Legislature(2013 - 2014)BELTZ 105 (TSBldg)
04/03/2013 05:00 PM Senate LABOR & COMMERCE
| Audio | Topic |
|---|---|
| Start | |
| HB84 | |
| SB25 | |
| SB8 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | HB 84 | TELECONFERENCED | |
| += | SB 79 | TELECONFERENCED | |
| += | HB 50 | TELECONFERENCED | |
| += | SB 8 | TELECONFERENCED | |
| *+ | SB 25 | TELECONFERENCED | |
SB 25-UNEMPLOYMENT; ELEC.FILING OF LABOR INFO
5:15:50 PM
CHAIR DUNLEAVY reconvened the meeting and announced the
consideration of SB 25, "An Act relating to electronic filing of
certain information with the Department of Labor and Workforce
Development; relating to surcharges, rate increase reduction,
prohibition on the relief of certain charges, the unemployment
trust fund account, and the offset of certain unemployment
compensation debt under the Alaska Employment Security Act;
relating to the definition of 'covered unemployment compensation
debt' in the Alaska Employment Security Act; and providing for
an effective date." He noted this was the first hearing on the
bill which was requested by the Governor.
5:16:47 PM
BRYNN KEITH, Acting Deputy Commissioner, Department of Labor and
Workforce Development (DOLWD), Juneau, Alaska, said SB 25 does
four things: 1) it allows for the electronic filing of reports
and documents; 2) it improves the ability to recoup fraudulent
unemployment insurance payments, 3) it adopts minor changes to
bring state law into compliance with federal law governing the
unemployment insurance program; and 4) it changes how the
unemployment insurance tax rates are set in order to keep more
money in the hands of Alaska employers and employees while
protecting the integrity of the unemployment insurance trust
fund.
5:18:00 PM
PAUL DICK, Director, Division of Employment Security, Department
of Labor and Workforce Development (DOLWD), provided the
following sectional analysis of SB 25:
Section 1 adds a new section, AS 23.05.055, authorizing the
commissioner to allow the use of electronic filing methods in
place of paper filing.
Section 2 adds a new section, AS 23.20.021, authorizing the
legislature to appropriate money into the unemployment trust
fund account.
Sections 3 adds a new section, AS 23.20.279, that brings the
state into conformity with federal law, Public Law 112-40, by
prohibiting the relief of charges to employers when an erroneous
payment of unemployment insurance benefits is made due to an
established pattern of the employer, or an agent of the
employer, for failing to respond timely or adequately to a
documented request for information relating to a claim for
unemployment compensation. This section defines "erroneous
payment" as a payment made that would not have otherwise been
paid, but was due to the failure of the employer to respond
timely or adequately. This section also defines "pattern of
failing" as two or more times or two percent or more of all
requests, whichever is greater, during the prior year.
MR. DICK emphasized the serious impacts of not being in
conformity with federal law. Because the state is in compliance,
Alaska employers receive a 90 percent credit on Federal
Unemployment Tax Act (FUTA) tax contributions for each employee.
If the state were to fall out of compliance it would mean a
substantial burden on employers in addition to the loss of
administrative funding, which is $21 million this year.
SENATOR MICCICHE asked when the state would be out of
compliance.
MR. DICK replied the federal requirements must be in place by
October 21, 2013. He continued the sectional analysis.
Section 4 repeals and reenacts AS 23.20.290(f), replacing a
table method for determining unemployment insurance trust fund
solvency adjustments with a more precise calculation method. It
also eliminates a restriction on how far the fund solvency
adjustment surcharge can fall in a single year. Surcharges are
currently calculated to tenths of a percent and the bill would
provide for surcharges to be calculated to hundredths of a
percent. Currently, the statutes allow the solvency adjustment
to only increase or decrease a maximum of .3 per year. This
removes the .3 limitation on decreases in solvency adjustments.
In decreasing situations this will provide more tax relief to
employers.
Section 5 adds a new section, AS 23.20.291, authorizing the
commissioner to eliminate or reduce increases in unemployment
insurance tax rates when the "average high cost multiple," a
measure of solvency calculated by the U.S. Department of Labor,
Employment and Training Administration, is 0.8 or greater. There
is also a requirement to consult with the department's actuarial
staff. This provides unemployment insurance tax relief to
employers during economic downturns.
Section 6 amends section AS 23.20.390(f) to bring the state into
conformity with federal law, Public Law 112-40, by removing the
department's authority to waive the collection of a penalty
established due to misrepresentation and requires that a minimum
of 30 percent of the unemployment insurance penalties collected
due to misrepresentation be deposited into the state's
unemployment trust fund account.
Section 7 adds a new section, AS 23.20.486, to authorize the
department to offset unemployment compensation debt against a
claimant's federal income tax refund. This section would allow
the state to participate in the federal treasury offset program.
This would allow the state to offset unemployment insurance
debts against federal income tax return refunds. The offsets are
projected to bring in $500,000.
Section 8 amends AS 23.20.520 by adding a new paragraph to
define "covered unemployment compensation debt" in accordance
with the federal statutory definition.
Sections 9 amends state uncodified law by specifying that AS
23.20.279, section 3, applies to overpaid benefits established
after October 21, 2013.
Section 10 specifies that the department will adopt necessary
regulations to implement changes. Regulations will not be
effective prior to July 1, 2013.
Section 11 establishes that Section 10 takes effect immediately.
Section 12 establishes the effective date for the remaining
sections of the Act as July 1, 2013.
5:23:18 PM
SENATOR MICCICHE asked if it would be possible to go below the
previous year's unemployment insurance tax rate.
MR. DICK said no because this only applies to an increase in a
given year.
5:24:21 PM
CHAIR DUNLEAVY opened public testimony.
5:24:31 PM
BARBARA HUFF TUCKNESS, Director, Governmental and Legislative
Affairs, Teamsters Local 959, said Local 959 represents about
7,000 members statewide who are affected by SB 25. Local 959 is
also an employer of 35 people, and in 2012 paid about $37,000
into the unemployment insurance trust fund. Those employees paid
a little over $8,300. She noted that Alaska is one of three
states in which employees and employers both pay into the trust
fund.
MS. HUFF TUCKNESS said she sent a letter to Commissioner Blumer
on February 12, 2013 to voice concerns about the bill,
specifically Section 5. She read the question she posed and the
answer she received as follows:
Q - If the rate increases are suspended, as referenced
in Section 5 of the bill, and the average high cost
multiple falls below the trigger, won't employers and
employees be required to pay more than what they would
have had the earlier rate increase been suspended?
A - If rate increases are suspended, employers and
employees would be required to pay slightly more in
subsequent years than they would have if the increased
had not been suspended in the earlier years. Over the
long term, however, the amount paid by the employers
and employees would be about the same, or slightly
less, than if increases were never suspended.
MS. HUFF TUCKNESS questioned the wisdom of changing the system
if employers and employees end up paying the suspended increase
anyway. The current system is tried and true and has been
working, as opposed to the 30-35 unemployment trust funds in the
Lower 48 that have gone through insolvency and had to borrow
money from the federal government to fund those plans. The state
ultimately is required to pay back the loan.
MS. HUFF TUCKNESS said, other than Section 5, the provisions of
the bill are positive changes that are for the good of everybody
and the betterment of the fund.
5:30:10 PM
PAUL GROSSI, Lobbyist, Alaska State Pipe Trades UA Local 375,
and Ironworkers Management Progressive Action Cooperative,
stated support on behalf of the union for SB 25 except for
Section 5. That is the section that allows the commissioner to
eliminate or reduce the increases in unemployment insurance tax
rates. Since the formula was implemented in 1980, the Alaska
trust fund has never been insolvent. He said he didn't want to
sound like the sky is falling, but if the increases have been
suspended for a period of time and there is a downturn in the
economy, there could be insufficient funds to make up for the
increased claims. That is a slight problem for the claimants
because the benefits may be delayed, but the federal government
will step in and make the claimants whole. The employer is then
responsible for making the fund solvent.
The question is whether the risk is worthwhile if the funds have
to be reimbursed anyway, and the current formula is proven. If
the department is concerned about overfunding, he suggested
tweaking the formula as opposed to throwing it out.
He reiterated support for the bill with the exception of Section
5.
5:34:02 PM
ANDY ROGERS, Deputy Director, Alaska State Chamber of Commerce
("Alaska Chamber"), testified in support of SB 25. He said this
is a membership organization comprised of private sector
businesses. Each year the membership discusses the challenges
facing businesses and selects positions for the staff to
advocate for. This issue got members attention. The Alaska
Chamber asked Deputy Commissioner Keith to address the
membership and give a sectional analysis of the bill and
responded to questions. The membership reviewed Section 5 and
supports giving the commissioner the option of providing relief
to Alaskan businesses when the fund is solvent and there are
economic reasons to do so. Section 2 provides some protections
because the legislature can make an appropriation to make the
fund whole.
The Alaska Chamber believes that a majority of the bill provides
good clean up provisions and he applauds the administration for
doing good business on behalf of the state and looking for areas
to optimize and seek efficiencies in the way it conducts
business. That's what [SB 25] does.
SENATOR MICCICHE commented that he agrees with Mr. Grossi that
the sky probably isn't falling, but the concerns about Section 5
are legitimate. He asked Ms. Keith and Mr. Dick if Section 5
needed some adjustment or if they felt it would remain solvent
under relatively challenging conditions.
MS. KEITH said the department believes that Section 5, as
currently written, maintains the solvency of the fund while
allowing businesses and employers to keep a little more money in
their pocket and churning through the economy and creating jobs.
It strikes a good balance and is a good move forward for
employers and employees.
SENATOR MICCICHE asked the typical increase from year to year
over the past 10 years.
MR. DICK said he didn't have the information, but the rate goes
up and down and that's what it's done over the history of the
trust fund as the economic times and benefit requirements have
changed.
SENATOR MICCICHE asked if the trust fund would be managed for a
relatively smooth ride as opposed to a roller coaster.
MR. DICK emphasized that this legislation does not change the
formula. He reiterated that over the history of the fund there
haven't been dramatic increases or decreases.
5:41:40 PM
SENATOR MICCICHE requested the 10-year trend.
MR. DICK acknowledged the request.
CHAIR DUNLEAVY stated he would hold SB 25 in committee.
| Document Name | Date/Time | Subjects |
|---|---|---|
| SB25 AK State Chamber_letter of support.pdf |
SL&C 4/3/2013 5:00:00 PM |
SB 25 |
| SB8_Opposition_Letter_CVS.pdf |
SL&C 4/3/2013 5:00:00 PM |
SB 8 |
| SB8 Pharmacy Benefit Managers.PDF |
SL&C 4/3/2013 5:00:00 PM |
SB 8 |
| SB8_Letter Alaska Nurses Assoc..docx |
SL&C 4/3/2013 5:00:00 PM |
SB 8 |
| SB8_Support Letter_RonsApoth.pdf |
SL&C 4/3/2013 5:00:00 PM |
SB 8 |
| SB 8 lttr supporting - AK Pharmacists 012513.PDF |
SL&C 4/3/2013 5:00:00 PM |
SB 8 |
| SB 8 lttr supporting - AK Pharmacists 012513.PDF |
SL&C 4/3/2013 5:00:00 PM |
SB 8 |
| SB 8 testimony RonsApoth 040313.pdf |
SL&C 4/3/2013 5:00:00 PM |
SB 8 |
| SB8_Support_Letter.PDF |
SL&C 4/3/2013 5:00:00 PM |
SB 8 |