Legislature(2015 - 2016)HOUSE FINANCE 519
04/21/2016 08:30 AM House FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| HB379 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HB 379 | TELECONFERENCED | |
| + | TELECONFERENCED |
HOUSE FINANCE COMMITTEE
April 21, 2016
8:33 a.m.
8:33:09 AM
CALL TO ORDER
Co-Chair Thompson called the House Finance Committee
meeting to order at 8:33 a.m.
MEMBERS PRESENT
Representative Mark Neuman, Co-Chair
Representative Steve Thompson, Co-Chair
Representative Dan Saddler, Vice-Chair
Representative Bryce Edgmon
Representative Les Gara
Representative Lynn Gattis
Representative David Guttenberg
Representative Scott Kawasaki
Representative Cathy Munoz
Representative Lance Pruitt
Representative Tammie Wilson
MEMBERS ABSENT
None
ALSO PRESENT
Representative Craig Johnson, Sponsor; Representative
Charisse Millett, Sponsor; Robert Ervine, Staff,
Representative Craig Johnson; Grace Abbott, Staff,
Representative Charisse Millett; Leslie Ridle, Deputy
Commissioner, Department of Administration; Kate Sheehan,
Director, Division of Personnel and Labor Relations; Jim
Duncan, State Employee, Association; Jake Metcalf, PSEA
Local 803, Juneau; Curtis Thayer, Alaska Chamber, Juneau;
Vince Beltrami, Alaska AFL-CIO, Juneau; Representative Dan
Ortiz; Representative Louise Stutes.
PRESENT VIA TELECONFERENCE
Kelsi Pulczinski, Self, Anchorage; Elisha Waugh, Self,
Anchorage; Mike Coons, Self, Palmer; Ryan McKee, Self, Mat-
Su; Kimberly Rudge-Karic, Self, Kasilof; Nathan Lockwood,
Self, Kenai; Michael Jesperson, Self, Anchorage; David
Nees, Self, Anchorage; Carl Kancir, Self, Anchorage;
Crystal Norman, Self, Anchorage; David Boyle, Self,
Anchorage; Jeremy Price, Americans for Prosperity,
Anchorage; Delice Calcote, Self, Sutton; Alicia Hughes,
Self, Juneau; Bob Fassino, Self, Wasilla; Sybille Castro,
Self, Nikiski; David Landry, Self, Anchorage; Mike Mason,
Self, Anchorage; Daniel Hamm, President of AK Republican
Assembly, Palmer.
SUMMARY
HB 379 STATE EMPLOYEE & OFFICER COMPENSATION
HB 379 was HEARD and HELD in committee for
further consideration.
Co-Chair Thompson relayed the agenda for the day.
8:33:49 AM
HOUSE BILL NO. 379
"An Act eliminating pay step increases and pay
increments for certain state employees; relating to
collective bargaining agreements entered into by the
state; and providing for an effective date."
8:34:56 AM
REPRESENTATIVE CRAIG JOHNSON, SPONSOR, stated that it was
senseless to appropriate "pay raises" during a fiscal
crisis and hoped that future layoffs could be avoided by
eliminating step increases. He emphasized that pay was not
being cut and the legislation only targeted pay increases
for elimination. He believed the action was the
"responsible thing to do." He pointed out that many people
in the private sector were losing jobs and no one received
automatic raises. He commented that the bill ensured that
future contracts would be negotiated without pay increases
and applied to every state worker. He indicated that the
reduction was not permanent and when the state's economy
recovered merit increases would be reintegrated into pay
based on the price of oil. He noted "overwhelming" public
response for the bill.
8:37:51 AM
REPRESENTATIVE CHARISSE MILLETT, SPONSOR, emphasized that
she appreciated state workers and admitted they were the
"backbone workforce for the state of Alaska and kept
government running smoothly." She explained that merit
increases would be frozen until oil prices increased or
fiscal stability was secured and that the bill was not
removing the statute regarding merit increases. She
mentioned that this was one of many other solutions that
had been evaluated through the legislative process. She
listed the budgetary options that had been weighed by the
legislature that included new resource taxes and tax
increases, income taxes, and restructuring the permanent
fund. She commented that at a time when the state was
looking at revenue increases the state could not justify
merit increases that were merely based on an annual date
rather than merit. She explained that merit increases were
reinstated when a trigger of $90 per barrel for the price
of oil was reached. She declared that the bill was a
reflection of the "drastic" budget difficulties the state
was facing. She claimed that the private sector was lying
off workers and decreasing wages making the state's merit
increases were hard to explain to her constituents. She
cited Commissioner Fisher's [Commissioner of the Department
of Administration] testimony reporting that the average
wage for a state worker was $64 thousand per year. She
recounted that in 10 years the state had provided 63
percent increases based on Cost of Living Allowance (COLA)
and merit raises. The recent labor contracts eliminated the
COLA but the merit increases, which were an automatic 3.25
percent to 3.75 percent, increase each year. She thought it
was a "judgement call" to look at the issue. She wanted to
retain her ability to "look her constituents in the eye"
and say "she had done everything she could" before
instituting taxes or restructuring permanent fund reserves.
She agreed with the governor that every option was on the
table and all options should be discussed. She indicated
that the bill only affected contracts going forward and in
the first year the savings were $18 million and up to $30
million in the second year. She believed the bill was the
"right thing to do."
Co-Chair Thompson indicated that Representative Munoz,
Representative Pruitt, and Representative Gara joined the
meeting.
8:43:32 AM
Vice-Chair Saddler wondered whether the constitution
mandated a system of merit increases. Representative
Millett responded that the constitution mandated a merit
system but was not specific.
Representative Kawasaki asked why the bill was introduced
as "By the House Rules Committee by Request."
Representative Johnson stated that the majority caucus
requested the legislation. He offered to remove "by
request." Representative Kawasaki asked about the labor
contracts that have been negotiated in the current year.
Representative Millett responded that she wanted to see the
contracts honored and believed they were "negotiated in
good faith" and offered to change the effective date of the
bill to July 2, 2016 to accommodate the contracts. Future
contracts would be subject to the bill.
Representative Johnson interjected that currently the bill
would impact the contracts but he also wanted the state to
"keep its word." He also understood the effective date
would have to be changed.
Representative Kawasaki referenced an opinion from
Legislative Legal Services addressed to Co-Chair Thompson
that discussed the constitutionality of the legislature
"getting involved" in negotiating labor contracts and could
be seen as an "impairment of contracts." He asked the
sponsor to address the constitutionality of the
legislation. Representative Millett disagreed with
Legislative Legal's interpretation and thought that the
legislature had the right to freeze wages written in
statute and that the merit system would remain in statute.
Representative Johnson thought that the legislature's
ability to either reject or accept a contract was not
interference in contract negotiations.
8:48:12 AM
Representative Kawasaki referenced Title 43 that dealt with
oil and gas tax credits. He relayed that the statute
authorized the legislature to withhold payment of oil and
gas taxes going forward due to lack of funding.
Representative Millett commented that his discussion was
not germane to the bill.
Representative Gara revealed that he read the entire
history of the Alaska Constitution and pointed out that the
merit pay principle existed to ensure the state hired
people based on merit and not political connections. He was
not sure the Constitution related to merit increases. He
asked whether the intention of the bill was to freeze merit
raises and step increases until the price of oil was $90,
per barrel. Representative Millett specified the words
"merit raises" and answered in the affirmative.
Representative Gara requested clarity about what type of
pay was being eliminated.
Representative Johnson replied that the bill included step
increases and merit pay. He believed that merit pay
rewarded and employee for exemplary work. He stated that
currently the state granted the merit increase to any
employee unless he received an unsatisfactory evaluation.
Representative Gara questioned whether the intention of HB
379 was to eliminate merit increases and step increases.
Representative Millett clarified that step increases were
merit increases. Representative Gara asked whether school
district teachers were impacted by the bill. Representative
Johnson stated that teachers would not be affected.
Representative Gara stated that according to the Department
of Revenue (DOR) forecasts the price of oil was not
anticipated to reach $90 per barrel in the next ten years;
therefore, there would be no merit or step increases. He
wondered how not granting any raises and possibly COLA's
for ten years would affect employee morale. Representative
Johnson stated that it was the House Finance Committee's
bill. He suggested that terms were negotiable and the
sponsors would be receptive to a balanced compromise. He
reminded the committee that COLA's were negotiated via
contracts. He restated that the sponsor's did not want to
interfere with contract negotiations and was specifically
targeting merit increases. He "did not want to leave any
stone unturned." He offered that the proposed mining and
fish tax revenues amounted to the pay increases.
8:55:31 AM
Representative Gara stated that the information from the
Department of Administration (DOA) regarding state salaries
reported below market salaries for professional employees
and new employees typically received low pay. He spoke to
the negative impacts of not being able to motivate
employees to remain employed in the state due to lower
wages and elimination of pay increases for up to 10 years.
He wondered how the state would be able to maintain a
talented workforce. Representative Millett responded that
the state had just lost 65 percent of its income and shared
his concern. She believed eliminating increases would save
state jobs and cited labor statistics that the state
recently laid off 37 employees out of a 24thousand member
workforce. She suggested that the private sector oil
companies were laying off employees at higher rates. She
understood workplace morale but thought that having "a job"
was preferable to unemployment. She cited the governor's
statement in regards to the fiscal crisis that everyone
needed to "pull the rope." She discussed the lost revenue
due to low oil prices and the devastating effects on the
state's budget that was the factors for drafting the bill.
She emphasized and reiterated that 65 percent of the
state's income was lost. She relayed her constituent's
grievances regarding state employee merit increases.
Representative Gara pointed out that the legislature failed
to adopt a fiscal plan, which caused the problem. He
thought that the legislation came from a "perspective" of
not taking action on a fiscal plan. He wanted legislators
to compromise and adopt a plan in order to alleviate the
fiscal problem.
9:01:31 AM
Representative Wilson asked whether the geographical
difference for state salaries was affected by the bill.
Representative Millett responded in the negative but
thought that was worth examining since the last study was
published 11 years ago. Representative Wilson stated that
employee advancement with the resulting wage increases
through contract negotiations were still allowable.
Representative Millett responded in the affirmative. She
stated that the bill did not prevent an employee from being
promoted. Representative Wilson asked whether only the
governor could issue a hiring freeze. Representative
Millett responded in the affirmative and noted a hiring
freeze was done through executive order. She was not
certain whether the legislature could legally enact a
hiring freeze. Representative Wilson thanked the sponsors
for introducing the legislation. She wanted to clarify that
the bill did not affect recently negotiated contracts.
Representative Johnson stated that the legislation affected
the contracts that had not been ratified and he wanted to
change the effective date of the bill to exempt recently
negotiated contracts. He restated the importance of the
state "keeping its word" in honor of employees and their
service. He thought the legislature had the ability to
freeze employees within its own branch but not the
executive branch.
Co-Chair Thompson asked whether the number of outstanding
negotiated contracts was 4. Representative Johnson was
uncertain but knew that the contracts included a
"substantial number of employees."
9:06:06 AM
Representative Gattis asked when the automatic merit
increases were put into statute. Representative Johnson was
uncertain but did not think the increases existed since
statehood.
Representative Gattis voiced that state salaries had been
"tweaked" or adjusted over the years. She contended that
she struggled with the notion of the "legislature keeping
its word." She elaborated that the administration
negotiated the contracts and the legislature ratified the
contracts and surmised that it was "not our word it's their
word." She relayed from personal experience receiving 50
percent pay cuts when employed in the private sector and
thought the ability "to have a job" was most important. She
appreciated the bill.
9:10:18 AM
Representative Munoz mentioned that the merit increases
were established in 1960. She wondered whether the merit
system had ever been suspended before. Representative
Johnson was unsure. Representative Munoz asked whether the
suspension applied to the University or the Permanent Fund
Corporation. Representative Johnson did not believe so.
Representative Munoz referenced testimony stating that 41
positions had been removed from the budget. She had asked
Commissioner Fisher and he reported more than 700 employees
were affected and requested more accurate data reporting
for the record. Representative Johnson questioned whether
the number included vacant positions cut or actual layoffs.
Representative Millett noted the sensitive nature of the
issue. She meant no disrespect to state employees and was
looking for ways to keep the state workforce whole. She
suggested that the choice was between foregoing a pay raise
or getting furloughed or laid off. She stated that the bill
would affect everyone in state employment. She reported
that as she examined all of the cuts the state faced
employee salaries had to be examined. The "intent was to
keep the backbone of state workers whole."
Co-Chair Thompson voiced that the issue was not only
sensitive but emotional as well.
Representative Johnson referred to a comment made by
Representative Gara about a fiscal plan and likened the
plan to a puzzle. He thought it was necessary to put pieces
of the puzzle together to develop a plan. Adjusting merit
increases was only one piece of the puzzle that could
complete the plan but by itself would not fix the problem.
He voiced that $30 million in savings was not an
insignificant amount of money.
9:16:45 AM
ROBERT ERVINE, STAFF, REPRESENTATIVE CRAIG JOHNSON,
introduced himself and offered to discuss the sectional
analysis (copy on file).
Representative Edgmon remarked on the governor's
presentation from the previous day regarding spending down
savings in the absence of a fiscal plan. He recognized the
need to have the conversation based on the fiscal crisis.
He also viewed the bill from another aspect which was the
troublesome effect on rural communities and the
difficulties of recruiting and retaining state employees.
He spoke to generalized statements regarding considerable
job loss in the private sector in Alaska. He expressed
doubt that job loss was universal and noted areas of the
private sector and federal jobs that were flourishing in
the state. He wondered whether the sponsors researched the
dynamic between recent job losses and gains and if there
was a cause and effect relationship between recruitment and
retention of employees.
9:20:12 AM
GRACE ABBOTT, STAFF, REPRESENTATIVE CHARISSE MILLETT,
agreed with Representative Edgmon's premise and answered
that the research had not been done. She cited headline
news and business's press releases indicating the loss of
jobs. The legislation was an attempt to be responsive to
the sponsor's observations of a "general tenor" and
"initial economic outlook" as well as communication from
constituents and remarked that they had not examined
anyone's "bottom line." Representative Edgmon contended
that had not implied that the sponsors scrutinize every
business's "bottom-line" in the state. His question was
about the different analysis for different industries. The
economy was made up of sectors and macroeconomic analysis
and Department of Labor (DLWD) information on economic
trends were available. He understood many jobs were being
eliminated within the oil industry and was looking for
analysis presenting the "big picture." He was attempting to
balance the interest between the difficulties of
recruitment and retention in rural areas and the economic
difficulties in the private sector.
9:23:04 AM
Vice-Chair Saddler wanted to clarify "misstatements" that
were made in the press and by committee members in regards
to Commissioner Fisher's statements. He contended that
Commissioner Fisher had reported that entry level
"educated" state workers were paid higher than "normal
market wages" but at the higher ranges professionals were
paid less than "market" salaries." He understood that state
employees were given 3.5 percent raises each year for their
first 5 years of state employment subsequently they
received a 3.25 percent merit increase every two years
unless a negative evaluation was issued. He cited previous
testimony stating that an employee's merit increase was
based on an evaluation and she would receive retroactive
compensation if the satisfactory evaluation was late. He
stated that the "two systems resulted in a higher pay than
inflation" and in addition, employees received COLA's which
counted for inflation. He reported that state "wages were
31 percent higher than inflation" in combination with the
five year raises, step increases, and COLS's combined. He
mentioned that the state's total payroll was $1.2 billion.
He asked whether the sponsors calculated "what the $30
million fiscal note represented in terms of reduced raises
for the $1.2 billion in total payroll." Mr. Ervine deferred
to the administration for the answer.
9:25:19 AM
Representative Gara understood that Vice-Chair Saddler had
certain points he wanted to make, but felt that his own
points were not misstatements and should not be
characterized as such.
Co-Chair Thompson noted that DOA would testify later in the
meeting.
Vice-Chair Saddler believed that he had the "right to ask
that the words be taken down and verified."
9:26:03 AM
AT EASE
9:42:49 AM
RECONVENED
Representative Guttenberg mentioned that comments had been
made about the private sector. He declared that the private
sectors bottom line was profit driven and the state's
bottom line delivered services which was a "critical"
endeavor. He exemplified the court system as an entity that
determined the correct level of services and had taken
measures to absorb the reductions. He believed the state
had asked public employees to do more with less and that
the budget reductions over the last few years' impacted
employees, the public sector, cut programs, and eliminated
positions. He wondered whether the sponsors considered the
"non-economic" impacts to the state. Mr. Ervine thought
that the current bill was trying to address the loss of
services by not eliminating jobs.
Ms. Abbott thought that there were non-economic impacts
resulting from the legislation such as morale and that
prioritizing the impacts was a policy call.
Co-Chair Thompson cautioned against asking staff policy
questions. Representative Guttenberg agreed and voiced that
he was asking for analysis regarding non-economic impacts
and not for a value judgement of the bill.
9:48:13 AM
Representative Gara referred to page 5 of the previous
day's PowerPoint presentation titled: "2016 Labor
Contracts" [April 19, 2016] (copy on file). He pointed to
the slide titled: "Cash Compensation" and read: "Higher
range professional employees tend to be below market and
new employees tend to be below market." He noted that the
statements related to salaries and asked for concurrence.
LESLIE RIDLE, DEPUTY COMMISSIONER, DEPARTMENT OF
ADMINISTRATION, answered in the affirmative. She elaborated
that the professionals being referred to represented
professions like attorneys, doctors, and troopers with
special training. New employees tended to be paid below
market but the benefits helped bring their salaries up to
market levels.
Representative Gara wondered whether the troopers were part
of the high range professional employees. Ms. Ridle was
uncertain but replied that some troopers had special
training and the state was competing with local police
departments within and out-of-state. She would need to
research further for an accurate answer.
Co-Chair Neuman referred to the salaries of the deputy
commissioners and noted the $250 thousand salary including
benefits for the Deputy Commissioner of the Department of
Fish and Game (DFG). He wondered whether the salary was
above or below the standard for deputy commissioners. Ms.
Ridle was not familiar with deputy commissioner salaries.
She did not know whether there was an across the board
standard for deputy commissioners.
Co-Chair Neuman asked where it compared to compensation in
the private sector. Ms. Ridle responded that she had worked
in city and federal jobs and her state compensation was "on
par" with those salaries. Co-Chair Neuman wanted to make
the point that some state employees made exceptionally high
wages and that the pay scale should be reexamined.
9:53:33 AM
Representative Wilson asked what state employees were
excluded from the legislation. Ms. Ridle stated that the
University and exempt agencies were not included in the
bill. Representative Wilson asked her to list the exempt
agencies.
KATE SHEEHAN, DIRECTOR, DIVISION OF PERSONNEL AND LABOR
RELATIONS, DEPARTMENT OF ADMINISTRATION, relayed that some
exempt agencies followed the state pay plan set in statute
through policy and some had their own pay plan.
Representative Wilson reiterated her request. Ms. Sheehan
would provide more information. Representative Wilson asked
what happened when a retired person re-entered state
employment. Ms. Sheehan replied that a person rehired into
a permanent position could receive the same step placement
based on "creditable" state service if the individual was
returning to the same position. Representative Wilson asked
whether the person would also receive their retirement. Ms.
Sheehan responded that the retired person entering a
permanent position would not receive retirement and the
same scenario applied to a non-permanent position allowed
the person to collect retirement but not receive a salary
based on creditable state service.
Representative Guttenberg wondered whether there was a
tangible benefit to the state for granting lower paying
positions pay increases. He voiced that the inference was
that the state was just handing employees money. Ms.
Sheehan deduced that salary increases helped with
recruitment and retention.
9:57:34 AM
Vice-Chair Saddler asked whether Ms. Ridle would expect to
have more or fewer applicants for state jobs at a time of
higher private sector unemployment. Ms. Ridle surmised that
she expected to have more applicants. Vice-Chair Saddler
asked whether fewer people would apply for state jobs and
more employees leave state jobs if the legislation was
adopted. Ms. Ridle had not analyzed recruitment in depth
and could not answer the question. Vice-Chair Saddler asked
whether the division knew of any studies pertaining to
"where pay fits into employee morale." Ms. Ridle remarked
that the state had not done any specific studies on
employee morale and anecdotally thought that people who
enjoyed their job and felt adequately compensated tended to
have good morale. Vice-Chair Saddler was looking for
scientific evidence that demonstrated a link between pay
and employee morale.
Representative Wilson thought that some of the questions
should be directed to the commissioner and were policy
questions.
Vice-Chair Saddler asked whether Ms. Ridle felt
"inadequate" to answer his questions. Ms. Ridle thought
that he was asking specifically for Alaskan studies. She
agreed that there were studies that showed that morale was
affected by compensation and working conditions.
Representative Pruitt was curious about exit interviews. He
wondered whether state employees had been surveyed
regarding employment satisfaction. Ms. Ridle stated that
the state did perform exit interviews upon request.
Ms. Sheehan stated that the state did not survey its
employees but was considering a system the City and Borough
of Juneau (CBJ) used to perform a similar employee study.
10:02:16 AM
Representative Kawasaki referred to the previous question
about merit pay ever being suspended. Ms. Ridle replied
that a similar wage freeze had not been mandated in the
previous 20 years. Representative Kawasaki noted that the
state personnel act, Title 39 contained the merit principal
from Article 7, Section 6 of the Alaska constitution. He
wondered about the impact on employees if DOA abandoned the
merit principle and there was a situation where one
employee earned merit pay and the other did not and both
were capped at the same level of pay. Ms. Ridle clarified
that the merit principle related to hiring, granting wage
increases, and firing based on merit and he was referring
to merit step increases. She further clarified that his
question was whether the state would be in conflict with
the merit principle if merit step increases were not
rewarded. Representative Kawasaki responded in the
affirmative. Ms. Ridle responded that attorney consultation
was needed to answer the question. Representative Kawasaki
hypothesized a situation where two people, hired at the
same time; one person performing well and the other
performing poorly but neither received merit pay. He asked
whether the scenario would affect morale. Ms. Ridle
believed it would.
Co-Chair Thompson asked legislators to stick to questions
regarding the provisions in the bill and not seek opinion.
Representative Gara hypothesized that the state's oil
forecast showing that the price of oil would not rise to
$90 per barrel in 10 years was correct. He recapped that
the amount was the trigger to restate merit increases. He
asked whether it would be difficult for retention and
recruitment if the state went 10 years without paying merit
increases. Ms. Ridle thought that it would be difficult to
maintain higher level professional employees under a
similar scenario.
10:07:34 AM
Representative Gattis stated she was thinking about raises
in particular. She received a legal opinion and relayed
that "in some instances prior legislatures have not funded
salary increases mandated by state collective bargaining
agreements and such action was upheld by the Alaska Supreme
Court." In addition, the legal opinion noted that in the
past the legislature had not appropriated increases and
that it had not happened since 1985.
Co-Chair Thompson OPENED public testimony.
10:09:07 AM
KELSI PULCZINSKI, SELF, ANCHORAGE (via teleconference),
supported HB 379. She thought freezing "automatic pay
increases was absolutely reasonable" relative to the
state's current economic situation. She related the
difficult economic conditions in the private sector and its
consequences. She opined that the private sector had "skin
in the game" through cost cutting measures and layoffs and
thought the same should apply to the state's workforce. She
thanked the committee and urged member's support for the
bill.
10:11:02 AM
ELISHA WAUGH, SELF, ANCHORAGE (via teleconference), spoke
in favor of HB 379 and believed the bill was a "positive
step" in creating a sustainable budget. He cited Department
of Labor estimates that 2,300 oil and gas industry workers
had been laid off in the last 12 months. He remarked that
the bill was freezing pay increases and was a "reasonable"
measure. He encouraged legislators to make the necessary
tough decisions and urged passage of the bill.
10:12:30 AM
MIKE COONS, SELF, PALMER (via teleconference), supported HB
379. He recommended eliminating the state's unfilled
positions that would save the state an "estimated $7
million in savings." He empathized with state workers and
felt they were hard workers but felt that they had to have
"skin in the game." He urged the committee to eliminate
duplicate executive positions in addition to freezing wage
increases.
10:14:17 AM
RYAN MCKEE, SELF, MAT-SU (via teleconference), supported
passage of HB 379. He stated that the private sector had
lost jobs and it was time for the state to make
adjustments. He noted that the bill did not cut pay and was
"just a freeze on raises" until the economy recovered. He
believed that it was "absurd" to "increase taxes on oil
companies" at a time of oil industry layoffs in order to
"finance a pay raise for state employees." He urged the
committee to pass the legislation as soon as possible.
10:15:34 AM
KIMBERLY RUDGE-KARIC, SELF, KASILOF (via teleconference),
opposed HB 379. She mentioned her experience as a seasonal
state employee since 1978. She felt that passage of the
bill would "remove an incentive to attract and retain
qualified employees." She spoke to her experience as a
seasonal employee and observed supervisors and seasonal
workers quit for more lucrative federal and private sector
jobs that offered better opportunities for advancement. She
spoke to the time investment in new hire training and the
disruption in projects and lack of consistency that
resulted from non-retention. She indicated that merit
increases had greatly impacted her decision to remain in
her seasonal position. She listed some seasonal state
positions and felt they offered vital services for the
state.
10:18:00 AM
NATHAN LOCKWOOD, SELF, KENAI (via teleconference), opposed
the legislation. He reported that he worked for the state
in the Public Defender Agency. He spoke to the issue of
morale and stated that pay increases made a huge impact on
morale and employment satisfaction; much more than lighting
or ventilation. He understood the public's comparison
between the state and private sector and voiced that
"everyone in Alaska was feeling the pain of the budget
crisis." He felt that the bill created a greater divide
between the public and private sector and thought that the
legislation "pitted" on against the other. He believed that
the perception that the public sector was "not doing
anything" in response to the fiscal crisis was a "fallacy."
He related that in his office three attorney positions were
cut and consolidations, cost cutting measures, and
furloughs were imposed. He stressed that the legislature
should start generating revenues and solve the problem
rather than solving the fiscal crisis by "passing the hurt
on to public employees" in order to placate the private
sector. He suggested that efforts should be made to educate
the public about the cost cutting measures that were
enacted.
10:20:40 AM
MICHAEL JESPERSON, SELF, ANCHORAGE (via teleconference),
supported HB 379. He opined that a 3.5 percent automatic
"cost of living" pay increase was not a pay cut. He made
comparisons with the private sector. He stated that
"turnover" was a common occurrence and that the bill should
not affect retention. He relayed that the Alaska Chamber of
Commerce reported that the state would save $70 million by
eliminating the pay increases and felt that would help
offset revenue measures. He urged the committee to support
the bill.
10:22:08 AM
DAVID NEES, SELF, ANCHORAGE (via teleconference), supported
HB 379. He spoke to his experience of receiving a 6 year
pay freeze in his job as an educator in the Anchorage
School District. He noted that the freeze "contributed to a
morale decline but guaranteed" that jobs stayed intact. He
listed some municipalities that froze pay during the fiscal
crisis in the 1980's. He urged members to support the bill.
10:23:20 AM
CARL KANCIR, SELF, ANCHORAGE (via teleconference), spoke in
favor of HB 379. He discussed cuts to Social Security
checks and believed that state wages should also be cut.
He referenced testimony that characterized the savings from
the legislation as a "drop in the bucket" but suggested
that many drops added up. He thanked the committee for its
time.
10:25:17 AM
CRYSTAL NORMAN, SELF, ANCHORAGE (via teleconference),
supported the bill. She had worked as a contractor for
Conocophillips, had received a raise, had it taken away,
and eventually lost her job. She believed that the bill
would not affect job retention in a job market full of job
seekers. She supported the legislation in an effort to help
balance the budget before "passing taxes on to the private
sector."
10:26:39 AM
DAVID BOYLE, SELF, ANCHORAGE (via teleconference), spoke in
favor of the legislation. He thought that "all Alaskans
must sacrifice and share in the pain" during the fiscal
crisis. He did want public sector employees receiving merit
increases when the private sector was lying off employees
and reducing benefits. He felt that the state's merit pay
system was broken due to the fact that 95 percent of
employees received it. He discussed the difficulties the
fiscal crisis imposed on senior citizens. He noted the
salary and benefit package for (Alaska State Employees
Association (ASEA), the largest public employee union, and
voiced that he would rather have "fewer employees standing
in the unemployment line" and get paid less. He thanked the
committee and urged support of HB 379.
10:29:00 AM
JEREMY PRICE, AMERICANS FOR PROSPERITY, ANCHORAGE (via
teleconference), expressed strong support for HB 379 and
opined that the bill was long overdue. He expressed his
appreciation of state employees. However, he did not
support automatic merit increases and stated that the bill
"would save $70 million to $75 million that would not come
out of taxpayer pockets." He urged members to support the
bill.
10:30:44 AM
DELICE CALCOTE, SELF, SUTTON (via teleconference), relayed
that she had worked for over 8 years for the Alaska
Commission on Post-Secondary Education in Anchorage and
supported the bill. She discussed her workload and learned
that she had been replaced by 6 people over the years since
she left. She referenced the commission's current
administrative costs of $15 million. She suggested that the
legislature review the state's corporations and commissions
and apply the pay freeze to them. She urged support for the
bill.
10:33:02 AM
JIM DUNCAN, EXECUTIVE DIRECTOR, ALASKA STATE EMPLOYEE
ASSOCIATION, shared that he was previously the commissioner
of DOA and served as a legislator for 24 years. He stated
that "the way the bill was written really changed the rules
of the game after the game was over." He did not believe
the bill was a good piece of legislation. He reported that
negotiations were engaged in "good faith" and contracts
were written this year with no costs at the request of the
legislature. The contracts took further steps and accepted
additional reductions in order to contribute to the
solution for the fiscal crisis. He noted that the contracts
contained a zero cost of living adjustment for three years,
decrease in employer health insurance contributions,
mandatory furlough hours, and language that management
could reduce travel costs. He declared that state employees
had "stepped to the plate." He detailed that merit steps
had been in place since 1960 and had never been frozen.
Merit steps were not a part of monetary terms of the
contract and were built into the base budget, and were
funded due to turnover. Under Governor Palin they were
changed to "pay increments" and were previously known as
"longevity steps." He elucidated that merit steps and pay
increments were established as a way to retain and recruit
quality employees. He felt elimination of both would be a
"major step backward for the state." He strongly opposed
the legislation.
Mr. Duncan interjected that ASEA lost 400 members over the
last year due to layoffs.
10:36:55 AM
JAKE METCALF, EXECUTIVE DIRECTOR, PUBLIC SAFETY EMPLOYEE
ASSOCIATION, PSEA LOCAL 803, JUNEAU, reported that PSEA
represented state troopers, court service officers, airport
police and fire fighters, and some municipal police
departments. He strongly agreed with Mr. Duncan. He stated
that recruitment and retention was a serious issue and that
municipal police departments were in competition with the
state in recruitment to state troopers. He relayed that
currently the Anchorage Police Department was recruiting
for police officers and he heard that 15 to 20 Alaska State
Troopers were applying due to better pay and no travel
requirements. He informed the committee that the state
invested $300 thousand to train state troopers over the
first five years of state service. He suggested that the
state would become the training ground for municipal and
other state police forces with passage of the bill. He
believed that merit pay was a fair way to ensure rewards
for good service and that most police departments in the
country offered merit pay. He revealed that under the PSEA
contract merit pay was not automatic and issued for "above
average" evaluations. He opposed the legislation.
10:39:35 AM
CURTIS THAYER, ALASKA CHAMBER, JUNEAU, spoke in favor of HB
379. He offered that he also was a previous commissioner of
DOA. He was aware of the value of state employees but felt
that it was unfair to grant automatic wage increases when
other sectors of the economy were "handing out pink slips."
He reviewed a list of reductions the private sector was
engaged in. He thought HB 379 allowed state employees to
keep their jobs.
10:42:25 AM
VINCE BELTRAMI, ALASKA AFL-CIO, JUNEAU, spoke against HB
379. He cited Representative Johnson's statement that the
bill was something the majority caucus was working on all
session. He believed that introducing the bill on the
ninety-first day of session was "an example of terrible
public process." He also referenced Representative
Johnson's remarks that HB 379 was introduced as a
bargaining chip for budget negotiations. He thought it was
unconscionable to treat state employees as "bargaining
chips." He compared the legislation's "$18 million" in
savings to the "$775 million" in oil tax credits issued in
FY 17. He pointed out that he was previously the executive
director of the largest apprenticeship program in the
state, and likened the process of journeyman apprentice
advancement to a full wage over 5 years to public
employees. He viewed step increases as a "progression" to
full wage. He commented that step and merit increases were
cost neutral as new employees replaced retired employees
and absence of them "stifled incentives for performance."
He quoted DOLWD statistics reporting the loss of 1,800 jobs
since October, 2014 and that the state lost 1,400 jobs over
the same time period with the possible loss of 1000 more
jobs. He noted that 20 percent to 30 percent of oil and gas
workers lived out-of-state and did not contribute to the
Alaskan economy. He furthered that "it boggled his mind
that the "State Chamber of Commerce" supported a bill that
cut the wages of the people that patronized chamber
member's businesses. He urged the committee to oppose the
bill.
10:44:55 AM
ALICIA HUGHES, SELF, JUNEAU (via teleconference), strongly
opposed HB 379. She reminded the committee that state
workers were also part of the legislature's constituency.
She believed that a "small state tax" would generate
revenues and ensured that the "public and private" sectors
would share the burden. She spoke to her experience as a
state employee and valued her ability to serve the state.
She relayed that she had gone to the negotiation meeting
with the unions. She had encouraged the contract
negotiating committee to share in the burden. She felt that
the bill was a divisive move and a "betrayal" and that
state workers "did their part" by taking furlough days,
cutting employer health contributions, and accepted a zero
COLA. She suggested generating more revenue rather than
keeping the state "anchored to oil" and imposing the
current legislation. She felt that the bill "targeted"
state employees. She opposed the legislation.
10:47:49 AM
BOB FASSINO, SELF, WASILLA (via teleconference), opposed
the legislation. He did not think the legislation was "well
thought out" and done at the last minute. He spoke to the
necessity of merit increases for public safety, correction
officers, and public employee retention. He supported
raising revenue through taxes, oil tax reform, and
restructuring the Permanent Fund Dividend.
10:48:53 AM
SYBILLE CASTRO, SELF, NIKISKI (via teleconference), opposed
HB 379. She shared that she was a former police officer and
believed that public safety and correctional officers
deserved regular merit increases. She related that she was
the mother of a handicapped adult and spoke to the
reduction in social services in her community. She
commented that she was already feeling the pain from budget
cuts and that "the elderly and the needy" were suffering
the most from budget cuts. She felt that everyone in the
state should stick together through the fiscal crisis. She
offered that firefighters, police officers, and troopers
were important positions. She suggested reducing the amount
of the merit increases but not eliminating them completely.
10:50:47 AM
DAVID LANDRY, SELF, ANCHORAGE (via teleconference), spoke
against HB 379. He reported that he was a construction
contractor in the private sector. He referenced the
sponsors and other testifier's frequent statements
regarding state workers having "skin in the game." He felt
that state workers would have skin in the game" just like
everyone else" when taxes were imposed. He remarked that
state workers reaped rewards or suffered consequences from
whatever condition the economy was in. He thought the bill
was "a side show" and it was "laughable" to say that the
bill would help save state jobs. He thought the problem
could be solved with passage of the governor's fiscal
reform plan. He urged committee members to vote against HB
379.
10:52:40 AM
DANIEL HAMM, PRESIDENT OF ALASKAN REPUBLICAN ASSEMBLY,
PALMER (via teleconference), spoke in favor of the bill. He
stated that the public sector realized that "you don't
raise labor costs during a deficit." He supported the bill
because every possible budget reduction should be enacted.
10:53:25 AM
MIKE MASON, SELF, ANCHORAGE (via teleconference), spoke
against HB 379. He relayed his work experience as a manager
of a multimillion dollar Alaskan business and lifelong
Alaskan. He called the measure "ludicrous" and stated that
the bill "did nothing to resolve the very serious and dire
economic circumstance" the majority in the legislature had
placed the state in through "short-sighted" actions. He did
not think the bill would fix what he considered a
"structural budget problem" and would "degrade" state
services. He urged instituting an income tax that would
"offset a PFD grab." He opined that "draconian cuts" would
not fix the problem but that raising revenue and supporting
the governor's fiscal plan would.
10:55:29 AM
Co-Chair Neuman CLOSED public testimony.
Co-Chair Thompson indicated that he was setting the bill
aside. He told committee members that amendments were due
by 5:00 PM on Friday.
HB 379 was HEARD and HELD in committee for further
consideration.
ADJOURNMENT
10:56:05 AM
The meeting was adjourned at 10:56 a.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| 2016.04.19 Alaska Chamber Cost Reduction Measures Letter.pdf |
HFIN 4/21/2016 8:30:00 AM |
HB 379 |
| HB 379 Sectional LH.pdf |
HFIN 4/21/2016 8:30:00 AM |
HB 379 |
| HB 379 Sponsor Statement.pdf |
HFIN 4/21/2016 8:30:00 AM |
HB 379 |
| HB379 Supporting Document Workforce Profile 2015.pdf |
HFIN 4/21/2016 8:30:00 AM |
HB 379 |
| HB379-LEG-LEG-04-20-16.pdf |
HFIN 4/21/2016 8:30:00 AM |
HB 379 |
| HB379-ACS-Various-04-21-16 Corrected.pdf |
HFIN 4/21/2016 8:30:00 AM |
HB 379 |
| HB 379 Letters Opposition.pdf |
HFIN 4/21/2016 8:30:00 AM |
HB 379 |
| HB 379 Letters Support.pdf |
HFIN 4/21/2016 8:30:00 AM |
HB 379 |
| HB 379 Letters Opposition PKT 2.pdf |
HFIN 4/21/2016 8:30:00 AM |
HB 379 |
| HB 379 Opposition PKT 4.pdf |
HFIN 4/21/2016 8:30:00 AM |
HB 379 |