Legislature(2001 - 2002)
05/10/2002 02:17 PM House FIN
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE FINANCE COMMITTEE
May 10, 2002
2:17 PM
TAPE HFC 02 - 108, Side A
TAPE HFC 02 - 108, Side B
CALL TO ORDER
Co-Chair Williams called the House Finance Committee meeting
to order at 2:17 PM.
MEMBERS PRESENT
Representative Eldon Mulder, Co-Chair
Representative Bill Williams, Co-Chair
Representative Con Bunde, Vice-Chair
Representative Eric Croft
Representative John Davies
Representative Richard Foster
Representative John Harris
Representative Ken Lancaster
Representative Carl Moses
Representative Jim Whitaker
MEMBERS ABSENT
Representative Bill Hudson
ALSO PRESENT
Ron Sommerville, Consultant, House and Senate Resource
Committee; Dick Bishop, Alaska Outdoor Council, Fairbanks;
Mike Tibbles, Staff, Representative Williams; Marilyn
Wilson, Staff, Senator Donley; Alison Elgee, Deputy
Commissioner, Department of Administration; Chris
Christensen, Staff Counsel, Alaska Court System
PRESENT VIA TELECONFERENCE
Paul Lyle, Fairbanks; John Athens, Fairbanks.
SUMMARY
CSSB 180(FIN)(efd fld)
"An Act implementing pay differentials based on
geographic areas for certain state employees and
for members of the Alaska State Defense Force;
relating to cost-of-living differentials for state
aid to municipalities."
CSSB 180(FIN)(efd fld) was heard and HELD in
Committee for further consideration.
CSSB 219(FIN)
"An Act establishing and relating to the Navigable
Waters Commission for Alaska."
CSSB 219(FIN) was REPORTED out of Committee with a
"do pass" recommendation and with a previously
published fiscal note: #1 LAA/DNR.
CS FOR SENATE BILL NO. 219(FIN)
"An Act establishing and relating to the Navigable
Waters Commission for Alaska."
RON SOMMERVILLE, CONSULTANT, HOUSE AND SENATE RESOURCE
COMMITTEE, testified in support of the legislation. He
explained that Senator Halford and Representative Porter put
the concept of the joint commission forward. The purpose of
the Alaska Navigable Waters Commission would be to expedite
transfers of title on submerged lands. Under the Submerged
Lands Act, when Alaska became a state in 1959 it received
the ownership of submerged lands that are under navigable
and marine waters up to three miles. Approximately 60
million acres of submerged lands were transferred to the
state (as long as the state can prove that they were
navigable at the time of statehood). In order to claim title
under the act the state has to file under the Act with 180-
day notice stating its intention to claim land under a
specific body of water. The courts and federal agencies have
taken a narrow interpretation of the federal Quite Title
Act. The courts have ruled that the state has no
jurisdiction if the federal government is silent; this
creates a barrier to the state's acquisition of submerged
lands. The definition of "navigable" has also created
problems. In Oregon, the definition centers on the ability
to float a log down a body of water. He noted that in the
Gulkana case of 1987 the Ninth Circuit Court upheld that the
Gulkana River was navigable all the way up to the lake. The
key point was that the river was used for purposes of
commerce or could be used for the purpose of commerce. A
rubber raft or canoe could be floated up the river with
approximately 1,000 pounds. The Court ruled in the state's
favor. The problem was that there were a lot of conveyances
prior to 1987. The Bureau of Land Management (BLM) has
refused to correct errors in these cases. This has clouded
titles. The state has not lost its title to navigable
waters, but the determination of which waters were navigable
was not made.
Mr. Sommerville noted that the BLM was not required to use
its own manual for surveying instructions for conveying
lands in Alaska until after 1988. The BLM, by their own
manual, is required to meander boundaries around lakes
larger than 50 acres or a stream wider than three chains or
198 feet, which would prevent the submerged lands that
belong to the state from transferring to the adjacent
landowner.
Mr. Sommerville explained that since statehood title on
submerged lands has been resolved on 13 rivers. There are
22,000 rivers that could be considered navigable. In 1992
and 1996 the state submitted to the BLM a list of 217 rivers
on which quiet title was requested. The state did not
receive federal cooperation and decided to take three rivers
lying in the northeastern part of Alaska to court: the
Black, Kandik and the Nation Rivers. After nine years the
court ruled in the state's favor on two of the rivers. The
third river was determined not to have jurisdiction. He
concluded that it would take 99,000 years to resolve title
at the current rate. Mr. Sommerville pointed out that it
took approximately $1 million dollars of state and federal
funds to resolve navigability on two rivers. Title is needed
for many reasons: to lease rivers, manage trespass, or
extract gravel. He stressed that it is not a subsistence
issue. Subsistence is a reserve water rights issue, which is
a separate court issue.
Mr. Sommerville observed that SB 219 is a process worked out
with the federal government to create a commission to
identify navigable and non-navigable rivers and develop a
list and where possible work with the Administration to
certify the list. He observed that Congress and the state
legislature might need to be consulted on certification of
some rivers. There is a CIP fiscal note of $200 thousand
dollars, which is exclusively for the conduct of the
commission. The operation of the commission would have to
come from the agencies and federal assistance.
Vice-Chair Bunde referred to the number of members in
section 3. He observed that the membership composition was
different in state and federal legislation. Mr. Sommerville
explained that the membership component was altered in the
Senate Finance Committee. The congressional version was made
prior to the Senate change. He anticipated that the
congressional version would be changed to correspond to the
state version. The sponsor was agreeable to the change in
the Senate Finance Committee and did not think that it would
be difficult to change the federal law to coincide with the
change.
Representative Croft questioned if any part of the Katie
John decision was based on the title of land. Mr.
Sommerville observed that some jurisdictional issues occur
with the exercise of submerged title. In the Katie John case
the state maintained that the area in question was a
navigable stream. The claim revolved around the reserved
water right. The argument did not center on the issue of
navigability.
Representative Croft questioned if the fact that the land
had never been certified under the Quiet Title Act played
into the jurisdictional issues in the Katie John case. Mr.
Sommerville observed that he is not an attorney, but did not
recall it being part of the case.
In response to a question by Representative John Davies, Mr.
Sommerville discussed title meandering. He explained that
the mean high waterline of a river or lake estimated for the
conveyance in order to assure that no submerged lands are
convey. The boundary of the uplands would be conveyed to the
adjacent landowner.
Representative John Davies observed that Mr. Sommerville had
indicated that there were mistakes made in the Gulkana case.
Mr. Sommerville clarified that mistakes were made prior to
issuance of the order. The BLM did not follow its own
surveying instructions until told to by Congress. Some
streams less than 3 meters wide and some lakes less than 50
acres were transmitted as submerged land. Some of these
bodies are clearly navigable and should have been corrected.
Those titles are still clouded.
Representative John Davies asked the interpretation of
navigable land through a national park. Mr. Sommerville
explained that ownership of submerged lands in parks would
belong to the state of Alaska. The question is how much
authority does the adjacent landowner, the federal
government, control. The federal government can exercise
some control if the activity would impact the adjacent
federal land. If the state controls the submerged land in a
national park or refuge area they could exercise control of
access to the navigable water. For instance the state could
limit by permit the number of people or how they access the
water.
Vice-Chair Bunde observed that as long as an individual is
on the water afloat that they are in state territory. If a
foot were stepped on the land than they would be in the
private landowner's water and would be trespassing. Mr.
Sommerville pointed out that the submerged landowner could
exercise some control. If a person floats down a river on
private land the state law, which applies to the use of
state waters, would apply as long as they remain on the
water. If the federal government owned the submerged land
they could exercise "quite a bit" of control on the water.
Representative Bunde pointed out that if the state did not
have control and a dispute occurred over the recreational
use of submerged lands, state residents would be in trespass
on federal land if they put foot on the surrounding land.
The state would not have significant use for recreational
purposes of the land, even though there is access to the
water.
DICK BISHOP, ALASKA OUTDOOR COUNCIL, FAIRBANKS, testified in
support of the legislation. He observed that the Gulkana
case was just the beginning of the story. He noted that he
had been contacted by the BLM regarding the use of rivers in
Alaska, which indicated that the task was difficult and
moving at a glacial pace. There has to be a means to
expedite the process. There are a number of lose ends that
could cause problems in the future. There are millions of
acres of state lands in limbo. The federal government hasn't
asserted interest in the lands. The legislation could
provide the factual background and legwork to allow it to be
settled by the courts.
Representative John Davies asked if the Commission could
identify rivers that are less controversial and could be
presented to Congress and resolved. Mr. Bishop responded
that resolution is contingent on a determination of
navigability and the process by which a decision is made.
There is not a lot of controversy about the basic issue of
the terms of the Submerged Lands Act. He concluded that
bureaucracy is more of an issue than controversy. The
difficulty is in getting a determination.
Vice-Chair Bunde observed that some of the rivers would be
used for travel during frozen periods. He questioned how the
legislation would interplay with the Katie John decision.
Mr. Bishop responded that they are different issues. The
Katie John issue relates to the reach of the federal
authority and Federal Reserve waters. The controversy is
tied to federal authority under the Reserved Waters
Doctrine, not the Submerged Lands Act.
Co-Chair Mulder MOVED to report CSSB 219 (FIN) out of
Committee with the accompanying fiscal note. Representative
Croft OBJECTED for the purpose of a statement. He concluded
that the issue did not interact with the Katie John case and
WITHDREW his OBJECTION. There being NO OBJECTION, it was so
ordered.
CSSB 219(FIN) was REPORTED out of Committee with a "do pass"
recommendation and with a previously published fiscal note:
#1 LAA/DNR.
CS FOR SENATE BILL NO. 180(FIN)(efd fld)
"An Act implementing pay differentials based on
geographic areas for certain state employees and for
members of the Alaska State Defense Force; relating to
cost-of-living differentials for state aid to
municipalities."
MARILYN WILSON, STAFF, SENATOR DONLEY, testified in support
of the legislation. Ms. Wilson read the sponsor statement
into the record:
Committee Substitute for Senate Bill 180 adopts the
most recent study to determine geographic differential
payments for cost-of-living differences paid to state
employees who are not union members. This legislation
adopts the most current geographic differential report.
The current statutory formula has not been updated
since June 1976 and unfairly discriminates against some
state employees while unfairly benefiting others. All
union state employees are already under the new formula
based on the most recent 1995 study. A similar change
in law was passed by the legislature in 2000. That
legislation contained other changes effecting public
employees and was vetoed by the governor. This bill
does not contain the provisions the governor cited as
the reason for his veto of the 2000 bill.
The geographic differential calculation utilizes a
percentage above a specific measurement baseline. In
Alaska, Anchorage is the only federal measurement of
the cost-of-living. Therefore, Anchorage is used as the
baseline measurement for determining the cost-of-living
in the various Alaska election districts and "out of
state" locations. This legislation will affect
employees in the executive branch of government in
partially exempt service or not covered by union
contract, and members of the Alaska State Defense Force
whenever they are called to active service.
Committee Substitute for Senate Bill 180 effects
employees hired on or after the effective date. Current
employees will remain under AS 39.27.020, even if they
leave and return to state employment after AS 39.27.02
1 goes into effect.
Committee Substitute for Senate Bill 180 purposely
holds harmless other programs that use these statutory
sections for calculation of revenue sharing cost-of-
living adjustments. It also makes no change to the
current differential applicable to state employees who
work in another state.
Committee Substitute for Senate Bill 180 will ensure
all new state employees receive fair pay adjustments
based on a new fairer cost-of-living analysis.
Fiscal Notes indicate that immediate savings in FY 03
will be approximately $55,000, increasing to $370,000
by FY 08.
Co-Chair Williams provided members with proposed committee
substitute, work draft 22-LS0324/R, 5/10/02 (copy on file).
MIKE TIBBLES, STAFF, REPRESENTATIVE WILLIAMS, provided
information on the legislation. He explained that the new
cost of living differential would only apply to new
employees. A new employee in an area where the cost of
living differential was higher would receive the higher
cost, but the old employee would not. It would be possible
for an employee who had been working in an area for several
years to receive less than a brand new employee. The
proposed committee substitute resolves the equity issue by
providing that everyone gets the old cost of living
differential unless that area went up; then everyone would
receive the increase.
Co-Chair Mulder MOVED to ADOPT work draft, 22-LS0324\R,
5/10/02. Representative Croft OBJECTED.
Representative Croft questioned if the change would depend
on the two employees staying in the same area. Mr. Tibbles
noted that the new schedule applies to all employees. The
old schedule would apply to old employees only if it is
better.
There being NO OBJECTION, it was so ordered.
Ms. Wilson explained that the issue was brought up in the
House State Affairs Committee. She provided members with
Amendment 1 (copy on file). She observed that the intent is
to save money. The amendment would exempt election districts
11, 14, 16c and 17 from the provisions of the legislation.
These areas would receive the current cost of living
differential. Co-Chair Williams noted that the amendment had
not been moved. Co-Chair Williams OBJECTED.
Representative Croft questioned why 1961 election districts
were used. Ms. Wilson responded that they are the election
districts that were used in statute. She clarified that
Kotzebue, Bethel, and Barrow would be affected.
Representative Harris WITHDREW Amendment 1.
ALISON ELGEE, DEPUTY COMMISSIONER, DEPARTMENT OF
ADMINISTRATION, testified in support of the legislation as
and effort to bring equity to the state employee salary
schedule. She explained that the last comprehensive cost of
living differential study was done in 1985. The legislation
incorporates the salary schedule for non-covered employees.
She stated that the Administration would support the
committee substitute, but not the amendment proposed by the
sponsor. The four districts that would receive increases
under the proposed committee substitute are: Kotzebue,
Kodiak, Bethel, and Barrow.
In response to a question by Vice-Chair Bunde, Ms Elgee
explained that, under the legislation, the existing
employees would be protected from any loss of pay as long as
they remain continuously employed; this is similar to the
method used under the collective bargaining agreements.
Vice-Chair Bunde summarized that there is equity between
union and nonunion employees, but inequity between new hires
and old.
TAPE HFC 02 - 108, Side B
Representative Croft questioned how the amendment would
affect the four areas that were identified for increases:
Kotzebue, Kodiak, Bethel, and Barrow. Ms. Elgee explained
that a new differential would be adopted but not applied to
the four election districts, which would increase under the
study. Collective bargaining agreements use the same
differentials. The legislation would apply the results of
the study, which determined that there should be an increase
in the four areas.
Co-Chair Mulder questioned if the amendment would result in
greater savings to the state of Alaska in the long or short
term.
Ms. Elgee explained that the legislation would result in a
savings of approximately $26 thousand dollars for the
executive branch. There would be an initial cost of $8
thousand dollars under the proposed committee substitute.
She clarified that the proposed committee substitute would
be cost neutral in the first year. The cost savings by the
third year would be almost identical to the House State
Affairs version. By FY08 there would be a savings of $134
thousand dollars in the executive branch. The amendment
would retain the old differential in districts 11, 14, 16c
and 17 and result in greater savings. She observed that the
amendment would provide greater savings in both the long and
short terms.
Co-Chair Mulder provided members with Amendment 2 (copy on
file). Ms. Elgee clarified that the proposed committee
substitute would grandfather in existing employees in
districts that would see a decrease in the cost of living
differential. These employees would continue to get cost of
living adjustments and merit increases as if the new
differential had not been adopted. Amendment 2 would freeze
those employees at their July 2002 salary level until such
time as the cost of living adjustments applied to their
salary in conjunction with the new differential was equal or
greater than the salary that they had been frozen at. The
amendment would apply to executive branch employees in
Fairbanks, Palmer, Kenai, Sitka, and Dillingham. There are
60 employees in Fairbanks, 15 in Palmer and, 10 in the
Kenai.
Co-Chair Mulder observed that the amendment would establish
a floor until they grew into the floor. Then they would grow
with the floor. He questioned the savings.
Ms. Elgee acknowledged that the savings would be greater
than the fiscal note and stated that the department would
have to recalculate the savings.
Representative Lancaster asked if employees transferred in
and out of the four areas. Ms. Elgee noted that personnel
transfers occur. The majority of the non-covered employees
in the executive branch are with the Department of Law or
Alaska Public Defenders Agency.
CHRIS CHRISTENSEN, STAFF COUNSEL, ALASKA COURT SYSTEM, noted
that the legislation would affect some employees positively
and some negatively. He observed that 240 court employees
would be affected. He observed that 170 employees work in
communities in which the differential would be reduced and
70 work in communities in which the differential would be
increased. He stressed that the union employees receive a 42
percent differential in rural areas such as Barrow. The
court non-union employees are being paid a 31 percent
differential. He noted that the previous version proposed to
pay new employees more than existing employees. He pointed
out that this would have resulted in cases where range 12
supervisors would be paid less than new range 10 employees.
The previous senate version would have saved the Alaska
Court System $28 thousand dollars in the first year and $235
thousand dollars by year six. The proposed committee
substitute would not start saving money until year three.
The first year would cost $70 thousand dollars; the second
year it would save $15 thousand dollar; it would save $40
thousand dollar in year three; and over $200 thousand
dollars by year six. The proposed committee substitute would
treat all employees fairly by grandfathering existing
employees.
Vice-Chair Bunde observed that there would be an urban/rural
fairness issue. Mr. Christensen acknowledged the urban/rural
fairness issue but observed that new employees know what
they are getting when they take the job. Tiered systems are
not unusual. The Senate version would reduce the salaries of
existing employees.
In response to a question by Representative Croft, Mr.
Christensen observed that Amendment 1 would carve out four
rural areas that would have received the greatest increase.
He pointed out that the sponsor statement indicated that the
intent was to treat employees fairly, but Amendment 1 would
discriminate against employees by continuing to pay certain
employees too little.
Mr. Christensen referred to Amendment 2. He summarized that
the intent of the amendment is to make sure that existing
employees would continue to get the new differential, in an
area where the geographical differential would go down, but
would not be entitled to COLA's or merit increases until
they catch up. The provision would not apply to internal
promotion; the provision would only apply to longevity and
COLA increases.
PAUL LYLE, FAIRBANKS, testified via teleconference in
support of the committee substitute. He urged the Committee
not to adopt Amendment 1, which would freeze their pay. He
maintained that the non-covered employees are already behind
in their pay. He stressed that it would mean that many in
state service would not receive another pay increase during
their employment. He stated that the committee substitute
would be a fair treatment of employees.
JOHN ATHENS, FAIRBANKS, testified via teleconference in
support of the committee substitute. He observed that the
differential change is based on a 1985 study by the
Department of Administration. He felt that it would be
unfair to reduce salaries of career state employees based on
a 1985 study.
Representative Whitaker observed that he would object to the
amendments.
Co-Chair Mulder MOVED to ADOPT Amendment 2, 22-LS0324\R.1,
5//10/02. He noted that Fairbanks has a 15 percent COLA,
which he thinks is unjustified. The new COLA is 4 percent.
He felt that it would be fair to hold those employees to the
existing COLA until they reach the floor. He observed that
the legislation would not generate real savings without the
amendment.
Representative Davies argued against the amendment. He
observed that the savings would be delayed for the first
couple of years, but that the full savings would be realized
as employees retire. He noted that employees have been hired
based on a certain pay rate and argued that it is not fair
to change the amount after employment. He emphasized that
employees have made financial commitments based on the
anticipation of their pay. He spoke in support of the
grandfather provision of the employees.
Representative Whitaker spoke against the amendment.
Representative Croft noted that the grandfather provision
would fade out through attrition. He questioned if the data
is really based on a 1985 study.
Ms. Elgee acknowledged that the last full differential study
was in 1985. She observed that similar legislation has been
introduced every year. Representative Croft stressed that
the data is not good enough to justify Amendment 2.
Vice-Chair Bunde spoke in support of the amendment.
Co-Chair Mulder argued that employees do not base their
finances on anticipated raises or COLA increases. He pointed
out that COLA's are adjusted periodically. He maintained
that it would be fair to hold the floor.
Representative Davies argued in opposition to the amendment.
He maintained that the fairest method would be to protect
current employees and set up a standard for those that are
hired with the understanding [of the new differential].
A roll call vote was taken on the motion.
IN FAVOR: Lancaster, Moses, Bunde, Williams, Mulder
OPPOSED: Whitaker, Croft, Davies, Harris,
Representative Foster and Hudson were absent from the vote.
The MOTION PASSED (5-4).
Co-Chair Mulder MOVED to report HCS CSSB 180 (FIN) out of
Committee with the accompanying fiscal note. Representative
John Davies OBJECTED.
Representative Croft stressed that the legislation is based
on 1985 data, which could result in radical different
calculations. He maintained that it would be appropriate to
do another study and implemented it quickly.
Representative Lancaster stated that he has a philosophical
problem with COLAs.
Vice-Chair Bunde spoke in support of the legislation. He
observed that the cost of living in Anchorage is no longer
significantly higher than other west coast cities in the
United States.
Representative Davies spoke in opposition to the
legislation. He stressed the inequities and maintained that
it would be challenged in court.
Co-Chair Mulder argued in support of the legislation. He
stressed that the numbers still pertain and that the intent
is to save money for the state.
Representative Davies stressed that the primary reason for
the COLA is to provide equity. The savings to the state of
Alaska is only $300 thousand dollars. He did not think that
the denial of someone's pay increase for the next five years
based on unsubstantiated data would stand up in court.
Co-Chair Mulder pointed out that the legislation protects
rural Alaska.
A roll call vote was taken on the motion to move CSSB
180(FIN)(efd fld) from Committee.
IN FAVOR: Moses, Bunde, Williams, Mulder
OPPOSED: Lancaster, Whitaker, Croft, Davies, Harris,
Representative Foster and Hudson were absent from the vote.
The MOTION FAILED (4-5).
CSSB 180(FIN)(efd fld) was heard and HELD in Committee for
further consideration.
ADJOURNMENT
The meeting was adjourned at 3:49 PM
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