn
Sen. Peterson moved to adjourn the meeting at 12:15 p.m. The motion passed unanimously.
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