Legislature(1999 - 2000)

04/27/1999 08:07 AM STA

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
SB 33-TASK FORCE ON PRIVATIZATION                                                                                               
CHAIR JAMES announced the first order of business is CSSB 33(FIN)                                                               
"An Act relating to contracts for the performance of certain state                                                              
functions previously performed by state employees and to the                                                                    
Commission on Privatization and Delivery of Government Services;                                                                
and providing for an effective date."                                                                                           
Number 018                                                                                                                      
PAM LaBOLLE, President, Alaska Chamber of Commerce, came before the                                                             
committee noting that creating a task force on privatization has                                                                
been a priority of the State Chamber.  She mentioned that a                                                                     
proposal passed the legislature in 1997 and was vetoed by the                                                                   
Governor and in 1998 another proposal passed the Senate and made it                                                             
to House Rules but ran out of time.                                                                                             
MS. LaBOLLE said the State Chamber held a seminar and invited                                                                   
national experts to find out what was going on around the country                                                               
because privatization is something that governments are looking at                                                              
all over the country.  She cited that the initiative to privatize                                                               
Alaska's correctional facilities was the outcome of that seminar.                                                               
The following year the State Chamber held another seminar which                                                                 
focused on the Department of Transportation and Public Facilities                                                               
(DOT/PF).  She stated, "What we learned in our first seminar was                                                                
that there's privatization which is when a state completely divests                                                             
itself of a business it is in (of providing a service or doing a                                                                
function) and they just don't do it anymore and someone in the                                                                  
private sector picks it up.  And then there's outsourcing where the                                                             
state's still paying for it but they're having someone else in the                                                              
private sector do it.  And then, of course, there is managed                                                                    
competition and that is where the state could put something out for                                                             
bid and the state's own agency would bid along with the private                                                                 
sector to see who could have the 'sharpest pencil' and do the job                                                               
for the best price and with the greatest efficiency."                                                                           
Number 129                                                                                                                      
MS. LaBOLLE referred to information which she had distributed                                                                   
[available in the packet].  She said the first page relates to the                                                              
privatization trends going on all over the country; it shows that                                                               
almost 59 percent of the states were increasing their activities in                                                             
privatization and that another 55.2 percent plan to increase it                                                                 
over the next five years.  The next page shows that the State of                                                                
Alaska was hiring in-house, doing more than was probably necessary                                                              
and that it was duplicative.  For example there is a lot of                                                                     
private-sector engineers who are registered who have to have the                                                                
same minimal level of training, who have to reach the same                                                                      
requirements, and they felt the work should go out.  Ms. LaBolle                                                                
further stated, "Knowing that there would be a great influx of                                                                  
federal dollars coming in on the highways this year, the Chamber                                                                
did a survey of private engineering firms ... to find out (here in                                                              
the state) what availability they had because the DOT/PF says                                                                   
frequently when they want to do a job they have to have someone on                                                              
staff because there's no one available in the private sector to do                                                              
it."  She said the State Chamber asked the private sector, by                                                                   
DOT/PF region:  How many professional do they have, could they move                                                             
their people from one region to another if needed, and was their                                                                
workload such that they could take on this work on the highways and                                                             
the response was overwhelming.  She said they were immediately                                                                  
interested in responding to this survey and it showed that they                                                                 
have plenty of people to do the work.  The reason the State Chamber                                                             
conducted the survey was so that there wouldn't be any immediate                                                                
hiring of more on-staff, in-house engineers in the department                                                                   
[DOT/PF] when there are private sector people ready to do the work.                                                             
She also mentioned other reports show that companies are putting                                                                
data processing, payroll and such out to privatization.                                                                         
Number 222                                                                                                                      
MS. LaBOLLE referred to an article in the Alaska Business Monthly                                                               
Magazine.  She said Governor Hammond asked for the business                                                                     
community to help him see what actions they could take to reduce                                                                
the cost of state spending because it had taken a mighty leap in                                                                
the previous two years.  She said she thinks it might have had                                                                  
something to do with the fact that the oil was flowing down the                                                                 
pipeline about that time.  Ms. LaBolle pointed out that 55 business                                                             
executives were lent to the state by corporations within Alaska and                                                             
those individuals (she believes) worked for 12 weeks and came up                                                                
with 362 recommendations, of which 247 of those were immediately                                                                
implemented.  She further noted that $44 million was saved by the                                                               
implementation of those (indisc.) benefits, and that was in 1978.                                                               
MS. LaBOLLE mentioned Arkansas put together the "Murphy Commission"                                                             
in which 100 to 150 citizens and business leaders volunteered to                                                                
look at their state government.  She emphasized that the State                                                                  
Chamber will be holding another seminar on June 25 to redefine                                                                  
Alaska's government and that they intend to invite someone from                                                                 
groups such as the "Murphy Commission" to explain how it's working                                                              
and what they've accomplished.  They also intend to invite someone                                                              
from Alberta to explain how they came about spending their                                                                      
permanent fund, how they continued to fund government, and how they                                                             
Number 296                                                                                                                      
MS. LaBOLLE indicated the population of Alaska has increased a                                                                  
little over 50 percent and that state spending has increased by                                                                 
nearly 300 percent.  She said the State Chamber thinks, "We don't                                                               
have the money any more and we need to reprioritize and look at                                                                 
what the state's responsibilities are, the things that must be                                                                  
done, and the things that the state shouldn't be in the business of                                                             
doing any more."                                                                                                                
MS. LaBOLLE further stated that, "The work draft [version V] I know                                                             
has removed the part about the contracting that it's not negotiable                                                             
with the -- if the state is going to be able to have someone other                                                              
than state employees do something the state employees have been                                                                 
doing.  We did not promote that in the legislation when it was in                                                               
the Senate, however, I know why the Senate put it in - was because,                                                             
as you heard ... it had been negotiated in state contracts where                                                                
there has to be a feasibility study and ... that those can cost                                                                 
between $20 and $50,000 a piece.  It was my understanding ... that                                                              
it had to show a 10 percent savings before it could go out to                                                                   
someone else, and of course, we kept asking the question, why, why.                                                             
I think it was 11 print shop workers - why couldn't we do away                                                                  
[with] the print shop and what was keeping the state from doing                                                                 
that, and it's my understanding that that had to do with the                                                                    
negotiated contracts.  There wasn't a feasibility [study] and there                                                             
wasn't all of that.  So how it becomes part of the requirements                                                                 
that in negotiating that you take that into consideration, or you                                                               
don't negotiate your right ... of state government, I don't know.                                                               
But that is the back ground for that."                                                                                          
Number 366                                                                                                                      
REPRESENTATIVE HUDSON noted that whole effort was the Governor's                                                                
initiative, the executive branch of government as opposed to what                                                               
we're dealing with now.  The legislature is essentially                                                                         
underwriting a complete review of privatization.  He asked if the                                                               
State Chamber communicated with the Governor and has the Governor                                                               
initiated efforts to try to pass this kind of legislation or move                                                               
the state more and more into the privatization fields.                                                                          
MS. LaBOLLE said they talked to Governor Knowles at the beginning                                                               
of this legislative session and their understanding was that he was                                                             
more amenable to privatization than he had been in the past.  She                                                               
believes the difference between now and two years ago is the price                                                              
of oil.  Ms. LaBolle further stated, "If you think you have the                                                                 
money, it's one thing to not want to go in this direction versus                                                                
actually deciding that some things got to be done and you have to                                                               
find ways to create efficiencies and perhaps not through some of                                                                
things you've been doing in the past."                                                                                          
Number 423                                                                                                                      
REPRESENTATIVE HUDSON said privatization has been ongoing for a                                                                 
long period of time and his big concern is that, "Let's be careful                                                              
that we don't replace a resident state employee with a nonresident                                                              
private employee," because an awful lot of people come from the                                                                 
Lower-48 to get rich on Alaska's dollars.  He said he assumed the                                                               
State Chamber still supports resident hire.                                                                                     
MS. LaBOLLE confirmed Alaska hire is a priority of the State                                                                    
Chamber.  She asked, how many of us came here because there was a                                                               
job and saw how wonderful it was and made it our home.  How many                                                                
"Coasties" [Coast guardsmen] come and make this their home.  She                                                                
said, "I think it's important that we create opportunities for                                                                  
people.  And the thing is private sector, you know corporations pay                                                             
their corporate taxes and the tax - we end up with an inverted                                                                  
pyramid if we have too many government workers and down here at the                                                             
point is the ones who are paying to support the government.  And                                                                
that's going to tip if it becomes to be too top-heavy.  So we've                                                                
got to build that base of private-sector economic opportunities."                                                               
CHAIR JAMES noted that she came to Alaska to find a job and that                                                                
local hire is a tough issue because we want to be sure all of our                                                               
people are working before we bring people in for jobs.  However, we                                                             
have no real control over this because we're part of the U.S., so                                                               
our doors are open.  Chair James reiterated, "It ought to be that                                                               
way, we just ought to be very careful when we walk down that road                                                               
to be sure that we don't displace a lot of folks and replace them                                                               
with someone else who will work cheaper, or is not even as                                                                      
qualified as they are."                                                                                                         
Number 491                                                                                                                      
BARBARA COTTING, Legislative Assistant to Representative Jeannette                                                              
James, came forward to explain the proposed committee substitute.                                                               
She said she and the bill drafter (Tam Cook) agreed that it would                                                               
be easier to continue working from version V rather than hurriedly                                                              
drafting another CS.  She said she will go through the new CS and                                                               
tell the members how version V changes version S.                                                                               
Number 513                                                                                                                      
REPRESENTATIVE COGHILL moved to adopt HCS CSSB 33, Version                                                                      
LS0317\V, Cook, 4/21/99, as the working document before the                                                                     
committee.  There being no objection, it was so ordered.                                                                        
MS. COTTING referred to the two amendments which were incorporated                                                              
into Version V.  Per Representative Ogan's request, the duties of                                                               
the commission now include the determination that there may be                                                                  
duties of the government that should cease.  This language was                                                                  
inserted on page 2, line 8 and on page 4.  Ms. Cotting noted that                                                               
the language should also be inserted on the last page before the                                                                
last two sections.  Therefore, paragraph (5) needs to be inserted                                                               
before Section 8.                                                                                                               
MS. COTTING explained Section 2 of Version S was completely                                                                     
eliminated per Representative Whitaker's request.  She explained                                                                
that Section 2 (in the original bill) would have eliminated                                                                     
collective bargaining from this process.  Therefore, the deletion                                                               
of Section 2 allows collective bargaining as a part of the process.                                                             
She noted that there are conforming changes to accommodate the                                                                  
elimination of Section 2.                                                                                                       
MS. COTTING said Representative Whitaker's amendment deleted the                                                                
following language, "the labor or employee organization may prepare                                                             
and submit a response to demonstrate the state will not reduce                                                                  
costs."  That language was replaced with language saying that "the                                                              
affected agency or department must prepare a written review of the                                                              
contract proposal setting out its benefits and detriments."                                                                     
REPRESENTATIVE HUDSON inquired as to the page and line to which Ms.                                                             
Cotting is referring.                                                                                                           
MS. COTTING directed the committee to page 2, lines 17-23 or                                                                    
Section 2.  The language on page 2, lines 21-23 replaces the                                                                    
following language, "the labor or employee organization may prepare                                                             
a report".  Perhaps, that needs to be revisited.                                                                                
Number 578                                                                                                                      
MS. COTTING referred to page 3, lines 13-16, Section 3 which deals                                                              
with the compensation for members of the commission.  She noted                                                                 
that Tamara Cook, Director, Legislative Legal and Research                                                                      
Services, Legislative Affairs Agency, had informed her of a problem                                                             
in this section.  Originally, the section only provided a per diem                                                              
for members appointed by the Senate President and the House                                                                     
Speaker.  In order to have clarity for the other members, Version                                                               
V states that the other members of the commission do not receive                                                                
any compensation, per diem, or travel.  Therefore, the language in                                                              
Version V does not provide compensation for the members of the                                                                  
commission, save the members appointed by the Senate President and                                                              
the House Speaker.  She believed that to be the intent desired by                                                               
the committee.  In response to Chair James, Ms. Cotting clarified                                                               
that only the commission members appointed under paragraph (6) and                                                              
(7) are entitled to per diem.  This may need to be changed.                                                                     
However Ms. Cotting did note that in discussions with some of the                                                               
organizations, there was indication that the organizations would be                                                             
willing to pay the travel and per diem of their members.  Ms.                                                                   
Cotting  reiterated the need to insert the language "identify state                                                             
functions that should be eliminated" after line 18 on page 4.                                                                   
Number 625                                                                                                                      
REPRESENTATIVE COGHILL inquired as to where that language was                                                                   
inserted earlier in Version V.                                                                                                  
MS. COTTING specified that the language was inserted on page 2,                                                                 
line 7 and page 4, line 6.  She restated that the language may need                                                             
to be inserted on page 4, after line 18.                                                                                        
REPRESENTATIVE OGAN moved Amendment 1:                                                                                          
     Page 4, after line 18                                                                                                      
     Insert, "(5) eliminated as a function of state                                                                             
There being no objection, Amendment 1 was adopted.                                                                              
CHAIR JAMES directed the committee to page 2, line 17, Section 2.                                                               
She said the collective bargaining process was reinstated.  Chair                                                               
James understood the collective bargaining agreement to read that                                                               
before chores of state employees can be outsourced, there has to be                                                             
a feasibility study.  The feasibility study must illustrate a 10                                                                
percent reduction in cost in order to outsource.                                                                                
JUANITA HENSLEY, Administrator, Division of Motor Vehicles,                                                                     
Department of Administration, explained that the current contract                                                               
does not specify a 10 percent cost savings.  The contract only                                                                  
requires a feasibility study and the illustration of cost savings                                                               
to the state before any state employee can be replaced.                                                                         
CHAIR JAMES understood subsection (b) to mean that before the state                                                             
can consider contracting out, there must be a feasibility study                                                                 
unless that is changed at the collective bargaining table.  Chair                                                               
James noted that the feasibility study could cost between $20,000                                                               
to $50,000.  The language in subsection (b) says, "the affected                                                                 
agency or department must prepare a written review of the contract                                                              
proposal setting out its benefits and detriments."  Chair James was                                                             
not sure this is part of the collective bargaining.  She inquired                                                               
as to the intent of Representative Whitaker with that language.                                                                 
Number 704                                                                                                                      
REPRESENTATIVE WHITAKER said that he felt the language in the                                                                   
original bill would have circumvented the collective bargaining                                                                 
process.  Providing unlimited power to replace a collective                                                                     
bargaining unit is essentially the destruction of the collective                                                                
bargaining process which is unacceptable.  This language simply                                                                 
requires the collective bargaining process to continue as in the                                                                
past.  The state can still replace a unit of state function, but                                                                
that cannot occur without the knowledge that doing so is in the                                                                 
state's best interest which would be determined through a written                                                               
review and contract proposal specifying the benefits and                                                                        
CHAIR JAMES asked if Representative Whitaker intended the language                                                              
to be a definition of what is to be included in the feasibility                                                                 
study under collective bargaining or is this a different study.                                                                 
REPRESENTATIVE WHITAKER clarified that this should not be viewed as                                                             
a study on top of a study.   Rather than replacing the collective                                                               
bargaining process with an absolute authority, this requires that                                                               
the collective bargaining process continue separately.                                                                          
Representative Whitaker said that if privatization is considered,                                                               
the results of the privatization should be known before it occurs.                                                              
REPRESENTATIVE OGAN pointed out that this is simply a task force                                                                
that can only advise the legislature of its recommendations.                                                                    
CHAIR JAMES agreed with Representative Ogan, however this is                                                                    
statutory change.  This legislation affords the opportunity to make                                                             
procedure to be followed if the task force's recommendations were                                                               
REPRESENTATIVE OGAN expressed concern with the statement that the                                                               
task force has absolute unlimited authority.  The absolute                                                                      
unlimited authority is only to make recommendations.                                                                            
CHAIR JAMES clarified that the insertion in SB 33 specified that                                                                
the state has unrestricted authority which is a statutory change.                                                               
She asked if this language was necessary since the feasibility                                                                  
study is required under collective bargaining.                                                                                  
REPRESENTATIVE WHITAKER said that it is a judgement call.                                                                       
Representative Whitaker expressed the need to seriously consider                                                                
the benefits and detriments of a decision changing the manner in                                                                
which the state does business.  He noted that this does not relate                                                              
to the collective bargaining process.                                                                                           
REPRESENTATIVE COGHILL said he believed this to be appropriate                                                                  
because this is something that is understood in collective                                                                      
bargaining, but not included in statute.                                                                                        
CHAIR JAMES said that Section 2(b) on page 2 seems to place what                                                                
the agency does in statute for the consideration of contracting out                                                             
a state employee function.  She noted that it does not have the                                                                 
same language as she was told is in the collective bargaining.                                                                  
Chair James inquired as to whether Mr. Etheridge is comfortable                                                                 
with the language.                                                                                                              
Number 792                                                                                                                      
DON ETHERIDGE, District Council of Laborers, said that there are                                                                
not two requirements.  This language provides more definition                                                                   
regarding what is required.  This would not require two studies.                                                                
He indicated that he is comfortable with the language.                                                                          
REPRESENTATIVE KERTTULA noted the section regarding the union's and                                                             
the employee's ability to respond to a report.  She inquired as to                                                              
the rights under the current contract.                                                                                          
MR. ETHERIDGE explained that under the current contracts, most have                                                             
a grievance procedure.  If the state does not provide the                                                                       
information required by contract, a grievance procedure can occur.                                                              
Mr. Etheridge believed that right would remain.  The requirement in                                                             
Section 2(b) would give all the information required under the                                                                  
REPRESENTATIVE KERTTULA asked if this part of the collective                                                                    
bargaining negotiations, requiring a written report by the state                                                                
agency, is codified, should the employee's right to respond be                                                                  
codified as well.                                                                                                               
REPRESENTATIVE WHITAKER said that he has not had a chance to think                                                              
about that and would not want to do it "off the cuff."                                                                          
REPRESENTATIVE HUDSON believed that this is appropriate to place in                                                             
the Public Employees Relations Act (PERA).  The state negotiates                                                                
with various unions and often there are different provisions.                                                                   
Therefore, placing a general requirement in statute allows the                                                                  
requirement to be amplified within the contract itself.                                                                         
Representative Hudson commented that had this language been in                                                                  
statute the closure of the print shop probably would not have                                                                   
occurred because the final report indicated that closure would                                                                  
actually end up costing money.                                                                                                  
CHAIR JAMES said that she was now convinced of the necessity of the                                                             
REPRESENTATIVE SMALLEY inquired as to the make up of the committee.                                                             
Nine of the 11 positions have been established by this legislation.                                                             
Of the nine, seven are established by the governing majority.  The                                                              
chair of the committee is established by the governing majority.                                                                
Representative Smalley expressed concern regarding the compensation                                                             
of the committee members.  He said the committee members should be                                                              
treated equally.  He also inquired as to the time frame for the                                                                 
cost savings projections.                                                                                                       
TAPE 99-30, SIDE B                                                                                                              
Number 002                                                                                                                      
CHAIR JAMES ..."goes up and keeps on going so a decision might be                                                               
made to whether or not to take this bleep we've got here and put it                                                             
out to contract as opposed to hiring new folks into the agency. "                                                               
That would be a short-term savings.  She doesn't believe they can                                                               
specifically say if it is something that this agency is doing, use                                                              
the print shop as an example, because they could contract out the                                                               
printing or they could have the print shop.  If they are going to                                                               
do that and lay off all these folks, then they're looking at a                                                                  
long-term savings.  She said she doesn't know if that responds to                                                               
their concern and she doesn't know that there is anything to do                                                                 
about it because it would be so specific to the kind of                                                                         
consideration that is being given.                                                                                              
Number 033                                                                                                                      
REPRESENTATIVE SMALLEY said it would probably be the committee's                                                                
recommendation as to whether it is a short-term or a long-term                                                                  
benefit to the state, and that is what concerns him about the                                                                   
committee makeup.                                                                                                               
CHAIR JAMES pointed out Section 2 where it says the review must                                                                 
address the quality of service and cost-effectiveness and may                                                                   
include other factors.  There are other considerations that could                                                               
go into that.  She read through the list of the composition of the                                                              
members of the commission:  Two members appointed by the Governor,                                                              
one of whom shall be a representative of the labor union.                                                                       
REPRESENTATIVE SMALLEY doesn't have a problem with that one.                                                                    
CHAIR JAMES read: One member of the Senate appointed by the                                                                     
President of the Senate who shall serve as co-chair.                                                                            
REPRESENTATIVE SMALLEY doesn't have a problem with the Senate                                                                   
president appointing someone, but he is not sure that that person                                                               
should be the co-chair.                                                                                                         
CHAIR JAMES commented that this is a legislative task force so she                                                              
assumes that it would be chaired by legislators.  She continued:                                                                
One member appointed by the Alaska Municipal League; no partisan                                                                
politics there.  One member of the Local Boundary Commission                                                                    
appointed by the Local Boundary Commission; no partisan politics                                                                
there.  Two public members appointed by the President of the Senate                                                             
and two by the Speaker of the House.  She asked him if he thought                                                               
those four persons would be partisan.  She said she believes they                                                               
would have one from the majority and one from the minority, which                                                               
is the way it has been done historically.                                                                                       
REPRESENTATIVE SMALLEY noted that it doesn't say that though.                                                                   
CHAIR JAMES mentioned that when they had the Long-Term Financial                                                                
Task Force, the appointees were made by the majority, but they were                                                             
non-partisan, or there wasn't a partisan issue on that.  She                                                                    
continued reading:  One member appointed by the Chamber of                                                                      
REPRESENTATIVE SMALLEY said he had no problem with that.                                                                        
CHAIR JAMES said she believes generally that the majority                                                                       
represents the public in the balance of power.  When there are at                                                               
least two members appointed by the President of the Senate,                                                                     
historically it always has been one from the majority and one from                                                              
the minority in both cases.  She said she believes it would be                                                                  
Number 114                                                                                                                      
REPRESENTATIVE SMALLEY commented that he would like to see it                                                                   
worded that way.                                                                                                                
CHAIR JAMES pointed out that they should be appointing people who                                                               
have business backgrounds, some kind of business management or                                                                  
labor issues.  It seems to her that if they pick the best people,                                                               
partisan politics shouldn't enter into it at all.                                                                               
REPRESENTATIVE SMALLEY mentioned that the compensation for                                                                      
committee members needs to be fair and equitable for all.  If per                                                               
diem and/or travel is appropriate, it should be paid.                                                                           
CHAIR JAMES indicated that the members of the House and Senate will                                                             
have their per diem and travel paid as a member of the House and                                                                
Senate.  She referred to testimony from Pam LaBolle and                                                                         
Representative  Hudson from the time of former Governor Hammond's                                                               
initiative of getting the loan from the business community to do a                                                              
study that the business committee said they would do that.  She                                                                 
assumes that these different groups would be happy to send somebody                                                             
without compensation, or they can take care of the compensation                                                                 
Number 168                                                                                                                      
REPRESENTATIVE HUDSON asked if the two public members, appointed by                                                             
the President of the Senate, and the two appointed by the Speaker                                                               
of the House, are also entitled to per diem.                                                                                    
CHAIR JAMES answered yes.                                                                                                       
REPRESENTATIVE HUDSON noted that four public members would be                                                                   
entitled to per diem, but the members from the municipal league and                                                             
the Local Boundary Commission and the public members appointed by                                                               
the Governor would not get per diem.  He suggested that this needs                                                              
to be uniformly applied so that they are all eligible for it.  They                                                             
don't have to take it if they don't want to, but the net value of                                                               
what the product is going to be will be certainly worth a few days                                                              
of per diem.                                                                                                                    
CHAIR JAMES went on to say it seems to her that the Governor ought                                                              
to be able to find two people willing to serve.  She agrees that                                                                
the public members appointed by the President of the Senate and the                                                             
Speaker of the House seem to be a duplication, and they are the                                                                 
only ones that get per diem and travel expenses. This is the glitch                                                             
they are trying to fix.  It seems to her that the sponsor intended                                                              
that those people, even though they are appointed, are probably                                                                 
volunteering to do this, that they don't get per diem.  Those                                                                   
people who are appointed, not to limit those people, they might not                                                             
have stepped up to serve if they aren't compensated.                                                                            
Number 229                                                                                                                      
MARK HODGINS, Legislative Assistant for Senator Jerry Ward, came                                                                
forward to testify saying it is Senator Ward's intention that the                                                               
folks who were appointed would receive per diem and travel costs.                                                               
The fiscal note reflects that.  On page 3, line 11, the commission                                                              
may appoint an advisory council, there was no compensation                                                                      
whatsoever for that advisory council.  The compensation was only in                                                             
the form of per diem and travel for the members appointed by the                                                                
Governor, the Senate President and the House Speaker.                                                                           
CHAIR JAMES asked Tam Cook to come forward to tell them if they                                                                 
have preserved the intent of the sponsor for the per diem.                                                                      
Number 255                                                                                                                      
TAMARA COOK, Director, Legislative Legal and Research Services,                                                                 
Legislative Affairs Agency, came forward to testify.  She is not                                                                
sure that they have preserved the intent of the sponsor.  She                                                                   
reiterated what this does.  If they are silent on the question of                                                               
compensation, the public members would not be receiving                                                                         
compensation.  Government employees, of course, get a salary.  If                                                               
they are silent on the question of per diem and travel expenses,                                                                
then by operation of the AS 39.21.080, public members are entitled                                                              
to per diem and travel normally.  This is a difference from the                                                                 
normal statutory rule, in that they are limiting the payment of per                                                             
diem and travel to only the identified public members.  It is                                                                   
possible that the Governor will appoint a state worker.  If it is                                                               
the desire of the committee for the public members to get per diem                                                              
and travel, and they wish to address it in this bill, if they are                                                               
silent on the subject, she said she believes they would get it by                                                               
operation of AS 39.21.080.  If they wish to address it, they can                                                                
also say something like the members appointed by the Governor, so                                                               
long as they are not state employees.                                                                                           
Number 287                                                                                                                      
CHAIR JAMES said she believes they are talking about the two people                                                             
appointed by the Governor, one shall be the labor union, and that                                                               
person could very well be a state employee.                                                                                     
MS. COOK noted that the labor union employee who is serving on this                                                             
commission, his time probably would not be paid by the state at                                                                 
that point.  He would be serving potentially as a volunteer outside                                                             
of his normal duties.  If the Governor appoints a commissioner,                                                                 
then it is more likely to be viewed as within the duties of that                                                                
commissioner.  As to the individual appointed by the Local Boundary                                                             
Commission, that individual as this is written, regardless whether                                                              
or not he/she is a state employee, would not be entitled to per                                                                 
diem.  As far as she knows, the Local Boundary Commission, being a                                                              
state agency, does not have any outside source of funding, but it                                                               
would be up to these people to volunteer both their time and the                                                                
CHAIR JAMES asked Ms. Cook if the Local Boundary Commission get                                                                 
travel per diem when they go to their meetings, so they would get                                                               
what they normally get.                                                                                                         
MS. COOK agreed that the Local Boundary Commission would.  For the                                                              
people appointed from private organizations such as the Alaska                                                                  
Municipal League, it would be up to the league to make whatever                                                                 
arrangements it chose to.                                                                                                       
CHAIR JAMES agreed that is the way it ought to be.                                                                              
REPRESENTATIVE HUDSON said he is not certain that unless the Local                                                              
Boundary Commission is performing their duties as a member of the                                                               
Local Boundary Commission they would be eligible for per diem and                                                               
travel and conduct another business here that is silent about their                                                             
travel and per diem.                                                                                                            
CHAIR JAMES said she believes that is the only reason they have                                                                 
this position because they are there, and she said she believes                                                                 
they are entitled because they are members of the Local Boundary                                                                
MS. COOK agrees that the member of the Local Boundary Commission                                                                
consists of the law that requires that a member be appointed and                                                                
serve, that would be within the duty of that Local Boundary                                                                     
Commission member.  Whatever the statutory compensation for the                                                                 
Local Boundary Commission is, would be a service of that                                                                        
individual.  It is a legal requirement that a member be appointed                                                               
and serve.                                                                                                                      
Number 349                                                                                                                      
REPRESENTATIVE KERTTULA asked Ms. Cook if she would consider the                                                                
Local Boundary Commission member a public member.                                                                               
MS. COOK answered no.                                                                                                           
CHAIR JAMES asked what is the bill's next referral.                                                                             
MR. HODGINS replied the Finance Committee.                                                                                      
CHAIR JAMES suggested since that is a money issue, perhaps they                                                                 
could let it go to the Finance Committee.  She is not necessarily                                                               
interested in the other folks having per diem or travel expenses;                                                               
the Finance Committee can choose whether they want to do this or                                                                
not, and it is to their advantage to do it.                                                                                     
Number 370                                                                                                                      
REPRESENTATIVE OGAN asked Ms. Cook if the title is broad enough to                                                              
cover Section 2.                                                                                                                
MS. COOK answered because of the existence of Section 2, the first                                                              
part of the title is necessary.  They do have something that                                                                    
relates to contracts through the performance of these functions.                                                                
She hopes this is what came over from the Senate.                                                                               
REPRESENTATIVE OGAN asked if this was germane as far as the single                                                              
subject rule.                                                                                                                   
MS. COOK said she believes it is so the way that the courts have so                                                             
broadly construed single subject.  It deals with basically state                                                                
employment issues.                                                                                                              
REPRESENTATIVE KERTTULA asked Ms. Cook if she knows of any other                                                                
commissions or boards that split the per diem according to what                                                                 
their status is.                                                                                                                
MS. COOK said she believes that the legislature does from time to                                                               
time on boards of a temporary nature; they are often called task                                                                
forces or commissions.  They very often do include representatives                                                              
of the public.  They tend to be advisory groups; they do not                                                                    
perform anything other than an advisory function.  Very often the                                                               
legislature will single out the treatment of per diem and treat                                                                 
that issue of per diem differently from the normal rule.  In some                                                               
circumstances, the legislature has gotten so precise in the                                                                     
treatment of per diem that they opted to use the legislatively                                                                  
determined per diem number or travel expense number, which is                                                                   
different even from the statutory one.                                                                                          
CHAIR JAMES mentioned that was so in the military task force and                                                                
long-term financing task force.                                                                                                 
REPRESENTATIVE KERTTULA asked if they treat individuals differently                                                             
within the group.                                                                                                               
MS. COOK said she believes that has occasionally occurred,                                                                      
particularly when there is representation from professional groups.                                                             
The professional group will often take care of the expenses or                                                                  
determine that the individual will bear the expense.                                                                            
REPRESENTATIVE OGAN asked Mr. Hodgins how the sponsor feels about                                                               
the new Section 2 and about the language in the original bill.                                                                  
Number 455                                                                                                                      
MR. HODGINS said Senator Ward originally set this bill up without                                                               
those sections in it.  He had originally decided that the problem                                                               
isn't with state employees, per se, it is with the management that                                                              
they must carry and charged to their activities when they are out                                                               
doing whatever they do.  The sponsor felt that there would be                                                                   
experts in this who are actually the state employees.  They are the                                                             
ones who have been delivering the front-line services, and they are                                                             
the ones who know the efficiency and inefficiency within the                                                                    
organization.  Senator Ward felt that the existing rules in the                                                                 
collective bargaining allowed for their voice to come out, and he                                                               
felt that they would get a lot more value out of the snowplow                                                                   
folks, saying that they can do something at a certain price, if                                                                 
they are not having to carry the cost of a commissioner, deputy                                                                 
commissioner and all the directors that they carry.  This is where                                                              
they are looking at privatization or making the government more                                                                 
efficient, by not necessarily removing state employees but having                                                               
them make suggestions about what they felt was the best way for                                                                 
them to deliver their services.                                                                                                 
REPRESENTATIVE OGAN asked if the sponsor supports the changes.                                                                  
MR. HODGINS said the sponsor supports the bill as long as there is                                                              
a commission or task force going out and looking at how they                                                                    
deliver government services, with the concept that they are facing                                                              
some tremendous deficits in the budget.  They have to look at a                                                                 
different way of delivering government services to the people of                                                                
the state.                                                                                                                      
Number 497                                                                                                                      
REPRESENTATIVE HUDSON moved Amendment 2 which changes the date from                                                             
January 1, 2000 to January 1, 2001.                                                                                             
REPRESENTATIVE OGAN objected for purposes of discussion.                                                                        
REPRESENTATIVE HUDSON said he said he believes that this may be the                                                             
most important single study that the state has done in 24 years.                                                                
They have been fumbling with it in the legislature this year trying                                                             
to identify consolidation of state agencies, elimination of                                                                     
functions, changes to collective bargaining, they are doing these                                                               
things as a body, and now for the first time, somebody has come up                                                              
and said let's put together a committee and look at all of the                                                                  
functions of government and come back to the legislature and                                                                    
Governor and recommend which can be transferred to the private                                                                  
sector, local government, federal government, consolidated,                                                                     
eliminated, which should remain the responsibility of the state,                                                                
get public comment, and they are asking them to do all of this by                                                               
January 1, 2000.  They won't even go through a winter to find out                                                               
whether or not they are plowing the roads efficiently.  If they                                                                 
keep that date, they will end up with only a paper track.  He said                                                              
he believes it would be better to come back with something of                                                                   
quality, and that commission will need time at least until 2001.                                                                
REPRESENTATIVE OGAN maintained his objection to the amendment                                                                   
because there are no guarantees that the current legislature will                                                               
be back after next year.  He would like something he can put his                                                                
teeth into next January to take substantive action on and make some                                                             
of the reforms of downsizing and elimination in state government.                                                               
He agrees with Representative Hudson, but he believes they could                                                                
reinstate the task force as written and extend the sunset date for                                                              
another year if they wanted to.  He wants a report he can look at.                                                              
Number 561                                                                                                                      
CHAIR JAMES agreed they wouldn't get a comprehensive written report                                                             
in that length of time, and she asked if they might have an interim                                                             
report in 2000 and then have it finalized in 2001.  She asked Pam                                                               
LaBolle to respond to that.                                                                                                     
MS. LaBOLLE said the commission done under Governor Hammond was                                                                 
done in 12 weeks.  She noted that an extension would have an impact                                                             
on the fiscal note.  Her concern is that this is a legislative                                                                  
commission, and it goes beyond this legislature if they take it                                                                 
until the end of next year instead of the end of this year.  She                                                                
agrees with Representative Hudson that it is very important and is                                                              
great if they have the time, but with the two-year window to work                                                               
in, where they use one year to set it up, they need to get a report                                                             
to the legislature so actions can be taken if this legislature                                                                  
decides that the commission has come up with some good                                                                          
Number 591                                                                                                                      
CHAIR JAMES asked Representative Hudson if they could just change                                                               
the date on line 19.                                                                                                            
REPRESENTATIVE HUDSON answered that that would defeat his                                                                       
intentions which were to have a complete report for the                                                                         
legislature.  He doesn't see any reason to have a complete report                                                               
submitted by 2000 and keep the group together until 2001.  He                                                                   
understands Representative Ogan's concerns, and he would like to                                                                
see this thing as soon as possible too.  When Governor Hammond's                                                                
review took place, and it was a "quick track" review where a                                                                    
totally new government had just come to Juneau.  He was part of it,                                                             
and they were overwhelmed.  Governor Hammond wisely brought in this                                                             
group of business people from all over the state, and they went                                                                 
through all the departments before the people were outgoing, and in                                                             
some cases had already left, and then tried to analyze the whole                                                                
thing from a business perspective and then present it to a brand                                                                
new government, who in turn, delivered it to all of us newly                                                                    
appointed officials.  He said he believes that is a different                                                                   
CHAIR JAMES agreed it sounds like an entirely different situation,                                                              
but most of the industry loaned their very fine folks who worked                                                                
intensely.  She doesn't believe this is a full-time commission.                                                                 
REPRESENTATIVE HUDSON indicated that if it is going to be something                                                             
meaningful, he said he believes it has to give meaningful                                                                       
consideration to how well the services are performed and calling                                                                
for audits and fiscal analysis.  They are talking about a group                                                                 
coming back in and recommending drastically modifying the Alaska                                                                
Marine Highway System, for example.                                                                                             
CHAIR JAMES commented that that sounds like someone the Governor                                                                
should put on his staff, and that is not happening so the                                                                       
legislature is doing this instead.                                                                                              
Number 635                                                                                                                      
REPRESENTATIVE COGHILL agreed a full study should be done, but he                                                               
doesn't believe the current financial situation tolerates studying                                                              
beyond 2000, to make sure they have a good framed issue of how to                                                               
look at it needs to be done during this particular legislative                                                                  
watch.  Urgency demands that if the commission can only look at it                                                              
in generalities, the legislature needs to look into it more                                                                     
Number 655                                                                                                                      
REPRESENTATIVE KERTTULA commented that if they are going to do it                                                               
right, they need to be going to the employees who are actually                                                                  
doing these jobs.  She fears what will happen with this is that                                                                 
they will just sit in a room and move pieces of paper around                                                                    
because the jobs sound alike, they should be going together.  It                                                                
should be done right, and they should be given the time to do it                                                                
right.  The voters will decide who will be in the legislature, and                                                              
she trusts that future legislators will look at the study and take                                                              
it seriously if it is done right.                                                                                               
Number 670                                                                                                                      
REPRESENTATIVE WHITAKER commented that there has been good debate                                                               
on both sides of the issue, but this is their watch, and they                                                                   
should do what they can with the best information they have.                                                                    
A roll call vote was taken.  Representatives Hudson, Smalley and                                                                
Kerttula voted for the amendment.  Representatives Ogan, Coghill,                                                               
Whitaker and James voted against it.  Therefore, Amendment 2 failed                                                             
by a vote of 4-3.                                                                                                               
Number 683                                                                                                                      
REPRESENTATIVE OGAN made a motion to move HCS for CSSB 33, version                                                              
1-LSO317\V, Cook, 4/21/99, as amended, out of committee with                                                                    
individual recommendations and asterisked fiscal note.                                                                          
REPRESENTATIVE HUDSON objected.                                                                                                 
A roll call vote was taken.  Representatives Ogan, Coghill,                                                                     
Whitaker and James voted in favor of moving the bill.                                                                           
Representatives Hudson, Smalley and Kerttula voted against it.                                                                  
Therefore, HCS for CSSB 33 moved from the House State Affairs                                                                   
Standing Committee by a vote of 4-3.                                                                                            

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