Legislature(1999 - 2000)

01/28/1999 03:29 PM STA

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= 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                                                                     
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                                                                   
SENATOR PHILLIPS asked who will execute the task force's                                                                        
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."                                                                 

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