Legislature(2007 - 2008)CAPITOL 106
01/17/2008 08:00 AM STATE AFFAIRS
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* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
HB 260-STATE OFFICERS COMPENSATION COMMISSION 8:56:36 AM CHAIR LYNN announced that the last order of business was HOUSE BILL NO. 260, "An Act relating to a State Officers Compensation Commission and establishing how legislators, the governor, the lieutenant governor, and executive department heads shall be compensated; providing for an effective date by repealing the effective dates of certain sections of ch. 124, SLA 1986; and providing for an effective date." 8:57:09 AM REPRESENTATIVE MIKE DOOGAN, Alaska State Legislature, introduced HB 260 as prime sponsor. He said the bill would bring back into existence a Commission that existed [as the Alaska Salary Commission] from 1977 through 1979. He noted that there was an attempt to reestablish the commission in the 1980s, which failed for reasons that Representative Doogan said are not entirely clear to him. He said the commission was tied to a constitutional amendment that was never offered. He added, "And part of the repealer language that you read in the title takes ... those provisions out of the law, which I think are ... essentially the only repealers in there." REPRESENTATIVE DOOGAN explained that the commission would be comprised of five public members appointed by the governor, with a member recommended from each of the presiding officers of the legislative house. He said the job of the commission would be to examine the compensation of the legislators and principle officers of the State of Alaska and submit a report at least every two years. The members of the commission would serve without compensation. The recommendations of the commission would become law if they were not disapproved by the legislature within a 60-day period of that recommendation. The legislature would essentially keep final authority because nothing recommended would be funded without legislative appropriation. He pointed out that there is a $7,500 fiscal note accompanying the proposed bill. In response to Chair Lynn, he explained the purpose of having recommendations made by the presiding officers of each legislative house is to ensure that the governor has the ability to choose members who can provide extra information and council for the other members of the commission. He clarified that legislators would not be nominated for the commission. 9:02:30 AM REPRESENTATIVE ROSES augmented Representative Doogan's response to Chair Lynn by directing attention to the language of AS 39.23.510, shown on page 3, beginning on line 13, which read: (a) A member of the commission may not be employed by the state, including the University of Alaska, serve as a member of another state board, commission, or authority, or hold elective state or municipal office during membership on the commission. REPRESENTATIVE DOOGAN stated his intent in having the bill drafted was to not put legislators in the position they are currently in, which is essentially acting as the arbiters of their own compensation. He described the [Alaska Salary Commission] as "the last thing we've had that actually worked." 9:03:29 AM REPRESENTATIVE ROSES directed attention to language on page 3, beginning on line 18, which read as follows: (b) A member of the commission may not have served in an office or position for which the commission shall submit a recommendation under AS 39.23.540. REPRESENTATIVE ROSES asked Representative Doogan if it is his intent that a former legislator not be able to serve. REPRESENTATIVE DOOGAN explained that he was attempting to put the legislature at arms length; however, if the committee wants to include former members, that would be fine. CHAIR LYNN suggested the language could specify that it be someone who has been out of office for a certain period of time. REPRESENTATIVE DOOGAN illustrated that a former legislator who had just served the prior year, being put in the position of making salary decisions for those legislators he/she worked with who are still in office, would not be very far removed from serving on the commission while still in office. 9:05:52 AM REPRESENTATIVE DOLL suggested the need for further study of the bill issue - perhaps through a subcommittee. CHAIR LYNN noted that the next committee of referral is the House Finance Committee. 9:06:57 AM REPRESENTATIVE JOHANSEN asked why the bill sponsor included a handout in the committee packet showing age groups of legislators. REPRESENTATIVE DOOGAN responded that he wanted to confirm his suspicion that "the level of compensation in the Alaska Legislature skews the composition of that body compared to the [general] population." He said there are more legislators serving who are of advanced maturity than those serving who are "out there trying to raise families and make a living." He said one possibility for that statistic is that the compensation for legislators is not sufficient for the latter group. He stated that Alaskans in the 30- to 50-year-old range are substantially underrepresented in the legislature, while those 50 and older are overrepresented compared to their numbers in the general population. He concluded, "I think it would be difficult to imagine a reason for that happening that didn't include the compensation." 9:09:19 AM SENATOR KIM ELTON told the committee that he was testifying, not as a senator, but as a private citizen who had past experience as a member of the aforementioned salary commission. He reviewed that in 1976, voters - through a referendum - repealed pay raises and a generous retirement system that the legislature had given itself. Subsequently, the five-member salary commission was established by law. SENATOR ELTON related that, unlike the proposed commission, the original commission was charged not only with looking at the salaries of the legislature, the governor, the lieutenant governor, and the commissioners, but also to make recommendations on deputy commissioners, division directors, sitting members of the commissions, and judicial salaries. He said the original commission members were appointed by the governor, as they would be to the proposed commission. He recollected that given the overwhelming voice of the electorate, what struck him about the public hearing process was that "most of the people that showed up were people whose salaries we were going to be adjusting or making recommendations about." The law related to the original commission was a "take-it-or-leave-it" law. He explained, "You couldn't cherry pick from the different recommendations." He stated his understanding of HB 260 is that "it would not take a vote of the legislature unless they were prepared to reject the recommendations of the salary commission." He said that is a different and perhaps better approach, "given what happened back then." SENATOR ELTON told the committee that the original commission recommended a salary of $11,750 and a schedule for payment of that salary to address the fact that the vast majority of a legislator's expenses are spent at the start of the session in order to move to the capital. Furthermore, that commission even voted to provide one round-trip airfare for the legislator to use to fly back to his/her district to meet with constituents. The commission also recommended some benefits that he said now he is not certain were good ideas. For example, for every bi- annual term, a legislator reelected would be given a $500 pay increase. Senator Elton said the legislature accepted the $11,750 component, but did not accept the rest of the recommendations. He stated that the former commission spent a lot of time trying to figure out whether, regarding parity issues, to "start at the bottom and work up" or "start at the top and work down." He explained that because the purview of the salary commission was broader than envisioned in HB 260, it wanted to ensure that the scale of pay was commensurate with rank. He said that was a difficult challenge, but it is one that is mostly avoided in the proposed legislation. 9:16:13 AM SENATOR ELTON commented on the length of time since that original commission made decisions. He stated, "I think the problem that actually prompted that salary commission informs this bill, and it is certainly, perhaps, a better alternative than asking legislators to do what they did in ... 1975, which is to set their own salary." He noted that the State of Washington uses an ongoing salary commission. 9:17:51 AM REPRESENTATIVE ELTON, in response to a question from Representative Roses, said the original commission did not require confirmation of the legislature, but was strictly appointed by the governor. He said the purpose was to try to separate the legislature as far from "any of the product that might be presented back to them." 9:18:38 AM SENATOR ELTON, in response to Representative Doll, regarding what led to the commission's demise, said he thinks one issue that became problematic was the notion that that salary commission would present something; "it was kind of an all or nothing." Also problematic was the broad scope of the commission. The proposed legislation would have a much narrower scope. 9:19:59 AM REPRESENTATIVE COGHILL asked Senator Elton to discuss the public's expectation and the commission's expectation regarding what a reasonable compensation package was. 9:21:00 AM SENATOR ELTON recollected that there was not a lot of angst from the public. Voters accepted the fact that the commission method was a fairer process, because those getting raises were not setting them for themselves. He said the angst occurred mostly inside the building, where legislators would react to the recommendations of the commission. For example, when the one round-trip ticket was proposed, some legislators asked why it would only be one, while others were concerned that their constituents might feel one was too many. 9:24:20 AM NICKI NEAL, Director, Division of Personnel & Labor Relations, Department of Administration, answered questions during the hearing on HB 260. She stated that the department has no opinion on the bill at this time, but did prepare the fiscal note. She stated that in preparing the fiscal note, the division accounted for the cost of conducting meetings and associated travel expenses. She noted that the division has the means within its existing staff to, for example, survey other states; however, if a more comprehensive study were needed, there would be an added cost, because the state would have to "contract out" to have it done. 9:25:18 AM REPRESENTATIVE COGHILL asked Ms. Neal to tell him what the scope of availability is regarding contracting. MS. NEAL said there are contractors available to conduct studies. The division, she said, has a method of surveying other states quickly and efficiently. She interpreted the proposed legislation as providing that "it would be up to the committee if they wanted us to go out and do something more extensive; it would get their direction." 9:26:36 AM REPRESENTATIVE DOOGAN added: One of the reasons for reducing the scope - the people who are covered under this bill, as opposed to the last salary commission - was to reduce the complexity of the task in front of the salary commission .... I tried to take what I considered to be the politically sensitive salaries and limit it to that, so ... it wouldn't have the necessity of going through any expensive salary studies or anything like that, because we're not going far enough down in the pecking order or broadly enough, in terms of numbers, to require that in all probability. At least that was my thinking. REPRESENTATIVE COGHILL said he concurs with Representative Doogan in terms of bargaining, because that is a complicated subject. He commented that everyone is competing for a smaller workforce, he mentioned the demographics of the legislature, and he indicated that he needs time to ponder what other states are doing. 9:28:46 AM REPRESENTATIVE DOOGAN said he does not think people run for the legislature because they want to get rich, or become commissioners because they cannot make money some place else. He stated his intent is to keep the compensation from being a barrier. He explained, "It's not really a recruitment and retention issue to me so much as not just erecting a complete barrier to people who would otherwise at least attempt to do what it is we're doing." REPRESENTATIVE COGHILL concurred. He said the commission would be tasked to look at equitable rate, so the word equitable is a huge issue. He said he thinks "this public record" will help the commission to find some direction in that regard. He added, "Because otherwise they have to look at what ... probably could be termed competitive rates rather than equitable rates." REPRESENTATIVE DOOGAN reiterated his aforementioned point regarding removing the barrier to public service. 9:31:03 AM KARL KURTZ, Director, NCSL Trust for Representative Democracy Division, National Conference of State Legislatures (NCSL), provided a comparison of other state legislatures' commissions during the hearing on HB 260. He said he would talk about what legislators are paid around the country compared to Alaska, and what methods are used to calculate their compensation. MR. KURTZ directed attention to a handout in the committee packet, entitled, "Perspectives on Legislative Compensation." He said it is often difficult to find out what legislators are paid, because, for example, in extreme cases, some legislators are paid only $5 a day in salary, but they get a lot of other payments that the Internal Revenue Service (IRS) would count as compensation. Mr. Kurtz said he did his best to show an estimate of what an average legislator in each state earns from legislative service, and he did that by combining salary, any taxable per diem payment, and any other expense payments without voucher that members could keep for themselves if they wished to do so. Not included in his estimate, he said, are the additional compensations given to Senate Presidents, Speakers of the House, Majority Leaders, or committee chairs in many states. 9:34 a.m. MR. KURTZ drew attention to a map in the aforementioned handout, labeled, "Estimated Annual Compensation, 2007." The map shows the 50 states, color-coded based upon the salaries of the legislators. The categories are: more than $60,000 a year, which includes California, Illinois, Michigan, Pennsylvania, New York, Massachusetts, and Maryland; from $45,000-$59,000, which includes Washington, Oklahoma, Missouri, Wisconsin, Ohio, New Jersey, and Delaware; from $30,000-$44.999, which includes Louisiana, Mississippi, Alabama, Florida, South Carolina, North Carolina, West Virginia, Tennessee, Kentucky, Iowa, Minnesota, Colorado, Oregon, Alaska, and Hawaii; from $15,000-$29,999, which includes Idaho, Arizona, Kansas, Nebraska, Arkansas, Georgia, Indiana, West Virginia, Vermont, and Maine; and less than $15,000, which includes Nevada, Utah, New Mexico, Wyoming, Montana, North Dakota, South Dakota, and New Hampshire. Mr. Kurtz said he figured the average for Alaska legislators is approximately $33,000, which he arrived at by taking the $24,000 salary and adding the average $9,000 in interim per diem payments. He noted that there are a number of Alaska legislators who do not claim any interim payments, while others claim substantially more. He noted that the states in the over $60,000 category, for the most part, are those with the largest population, in which the members of the legislature serve full- time; therefore, it may seem surprising that the big state of Texas pays its legislators such a low salary, but that state's salaries are embedded in its state constitution, and the state has had difficulty in changing that. The members of the legislature in New Hampshire, he said, are paid $100 a year, plus mileage compensation for their vehicles. 9:38:47 AM MR. KURTZ directed attention to the next map, entitled, "Red, White & Blue Legislatures." Those states shown in red have legislators who are virtually full-time, well-paid, and have large staffs. Those states are: California, Wisconsin, Illinois, Michigan, Ohio, Pennsylvania, New York, New Jersey, Massachusetts, and Florida. Those states shown in blue are the classic citizen legislatures that meet only two or three months of the year, have low pay and small staffs. Those states are: Nevada, Utah, New Mexico, Idaho, Montana, Wyoming, North Dakota, South Dakota, Arkansas, Mississippi, Georgia, Indiana, West Virginia, Vermont, New Hampshire, Maine, and Rhode Island. Those states shown in white are "hybrid." Those states include: Hawaii, Alaska, Washington, Oregon, Arizona, Colorado, Nebraska, Kansas, Oklahoma, Texas, Louisiana, Minnesota, Iowa, Missouri, Kentucky, Tennessee, Alabama, South Carolina, North Carolina, Virginia, Maryland, Delaware, and Connecticut. MR. KURTZ directed attention to the next page of the handout, which shows, "Compensation of Legislators." The chart shows the average pay of legislators in 2007 versus 1972, for "red," "white," and "blue" states, with Alaska shown separately, and the U.S. Congress included, as well. Alaska is slightly below the average of those states in the white category, he noted. Mr. Kurtz said he chose the year 1972, because that is the year in which he began work for NCSL. 9:42:19 AM MR. KURTZ turned to the next page, which shows "Real Compensation" in "Constant Dollars," which uses the same groups for comparison as the prior compensation chart. He stated, "In most categories, there's been virtually no change in real terms in the amount of compensation given to legislators over this 35- year period of time;" however, both U.S. Congress and the State of Alaska have suffered a significant decline in the value of their salary against inflation. MR. KURTZ highlighted the information on the next page, which shows "Compensation Methods." The first category is states that either have no commission at all or whose commission is on the books, but is inactive. Well over 30 of the states fall into that category, he noted. The second category is states in which there is a commission, but that commission only makes recommendations that can be accepted or rejected either by the legislature or some other entity. Those states include: Connecticut, Maine, Minnesota, Virginia, and West Virginia. The third category is states in which commission actions take effect unless they are rejected by - depending upon the state - the legislature, the governor, or - in the case of the State of Arizona - a vote of the people. The fourth category is states that have tied their salaries automatically to some kind of an index in the state. He explained that that index could be related to some kind of category of state workers or a cost of living index or some other kind of economic index. The states in this category are, with one exception, large population states - Florida, Illinois, Massachusetts, Pennsylvania, and Wisconsin - but also include Montana. MR. KURTZ said the fifth and final category applies only to the State of Washington, where the commission has the complete power to determine the compensation for the governor, the cabinet officers, and the legislature, and according to that state's constitution, the only way to overturn the Washington commission's recommendation is through a citizen initiated referendum. Mr. Kurtz remarked that in the course of the 20- some years that the State of Washington's commission has been in existence, that has never happened. He stated that the Washington commission is comprised of 16 members, nine of which are randomly drawn from the list of registered voters - one from each district. Then there are seven other members selected from five specific professions set forth in law. Those seven members are selected by the Speaker of the House and the Senate President. 9:49:33 AM REPRESENTATIVE JOHANSEN described the proposed bill as a positive step in considering the matter of compensation. 9:51:06 AM REPRESENTATIVE DOOGAN, in response to a question from Representative Johansen, said the reason that the bill would form a compensation commission as opposed to a salary commission is that the legislation recognizes the fact that there are other elements to compensation beside what is strictly called salary. He said he has attempted to not be too prescriptive in terms of what the commission would do, but he has in mind that the commission would consider all elements of the compensation package for "the people who are listed here." He said he thinks that while there may be comparisons to other compensation packages, he does not think there would be "any direct effect on those from what the commission might do." 9:52:33 AM REPRESENTATIVE ROSES moved to adopt Amendment 1, which read as follows: Page 3, line 18, following "not": Insert ", in the four years preceeding [sic] that member's appointment" REPRESENTATIVE ROSES explained, "I hate to see us eliminate the possibility of having anybody that's served in public office either at a state or municipal level be excluded from this commission. Had we done that, the commission 30 years ago would have been absent some of the members that they had." REPRESENTATIVE COGHILL objected to Amendment 1. He explained that he has not had time to study limitation regarding the bill. He said he wants to see the amendment in writing. 9:54:21 AM REPRESENTATIVE JOHANSEN mentioned a candidate for office who is a former legislator who has been out of the legislature for four or five years. He indicated that it might not look good for someone who has been out of office for four years to get a position on the commission, support a major change, and then file to run for office the following year. He concurred with Representative Coghill that the committee needs some time to work out the issue. 9:55:10 AM CHAIR LYNN, in response to Representative Johnson, said he had hoped the bill would move out of committee today, but he recognizes that there is an amendment to discuss and perhaps other concerns to address. He said he would be willing to hold the bill. REPRESENTATIVE JOHNSON said he will hold his questions. REPRESENTATIVE COGHILL stated that not only would he object to moving the bill out of committee today, he may even object to it at the next meeting. He repeated that there are bigger issues to tackle. One question is whether or not a full-time legislator would ever be considered. He said he thinks history needs to be studied. He mentioned considerations related to staffing levels, as well. 9:56:23 AM REPRESENTATIVE DOOGAN responded that he does not believe the current proposed language of the bill would preclude even city or municipal officials from serving on the commission, "because it's a limited scope in terms of whose salaries are affected." 9:56:49 AM CHAIR LYNN announced that HB 260 was heard and held with Amendment 1 pending.