Legislature(1999 - 2000)
01/28/1999 03:29 PM STA
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
SB 33-TASK FORCE ON PRIVATIZATION MARK HODGINS, aide to the Senate State Affairs Committee, presented SB 33 for the sponsor, Senator Ward. SB 33 was introduced to establish a task force to review functions of state government that could be easily transferred to the private sector. The task force will be comprised of members from the public and the legislative and executive branches. The task force will take the first all- encompassing look at privatization of governmental services in Alaska. Some form of privatization of governmental services has taken place in 48 other states. When enacted, SB 33 will evaluate which services can be provided more efficiently by the private sector, as well as highlight those services that are better provided by the government. The report should provide a road map for reducing the size and cost of state government without reducing services, while providing options for the future. SB 33 will also look into the state's contracting procedures to ensure that Alaskans are getting the most out of their contracting dollars. Number 048 SENATOR PHILLIPS asked which two states have not privatized any government services. SENATOR WARD answered the States of Massachusetts and New Jersey. SENATOR ELTON pointed out the fiscal note refers to last year's bill. He questioned whether costs will be higher since SB 33 requires more task force members. MR. HODGINS explained he provided the fiscal note from last year's bill to use as a reference. The narrative on that fiscal note suggests that the costs are indeterminate because the Department of Administration (DOA) did not know which departments will be affected. Number 073 SENATOR ELTON questioned why SB 33 restricts, to some extent, the ability of the Senate President and Speaker of the House to select the co-chairs of the task force. SENATOR WARD replied this legislation was copied from a document that created a similar task force in the State of Wyoming. Number 111 KATHLEEN STRASBAUGH, assistant attorney general, Department of Law (DOL), gave the following testimony. The Administration opposes SB 33 for the same reason it vetoed similar legislation recently passed by the Legislature. The Administration supports the concept of investigating this matter, would provide information, participate, and help the committee in any way it could; however, it feels there is a separation of powers issue associated with bringing together the two branches. It prefers that the Legislature accomplish the same objective by setting up its own committee with a resolution. SENATOR MACKIE asked if the Governor would support SB 33 if he did not have to appoint any task force members. MS. STRASBAUGH was unable to describe what type of structure the Governor would like to see. The Administration's position on the last bill was that it is more appropriate to accomplish this task by committee rather than by statute. Number 136 SENATOR MACKIE asked what the Administration has done in this area under its own powers. MS. STRASBAUGH replied all contracts are currently up for negotiation, but the state previously negotiated with the union the ability to contract out certain kinds of functions if found to be appropriate in a feasibility study. Some litigation has taken place related to that agreement. SENATOR MACKIE asked Ms. Strasbaugh if the Administration is opposed to the bill because it does not want to participate with the Legislature in this type of a task force because it believes there are two separate branches of government, regardless of what the issue is. MS. STRASBAUGH said that is correct, and repeated that the Legislature can accomplish its objective by passing a resolution to form a committee. Number 159 DON ETHERIDGE, representing Local 71, testified in opposition to SB 33 and expressed concern that certain functions of state government have been pre-targeted for contracting. Local 71 has been trying to protect certain jobs within the Department of Transportation and Public Facilities (DOTPF). Local 71 workers have been able to do the jobs at a lower cost, but DOTPF has been under political pressure to contract the work out: Local 71 fears SB 33 will add additional pressure. Local 71 has provisions in its contract that require the Administration to do feasibility studies. If the Administration can prove the work can be done cheaper through contracts, Local 71 will not litigate. During this time of budget reductions, Local 71 sees no point in funding a task force when a process already exists to serve the same purpose. Number 190 SENATOR PHILLIPS asked Mr. Etheridge who Local 71 believes is targeting its workers. MR. ETHERIDGE replied Local 71's major fear is that it is not sure where the threat is coming from. Contractors have been putting pressure on the Administration and legislators to contract out Local 71's positions, specifically pipeline drillers. When pipeline construction began, the state did not have any drillers on its payroll. DOTPF eventually put together its own drilling crew, and now that the pipeline work has slowed down, those drillers may be laid off but expected to hang around in case a gas line is built. SENATOR PHILLIPS asked who will execute the task force's recommendations. SENATOR WARD replied the recommendations are reported to the Legislature and the Administration, and the power of appropriations remains with the Legislature. He stated he has discussed with Mr. Etheridge his concern for two years. SENATOR WARD stated his intent is to review all departments to determine what services can be performed at a reduced cost by contracting, and that it is not his intention to remove one state employee. He does support a hiring freeze, however. Number 250 SENATOR PHILLIPS maintained members of Local 71 are some of the most important state employees. He asked Mr. Etheridge why he thought Local 71 employees would be the easiest to target. MR. ETHERIDGE responded all of the highway maintenance was contracted out in British Columbia, without success. SENATOR WARD said he wanted to establish a task force two years ago so that it could make thoughtful decisions without the added pressure of a financial crisis. Number 265 SENATOR MACKIE said last year's discussions revolved around labor group representation on the task force. He noted downsizing could occur at anytime. He stated his intent to support SB 33 because the task force report will not list positions that should be cut; it will recommend ways to make government more efficient and less costly. The Legislature is now forced to ask the Governor for suggested reductions and to downsize, and many of those decisions are made off the cuff. He asked Mr. Etheridge if he was more comfortable with the new bill, in terms of the composition of the task force. MR. ETHERIDGE said yes, and that his concern about the short time frame has also been resolved. He explained Local 71 came out in support of the bill when it was first introduced two years ago, but in conversations with staff last year, he became nervous. Local 71 and the Administration did a job study this past year and reclassified positions in an attempt to reduce costs: 200 positions will be downgraded and 16 will be upgraded. Number 325 SENATOR MACKIE assured Mr. Etheridge he has no preconceived notions about which jobs should be contracted out. He thanked Mr. Etheridge for his testimony. Number 335 DAVID KOIVUNIEMI, Assistant Commissioner of the Department of Administration (DOA), testified that the collective bargaining agreements require that feasibility studies be done if work is to be contracted out. According to the past fiscal note, feasibility studies cost $50,000. DOA is willing to cooperate and provide any information it has available to the task force. SENATOR MACKIE moved SB 33 out with individual recommendations. SENATOR ELTON objected. The motion carried with Senators Mackie, Phillips and Ward voting "Yea," and Senator Elton voting "Nay."