Legislature(1995 - 1996)
04/21/1995 03:10 PM L&C
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
HB 236 - REDUCTION IN STATE EMPLOYEE COMPENSATION Number 570 The next order of business was HB 236, "An Act relating to reductions in compensation for state officers and employees; and providing for an effective date." CHAIRMAN KOTT said he would like thank the subcommittee chairman, Representative Sanders, for holding extensive subcommittee hearings. REPRESENTATIVE SANDERS said when the bill was put into a subcommittee, Chairman Kott asked them to try and find out what the bill does, who it does it to, and to see what they could do to make it more acceptable to the working public. He said after ten hours of public testimony and well over 1,000 letters, he feels that everyone knows what they are doing and they all have a good understanding of who they're doing it to. Now the committee needs to review the numbers and see what, if anything, they can do to make it acceptable to the public employees. Representative Sanders said earlier in the day he received information from Legislative Research which is comprehensive. It includes every employee in the state. Representative Sanders said, "What we need is more time, Mr. Chairman, but it seems that for some reason unbeknownst to me, there is no more time -- that his bill, Mr. Chairman, is so important that it must be rushed through. I have never seen a bill in my three sessions that had to move so fast with so little scrutiny, Mr. Chairman. I just don't understand the urgency, but for the unity of the majority, I am going to report this bill out to the full Labor and Commerce Committee with the hope that as a full committee, we can make a few adjustments that will ease the pain caused by HB 236." Representative Sanders referred to pay schedules and said he would challenge anyone at the table to tell him how many different pay schedules are floating around in Alaska state government. He said there are 180 different pay schedules and every one of them are different. Representative Sanders said how anyone would expect the legislature to do something like this in the short amount of time they have had, he doesn't understand. Number 611 CHAIRMAN KOTT said he appreciate all the work Representative Sanders has put into the matter. He said he doesn't believe the bill is being rushed to the next committee of referral. The bill has been in the House Labor and Commerce Committee for over a month. Number 621 ART SNOWDEN, Administrative Director, Central Office, Alaska Court System, came forward to testify in opposition to HB 236. He said our judges are about thirty-fifth in the nation in salary. Over 70 percent of his employees within the Judiciary are range 15 or less. They do not have a number of high paid employees and they would respectfully seek exemption from the Judicial Branch from the application of the bill. Number 630 MARK BOYER, Commissioner, Department of Administration, came forward to testify. He thanked the committee for giving the Administration the opportunity to testify on the bill previously. The Governor felt that given the lateness in the session and given what they are currently doing at the bargaining table on a daily basis.... (End of Tape) TAPE 95-42, SIDE B Number 000 COMMISSIONER BOYER continued, .... would do to the work force. He said they are unclear of what the goals are of the proposers of the legislation. If the goals are to reduce the personal services cost to state government, the Governor and the Administration are absolutely in support of that goal. They clearly understand the need to reduce personal services costs over the next few years. This bill, however, they feel is the wrong way to do it. If the goal is to change the Public Employees Relations Act (PERA), this bill is also the wrong way to do that. A more appropriate way to change PERA, if the goal is to not have the Administration bargain at the table over wages and benefits, is for the legislature to change PERA taking the mandatory term of bargaining out of the act. He said the Administration is unclear as to what the goal is. Commissioner Boyer said the Governor is looking for a way to deal with personal services costs without creating such havoc in the labor work force. If the bill were enacted and were allowed to go into law, the Governor has suggested that he will not allow the kind of disruption to the work force that this bill would cause to occur. There are alternatives to reducing personal services if that is the goal. He said he would like to work with the legislature in achieving that goal. COMMISSIONER BOYER said the Governor is not prepared to encourage the committee to go down a path that would have the Administration unilaterally impose these terms and conditions on what could be as many as 14,000 or 15,000 state employees. He informed the committee that the Administration is currently negotiation with the state's largest union which includes about 8,500 employees. There are three contracts that cover approximately 3,000. If the bill were passed and became law, the state would be forced to impose the terms and conditions of this contract. There would be major disruptions. Number 012 CHAIRMAN KOTT referred to Commissioner Boyer saying that if the intent is to change PERA, they should use a different vehicle. He asked if it is safe to assume that the Administration would be supportive of seeking ways to improve the PERA system. COMMISSIONER BOYER said there are changes to PERA that even the current Administration would like at some point in the further. He said, "I'm not suggesting in any way, shape or form that the Governor would support a wholesale change in the complexion of the Employment Relations Act. I'm not suggesting that whatsoever. I'm suggesting that if that's your interest or the interest of the legislature, that there is a much more straight forward way to do that and a clear delineation, if you will, in the sand on that issue. This is not very clear. This is not a clear way of dealing with that issue." Number 025 CHAIRMAN KOTT referred to Commissioner Boyer saying that the Governor has suggested that he will not allow the kind of disruption to the work force that this bill would cause to occur and said that suggests a veto. Number 039 REPRESENTATIVE KUBINA referred to Commissioner Boyer saying the Governor is working on ways to deal with personnel costs and asked if there is a bill, proposed by the Governor, that he thinks does deal with personnel costs in a better way than HB 236. COMMISSIONER BOYER said they are developing a number of initiatives that will be introduced during the next legislative session that will deal with a number of issues. One bill that was introduced this session are a couple of tools that will be necessary in downsizing environmental. One tool is the change in the area cost differential for non covered employees. While the fiscal savings in that piece of legislation are small, the implications of the application of that statutory scheme in other contract environments is quite immense. Commissioner Boyer said the second tool has to do with an early retirement incentive bill that has a private sector twist to it. The private sector twist has two pieces. One, there is a voluntary cash separation piece that was borrowed from the private sector. ARCO has used that kind of a mechanism successfully to permanently downsize its operation. He noted that there are some up-front costs, but in the ARCO example for an up- front expenditure of $39 million, they've reduced their work size by 30 percent for a permanent reduction in personal costs of $25 billion per year for as long into the future as you can see. Commissioner Boyer said they see that as a tool that should be available to the state as well as the private sector. COMMISSIONER BOYER said, "The RIP (Retirement Incentive Program) is a very surgical RIP. We have an example, I hate to use this example here at the table, Mr. Chairman, but in Representative Kubina's district we think that with the RIP as a tool, and the voluntary separation piece as a tool, that we can craft a package that when we look at Harborview Developmental Center that is in the heart of his district - a hundred highly trained and skilled professionals providing services there, that as we stop doing that service that we allow some of the people to RIP out of the system. Some of the people whose jobs are disappearing to take a separation pay. And those people that are left at the bottom who aren't able to take advantage of either one of those for one reason or another, help those people through an attrition plan - move throughout the system and stay employed if that is in fact what their choice is. So we're hoping that you do give us the opportunity to use a couple of the tools that we've introduced. Long answer to a short question." Number 094 CHAIRMAN KOTT said he thinks it is safe to assume that the reason why the bill was introduced was to close the fiscal gap and to look at wages and compensation. CHAIRMAN KOTT said he has prepared some amendments. Amendment 1, K.5 4/20/95, exempts the courts. He said there has been testimony that our court system and those individuals that work within the court system are well down the ladder compared to other states. He said there was testimony from our Supreme Court Chief Justice alluded to the fact that they are over burdened with work and we're asking them to do more. On top of that, we're asking them to take a reduction in pay at a point when court employees are way down on the ladder to begin with. Number 130 REPRESENTATIVE PORTER moved Amendment 1. He explained he is familiar with the wage and benefit packages that exist in the Criminal Justice System. He said he believes the Court System has done a good job in trying to be frugal. He said he believes Amendment 1 is an appropriate amendment and he supports it. CHAIRMAN KOTT asked if there was an objection to the adoption of the amendment. Number 146 REPRESENTATIVE ROKEBERG objected for the purpose of discussion. He asked if there are other amendments. CHAIRMAN KOTT said there are four independent amendments. REPRESENTATIVE ELTON said he curious as to what criteria is being applied to the court system. CHAIRMAN KOTT said after listening to the testimony by the court administrator as well as the chief justice and alluding to the fact how far behind our Judicial Branch is as compared to other states, he thinks that with the amount of work they are asked to do, it is only warranted that they be exempted from the measure. CHAIRMAN KOTT said Amendment 1 has been moved and asked if there was an objection. REPRESENTATIVE ROKEBERG withdrew his objection. Hearing no further objection, Amendment 1 was adopted. Number 180 CHAIRMAN KOTT explained Amendment 2, K.6, dated 4/21/95. He said it strikes at the heart of the problem, from a public perspective, that he heard from public testimony that we're cutting them 5 percent, however, we're not really addressing ourselves. He said Amendment 2 conforms to many of the criticisms conveyed to the committee by members of the public and that is that the legislators took an increase in per diem this year. The amendment restores the per diem back to the 1993 level. There is no option. The per diem would go back to $100 per day. Chairman Kott said he isn't suggesting that the legislators aren't deserving of it or that it isn't warranted, but in many cases it is warranted. Every individual in the legislature has a different circumstance. Some have given up $30,000 or $40,000 a year jobs, some are maintaining two households. All that must be factored in. He moved the amendment. Number 202 REPRESENTATIVE ROKEBERG objected for the purpose of discussion. He suggested an amendment to the amendment which would add a differential for the members of the legislature who are single and also presently receiving state retirement income. He suggested lowering their per diem to $50 per day. CHAIRMAN KOTT said he believes that is a hostile amendment to his amendment. He said the reason he would object to that is from a constitutional perspective, we would be treating groups of individuals unequally based primarily on marital status. REPRESENTATIVE ROKEBERG said he would point out that it is the policy of the state of Alaska to administer all employment benefits on a differential between marital status. That is the present call. There is nothing unconstitutional. Representative Rokeberg then withdrew his amendment to the amendment. CHAIRMAN KOTT said under this provision, if you live within 25 miles of where the legislature is convened, there is no per diem. CHAIRMAN KOTT asked if there was further discussion on Amendment 2. REPRESENTATIVE ROKEBERG withdrew his objection. CHAIRMAN KOTT asked if there was further objection. Number 250 REPRESENTATIVE KUBINA said he objects. He explained he has gone on record opposing this. He said he thinks that the bill that it is in "stinks." He maintained his objection. A roll call vote was taken. Representatives Kott, Rokeberg, Porter, Masek and Sanders voted in favor of the amendment. Representatives Elton and Kubina voted against the amendment. So Amendment 2 was adopted. Number 269 CHAIRMAN KOTT referred to Amendment 3 and said the Administration had testified that the bill probably doesn't get the intent of what they're trying to do. He said he agrees and thinks there are substantial problems with the measure in just making a wholesale cross board cut. It is great for this year, but in further years it probably will have little affect. Amendment 3, K.7, is to establish a three year wage freeze for all non covered employees. That includes an increase of compensation based on merit for the incremental annual increases. He said we really have to hold the line on wages. Chairman Kott moved Amendment 3, K.7, dated 4/21/95, be adopted. Number 283 REPRESENTATIVE ELTON objected for the purpose of a comment. He said the people who haven't gotten the wage increases are the non union people as they haven't gotten a pay increase in six years. He said he will do everything he can to make the bill better so that if it does unfortunately move out of the House Labor and Commerce Committee, at least they'll be moving something better than what there currently is. Amendment 3 is making the people who have already paid the cost pay more. Number 294 REPRESENTATIVE SANDERS referred to Amendment 3 being a three year wage freeze and asked if that would freeze the pay at the rate that it is today and the 5 percent wouldn't apply. CHAIRMAN KOTT said the effective date of the bill would be the effective date of everything in the bill. If non covered (indisc.) a 5 percent reduction, they would get the 5 percent reduction and then there would be no increase for a period of up to three years. REPRESENTATIVE KUBINA said he agrees with Representative Sanders in that there is a conflict. He referred to page 3, Section 9, and said still sets out a new pay scale and these are non collective (indisc.) people. He said he believes that Section 9 should also be deleted. In other words, Section 9 cuts their pay by 5 percent and then a three year wage freeze is being added. He said he believes is what would happen if the amendment is adopted is you would cut their pay 5 percent and then freeze it to three years. Representative Kubina asked Chairman Kott if that is his intent. CHAIRMAN KOTT said that is his intent. That is what the drafters of the bill have informed him that is what would occur. REPRESENTATIVE KUBINA stated he objects. CHAIRMAN KOTT referred ahead to a proposed Amendment 4 and said it establishes a three year hiring freeze. REPRESENTATIVE ROKEBERG asked if the freeze would apply to all the wage schedules exclusive of the Alaska Court System. Number 338 CHAIRMAN KOTT said because of all the confusion with Amendment 3, he withdrew it. CHAIRMAN KOTT referred to Amendment 4, K.8, and said it establishes a three year hiring freeze for the Executive Branch. He moved Amendment 4. Number 344 REPRESENTATIVE ELTON objected. He said he is willing to vote for Amendment 4 under one condition which is that the House Labor and Commerce Committee refer the bill back to subcommittee so that they could go back to the public and say, "We've changed the parameters of this bill dramatically. We're no longer talking about a wage cut. We're talking about something that really gets into management. We're talking about something that really gets into management. We're talking about not being able to hire people to fill critical jobs whether they're in Corrections or Public Safety or something else." Representative Elton said if the bill sent back to subcommittee so that new public testimony could be taken on the whole new element, he would vote for it. If the bill isn't sent back to subcommittee, he believes the committee is doing the public a disservice. The bill is being made into something much more dramatic. REPRESENTATIVE SANDERS said he feels he could vote for the amendment because it falls in line with his philosophy as he is in favor of smaller government, not cheaper government. He said he thinks the amendment helps to accomplish that. REPRESENTATIVE ELTON said he is in favor of smaller government too. He said when you talk about things like this, you have to talk about not only cost but value and the service that government is providing. The amendment addresses cost, but we may have a problem with value. Number 379 REPRESENTATIVE PORTER said the hiring freezes that he is used to seeing have got a "fail safe" built into them that allow for emergency exceptions. He said in review the bill, he didn't see a "fail safe" that would qualify for the kind of situation that Representative Elton discussed. CHAIRMAN KOTT referred to page l, line 8, "State agency may fill a vacancy in a position if the department, commissioner or agency head certifies that the agency needs to fill that specific positions to protect the health, safety and welfare of the public." REPRESENTATIVE PORTER said he stands corrected and removed his objection. Number 390 REPRESENTATIVE KUBINA said he will have to vote against the bill as it is a whole new way of looking at saving money. No public testimony has been taken. There hasn't been comments from the department or the Administration. There should be hearings held on the bill. CHAIRMAN KOTT said an agency could fill a specific position to protect the health, safety or welfare of the public. He said the statement is open ended and could almost be considered to be all inclusive with every conceivable problem out there. Number 413 REPRESENTATIVE ROKEBERG said under the terms of the welfare of the public, would the University of Alaska be able to hire a professor of widgets in their school of business. CHAIRMAN KOTT said he would suppose so only if they're teaching widget construction. REPRESENTATIVE KUBINA said he would be more apt to be able to vote on that if the rest of the bill were deleted. He said we're going from a pay cut to a hiring freeze. He said he would like to hear that debate go forward. Representative Kubina said he has a proposed amendment that he may bring forward after all other amendments are brought up. Number 426 CHAIRMAN KOTT said Amendment 4 is before the committee and there is objection. A roll call vote was taken. Representatives Kott, Sanders, Rokeberg, Masek and Porter voted in favor of adopting the amendment. Representative Kubina and Elton voted against the adoption of the amendment. So Amendment 4 was adopted. CHAIRMAN KOTT asked if there were additional amendments. REPRESENTATIVE SANDERS said he did have a proposed amendment, but seeing the turn of events he said he would like to move to table the bill until the committee has had time to study it and perhaps bring it up at a later date. CHAIRMAN KOTT said he would object to the motion for the purpose of discussion. REPRESENTATIVE ROKEBERG asked for an at ease. An unidentified speaker said a motion to table is not debatable. CHAIRMAN KOTT announced the committee would take a brief at ease at 4:37 p.m. The meeting was called back to order. Number 459 CHAIRMAN KOTT said there is a motion to table HB 236. The motion is not debatable. There is objection. He asked the committee secretary to take a roll call vote. Representatives Kubina, Masek, Elton, Sanders and Rokeberg voted in favor of tabling HB 236. Representatives Porter and Kott voted against tabling the bill. So HB 236 was tabled until further notice.