Legislature(1995 - 1996)

02/22/1995 08:05 AM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
                                                                               
                                                                               
                     HOUSE FINANCE COMMITTEE                                   
                        February 22, 1995                                      
                            8:00 A.M.                                          
                                                                               
  TAPE HFC 95-27, Side 1, #000 - end.                                          
  TAPE HFC 95-27, Side 2, #000 - end.                                          
  TAPE HFC 95-28, Side 1, #000 - 145.                                          
                                                                               
  CALL TO ORDER                                                                
                                                                               
  Co-Chair  Mark  Hanley called  the  House Finance  Committee                 
  meeting to order at 8:05 a.m.                                                
                                                                               
  PRESENT                                                                      
                                                                               
  Co-Chair Hanley               Representative Martin                          
  Co-Chair Foster               Representative Mulder                          
  Representative Brown          Representative Navarre                         
  Representative Grussendorf    Representative Parnell                         
  Representative Kelly          Representative Therriault                      
  Representative Kohring                                                       
                                                                               
  ALSO PRESENT                                                                 
                                                                               
  Kevin Richie,  Executive Director, Alaska  Municipal League;                 
  Bruce  Ludwig,  Alaska Public  Employees  Association; Susan                 
  Cox,  Assistant Attorney  General, Department  of  Law, Mary                 
  Hughes, Municipal Attorney,  Anchorage; Duane Udland, Alaska                 
  Association  of  Chiefs of  Police;  Don Otis,  Alaska Peace                 
  Officers Association.                                                        
                                                                               
  SUMMARY                                                                      
                                                                               
  HB 120    An Act  relating to public employers defending and                 
            indemnifying  public  employees and  former public                 
            employees with  respect to  claims arising  out of                 
            conduct that is within the scope of employment.                    
                                                                               
            CSHB 120 (FIN) was reported  out of Committee with                 
            a  "do  pass" recommendation  and with  three zero                 
            fiscal   notes;   two   by   the   Department   of                 
            Administration, dated  2/10/95;  and  one  by  the                 
            Department of Law.                                                 
                                                                               
  HB 183    An Act  extending the requirements  of preliminary                 
            evaluation, notice, and prior legislative approval                 
            of  certain  lease-purchase agreements  to include                 
            proposed  improvements  to   real  property;   and                 
            providing for an effective date.                                   
                                                                               
                                                                               
                                1                                              
                                                                               
                                                                               
            CSHB 183 (FIN) was reported  out of Committee with                 
            a "do pass" recommendation and  with a zero fiscal                 
            note by the Department of Administration.                          
                                                                               
  HJR 5     Proposing amendments  to the  Constitution of  the                 
            State of Alaska relating to terms of legislators.                  
                                                                               
            CSHJR 5 (FIN) was reported out of Committee with a                 
            "do  pass" recommendation and  with a  zero fiscal                 
            note by the Office of the Governor, dated 2/3/95.                  
  HOUSE BILL NO. 183                                                           
                                                                               
       "An  Act  extending  the  requirements  of  preliminary                 
       evaluation, notice,  and prior legislative  approval of                 
       certain lease-purchase agreements  to include  proposed                 
       improvements  to real  property; and  providing for  an                 
       effective date."                                                        
                                                                               
  Representative  Martin provided members with a substitute to                 
  Amendment 1, introduced in Committee  on 2/20/95 (Attachment                 
  1).  Representative Martin MOVED to adopt Amendment 1.                       
                                                                               
  Representative Kohring  OBJECTED for purpose  of discussion.                 
  He   inquired  about   other   entities  similar   to  AHFC.                 
  Representative Martin  stated  that  the  Alaska  Industrial                 
  Development  and  Export Authority  (AIDEA)  and the  Alaska                 
  Railroad Corporation are similar in regards to their bonding                 
  capabilities.    He asserted  that  it  would be  better  to                 
  address AIDEA and the Alaska Railroad Corporation in HB 189.                 
                                                                               
  Representative Kohring WITHDREW his objection.  There  being                 
  NO OBJECTION, Amendment 1 was adopted.                                       
                                                                               
  Representative Mulder MOVED to report CSHB 183 (FIN)  out of                 
  Committee  with  individual  recommendations  and  with  the                 
  accompanying fiscal note.   There being NO OBJECTION, it was                 
  so ordered.                                                                  
                                                                               
  CSHB 183  (FIN) was  reported out  of Committee  with a  "do                 
  pass" recommendation  and with  a zero  fiscal  note by  the                 
  Department of Administration.                                                
  HOUSE JOINT RESOLUTION NO. 5                                                 
                                                                               
       Proposing amendments  to the Constitution  of the State                 
       of Alaska relating to terms of legislators.                             
                                                                               
  Representative Therriault provided members with Amendment 1,                 
  9-LS0226\M.3 (Attachment 2).  He observed that the amendment                 
  deletes language regarding terms served through appointment.                 
  He  maintained  that the  language is  redundant in  lieu of                 
                                                                               
                                2                                              
                                                                               
                                                                               
  language added by  the House State  Affairs Committee.   The                 
  amendment by  the  House State  Affairs Committee  clarifies                 
  that members who  reach the  end of their  term limit  while                 
  partially through an elected term will be allowed to  finish                 
  the  term.    Co-Chair Hanley  observed  that  the amendment                 
  eliminates all  references to appointment.   If a  member is                 
  appointed  to  a  regular  legislative session  the  session                 
  served would be counted as if the member were elected.                       
                                                                               
  Representative  Therriault  MOVED  to   adopt  Amendment  1.                 
  Representative  Kelly OBJECTED  for  purpose of  discussion.                 
  Representative  Kelly indicated  his  intention  to offer  a                 
  conflicting amendment.   Representative  Kelly WITHDREW  his                 
  objection.    There  being  NO  OBJECTION, Amendment  1  was                 
  adopted.                                                                     
                                                                               
  Representative  Kelly  provided  members  with  Amendment  2                 
  (Attachment 3).  He explained that Amendment 2 would place a                 
  16 year term limit on the legislature and allow that no more                 
  than 8  years be served  in a single  body without taking  a                 
  break during two regular sessions.                                           
                                                                               
  Representative Therriault argued against the adoption of                     
  Amendment 2                                                                  
                                                                               
  In response to a question by Representative Grussendorf, Co-                 
  Chair Hanley clarified  that "session"  refers to a  regular                 
  121 day legislative  session.  Special sessions would not be                 
  counted.                                                                     
  Co-Chair Hanley expressed  concern that 16 year  term limits                 
  are too  long.   He stressed  that an  inequity would  exist                 
  between  House   districts  since  half   of  the   district                 
  representatives would not have a Senate seat open at the end                 
  of their eight year terms.  Half  of the House members would                 
  not  be able to extend their  service past 8 years by moving                 
  to the Senate.                                                               
                                                                               
  Representative Kelly emphasized that consideration be  given                 
  to what is  fair to  the district.   Co-Chair Hanley  argued                 
  that the amendment is inequitable to half the districts.  He                 
  summarized that Amendment 2 would treat the House and Senate                 
  differently.                                                                 
                                                                               
  Representative  Therriault  echoed  concerns  regarding  the                 
  inequity between bodies as provided in Amendment 2.                          
                                                                               
  A roll call vote was taken on the MOTION to adopt  Amendment                 
  2.                                                                           
                                                                               
  IN FAVOR: Brown, Grussendorf, Kelly, Mulder                                  
  OPPOSED:  Kohring,  Martin,  Navarre,  Parnell,  Therriault,                 
  Hanley,        Foster                                                        
                                                                               
                                3                                              
                                                                               
                                                                               
  The MOTION FAILED (4-7).                                                     
                                                                               
  Representative  Brown  provided  members  with  Amendment  3                 
  (Attachment  4).   She  explained  that the  amendment would                 
  trigger  term  limits beginning  in  the  year 2000  if  the                 
  constitutional amendment is ratified in 1996.  She explained                 
  that the effective dated  is delayed to allow a  Senate term                 
  beginning in 1996 to be finished.                                            
                                                                               
  Representative   Brown   MOVED   to   adopt   Amendment   3.                 
  Representative  Martin  spoke  in support  of  Amendment  3.                 
  Representative  Brown  clarified that  all  previous service                 
  would be counted beginning in the year 2000.                                 
                                                                               
  Representative Therriault stated that he considered adopting                 
  the  approach taken by the amendment.   He expressed concern                 
  that  the   amendment  may   affect  the   passage  of   the                 
  legislation.  Co-Chair Hanley felt  that the amendment would                 
  prevent the  legislation's passage.   Representative  Martin                 
  asserted  that the amendment  is a  good compromise  from an                 
  immediate effective date.                                                    
                                                                               
  Representative Grussendorf  noted that  he would  oppose the                 
  amendment.  He stated that he would support the amendment if                 
  it is introduced as a House floor amendment.                                 
                                                                               
  A roll call vote was taken  on the MOTION to adopt Amendment                 
  3.                                                                           
                                                                               
  IN FAVOR: Martin, Navarre, Parnell, Brown                                    
  OPPOSED:  Grussendorf, Kelly,  Kohring, Mulder,  Therriault,                 
  Foster,        Hanley                                                        
                                                                               
  The MOTION FAILED (4-7).                                                     
                                                                               
  Co-Chair Foster spoke  in opposition to  HJR 5.  He  pointed                 
  out  that  the  political strength  of  the  Municipality of                 
  Anchorage  can  only  be countered  by  rural  areas through                 
  seniority of rural members.                                                  
                                                                               
  Representative  Therriault  pointed  out  that  members  can                 
  return to service after the two year break.                                  
                                                                               
  Representative Kelly spoke against term limits.  He observed                 
  that national term  limits are disadvantageous to  the State                 
  of Alaska.  He noted  the position the Alaskan Congressional                 
  Delegation  has  recently  gained  through  seniority.    He                 
  maintained  that  citizens'  constitutional  right to  elect                 
  whoever they choose must be considered.                                      
                                                                               
  Representative  Grussendorf  observed   the  high  rate   of                 
                                                                               
                                4                                              
                                                                               
                                                                               
  turnover in the Alaska State Legislature.  He noted that his                 
  district encourages long service by their representatives.                   
                                                                               
  Representative Martin pointed out that the Constitution is a                 
  contract with  the people  they elect  to govern  them.   He                 
  observed that the contract can be changed by the people.  He                 
  maintained  that  the framers  of the  Constitution intended                 
  that the Constitution  remain flexible.  He  emphasized that                 
  the  constitutional  amendment  would  be  voted on  by  the                 
  citizens of the state.                                                       
                                                                               
  (Tape Change, HFC 95-27, Side 2)                                             
                                                                               
  Representative Mulder questioned who and what is driving the                 
  push and urgency of the concept of term limits.  He stressed                 
  that the framers included limits  in other governing bodies.                 
  He  supposed  that the  framers did  not  want to  limit the                 
  voters' range  of choices.   He maintained  that voters  are                 
  frustrated by a lack of contact  with their legislators.  He                 
  noted  the  large  turnover  of   members  in  the  previous                 
  election.                                                                    
                                                                               
  Representative Brown asserted that term limits are a "double                 
  edged  sword".   She emphasized  that the  balance of  power                 
  would  be  changed  between  the  legislative  and executive                 
  branch of government  by the adoption  of term limits.   She                 
  acknowledged that term limits would be an improvement to the                 
  accumulation of power that long  time members have acquired.                 
  She  stressed  the  weight  of  incumbent  financing.    She                 
  maintained that due  to incumbent  financing members may  be                 
  returned   to   the   legislature    regardless   of   their                 
  representation.  She summarized  that she would like to  see                 
  more  turnover  and  greater  representation  by  women  and                 
  minorities.    She surmised  that  term limits  will benefit                 
  under-represented groups.  She stated that she would support                 
  HJR 5.                                                                       
                                                                               
  Representative Navarre  stated his intention to  support HJR                 
  5.    He expressed  his  doubt  that term  limits  would fix                 
  legislative  problems.   He hypothesized  that voter  apathy                 
  would be increased  by term  limits.  He  observed that  the                 
  public  does  not   have  access  to  the   same  amount  of                 
  information as their elected representatives.  He emphasized                 
  that members must try to digest the information available to                 
  them  and make the  best decision in  the public's interest.                 
  He stated  that term  limits in  Alaska are not  necessarily                 
  needed.  He  maintained that  if term limits  serve to  take                 
  away a negative perception  by the public in regards  to the                 
  legislative process than term limits would be useful.                        
                                                                               
  Representative  Therriault reminded members  that HJR 5 will                 
  place the question before the voters.                                        
                                                                               
                                5                                              
                                                                               
                                                                               
  Representative Kohring MOVED to report  CSHJR 5 (FIN) out of                 
  Committee  with  individual  recommendations  and  with  the                 
  accompanying fiscal note.  There being NO OBJECTION, it  was                 
  so ordered.                                                                  
                                                                               
  CSHJR 5 (FIN) was reported out of Committee with a "do pass"                 
  recommendation and with a zero fiscal  note by the Office of                 
  the Governor, dated 2/3/95.                                                  
  HOUSE BILL NO. 120                                                           
                                                                               
       "An  Act  relating to  public  employers defending  and                 
       indemnifying   public   employees  and   former  public                 
       employees with respect to claims arising out of conduct                 
       that is within the scope of employment."                                
                                                                               
  REPRESENTATIVE BRIAN PORTER, sponsor of HB 120, gave a brief                 
  overview of the legislation.  He  noted that the bill passed                 
  the House  last year  but failed  to  pass the  Senate.   He                 
  observed  that  the legislation  would  place  current state                 
  policy regarding  the indemnification of public employees in                 
  statute.   The legislation  indemnifies public employees who                 
  are acting within the scope of their employment, from normal                 
  acts and/or omissions  from civil  tort suit.   He  asserted                 
  that the  legislation will provide security  for individuals                 
  who  could be named in a civil  suit based on their position                 
  or  line of  authority.   He observed  that  an individual's                 
  credit rating is effected by a lack of indemnification.                      
                                                                               
  Representative  Porter  pointed  out  that  the  legislation                 
  precludes any requirement  for the government to  protect an                 
  employee against punitive damages.  The legislation does not                 
  require  protection  of  a person  who  has  committed gross                 
  negligence or an intentional reckless act.                                   
                                                                               
  Representative   Porter   observed  that   most  represented                 
  employees receive these protections through labor contracts.                 
  He  noted  that  the  legislation   does  not  cover  school                 
  district,  University of  Alaska, and  REAA employees  since                 
  they are already covered in another statute.                                 
                                                                               
  In  response  to  a   question  by  Representative   Mulder,                 
  Representative   Porter   clarified   that   probation   and                 
  correctional officers  are not currently protected  by labor                 
  contract.  They would be covered by the legislation.                         
                                                                               
  Representative  Brown asked  if legislators  and legislative                 
  employees   would   be    covered   by   the    legislation.                 
  Representative Ported  stated that  it is his  understanding                 
  that all public  employees, not currently covered,  would be                 
  covered under the provisions of HB 120.                                      
                                                                               
                                6                                              
                                                                               
                                                                               
  Representative Brown  presented  members  with  Amendment  1                 
  9LS0502\C.1  (Attachment  5).   Amendment  1  inserts  after                 
  "state"  on  page  5,  line  5,  "including  the  executive,                 
  legislative, and judicial branches of state government."                     
                                                                               
  Representative  Brown  expressed  concern  that the  injured                 
  third  party would  not  receive recovery  in acts  of gross                 
  negligence.  Representative Porter stated  that it would not                 
  be good public policy to provide total protection to someone                 
  who commits  gross negligence or  intentional wrongful acts.                 
  He  observed  that  the  injured  third  party can  sue  the                 
  responsible party.  In addition, the state is not  precluded                 
  from providing coverage on a case by case basis.                             
                                                                               
  Representative  Brown  noted  that  the  employer   is  also                 
  excluded  from   the  requirement  to  provide   defence  or                 
  indemnification  when  the  case  involves  a  disciplinary,                 
  administrative  or  criminal  matter   brought  against  the                 
  employee  or  when the  employee  has  been convicted  of  a                 
  criminal offense or  terminated from  employment because  of                 
  the conduct.  Representative Porter clarified that the state                 
  would not  be required  to provide  indemnification for  the                 
  defense,  unless provided  by a  labor contract,  in a  case                 
  brought by the state  against an employee.  The  state would                 
  be responsible for indemnification if the act led to a civil                 
  suit.                                                                        
                                                                               
  Representative Brown referred to the Greenfield versus State                 
  case.  Representative Porter observed that the case involved                 
  an Alaska Psychiatric Institute (API) employee who allegedly                 
  was forced to quit their employment.   The court agreed with                 
  the employee  and awarded punitive  damages.  He  noted that                 
  the legislation would  not effect  the awarding of  punitive                 
  damages.  He observed that any case that can  now be brought                 
  to court would  still be  allowed after the  passage of  the                 
  legislation.   The  legislation only  provides  a  statutory                 
  guarantee  in  simple  negligent  cases  that the  state  or                 
  municipal entity protect  their employee  by defense and  by                 
  indemnification.                                                             
                                                                               
  DON OTIS, ALASKA PEACE OFFICERS ASSOCIATION (APOA) testified                 
  via the teleconference network  from Haines.  He  noted that                 
  the APOA strongly supports HB 120.  He note that APOA listed                 
  indemnification as  one of  its highest  priority issues  in                 
  1992.  He read a position paper by APOA in support of HB 102                 
  (Attachment 6).                                                              
                                                                               
  MARY HUGHES, MUNICIPAL ATTORNEY, ANCHORAGE testified via the                 
  teleconference network from  Anchorage.  She noted  that the                 
  Municipality of Anchorage has adopted the  policies outlined                 
  by HB 102.   She noted that passage of HB  102 would clarify                 
                                                                               
                                7                                              
                                                                               
                                                                               
  for employees their indemnification by the Municipality.                     
                                                                               
  DUANE  UDLAND,  ALASKA  ASSOCIATION   OF  CHIEFS  OF  POLICE                 
  testified via the teleconference network from Anchorage.  He                 
  expressed support for  HB 102.   He pointed out that  public                 
  employees  who  are  not  indemnified  may  have  difficulty                 
  obtaining personal loans.                                                    
                                                                               
  BRUCE  LUDWIG,  BUSINESS  MANAGER, ALASKA  PUBLIC  EMPLOYEES                 
  ASSOCIATION  referred  to  the provisions  of  AS  39.55.010                 
  (b)(3).   He expressed  concern that  an employer  may think                 
  that they can escape a liability through  the termination of                 
  an employee.  He noted that if the termination was incorrect                 
  the  employer would  have  to  pay  attorney  fees  and  the                 
  employee's back wages.                                                       
                                                                               
  Mr. Ludwig maintained that if an employee acts intentionally                 
  within the scope  of their  employment and punitive  damages                 
  are  found against  them then  the employer  should  pay the                 
  consequences.  He asserted that  if the employee acts within                 
  the scope and course of their  employment all their acts and                 
  consequences  should  be  covered  by   the  employer.    He                 
  recommended that the language "or terminated from employment                 
  by the public  employer" be deleted in  AS 39.55.010 (b)(3).                 
  He suggested that AS 39.55.010 (d) be deleted.                               
                                                                               
  KEVIN  RICHIE, EXECUTIVE  DIRECTOR, ALASKA  MUNICIPAL LEAGUE                 
  stated that  the AML  supports HB  102.   He emphasized  the                 
  positive  effect  the  legislation   would  have  on   small                 
  communities.  He asserted that  the legislation is good  for                 
  both employer and employee.                                                  
                                                                               
  SUSAN  COX, ASSISTANT  ATTORNEY GENERAL,  DEPARTMENT OF  LAW                 
  responded  to  questions  raised  by  the  Committee.    She                 
  clarified that the state covers  the legislative branch when                 
  personal injuries  occur  in the  course  and scope  of  the                 
  legislator's business.   She indicated that an  amendment to                 
  clarify that all  three branches  of state government  would                 
  not be objectionable.                                                        
                                                                               
  Ms. Cox pointed  out that the  state does not  want to  give                 
  public employees a blank check or encourage employees not to                 
  be careful and cautious.  A third party injured by the gross                 
  negligence of a public employee can sue the  public employee                 
  directly.    The  allegation  of  gross  negligence  in  the                 
  complaint  will not deny the  employee defense by the state.                 
  She  noted that  most  cases are  brought  against both  the                 
  employee and employer.  In  most cases the employer  settles                 
  both claims against  the employee and  employer.  She  noted                 
  that   the  language   regarding   "gross  negligence"   and                 
  "intentional  willful  misconduct"  is taken  from  existing                 
  collective bargaining agreements.                                            
                                                                               
                                8                                              
                                                                               
                                                                               
  Ms. Cox did  not think that  the provisions of AS  39.55.010                 
  (b)(3) would provide incentive to  the employer to terminate                 
  an  employee.    She  pointed  out  that  the  employer   is                 
  vicariously liable for the  action of the employee.   If the                 
  employee  is  found  to be  grossly  negligent  or committed                 
  intentional   misconduct   the   employer   would   not   be                 
  responsible.    She  discussed   cases  of  employee   gross                 
  negligence.  She noted  that (f) stated that whether  or not                 
  the state provides defense or indemnification of an employee                 
  "does not constitute  a waiver, limitation, or  expansion of                 
  sovereign immunity or  of other immunity."   The legislation                 
  does not change anyone's rights in  terms of suing the state                 
  or the state's immunity.  The third party's right to sue the                 
  employer is not altered by HB 102.                                           
                                                                               
  Ms. Cox addressed AS 39.55.010 (b)(2).                                       
                                                                               
  (Tape Change, HFC 95-28, Side 1)                                             
                                                                               
  Ms. Cox discussed the  Greenfield case.  She noted  that the                 
  way the state handled the defense and indemnification of the                 
  individual would not  have been changed by  the legislation.                 
  She noted that the Superior  Court determined that the state                 
  could be held liable for punitive  damages under the whistle                 
  blower  law.    The  court  concluded that  the  legislature                 
  intended to waive the state's  immunity from punitive damage                 
  liability in whistle blower actions.                                         
                                                                               
  Representative Brown summarized that the state does not have                 
  to pay a judgement  against the employee in cases  where the                 
  employee  is  grossly  negligent.     Ms.  Cox  agreed  with                 
  Representative Brown's conclusion.                                           
                                                                               
  Representative Martin express concern that citizen's ability                 
  to receive justice would be inhibited.   Ms. Cox pointed out                 
  that  the public employee the  injured third party wishes to                 
  sue  will  be  backed  by   the  employer's  funding.    She                 
  reiterated that  state  policy will  not be  changed by  the                 
  legislation.  The legislation codifies current policy.                       
                                                                               
  Representative  Brown  MOVED   to  adopt  Amendment  1,   9-                 
  LS0502\C.1.  She  stressed that the amendment  would clarify                 
  that "state" does  include all  the branches of  government.                 
  There being NO OBJECTION, it was so ordered.                                 
                                                                               
  Ms. Cox  confirmed that the  employees of the  University of                 
  Alaska, a municipal school district,  or a Rural Educational                 
  Attendance Area, excluded on page 5, are already covered.                    
                                                                               
  Representative Mulder MOVED to report  CSHB 120 (FIN) out of                 
  Committee  with  individual  recommendations  and  with  the                 
                                                                               
                                9                                              
                                                                               
                                                                               
  accompanying fiscal notes.                                                   
  ADJOURNMENT                                                                  
                                                                               
  The meeting adjourned at 9:49 a.m.                                           
                                                                               
                                                                               
                               10                                              

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