Legislature(2003 - 2004)
05/01/2003 03:14 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 01, 2003
3:14 PM
TAPE HFC 03 - 73, Side A
TAPE HFC 03 - 73, Side B
CALL TO ORDER
Co-Chair Williams called the House Finance Committee meeting
to order at 3:14 PM.
MEMBERS PRESENT
Representative John Harris, Co-Chair
Representative Bill Williams, Co-Chair
Representative Kevin Meyer, Vice-Chair
Representative Mike Chenault
Representative Eric Croft
Representative Richard Foster
Representative Mike Hawker
Representative Reggie Joule
Representative Carl Moses
Representative Bill Stoltze
Representative Jim Whitaker
MEMBERS ABSENT
None
ALSO PRESENT
Representative Norman Rokeberg; Representative John Coghill;
Ian Fisk, Staff, Representative Ogg; George McClune, United
Fisherman of Alaska; Benjamin Brown, Alaska State Chamber of
Commerce; Chip Wagoner, Alaska Catholic Conference; Don
Etheridge, AFL-CIO; Karen Rugina, Alaska Hospitality
Alliance; Eddy Jeans, Manager, School Finance and Facilities
Section, Department of Education and Early Development;
Debby Chalmers, Alyeska Central School Education
Association; Cecilia Miller, ACSEA; John Paden, Counselor,
Alyeska School; Kevin Sweeney, Legislative Liaison,
Department of Education and Early Development.
PRESENT VIA TELECONFERENCE
Jay Sutherland, Anchorage; John Brown, President, Labor
Council, Fairbanks; Jack Lewis, Sour Mining Company,
Anchorage; Ayiare Voorhees, student; Nancy Rochar, parent;
Victoria Martin, parent, Anchorage; Greg Miller, Charter
Schools, Anchorage; Kym Wolcott, Anchorage; Ryan Wolcott,
student, Anchorage; Victoria Martin, parent, Anchorage; Sean
Ruddell, student, Anchorage; Dan Gavora, Executive Vice
President, Utility Services of Alaska; Michael Jeffrey,
parent, Barrow; Dan Easton, Director, Division of Facility
Construction and Operation, Department of Environmental
Conservation;
SUMMARY
HB 119 "An Act permitting grants to certain regulated
public utilities for water quality enhancement
projects and water supply and wastewater systems."
HB 119 was heard and HELD in Committee for further
consideration.
HB 174 "An Act relating to the state centralized
correspondence study program, to funding for
educational programs that occur primarily outside
school facilities, and to the duties of school
boards of borough and city school districts and
regional educational attendance areas; and
providing for an effective date."
HB 174 was heard and HELD in Committee for further
consideration.
HB 199 "An Act removing the annual adjustment to the
minimum wage based on the rate of inflation; and
providing for an effective date."
HB 199 was heard and HELD in Committee for further
consideration.
SB 139 "An Act repealing the termination date of the
Alaska salmon price report program; and providing
for an effective date."
SB 139 was REPORTED out of Committee with a "do
pass" recommendation and one new fiscal impact
note from the Department of Revenue.
SENATE BILL NO. 139
"An Act repealing the termination date of the Alaska
salmon price report program; and providing for an
effective date."
IAN FISK, STAFF, REPRSENTATIVE OGG, spoke in support of the
bill. He explained that the current bill would repeal the
sunset date of a Department of Revenue program called the
Alaska Salmon Price Report (ASPR), which is in AS 43.80.050.
Processors that sell over one million pounds in salmon
products a year are required to report the wholesale price
received for the product to the Department of Revenue. The
Department publishes the data three times a year: January
31, May 31, and September 30. The ASPR details monthly and
annual average wholesale price sorted by salmon species,
product form and the eight regions where the salmon is
produced. The report provides data helpful to negotiations
between harvesters and processors. The ASPR statute would
sunset on July 1, 2003, without the legislation. The sponsor
believes the ASPR should be a permanent function of the
Department of Revenue.
Co-Chair Harris observed that Representative Austerman had
previously introduced the legislation. Mr. Fisk noted that
the bill was successful and received broad support. In
response to a question by Co-Chair Harris, he confirmed that
the proposed bill merely eliminated the sunset of the
program. He noted that the report was used to help with the
purchase program and had no opposition.
Representative Whitaker referred to the zero fiscal note and
expressed support for the legislation.
Representative Croft noted that Chair had expressed the
desire to know the real cost of boards or commissions. He
observed that the program cost roughly $50 thousand and
suggested that it should be reflected in the fiscal note.
Mr. Fisk confirmed that this cost estimate was accurate.
They pointed out that funding would come from the salmon
fund.
Representative Croft MOVED that the fiscal note be changed
to reflect the $50 thousand in salmon treaty funds. There
being NO OBJECTION, it was so ordered.
Co-Chair Harris MOVED to report SB 139 out of Committee with
the accompanying revised fiscal note.
Representative Stoltze OBJECTED and stated that he hoped to
someday pass a bill to benefit sports fishing as well as
commercial fishing. He WITHDREW his OBJECTION. There being
NO OBJECTION, it was so ordered.
SB 139 was REPORTED out of Committee with a "do pass"
recommendation and one new fiscal impact note from the
Department of Revenue.
HOUSE BILL NO. 199
"An Act removing the annual adjustment to the minimum
wage based on the rate of inflation; and providing for
an effective date."
REPRESENTATIVE NORMAN ROKEBERG, SPONSOR, provided
information regarding the legislation. He discussed the
history and methodology behind the bill, which tied the
minimum wage to the consumer price index (CPI) and/or one
dollar above federal standard. He suggested that an annual
increase in the minimum wage would have an inflationary
impact on the State's economy. He speculated that the
increases affected potential employers and would increased
unemployment. He noted competing theories regarding minimum
wage legislation. He noted that one point of view indicated
that legislative action created negative impacts, but that
the other side stated that increase in income had a positive
impact on lower income workers. He stated that he adhered
to the belief that the impact of increases were negative,
and quoted research by the Ohio University, analyzing law in
Washington State. Representative Rokeberg stressed that the
bill would not cut the minimum wage and emphasized that
Alaska's $7.15 per hour minimum wage was the highest in the
country. He questioned whether businesses could afford an
increase and suggested that the largest provider of jobs in
this sector was the hospitality industry. He stated that
the industry had been hit with a 27 percent increase. He
maintained that this sent the message the Alaska was not
"open for business".
BENJAMIN BROWN, ALASKA STATE CHAMBER OF COMMERCE testified
in support of the bill. He acknowledged the debate
engendered by the legislation. He suggested de-indexing the
Alaska minimum wage from the national index. He discussed
economic theories, such as the "invisible hand" theory. He
maintained that the "invisible hand" became visible when the
minimum wage increase was implemented with a tie to the CPI
index. He explained that employers were forced to pay the
amount specified by the state. He stated that the bill did
not reduce minimum wage, but created a system of
automatically deciding the proper minimum wage, rather than
allowing future debate based on the economy needs. He also
noted that some believe that using the consumer price index
created an artificial inflation in the economy. He added
that there was a suggestion that the legislature was
aggregating an earlier decision by de-indexing the minimum
wage, and suggested that there was no legal implication
against the State in this regard.
CHIP WAGONER, ALASKA CATHOLIC CONFERENCE testified in
opposition to the bill and expressed the Church's support of
the minimum wage. He discussed the concept of a "living
wage" to support individuals with dignity. He pointed out
that the current minimum wage still placed individuals below
the poverty level. He discussed the two public policy
issues when evaluating the minimum wage. He first emphasized
that the legislature should determine a floor below which
the legislature believed was an unjust wage. Once a just
minimum wage is determined by the legislature then it should
remain constant with the economy in terms of inflation
because below that minimum wage it becomes unjust. The
second public issue is economics. He suggested that the main
arguments against indexing dealt with the cost of jobs. He
urged the Committee to carefully examine the source of
information in this area. He noted that professionals in
this area could create information to support their
viewpoints. He suggested that the Employment Policies
Institute was historically against the minimum wage, and the
Economic Institute was historically for the minimum wage.
He discussed information from the state of Alaska. He noted
that according to Department of Labor and Workforce
Development there are only 14,000 people in Alaska earning
the minimum wage. He argued that 14,000 people earning
minimum wage would not create an inflationary spiral that
would affect the entire state of Alaska. Of these 14,000,
about a third were in the food service/drinking industry.
He noted that these industries were those against the
minimum wage increase. He argued that if there were going
to be a loss of jobs that it would have occurred between
December and January [2003] when there was a $1.5 overnight
increase in minimum wage. He acknowledged that there was a
six percent drop in employment, but pointed out that the
drop could be attributed to the seasonal drop, which
occurred at the same time in the previous year. He stated
that a similar situation occurred in Washington State. He
quoted the state of Washington concluded that: "There does
not appear to be a direct correlation between the index
minimum wage and the number of jobs in the food
service/drinking places industry." He concluded that a the
raise in minimum wage was only one factor among many in
terms of job loss and the numbers don't prove that there has
been a job loss in the food service/drinking places
industry.
DON ETHERIDGE, AFL-CIO testified on behalf of his 60,000
members in opposition to the bill. He noted that his
organization petitioned to achieve an increase in minimum
wage. He pointed out that the subsequent increase finally
raised Alaska's rank from being the lowest on the west
coast. He suggested that the first CPI increase should be
observed before repealing it. He noted that the first
increase would be a 14-cent increase that should not impact
businesses.
KAREN RUGINA, ALASKA HOSPITALITY ALLIANCE testified in
support of the bill. She provided information of losses
experienced by restaurants and hotels due to increases in
wages, and explained that hotels and restaurants operated on
a narrow margin. She suggested that the increase, in
combination with an increase in insurance and decrease in
customers. She suggested that benefits were being cut. She
gave examples of businesses that had decided not to come to
Alaska due to the increase in minimum wage. She noted a
natural CPI indexing occurred in the business with an
increase in menu prices. She concluded that this added more
uncertainty to an already uncertain climate.
JAY SUTHERLAND, ANCHORAGE, testified via teleconference in
support of the bill. He stated that he is a restaurant
operator and noted that his business had been forced to lay
off employees and suggested that there would be fewer future
jobs for youth. He noted that the CPI was suggested in
Washington State, and referred to its effects on the
industry. He maintained that businesses invested in other
states to avoid this restriction.
JOHN BROWN, PRESIDENT, LABOR COUNCIL, FAIRBANKS, testified
via teleconference in opposition to the bill. He noted that
50 thousand people signed a petition supporting CPI
indexing, and maintained that legislators had also voted to
support it. He suggested that workers needed a fair wage
and that if wages were not guaranteed it would negatively
affect the economy. He maintained that all businesses
competed on an equal basis.
JACK LEWIS, SOUR MINING COMPANY, ANCHORAGE, testified via
teleconference in support of the bill. He stressed that the
last increase was sizable and that, for the first time ever,
he was not able to pass along the increases in menu prices.
He referenced the liquor tax in addition to the minimum wage
increase. He noted the need to decrease benefit programs in
order to accommodate increases. He stated that he did not
support an automatic increase or the legislature suggesting
appropriate levels. He expressed concern over the increase
since customers were already eating out less.
Co-Chair Harris requested that the Department of Labor and
Workforce Development should produce an additional fiscal
note.
HB 199 was heard and HELD in Committee for further
consideration.
HOUSE BILL NO. 174
"An Act relating to the state centralized
correspondence study program, to funding for
educational programs that occur primarily outside
school facilities, and to the duties of school boards
of borough and city school districts and regional
educational attendance areas; and providing for an
effective date."
EDDY JEANS, MANAGER, SCHOOL FINANCE AND FACILITIES SECTION,
DEPARTMENT OF EDUCATION AND EARLY DEVELOPMENT provided
information about the legislation. He compared the House
State Affairs Committee version and the Governor's Bill as
introduced. He noted that the Governor's bill would
eliminate the program beginning July 1, 2003 whereas the
House State Affairs' Committee Substitute would eliminate
the current summer program with a one-year delay in the
effective date eliminating the statewide correspondence
program. Both bills contain a provision under 14.70.430,
which deals with state funding of correspondence study
programs in the foundation program. These and similar
programs are funded at 80 percent. Some charter schools,
which are home-based programs, have challenged the
Department because they do not see themselves as
correspondence programs. The Department has taken the
position that, for foundation formula purposes, programs
outside of a brick and mortar school are correspondence
programs. The legislation would bring clarity by expanding
the definition to include home-based programs.
Mr. Jeans discussed two central issues: first, cost
savings. He noted the argument that eliminating the program
would not save the state of Alaska money, but rather cost
money as students seek accredited programs in brick and
mortar schools. He suggested that the Department believes
that many of the students will find correspondence services
elsewhere in the state. He added that there is a potential
savings through space lease reductions, but noted that the
Department might have other uses for the space. He discussed
the second issue: policy. He gave a brief history of the
Alyeska Central School (ACS or Alyeska), which was initiated
in 1939 and has provided valuable services. He pointed out
that at that time there were only two options, municipal
school districts and state operated schools. He stated that
in 1977, Regional Education Attendance Areas (REAA) were
initiated, so that every area of Alaska was covered by a
school district. Each school district has the responsibility
of educating students within their boundaries. Approximately
seven years ago, the State began allowing students to take
advantage of correspondence programs. He referenced SB 36,
which supports correspondence programs. Today there are 12
[correspondence] programs including ACS. He suggested that
[ACS] students would attend another program. He addressed
statewide enrollments, and observed that the bill addressed
open enrollments. He noted that Alyeska would allow certain
exceptions to enrollment, such as disability, but that these
were case by case. He suggested that they had other rules
for closing enrollment.
Mr. Jeans addressed accreditation and noted that Craig,
Delta, Galena, and Yukon schools districts had applied for
accreditation and been awarded conditional accreditation.
He explained that conditional accreditation provides
transferable credit for students.
TAPE HFC 03 - 73, Side B
AYIARE VOORHEES, STUDENT, testified via teleconference in
support of the amended bill. She stated that, although they
would prefer for the school to remain mandated, she
appreciated the response of the State to requests to allow
the school to remain open for the year.
NANCY ROCHAR, PARENT, testified in support of the Alyeska
Central School. She suggested that it was the only school
that upheld the no child left behind regulations currently.
She pointed out that all teachers were certified in the
subjects that they teach. She maintained that services are
not duplicated, and suggested that it was the only program
with direct teacher involvement. She acknowledged that
other programs, which offer cash inducements might be more
popular, but maintained that other programs were deficient
in teacher involvement. She suggested that this cut
produced no cost savings to the state of Alaska. She
pointed out that not every student had Internet access, and
that Alyeska also utilized regular mail correspondence. She
commended the success and quality of the program.
JANET WALKER, PARENT, testified via teleconference in
support of the Alyeska Central School. She noted that her
family lived in the wilderness of Alaska. Therefore, Alyeska
was essential since it offered programs that were not on the
Internet. She acknowledged that while there were other
correspondence schools, Alyeska was the only one that was
fully accredited and provided online adult education. She
suggested that to close the school would cost the state of
Alaska up to $300 thousand. She urged members to keep
Alyeska open.
GREG MILLER, CHARTER SCHOOLS, ANCHORAGE testified via
teleconference. He stated his experience as an attorney in
representing charter schools. He addressed Section 5 to the
Committee Substitute, which pertained to AS 14.70.430, which
set the level of 80 percent for charter schools. He noted
that the change expands the definition of correspondence
schools, and suggested that it raised a much larger issue.
He stated that it would in essence treat any school not in a
regular facility as a correspondence school. He suggested
that this was not an appropriate definition and should
rather relate to the mailing of materials between the school
and students. He noted three potential impacts of the
language change: first, that charter schools that were
outside of a "school facility" as a correspondence school;
second, home school study programs would now be considered
correspondence schools; and third, alternative school
district programs would now be affected. He concluded that
this sentence raised a larger issue.
KYM WOLCOTT, ANCHORAGE, parent of Alyeska Central School
students testified via teleconference in support of Alyeska
Central School. She suggested that ACS had no parallel in
service in the state. She discussed the services provided
by ACS, and questioned how students may be absorbed into
districts that are already overcrowded and under-funded.
She challenged the Administration to support quality
education and not close ACS.
RYAN WOLCOTT, student, Anchorage, testified via
teleconference in support of the Alyeska Central Schools.
He said that the teachers at Alyeska provided him with the
support he needed to achieve an education. He suggested
that there was not a cost savings and requested that the
members consider saving the school.
VICTORIA MARTIN, PARENT, ANCHORAGE testified via
teleconference in support of the Alyeska Central School.
She pointed out that Alyeska was currently accredited and
had been a part of the state since 1938. She suggested that
every child could be supported by the Alyeska Central School
and expressed the negative impact on her family of closing
the school. She noted that she had testified on numerous
occasions.
SEAN RUDDELL, STUDENT, ANCHORAGE testified via
teleconference in opposition to the bill. He stated that
the amendment was not acceptable.
DEBBY CHALMERS, ALYESKA CENTRAL SCHOOL EDUCATION ASSOCIATION
(ACSEA) testified in support of the Committee Substitute.
The teachers and parents support a one-year transition
period. She observed that the school has a very complex
program and infrastructure, which has been developed over
many years.
CECILIA MILLER, ACSEA, testified in support of keeping the
Alyeska Central School open for all the children that need
to be served. She asked that there be at least a year for
transition. It would benefit the State for the best. This
will impact kids that are off to college.
JOHN PADEN, COUNSELOR, ALYESKA CENTRAL SCHOOL, spoke in
opposition to the proposed legislation. He noted that when
the bill was first heard, the idea of saving of money was
the major consideration. He observed that the elimination
of the program might not reduce the lease costs of the
Department. He noted that the two main issues were money
and duplication of services. Parents and students with
Alyeska recognize that it is unique. The real issue is a
policy one. He maintained that the legislation is an
affront to those children and families. Extending Alyeska
th
would be better than closing it on June 30. Allowing
Alyeska to continue would be the best solution.
KEVIN SWEENEY, LEGISLATIVE LIAISON, DEPARTMENT OF EDUCATION
AND EARLY DEVELOPMENT, summed up the Administration's
arguments in support of the bill. He realized that this was
an emotional issue, but observed that the educational system
has changed since the implementation of ACS. At its peak ACS
served more than 2,000 students. It now educates just over
one-quarter of that amount. He pointed out that other
districts now offer the same type of service, which could
accommodate the program. There are currently over 8,000
students registered in statewide correspondence programs.
The State has encouraged these school districts to expand
their correspondence program.
Mr. Sweeney stated that the intent is to see the programs
continue to grow and attract students. He observed that the
primary argument against the closure of ACS is that the
program is unique and is the only program that offers
accreditation. He disagreed with those arguments. He
stressed that programs, which are run outside of Juneau,
have shown great promise. These programs have assured the
Department that they will adapt to the needs of the students
and they want to attract students. He asserted that school
districts are ready to provide teacher interaction and
"snail mail" service.
Mr. Sweeney pointed out that the temporary accreditation is
not an issue that is unique to correspondence programs. All
the credits that students earn [under temporary
accreditation] are counted as accounted credits. The
Governor's approach is to avoid duplication and support
competition among school districts.
Discussion on HB 174 was HELD until later in the meeting.
HOUSE BILL NO. 119
"An Act permitting grants to certain regulated public
utilities for water quality enhancement projects and
water supply and wastewater systems."
REPRESENTATIVE JOHN COGHILL, SPONSOR spoke in support of the
legislation. The legislation would permit grants to be
offered to utilities that serve the pubic (municipally and
privately owned). The intent is to encourage municipal
development. Section 3 would allow public water and sewer
utilities to be eligible for projects that are regulated by
Regulatory Commission of Alaska. The question arises
regarding whether those doing contract work or own a utility
would be able to a make profit from the grants. He stated
that they would not. He referenced a letter from the
Department of Community and Economic Development, dated
April 8, 2002, in member's packets. Grants would be for
project expansion and would not be put into the asset base
that would be later sold. The purchase price that the
utility would be able to recover would be regulated. He
stressed that the legislation seeks equity. The intent is
not to allow public money to bolster up private
corporations, but to give ratepayers relief and to grow
Alaska through an expansion of utilities.
Representative Coghill observed that the contributed capital
for the utilities would be regulated. Regulated utilities
would not be permitted to recover contributed capital from
its costumers. It would account for the contributed capital
in a manner that is identified and outlined in the rate base
under the uniform system of accounts in the Regulatory
Commission of Alaska. The bill contains many safeguards.
He claimed that he was comfortable with the issue and
requested approval and passage of the legislation.
Co-Chair Harris asked how many private water and sewer
utilities were in the state of Alaska. Representative
Coghill stated that there were four sewer and 21 water
related utilities. He noted that in Fairbanks, one company
operates two different utilities.
DAN GAVORA, EXECUTIVE VICE PRESIDENT, UTILITY SERVICES OF
ALASKA testified via teleconference in support of the bill.
He stated that as a result of the privatization process that
Fairbanks ratepayers had lost this eligibility. The source
of the funds that pay for the grants are collected from the
taxes paid by both municipal and private owned utilities.
He maintained that to discriminate against utilities, which
shared equally in the burden, was unjust and that the bill
would put Fairbanks ratepayers on an equal level with others
in the state. He noted that there were 45 thousand
residents in the state that are not given the same treatment
as the remainder of the state. He noted that under
Regulatory Commission of Alaska regulations all economic
benefits of the grants are passed on to the ratepayers.
Shareholders receive no benefit. He stated that the bill
would reduce the burden to ratepayers, and to expand
service.
Representative Stoltze requested that the Regulatory
Commission of Alaska testify at a future meeting.
HB 119 was heard and HELD in Committee for further
consideration.
HOUSE BILL NO. 174
"An Act relating to the state centralized
correspondence study program, to funding for
educational programs that occur primarily outside
school facilities, and to the duties of school boards
of borough and city school districts and regional
educational attendance areas; and providing for an
effective date."
MICHEAL JEFFREY, PARENT, BARROW, testified in support of the
Alyeska Central School. He commended the school's
reputation and accreditation. He maintained that temporary
accreditation did not reflect well with prestigious
colleges. He referred to the Committee Substitute and
suggested that it would provide a compromise and allow
parents to attempt to keep the school going in some form.
He suggested that Alyeska's certified teachers presented a
cost savings to the state of Alaska. He urged the Committee
to pass the Committee Substitute for HB 174.
HB 174 was heard and HELD in Committee for further
consideration.
ADJOURNMENT
The meeting was adjourned at 4:48 PM
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