Legislature(2017 - 2018)HOUSE FINANCE 519
04/18/2017 01:30 PM FINANCE
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HOUSE FINANCE COMMITTEE April 18, 2017 1:34 p.m. 1:34:58 PM CALL TO ORDER Co-Chair Foster called the House Finance Committee meeting to order at 1:34 p.m. MEMBERS PRESENT Representative Neal Foster, Co-Chair Representative Paul Seaton, Co-Chair Representative Les Gara, Vice-Chair Representative Jason Grenn Representative David Guttenberg Representative Scott Kawasaki Representative Dan Ortiz Representative Lance Pruitt Representative Steve Thompson Representative Cathy Tilton Representative Tammie Wilson MEMBERS ABSENT None ALSO PRESENT Representative Geran Tarr, Sponsor; Konrad Jackson, Staff, Senator Natasha von Imhof; Janey Hovenden, Director, Division of Corporations, Business and Professional Licensing, Department of Commerce, Community and Economic Development; Representative Andy Josephson, Sponsor; Paul Kelly, Staff, Representative Andy Josephson; Marie Marx, Director, Workers' Compensation Division, Department of Labor and Workforce Development; Sheri Gray, Risk Manager, Division of Risk Management, Department of Administration; Heidi Drygas, Commissioner, Department of Labor and Workforce Development; Paloma Harbour, Director, Division of Administrative Services, Department of Labor and Workforce Development; Nancy Meade, General Counsel, Alaska Court System; Paul Grossi, Lobbyist, Alaska State Pipe Trades and Iron Workers. PRESENT VIA TELECONFERENCE Trevor Storrs, Alaska Children's Trust, Anchorage; Teresa Beck, Alaska Board of Veterinary Examiners, Palmer; Marianne Burke, Mother of Abigail Caudle, Anchorage; Betty Caudle, Aunt of Abigail Caudle, Anchorage; Jeffrey Caudle, Brother of Abigail Caudle, Anchorage; Ron Ross, Grandfather of Abigail Caudle, Anchorage; Kevin Dougherty, General Counsel, Alaska Laborers, Eagle River; Angelee Wood, Self, Anchorage; Eric Croft, Self, Anchorage; Steve Constantino, Self, Anchorage; Vicki Paddock, Self, Anchorage. SUMMARY HB 38 WORKERS' COMPENSATION: DEATH BENEFITS HB 38 was HEARD and HELD in committee for further consideration. HB 69 REPEAL WORKERS' COMP APPEALS COMMISSION CSHB 69(JUD) was REPORTED out of committee with a "do pass" recommendation and with two previously published fiscal notes: FN2 (AJS) and FN3 (LWF). HCR 3 APRIL 2017: CHILD ABUSE PREVENTION MONTH CSHCR 3(FIN) was REPORTED out of committee with a "do pass" recommendation and with one previously published zero fiscal note: FN1 (HHSS Committee). CSSB 51(FIN) EXTEND BOARD OF VETERINARY EXAMINERS CSSB 51(FIN) was REPORTED out of committee with a "do pass" recommendation and with one previously published fiscal impact note: FN1 (CED). Co-Chair Foster reviewed the meeting agenda. HOUSE CONCURRENT RESOLUTION NO. 3 Proclaiming April 2017 as Child Abuse Prevention Month; and proclaiming April 7, 2017, as Go Blue Friday. 1:34:58 PM REPRESENTATIVE GERAN TARR, SPONSOR, explained the bill: Child abuse in Alaska is a chronic and devastating problem. In 2014, the Office of Children's Services statistics showed that there were 40,000 allegations of child maltreatment, meaning abuse or neglect of a person under 18 years of age. Children subject to abuse are more likely to become abusers themselves. They are also 9 times more likely to engage in criminal and other anti-social behavior than children who do not experience neglect. Emotionally and physically, abuse has long-term effects including improper brain formation, an inability to trust, low self-esteem, and an increased vulnerability to posttraumatic stress disorder, sexually transmitted diseases, heart disease, cancer, and depression. Every child deserves a loving family, a safe home, and the opportunity to grow into an upstanding and responsible member of society. We have to work together to support our children. This resolution proclaims April 2017 as Child Abuse Prevention Month in an effort to raise awareness of child abuse nationally and in-state. In 1983, the U.S. Legislature proclaimed April the first National Child Abuse Prevention Month to show a commitment to identifying and implementing solutions to end child abuse. As a result, child abuse and neglect awareness activities are promoted across the country during April of each year. Many governors also issue proclamations to encourage initiatives and events in their respective states. The high rates of child abuse in Alaska must stop, and recognition and an open discussion are ways to assist in breaking this painful cycle. I invite all citizens in Alaska to join me on April 10th, 2017 to wear blue as a symbolic gesture that child abuse will not be tolerated and we stand together in putting an end to the abuse. Vice-Chair Gara thanked the bill sponsor. He wondered whether the bill was permanent or make it an annual basis. Representative Tarr replied there was an amendment that had been distributed to deal with the issue. She stated that the issues were important to address annually. She remarked that the amendment would name the 2018 dates. 1:39:24 PM TREVOR STORRS, ALASKA CHILDREN'S TRUST, ANCHORAGE (via teleconference), spoke in support of the legislation. He wanted to reduce the deficit and pass the bill which was about engaging the community at all levels to actively prevent child abuse and neglect. Co-Chair Foster CLOSED public testimony. Co-Chair Foster MOVED to ADOPT Amendment 1, 30-LS0280\A.1 (Glover, 4/18/17) (copy on file). Representative Wilson OBJECTED for discussion. Representative Tarr explained the amendment that would name April of 2018 as the "go blue" Friday. There being NO OBJECTION, it was so ordered. Vice-Chair Gara explained the zero fiscal note. Representative Wilson MOVED to REPORT CSHCR 3(FIN) out of committee with individual recommendations and the accompanying fiscal note. There being NO OBJECTION, it was so ordered. CSHCR 3(FIN) was REPORTED out of committee with a "do pass" recommendation and with one previously published zero fiscal note: FN1 (HHSS Committee). CS FOR SENATE BILL NO. 51(FIN) "An Act extending the termination date of the Board of Veterinary Examiners; and providing for an effective date." 1:46:01 PM KONRAD JACKSON, STAFF, SENATOR NATASHA VON IMHOF, introduced the legislation. Representative Wilson asked // TERESA BECK, ALASKA BOARD OF VETERINARY EXAMINERS, PALMER (via teleconference), asked for clarification on the question. Representative Wilson clarified // the challenges in rural areas. Ms. Beck answered // the veterinarians in that area had a very unique role // Representative Wilson wanted to ensure it was on record that she had received quite a few comments from the public // Co-Chair Foster spoke to a lack of availability of veterinarians in rural Alaska. // the highest quality of veterinary service in the areas. He asked for detail. Ms. Beck answered that the board had discussed the issue. She elaborated that highly qualified veterinarians were needed to do the work. She characterized the work as "in the trenches" and it was necessary to have qualified individuals to provide the services. It was not prudent to have someone visit a community and leave right away. 1:52:52 PM Representative Guttenberg referred to the audit recommendation asking the chair to be more diligent in the annual audit //. He asked for detail. Ms. Beck believed it pertained to a clerical error. She explained detail about the situation. The recommendation was for the board chair to review the document thoroughly. Representative Guttenberg asked if Ms. Beck was satisfied that the documents she received for review were aligned. Ms. Beck answered in the affirmative. She detailed // the licensing office had the secretary // it was easy for clerical errors to occur. She was satisfied. 1:55:13 PM Co-Chair Foster OPENED and CLOSED public testimony. Vice-Chair Gara addressed the fiscal note from the Department of Commerce, Community and Economic Development. Representative Wilson pointed to page 2 of the fiscal note. She asked who paid for staff. JANEY HOVENDEN, DIRECTOR, DIVISION OF CORPORATIONS, BUSINESS AND PROFESSIONAL LICENSING, DEPARTMENT OF COMMERCE, COMMUNITY AND ECONOMIC DEVELOPMENT, replied that the program absorbed the cost. The program paid for the other incidentals. The cost was directly associated with the cost of the board. Representative Wilson understood the cost was related to travel and services. She wondered why the costs would be put out. She thought it seemed all or none would be listed. Ms. Hovenden answered // board related costs. Representative Wilson stated // would be a reduction of staff. // She provided a scenario with four boards in a year // the board was paying for time. // 2:00:03 PM Vice-Chair Gara asked if the funding for the receipt authority was in the operating budget. Ms. Hovenden replied in the affirmative. Representative Wilson MOVED to REPORT CSSB 51(FIN) out of committee with individual recommendations and the accompanying fiscal note. There being NO OBJECTION, CSSB 51(FIN) was REPORTED out of committee with a "do pass" recommendation and with one previously published fiscal impact note: FN1 (CED). HOUSE BILL NO. 38 "An Act relating to the calculation and payment of workers' compensation benefits in the case of permanent partial impairment; relating to the calculation and payment of workers' compensation death benefits payable to a child of an employee where there is no surviving spouse; relating to the calculation and payment of workers' compensation death benefits for an employee without a surviving spouse or child; relating to notice of workers' compensation death benefits; and providing for an effective date." 2:01:17 PM Vice-Chair Gara MOVED to ADOPT the proposed committee substitute for HB 38, Work Draft 30-LS0160\R (Wallace, 4/11/17). Representative Wilson OBJECTED for discussion. REPRESENTATIVE ANDY JOSEPHSON, SPONSOR, explained the bill. House Bill 38 addressed an injustice that came to light when Abigail Caudle, a twenty-six year-old electrical worker, was killed on the job in 2011. Because Ms. Caudle was unmarried and had no dependents, the workers' compensation system paid only for her funeral expenses. HB 38 directs that when a worker dies without a spouse or minor children, then either relatives who depended on that worker for support, or the worker's estate, will receive a respectful amount of compensation. HB 38 also solves the problem of inadequate financial support of children after their single parent dies on the job. Currently, teenagers may receive only a few months of financial assistance before their support is cut off when they turn eighteen. The bill continued payment of the death benefit for five years after the child reaches legal adulthood. Finally, HB 38 would bring more equitable compensation to workers for permanent injuries, such as loss of an arm. One-time payments for permanent, partial disability had not increased since 2000, and their value had been eroded by inflation. The bill increased the payments to off-set past inflation, and provided an annual adjustment based on the Anchorage Consumer Price Index. 2:10:51 PM Vice-Chair Gara surmised that a worker's compensation claim was often much less. Representative Josephson replied it was generally true. Vice-Chair Gara wondered whether there would be the same compensation should a person lose one arm versus both arms. Representative Josephson replied that he felt that the compensation would increase, so the scheduled weekly wage equivalent would increase. PAUL KELLY, STAFF, REPRESENTATIVE ANDY JOSEPHSON, furthered that the schedule was determined by the American Medical Association guides, so that would determine the percentage of permanent partial impairment that the worker would receive. Representative Wilson WITHDREW her OBJECTION. There being NO OBJECTION, Work Draft 30-LS0160\R was ADOPTED. Representative Guttenberg noted that there was an elevator analogy where the worker received compensation, but wondered whether the customer would receive compensation. Representative Josephson responded that the customer would not receive worker's compensation. He stated that there would generally be no compensation, unless the customer filed a claim or a lawsuit. 2:14:53 PM Representative Guttenberg stressed that worker's compensation was created to get the worker back to work, and not only to create a "right or wrong." He wondered whether there was a similar law. Representative Josephson replied that he did not know the answer. 2:16:26 PM Representative Kawasaki referred to Representative Josephson's statement related to family and friends. Representative Josephson replied he had meant the statement almost in a spiritual sense. Representative Kawasaki asked how far the benefit extended. Representative Josephson replied that the benefit ended at the parents; if there were no parents it went to the estate. 2:20:06 PM Representative Kawasaki spoke about a person who was a beneficiary of the estate. He asked for verification the money could go to someone who was not a family member. Representative Josephson supposed there could be a best friend named in the will who would get the benefit. Representative Kawasaki asked if the $100,000 was an admission that it was the current status with inflation. Representative Josephson replied that his staff had done some research and the number may be as high as $140,000. Representative Wilson pointed to agency receipts in the fiscal note. She wondered if employers would be paying more into workers' compensation to cover the increase. Representative Josephson answered that the number was $512,000, which came principally from an increase in the PPI [personal property insurance]; it was a fiscal note increase that would have to be collected in the event of death. The problem was if the situation was not upgraded they were stuck at 2000 indefinitely. Representative Wilson did not understand where the money was coming from. She asked for detail. 2:24:54 PM Representative Josephson answered risk management was funded by interagency receipts. MARIE MARX, DIRECTOR, WORKERS' COMPENSATION DIVISION, DEPARTMENT OF LABOR AND WORKFORCE DEVELOPMENT, introduced herself. SHERI GRAY, RISK MANAGER, DIVISION OF RISK MANAGEMENT, DEPARTMENT OF ADMINISTRATION, answered that the dissemination to the agencies was through the cost of risk agencies who were under the state's self-insurance plan for worker's compensation. She explained that it involved the number of full-time employees and a formula of experience of actual worker's compensation claims and the expectation of additional claims. She remarked that there was a complex process, and she could not fully explain the process. Representative Wilson surmised that the interagency receipts were paid into the funds to pay for the possible occurrence. Ms. Gray answered that she did not know. Representative Wilson stated the money had to be coming from somewhere. She was trying to determine the fiscal impact. She asked the department to follow up. She understood the note was indeterminate. Ms. Gray answered that the allocations to the agencies were done on an annual basis and were based on 80 percent of prior five years claims and 20 percent of expected claims. The process it was spread out through agencies, so they were not taking the full brunt. 2:29:37 PM Representative Wilson asked if there was a specific fund where the money was collected into. Ms. Gray replied in the affirmative. Representative Wilson asked how it was done. Ms. Gray would follow up. Vice-Chair Gara stated there was an annual contribution by agencies, and remarked in some years where there was not enough money there would have to be an additional appropriation. Ms. Gray agreed to follow up with additional information. 2:30:49 PM MARIANNE BURKE, MOTHER OF ABIGAIL CAUDLE, ANCHORAGE (via teleconference), testified that she was the mother of Abigail Caudle. Her daughter had been up on a ladder working and inadvertently touched a live wire. She had not been revived. It had been very difficult to understand that there was no liability to the employer. Abigail had been given nothing for her life. She continued to explain the situation. She was frustrated there had been no justice. She could not go to civil court, and could only pursue workers' compensation. She asked the committee members to consider the value of their children's lives. She thought $20,000 was an insult to the value of life. She wondered what was wrong with Alaska being number one in recognizing human life. She stressed that the accident had not been her daughter's fault. She urged the committee to pass the bill. 2:37:50 PM Vice-Chair Gara expressed his sympathy. Ms. Burke looked at Chapter 25 of Alaska State Statute, which was the "Defective Machinery Act." She stressed that in that statute, the employer was liable, but she had received to recognition of that statute. [Co-Chair Seaton joined the meeting] Co-Chair Foster indicated that Mr. Kelly had a short presentation. 2:39:58 PM Mr. Kelly provided a PowerPoint presentation titled "HB 38: Abigail Caudle Act" (copy on file): The estate of a single worker with no dependents who dies on the job has no remedy protect these employees PPI