Legislature(2017 - 2018)HOUSE FINANCE 519
04/06/2017 01:30 PM House FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| HB47 | |
| HB131 | |
| HB127 | |
| HB141 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | HB 47 | TELECONFERENCED | |
| + | HB 131 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | HB 141 | TELECONFERENCED | |
| += | HB 127 | TELECONFERENCED | |
HOUSE FINANCE COMMITTEE
April 6, 2017
1:35 p.m.
1:35:47 PM
CALL TO ORDER
Co-Chair Foster called the House Finance Committee meeting
to order at 1:35 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
Paul Labolle, Staff, Representative Neal Foster; Kevin
Worley, CFO -Division of Retirement and Benefits,
Department of Administration; Kathie Wasserman, Executive
Director, Alaska Municipal League, Anchorage; Laura
Stidolph, Staff, Representative Adam Wool; Heather Fair,
Chief of Right-of-Way, Department of Transportation;
Representative Scott Kawasaki, Sponsor; Kaci Schroeder,
Assistant Attorney General, Criminal Division, Department
of Law; Representative Zach Fansler, Sponsor; Paloma
Harbour, Admin Services Director, Department of Labor;
Jerry Burnett, Deputy Commissioner, Treasury Division,
Department of Revenue.
PRESENT VIA TELECONFERENCE
Jon Korta, Mayor, City of Galena, Galena; Shanda
Huntington, City Manager/Clerk - City of Galena, Galena;
Hilary Martin, Legislative Legal, Juneau.
SUMMARY
HB 47 MUNICIPAL PERS CONTRIBUTIONS/INTEREST
HB 47 was HEARD and HELD in committee for further
consideration.
HB 127 CRIM. CONV. OVERTURNED: RECEIVE PAST PFD
HB 127 was HEARD and HELD in committee for
further consideration.
HB 131 RELOCATION ASSISTANCE FOR FED. PROJ/PROG
HB 131 was HEARD and HELD in committee for
further consideration.
HB 141 AK WORKFORCE INVESTMENT BOARD; FUNDS
HB 141 was REPORTED OUT of Committee with a "do
Pass" recommendation and with three new fiscal
impact notes from Department of Labor and
Workforce Development and with two previously
public fiscal notes: FN1 (EED) and FN4 (UA).
Co-Chair Foster reviewed the agenda for the day.
HOUSE BILL NO. 47
"An Act requiring certain municipalities with a
population that decreased by more than 25 percent
between 2000 and 2010 that participate in the defined
benefit retirement plan of the Public Employees'
Retirement System of Alaska to contribute to the
system an amount calculated by applying a rate of 22
percent of the total of all base salaries paid by the
municipality to employees of the municipality who are
active members of the system during a payroll period;
authorizing the administrator of the defined benefit
retirement plan of the Public Employees' Retirement
System of Alaska to reduce the rate of interest
payable by certain municipalities that are delinquent
in transmitting employee and employer contributions to
the retirement plan; and providing for an effective
date."
Co-Chair Seaton invited Co-Chair Foster to join his staff
at the table to present his bill.
1:38:02 PM
PAUL LABOLLE, STAFF, REPRESENTATIVE NEAL FOSTER, read the
sponsor statement:
HB 47 seeks to correct an unintended consequence of
the PERS "salary floor" established in SB 125 of the
25th Legislature.
SB 125 changed the PERS system from a multiple
employer plan to a cost share plan. It transferred the
individual liability of the 160 PERS employers and
consolidated it so that all the employers share in
that liability.
SB 125 also created what is commonly referred to as
the 2008 salary floor. This requires employer's
contribute 22% of annual salaries or 22% of FY08
salaries, whichever is greater. The floor was
instituted to ensure that the system could not be
"gamed" by discouraging employers from replacing PERS
employees with contract hires to reduce their base
contribution to the system.
Some municipalities have found themselves under the
2008 floor through no fault of their own. A large
change in population results in a reduced tax base,
which affects the services a city can provide. As that
financial reality drives a city to downsize, current
law exacerbates this problem by keeping their PERS
contribution at the 2008 level. This bill targets the
communities whose population has dropped by more than
25% since the previous census.
HB 47 will address this issue in two ways:
1. Establish a new floor of FY 2012 for communities
whose population decreased by more than 25% between
2000 and 2010.
2. Allows the PERS administrator to negotiate penalty
interest rates on delinquent payments.
HB 47 does not intend to repeat the "2008 floor"
debate but to correct one of the unintended
consequences caused by the arbitrary line that debate
created.
I urge your support of this legislation.
1:40:22 PM
Representative Wilson asked whether the bill opened the
Public Employees' Retirement System (PERS) and Teachers
Retirement System (TRS) to liability issue. Mr. Labolle
responded that the bill would "slightly add to the unfunded
liability," but eliminated "future exposure" because the
qualification period was during a past census.
Representative Wilson deduced that the municipalities'
contribution would be reduced due to decreased population,
but the state remained liable for the retirees, which
represented the initial increase in liability. Mr. Labolle
responded in the affirmative.
1:41:25 PM
Representative Ortiz asked Mr. Labolle to provide an
example of how the legislation worked. Mr. Labolle used the
example of a fish processing plant that closed in a village
causing some residents to move away. He assumed that the
villages 22 percent contribution rate was $150 thousand,
and the 2008 floor was $100 thousand. After the plant
closure, the villages 22 percent of gross salaries dropped
to $80 thousand, but the village was still statutorily
required to pay the $100 thousand floor. He continued that
if the village continued to pay the gross salaries, but was
unable to pay the floor amount, the remainder of the
difference was considered a delinquent payment subject to a
statutory 12 percent interest rate that accrued each year.
He related that the state and municipality did not have
options to mitigate the debt due to statute. The state was
bound by law to charge the 12 percent assessment and
indebted municipalities could not declare bankruptcy or
dissolve. Representative Ortiz surmised that the bill
"moved the floor to a later date, which would presumably be
a less burdensome floor" when the population decrease was
factored in. Mr. Labolle responded in the affirmative.
Co-Chair Foster pointed out that the situation Mr. Labolle
provided was hypothetical. He indicated the committee would
hear testimony from a real situation in Galena where the
military base closed.
1:44:47 PM
Representative Grenn referred to an email from the Division
of Retirements and Benefits {Jim Puckett, Division Director
(copy on file)] listing the communities that between 2000
and 2010 lost 25 percent of their population as; St.
George, Galena, and Pelican. He asked for confirmation. Mr.
Labolle responded that 5 communities qualified, but only
the three Representative Grenn mentioned were affected. He
noted that Atka was already paying above the floor. In
addition, the community of Anderson had zero active PERS
eligible employees [St. George was also listed.]
Representative Wilson wanted to understand the fiscal note.
She reported that the state was required to pay $129
thousand in the FY 2017 Supplemental Budget bill and an
additional $121 thousand in 2018.
Co-Chair Seaton asked Mr. Worley to come to the table.
1:47:17 PM
KEVIN WORLEY, CHIEF FINANCIAL OFFICER, DIVISION OF
RETIREMENT AND BENEFITS, DEPARTMENT OF ADMINISTRATION,
explained that the figures were estimates from the actuary
based on the reduced floor that shifted the remaining
liability to the state. Representative Wilson asked whether
the state was required to deposit the stated amounts in the
PERS and TRS funds. Mr. Worley responded that the figures
would be an additional state contribution for PERS only.
Co-Chair Seaton asked whether the fiscal note satisfied the
statutory requirement that an actuarial analysis was
required. Mr. Worley responded in the affirmative.
1:49:19 PM
Co-Chair Seaton OPENED Public Testimony.
1:49:35 PM
JON KORTA, MAYOR, CITY OF GALENA, GALENA (via
teleconference), spoke in favor of HB 47. He read from a
prepared statement:
My name is Jon Korta. I am the mayor of Galena,
Alaska. I would like to thank the committee for taking
time today so that I may explain the importance of
HB47 for communities like Galena that have seen
significant population decreases in the last decade.
As you may know, the Galena Forward Operating Location
was closed by the United States Air Force. As part of
the BRAC process, the Galena FOL closure was effective
October 1, 2010, but had been in process for four
years. The Air Force base was the main source of
employment for Galena residents. Not surprisingly, the
base closure resulted in a reduction of the
population. In 2000, Galena had 675 residents. In
2010, 470 residents, representing a 30% decline.
Galena was again struck by hardship in spring of 2013
when ice dammed the Yukon River and inundated the
City, leading to a disaster declaration.
The 2008 "Floor" established by the current law exists
to prevent a municipality from gaming the PERS system
by contracting out work previously performed by
municipal employees in order to avoid making ongoing
contributions to PERS. The current minimum PERS
contribution is based on the level of salaries that
existed in 2008. This purpose does not account for
Galena's situation. It was not intended, nor does it
contemplate, municipalities with sharply declining
populations. HB 47 does not change the PERS policy,
but rather recognizes nuance.
The amendment affects only communities that suffered a
minimum 25% decline in population between 2000 and
2010, like Galena. To put that in perspective, the 25%
threshold would represent the loss of 75,000 people
from Anchorage or 8,000 people from Juneau. What would
happen to Fairbanks if the Borough's population
declined by 30,000, while at the same time seeing the
closure of Eielson and Fort Wainwright? The demand for
municipal administrative and public services would
decline sharply; so would the municipality's ability
to provide these services having lost the region's
economic driver.
HB 47, which moves the floor year from 2008 to 2012
for the communities that experienced these huge
losses, does not provide a "loophole" allowing Galena
or any other community with a similar population loss
between 2000 and 2010 to "game" the system now or in
the future. The 2008 floor for these communities is
replaced with a 2012 floor. Galena's budgeted payroll
for FY 2015 is above the 2012 amount for 17 employees.
Galena's circumstances are not a result of any choice
the city made. The base closure and concomitant loss
of close to 1/3 of the city's population was entirely
involuntary. The relationship between a declining
population and declining payroll is clear: fewer
residents = fewer public employee = lower public
payroll. Based on the 2008 floor, Galena is required
to pay an amount owed by a city substantially larger
than Galena. Galena's required PERS contribution
approaches half of the City's entire payroll.
Galena's FY 2008 salary total was $1,513,365.19 for 36
employees. Therefore, Galena's annual minimum PERS
contribution is $332,940. In FY 2012 Galena's payroll
was $765,776 for 17 employees. That is the year this
amendment would move the floor to for cities that saw
a 25% decrease in population between 2000 and 2010.
Under the 2008 floor, Galena's annual minimum PERS
contribution is nearly half of the City's entire
payroll costs.
For Galena, the difference in PERS contributions
between the 2008 "floor" and FY 2012 actual payroll is
$164,000. This difference will continue going forward
creating an ever-increasing obligation. By statute,
any amount unpaid accrues interest at 12%. This ever-
increasing obligation adds to an already stressed
situation. The City's financial situation was so
severe in FY 2011 that it required a low interest loan
through the Alaska Municipal Bond Bank to deal with a
severe cash flow crisis that was preventing them from
being able to secure fuel for heat and electricity.
Simply put, if Galena cannot pay its bills, the lights
go out in Galena.
The 2008 Floor is, overall, a sound piece of
legislation, furthering sound policy, but it does not
account for all situations. It does not account for
cities that have suffered massive population
contractions. This amendment furthers the underlying
policy goals of the regulatory structure: It helps
ensure that municipalities are able to continue
contributing to PERS, while recognizing that a city
cannot, and should not, have to make the contribution
of a city that has a significantly larger population.
Recognizing that Galena is not the same city it was
before the base closed and 30% of its population moved
away is simply good policy, policy that helps ensure
that Galena continues to contribute to PERS and that
the lights stay on.
Recognizing the reality of sharply declining
populations is a worthy amendment and is just plain
fair.
Thank you for your time this morning. I would be happy
to answer any questions you may have.
1:56:13 PM
SHANDA HUNTINGTON, CITY MANAGER/CLERK - CITY OF GALENA,
GALENA (via teleconference), read a prepared statement:
My name Shanda Huntington and I am the city manager
for Galena, Alaska. Before serving as the city
manager, I served as the city clerk for 6 years. I was
also born in Galena, grew up there, and raised my
children in Galena. I would like to follow up on Mayor
Korta's testimony with information relating to
Galena's population decline, the base closure, and the
effects on city payroll and finances.
As Mayor Korta said, the air force base officially
closed in 2010, following a multi-year drawdown. In
1990, before base realignment, Galena's population was
847. Galena has always been a small city and the base
was the driver of economic activity. According to the
2000 census, the number of residents, which does not
include all of the Air Force personnel, was 675. That
number had dropped to 470 with the 2010 census. 205
people may not sound like a lot, but it represents a
30% decrease in the city's resident population between
the two censuses. 30% of residents moved away, but the
decline in the city's economic activity was much
greater. Without the base, the decline in demand for
city services was disproportionate to the population
decrease.
For FY 2008, the current floor year, Galena's salary
total was $1,513,365.19 for 36 employees. Therefore,
Galena's annual minimum PERS contribution is $332,940.
In FY 2012, the amended floor year, Galena's payroll
was $765,776 for 17 employees. Between FY 2008 and FY
2012, Galena's payroll was cut in half, reflecting the
decrease in population and in economic activity.
Galena's current annual minimum PERS contribution of
$332,940 is nearly half of the City's FY 2012 total
payroll costs. Allowing a floor year of 2012 for
cities that experienced a drastic decrease in
population changes Galena's annual minimum
contribution to $168,940.
For Galena, the difference in PERS contributions
between the 2008 floor and FY 2012 actual payroll is
$164,000. This difference will continue going forward
creating an ever-increasing obligation. By statute,
any amount unpaid accrues compounded interest at 12%.
This ever-increasing obligation adds to an already
stressed situation. The City's financial situation was
so severe in FY 2011 that it required a low interest
loan through the Alaska Municipal Bond Bank to deal
with a severe cash flow crisis that was preventing us
from being able to secure fuel for heat and
electricity. Simply put, if Galena can't pay its
bills, the lights go out in Galena.
Reasonably adjusting the floor year for severely
impacted cities does not mean that the cities will pay
the minimum amount only. Modifying the floor year
changes Galena's minimum annual contribution from
$332,940 to $168,940; the actual contribution may be
higher. For FY 2013, Galena would in fact pay more
than that amended minimum. For FY 2013, Galena added
one employee, for a total payroll of $895,784.53. For
FY 2013, Galena's contribution would have been above
the 2012 floor by approximately $30,000.
HB 47 simply recognizes that reality of drastic
population decreases experienced by some Alaska
cities, using a clearly defined metric: a 25% decrease
in population according the 2000 and 2010 censuses.
The base closure has been very difficult for Galena.
As previously noted, Galena required a low interest
loan through the Alaska Municipal Bond Bank to secure
fuel for heat and electricity in FY 2011. In the last
several years, Galena's finances have stabilized and
there are even indicators of recovery after the
catastrophic decline. We cannot say what will happen
to Galena's population long-term, but we believe that
we have turned a corner in terms of population and
finances.
The City of Galena is adjusting to a new reality
following the base closure and loss of 30% of the
population. This legislation is one part of that
adjustment. I became city manager during a difficult
period for the City. Our finances have stabilized
somewhat over the last several years. Requiring the
City of Galena to pay to PERS a contribution owed by a
much larger city weakens Galena, and threatens its
ability to provide any contribution to PERS. We are
cautiously optimistic that the City will become
stronger and even grow over time. If and when Galena
becomes the city it was in 2008, the city will be
required to make a PERS contribution commensurate with
that size and payroll, and will do so gladly, but it's
not that city right now and the oversized PERS
contribution inhibits it from becoming so.
Recognizing the reality of drastically declining
populations is a matter of simple fairness. The
amendment recognizes this and ultimately promotes the
goals of PERS: ensuring that Alaska municipalities
continue to contribute their fair share to the system.
I would like to thank the committee for taking time
today so that I may explain the importance of this
amendment for communities like Galena that have seen
significant population decreases in the last decade.
2:02:58 PM
KATHIE WASSERMAN, EXECUTIVE DIRECTOR, ALASKA MUNICIPAL
LEAGUE, ANCHORAGE, spoke in support of HB 47. She reported
that the league had been working on the issue for several
years. She was the previous mayor of Pelican, Alaska. She
relayed an example when the local cold storage facility was
purchased by Kake Tribal, subsequently went bankrupt
resulting in the city's 2008 floor dramatically decreasing
due to population loss. She emphasized that the 12 percent
assessment was incredibly high. She voiced that in some
instances municipalities fall into a situation where they
could never get out of the debt. The league offered its
full support of HB 47.
2:06:10 PM
Representative Guttenberg wondered about the ability to
collect what a city owed for a liability. He related a
prior conversation with Michael Lamb, [Interim Executive
Director and Chief Financial Officer, Alaska Energy
Authority, Department of Commerce, Community and Economic
Development] who was "instrumental" in a prior settlement
agreement. He relayed that Mr. Lamb stated a community
would never be able to pay off its indebtedness to PERS. He
stated that communities were paying through a formula, but
it was unknown whether the payments were underpayments or
overpayments. He asked whether the statement was accurate.
Ms. Wasserman responded in the affirmative. She spoke of a
historical arbitrary percentage that had been decided
between the league and the Senate Finance Committee. She
acknowledged that some communities might be overpaying, and
some were likely underpaying. Representative Guttenberg
commented that the purpose of the bill was to ensure that
payments could continue and were made more affordable. Ms.
Wasserman explained that the bill did not provide relief
from the liability, but simply moved the floor and adjusted
the interest. The municipality still owed the principal of
their past debt.
2:09:04 PM
Representative Pruitt asked whether Ms. Wasserman expected
other cities coming to the legislature requesting
adjustments in the future. Ms. Wasserman replied in the
negative. She explained that wages continued to increase,
and the floor issue will likely resolve itself in the
future. She deemed that it would be very difficult to
revert further than 2008 due to inflation. Representative
Pruitt commented that the municipalities were asking the
state to take on more of its burden. He wondered if the
rest of the league's membership was supportive of the bill.
Ms. Wasserman thought the other member communities were
supportive. However, every municipality was waiting for the
state to address the "termination studies and the PERS
floor," which were the larger issues. She claimed that the
legislation was only a temporary fix for communities that
were in a desperate situation. She was still working on
additional legislation to provide a more permanent fix for
the larger issues.
2:12:51 PM
Co-Chair Seaton CLOSED Public Testimony.
Co-Chair Foster indicated amendments were due on the
following Monday by 5:00 PM.
HB 47 was HEARD and HELD in committee for further
consideration.
HOUSE BILL NO. 131
"An Act relating to relocation assistance for
federally assisted public construction and improvement
projects and programs; and providing for an effective
date."
2:13:17 PM
LAURA STIDOLPH, STAFF, REPRESENTATIVE ADAM WOOL, read from
a prepared statement:
In front of you is House Bill 131 "Federal Relocation
Assistance Programs/Projects" which will bring Alaska
into compliance with Federal law concerning
reimbursement for relocation expenses incurred by
individuals or businesses that were displaced due to a
federally-funded highway, bridge, or facilities
project. Alaskans deserve to be fairly compensated in
these circumstances. HB131 will also protect Alaska's
500+ million dollar annual allocation of Federal
Highway Administration funding by bringing the state
into compliance.
In 2012, Congress relaxed the eligibility criteria and
increased the maximum reimbursement limits for State's
relocation assistance payment programs when they
passed their transportation authorization and funding
bill, the Moving Ahead for Progress in the 21st
Century Act, aka MAP-21. Prior to MAP-21, the payment
rates had not been changed for 30 years.
These changes went into effect October 1, 2014.
Unfortunately, Alaska Statute continues to reflect the
more stringent eligibility criteria and the smaller
maximum reimbursement limits.
th
During the second half of the 29 Alaska Legislature,
this inconsistency between state and federal law was
nearly fixed. Language similar to HB 131 was proposed
and passed the House unanimously. It passed through
the Senate State Affairs and Senate Finance. However,
the bill was held in Senate Rules and never calendared
for a Senate floor vote.
HB 131 assures Alaskans that their Legislature wants
them to be compensated the same as a resident of any
other state.
Thank you for the opportunity to present this bill on
behalf of the House Transportation Committee. Heather
Fair, the Department of Transportation & Public
Facilities' Statewide Right-of-Way Chief, is here to
answer any questions you may have.
· Property acquisition and therefore the
subsequent displacement of individuals and
relocation of their homes/businesses is the
exception, not the norm. Our engineers work
hard to design projects in a manner such that
we do not encroach upon private property.
· Relocation assistance payments are
reimbursements for actual, documented
relocation expenditures. If a party does not
have the means to relocate themselves up front,
there is a hardship program that will help with
the cost.
· The new payment amounts created in federal law
are maximums;
· The payments we do make are a mix of
approximately 91% federal funding and 9% state
funding.
2:15:42 PM
Representative Wilson asked whether the federal government
also compensated for the lost property. Ms. Stidolph
indicated that the bill only dealt with relocation costs.
Representative Wilson asked whether the federal government
addressed property loss under another component of the
program. Ms. Stidolph deferred to the Department of
Transportation and Public Facilities (DOT) for the answer.
2:17:02 PM
HEATHER FAIR, CHIEF OF RIGHT-OF-WAY, DEPARTMENT OF
TRANSPORTATION, asked for clarification of the question.
Representative Wilson asked whether the federal government
had a program that paid fair market value for displaced
property owners. Ms. Fair answered in the affirmative. She
indicated that the federal government placed the guidelines
in the "Uniform Act." She noted that MAP-21 updated the
Uniform Act specific to relocation. The department met
federal requirements via state statute to compensate for
acquisition of property separate from relocation.
Representative Wilson asked whether the state was currently
in compliance with federal acquisition regulations. Ms.
Fair responded in the affirmative.
2:18:21 PM
Vice-Chair Gara commented that the cost of the relocation
compensation was absorbed when the legislature funded
capital projects. He asked whether the higher compensation
rate warranted an indeterminate fiscal note. Ms. Fair
replied that the state contributed roughly 9 percent to the
federal government's 91 percent contribution on federal
projects. She shared that the department tried to minimize
impacts on Alaskan families, businesses, and farms when
designing projects. The department had run some numbers on
known projects and determined that the state's share
equaled about $12 thousand.
Representative Pruitt noticed that the fiscal note was
retroactive to 2014. He wondered about the fiscal aspect of
the retroactivity. Ms. Fair answered that the state's
contribution was less than a "few thousand dollars" in
retroactive payments. She was uncertain whether the state
had paid the recipients or if the money was set aside.
Since the state was currently out of compliance with MAP-
21, the state was not able to make the payments and comply
with state law at the same time.
Representative Ortiz wondered to what extent the
legislation remedied a potential problem in the future. He
asked whether a significant amount of people in the past
had access to relocation benefits. Ms. Fair responded that
the bill affected less than 12 people.
Vice-Chair Gara asked whether the bill increased the number
of people eligible for compensation. Ms. Fair responded
that the legislation increased eligibility because the
federal government "relaxed" the requirements. However,
currently the eligibility in Alaska did not increase.
2:22:09 PM
Representative Wilson surmised that the state would owe
more money for the retroactive payments, even if the amount
was small. Ms. Fair responded that she was correct.
However, she reiterated that she was uncertain whether the
retroactive payments were made because, so few people were
affected.
Representative Kawasaki wanted to challenge the zero fiscal
note. He referred to the document in the members files
titled "DOT&PF's Proposed Bill for Relocation Assistance
Program Compliance" (copy on file). He mentioned several of
the increases listed in the document that included:
Increases maximum reestablishment expense payment
from $10,000 to $25,000
Increases maximum amount of the fixed payment for
nonresidential moves from $20,000 to $40,000
Increases maximum purchase price differential for
homeowners from $22,500 to $31,000
Representative Kawasaki thought that the increases "seemed
like a lot." He recognized that the state's share was
roughly 9 percent but thought the amount could add up for
future projects. He asked her to speak to the potential
cost increases of projects in the future. He thought
recipients would request the highest level of
reimbursement. Ms. Fair responded that the reimbursements
were based on actual expenses. She agreed that if a project
DOT was unable to redesign had high impacts, it was
possible that the state's 9 percent share could be costly.
She determined that it was impossible to know regarding
projects that were 3 to 5 years away from construction. She
stressed that the department always endeavored to minimize
impacts.
2:24:49 PM
Co-Chair Foster OPENED Public Testimony.
Co-Chair Foster CLOSED Public Testimony.
Co-Chair Foster requested that amendments be submitted by
Monday at 5:00 pm.
HB 131 was HEARD and HELD in committee for further
consideration.
HOUSE BILL NO. 127
"An Act relating to a permanent fund dividend for an
individual whose conviction has been vacated,
reversed, or dismissed; and relating to the
calculation of the value of the permanent fund
dividend by including payment to individuals eligible
for a permanent fund dividend because of a conviction
that has been vacated, reversed, or dismissed."
2:26:33 PM
Representative Wilson referred to page 1, line 10 and read
the following:
…individual's conviction is vacated or reversed, and
(1) the charges on which the conviction was based are
later dismissed; or
(2) the individual is retried and found not guilty.
Representative Wilson wondered whether the language meant
that if a conviction had been merely vacated a person was
not eligible under the bill.
REPRESENTATIVE SCOTT KAWASAKI, SPONSOR, relayed that the
bill was not necessarily introduced to address the
Fairbanks Four. He voiced that the bill was intended to
address anyone who was wrongfully convicted and
incarcerated and was denied the ability to receive a
Permanent Fund Dividend (PFD). He deferred any questions
regarding the Fairbanks Four to the Department of Law. He
noted that he had a copy of the agreement between Attorney
General Craig Richards and the individuals known as the
Fairbanks Four.
Representative Wilson believed that the Fairbanks Four
would not be eligible under the bill. She cited previous
testimony from the individual members of the Fairbanks Four
who testified in favor of the bill.
2:29:25 PM
HILARY MARTIN, LEGISLATIVE LEGAL, JUNEAU (via
teleconference), did not know the answer to the question.
Representative Wilson repeated the question.
KACI SCHROEDER, ASSISTANT ATTORNEY GENERAL, CRIMINAL
DIVISION, DEPARTMENT OF LAW, replied that the Fairbanks
Four would fall under the bill because the convictions were
vacated, and the charges were dismissed. Representative
Wilson asked for verification that all the charges against
the Four were dismissed. Ms. Schroeder replied in the
affirmative.
Representative Thompson asked about the difference between
overturned, dismissed, and vacated. Ms. Schroeder answered
that all the judgements were vacated in the case of the
Fairbanks Four. She added that vacated and reversed meant
to annul. The words were used interchangeably.
2:32:31 PM
Representative Guttenberg pointed to page 1, line 10 after
the word "reversed" in the bill and asked if the comma was
considered an Oxford comma that separated the clauses. Ms.
Schroeder replied in the affirmative.
Representative Pruitt asked how many people were eligible
under the provisions in the bill. Ms. Schroeder did not
have the data. She believed the bill sponsor had the exact
numbers. Representative Pruitt spoke of a previous
situation when the governor had the ability to pardon
people. He wondered whether previously pardoned people had
the ability to claim their dividend. Ms. Schroeder
responded that the bill did not include pardons. She
deferred the question to the Department of Revenue.
Representative Kawasaki relayed the difficulty to obtain
data regarding the issue and that DOL did not track the
information, however, he discovered that the Court System
produced some data for a similar bill in the 29th
legislature. He reported that the number showed that 19 to
23 individuals between the years 2011 and 2015 were
eligible.
Representative Pruitt believed that the bill was
retroactive to 1982 at the start of the PFD distribution.
He wondered if the sponsor had any idea how many
individuals would be eligible since 1982. He also asked
whether the bill provided for interest accrual.
Representative Kawasaki answered that the bill did not
contain a provision applying interest to the retroactive
payments. He added that DOR would determine the value of
the PFD for each year the individual applied for and DOL
would decide eligibility. The bill provided for an
application period of 120 days after the bill was signed
into law. Representative Pruitt asked whether the
appropriations would come out of the Earnings Reserve
Account (ERA) of the Permanent Fund. Representative
Kawasaki answered that the money would be paid from a
specific "Reserve for Prior Year Dividend Liabilities." He
explained that DOR established the reserve account for
circumstances when prior year dividends were owed, which
was why the fiscal note was zero.
2:38:30 PM
Representative Pruitt commented that prisoners PFDs were
applied to health care costs or victim's compensation and
the funds were already spent. He asked whether any future
"conflicts" might arise from the issue that the funds were
already spent and used money from the reserve account for
compensation. Representative Kawasaki thought it was a
policy call. He believed that a person who went to jail and
was wrongfully convicted was a victim. He contended that
the legislation was for the wrongfully convicted.
Representative Pruitt wanted to understand any ancillary
fiscal effects of the bill. He agreed that if a person was
wrongfully convicted their life was disrupted. He wanted to
ensure that the reserve fund would be the absolute source
of the reimbursement funding. Representative Kawasaki
reiterated that the issue was a policy call. He believed
that when a person was placed in jail and wrongfully
convicted the state owed the victims something. He pointed
out that the individual was denied the benefit of applying
for the PFD.
Representative Pruitt requested that DOR answer the
question. He merely wanted to understand the fiscal
ramifications from the bill.
2:41:45 PM
JERRY BURNETT, DEPUTY COMMISSIONER, TREASURY DIVISION,
DEPARTMENT OF REVENUE, responded that in 1982 the
incarcerated population in Alaska could apply for a PFD
until sometime in the 1990s so the retroactivity did not go
back that far. He confirmed that the money would be paid
for out of the Reserve for Prior Year Dividends, which was
calculated each year on a statistical basis. He thought the
number of people the legislation would affect was "not
significant relative to the amount of money reserved each
year." He delineated that the reserve funding was used to
pay for situations such as upheld appeals from the Office
of Administrative Hearings, Commissioner's Office, or by
the Courts. He reiterated that the bill would cover an
"insignificant" number of people relative to the total
number of appeals.
Vice-Chair Gara did not see a provision for notifying
someone who was released from wrongful incarceration
included in the bill. He thought 120 days was a short
period of time for people who were trying to piece their
lives together after release. He felt that a year was
fairer. Representative Kawasaki replied that the previous
committee engaged in discussion over the time period but
did not want to offer an amendment to lengthen the amount
of time. He announced that he would honor the will of the
committee. Vice-Chair Gara commented that he wanted the
sponsor to decide whether to offer the amendment.
Co-Chair Foster asked members to submit their amendments by
5:00 pm, Monday, 10, 2017.
HB 127 was HEARD and HELD in committee for further
consideration.
HOUSE BILL NO. 141
"An Act relating to allocations of funding for the
Alaska Workforce Investment Board; and providing for
an effective date."
2:46:42 PM
REPRESENTATIVE ZACH FANSLER, SPONSOR, reminded the
committee that the bill was a funding mechanism for
technical and vocational education programs set to sunset
on June 30, 2017. He furthered that HB 141 included a five-
year renewal extending it through June 30, 2022. He noted
that during the prior hearing several questions were asked.
He had distributed a memo with answers in response to
committee member questions [Memo "House Bill 141 Questions"
(copy on file)].
Representative Wilson asked about the constitutionality of
a private school receiving some of the funding.
2:49:53 PM
PALOMA HARBOUR, ADMIN SERVICES DIRECTOR, DEPARTMENT OF
LABOR, was not aware of any constitutional restrictions or
violations. She referred to the memo and noted that the
answers listed the federal requirements regarding use of
the fund and specified that there were no federal
requirements regarding use of employee contributions to
unemployment programs. She reminded committee members that
the state requirements were statutes enacted by the
legislature. Representative Wilson asked whether private
schools were required to meet state standards to qualify
for the funding. Ms. Harbour was unable to answer the
question but remembered that the list of eligible
recipients were placed in state statute. Representative
Wilson commented that there were certain restrictions on
uses of general funds for education. She deemed that since
the funding was generated by unemployment funds,
restrictions regarding type of institution did not apply.
Ms. Harbour responded that the funds became designated
state general funds.
2:51:46 PM
Vice-Chair Gara asked whether the bill covered the same
training institutions at the same amounts as in years prior
to the sunset. Representative Fansler replied that the same
10 institutions would receive the same amount of funding
they received in prior years. Vice-Chair Gara commented
that the Constitution did stipulate that private funds were
prohibited for use for public education. He was not
concerned about any constitutional issues over the funding.
Co-Chair Foster asked Vice-Chair Gara to review the bill's
fiscal notes.
2:53:17 PM
Vice-Chair Gara reviewed the fiscal notes for HB 141. He
noted the new Department of Labor and Workforce Development
(DLWD) fiscal impact note appropriated for Employment
Training Services in the amount of $408 thousand in
designated general funds (DGF). He cited the new Department
of Labor and Workforce Development fiscal impact note
allocated to Workforce Development in the amount of $4.2
million DGF. He reported that another new Department of
Labor and Workforce Development fiscal note was
appropriated to the Alaska Vocational Technical Center
(AVTEC) in the amount of $2 million DGF. He turned to the
previously published fiscal notes: FN4 (UA) for the
University of Alaska in the amount of $5.3 million DGF and
a previously published fiscal notes: FN1 (EED) for the
Department of Education and Early Development in the amount
of $478 thousand DGF.
2:56:02 PM
Co-Chair Seaton MOVED to report HB 141 out of Committee
with individual recommendations and the accompanying fiscal
notes.
There being NO OBJECTION, it was so ordered.
HB 141 was REPORTED OUT of Committee with a "do Pass"
recommendation and with three new fiscal impact notes from
Department of Labor and Workforce Development and with two
previously published fiscal notes: FN1 (EED) and FN4 (UA).
Co-Chair Foster reviewed the agenda for the following day.
Co-Chair Foster recessed the meeting to a call of the chair
[Note: the meeting never reconvened].
ADJOURNMENT
2:58:42 PM
The meeting was adjourned at 2:58 p.m.