Legislature(1995 - 1996)

06/06/1996 09:20 AM House FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
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                     HOUSE FINANCE COMMITTEE                                   
                          June 6, 1996                                         
                            9:20 A.M.                                          
                                                                               
  TAPE 1st SSHFC 96-4, Side 1, #000 - end.                                     
  TAPE 1st SSHFC 96-4, Side 2, #000 - #053.                                    
                                                                               
  CALL TO ORDER                                                                
                                                                               
  Co-Chair  Mark Hanley  called  the  House Finance  Committee                 
  meeting to order at 9:20 a.m.                                                
                                                                               
  PRESENT                                                                      
                                                                               
  Co-Chair Hanley               Representative Martin                          
  Co-Chair Foster               Representative Mulder                          
  Representative Brown          Representative Navarre                         
  Representative Grussendorf    Representative Parnell                         
  Representative Kelly          Representative Therriault                      
  Representative Kohring                                                       
                                                                               
  ALSO PRESENT                                                                 
                                                                               
  Annalee  McConnell,  Director,  Office  of  Management   and                 
  Budget,  Office  of the  Governor;  Chuck O'Connell,  Alaska                 
  State  Employees  Association;   Bob  Stalnaker,   Director,                 
  Division   of  Retirement   and   Benefits,  Department   of                 
  Administration;  Sandy  Perry  Provost,  Special  Assistant,                 
  Department of Public Safety.                                                 
                                                                               
  SUMMARY                                                                      
                                                                               
  SB 1003   An Act relating to public employees.                               
                                                                               
            CSSB 1003 (FIN)  am was reported out  of Committee                 
            with  "no  recommendation"  and  with  two  fiscal                 
            impact notes by the Department of Administration.                  
                                                                               
  SB 1005   An   Act   making,    amending,   and    repealing                 
            appropriations; making  appropriations under  art.                 
            IX,  sec. 17(c),  Constitution  of  the  State  of                 
            Alaska,  from  the  constitutional budget  reserve                 
            fund; and providing for an effective date.                         
                                                                               
            CSSB 1005 (FIN)  am was reported out  of Committee                 
            with a "do pass" recommendation.                                   
                                                                               
  SB 1010   An  Act relating  to  motor  vehicle  records  and                 
            hearings  of  the  Department  of  Public  Safety;                 
            increasing  the period  under which  a person  may                 
                                                                               
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            drive a  motor vehicle  under a temporary  permit;                 
            relating to  ownership of certain  abandoned motor                 
            vehicles; relating to  suspension or revocation of                 
            a motor  vehicle registration  or special  permit;                 
            relating to renewal of a driver's license by mail;                 
            relating    to     procedures    applicable     to                 
            administrative revocation of  a driver's  license;                 
            relating  to  commercial driver  training schools;                 
            increasing the  property damage amounts  for proof                 
            of  financial  responsibility and  proof  of motor                 
            vehicle eligibility in order to lawfully operate a                 
            motor   vehicle  in   the   state;  amending   the                 
            definition of `commercial motor vehicle'; relating                 
            to prohibited  operation  of  a  commercial  motor                 
            vehicle  and to  disqualification  from driving  a                 
            commercial  motor  vehicle;  relating  to  certain                 
            notifications  in  accidents   involving  property                 
            damage;  relating  to  motor vehicle  registration                 
            procedures; and providing for an effective date.                   
                                                                               
            CSSB 1010 (L&C)  am was reported out  of Committee                 
            with a "do pass" recommendation  and with two zero                 
            fiscal  notes  one  by  the  Department of  Public                 
            Safety, dated 6/3/96, and one by the Department of                 
            Transportation   and   Public   Facilities,  dated                 
            6/3/96.                                                            
  SENATE BILL NO. 1003                                                         
                                                                               
       An Act relating to public employees.                                    
                                                                               
  CHUCK  O'CONNEL, BUSINESS  MANAGER,  ALASKA STATE  EMPLOYEES                 
  ASSOCIATION (ASEA) spoke in  support of SB 1003.   He stated                 
  that  ASEA  can  accept the  compromise  represented  by the                 
  legislation.  He observed that the legislation makes changes                 
  to the retirement system  that ASEA has resisted.   He noted                 
  that there is  no diminishment  of benefits for  any of  the                 
  present bargaining units.  He  observed that contracts would                 
  have  to  be voted  on  again  if there  were  reductions in                 
  benefits for existing bargaining units.                                      
                                                                               
  MARK  BOYER,  COMMISSIONER,  DEPARTMENT   OF  ADMINISTRATION                 
  reviewed changes to SB 1003 made by the Senate.  He observed                 
  that  references  to  geographic  differentials  have   been                 
  deleted.   Reference to  the geographic  differential as  it                 
  relates to municipal assistance and revenue sharing were not                 
  included  in the  legislation.   He  explained  that it  was                 
  unnecessary  to  restate in  Title  29 the  differentials in                 
  these programs.   The legislation maintains the  status quo.                 
  The legislation would provide  that leave be accrued at  the                 
  rate of pay in which it is earned.  Presently, leave paid at                 
  cash out is at the current wage  rate, not the rate at which                 
                                                                               
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  it was  earned.   Retirement will  be based  on the  average                 
  salary of the highest five years  times the years of service                 
  with a multiplier, instead of the  highest three years.  The                 
  legislation also  changes the  qualification for  retirement                 
  health benefits.   New employees will  have to work for  the                 
  State for a  minimum of ten  years, instead of five,  before                 
  qualifying for retirement  health benefits.   New  employees                 
  would still be eligible for other aspects of  the retirement                 
  system after five  years.  The legislation also  contains an                 
  early  retirement  incentive   program  and  clarifies   the                 
  qualifying criteria for cost of  living differentials in the                 
  marine units.   A person must  otherwise qualify as if  they                 
  were receiving  a permanent fund dividend in  order to prove                 
  residency  for the  purposes of  receiving a cost  of living                 
  differential.  Legislators' salaries  will not be  increased                 
  by the provisions  that approve  the monetary  terms of  the                 
  contracts.  Non-covered  employees would also receive  a 1.4                 
  percent increase for three years.                                            
                                                                               
  In   response  to   a  question  by   Representative  Brown,                 
  Commissioner Boyer noted  that section  10 was deleted  from                 
  the legislation because it  duplicated language existing  in                 
  statute.    He noted  that  it  was not  the  intent  of the                 
  Governor to change differentials of the municipal assistance                 
  and revenue  sharing programs.   Changes  to the  retirement                 
  system  of  new police  and  fire department  employees were                 
  eliminated.  He  observed that  the benefit calculation  was                 
  eliminated from sections 20 and 21.   He added that sections                 
  22 and  23 were  eliminated.   He explained  that clarifying                 
  language   was   added   to  provisions   regarding   salary                 
  adjustments for judicial employees.  A new section was added                 
  to clarify that  appropriations made for the  University are                 
  made for  contracts during the current  legislation session.                 
  A reference to the limitation  of employee salaries relating                 
  to  the  geographical   differential  was  eliminated.     A                 
  traditional period for  conversion from an hourly bank  to a                 
  cash bank was included.                                                      
                                                                               
  In  response   to  a  question   by  Representative   Brown,                 
  Commissioner Boyer noted that  leave conversions only effect                 
  non-covered employees.  He added that retirement changes are                 
  not subject to bargaining.   Retirement changes would effect                 
  new  employees  only.   He  explained that  the Constitution                 
  prevents modification or impairment of benefits  for current                 
  employees.  The  cost of  living differential language  will                 
  effect  new  contracts in  the  marine highway  system.   He                 
  observed that a recent Superior Court decision validates the                 
  State's position that the State has the  authority to change                 
  the format of the  differential.  A new qualifying  form has                 
  been sent to marine  highway employees that conforms to  the                 
  definition change included in the legislation.                               
                                                                               
                                                                               
                                3                                              
                                                                               
                                                                               
  Representative Martin asked for more details on the proposed                 
  retirement incentive program (RIP).                                          
                                                                               
  Commissioner Boyer noted that the contracts have a four year                 
  span.   There would  be no  increase the  first year of  the                 
  contract.    The  total  four year  cost  for  the  contract                 
  increase is approximately  $32 -  $34 million  dollars.   He                 
  observed that the changes included  in the legislation would                 
  save approximately $17.0 million dollars over the first five                 
  years.  This amount would grow exponentially over time.  The                 
  total  savings  over  25  years  would be  approximately  51                 
  million dollars.                                                             
                                                                               
  BOB  STALNAKER,   DIRECTOR,  DIVISION   OF  RETIREMENT   AND                 
  BENEFITS, DEPARTMENT  OF ADMINISTRATION reiterated  that the                 
  only remaining cost reduction provisions in  the legislation                 
  are the  five year average  salary and ten  year requirement                 
  for  retirement health insurance.   These will  result in an                 
  employer  savings of  approximately 1.8  percent.   Employer                 
  cost would be  approximately 8 percent upon  transition into                 
  the Tier III environment.   He noted that the  RIP provision                 
  has not been altered.                                                        
                                                                               
  In  response  to a  question  by Representative  Martin, Mr.                 
  Stalnaker stressed that employees determine their ability to                 
  RIP  based  on the  level of  salary  they would  receive at                 
  retirement.  He  pointed out that  some of the highest  paid                 
  employees  are  excluded  from  the   RIP  provisions.    He                 
  estimated that  the majority  of employees exercising  early                 
  retirements are at the mid range level.                                      
                                                                               
  Representative Therriault  noted that  the University  saved                 
  the  most money  in the  previous RIP.   Commissioner  Boyer                 
  noted that the University  is eligible to implement  the RIP                 
  provisions.                                                                  
                                                                               
  Representative Mulder MOVED to report CSSB 1003 (FIN) am out                 
  of Committee  with individual  recommendations and  with the                 
  accompanying fiscal notes.  There being NO OBJECTION, it was                 
  so ordered.                                                                  
                                                                               
  Commissioner Boyer noted  that the  two accompanying  fiscal                 
  notes were not  adopted by the Senate.  He stressed that the                 
  Department of Administration will ask the Legislative Budget                 
  and Audit Committee for authority to expend retirement funds                 
  if the fiscal notes are not appropriated.                                    
                                                                               
  CSSB 1003 (FIN)  am was reported  out of Committee with  "no                 
  recommendation"  and  with two  fiscal  impact notes  by the                 
  Department of Administration.                                                
                                                                               
  CSSB 1005 (FIN) am was reported out of Committee with  a "do                 
                                                                               
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  pass" recommendation.                                                        
  SENATE BILL NO. 1005                                                         
                                                                               
       An Act making, amending, and repealing  appropriations;                 
       making  appropriations  under   art.  IX,  sec.  17(c),                 
       Constitution  of  the   State  of   Alaska,  from   the                 
       constitutional budget  reserve fund; and  providing for                 
       an effective date.                                                      
                                                                               
  Co-Chair Hanley  reviewed amendments adopted  by the Senate.                 
  He noted that the Senate  Finance Committee version included                 
  a higher savings amount.  Funding was increased in CSSB 1005                 
  (FIN) am  to correspond  to the  reduction in  savings.   He                 
  observed that  CSSB 1005 (FIN) am funds CSSB 1003 (FIN) am.                  
  He  observed  that CSSB  1005  (FIN) am  includes additional                 
  funding;  $25.0 thousand  dollars for  Victims for  Justice,                 
  $200.0 thousand dollars  for work programs and  childcare in                 
  the  Welfare   Program,  $200.0  thousand  dollars   to  the                 
  Department of Fish and Game, $140.0 thousand dollars for the                 
  Juneau  health  lab,  $1.6 million  dollars  for  the Bethel                 
  seawall,  and  $250.0  thousand dollars  for  the Harborview                 
  facility.                                                                    
                                                                               
  Representative Martin expressed concern with sections 17 and                 
  18.    He  questioned  the  use  of  Alaska Housing  Finance                 
  Corporation   (AHFC)   funds   for   the   Bethel   seawall.                 
  Representative Navarre observed that the majority has placed                 
  a cap on  the budget, reducing  the budget by $70.0  million                 
  dollars.   He stressed  that this requires  that sections 17                 
  and 18  allow funding from  AHFC to not  be counted in  this                 
  cap.                                                                         
                                                                               
  ANNALEE  MCCONNELL,  DIRECTOR,  OFFICE   OF  MANAGEMENT  AND                 
  BUDGET,   OFFICE   OF   THE   GOVERNOR   stated   that   the                 
  Administration's preference would be  to use other  projects                 
  for AHFC funding.  She stressed  that the primary concern of                 
  the  bonding  agency  is  the  total  dollar  amount.    She                 
  emphasized  that  the Bethel  seawall  fits well  within the                 
  total  dollar  amount  that  is  authorized under  the  plan                 
  approved by  AHFC.  She  observed that all  projects require                 
  legislative authorization.                                                   
                                                                               
  Representative Martin noted that $36.0 million  dollars have                 
  been spent on the Bethel seawall.  He referred to section 18                 
  which appropriates $250.0  thousand dollars  to the city  of                 
  Valdez for reviewing and implementing a study of alternative                 
  uses of the Harborview facility.                                             
                                                                               
  Ms.  McConnell   noted  that  the   study  is  to   look  at                 
  alternatives  for the current  facility serving  people with                 
  developmental disabilities.                                                  
                                                                               
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  Representative Navarre noted that the  closure of the Valdez                 
  facility would result  in the  loss of 110  jobs in  Valdez.                 
  The  building  will  require  additional  funding  for  moth                 
  balling.    He  maintained that  the  expenditure  of $250.0                 
  thousand  dollars is  well spent  if an  alternative use  is                 
  determined.                                                                  
                                                                               
  Representative Brown  referred to  section 11.   Section  11                 
  reappropriates  funding that  would otherwise  lapse to  the                 
  Department of  Community and Regional  Affairs, Division  of                 
  Energy  for  hydroelectric  and   intertie  projects.    Ms.                 
  McConnell  explained  that  section  11  was  introduced  by                 
  Senator  Sharp.   She noted  that no specific  projects were                 
  identified.  Co-Chair Hanley summarized that the Division of                 
  Energy would identify projects.  Ms. McConnell added that it                 
  would  also  depend   on  which  projects  were   ready  for                 
  development.                                                                 
                                                                               
  Representative Mulder MOVED to report CSSB 1005 (FIN) am out                 
  of Committee with  individual recommendations.  There  being                 
  NO OBJECTION, it was so ordered.                                             
  SENATE BILL NO. 1010                                                         
                                                                               
       "An Act relating to motor  vehicle records and hearings                 
       of  the  Department of  Public  Safety; increasing  the                 
       period  under which a person  may drive a motor vehicle                 
       under  a  temporary  permit; relating  to  ownership of                 
       certain   abandoned   motor   vehicles;   relating   to                 
       suspension   or   revocation   of   a   motor   vehicle                 
       registration or special permit; relating to renewal  of                 
       a  driver's license  by  mail;  relating to  procedures                 
       applicable to administrative  revocation of a  driver's                 
       license;   relating   to  commercial   driver  training                 
       schools;  increasing the  property  damage amounts  for                 
       proof  of financial responsibility  and proof  of motor                 
       vehicle  eligibility in  order  to  lawfully operate  a                 
       motor vehicle in the state;  amending the definition of                 
       `commercial  motor  vehicle';  relating  to  prohibited                 
       operation  of  a   commercial  motor  vehicle   and  to                 
       disqualification  from  driving   a  commercial   motor                 
       vehicle; relating to certain notifications in accidents                 
       involving property  damage; relating  to motor  vehicle                 
       registration procedures; and providing for an effective                 
       date."                                                                  
                                                                               
  Co-Chair Hanley noted that CSSB 1010  (L&C) am is similar to                 
  CSHB 517 (TRA) am S.   He observed that CSHB 517  (TRA) am S                 
  required a title  change due  to House action  that was  not                 
  caught by Legislative Legal Services.  He concluded that the                 
  title of CSHB  517 (TRA)  am S  as before the  House is  not                 
                                                                               
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  correct.                                                                     
                                                                               
  SANDY PERRY PROVOST, SPECIAL ASSISTANT, DEPARTMENT OF PUBLIC                 
  SAFETY  explained  that  CSSB 1010  (L&C)  am  as introduced                 
  duplicated CSHB 517 (TRA) am S as passed by the Senate.  She                 
  noted that  CSSB 1010 (L&C) am  matches CSHB 517 (TRA)  am S                 
  except  for  an  amendment  introduced  by  Senator  Halford                 
  defining "motor vehicles".   Co-Chair Hanley explained  that                 
  "motor vehicle" was defined to include cars and trucks.                      
                                                                               
  (Tape Change, SSHFC 96-4, Side 2)                                            
                                                                               
  Representative Mulder MOVED to report CSSB 1010 (L&C) am out                 
  of Committee with  individual recommendations  and with  the                 
  accompanying fiscal notes.                                                   
                                                                               
  Representative Navarre noted that the fiscal notes are zero.                 
                                                                               
                                                                               
  CSSB  1010 (L&C) am was reported out of Committee with a "do                 
  pass" recommendation and with two  zero fiscal notes one  by                 
  the Department of  Public Safety, dated  6/3/96, and one  by                 
  the Department  of  Transportation  and  Public  Facilities,                 
  dated 6/3/96.                                                                
  ADJOURNMENT                                                                  
                                                                               
  The meeting adjourned at 9:50 a.m.                                           
                                                                               
                                                                               
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