Legislature(2007 - 2008)CAPITOL 106
04/03/2007 08:00 AM House STATE AFFAIRS
| Audio | Topic |
|---|---|
| Start | |
| HB179 | |
| HB210 | |
| HJR7 | |
| HB45 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HB 193 | TELECONFERENCED | |
| + | HB 210 | TELECONFERENCED | |
| *+ | HJR 7 | TELECONFERENCED | |
| *+ | HB 52 | TELECONFERENCED | |
| + | HB 45 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | HB 179 | TELECONFERENCED | |
HB 179-PUBLIC EMPLOYEE/TEACHER RETIREM'T SYSTEMS 8:09:09 AM CHAIR LYNN announced that the first order of business was HOUSE BILL NO. 179, "An Act relating to insurance for public employees, teachers, and certain retired public employees and teachers and to supplemental employee benefits; relating to teachers' and public employees' defined benefit retirement plans, to teachers' and public employees' defined contribution retirement plans, to employee and employer contributions to the teachers' retirement system and the public employees' retirement system, and to the administration of the Public Employees' Retirement System of Alaska and the deferred compensation program for state employees; establishing in the Department of Revenue the teachers' retirement system past service cost liability account and the public employees' retirement system past service cost liability account; relating to benefits of, references to federal law in, and investments in the teachers' retirement system and the public employees' retirement system; modifying the jurisdiction of the independent office of administrative hearings as related to retirement and related personnel benefits; and providing for an effective date." 8:09:45 AM REPRESENTATIVE ROSES moved to adopt Amendment 1, labeled 25- LS0252\M.1, Wayne, 4/2/07, which read as follows: Page 2, line 3: Delete "a new subsection" Insert "new subsections" Page 2, line 4: Delete "2007" Insert "2010" Page 2, line 6: Delete "five" Insert "one" Page 2, following line 6: Insert new bill subsections to read: "(f) Beginning with the payroll for the first pay period in July 2011, a member shall contribute to the plan, in addition to the combined total of the amounts calculated in (a) and (e) of this section, an amount equal to two percent of the member's base salary. (g) Beginning with the payroll for the first pay period in July 2012, a member shall contribute to the plan, in addition to the combined total of the amounts calculated in (a), (e), and (f) of this section, an amount equal to two percent of the member's base salary." 8:10:20 AM REPRESENTATIVE JOHNSON objected for discussion purposes. 8:10:44 AM REPRESENTATIVE ROSES explained the intent of the amendment. He noted that there are several labor contracts that have either recently been settled or have the potential of being settled before the proposed legislation would go into effect. He said one of the questions in negotiating a labor contract is deciding how much the take-home pay will be and comparing that take-home pay with that of the last contract. He said people negotiate the contracts in good faith; they expend a lot of effort and equity. For example, Representative Roses noted that the Anchorage Education Association was in negotiations for two years. He stated his concern is related to retroactivity. He explained, "If you know going in that you're going to have issues that are impacting your take-home pay, you negotiate differently. And so, to have this go in effect after the fact, to me becomes ... a retroactive bill; it's something over which they had no control in negotiations." He clarified that negotiations are not made on employee contributions; however, they are made involving "everything else," which has a direct impact on take-home pay. He concluded, "So, I felt if we were going to put the 5 percent in, ... it at least ought to be delayed so that we hold harmless those contracts that have just gotten settled, or those that may be settled here in the near future." The committee took an at-ease from 8:12:33 AM to 8:15:05 AM. 8:15:26 AM REPRESENTATIVE GRUENBERG reminded the committee that he had asked for a legal opinion regarding a memorandum - referenced during the last hearing on HB 179 - from Legislative Legal and Research Services, dated January 29, 2005, [included in the committee packet]. [That opinion was noted at the time to be in conflict with that of the attorney general.] He drew attention to the response to his request, made via memorandum dated April 2, 2007, from Dan Wayne, Legal Council, Legislative Legal and Research Services, in which Mr. Wayne concurs with the Attorney General's opinion. He paraphrased an excerpt of the AG's opinion, which read as follows [original punctuation provided]: These statement [sic] and the analysis that follows them in the LAA memorandum are not consistent with the Alaska Supreme Court's repeated rulings that an employee's rights under the retirement systems vest -- i.e., are "accrued" -- at the time the employee first enrolls in the system, and that those accrued rights include not only the amount of and eligibility requirements for benefits, but also "the practical effect of the whole complex of provisions" of the systems. 8:17:19 AM REPRESENTATIVE COGHILL remarked, "There is section in here that talks about the strong argument that the 5 percent may not be considered an accrued benefit. So, I think that there is room for argument." 8:18:17 AM REPRESENTATIVE ROSES, in response to being asked if he would consider withdrawing his amendment so that Representative Doll could offer an amendment, stated: The concern that I have is the legal part of it. I understand where Representative Kelly is going, and I understand the arguments that he's making, in terms of everybody having skin in the game, but part of the concern that we have is: when there were surpluses in the account, what happened at that point in time is they reduced the amount that the employers paid; they never did reduce the amount the employee paid. So, now, when there's a shortfall, we're trying to get the employees to kick in, whereas if that reduction hadn't been made, we maybe wouldn't have been in quite as bad a shape as we are. So, ... this is one of those ones where you're kind of caught in the middle. I don't like the 5 percent, but if we are going to put the 5 percent in, I think it needs to be taken care of properly. So, it appears to me from the discussions that I've had with the other members sitting around the table that they are not going to pass this amendment that I've made; that they're more in favor of reducing the 5 percent. So, we can either vote it up or vote it down. 8:19:28 AM REPRESENTATIVE COGHILL recommended that Representative Doll offer her amendment as an amendment to Amendment 1, rather than having Representative Roses withdraw his amendment. CHAIR LYNN concurred and suggested that it be conceptual. 8:19:37 AM REPRESENTATIVE DOLL moved to adopt [Conceptual Amendment 1 to Amendment 1], which read as follows [original punctuation provided]: Page 2, lines 3-6 Delete all language [(E) BEGINNING WITH THE PAYROLL FOR THE FIRST PAY PERIOD IN JULY 2007, A MEMBER SHALL CONTRIBUTE TO THE PLAN, IN ADDITION TO THE AMOUNT CALCULATED IN (A) OF THIS SECTION, AN AMOUNT EQUAL TO FIVE PERCENT OF THE MEMBER'S BASE SALARY] Page 17, lines 17-19 Delete all language [(E) BEGINNING WITH THE PAYROLL FOR THE FIRST PAY PERIOD IN JULY 2007, A MEMBER SHALL CONTRIBUTE TO THE PLAN, IN ADDITION TO THE AMOUNT CALCULATED IN (A) OF THIS SECTION, AN AMOUNT EQUAL TO FIVE PERCENT OF THE MEMBER'S BASE SALARY] 8:21:14 AM REPRESENTATIVE COGHILL objected. He explained as follows: This pushes hard against the contribution rate employees need to bring in. But the tension here is you have a 3 to 5 percent, before or after tax - however you want to count it - contribution level that's going to go up, compared to a chunk that the state's going to pick up that is in the double digits and beyond, as far as the overall payment or not only the existing system, but the debt retirement. So, the cost borne by both the employers and the state is not even close to 5 percent; it's not close to 10 percent; it's not close to 50 percent; it gets way, way up there. ... And then, the needle keeps tipping over to the point where the people of Alaska, through their taxes -- now the benefit to Alaskans is: we get oil taxes, so we're not digging it out of people's back pockets very much. But I could conceive of a day where the bill goes to the back pockets of the people of Alaska who are not in state employment. Be that as it may, regardless of where the money comes from, the fact is it's the people of Alaska that pick up that, not only in the double digits, but the double digits that are very high. ... And honestly, [all] I know is that it's high; I honestly don't know where you fix that number; I just know it's way up there. So, asking employees to step up to the plate: I like the amendment, because it looks past the bargaining deadlines that we have now. I like that part, because I don't think this retroactive thing is -- the case was made very well that it could be very retroactive. And I like the idea of maybe incrementally going into it. Even though that small incremental change becomes, probably, less significant in the overall bill, it's ... a part of saying we're going to feel some responsibility for it. My guess is you would probably bargain for higher wages, so I don't know that the cost really goes to the employee anyway. Eventually, I think the state's going to pick it up. But it's a recognition that we all have to kind of step up to it. So, just taking it out, I think, is not the best policy in my view. And so, I'm going to vote against it. I like the idea that it asks people to come to the table. That's painful, but not any less painful than everybody else who has to come kind of take care of this bill. So, I'm going to speak against the amendment to the amendment. 8:24:21 AM REPRESENTATIVE COGHILL, in response to Representative Gruenberg, explained his previous mention of "may be" and "may not be" was meant to illustrate that he thinks other opinions outside that of Mr. Wayne may be correct. 8:25:06 AM CHAIR LYNN said using "may" in legislation is ambiguous. 8:25:32 AM REPRESENTATIVE GRUENBERG provided clarification regarding the aforementioned letter from Mr. Wayne. He offered his understanding that [Conceptual Amendment 1 to Amendment 1] would replace the entire Amendment 1, and would be a "flat out deletion of the 5 percent," which would mean that employees would be contributing no more than they currently contribute. 8:28:05 AM REPRESENTATIVE DOLL warned, "I think we're running into a lot of trouble if we do not do this. ... Even trying to phase it in, I think we'd be running into a great deal of trouble." She said a great contributor to the unfunded liability is related to health care cost, and she said she would like the legislature to confront that issue. 8:29:09 AM A roll call vote was taken. Representatives Johansen, Johnson, Gruenberg, Doll, Roses, and Lynn voted in favor of Amendment 1 to Amendment 1. Representative Coghill voted against it. Therefore, Amendment 1 to Amendment 1 was adopted by a vote of 6-1. 8:30:18 AM CHAIR LYNN asked if there was any further discussion on Amendment 1, as amended. REPRESENTATIVE COGHILL objected to Amendment 1, as amended. 8:30:58 AM REPRESENTATIVE JOHNSON opined that the state's retirement system is a crushing burden and employees need to share [in that burden]. He stated his primary concern is regarding constitutionality, and he said he doesn't want to see a long legal battle. He said he supports the concept [of Amendment 1, as amended], but is not prepared at this point to "go against the constitution." 8:32:43 AM REPRESENTATIVE GRUENBERG pointed out that the House State Affairs Standing Committee has changed over the last few years. He explained that an increasing number of bills proposed have legal implications. Not all those bills can go before House Judiciary Standing Committee, thus they are being heard by the House State Affairs Standing Committee. He urged members to be willing to look at legal issues, as well [as policy issues]. 8:33:59 AM REPRESENTATIVE COGHILL remarked that every bill addressed in almost every committee has a legal implication. He said issues of constitutionality properly reside within both the House Judiciary Standing Committee and House State Affairs Standing Committee. He said he is sorry the committee voted - through its adoption of Conceptual Amendment 1 to Amendment 1 - to take out the language proposed by Representative Roses, thus shrinking from bringing employees to the table at a crucial time of discussion. He concluded that he thinks the committee has removed the question of constitutionality. 8:36:02 AM REPRESENTATIVE ROSES said there has been considerable discussion regarding the issue of 5 percent. Many people he spoke with expressed willingness to support the 5 percent, provided the bill would be heard in the House Judiciary Standing Committee; however, since it was not scheduled for that committee, they felt the 5 percent should be removed. He stated that he understands both sides of the issue. He said he doesn't disagree with Representative Kelly regarding moving forward, and that when people were given benefits years ago, no one had a way of predicting the increased costs. He stated, "With that being said, I supported the amendment to the amendment, and I'm going to support this amendment, as is." 8:38:29 AM REPRESENTATIVE COGHILL [maintained his objection to Amendment 1, as amended.] 8:38:36 AM A roll call vote was taken. Representatives Johnson, Gruenberg, Doll, Roses, Johansen, and Lynn voted in favor of Amendment 1, as amended. Representative Coghill voted against it. Therefore, Amendment 1, as amended, was adopted by a vote of 6- 1. 8:39:28 AM REPRESENTATIVE ROSES noted that there was another amendment in the committee packet that would have been necessary, had Amendment 1 been adopted, unamended; however, it would not be offered now. 8:40:17 AM REPRESENTATIVE COGHILL moved to report HB 179, as amended, out of committee with individual recommendations and the accompanying fiscal notes. There being no objection, CSHB 179(STA) was reported out of the House State Affairs Standing Committee. The committee took an at-ease from 8:40:47 AM to 8:41:59 AM.
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