Legislature(1995 - 1996)
03/17/1995 03:15 PM L&C
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
HOUSE LABOR & COMMERCE STANDING COMMITTEE March 17, 1995 3:15 p.m. MEMBERS PRESENT Representative Pete Kott, Chairman Representative Norman Rokeberg, Vice Chairman Representative Jerry Sanders Representative Gene Kubina MEMBERS ABSENT Representative Beverly Masek Representative Kim Elton Representative Brian Porter OTHER HOUSE MEMBERS PRESENT Representative Gail Phillips COMMITTEE CALENDAR Confirmation Hearing: Paige Hodson to the Board of Certified Real Estate Appraisers SB 78 am: "An Act related to the authority of certain beverage dispensary licensees to stock alcoholic beverages in guest rooms and prohibiting certain room rentals for the purpose of providing alcoholic beverages to a person under 21 years of age." PASSED OUT OF COMMITTEE * HB 233: "An Act extending until 1999 the termination date of the Board of Clinical Social Work Examiners, Board of Marital and Family Therapy, State Medical Board, Board of Nursing, Board of Nursing Home Administrators, Board of Psychologist and Psychological Associate Examiners, Real Estate Commission, and Hazardous Substance Spill Technology Review Council; extending until 1996 the termination date of the Board of Marine Pilots and the Correctional Industries Commission; and providing for an effective date." PASSED OUT OF COMMITTEE * HB 236: "An Act relating to reductions in compensation for state officers and employees; and providing for an effective date." HEARD AND HELD (* First Public Hearing) WITNESS REGISTER PAIGE HODSON 821 "N" Street, Suite 105 Anchorage, AK 99501 Telephone: (907) 274-8258 POSITION STATEMENT: Answered questions regarding her confirmation to the Board of Certified Real Estate Appraisers SENATOR BERT SHARP Alaska State Legislature State Capitol, Room 514 Juneau, AK 99801-1182 Telephone: (907) 465-3004 POSITION STATEMENT: Prime sponsor of SB 78 CATHERINE REARDON, Director Division of Occupational Licensing Department of Commerce & Economic Development P.O. Box 110806 Juneau, AK 99811-0806 Telephone: (907) 465-2538 POSITION STATEMENT: Testified on HB 233 WALLY ROMER, Manager Alaska Correctional Industries Department of Corrections P.O. Box 112000 Juneau, AK 99811-2000 Telephone: (907) 465-3309 POSITION STATEMENT: Testified on HB 233 JERRY SHRINER, Special Assistant to the Commissioner Department of Corrections 240 Main Street, Suite 700 Juneau, AK 99801 Telephone (907) 465-4640 POSITION STATEMENT: Testified on HB 233 RACHAEL YATES Alaska Association of Marriage and Family Therapists 200 West 34th, Number 508 Anchorage, AK 99503 Telephone: (907) 562-3081 POSITION STATEMENT: Answered questions on HB 233 REPRESENTATIVE MARK HANLEY Alaska State Legislature State Capitol, Room 507 Juneau, AK 99801-1182 Telephone: (907) 465-4939 POSITION STATEMENT: Prime sponsor of HB 236 ALISON ELGEE, Deputy Commissioner Department of Administration P.O. Box 110200 Juneau, AK 99811-0200 Telephone: (907) 465-5668 POSITION STATEMENT: Answered questions on HB 236 ART SNOWDEN, Administrative Director Alaska Court System 303 K Street Anchorage, AK 99501 Telephone: (907) 463-4770 POSITION STATEMENT: Testified against HB 236 ALLEN ODELL P.O. Box 160 Copper Center, AK 99573 Telephone: (907) 892-3341 POSITION STATEMENT: Testified against HB 236 RICHARD SEWARD Alaska State Employees Association (ASEA) American Federation of State County and Municipal Employees (AFSCME) Local 52 315 Barnette, Suite 104 Fairbanks, AK 99701 Telephone: (907) 452-2300 POSITION STATEMENT: Testified against HB 236 DEBRA CHRISTIANSEN 751 Old Richardson Highway, 300 Fairbanks, AK 99701 Telephone: (907) 451-2650 POSITION STATEMENT: Testified against HB 236 BRUCE LUDWIG, Business Manager Alaska Public Employees Association Alaska Federation of Teachers 211 4th Street Suite 306 Juneau, AK 99801 Telephone: (907) 586-2334 POSITION STATEMENT: Testified against HB 236 DON ETHERIDGE, Business Representative Local 71 710 West 9th Street Juneau, AK 99801 Telephone: (907) 586-6993 POSITION STATEMENT: Testified against HB 236 GINA SAMUELS P.O. Box 3367 Kenai, AK 99611 Telephone: (907) 283-6174 POSITION STATEMENT: Testified against HB 236 ELAINA SPRAKER P.O. Box 2534 Soldotna, Ak 99669 Telephone: (907) 262-9592 POSITION STATEMENT: Testified against HB 236 PAT MOSS P.O. Box 61155 Fairbanks, AK 99706 Telephone: (907) 479-3249 POSITION STATEMENT: Testified against HB 236 FATE PUTNAM, Lobbyist Alaska State Employees Association AFL-CIO American Federation of State County and Municipal Employees (AFSCME) Local 52 Legislative Lobbyist 641 Willoughby, Suite 100 Juneau, AK 99801 Telephone: (907) 586-5657 POSITION STATEMENT: Testified against HB 236 PREVIOUS ACTION BILL: SB 78 SHORT TITLE: ALCOHOL SALES IN HOTEL ROOMS SPONSOR(S): SENATOR(S) SHARP, Ellis, Zharoff, Taylor, Pearce; REPRESENTATIVE(S) Ogan JRN-DATE JRN-PG ACTION 02/08/95 207 (S) READ THE FIRST TIME - REFERRAL(S) 02/08/95 207 (S) L&C, FIN 02/14/95 (S) L&C AT 01:30 PM FAHRENKAMP RM 203 02/14/95 (S) MINUTE(L&C) 02/15/95 287 (S) L&C RPT 1DP 3NR 02/15/95 287 (S) ZERO FISCAL NOTE (REV #1) 02/28/95 425 (S) FIN REFERRAL WAIVED 03/02/95 (S) RLS AT 11:25 AM FAHRENKAMP ROOM 203 03/02/95 (S) MINUTE(RLS) 03/03/95 470 (S) RULES TO CALENDAR 3/6/95 03/06/95 501 (S) READ THE SECOND TIME 03/06/95 501 (S) ADVANCE TO 3RD READING MOTION WITHDRAWN 03/06/95 501 (S) THIRD READING 3/7 CALENDAR 03/07/95 522 (S) RETURN TO SECOND FOR AM 1 UNAN CONSENT 03/07/95 523 (S) AM NO 1 ADOPTED UNAN CONSENT 03/07/95 523 (S) AUTOMATICALLY IN THIRD READING 03/07/95 523 (S) PASSED Y13 N5 E2 SB 78 AM 03/07/95 523 (S) ADAMS NOTICE OF RECONSIDERATION 03/08/95 542 (S) RECONSIDERATION NOT TAKEN UP 03/08/95 544 (S) TRANSMITTED TO (H) 03/09/95 671 (H) READ THE FIRST TIME - REFERRAL(S) 03/09/95 671 (H) LABOR & COMMERCE 03/17/95 (H) L&C AT 03:00 PM CAPITOL 17 BILL: HB 233 SHORT TITLE: EXTENSION OF MISC BOARDS & COMMISSIONS SPONSOR(S): LABOR & COMMERCE JRN-DATE JRN-PG ACTION 03/06/95 590 (H) READ THE FIRST TIME - REFERRAL(S) 03/06/95 590 (H) LABOR & COMMERCE, FINANCE 03/17/95 (H) L&C AT 03:00 PM CAPITOL 17 BILL: HB 236 SHORT TITLE: REDUCTION IN STATE EMPLOYEE COMPENSATION SPONSOR(S): FINANCE JRN-DATE JRN-PG ACTION 03/06/95 597 (H) READ THE FIRST TIME - REFERRAL(S) 03/06/95 597 (H) LABOR & COMMERCE, FINANCE 03/17/95 (H) L&C AT 03:00 PM CAPITOL 17 ACTION NARRATIVE TAPE 95-19, SIDE A Number 000 The House Labor & Commerce Standing Committee meeting was called to order by Chairman Pete Kott at 3:15 p.m. Members present at the call to order were Representatives Kott, Sanders and Kubina. Members absent were Representatives Rokeberg, Elton, Masek and Porter. Representative Rokeberg arrived at 3:20 p.m. CHAIRMAN PETE KOTT stated the committee wouldn't have a quorum until the next member arrived. He said that the first order of business would be the confirmation hearing for Paige Hodson. Number 031 PAIGE HODSON, testified via teleconference, regarding her confirmation. She informed the committee she was a lifelong resident of Alaska. She had been a residential real estate appraiser since 1982. She said she holds the senior residential appraiser (SRA) designation with the Appraisal Institute and serves on various boards and commissions. Ms. Hodson explained she has a degree in Business Administration with an emphasis on real estate. Her goals are to maintain the highest level of quality of work; to keep active in the community as it relates to real estate appraisal; and to maintain a high level of education during that process. Number 057 CHAIRMAN KOTT referred to her resume' and asked what was meant when she listed "qualified as an expert witness in appraising in various levels of the State of Alaska Court System". MS. HODSON responded that the major call was to give testimony in dealing with divorces. CHAIRMAN KOTT asked if she had done any appraisals on the new court building. MS. HODSON stated that she was strictly a residential appraiser. CHAIRMAN KOTT thanked Ms. Hodson for her testimony on behalf of the committee. For the record, he stated that Representative Rokeberg had joined the meeting at 3:20 and that they now had a quorum. SB 78 AM - ALCOHOL SALES IN HOTEL ROOMS The next order of business was SB 78 am. SENATOR BERT SHARP, ALASKA STATE LEGISLATURE, PRIME SPONSOR, stated that tourists, especially European and Japanese travelers, feel that this is an amenity that they want in hotel rooms. This bill seeks to authorize the Alaska Beverage Control (ABC) Board to allow beverage dispensary license holders the right to allow self serve liquor sales in hotel and motel rooms. He said that the current plan is to allow alcoholic beverages to be stocked in lockable refrigerators placed in the rooms. Once the hotel or motel staff has determined the registered guest to be at least 21 years of age, a key to the locked unit can be obtained along with the room key. He stated that the bill has been introduced at the urging of many hotel and motel operators, as well as the Alaska Hotel and Motel Association, the Alaska Cabaret Hotel Restaurant and Retailers Association, and others. He pointed out that the Seventeenth Alaska Legislature had passed SB 183, which was an identical bill, but that Governor Hickel had vetoed it. He stated there is a zero fiscal note and that the director of the ABC Board, Pat Sharrock, had furnished a letter stating, "because the bill retains the provision that the board must authorize stocking of alcohol beverages in hotel rooms and the board may provide for permit for stocking by regulation, the board does not object to the proposed amendment to the current statutes which this bill encompasses." He read a portion of a letter from Frank Rose of North American Asset Management which stated, "I believe that it's important legislation for the hospitality business. It allows a service to be provided that many facilities outside Alaska provide to vacation and business travelers. In fact, it has become an expected amenity. The new mini bar systems have a number of features that allow for control, such as the time of use, automatic inventory, special key systems, et cetera. Additionally, statistics show that the primary use of the mini bar is for dispensing snacks and non-alcoholic beverages, but the alcoholic beverage sales are important because they make the system profitable." Number 175 CHAIRMAN KOTT pointed out the differences between SB 78 and HB 162. He said that SB 78 contains the requirement that the person stocking the alcoholic beverages be at least 21 years of age and can only take place during certain hours. He stated that it also contains provision that the key cannot be removable from the unit's lock unless the unit is in fact locked. SB 78 further makes the provision for the ABC Board to issue permits for the dispensary service, and by regulation, set the fee for the administrative cost. He stated that it deletes the provisions of minimum rooms. CHAIRMAN KOTT asked if the refrigerated unit, using a key or combination lock system within the guest room, is included in those systems that are electronically controlled by the front desk. SENATOR SHARP responded that was correct. REPRESENTATIVE NORMAN ROKEBERG made a motion to move SB 78 am, out of the House Labor and Commerce Committee, with individual recommendations and accompanying fiscal notes. CHAIRMAN KOTT asked if there were any objections. Hearing none, the motion passed. HB 233 - EXTENSION OF MISC BOARDS & COMMISSIONS CHAIRMAN KOTT stated that the next bill before them is HB 233, sponsored by the House Labor and Commerce Committee. He continued the bill extends a number of boards and commissions which are either sunsetting or in their wind down year. The affected boards and commissions perform regulatory and licensure services. He stated they are all essential, necessary and in the best interest of the state. He referred to the proposed committee substitute (CS), Lauterbach, Version M, dated 3-16-95, and said sections eight, nine and ten have been added. Those are the Real Estate Commission, the Special Education Service Agency, and the Board of Storage Tank Assistance. He said these were overlooked. He indicated they did have a report by the Legislative Budget and Audit Committee that recommends their extensions. Number 262 REPRESENTATIVE GENE KUBINA stated that he was interested in Section 12, and asked if this was the correctional industries sunset date. CHAIRMAN KOTT asked if he was referring to the original bill or the proposed CS. REPRESENTATIVE KUBINA responded he was referring to Section 12 of the proposed CS. He explained he had been asked by live stock producers in his district if that date could be extended until 1999. CHAIRMAN KOTT stated that they first would need to adopt the proposed CS. REPRESENTATIVE KUBINA made a motion to adopt the CS. CHAIRMAN KOTT asked if there were any objections. Hearing none, the CS for HB 233 was adopted. In response to Representative Kubina's question, Chairman Kott stated that they had extended the Correctional Industries Commission for an additional year based upon comments made by the commissioner regarding the supplemental budget. He said there was some discussion that the whole program is in jeopardy and may just be deleted. He said that rather than extending the date four years, and then finding out that they don't have a program, they opted to go with one year. Chairman Kott said that if something happens between now and the time this bill passes the Senate, it can be amended. REPRESENTATIVE KUBINA commented that he wouldn't offer an amendment at this time but would like to work with the Chairman. In case things change, they could amend the bill on the floor. CHAIRMAN KOTT stated there is a meeting scheduled with the correctional industry in hopes that they can resolve some of the financial problems. REPRESENTATIVE ROKEBERG agreed with Representative Kubina in wanting to work something out before the bill got to the floor. CHAIRMAN KOTT offered two conceptual amendments. The first, was on page 2, line 1 of the CS, dealing with Board of Marine Pilots, to conform with the transportation bill that extends them until 1999. The amendment would extend the Board of Marine Pilots until 1999. REPRESENTATIVE KUBINA made a motion to delete line 1. CHAIRMAN KOTT stated that it would be line 1, change "1996" to "1999". The change would reflect the same bill that is being sponsored by Representative Gary Davis. The second change would delete line 9 and 10 on page 2, that deals with Section 6. He stated that this particular area would now be within the Department of Administration. REPRESENTATIVE KUBINA asked if they were addressing the amendments separately or as one. CHAIRMAN KOTT preferred that they address them separately. He stated that amendment one had already been adopted, that being the change of 1996 to 1999. He stated this amendment would be conceptual amendment two, deleting section six. REPRESENTATIVE ROKEBERG made a motion to adopt Amendment 2. CHAIRMAN KOTT added that along with the two amendments, the title would have to be amended and requested that a comma be placed after "Real Estate Commission." Number 370 REPRESENTATIVE KUBINA asked why some boards are extended to the year 2004, and some are to 1999. Number 372 CHAIRMAN KOTT responded that in the Legislative budget and audit reports, most of these boards have gone to a ten year provision. REPRESENTATIVE ROKEBERG asked if the section numbers needed to be conformed. CHAIRMAN KOTT responded that they would change the section numbers accordingly. He explained the three changes as adding three areas: deleting the Board of Nursing Home Administrators, making a grammatical change, and extending Marine Pilots to 1999. He continued Amendment 2 had been adopted and that they still had Amendment 3. REPRESENTATIVE ROKEBERG made a motion to adopt Amendment 3. Number 400 CHAIRMAN KOTT asked if there were any objections. Hearing none, the motion passed. He stated that they now had the CSHB 233(L&C) with accompanying fiscal notes before the committee. He asked if there was anyone wishing to testify. CATHERINE REARDON, DIRECTOR, DIVISION OF OCCUPATIONAL LICENSING, DEPARTMENT OF COMMERCE AND ECONOMIC DEVELOPMENT, explained that eight of these entities were within the Division of Occupational Licensing. She commented that the Department of Commerce, Division of Occupational Licensing, would be administering the program of Nursing Home Administrators. She mentioned that the Big Game Commercial Services Board was also in it's wind down year and is not mentioned in this bill. It is included in HB 102, which does extend that board. She said that there is a positive fiscal note; however, it does not indicate any increase over the current operating budget. She explained with sunset legislation, they are required to reflect the entire cost of administering these boards, rather than reflecting that it is a zero fiscal note. She also stated that the Division of Legislative Audit has recommended continuing all of these boards for either eight or ten years, rather that the four year period. They see this as being more efficient. Number 436 REPRESENTATIVE ROKEBERG asked why it would cost $260,000 for personnel services for the State Medical Board. MS. REARDON stated that they have an executive secretary in statute, which is more or less an Executive Director along with two other staffers assigned to them. She stated that her division operates off of a self sufficiency mandate, which means that the fees charged to licensees must cover 100 percent of the cost of licensing and disciplining that particular profession. In order to do this, each employee writes down how much time they spend on a particular profession for every two week pay period, and accounts for all phone calls, which must be attributed to one profession or another. Number 453 CHAIRMAN KOTT stated that they tried to come up with a composite list which covered all boards and commissions that needed to be covered. WALLY ROMAN, MANAGER, ALASKA CORRECTIONAL INDUSTRIES, DEPARTMENT OF CORRECTIONS, stated that he was there to answer any questions. Number 470 CHAIRMAN KOTT commented he had seen information which suggested that they may be at a point where they have to discontinue the Correctional Industries Program. He asked Mr. Roman if he had any information. MR. ROMAN stated that he had no information. JERRY SHRINER, SPECIAL ASSISTANT TO THE COMMISSIONER, DEPARTMENT OF CORRECTIONS, stated that the budget issues are for the supplemental budget, not FY 96. The department is comfortable that they have sufficient money in the supplemental budget, and they will be able to continue to operate correctional industries, statewide, as long as they receive the funding as it now stands. Number 490 REPRESENTATIVE KUBINA asked if it was the department's desire to leave the date at 1996, or raise it to 1999. Number 500 MR. SHRINER responded that the department considers correctional industries an integral part of the efforts of reformation and population management. From the Corrections stand point, it is first a program of rehabilitation and vocational training. In the effort to do that, they interject themselves into the private community. He said they work with Mt. McKinley Meats, they provide a vital service to various farmers from Delta to the Mat-Su Valley. He stated they have public/private efforts with a casket company out of Spring Creek, and also with a laundry service here in Juneau. He stated private businessmen need to be able to plan longer than June 30, of one year to June 30, of another. He said they would like to not have the sunset date at all, or have it considerably longer than the one year, not only for planning internally, but also because its difficult dealing with the private sector when they aren't sure that the correctional industries can follow through from one year to the next. Number 523 CHAIRMAN KOTT noted that Mt. McKinley Meats slaughters, cuts and packages. He said that the slaughtering is not competing with the private sector. However, the cutting and packaging processes are by one third or one half. Number 532 MR. ROMAN stated in FY92 and FY93 when there was concern among the red meat industry that Mt. McKinley Meats might go out of business. They have held several public hearings and, from the testimony, the ranchers in the valley clearly stated that Mt. McKinley Meats should continue its operations. The commission at the time appointed a private sector committee to look into the problem. That committee recommended that the correctional industries enter into the custom cut and wrap operation. The commission voted to enter into this. He said their pricing is on the low end of the scale. On March 31, they will be meeting with the Correctional Industries Commission and the private sector to determine what process they should establish. He explained the correctional industries is caught in the middle. One side of the private sector wishes them to lower their prices because they provide a service to the public, and the other side of the private sector is in that business and they don't want them to fall below the market price. He stated that they need to clarify how they arrive at these prices and it should be reviewed regularly by the commission. This will all be discussed at the March 31st, meeting along with a survey by the Division of Agriculture and Correctional Industries of how their prices fall in with the rest of the state. Number 562 CHAIRMAN KOTT made the observation that people will always want to pay a lower price for services but that this isn't always feasible. Number 575 REPRESENTATIVE KUBINA said he was under the impression, after attending an agricultural symposium, that they had in fact raised their prices, and are now five percent above the average. MR. ROMAN responded that this was one of the strategies that they had put forth. They should be five percent above the private sector, giving the private sector the edge. It was then determined that perhaps this would be too high. He said several scenarios will be brought forth on March 31, and that the prices should be higher than what they are now. REPRESENTATIVE KUBINA concurred they shouldn't be undercutting private businesses. Number 601 CHAIRMAN KOTT added if similar prices were charged, there is still an advantage of taking your products to Mt. McKinley Meats, because they are the only ones who do the slaughtering. MR. ROMAN stated there is some benefit at having everything done at Mt. McKinley. What they have offered to do is truck to private sector companies, providing them the option of having it done at Mt. McKinley Meats or another private sector processor. Number 601 CHAIRMAN KOTT asked what they pay the inmates. MR. ROMAN answered that $1.25 per hour is the top wage. CHAIRMAN KOTT added a butcher in Anchorage receives approximately $15 per hour. MR. ROMAN pointed out most of the people that come through Mt. McKinley Meats are learning the profession. Unfortunately, you get what you pay for. Number 610 REPRESENTATIVE KUBINA stated that AS 33.32 will be repealed July 1st, and they are changing 1995, to 1996. He said it's not just the commission they are talking about, and that the Chairman may be right on the point of deleting the repeal dates. He stated if you don't fund them, they are not going to happen anyway. He would like to see this extended, but if there is controversy, they should get more backup material. He said it might be better to repeal the whole repealer. CHAIRMAN KOTT asked if that meant to not have a sunset date at all. He supposed that you could make that an argument for all the boards and commissions, that if you don't fund them, they're not going to be there. REPRESENTATIVE KUBINA interjected only this particular repealing date is in the section several times. They could leave it this way for the commission itself, but for the law as having correctional industries in that section, they are repealing it more than once. It's not just the commission this is effecting. He asked if they should change the date to 1999. CHAIRMAN KOTT stated that he would have no problem with that. REPRESENTATIVE KUBINA moved to amend Section 7, AS 33.32 to July, 1999, rather than 1996. Number 640 CHAIRMAN KOTT stated that there was a motion to change Section 7, line 28, from "1996" to "1999". This would be conceptual amendment 4. TAPE 95-19, SIDE B Number 000 CHAIRMAN KOTT asked if there was an objection to Amendment 4. Hearing none, it was so ordered. RACHAEL YATES, ALASKA ASSOCIATION OF MARRIAGE AND FAMILY THERAPISTS, stated that she was here to answer any questions. CHAIRMAN KOTT asked what the board does and how often they meet. MS. YATES responded that the board licenses and looks over the licensure regulations for marriage and family therapists in the state. They meet every quarter. Number 041 CHAIRMAN KOTT stated that the CSHB 233(L&C) as amended was before the committee. Number 052 REPRESENTATIVE ROKEBERG made a motion to move the CSHB 233(L&C), as amended, with individual recommendations and accompanying fiscal notes. Number 060 CHAIRMAN KOTT asked if there was an objection. Hearing none, the motion passed. HB 236 - REDUCTION IN STATE EMPLOYEE COMPENSATION Number 078 CHAIRMAN KOTT asked Representative Hanley, prime sponsor of HB 236, to come forward. Number 078 MARK HANLEY, PRIME SPONSOR of HB 236, commented that there had been a press conference three weeks ago on an overall five year financial plan. They had discussed that there were three areas of government that made up 75 percent of the spending. Those include education, health and social services, employee salaries and benefits. He stated that overall employee salaries run about $700 million in general funds. All three areas are growing at about four percent per year. The overall goal is to reduce spending $70 million below last year's budget. He said without making reductions in those three areas, it would require incredible cuts in the other 25 percent of the budget. He stated it was not their intent to balance the budget on the backs of state employees. There are major reductions in programs that will be affected throughout the budget, with people all over the state being affected. There is the potential for graduated reduction in the lower range salaries instead of the five percent across the board reduction. He said they are willing to look at areas that will not utilize these particular tools, but the overall goal is to start closing the gap on state spending. REPRESENTATIVE HANLEY pointed out that the specifics of the existing bill is intended to be a five percent reduction for all state employees including the Governor and Lieutenant Governor, who were inadvertently left out. He stated in the backup section of the bill packets, there is information from the Department of Administration that gives statistics of relative levels of state salaries compared to the private sector. The average change in salaries in 1980 to 1991, in the private sector, in comparison to the inflation rate has lost 25 percent, whereas the state wages have lost two percent. He said that non-covered employees are paid based on a salary schedule in statute, this bill makes a five percent reduction in those particular salaries. For employees covered under collective bargaining agreements, as their contracts come up, this bill would require the Governor to negotiate a five percent reduction in the value of those salaries and benefits. The reductions are required for all parties and are to exist for three years. Those who take the five percent reduction through the statutory chart change, at a particular date or those that have their negotiations come up sooner, may take their reductions sooner, but they will last for three years. The intent is that everyone would take a five percent flat line and it would last for three years, even though they're not implemented at the same time. Whatever inequities exist, would exist throughout the process. This does not attempt to equalize all of the contracts. Number 211 CHAIRMAN KOTT asked if theoretically, you could have members within the unions not taking any pay cuts. For instance if the union had just ratified a contract for three years, and a group of individuals within that group retired in two and a half years, would they not take the cuts. REPRESENTATIVE HANLEY replied that would be correct, there would be no penalty for those individuals. Number 220 REPRESENTATIVE KUBINA asked why they were singling out this bill before the special session in October. REPRESENTATIVE HANLEY asked if he was speaking of the Long Range Planning Commission. REPRESENTATIVE KUBINA responded yes. REPRESENTATIVE HANLEY stated the point could be made that why should any reductions be made now, and the same point could be made of why should we allow any increases. He said their intent was to put together a five year plan to try to make progress to that. He said if the commission comes back with some recommendations, they will incorporate them into their plan. Number 247 REPRESENTATIVE ROKEBERG asked how they could implement the sliding scale provisions. REPRESENTATIVE HANLEY commented that people were interested in achieving the same net result but of having less of a reduction on the lower end of the scale. He said the concept was reasonable but would take some time to work through it. Number 280 ALISON ELGEE, DEPUTY COMMISSIONER, DEPARTMENT OF ADMINISTRATION, stated that non-covered employees for the state have not had any kind of increase since 1991. At the present time they are 3.6 percent below most of the bargaining unit salaries. Under the terms of several recently negotiated contracts with the legislature, another 2.5 percent would be added to that. The compounded effect of this will be a 6.2 percent difference between non-covered employees and those protected by collective bargaining. She said the State Personnel Board recommended consideration of an adjustment of this schedule to 6.2 percent looking not only at equity with private sector employers, but also internal equity among state employees. She continued there are several contracts currently under negotiation. Section 10 takes much of the bargaining aspect out of collective bargaining. Once parties reach impasse, the unilateral implementation of changes to compensation of members could not be done as this legislation envisions. She explained there are three classes of employees in the State. Class one employees are not permitted to strike, they include police and fire employees, general prison and correctional employees, and hospital employees. State statute provides that those employees, should they reach impasse, would go to mediation. If that was not successful, they would go to arbitration. Class two employees include public utilities, snow removal, and sanitation employees. If they were to reach impasse, they go to mediation. If mediation is unsuccessful, they are able to strike. Class three employees are able to strike if impasse is reached. Her concern in this section is that there is no anticipation of strike resolution. If they are bound by an inability to negotiate compensation under any conditions then the five percent reduction and the employees go to strike. Number 331 REPRESENTATIVE ROKEBERG asked Ms. Elgee to explain how she came up with the 6.2 percent. MS. ELGEE stated that the last pay adjustment for non-covered employees was passed by the 1991 legislature. Since that time, employees covered by collective bargaining have received additional increases. The non-covered employees are 3.6 percent, below the Alaska Public Employees Association (APEA) employees. She said many of the other smaller units that currently have contracts under consideration by the legislature would include an additional 2.5 percent in conjunction with a 40 hour work week. The compounding effect of these two actions will make the non-covered employees, as of July 1, 6.2 percent below the majority of union members. REPRESENTATIVE ROKEBERG asked if the first integer was 3.6 percent and if it had a compounding affect over the life of the average contract. MS. ELGEE replied that it was 3.6 percent with 2.5 percent on top of the already adjusted base. The accumulated effect being 6.2 percent. CHAIRMAN KOTT pointed out that there were bills in both the House and Senate that would close that gap. Number 364 REPRESENTATIVE KUBINA asked if the Administration supports this bill. MS. ELGEE responded that they had not taken a position on the bill yet. number 368 CHAIRMAN KOTT asked her to comment on Section 10, as to whether or not she could suggest any compromise language that could resolve the no strike provision of the bill. MS. ELGEE stated that she would talk to the labor relations analyst to see if they have suggestions that might work. CHAIRMAN KOTT announced that the Speaker of the House, Gail Phillips, had joined the meeting. Number 379 ART SNOWDEN, ADMINISTRATIVE DIRECTOR, ALASKA COURT SYSTEM, stated that he had major problems with the substantive contents of this legislation. He pointed out the non-covered, including judicial employees, have not had a raise in a much longer period than their union counterparts. He also stated that the 3.6 percent that the Executive Branch talks about should be compounded back to when this raise was given to the unions. The non-unions have lost the use of that money. The State Personnel Board, has suggested the following: While it appears that state employees are generally adequately compensated, in most job classes the non-represented employees have not received reasonable cost of living increases, received by and offered to represented employees. The State Personnel Act requires that the statutory pay plan reflect the principal of like pay, for like work, (AS 39.25.150 2B). He continued that the law further requires that the annual pay schedule be developed, taking into account the statistics and reasonable internal pay relationships.(AS 39.27.035). This report suggests that there is a 6.2 percent pay gap. He stated that we are violating statute right now, and he believes that they are balancing the budget on the backs of the employees, mainly because of the sponsor's statement that the unions would only take a reduction for the term of their contract. He stated that when you change the statute, it could be forever. It doesn't say for three years and then it sunsets. He pointed out that 70 percent of the court system employees are a range 15 or under. These people are on the edge of having to receive assistance. He said that 200 of his employees have already organized, and if this legislation passes, they'll be hanging out a sign that says "Union Shop." He said if they want fairness, take the union cuts first once they've achieved those, then they can cut the general pay schedule. He said that they would then be even and they wouldn't have to cut the general pay as much because unions are already in front of the non-covered in regard to salaries. MR. SNOWDEN passed out a document that would take the committee through the judicial side of his testimony. He disagreed with Representative Hanley's remarks that the state employees had not taken a big hit on the Consumer Price Index (CPI). He illustrated that when you adjust for cost of living that, for example, a Supreme Court Judge in Atlanta, makes `X' amount and the CPI in Atlanta is `X', a judge in Anchorage makes `Y' and the CPI in Anchorage is 'Y', based on this report, Alaska's Supreme Court ranks 35th in the nation in pay. On page 2, it shows the Intermediate Court of Appeals ranks thirty-third in the nation. The general trial court is thirty-fourth. He said that since 1975, the Supreme Court judges have lost approximately $17,000 in purchasing power. In 1989, the legislature had to provide the judges approximately an $18,000 pay raise because the only applicants they were getting were out of the public sector; private sector attorneys wouldn't even apply. He stated they need to provide a range that attracts some of the most skilled attorneys in the state to the bench. With this reduction, our courts would drop to forty-fifth in the nation, in salary. He added judicial employees work two and a half hours more, per week, than the Executive Branch; they don't receive overtime until after 40 hours. They process over 140,000 cases, per year, and they didn't receive the last pay raise. He asked that the committee change their priorities and demand that the unions negotiate these cuts and, at that point in time, bring the non-covered employees into parody with the unions. CHAIRMAN KOTT asked where the document came from. Number 468 MR. SNOWDEN stated that they took from the National Center of State Courts, their report on salaries of judges in all states, and the report from census bureau on the CPI. He said that they matched these across the country and made the reductions accordingly. Number 470 REPRESENTATIVE ROKEBERG made the comment that it would be interesting to see these same graphs, along with the price of oil, adjusted for inflation. He said this might help everyone put things in prospective. MR. SNOWDEN stated that since 1975, a range 24 wage has increased by 165 percent, a range ten has increased by 177 percent, a superior court judge by 99 percent. These are well behind the other state employees. In reference to Representative Hanley's recommendation that they start at two percent for lower ranges, graduated for the middle range, and more for the upper ranges, the personnel studies show that the highest paid executives in the state are well under paid. The Commissioner of Health and Social Services, running a $300 million organization, makes $78,000, he said if there is a negative adjustment for the private sector, it's in the middle. Therefore, adjusting the salaries as suggested by Representative Hanley, would further exacerbate this problem at the top. He understands the problems of the state. However, if they want to cut everybody, don't take the uncovered first this time. Number 496 ALLEN ODELL, testifying via teleconference, said he is an operator for the Department of Transportation and Public Facilities (DOT/PF). He said that he is opposed to HB 236. His major concern was with them bypassing collective bargaining. He asked if troopers and teachers would be included in the pay cuts. CHAIRMAN KOTT responded that yes, there is that provision. Number 509 RICHARD SEWARD, ALASKA STATE EMPLOYEES ASSOCIATION (ASEA) LOCAL 52, AMERICAN FEDERATION OF STATE COUNTY AND MUNICIPAL EMPLOYEES (AFSCME), said he is the chief spokes person for the General Government Unit (GGU) at the collective bargaining, currently taking place, testified via teleconference. He agreed with the Administration's concerns about the effect of HB 236 on collective bargaining. He feels that it takes the bargaining out of collective bargaining and is a detriment to the whole process. He said he is concerned about the numbers that have been thrown about. The last collective bargaining agreement was January 1990, since that time the CPI has increased by 19 percent. Their wages have increased by eight percent. He said that this may be more than the unchartered employees, but he encourages all uncovered employees to "organize, organize, organize." MR. SEWARD said that through various negotiations, proposals and research he has done a great deal of comparisons with the private sector. He said that the numbers he uses are generated by the Department of Labor. He found that the average hourly wage, monthly wage and work week for members of the GGU remain in the middle of the private sector. In the mining and construction industries, we do much worse. In the retail trades, we make a better average wage. He stated that in going from work site to work site, as a business agent for the unions, he has come to believe the workers in the field are running a fat free operation. He said that Alaska needs to decide what services are no longer needed and, in that way, shrink the size of government. Number 540 DEBRA CHRISTIANSEN, testifying via teleconference, said she has been employed with the state since 1986. She said she is a Native Alaskan, single mother of three and is currently a range 10 grossing $526 per week. She explained that six months ago her children's father filed for a garnishment of her wages. The state finance office notified the courts that she did not make enough money for a garnishment. She said that if the legislature decreases her wages five percent over the next three years, her day care and housing costs would still remain the same. At that time, it would behoove her to quit her job, obtain food stamps and any other assistance that is out there. She closed by stating that "our elected officials profess to believe in the sanctity of the Alaskan family. But Alaskans are seeing with HB 236, is to the contrary". CHAIRMAN KOTT thanked Ms. Christianson for her testimony and commented that the bill sponsor had made comments on the possibility of graduating the percentages. He stated that if this bill did come to fruition, she would be affected very minimally. MS. CHRISTIANSEN stated that any decrease in her salary would affect her children and she could not afford it, period. The people that she works with can't afford it. She said if you decrease her salary by even one percent, she wouldn't be able to meet her living costs. Number 565 BRUCE LUDWIG, BUSINESS MANAGER, ALASKA PUBLIC EMPLOYEES ASSOCIATION, ALASKA FEDERATION OF TEACHERS (AFT), testified against HB 236. He said it is inconstant with both the collective bargaining and merit system. Bargaining units are established on the basis of a community of interest. He said that each group is unique, or it wouldn't be its own bargaining unit. He said that we all have different demands, and working conditions. They deal with these issues through the bargaining process. To establish an across the board cut ignores this process. He said that the state has the responsibility to establish wages. Many people think that the unions go in and negotiate the wages, however, the Supreme Court took this away from them several years ago. He said the only thing they negotiate is the salary schedule. The state has the right to put classes at different levels. Depending on the statute, they may put a clerk typist at a range 6, 8, or 10. He said that he represents the supervisory unit employees (middle management). In the last ten years, they have received four increases. In 1985, they received a 3.5 percent; in 1990, it was 3.3 percent; 1991 was 5 percent; and in 1992, they received a 3.6 percent increase. He said that they had a 3.8 percent scheduled for 1996, but voluntarily gave that up when the price of oil dropped. He said hundreds of their members volunteered to a reduced work week and to leave without pay. The raises that they have received are 27.8 percent behind the Anchorage CPI since 1993, taking into account the 6.6 percent increase that is before the legislature at this time, negotiated during the Hickel Administration. He said they have substantially cut their health plan, holidays, travel and premium pays. TAPE 95-20 SIDE A, Number 000 MR. LUDWIG pointed out that everyone knows that the oil money is tapering off and they aren't going to have the money they used to. He suggests that the state figure out which programs they don't want to operate, or let the employees within the Administration try to mitigate and keep as many programs from going with a certain amount of money to accomplish that. He closed by saying taking five percent from everyone is not a good idea. They should bury the bill, and "let it rest in peace." Number 015 CHAIRMAN KOTT asked Mr. Ludwig to summarize the second recommendation. Number 020 MR. LUDWIG stated that they are currently working with the Administration to create a labor management program with the different state unions. Their goal is to identify ways of cutting costs by giving workers a target figure. For example, "Joe" is two years away from retirement. If we can find a way to have him retire early, that would save `X' amount of dollars. "Mary" wants to be a programmer. If we can get her training, that would leave her position vacant. He said maybe there is no alternative but to layoff. However, the employees are the ones that do the work and have the best ideas on how best to do it. Number 144 DON ETHERIDGE, PUBLIC EMPLOYEES LOCAL 71, testified that Local 71 just finished negotiations with the Administration. Both sides feel the negotiations were fair, both sides had concessions in that contract. He said that it wouldn't be fair for this contract to now be thrown out after spending so much time and effort on the negotiations. They are opposed to a five percent cut in any form. He said in the contract, they voluntarily went to a 40 hour work week with no wage increase. They did this because they were tired of public ridicule for not putting in a 40 hour work week. He said that the only thing they wanted with this was their hourly wage. They were offered an increase, at the table, and declined. He stated that Local 71 has probably been the hardest hit in any of the state bargaining units since the 1986 cuts. The Buildings Division in Juneau had 33 employees in the 1970s to take care of all buildings in the Juneau area. Today there are seven caring for those same buildings. He said that there was more maintenance staff taking care of the Capitol Building, than there are taking care of the rest of the state buildings in the area. He said that Local 71 has had no step increases, except for longevity, which is three percent after seven years, another three percent after your ninth year. REPRESENTATIVE KUBINA asked if the maintenance people in the Capitol building were all working for the legislature. MR. ETHERIDGE responded "yes," they work for Legislative Affairs. However, when the Capitol Building was taken from the Division of Buildings, they also took two employees and then gave the Division of Buildings back maintenance of the third floor. REPRESENTATIVE KOTT referred to the 40 hour work week, and asked if they were compensated for the extra two and a half hours, and didn't take a wage increase beyond that. MR. ETHERIDGE said that they will be paid the base rate for the extra hours Number 144 GINA SAMUELS testified via teleconference that she is a 25 year resident, and a 10 year state employee for the Department of Corrections at the Wildwood Pretrial Facility in Kenai. She disagrees with the five percent pay cut. She said that 75 percent of the state employees are under a range 15. She herself is a range 10 and can't afford a pay cut. She said that there are other ways money can be cut from the budget. She said she cannot understand how the legislature can even consider cutting state employees wages when the Eighteenth Legislative Council voted to increase their per diem rate. She asked how can it be fair to raise per diem rates and then turn around and cut employees wages. She noted that the sponsor of HB 236, along with Chairman Kott and Speaker Phillips, were the people that voted for this increase. She asked that they consider that the bulk of state workers do not make big bucks. The loss of this money is also a loss to the communities and local economies. Number 192 ELAINA SPRAKER testified via teleconference against HB 236. She said that she is married to area biologist, Ted Spraker, who works for the Department of Fish and Game. She said it is obvious that supporters of this bill are balancing the state budget on the backs of the state employees. She indicated she speaks on behalf of the many of the Department of Fish and Game employees, in using her husband and family as an example. Her husband averages 60 hours per week. She said last week, three of the days he worked were 18 to 20 hours, per day, with no overtime pay. Any compensation he receives in his pay, which is called "hazardous pay," is a whopping $2.11 per hour. She enlightened the committee as to what hazardous pay has included: One plane crash, one helicopter crash, he fell off the side of a mountain while taking goats, has been bitten by wolves, kicked by moose and crawled into many bear dens, but the most dangerous hazard that he endures is when people don't realize the dedication that he has to his job. She said that his colleagues with the same number of years in the department have also endured these hazards as well and she has rarely heard them complain. Most the employees in the Soldotna Fish and Game Office have not had a pay raise in ten years. She stated that this gives her heartburn. With her husbands busy schedule, he is very hard to reach. Many people call their house figuring that since she lives with him that she too works for the state. She said that she has personally donated hours and hours of public service to the department, and is glad to do it because she supports her husband, the Department of Fish and Game and the state of Alaska. If she is willing to do this, the legislature should be willing to do so also. HB 236 is taking direct aim at destroying one of the highest standards of resource management in the United States by cutting wages and budgets from skilled and dedicated people. The wildlife scientist will soon become underpaid historians. She pointed out that most of the funding from the Department of Fish and Game comes from permits and licensees. The five percent cut would be very unfair. Number 236 PAT MOSS, testified via teleconference that she had been employed with the state since 1989. She is a 21 year Alaska resident. She said when she went to work for the state, she took a 50 percent pay cut from her private sector job. That job, due to automation, was done away with. She reiterated that low range employees would be very much affected by this. There hasn't been any cost of living decrease. She observed that in talking with many of her co-workers, they were willing to accept a wage freeze, but they are not willing to take a reduction. What concerns them is the continued addition of legislative mandates for more work, longer hours with no additional pay and now this five percent decrease in salary. She said the Department of Labor, Unemployment and Job Placement Division, has experienced a 33 percent staffing attrition. Another office within the Department of Labor, has lost more than 50 percent in the past two years, yet are asked to do the same job. She pointed out that the legislature had said they intended to reduce all government spending, yet the teachers just negotiated a contract. The way education handles decreases in money is that they don't decrease salaries of teachers or administrators, they decrease programs. She commented that the University of Alaska, Fairbanks campus, is a mess. The buildings are dilapidated with paint peeling, water dripping and yet, they build a huge new home for the chancellor. Number 280 CHAIRMAN KOTT appreciated that state employees are doing more with less. Number 295 FATE PUTNAM, LOBBYIST, ALASKA STATE EMPLOYEES ASSOCIATION, AFL-CIO, AMERICAN FEDERATION OF STATE AND COUNTY AND MUNICIPAL EMPLOYEES LOCAL 52, reemphasized the previous testimony of members of his union. He stated that they are a 8,600 member bargaining unit currently in the middle of bargaining contracts. The Administration is doing a very good job negotiating that contract to be in the best interest of the state of Alaska. The offers put across the table are evidence that the legislature is getting a good bargaining position from the state. He said that they haven't had a pay raise since 1992, the cost of living has gone up, their pay has stayed level. The purchasing power of the dollar has been reduced. He said that they are not opposed to a pay freeze, but most of these people are range 10 and below. They qualify for public assistance. There are state employees that are on public assistance. If you ask them to take an additional five percent cut, the number of people opting for welfare assistance will increase. He stated that this isn't something they want to see happen, and they go on record as opposed to a pay reduction. He said that it should be left to collective bargaining to allow them to negotiate a reasonable salary for all state employees. Number 319 REPRESENTATIVE JERRY SANDERS asked if the $526.50 received by the lady who testified previously, if this was gross or net. MR. PUTNAM thought this would be her gross salary. He said that people on public assistance would have to make over $11 an hour to make it reasonable to come off public assistance. He said that there are state employees making less than that. CHAIRMAN KOTT asked if there was anyone else wishing to testify on HB 236. Hearing none he stated that they would hold HB 236 over until the next committee meeting. There being no further business to come before the House Labor and Commerce Committee, Chairman Kott adjourned the meeting at 5:15 p.m.