Legislature(2003 - 2004)

03/18/2003 01:47 PM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                  HOUSE FINANCE COMMITTEE                                                                                       
                       March 18, 2003                                                                                           
                         1:47 P.M.                                                                                              
TAPE HFC 03 - 35, Side A                                                                                                        
TAPE HFC 03 - 35, Side B                                                                                                        
TAPE HFC 03 - 36, Side A                                                                                                        
CALL TO ORDER                                                                                                                 
Co-Chair Williams called the House  Finance Committee meeting                                                                   
to order at 1:47 P.M.                                                                                                           
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                                                                                                     
MEMBERS ABSENT                                                                                                                
Representative Jim Whitaker                                                                                                     
ALSO PRESENT                                                                                                                  
Representative  Jim Holm; Representative  Tom Anderson;  Zach                                                                   
Warwick,  Staff,  Senator  Gene  Therriault;  Robert  Winter,                                                                   
Captain, Southeast Pilot, Anchorage;  Pat Davidson, Director,                                                                   
Division   of  Legislative  Audit;   Captain  Dale   Collins,                                                                   
President,  Southeast  Alaska Pilot  Association,  Ketchikan;                                                                   
Kate Tesar,  Alaska Yacht Services and  Provisioning, Juneau;                                                                   
Peter  Christensen,  Board  of  Marine  Pilots;  Jeff  White,                                                                   
Manager,  Seadrome Marine  Complex,  Goldbelt Hotel,  Juneau;                                                                   
Mike  Fox,   Public  Safety  Employees  Association   (PSEA),                                                                   
Anchorage;  Mark O'Brien,  Contract  Officer,  Commissioner's                                                                   
Office, Department of Transportation and Public Facilities                                                                      
PRESENT VIA TELECONFERENCE                                                                                                    
Guy  Bell, Director,  Division  of Retirement  and  Benefits,                                                                   
Department  of  Administration,   Anchorage;  Captain  Graham                                                                   
Hayes, Seattle; Mike Couturier,  Anchorage Police Department,                                                                   
Anchorage;  Dan Colang, Correctional  Officer, Department  of                                                                   
Corrections,   Fairbanks;  Mike   Davidson,  Anchorage   Fire                                                                   
Department,  Anchorage; Adam Benson,  Alaska State  Troopers,                                                                   
Ketchikan;  Dr.  Gene  Sanders,   Clinical  Director,  Police                                                                   
Stress Institute                                                                                                                
HB 67     An Act relating to construction of highways by the                                                                    
          Department    of    Transportation    and    Public                                                                   
          HB 67 was HEARD and HELD in Committee for further                                                                     
HB 91     An Act relating to a cost-of-living allowance and                                                                     
          medical benefits for retired peace officers after                                                                     
          20 years of credited service.                                                                                         
          HB 91 was HEARD and HELD in Committee for further                                                                     
CS SB 20 (FIN)                                                                                                                  
          An Act  relating to the Board of Marine  Pilots and                                                                   
          to marine pilotage;  extending the termination date                                                                   
          of the  Board of Marine  Pilots; and  providing for                                                                   
          an effective date.                                                                                                    
          CS SB 20 (FIN) was HEARD and HELD in Committee for                                                                    
          further consideration.                                                                                                
HOUSE BILL NO. 91                                                                                                             
     An Act relating to a cost-of-living allowance and                                                                          
     medical benefits for retired peace officers after 20                                                                       
     years of credited service.                                                                                                 
REPRESENTATIVE   TOM  ANDERSON   testified  that  the   State                                                                   
troopers,  firemen, correctional  officers, and others  known                                                                   
as "peace  officers" employed by  the State of Alaska  are an                                                                   
invaluable resource.   These employees risk  their health and                                                                   
safety in their service to the citizens of Alaska.                                                                              
Until  1986, all  Public  Employee Retirement  System  (PERS)                                                                   
benefit  recipients were  eligible to  receive major  medical                                                                   
insurance benefits  after becoming  vested in the  retirement                                                                   
system.    In  addition,  peace  officers  were  eligible  to                                                                   
receive  an   Alaska  Cost-of-Living-Allowance   (COLA)  upon                                                                   
retirement.  In  1986, the requirements for  medical benefits                                                                   
and  COLA  were modified  to  reduce  the number  of  benefit                                                                   
recipients eligible to receive those benefits.                                                                                  
Currently,  the   participants  may  receive   major  medical                                                                   
insurance  benefits upon  their  normal  retirement after  30                                                                   
years of  service.  Normal  retirement for peace  officers is                                                                   
after  20 years  of service,  however,  current law  requires                                                                   
peace officers  to have 25 years  of service before  they are                                                                   
eligible   to  receive   medical  benefits.     That   system                                                                   
undermines the intent of the peace  officer normal retirement                                                                   
by  withholding  their  medical insurance  benefit  until  an                                                                   
additional 5 years of service are given.                                                                                        
Representative Anderson pointed  out that HB 91 would correct                                                                   
the  existing benefit  delay by  allowing  peace officers  to                                                                   
receive major  medical insurance at their  normal retirement.                                                                   
Alaska  COLA  is  currently  payable   to  non-disabled  PERS                                                                   
benefit recipients,  age 65  or older,  who remain  in Alaska                                                                   
after retirement.   HB 91 would  provide the COLA  benefit to                                                                   
peace  officers  upon normal  retirement  after  20 years  of                                                                   
service, offering  an incentive  to those citizens  to remain                                                                   
in  Alaska,  where  they may  continue  contributing  to  the                                                                   
public good.                                                                                                                    
The  legislation   would  end  the  requirement   that  peace                                                                   
officers  work beyond  their normal  retirement  in order  to                                                                   
obtain their medical benefits.   By offering the COLA benefit                                                                   
upon  retirement,  the legislation  also  encourages  retired                                                                   
peace officers to remain in the State.                                                                                          
Representative Anderson listed  the number of bi-partisan co-                                                                   
sponsors  for  the  legislation:  Representative  Guttenberg,                                                                   
Representative Gara, Representative  Crawford, Representative                                                                   
Heinz,  Representative  Lynn, and  Representative  Dahlstrom.                                                                   
The  bill  also  has the  support  of  the  Public  Employees                                                                   
Retirement   System  (PERS)  Board,   the  Anchorage   Police                                                                   
Department, the Anchorage Fire  Fighters Union, Public Safety                                                                   
Employees   Association   and    numerous   police   officers                                                                   
throughout the State.                                                                                                           
Representative  Anderson acknowledged  that  there have  been                                                                   
questions regarding the cost of  the legislation for the City                                                                   
of Anchorage.  That amount would  be the annual PERS employer                                                                   
contribution increase of $44,544 dollars.                                                                                       
MICHAEL  FOX,  PUBLIC SAFETY  EMPLOYEES  ASSOCIATION  (PSEA),                                                                   
discussed the merits of the proposed  legislation.  He listed                                                                   
the people that would be affected by the legislation:                                                                           
   ·    Police officers                                                                                                         
   ·    Fire fighters                                                                                                           
   ·    Peace officers                                                                                                          
   ·    Public safety officers                                                                                                  
   ·    Chief of police                                                                                                         
   ·    Correctional officers                                                                                                   
   ·    Probation officers                                                                                                      
Mr. Fox pointed  out that the PERS mission is  to attract and                                                                   
retain qualified  people into public service  employment.  It                                                                   
is not the PERS mission to provide a living wage for life.                                                                      
Mr.  Fox  addressed the  history  of  the  program.   Tier  1                                                                   
consists  of  employees  hired between  1961-1986  with  COLA                                                                   
payable to all benefit recipients.   HB 252 passed in 1986 by                                                                   
Senator Duncan  changed that to  Tier II.  Tier  II clarified                                                                   
that COLA  would be payable after  the age 65 and  that major                                                                   
medical  would   be  provided   at  age  60.     HB   242  by                                                                   
Representative  Kott  passed in  2001  created  the Tier  III                                                                   
system.   The  Alaska COLA  will be  paid after  the age  65,                                                                   
major medical at  age 60 and/or at normal retirement  for all                                                                   
others, except  normal retirement  plus five years  for peace                                                                   
officers.   Mr.  Fox  continued,  HB 91  changed  that to  an                                                                   
Alaska  COLA payable  after  the  age 65  years  or to  peace                                                                   
officers at  normal retirement  and major  medical at  age 60                                                                   
years  or  at normal  retirement  for  all others  and  peace                                                                   
Mr. Fox  addressed the  increase of  $1.2 million dollars  to                                                                   
the fiscal  note of which  approximately $600  thousand would                                                                   
be  taken  from  the general  fund.    The  current  employer                                                                   
contribution  is  8.42%  with  an increase  of  0.18%.    The                                                                   
employer contribution  is a percent of salary.   In 1990, the                                                                   
employer  contribution  was approximately  12%,  in 1994,  it                                                                   
peaked at  about 17% while,  this year it  is at 8.42%.   The                                                                   
proposed fiscal  note would change that percentage  to 8.60%.                                                                   
All other employees contribute  about 6.7% and peace officers                                                                   
contribute 7.5%.                                                                                                                
Mr. Fox  stated that  the justification  for change  rests in                                                                   
the fact  that current  law undermines  retirement for  peace                                                                   
officers by  denying benefits  requiring an extra  five years                                                                   
of  work.   That  requirement  inhibits  recruitment,  lowers                                                                   
morale and inhibits retention.                                                                                                  
Mr. Fox pointed out that the graph  indicates turnover by the                                                                   
percentage of Troopers per year  class, who are still working                                                                   
compared  to those  separated  from service.   The  following                                                                   
graph illustrates  turnover by  using the number  of Troopers                                                                   
by groups of year  class.  There are 237 Troopers  out of 315                                                                   
who have ten years  or less of service.  The  following graph                                                                   
indicates turnover using the number  of correctional officers                                                                   
by years of service.                                                                                                            
Representative  Anderson  stated that  the  concern rests  in                                                                   
year #9 when  up to 40% are  leaving the force.  Part  of the                                                                   
reason  for  that  turnover  is   the  lack  of  medical  and                                                                   
benefits.   He added, it is  difficult to recruit  the number                                                                   
of people needed  when so many in the force are  leaving.  He                                                                   
emphasized that  the chart indicates  that separation  is due                                                                   
to lack of guaranteed medical benefits and other concerns.                                                                      
Mr. Fox commented  that there is great potential  for savings                                                                   
through improved  retention.   There is  a direct savings  in                                                                   
recruiting  and  retaining  troopers.     It  costs  $104,871                                                                   
thousand  dollars for  each trooper  trained and  hired.   He                                                                   
added that the improved retention  equals experience and that                                                                   
makes  for  better  decisions.   Better  decisions  make  for                                                                   
better  savings for  the State.   Peace  officers are  called                                                                   
upon to  make life and death  decisions and that  experienced                                                                   
officers are more likely to make better decisions.                                                                              
Mr.  Fox  mentioned   the  problems  associated   with  peace                                                                   
officers working past normal retirement:                                                                                        
   ·    Increased health problems                                                                                               
   ·    Increased risk of injury                                                                                                
   ·    Low morale                                                                                                              
He   continued,  the   next  graph   indicates  the   limited                                                                   
opportunity    for   peace   officers    to   promote    into                                                                   
administrative positions.   The graph compares  the number of                                                                   
patrol-level officers  to the number of  administrative-level                                                                   
Mr. Fox listed  the benefits of  Alaska COLA.  It is  not the                                                                   
intention of PERS  to provide a living wage  upon retirement.                                                                   
The base benefit for a peace officer  at normal retirement is                                                                   
45% before  deductions.   Peace officers  have to work  after                                                                   
normal retirement.   He  stressed that it  is in  the State's                                                                   
best  interest to  keep the  peace officers  working here  in                                                                   
Mr. Fox summarized current law:                                                                                                 
   ·    Undermines the normal retirement for peace officers;                                                                    
   ·    Inhibits the PERS mission to recruit and retain                                                                         
        peace officers in public service.                                                                                       
Mr. Fox  suggested that  HB 91  could restore retirement  and                                                                   
improve retention.                                                                                                              
Co-Chair  Harris referenced  the handout,  which states  that                                                                   
current law requires  peace officers to work  five years past                                                                   
normal  retirement to  receive  medical benefits.   He  asked                                                                   
which tier  that related  to.   Mr. Fox  replied that  Tier I                                                                   
would  receive  the benefits  at  20  years employment.    He                                                                   
explained that if  the person was vested with  five years and                                                                   
was hired prior to 1986, they  would receive medical benefits                                                                   
if they worked  beyond those five years.  They  would receive                                                                   
the retirement  benefit when  they qualified  for it.   Other                                                                   
people have  to be vested  for 10 years  and be age  sixty or                                                                   
have 25 years  of service.  The legislation  would change the                                                                   
25 years of service to 20 years of service.                                                                                     
Co-Chair  Harris commented  that a peace  officer would  only                                                                   
have to  work for 20  years to qualify  rather than 25.   Mr.                                                                   
Fox  reiterated  that  a  peace  officer  would  not  receive                                                                   
medical  benefits unless  they worked  25 years, whereas  all                                                                   
other State employees  only have to work 20  years to receive                                                                   
the  benefit.   Co-Chair Harris  pointed out  that no  matter                                                                   
what their  age, after working  20 years, they  would receive                                                                   
automatic retirement.                                                                                                           
Vice-Chair  Meyer asked if  there is  concern that  the peace                                                                   
officer would  stay for only  20 years, get their  retirement                                                                   
and then  would leave the State  to find a  second retirement                                                                   
job.   He suggested  they could leave  the State  faster than                                                                   
they currently are.                                                                                                             
Mr. Fox commented that when a  person retires, they must make                                                                   
a choice as  to where they will work after  their retirement.                                                                   
He admitted  that most peace officers  do retire and  then go                                                                   
back to work and  that the hope of the bill  is that it would                                                                   
provide incentive to keep them in the State.                                                                                    
Vice-Chair Meyer  thought that the incentive  could keep them                                                                   
in Alaska  for 20-years.   After that,  they would  have full                                                                   
retirement and  they could go  anywhere they wanted  to move.                                                                   
He  stated that  the bill  accompanied with  the fiscal  note                                                                   
were difficult at this time.                                                                                                    
Vice  Chair  Meyer questioned  where  the  idea of  the  bill                                                                   
originated.  The  people who are responsible  for recruitment                                                                   
and retention are  the mayors of Anchorage and  Fairbanks and                                                                   
the Governor  of Alaska.   He pointed  out that the  files do                                                                   
not contain any letters of support from those people.                                                                           
Representative   Anderson  explained   that  the   statistics                                                                   
indicate  that  most  fish  and  wildlife  officers,  retired                                                                   
fireman,  and troopers  have an  affinity to  stay in  Alaska                                                                   
when  they retire.   The  proposed  bill is  a supplement  to                                                                   
their foundational  interest.   There is  always the  risk of                                                                   
providing  benefits  for  someone that  leaves,  however,  he                                                                   
pointed out that  many in officer positions  have remained in                                                                   
the State.                                                                                                                      
Representative  Anderson  emphasized  that  at  10  years  of                                                                   
service,  many peace  officers are  leaving the  force.   The                                                                   
certainty rests that the State  is loosing good men and women                                                                   
to other  agencies.  The  State needs to revisit  recruitment                                                                   
and benefit issues, which is the  impetuous behind this bill.                                                                   
Vice-Chair Meyer  agreed that  there are many  people leaving                                                                   
at the 10-year  period.  He reminded  Representative Anderson                                                                   
that the legislation  would have a financial  impact on local                                                                   
cities  and questioned  why the  Mayor of  Anchorage had  not                                                                   
publicly supported the legislation.                                                                                             
Representative   Anderson  acknowledged   that  concern   was                                                                   
warranted.   He  requested that  teleconference testimony  be                                                                   
taken  to address  some  concerns.   Representative  Anderson                                                                   
noted  that  the  sponsors  had   spoken  directly  with  the                                                                   
department staff rather than specifically to the mayors.                                                                        
MIKE  COUTURIER, (TESTIFIED  VIA  TELECONFERENCE),  ANCHORAGE                                                                   
POLICE DEPARTMENT, ANCHORAGE,  voiced support of the proposed                                                                   
legislation.     He  explained   that  the  Municipality   of                                                                   
Anchorage  opted  to  place  its  officers  under  the  Peace                                                                   
officers PERS retirement system  in 1994.  The change reduced                                                                   
the  disability, debt  and retirement  benefits for  officers                                                                   
hired  after 1993.   The action  resulted in  making it  more                                                                   
difficult to recruit and retain employees.                                                                                      
Officer Couturier offered some  basic recruiting and training                                                                   
facts for  consideration.   He noted that  it takes  over 100                                                                   
applicants to obtain  one hired recruit.  It  costs $5,000 to                                                                   
get one recruit  to the 1  day of the academy  and $93,400 to                                                                   
fully  train and recruit  one  officer.  Those  costs do  not                                                                   
include the patrol  car.  The field officer  training program                                                                   
is 3.5 months long.  He emphasized  that it is very expensive                                                                   
to  recruit,  hire  and  train   one  police  officer.    The                                                                   
investment  is  huge  and  it  is  important  to  keep  these                                                                   
officers serving Alaska for as long as possible.                                                                                
Officer  Couturier observed  that  the Anchorage  police  are                                                                   
currently  loosing early  and  mid career  officers to  other                                                                   
police  agencies out  of state.   Officers  are hiring  on in                                                                   
order  to receive  their training  and  after receiving  that                                                                   
credential,  they are  transferring out  to the lower  forty-                                                                   
eight.  He noted that the California  PERS system offers high                                                                   
benefits  after twenty  years  of service  regardless of  the                                                                   
employees age.                                                                                                                  
Mr.  Couturier encouraged  Committee members  to support  the                                                                   
proposed legislation.                                                                                                           
Representative Hawker  questioned how many officers  would be                                                                   
affected  in  Anchorage  if the  legislation  were  to  pass.                                                                   
Officer  Couturier   responded  that  the   Anchorage  Police                                                                   
Department presently  has 318 officers, of which,  72% are in                                                                   
PERS Tier  II and Tier III,  which means about  250 employees                                                                   
would be affected.                                                                                                              
Co-Chair Harris  suggested that the bill be  accompanied with                                                                   
a "letter of  support" from the current mayors  of Anchorage,                                                                   
Fairbanks and Wasilla, the largest  communities in the State.                                                                   
He  asked  what  costs those  municipalities  would  have  to                                                                   
absorb  for   the  proposed  fiscal  note.     Representative                                                                   
Anderson  responded  that  he  would  have  that  information                                                                   
available for the next meeting.                                                                                                 
DAN  COLANG,  (TESTIFIED  VIA  TELECONFERENCE),  CORRECTIONAL                                                                   
OFFICIER,  DEPARTMENT  OF  CORRECTION,  FAIRBANKS,  spoke  in                                                                   
support of  the legislation.  He  commented on his work  as a                                                                   
correctional  officer and the  pressures associated  with it.                                                                   
Law enforcement  is stressful and  to ask someone to  work an                                                                   
additional five  years to receive  their medical  benefits is                                                                   
not  fair.   Mr. Colang  urged  that the  Committee pass  the                                                                   
legislation  so that  the peace  officer  workers can  retain                                                                   
their sanity and self worth.                                                                                                    
MIKE  DAVIDSON,  (TESTIFIED  VIA  TELECONFERENCE),  ANCHORAGE                                                                   
FIRE DEPARTMENT, ANCHORAGE, urged  the Committee's support of                                                                   
the legislation.  He noted that  the fire profession requires                                                                   
long and  intense hours  and difficult  decisions.   He noted                                                                   
that currently, he works 60-hour  weeks due to not being able                                                                   
to fill  all the vacant  positions.   He reiterated  that the                                                                   
main reason  for these long hours  is the difficulty  for the                                                                   
Anchorage Fire  Department to recruit successful  applicants.                                                                   
During  the   mid  1980's,  the  Municipality   of  Anchorage                                                                   
provided a good  pay structure, which was comparable  to many                                                                   
other states.   Because  of that  benefit package,  there was                                                                   
not a shortage of personnel applying for these positions.                                                                       
Mr. Davidson  emphasized that  passage of  HB 91 would  allow                                                                   
fire   fighters  to   better   gain  successful   applicants.                                                                   
Generally, these  employees come from a group  of people that                                                                   
are already  educated.  The provisions  in HB 91  would allow                                                                   
Alaska to  be more  competitive in  recruiting.  He  believed                                                                   
that the  ability to recruit  new employees would  offset the                                                                   
costs for the  fire department.  HB 91 should  provide better                                                                   
leverage  for more  successful recruiting,  which will  allow                                                                   
for filling job openings.                                                                                                       
ADAM  BENSON, (TESTIFIED  VIA  TELECONFERENCE), ALASKA  STATE                                                                   
TROOPER,  KETCHIKAN,  noted  that   the  bill  was  extremely                                                                   
important to all  State Troopers and would help  the State to                                                                   
retain troopers.   He noted that  the troopers that  he works                                                                   
with   are   mostly   young,   well-educated   professionals.                                                                   
Troopers take great  pride in the work that they  do and take                                                                   
their  training responsibilities  very  seriously.   Men  and                                                                   
women become  troopers because they  choose to.   The initial                                                                   
training  programs are  rigorous as  well as  are the  annual                                                                   
follow  up training  programs,  in  which there  is  constant                                                                   
exposure to new and challenging situations.                                                                                     
Mr. Benson  claimed that  experience is  a valuable  asset to                                                                   
the State and that  it would be in the State's  best interest                                                                   
to retain  these people.   He explained that  the challenges,                                                                   
which make the work worthwhile,  are not always beneficial to                                                                   
his family  and his future retirement.   With the  passage of                                                                   
HB 91,  there would be  more incentive  to stay in  the force                                                                   
for  20-years.   However,  without  the  bill, he  and  other                                                                   
troopers will  want and need to  explore other options.   Mr.                                                                   
Benson stressed that HB 91 will  act as an "insurance policy"                                                                   
for the State of Alaska.                                                                                                        
DR. GENE  SANDERS, (TESTIFIED  VIA TELECONFERENCE),  CLINCIAL                                                                   
DIRECTOR, POLICE  STRESS INSTITUTE, urged support  for HB 91.                                                                   
He  stated that  the  legislation  is supported  by  numerous                                                                   
studies done over  the years.  Dr. Sanders spoke  to the work                                                                   
and stress associated with police  work and that few officers                                                                   
actually  make it  to the retirement  age.   When they  leave                                                                   
prematurely, they  think that  the compensation is  no longer                                                                   
worth the  risk.  On the  other hand, police respond  well to                                                                   
health and  retirement programs  that help  them to  do their                                                                   
jobs.    It is  very  common  to see  police  officers  spend                                                                   
inordinate  amount  of  time   and  energy  in  the  face  of                                                                   
adversity  when they  believe that  the work  is feeding  and                                                                   
caring  for them down  the road.   Reducing  retirement  to a                                                                   
reasonable  and achievable  20  years becomes  and  effective                                                                   
approach to keeping highly trained officers on the job.                                                                         
Dr.  Sanders encouraged  serious consideration  of the  facts                                                                   
and  a support  vote for  HB 91.   He  stressed that  passage                                                                   
would be a medically sound and a responsible decision.                                                                          
GUY BELL, (TESTIFIED VIA TELECONFERENCE),  DIRECTOR, DIVISION                                                                   
OF  RETIREMENT AND  BENEFITS,  DEPARTMENT OF  ADMINISTRATION,                                                                   
ANCHORAGE, requested to testify on the bill.                                                                                    
TAPE HFC 03 - 35, Side B                                                                                                      
Mr. Bell addressed  the fiscal note.  He noted  that the note                                                                   
shows a  .18% increase  in payroll  costs resulting  from the                                                                   
legislation.   A dollar amount  is not indicated  because the                                                                   
cost  of the  change  would  be  spread across  the  personal                                                                   
services line of all state agencies,  which would amount to a                                                                   
spread  of  $1.2  million  dollars.   He  offered  to  answer                                                                   
questions of the Committee.                                                                                                     
Representative  Croft  inquired if  the  State would  require                                                                   
that  the municipalities  participate  in the  program.   Mr.                                                                   
Bell   replied   that   participation    by   the   political                                                                   
subdivisions  is  voluntary.   Those  political  subdivisions                                                                   
designate groups of employees  that will participate in PERS.                                                                   
Once  they  participate   in  PERS,  the  statutes   set  the                                                                   
Representative   Croft  asked   if  there   were  any   major                                                                   
municipalities  that  do  not   have  their  police  officers                                                                   
participate.  Mr. Bell responded  that the only one that does                                                                   
not participate is the Municipality  of Anchorage.  Anchorage                                                                   
has a police and fire retirement  system that effectively has                                                                   
been closed since  the mid 1990's.  Any employee  hired after                                                                   
that date is in the PERS system.                                                                                                
Representative Croft  inquired if a major  municipality could                                                                   
choose not to participate in the  legislation if passed.  Mr.                                                                   
Bell  responded  that the  participants  choice  would be  to                                                                   
participate  or to  not participate  in  PERS; however,  they                                                                   
would  need  to  offer  another   retirement  plan  to  their                                                                   
Representative Croft  commented that it would  be interesting                                                                   
to hear the  various municipalities decision  regarding this.                                                                   
He  pointed out  that  the  legislature would  establish  the                                                                   
State standard.                                                                                                                 
Representative  Hawker noted that  the fiscal note  indicates                                                                   
that   the  increased   PERS  accrued   liability  would   be                                                                   
approximately $13.45  million dollars.  He asked  if that was                                                                   
unfunded  pass service  costs or  a prospective  calculation.                                                                   
Mr. Bell responded  that was the unfunded past  service cost.                                                                   
The .18%  would include  that  and would amortize  it over  a                                                                   
period  of 25  years.   In  addition,  it would  include  the                                                                   
future costs,  costs of  benefits, which  will accrue  in the                                                                   
future as a result of the change.                                                                                               
Representative  Hawker   asked  if  .18%  payroll   would  be                                                                   
amortized as  $13.45 million dollars  over a 25-year  period.                                                                   
Mr. Bell replied that was correct.                                                                                              
Representative Hawker  advised that an $85 thousand  dollar a                                                                   
year  trooper, at  .0018 benefit  cost would  amount to  $153                                                                   
dollars a  year or $13  dollars a month.   He was  curious if                                                                   
the  participants would  be willing  to absorb  any of  those                                                                   
Co-Chair  Williams  stated  that  HB  91  would  be  HELD  in                                                                   
Committee for further consideration.                                                                                            
CS FOR SENATE BILL NO. 20(FIN)                                                                                                
     An Act  relating to  the Board of  Marine Pilots  and to                                                                   
     marine pilotage;  extending the termination  date of the                                                                   
     Board of  Marine Pilots; and providing for  an effective                                                                   
ZACH  WARWICK, STAFF,  SENATOR GENE  THERRIAULT, stated  that                                                                   
under  AS 08.03.010(10),  the  Board of  Marine Pilots  (BMP)                                                                   
will terminate  on June 30, 2003.   A report released  by the                                                                   
Legislative  Budget  and Audit  (LBA)  Committee  recommended                                                                   
that the Legislature  extend the board's termination  date to                                                                   
June 30, 2007, and that HB 32 would do that.                                                                                    
Mr.  Warwick  continued,  the  regulation  and  licensing  of                                                                   
qualified  marine pilots  benefits  the  public's safety  and                                                                   
welfare.  The steady increase  in the tourist passenger ships                                                                   
in  recent  years  has  made  BMP's  role  increasingly  more                                                                   
important.  The board provides  reasonable assurance that the                                                                   
individuals licensed  to pilot  passenger and cargo  ships in                                                                   
Alaskan waters are qualified to do so.                                                                                          
CAPTAIN  DALE  COLLINS,  PRESIDENT,  SOUTHEAST  ALASKA  PILOT                                                                   
ASSOCIATION, KETCHIKAN,  spoke in favor of SB 20.   He stated                                                                   
that he  had been a pilot  in Southeast Alaska for  25 years.                                                                   
He  noted  that  his  association  has  a  responsibility  to                                                                   
provide pilot service to foreign  flagships of 300 gross tons                                                                   
or  more in  the Dixon  entrance  to Southeast  Alaska.   The                                                                   
original  pilots   act  was  created  in  1970   through  the                                                                   
legislature and has  been working well ever since.   He urged                                                                   
passage of the bill.                                                                                                            
Representative  Foster referenced  correspondence from  House                                                                   
Speaker Brian  Porter and  asked what  had happened  with the                                                                   
exemption  request for  the private  motor  yachts.   Captain                                                                   
Collins  responded that  there is interest  in providing  for                                                                   
those private  motor yachts  and that they  are exempt  up to                                                                   
300  gross tons.   He  pointed  out that  concerns have  been                                                                   
raised regarding  homeland security and that  no language has                                                                   
yet been added to address a sunset to the bill.                                                                                 
KATE   TESAR,    LOBBYIST,   ALASKA   YACHT    SERVICES   AND                                                                   
PROVISIONING, JUNEAU,  commented that she represents  a small                                                                   
local  Juneau business,  which  works with  yacht  management                                                                   
companies  throughout   the  United  States,   booking  large                                                                   
pleasure craft coming to Alaska.   She stated that they fully                                                                   
support the Board of Marine Pilots  and support the extension                                                                   
of that  board.  Ms. Tesar  addressed recommendation  #4 made                                                                   
by the LBA Committee, which calls  for the State to implement                                                                   
a waiver system for some large pleasure craft.                                                                                  
Ms. Tesar  explained that some  owners are considering  other                                                                   
destinations  rather  than  Alaska  because  of  a  law  that                                                                   
mandates a  marine pilot  be aboard  certain size yachts  the                                                                   
entire time  they are in Alaska.   In some cases,  the cruise                                                                   
time last  a number of  weeks.  Many  of the owners  position                                                                   
their boats in  Alaska during the summer months  and then fly                                                                   
their  guests and  family  back  and forth.    She noted  the                                                                   
change to  the statute, which  would allow vessels up  to 200                                                                   
feet to operate  in the Alaskan waters without a  pilot.  She                                                                   
advised that  such a system has  been operating in  the State                                                                   
of  Washington   for  many  years.     She  referred   to  an                                                                   
application in  member's files from the State  of Washington.                                                                   
(Copy on File).                                                                                                                 
Ms. Tesar  indicated that  the rewrites  of the marine  pilot                                                                   
laws  had been  in  response to  the Exxon  Valdez  incident.                                                                   
Following that, a  rewrite was done in 1995.   Prior to 1995,                                                                   
all  pleasure craft  were exempt  from marine  piloting.   In                                                                   
1995,  a decision  was  made to  mandate  pilots for  foreign                                                                   
plate vessels  over 300  tons.  She  recalled, at  that time,                                                                   
there was a  large private research vessel in  Alaska raising                                                                   
concerns  regarding such  activities.   It was  at that  time                                                                   
that the  law was  changed to  mandate a  marine pilot  be on                                                                   
board of larger  vessels.  She added that in  1999, there was                                                                   
an  extension  of the  board  and  that  none of  the  issues                                                                   
regarding marine pilotage had been addressed.                                                                                   
Ms. Tesar advised  that the issue is an  economic development                                                                   
concern.   These pleasure  craft bring  new money into  shore                                                                   
side  communities.   It is  estimated that  the yachts  spend                                                                   
about 30% over the cost of the  trip in the port communities.                                                                   
Because  of the Gulf  circumstances,  this summer the  United                                                                   
States will be a destination of choice for many of boats.                                                                       
Ms.  Tesar referenced  the  letters  of support  in  member's                                                                   
files  from   the  various  communities  and   their  mayors.                                                                   
(Copies on  File).  She urged  that capturing new  revenue in                                                                   
these communities be a major consideration.                                                                                     
Co-Chair  Williams  asked if  there  were any  exempt  yachts                                                                   
being  used.    Ms. Tesar  responded  that  all  commercially                                                                   
designated  vessels are  mandated  to have  pilots on  board,                                                                   
previously designated as pleasure  craft only.  She explained                                                                   
that foreign-hulled pleasure craft  up to 300 tons are exempt                                                                   
and that all American vessels  are already exempt from marine                                                                   
pilotage.  The  only ones that must have pilots  on board are                                                                   
the foreign plate vessels over 300 tons.                                                                                        
Co-Chair  Harris asked  why the American  flagged ships  were                                                                   
exempt  from the  pilotage requirement.   Ms.  Tesar did  not                                                                   
know for  sure but speculated that  it might have to  do with                                                                   
impeding commerce between states  and nations.  She suggested                                                                   
that the  Board of Marine Pilots  answer that question.   Co-                                                                   
Chair  Harris commented  that his  biggest concern  regarding                                                                   
the ships was one of "safety".                                                                                                  
Representative Stoltze  mentioned the Coast Guard  waiver for                                                                   
the Canadian vessels.                                                                                                           
JEFF  WHITE,  MANAGER,  SEADROME   MARINE  COMPLEX,  GOLDBELT                                                                   
CORPORATION,  JUNEAU, testified  in support  of the  proposed                                                                   
change to the marine pilotage  law concerning foreign flagged                                                                   
yachts.  He has observed that  vessels become frustrated with                                                                   
current regulations,  and then leave for  "friendlier ports".                                                                   
This past year, 25% of Goldbelt's  moorage business came from                                                                   
yachts  and transient  vessels.   Most travel  from the  East                                                                   
Coast  to visit  Alaska,  while others  are  on their  maiden                                                                   
voyage after  leaving the  boat builders  in the Puget  Sound                                                                   
area.     The  limited   availability   of  pilots   is  also                                                                   
problematic  for  many  vessels  including  yachts  with  the                                                                   
every-changing schedules.                                                                                                       
Mr. White suggested that the independent  yacht visitors have                                                                   
a comparably  greater  positive economic  impact by  spending                                                                   
much time  in Alaska, spreading  their purchasing  power over                                                                   
numerous  businesses  and  communities.     Mr.  White  urged                                                                   
consideration of  the exemption to allow the  market to reach                                                                   
its potential in Alaska.                                                                                                        
PETER CHRISTENSEN, MARINE PILOT  COORDINATOR, BOARD OF MARINE                                                                   
PILOTS, encouraged  the passage  of SB 20.   He responded  to                                                                   
previous  questions  regarding   the  United  States  yachts,                                                                   
indicating  that   the  co-pilotage  law  code   defines  the                                                                   
responsibilities for  marine pilotage between the  states and                                                                   
the federal government.   Federal government  has the control                                                                   
over the U.S. vessels & yachts  and the State has the control                                                                   
over the foreign flagged vessels.                                                                                               
Co-Chair Harris asked  if a ship were over  a certain length,                                                                   
would they then  require a pilot.  Mr.  Christensen suggested                                                                   
that length  could be  better criterion  than gross  tonnage.                                                                   
Representative Foster interjected  that the tonnage had to be                                                                   
over 300 tons to require a pilot.                                                                                               
Co-Chair Harris questioned  why the length of  the ship would                                                                   
be a factor.  Mr. Christensen  responded that current statute                                                                   
indicates gross tonnage, which  is an old method of measuring                                                                   
ships.    It  is  a method  that  has  many  loopholes.    He                                                                   
acknowledged that  length would be  a better way  to measure.                                                                   
The  Coast Guard  establishes  its regulations  based on  the                                                                   
number  of passengers  on board.   He concluded  that if  the                                                                   
statute should change, it would  be more helpful that it move                                                                   
to something more specific such as the length measurement.                                                                      
Co-Chair  Harris  asked if  100  feet  would be  a  break-off                                                                   
point.  Mr.  Christensen stated that the Board  does not have                                                                   
a position on that.                                                                                                             
Co-Chair  Harris  asked if  there  were situations  in  which                                                                   
pleasure craft could  be allowed to operate  in Alaska waters                                                                   
without  a  pilot  and  if  there  were  any  safety  devices                                                                   
required  to   make  it  more  amenable.     Mr.  Christensen                                                                   
commented  that  there could  be  legal forms  regarding  the                                                                   
captain's  experience and/or that  the ship  could put  up an                                                                   
assurity  bond.   There are  a  variety of  ways to  mitigate                                                                   
these issues.                                                                                                                   
Co-Chair Harris  reiterated that  his concerns are  about the                                                                   
safety and  security of  the waterways  and the vessel  while                                                                   
maintaining their privacy.                                                                                                      
Representative  Stoltze interjected that  sunsets are  a good                                                                   
way to handle those types of concern.                                                                                           
Co-Chair Williams noted that CS  SB 20 (FIN) would be HELD in                                                                   
Committee for further consideration.                                                                                            
HOUSE BILL NO. 67                                                                                                             
     An Act relating to construction of highways by the                                                                         
    Department of Transportation and Public Facilities.                                                                         
REPRESENTATIVE  JIM HOLM  commented that  the Alaska  statute                                                                   
requires  that  construction  and  maintenance  contracts  be                                                                   
awarded to  the private  sector on  the basis of  competitive                                                                   
bidding.   However,  statute also  allows the  State to  fund                                                                   
small  projects   or  repairs   in-house  through   a  "force                                                                   
account",  meaning that  the  State uses  its  own forces  to                                                                   
accomplish the work.                                                                                                            
To   date,   force  account   spending   by   Department   of                                                                   
Transportation &  Public Facilities has been  frequently used                                                                   
to  fund projects  costing  considerably  more than  $250,000                                                                   
dollars.    Such action  takes  dollars  out of  the  private                                                                   
sector and  omits the  checks and  balance over-sight  of the                                                                   
competitive bidding process.                                                                                                    
HB  67 was  introduced to  insure that  State force  accounts                                                                   
continue to be allowed for smaller  jobs while requiring that                                                                   
projects over  $250,000 dollars  utilize private  contractors                                                                   
in the competitive bidding process.   Private contractors not                                                                   
only  maintain  an inventory  of  specialized  equipment  and                                                                   
employ  skilled managers,  but they  assume risk-costs,  thus                                                                   
providing the State with considerable savings.                                                                                  
Representative  Hawker  agreed  that the  bill  makes  sense,                                                                   
however,  the fiscal note  indicates that  assuming that  the                                                                   
forced  account projects  remain constant  over the next  six                                                                   
years, the lost savings would total $25.6 million dollars.                                                                      
Representative  Holm responded  that  the analysis  indicates                                                                   
that potential loss.  He added  that he had not seen any back                                                                   
up material  to justify  the number and  that he  believed it                                                                   
was a "fear" tactic.   He claimed that the fiscal  note would                                                                   
be zero and that putting a project  out to bid would not cost                                                                   
Co-Chair  Harris pointed  out  that the  Department does  not                                                                   
support  the bill.    He acknowledged  that  the concept  was                                                                   
good, however,  certain communities do have  a difficult time                                                                   
retaining  Department of Transportation  & Public  Facilities                                                                   
employees.  If  those employees were laid off  in the summer,                                                                   
there would  be a tremendous amount  of turn over.   He asked                                                                   
if there was a way to address  this concern without affecting                                                                   
the rural communities.   Co-Chair Harris advised  that he did                                                                   
not support  the bill; however,  he would be willing  to work                                                                   
with Representative Holm.                                                                                                       
MARK   O'BRIEN,  CHIEF   CONTRACT  OFFICIER,   COMMISSIONER'S                                                                   
OFFICE,  DEPARTMENT OF  TRANSPORTATION  & PUBLIC  FACILITIES,                                                                   
stated  that  the   effect  of  HB  67  would   prohibit  the                                                                   
Department and any agency that  transfers projects from using                                                                   
its  own employees  to  perform  the  work on  projects  that                                                                   
exceed $250  thousand dollars.   There are two  categories of                                                                   
projects that fall under the force account:                                                                                     
   ·    Community roads                                                                                                         
   ·    State maintenance forces                                                                                                
Using  capital  funds,  the Department  is  able  to  develop                                                                   
programs  within the  three regions  to address  some of  the                                                                   
$200  million  dollar  backlog in  the  deferred  maintenance                                                                   
Mr. O'Brien  noted that  there are four  key benefits  of the                                                                   
   ·    Ability to transfers the cost of the winter                                                                             
        maintenance employees to federal aid money which                                                                        
        allows the Department to preserve general fund money                                                                    
        for severe wintertime events;                                                                                           
   ·    Retain year round employees;                                                                                            
   ·    Use the federal aid funds to fund a portion of the                                                                      
        equipment costs which then helps to defer the cost                                                                      
        of repair for maintenance activities; and                                                                               
   ·    Extend and utilize the money further.                                                                                   
TAPE HFC 03 - 36, Side A                                                                                                      
Mr. O'Brien concluded  his discussion regarding  the four key                                                                   
Representative  Stoltze asked  if there  was a definition  of                                                                   
"construction projects" for major capital and maintenance.                                                                      
Co-Chair  Williams  stated  that  HB  67  would  be  HELD  in                                                                   
Committee for further consideration.                                                                                            
The meeting was adjourned at 3:27 P.M.                                                                                          

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