Legislature(2003 - 2004)
04/25/2003 09:10 AM House FIN
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* first hearing in first committee of referral
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+ teleconferenced
= bill was previously heard/scheduled
HOUSE FINANCE COMMITTEE
April 25, 2003
9:10 A.M.
TAPE HFC 03 - 64, Side A
CALL TO ORDER
Co-Chair Williams called the House Finance Committee meeting
to order at 9:10 A.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 Carl Moses
Representative Bill Stoltze
Representative Jim Whitaker
MEMBERS ABSENT
Representative Mike Hawker
Representative Reggie Joule
ALSO PRESENT
Kevin Jardell, Assistant Commissioner, Department of
Administration; Susan Cox, Assistant Attorney General,
Department of Law; Jerry Burnett, Director, Division of
Administrative Services, Department of Corrections
PRESENT VIA TELECONFERENCE
Peter Lapinski, Inland Boatman's Union, Ketchikan
SUMMARY
HB 61 An Act establishing an exploration and development
incentive tax credit for persons engaged in the
exploration for and development of less than 150
barrels of oil or of gas for sale and delivery
without reference to volume from a lease or
property in the state; and providing for an
effective date.
CS HB 61 (FIN) was reported out of Committee with
a "do pass" recommendation and with zero fiscal
note #1 by the Department of Natural Resources and
zero fiscal note #2 by the Department of Revenue.
SB 115 An Act allowing expenses of the correctional
industries program that may be financed from the
correctional industries fund to include the
salaries and benefits of state employees.
SB 115 was HEARD and HELD in Committee for further
consideration.
SB 120 An Act relating to the state's sovereign immunity
for certain actions regarding injury, illness, or
death of state-employed seamen and to workers'
compensation coverage for those seamen; and
providing for an effective date.
SB 120 was reported out of Committee with a "do
pass" recommendation and with a zero fiscal note
#1 by Department of Administration and fiscal note
#2 by the Department of Labor and Work Force
Development.
SENATE BILL NO. 120
An Act relating to the state's sovereign immunity for
certain actions regarding injury, illness, or death of
state-employed seamen and to workers' compensation
coverage for those seamen; and providing for an
effective date.
Co-Chair Harris asked if the Unions were supportive of the
proposed legislation.
SUSAN COX, ASSISTANT ATTORNEY GENERAL, DEPARTMENT OF LAW,
advised that there have been hearings in other committees on
this bill and the identical House bill, HB 164. She noted
that in the Senate Labor and Commerce Committee, the Union
attorney, Mr. Joe Geldoff suggested that there be some kind
of legal review and Senator Con Bunde requested that the
Department of Law provide that review. The Inland Boatman's
Union (IBU) did have a member testify in opposition to the
legislation. She observed that testimony seemed to be more
of a "neutral" observation.
Ms. Cox continued, in the House Judiciary Committee,
Representative Gara asked if the Inland Boatman's Union
(IBU) was for or against the bill. The representative was
not willing to take a position at that time. Ms. Cox
understood that a gentleman, Mr. David Moore, thought that
the bill could benefit 98% of the members more than the
current system does.
PETER LAPINSKI, (TESTIFIED VIA TELECONFERENCE), INLAND
BOATMANS UNION (IBU), KETCHIKAN, stated that it was the
official position of the IBU-Alaska that they oppose the
bill and that they do not want to go into the worker's
compensation plan. He stated that it would be detrimental
to the Union members and not in their best interest.
Co-Chair Harris noted that there had only been one testimony
in opposition to the legislation.
Co-Chair Harris MOVED to report SB 120 out of Committee with
individual recommendations and with the accompanying fiscal
notes.
Representative Croft OBJECTED.
Representative Croft stated that these employees should not
be forced out of the Jones Act. They have testified through
their Union representative that they do not want the change.
He understood that worker's compensation would severely
limit the benefits and what a jury could award for an injury
on the job. The trade-off is that they would receive a "lot
less money, quicker". He recommended that it should be the
employees that make the decision to change.
KEVIN JARDELL, ASSISTANT COMMISSIONER, DEPARTMENT OF
ADMINISTRATION, noted that another IBU representative had
testified in the Senate Judiciary Committee indicating that
98%-99% of their membership supports the change. Mr.
Jardell stressed that the legislation would provide a good
policy and that the Administration believes in it.
At-Ease: 9:25 A.M.
Reconvene: 9:30 A.M.
Co-Chair Harris asked if the legislation would require that
the seamen working on the Alaska Highway System would have
to be under the workmen's compensation insurance rather than
a different type of protection system. Mr. Jardell replied
that was correct.
Co-Chair Harris asked if at the present time, those
employees had the right to be under either system. Mr.
Jardell stated they did not. At one time, they did bargain
to be included under workmen's compensation. A single
individual litigated the issue of whether it was a bargain-
able issue. The Alaska Supreme Court stated that you cannot
bargain your way out of the Jones Act without changing the
statute asserting the State's immunity.
SB 120 provides the statutory authority to bring the State
employed seamen under the worker's compensation rules. He
commented that this would be a better remedy for a vast
majority of labor employees on the sea.
Co-Chair Harris asked the difference between the two
systems.
Ms. Cox explained that there are no fault remedies now for
seamen. If a person becomes injured or ill at sea, they
would be entitled to their wages until the end of the voyage
without deductions from their regular sick-leave account.
That person would receive their regular paycheck for that
voyage. They also receive a maintenance stipend to cover
food and lodging, which amounts to a $45 dollar a day
payment until they recover and are able to return to the
vessel. Ms. Cox pointed out that no fault remedies are
currently being paid. In addition, if that person is
injured on a vessel and believe that it was the fault of the
employer, they would have the right to sue the employer
under the Jones Act. If they do sue, the potential range of
damages that could be recovered would be more substantial
than would be available in the typical, no-fault worker's
compensation claim. She went on to say that if the injured
person had no intent to sue, the $45 dollars a day is less
significant and a smaller payment than they would receive
through worker's compensation. That payment would be more
equivalent to 80% of the net wage, tax-free. The proposed
system would provide as no fault measure more as an economic
compensation to most employees with most injuries. In the
case of a more significant injury, the potential for
recovery is greater under the Jones Act but again, they
would have to prove fault and would have to hire a lawyer to
do it.
Co-Chair Harris clarified that the Jones Act would be better
if the employee had to sue for damages. Mr. Jardell replied
that was not always the case. There is potentially a
greater windfall in the end with the Jones Act; however,
there have been some instances where it has taken four years
for the case to close. Whereas, with worker's comp, the
claim pays 80% of net income. He believed the policy would
benefit State employees.
Representative Stoltze asked what was the definition of a
"seaman" and how many employees would be included in the
legislation. Ms. Cox responded that it would apply to all
the people that work on the ships for the Alaska Marine
Highway System. There are approximately 650 employees
working on those ships. Additionally, there are employees
that work on law enforcement and research vessels who also
would qualify.
Representative Stoltze noted that the legislation would
affect three different State agencies, the Department of
Fish and Game, Department of Transportation & Public
Facilities and Department of Public Safety.
Mr. Lapinski explained that in the current contract, if the
employee becomes sick or injured, they would continue to be
paid until the end of the voyage. That language would
continue to be in the contract. He added that the Alaska
Marine Highway System is a seasonal job and that the
employees do not make a lot of money. He noted that 70% of
the employees receive a very minimal payment. The $45
dollars a day, if they got sick, helps them out and plus
they receive maintenance on their medical and are paid until
cured. Under the workman's comp, if that employee got sick
on the job, they receive nothing. He stressed it would be
detrimental to the members.
Representative Croft advised that the legislation would not
be in the best interest of the employee. He stressed that
there are "good reasons" that the employees want to stay
under the Jones Act. He recommended that they be given the
choice.
Co-Chair Harris interjected that some individuals in the
Union want it and some do not. He stated he would support
the bill.
A roll call vote was taken on the motion to move the bill
from Committee.
IN FAVOR: Whitaker, Chenault, Foster, Meyer, Stolze,
Harris, Williams
OPPOSED: Croft, Moses
Representative Hawker and Representative Joule were not
present for the vote.
The MOTION PASSED (7-2).
SB 120 was reported out of Committee with a "do pass"
recommendation and with a zero fiscal note #1 by the
Department of Administration and fiscal note #2 by
Department of Labor & Workforce Development.
SENATE BILL NO. 115
An Act allowing expenses of the correctional industries
program that may be financed from the correctional
industries fund to include the salaries and benefits of
state employees.
JERRY BURNETT, DIRECTOR, ADMINISTRATIVE SERVICES DIVISION,
DEPARTMENT OF CORRECTIONS, stated that SB 115 would allow
the administrative costs of the Correctional Industries
Program to be paid from product revenues instead of the
general fund.
Currently, 14 correctional industry positions are paid from
the general fund. By allowing employee salaries to be paid
from the correctional industries fund, the Department would
be taking the first step toward making the program self-
sufficient.
Mr. Burnett understood that Vice-Chair Meyer would be
providing a committee substitute, which originated from
discussions in the House State Affairs Committee on HB 161,
the companion bill. The purpose of the committee
substitute, which the Department would support, would make
it clear that the correctional industries will cooperate
with and for the benefit of the private industry. The
intent is to insure that revenues could be increased enough
to make it self-supporting. Currently, $960,000 dollars a
year is paid in salaries.
Representative Stoltze inquired the plans for the Mt.
McKinley meat processing plant. Mr. Burnett responded that
at this point, the Department of Natural Resources through
the Division of Agriculture will support the product
manager's salaries within that plant. The Department of
Corrections will continue to provide security and inmate
labor.
Co-Chair Harris asked if it was scheduled to be shut down.
Mr. Burnett replied that Department of Corrections has no
plans to make changes to that operation.
Co-Chair Harris noted that the $960,000 dollars would be
shifted to the correctional industry fund. He asked if
currently, the Department was making $960,000 dollars
through that system. Mr. Burnett replied that at the end of
FY03, it is expected that there will be approximately a $400
thousand dollar balance. He added that the Department is
looking at a number of ways to increase sales. The
committee substitute will provide more tools to increase
revenues. He listed measures that the Department currently
has undertaken. Recently, the Department closed the Juneau
Alaska Correctional Industries office, which consists of two
people and a $50,000 dollar a year grant and will be
avoiding those costs. He believed that the Department would
be able to make the projected amount this year.
Co-Chair Harris reiterated his question if the Department
will make the targeted amount of $960,000 dollars this year.
Mr. Burnett stated that they intent to make that much "in
the future". He reiterated that they would be increasing
product sales and would not be competing with the private
sector. Current statute requires that correctional
industries will not compete with the private sector. The
committee substitute makes that a more positive statement in
regard to the private sector.
Representative Stoltze asked what Mr. Burnett meant by
"avoiding costs". Mr. Burnett replied that was in reference
to reducing the lease costs and avoiding a cost that they
currently have been paying at $50,000 a year.
Co-Chair Williams indicated that the Committee would wait
for the committee substitute to be presented later this
afternoon.
SB 115 was HELD in Committee for further consideration.
HOUSE BILL NO. 61
An Act establishing an exploration and development
incentive tax credit for persons engaged in the
exploration for and development of less than 150
barrels of oil or of gas for sale and delivery without
reference to volume from a lease or property in the
state; and providing for an effective date.
Representative Chenault MOVED to ADOPT Amendment #1, #23-
LS0270\Q.4, Chenoweth, 4/24/03. (Copy on File). Co-Chair
Williams OBJECTED for purposes of discussion.
Representative Chenault explained that the amendment would
address concerns voiced by Representative Hawker at the last
meeting. The new language would establish the parameters of
when the tax credit can happen.
Co-Chair Williams WITHDREW his OBJECTION.
There being NO further OBJECTION, Amendment #1 was adopted.
Representative Chenault MOVED to ADOPT Amendment #2, #23-
LS0270\Q.2, Chenoweth, 4/24/03. (Copy on File). Co-Chair
Harris OBJECTED for purposes of discussion.
Representative Chenault explained that Amendment #2 would
address concerns regarding "operators". The amendment would
change the current language of "person" to "operators" and
would insert language on Page 1, Line 9: "That is an
operator or working interest owner directly".
Co-Chair Harris WITHDREW his OBJECTION.
There being NO further OBJECTION, Amendment #2 was adopted.
Representative Chenault MOVED to adopt Amendment #3, #23-
LS0270\Q.3, Chenoweth, 4/24/03. (Copy on File). Co-Chair
Harris OBJECTED for purposes of discussion.
Representative Chenault explained that Amendment #3 inserts
new language at the request of the Department. The language
would tie the bill in with income tax credit by inserting
that language on Page 2, Line 7: "In or before the tax year
in which the credit is claimed through the date the reserves
produce gas for sale and delivery".
Co-Chair Harris WITHDREW his OBJECTION.
There being NO further OBJECTION, Amendment #3 was adopted.
Representative Foster MOVED to report CS HB 61 (FIN) out of
Committee with individual recommendations and with the
accompanying fiscal notes.
There being NO OBJECTION, it was so ordered.
CS HB 61 (FIN) was reported out of Committee with a "do
pass" recommendation and with zero fiscal note #1 by the
Department of Natural Resources and zero fiscal note #2 by
the Department of Revenue.
ADJOURNMENT
The meeting was adjourned at 9:48 A.M.
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