Legislature(2009 - 2010)BELTZ 211
03/17/2009 01:30 PM Senate LABOR & COMMERCE
| Audio | Topic |
|---|---|
| Start | |
| SB106 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | SB 106 | TELECONFERENCED | |
| + | TELECONFERENCED |
SB 106-REJECT RECOMMENDATION OF COMP. COMMISSION
2:13:35 PM
CHAIR PASKVAN announced SB 106 to be up for consideration.
SENATOR BUNDE, sponsor of SB 106, introduced his aide, Jane
Alberts, "to fill in any of the blanks" that he might draw.
He then explained that this bill was introduced not to cast any
judgment on the findings of the salary commission, but rather to
allow an opportunity for public debate, discussion and a vote by
the legislature on this issue. Good arguments can be made on
both sides of this issue and without this bill, the pay raises
would go into effect without any discussion at all.
He added that the Commission was established by the legislature
on a strong positive vote. When he voted for it, he didn't mean
that the legislature wouldn't have any input, and this is a
vehicle for that.
2:16:51 PM
JANE ALBERTS, staff to Senator Bunde, said since they were short
on time she would simply answer questions.
Seeing no questions, CHAIR PASKVAN invited Mr. Halford to
testify.
2:17:18 PM
RICK HALFORD, Chairman, Alaska State Officers Compensation
Commission, said he was glad to be here to explain its
recommendations. He agreed that the debate and process is
worthwhile, but the process of not reaching a solution which has
occurred over the last 20 years hasn't worked. The Commission
didn't have the opportunity to set up the rules it operated
under. He was asked to join it, and part of the reason he was
willing to do that is because:
Frankly, I felt a little bit guilty about being here
all those years, and not being a part of a better
compensation package for legislators. I was one of
those who were fortunate enough to have a seasonal
self employment income, and I was able to make it work
for me. But a lot of people weren't. And a lot of
people who gained by experience and could have stayed
didn't stay and some people who could have run, didn't
run.
So, I was willing to take on the task of addressing
this, but the Commission was a wonderful commission in
that we had Gordon Harrison who has a great reputation
here in Juneau, wrote the book on the explanation of
the Constitution, an author who was the head of the
legislative research arm for a while. We had Rick Cook
who is the city manager of Kenai, Tom McGrath who owns
the Frigid North, the big electronics wholesaler in
Anchorage, and we had former Senate President Mike
Miller who had also served as commissioner of
Administration. So, we had a group of people that I
think were very well experienced in the private sector
and in the public sector.
And about the first thing we did is we adopted a
policy that we were not going to do anything unless we
had unanimous consent. Because this is an issue that
has been divisive in the past, we did not want
anything that we couldn't all wholeheartedly agree to
be our recommendation.
We had a very short timeline; we came out with a
recommendation that included the governor, lieutenant
governor, commissioners and the legislature. We met
the requirement for the timing and the hearings and
the process to deliver it, but just barely. We, as a
matter of fact, asked for the Attorney General's
advice to make sure that we could meet it, and do all
the things that we had to do. But, I believe the
recommendation is very, very reasonable. As a final
recommendation - you know that we dropped out the
governor and lieutenant governor and the major piece
remaining is the legislative pay equalization. But
what it does is it takes out the out of session per
diem that people took in their homes on a very
differential basis and it sets the salary at $50,400
per year.
2:20:45 PM
MR. HALFORD said that Alaskans want citizen legislators, but
expectations with regard to conflict of interest make it harder
and harder for people to have other work to be able to support
their families and be able to participate in this process. It's
very difficult to live on $24,000 per year and deal with a
family's needs. This is a minimum step in the right direction.
It is unanimously supported by the commission, and it doesn't
take effect until next year. He stated:
I believe that you are the board of directors of one
of the greatest natural resource corporations - and
human resource corporations - on earth. I believe that
you sit across the table from some of the toughest,
single-minded, well-educated, well-funded interests
who come for our resources or for our interest, and it
doesn't matter whether they are a national health
corporation or a national resource corporation. They
have phenomenal resources at their disposal in these
negotiations. You have to go to consultants for
information who are often looking for their next job
from the opposite side of the table. You have a very
tough job and you are worth it.
I wish we could have come up with a stronger
recommendation for a better compensation package, and
in the future we may. But for the short term I think
it's a strong step in the right direction. Again, it
gets away from the questions that the public has had
about how the in-district per diem was taken on a
differential basis by individuals, and that was often
based on what they felt they could establish with
their constituency regardless of whether they actually
spent the time working. Often people were not willing
to take per diem that they were really due because
they didn't think their constituency would appreciate
that.
CHAIR PASKVAN asked him to explain the range of wages they
considered, so people understand the thought process they went
through.
2:23:40 PM
MR. HALFORD introduced Micki Neal, staff to the Commission,
being the director of personnel, who did "a wonderful job"
gathering information onto a website. It now has a wealth of
information including projections based on cost of living to
other states. He explained the legislature doesn't get to
approve contracts.
SENATOR BUNDE reiterated that bill is not a criticism of his and
their work, but rather a necessary dialogue.
2:26:44 PM
MR. HALFORD reiterated that on one hand Alaskans have very high
expectations with regard to conflict of interest and that's very
difficult for people to deal with. "On the other hand, we assume
that legislative sessions are 90 or 120 days when, in fact, the
record in recent years, when you add special sessions and
everything else, is more than a half-a-year when you add the
time to get ready. Every legislator is continuously available to
his constituency. So the legislative jobs are not 90 or 120
days; they are long-term jobs. The time requirement is much
higher than people understand it to be.
He said the Commission looked back at the salary of Supreme
Court judges that used to be tied the salaries of commissioners
for the first 15 years of statehood when it was hard to get the
very best commissioners. If those two were still tied together,
commissioners would be paid something like $165,000 a year
today.
A good long term goal might be after the next election to start
with the governor's salary and use the 75th percentile of the
governor's of the nation, and then pay the commissioners and
lieutenant governor at a percentage of the governor's salary.
You would pay the legislature at a percentage of the
commissioners' salary and base that percentage on what the work
commitment of the legislature really is. An integrated system
that pays those who are in public office at a reasonable rate so
that you can keep the best quality people involved is important
and should be one of the long-term goals.
CHAIR PASKVAN said the report addressed the legislature as an
equal branch of government and asked him to expand on that.
2:29:57 PM
MR. HALFORD said the Commission was set up with a limited
purview; the effective date of what they did was in the law.
They had rules to follow that said they covered only certain
elected or top-appointed officials. There were a lot of parity
questions. However, he felt the legislative branch has lost a
lot of ground in that balance in a number of ways over the last
few years - in the staff is paid, legislators, in the shortness
of the sessions, their inability to set their own agenda and the
continuous special sessions that are set by the agenda of the
administration.
2:32:10 PM
PAM VARNI, Executive Director, Legislative Affairs Agency, said
she and Karla Schofield, Deputy Director, Legislative Affairs
Agency, prepared the fiscal note for SB 106. She explained that
legislators' salaries used to be tied to a range 10, and now
they are equivalent to a range 5. When state employees receive a
3 percent cost of living increase on July 1 of this year, it
will be entirely off of the salary schedule.
She said in 2006, the Council of State Governments did a trend
analysis of state legislators' compensation from 1975 to 2005
with the CPI adjusted, and Alaska had one of the largest salary
decreases in real dollars at a minus 55.94 percent. A full year
of the new compensation package is an increase of $1.2 million.
That increase is split between two years in the fiscal note. So
for FY10 it's an increase of $833,600, and for FY11 - $383,600.
This eliminates a total of $810,000 for interim per diem over
that two-year period. She said some other efficiencies would be
realized in legislators' and legislative staff time by not
having to fill out the interim per diem forms and by the
accounting section not having to process them.
2:33:57 PM
SENATOR BUNDE said it appears to him that Juneau area
legislators receive another per diem for every day they are in
session and it appears to him that they're getting an additional
salary. Why do they get that for living in their own homes?
MS. VARNI explained that issue came up quite a few years ago
when it was decided that Juneau legislators would receive 75
percent of what the other 57 members get, but they are taxed on
it; whereas if you live more than 50 miles from the capital like
the other 57 legislators do, you qualify for that session per
diem - so they can pay their mortgages back home and pay for
their rent here. That was a Legislative Council decision and it
could be reversed.
2:37:43 PM
CHAIR PASKVAN called an at ease at 2:37.
2:41:29 PM
He called the meeting back to order at 2:41.
2:41:53 PM
CHAIR PASKVAN announced an at ease at 2:41 because of technical
difficulties and to move to another committee room.
2:49:25 PM
He called the meeting back to order at 2:49.
JASON BRUNE, Executive Director, Resource Development Council
(RDC), opposed SB 106. Currently Alaskan legislators are grossly
underpaid, he said. "The fact that legislators are compensated
at levels below their lowest staff member is appalling." It is
difficult for legislators to find and have a job or to be
reliable employees outside of the legislature especially with
the number of special sessions that have been held. Furthermore,
he said, the common denominator for the legislators in jail is
money, and not much of it.
The current system in Alaska allows only for the independently
wealthy, retirees or people who are willing to live in their
offices and eat ramen noodles. Alaska relies upon the
responsible development of its natural resources as a foundation
of its economy. Decisions made by the legislature have a
significant financial impact on corporations as well as the
state's citizens, and it should be imperative to lure more of
the best and brightest to Juneau.
2:53:15 PM
SENATOR BUNDE pointed out that the proposed pay increase for
some legislators that claim per diem would actually be a pay
decrease for other legislators who didn't claim any.
MR. BRUNE agreed, but he added that he is happy that this is a
start in the right direction, though.
2:55:01 PM
KATE GIARD, Commissioner, Regulatory Commissioner of Alaska
(RCA), opposed SB 106. RCA commissioners are not impacted by the
decisions of the Compensation Commission. While she didn't
agreed with the language of Senator Bunde's bill, it does
provide an important public forum for this discussion within the
legislative arena, and she is grateful for this discussion. In
her eyes there is no replacement for a public hearing before the
Alaska legislature. In matters related to compensation, the
highest degree of public participation will provide the Alaska
legislature with the highest degree of integrity in any decision
to take action or not on any Compensation Committee
recommendation.
MS. GIARD said she wanted to talk about public trust in a system
with internal controls. Both of these strongly indicate the
elimination of long-term per diem is and must be completed as
soon as possible.
As a state regulator and former CFO for the Municipality of
Anchorage and past internal auditor for the school district, she
knows that a system of internal controls in the public sector is
essential to insure that the public can trust elected officials
and its public institutions. On page 6 of the Commission's
report beginning with the word "Disparity" the Commission
generally describes a few possible reasons for the apparent
difference in the use of long-term per diem by members of the
Alaska legislature, including striking inequities in the how
legislative per diem is viewed.
She said, "The long-term per diem system is absent any
meaningful internal control, and I don't know if it can even be
audited in any real sense." To qualify for long-term per diem
the legislator must attend a meeting for legislative or public
purpose or spend four hours on legislative or constituent
business. Little documentation is required and opportunities for
third-party verification are few. In 2007, based on the 2007
legislative salary and business expense report, long term per
diem exceeded $650,000. She knew of no other place in state
government where the internal controls over an expenditure of
that much money was so weak.
After reading the history of the legislature's compensation she
found and acknowledges that long-term per diem resulted from an
inability of past legislators to appropriately compensate
members for their public service. Based on that history, a
legislator is encouraged to view long-term per diem as part of
the overall compensation package. The fact of the matter is that
being an elected representative is a year-round duty, and there
is a remarkable inequity in the use of long-term per diem
between legislators that does not reflect the difference in
demands, but rather in their personal feelings about billing per
diem. Thus the long-term per diem as a substitute system for
compensation has failed miserably to recognize the work
contribution of Alaska legislators. The system is broken; it has
little to no internal controls or uniformity in applications,
and, therefore it can't engender public trust. Replacing the per
diem system with a straight salary provides a far improved
system of internal controls and eliminates the very troubling
aspects of public service provided by our elected officials.
MS. GIARD said she didn't think this legislature should
interfere in any way with the immediate elimination of long-term
per diem, which is contemplated by the Compensation Commission's
recommendations. Her other thoughts on the report are included
in the records that are maintained on the Commission's website.
3:01:24 PM
CHAIR PASKVAN thanked her, and closed public testimony. He noted
that he would hold SB 106.
SENATOR BUNDE wrapped up that more money doesn't produce ethical
legislators, but possibly a larger talent pool that would.
| Document Name | Date/Time | Subjects |
|---|---|---|
| SB 106 Bill Packet.pdf |
SL&C 3/17/2009 1:30:00 PM |
SB 106 |