Legislature(1999 - 2000)
04/28/1999 01:50 PM House FIN
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE FINANCE COMMITTEE
April 28, 1999
1:50 P.M.
TAPE HFC 99 - 112, Side 1.
TAPE HFC 99 - 112, Side 2.
TAPE HFC 99 - 113, Side 1.
CALL TO ORDER
Co-Chair Therriault called the House Finance Committee
meeting to order at 1:50 P.M.
PRESENT
Co-Chair Therriault Representative Foster
Co-Chair Mulder Representative Grussendorf
Vice Chair Bunde Representative Kohring
Representative Austerman Representative Moses
Representative J. Davies Representative Williams
Representative G. Davis
ALSO PRESENT
Mark Hodgins, Staff, Senator Jerry Ward; Representative
Andrew Halcro; Pamela LaBolle, President, Alaska State
Chamber of Commerce, Juneau; Don Etheridge, Alaska Laborers
Union, Juneau; Juanita Hensley, Department of
Administration; Darwin Peterson, Staff, Senator John
Torgerson; George Utermohle, (Testified via Teleconference),
Attorney, Legislative Legal and Research Services; Mike
Tibbles, Staff, Representative Gene Therriault.
SUMMARY
HB 141 An Act providing for preferential voting in state
and local elections.
HB 141 was not heard and was rescheduled for a
later date.
CSSB 33(FIN) An Act relating to contracts for the
performance of certain state functions previously
performed by state employees and to the Commission
on Privatization and Delivery of Government
Services; and providing for an effective date.
HCS CS SB 33 (FIN) was reported out of Committee
with "no recommendation" and with a fiscal note by
the Legislative Affairs Agency and the Office of
the Governor dated 2/1/99.
CSSB 101(FIN) An Act relating to disasters and to the
Disaster relief fund.
HCS CS SB 101 (FIN) was reported out of Committee
with a "do pass" recommendation and with a zero
fiscal notes by the Department of Environmental
Conservation dated 4/7/99 and Department of
Military and Veterans Affairs dated 4/7/99.
CS FOR SENATE BILL NO. 33(FIN)
An Act relating to contracts for the performance of
certain state functions previously performed by state
employees and to the Commission on Privatization and
Delivery of Government Services; and providing for an
effective date.
MARK HODGINS, STAFF, SENATOR JERRY WARD, stated SB 33 is an
act relating to contracts of performance of certain state
functions. He noted that "privatization" would help to
address the budget deficit and would provide a good plan to
cut the cost of government while at the same time continuing
to deliver services. Mr. Hodgins stated that privatization
would allow State government "get out" and then allow
private enterprise to pick up. Government should not be
based on a for profit concept. There are certain areas of
government such as education, protection, health and safety
issues, and the transportation of infrastructure for the
citizens as indicated in the State Constitution.
Mr. Hodgins commented that SB 33 recommends forming a
commission to address various aspects of delivery for
services by State government and how those services could be
redistributed. He listed examples of privatization
possibilities:
* The sale of government assets, publicly owned
facilities or enterprises;
* Private development infrastructure; and
* Contracting out.
Mr. Hodgins spoke to some current trends toward
privatization in reshaping government. He emphasized that
savings are the most important factor.
* Contracting out some health and social service
programs; and
* Situations within the Department of Corrections.
Mr. Hodgins continued, the most likely candidates for
privatization are those services readily available in the
private sector, such as towing, tree trimming, street
repairs, and data processing. There are four key areas
which offer immediate opportunity for privatization:
* Highway infrastructure of private construction and
maintenance;
* Corrections facilities by awarding private
operating contracts for existing prisons or by
private construction of new prisons;
* Fleet and highway maintenance. There is a history
of contracting out services for road and bridge
maintenance; and he added that
* Significant cost savings could be achieved if
State legislation required local governments to
open selected services to competitive bidding.
Mr. Hodgins commented that the State and federal government
should not compete with the private sector. He stressed
that contracting out through the competitive bidding process
should be pushed more aggressively.
Mr. Hodgins addressed the newly proposed commission. He
pointed out that Senator Ward's would like to see that
members of the commission are compensated only for travel
and per diem costs.
Representative Bunde asked if there was anything in State
law that would prevent the Legislature from privatizing
activities. Mr. Hodgins discussed that feasibility studies
need to occur prior to privatization.
Representative Austerman commented that SB 33 was "more
than" a privatization bill. He advised that in order to
undertake the work proposed in this bill will require much
time in order to establish a rational plan. He emphasized
the magnitude of this job, which will take a lot of input
and public hearings. Representative Austerman stressed the
importance of the work. He pointed out that there is
nothing in the bill which speaks to appointment dates.
Because of the size of the job, the public portion of the
commission will need to be compensated more than per diem
costs.
Mr. Hodgins explained that the interest of the legislation
is that the privatization will begin with the accumulation
of ideas and thoughts, which would then create direction and
effort. Senator Ward is adamant that he does not want the
plan to be enhanced with compensation; the positions will
consist of public volunteers.
Representative Austerman questioned what the future intended
size of government would be with passage of this
legislation. If the information is not available, the State
can not plan for the size that the budget should be each
year. He reemphasized that the proposed job is bigger than
suggested by the legislation. Additionally there is
included a sunset clause which would halt the longevity
concern.
Representative Grussendorf echoed concerns voiced by
Representative Austerman. He speculated that the task laid
out for this commission is beyond the scope of being
accomplished. He questioned why one member from the Local
Boundary Commission (LBC) had been included. Mr. Hodgins
stated that the bill title indicates that it would be the
"delivery of government services". He acknowledged that
could mean a lot of different ideas.
Representative J. Davies asked a definition of
"privatization" and if it meant delivery of governmental
services through the private sector. Mr. Hodgins explained
that privatization means that some services should only be
provided by the State and other services should be totally
subsidized by the public sector.
Representative Foster voiced concerns that often times newly
formed commission's take on a life of there own and become
the problem rather than the solution.
Representative Austerman pointed out that he supports the
concept of the legislation and hoped that the result would
be worthwhile.
Co-Chair Therriault referenced Page 4, Lines 14-20,
questioning why those lines began with "state". He argued
that some functions should be transferred to local
government. Mr. Hodgins pointed out that those functions
have traditionally been provided by the State in delivery of
State services. He added that the commission would not be
isolated to municipalities but would include the federal
government also. Representative J. Davies recommended
inserting "funded" following the word "state".
PAMELA LABOLLE, PRESIDENT, ALASKA STATE CHAMBER OF COMMERCE
(ASCC), JUNEAU, voiced support for SB 33. She noted that
the proposal to create a task force to explore privatization
opportunities within State government was before the 20th
Legislature twice--in 1997 as SB 68 and in 1998 as SB 209.
SB 68 passed the Legislature but was vetoed by the Governor.
The concept is a familiar one.
Ms. LaBolle commented that privatization has been a priority
of the ASCC membership for several years. The ASCC believe
that the potential exists for many functions and services
now provided by state government to be delivered by the
private sector at a lower cost, with greater efficiency and
with more opportunity for innovation.
Ms. LaBolle commented that the reason most often given by
the State for continuing to do the work in-house is that
private firms are not geared up to handle the work when it
needs to be done. She pointed out that the Chamber sent a
letter to Alaskan engineering firms throughout the State, to
determine the readiness of these firms to provide service
needs. About 35% of those contacted responded indicating
that there are a lot of firms ready, willing and able to
undertake the work.
(Tape Change HFC 99 - 102, Side 2).
Ms. LaBolle urged Committee members to support SB 33 in
creating a commission on privatization and alternative ways
for delivering government services. The Chamber membership
believes that the work of such a commission would be the key
to finding ways to reduce costs. She summarized that it is
very important that a study is pursued by this Legislature.
Representative Bunde questioned if the proposed commissioner
would be a duplicated service within the Legislative
Committee. Ms. LaBolle reiterated that the Chamber knows
that the State needs to reduce the size of government and
that this bill would be of great benefit.
Representative Bunde doubted that anyone from the public
sector would be willing to donate 12 weeks of their time in
order to be a part of the commission unless they had a
serious personal interest and hoping to get a contract out
of it. Ms. LaBolle disagreed, stating that it was the
"civic minded community" statewide that would want to be
participating in the proposed commission. She cited that
situation had occurred during Governor Hammond years and
some corporations donated employees.
Representative Kohring voiced his support of the
legislation, as it would redefine state government.
Representative Moses suggested that it is better to hire
experts when making important decisions. He did not believe
that the proposed task force could address the concern
better than the State economic task force.
Representative Foster noted that he agreed with the concept,
however, pointed out that the composition of the commission
would again be represented by urban concerns and foresaw
problems with the legislation for the Bush Alaska.
DON ETHERIDGE, DISTRICT COUNCIL, ALASKA LABORERS UNION,
JUNEAU, noted that the Labor Union does not oppose the bill
with the compromise reached in the State Affairs Committee,
however, the Labor Union does not like the bill. He noted
that taking jobs away from State employees versus saving
money for the State are two very different perspectives of
the legislation. In order to do a fair job, each job would
need to be addressed individually to determine if the State
or private industry could do it cheaper. He strongly
recommended that the legislation produce a fair study. Mr.
Etheridge emphasized that the Labor Union would support the
legislation as long as they continued to have a seat on that
commission.
Co-Chair Therriault voiced concern with Sections 2 & 3. He
understood that the Labor Union currently addresses such
concerns through the Administration. Mr. Etheridge noted
that information contained in Section #2, mirrors the
current contract with the Administration. Co-Chair
Therriault stated that he would be more comfortable if that
language were struck out, as he understood the language on
the Senate side mandated that type of matter could not be
negotiated. Mr. Etheridge replied that the Labor Union
supports the language in Section #2 because it mirrors the
contract language and specifies the procedures needed to
privatize.
JUANITA HENSLEY, DEPARTMENT OF ADMINISTRATION, stated that
the Administration does not oppose SB 33, as it provides for
a commission to study how government function could be run
more efficiently under the private sector. She continued,
the Administration would like to see a change to the
membership of the commission leaving the Governor's
appointment and at the same time, designating a seat
representing Labor.
Representative Bunde questioned if that language needed to
be included in statute or if a resolution could accomplish
the same intent. Ms. Hensley agreed that a resolution could
accomplish the same intent and that current contracts with
labor agreements do not forbid "contracting out" language.
However, the Administration feels strongly that certain
steps have to be undertaken which would include a cost
effective feasibility study.
Co-Chair Therriault MOVED to adopt Amendment #1 which would
delete Sections #2 & #3. Representative J. Davies OBJECTED.
Co-Chair Therriault advised that the Committee should not be
taking negotiated contractual language and putting it into
State statute. He recommended that the commission be given
that responsibility.
Representative J. Davies pointed out that the bill before
the Committee was a compromise with the Labor Union. Co-
Chair Therriault stated that price of compromise was "too
high". Mr. Hodgins advised that removing Sections #2 & #3
would bring the bill back to the original version and that
the sponsor would prefer it without the language.
Mr. Etheridge explained that Section #2 language was
included in all State contracts. He emphasized that the
Union would prefer to keep Section #2 in the bill. It would
clarify exactly what was intended in privatizing. For the
commission to be able to determine whether there was a
savings, such information would need to be included.
Representative Kohring cautioned that Section 2 of the bill
is not relevant to the legislation. Co-Chair Therriault
added that the language would give power to the Unions which
they currently have to negotiate. He emphasized that the
Legislature would be mandating this by statute if the
language remained in the bill. He believed that it could
invalidate the proposed fiscal note.
Representative G. Davis voiced support for inclusion of the
language as it would encourage support of the Labor Union.
Mr. Hodgins noted that an amendment had been included in the
Senate Finance Committee (SFC) which placed a moratorium on
any further negotiations for the feasibility study. That
had been deleted in the House State Affairs Committee and
that the language of Sections #2 and #3 had been added in
that Committee. He understood that the Union would still
support the bill without that language.
Representative Bunde inquired if there had been a sunset
clause proposed. Mr. Hodgins acknowledged that there is a
sunset clause which would delete Sections #1, #4, & #7, but
not Sections #2 & #3.
Representative Austerman OBJECTED. He asked why it would
remain after the task force. Co-Chair Therriault explained
that organized labor wanted to retain Section #2 in statute,
which he believed would be worth a lot. Representative
Williams recommended amending Section #8, adding Sections #2
& #3, in order that the legislation would have the Union's
support.
Representative G. Davis indicated that it would be
beneficial to have that section included during the duration
of the task force. Co-Chair Therriault pointed out that
language is already included in contract and reiterated that
it would be dangerous to place it in statute.
Representative Kohring asked if the amendment were passed,
would the Union continue to support the legislation. Mr.
Etheridge replied that the Union would support the bill as
it came out of the House State Affairs Committee. He
indicated that he would need to take any change back to the
full Union to determine continued support.
Representative Austerman MOVED to AMEND Amendment #1,
striking the original language of the amendment and
inserting a change in Section #8, clarifying that this act
would be repealed on January 1, 2000. Co-Chair Therriault
OBJECTED.
A roll call vote was taken on the motion.
IN FAVOR: Williams, Austerman
OPPOSED: G. Davis, Foster, Kohring, Moses, Bunde,
Therriault
Representatives Grussendorf, J. Davies, and Mulder were not
present for the vote.
The MOTION FAILED (2-6).
Representative Williams OBJECTED to the adoption of the
original amendment.
A roll call vote was taken on the motion.
IN FAVOR: Foster, Kohring, Moses, Austerman, Bunde,
Therriault
OPPOSED: Williams, G. Davis
Representatives Grussendorf, J. Davies and Mulder were not
present for the vote.
The MOTION PASSED (6-2).
(Tape Change HFC 99 - 113, Side 1).
Co-Chair Therriault MOVED to adopt Amendment #2, Page 4,
Lines 14 - 20. In each of the enumerated sentences, after
the word "state" insert the word "funded". There being NO
OBJECTION, it was adopted.
Representative Kohring MOVED to report HCS CS SB 33 (FIN)
out of Committee with individual recommendations and with
the accompanying fiscal notes.
Representative Foster stated that he did support
privatization, however, the bill includes some harmful
language. He cited language on Page 4, Line 6, "identify
state government functions that should be eliminated". He
emphasized that language would place Bush Alaska in jeopardy
with no guarantee what the make-up of the commission would
consist of. He agreed with the intent of the legislation
however, could not support it because it would be harmful to
his district.
Representative Bunde added that he would be more comfortable
with the bill if it were a resolution rather than a proposed
statute change. No one wants cuts to their budget
districts.
Representative Austerman noted that he shared concerns
voiced by Representative Foster and agreed that the
legislation should be a resolution rather than placed into
statute. He indicated that he also would be a no vote.
Representative Williams recognized Representative Foster
concerns. He asked if there was a way to add a rural
community person to the commission. Representative Foster
pointed out that with only one rural representative on the
commission, Bush Alaska would still be outnumbered by 11 to
1.
The meeting RECESSED at 3:45 P.M. to the call of the Chair.
The House Finance Committee meeting RECONVENED at 4:45 P.M.
Representative Kohring WITHDREW the MOTION to MOVE the bill
from Committee. There being NO OBJECTION, it was withdrawn.
Representative Foster MOVED to adopt Amendment #3. [Copy on
File]. There being NO OBJECTION, it was adopted.
Representative Kohring MOVED to report HCS CS SB 33 (FIN)
out of Committee with individual recommendations and the
accompanying fiscal notes. Representative Austerman
OBJECTED.
A roll call vote was taken on the motion.
IN FAVOR: Kohring, Williams, Bunde, G. Davis, Foster,
Therriault, Mulder
OPPOSED: Grussendorf, Austerman
Representatives Moses and J. Davies were not present for the
vote.
The MOTION PASSED (7-2).
HCS CS SB 33 (FIN) was reported out of Committee with "no
recommendation" and with fiscal notes by the Legislative
Affairs Agency and the Office of the Governor dated 2/1/99.
CS FOR SENATE BILL NO. 101(FIN) am
"An Act relating to disasters and to the disaster
relief fund."
Co-Chair Mulder MOVED to adopt work draft 1-LS0625\Y,
Utermohle, 4/27/99, as the version before the Committee.
There being NO OBJECTION, it was adopted.
Co-Chair Therriault MOVED to adopt Amendment #1. [Copy on
File]. He explained that the amendment would insert
language "an incident such as" on Page 4, Line 10. He
believed that the language would add back more flexibility
and would provide direction to the Administration. There
was NO OBJECTION to adoption of Amendment #1.
Representative Grussendorf voiced concern with the language
change made on Page 1, Line 13, having replaced "a
concurrent resolution" with "law". Representative
Grussendorf advised that from a procedural point, in order
to be responsive to an emergency, the language should be
changed back.
DARWIN PETERSON, STAFF, SENATOR JOHN TORGERSON, explained
that the service would continue to need to be addressed by
law. Mr. Peterson pointed out that George Utermohle
indicated that was an oversight in statute, and that a
concurrent resolution would be the vehicle which could stop
the Governor's disaster declaration done by law not by
concurrent resolution.
Representative J. Davies argued that presiding officers
could not do anything by law or by concurrent resolution.
Such action would be dependent upon the vote of the entire
body. Mr. Peterson explained that Mr. Utermohle had amended
the legislation to read "law".
GEORGE UTERMOHLE, (TESTIFIED VIA TELECONFERENCE), ATTORNEY,
LEGISLATIVE LEGAL AND RESEARCH SERVICES, explained that he
recommended the change because under the provision, a
disaster declaration is good for a period of thirty days.
In order to extend that period, there must be an extension
of the power to address the disaster, which is a power given
by law. To extend that power provided in statute, would
take an act of the Legislature. He advised that extending
through a concurrent resolution would not be appropriate.
Co-Chair Therriault questioned if authority had been granted
for a disaster declaration in the front section of the
budget and would that take new law to continue. Mr.
Utermohle replied that it would as it is provided by the
provision.
Representative Grussendorf pointed out that in the original
legislation, a concurrent resolution was proposed. He
challenged the timing in changing that to a "law". Mr.
Utermohle responded that he did not question the purpose
behind the resolution, however, noted that he was trying to
provide for the recommendation so that the action taken by
the Legislature will have effect and be upheld given a court
challenge.
Representative J. Davies advised that law currently is
provided for such a mechanism. He asked how this would be
different then LBA acting through a revised program. Mr.
Utermohle replied that an appropriation does not have the
affect of changing the law. The appropriation may authorize
the Governor's response to extend it to the disaster
declaration but the Governor's power to act would be
restrained by the language in the statute. An appropriation
would not change that.
Representative J. Davies replied that it would not
absolutely be constrained to 30 days, however, it would be
unless the Legislature takes that action. Mr. Utermohle
replied that the language stipulates that a disaster may not
be placed into effect after 30 days, unless extended by the
Legislature. Representative J. Davies pointed out that the
current statute states that "unless extended by the
Legislature" by a concurrent resolution. It is provided for
a 30-day extension by that mechanism. Mr. Utermohle argued
that logic had been used to justify the use of the
concurrent resolution to absolve regulations. The
Legislature has the power to grant agencies to adopt
regulations and has the power to determine the means by
which those regulations could be repealed or resolved. The
Court determined that the Legislature could not give
themselves that power.
Representative Grussendorf advised that this is the
separation of powers issue, however, the discussion is not a
separation of powers concern. In response to Representative
J. Davies, Mr. Utermohle testified that he was not sure how
the appropriation would fit into this. Representative
Grussendorf pointed out that the Governor should have the
appropriation power.
Co-Chair Therriault summarized that Mr. Utermohle foresaw a
problem with proposed language and has advised the
Legislature that a change could address this concern. Mr.
Utermohle agreed.
Representative Grussendorf MOVED to amend the language in
the committee substitute deleting "law" and inserting "a
concurrent resolution" as Amendment #2. There being NO
OBJECTION, it was adopted.
Co-Chair Therriault requested Mr. Utermohle to write a memo
outlining his concerns. Representative J. Davies asked him
to include information regarding how the action would be
different from authority given to the Legislative Budget and
Audit Committee.
MIKE TIBBLES, STAFF, REPRESENTATIVE GENE THERRIAULT,
provided an in-depth overview of the proposed committee
substitute, l-LS0625\Y, Utermohle, 4/27/99. He advised that
there was no fire limit placed in the House Finance
committee substitute.
Representative J. Davies questioned how different the
proposed legislation was from existing statute.
Mr. Peterson replied that it is not that different from
existing statutes. Mr. Tibbles noted that Subsection (I)
was identical to the previous version.
Representative J. Davies MOVED to adopt Amendment #3 to Page
2, Line 13, inserting "per disaster declaration" after
"$1,000,000". There being NO OBJECTION, it was adopted.
Representative Bunde MOVED to report HCS CS SB 101 (FIN) out
of Committee with individual recommendations and with the
accompanying fiscal notes. There being NO OBJECTION, it was
so ordered.
HCS CS SB 101 (FIN) was reported out of Committee with a "do
pass" recommendation and with two zero fiscal notes by the
Department of Environmental Conservation dated 4/7/99 and
Department of Military and Veterans Affairs dated 4/7/99.
ADJOURNMENT
The meeting adjourned at 5:50 P.M.
H.F.C. 13 4/28/99 pm
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