Legislature(2003 - 2004)

04/04/2003 03:19 PM L&C

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                    ALASKA STATE LEGISLATURE                                                                                  
          HOUSE LABOR AND COMMERCE STANDING COMMITTEE                                                                         
                         April 4, 2003                                                                                          
                           3:19 p.m.                                                                                            
                                                                                                                                
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Tom Anderson, Chair                                                                                              
Representative Bob Lynn, Vice Chair                                                                                             
Representative Nancy Dahlstrom                                                                                                  
Representative Carl Gatto                                                                                                       
Representative Harry Crawford                                                                                                   
Representative David Guttenberg                                                                                                 
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Representative Norman Rokeberg                                                                                                  
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
HOUSE BILL NO. 155                                                                                                              
"An Act relating to the submission of payroll information by                                                                    
contractors and subcontractors performing work on a public                                                                      
construction contract; and providing for an effective date."                                                                    
                                                                                                                                
     - MOVED CSHB 155(L&C) OUT OF COMMITTEE                                                                                     
                                                                                                                                
HOUSE BILL NO. 162                                                                                                              
"An Act increasing the fee for a state business license; and                                                                    
providing for an effective date."                                                                                               
                                                                                                                                
     - MOVED CSHB 162(L&C) OUT OF COMMITTEE                                                                                     
                                                                                                                                
PREVIOUS ACTION                                                                                                               
                                                                                                                                
BILL: HB 155                                                                                                                  
SHORT TITLE:PUBLIC CONSTRUCTION PROJECT REQUIREMENTS                                                                            
SPONSOR(S): RLS BY REQUEST OF THE GOVERNOR                                                                                      
                                                                                                                                
Jrn-Date   Jrn-Page                     Action                                                                                  
03/05/03     0423       (H)        READ THE FIRST TIME -                                                                        
                                   REFERRALS                                                                                    
03/05/03     0423       (H)        L&C, FIN                                                                                     
03/05/03     0423       (H)        FN1: (LWF)                                                                                   
03/05/03     0423       (H)        GOVERNOR'S TRANSMITTAL LETTER                                                                
03/14/03                (H)        L&C AT 3:15 PM CAPITOL 17                                                                    
03/14/03                (H)        Heard & Held                                                                                 
03/14/03                (H)        MINUTE(L&C)                                                                                  
04/04/03                (H)        L&C AT 3:15 PM CAPITOL 17                                                                    
                                                                                                                                
BILL: HB 162                                                                                                                  
SHORT TITLE:INCREASE BUSINESS LICENSE FEE                                                                                       
SPONSOR(S): RLS BY REQUEST OF THE GOVERNOR                                                                                      
                                                                                                                                
Jrn-Date   Jrn-Page                     Action                                                                                  
03/05/03     0432       (H)        READ THE FIRST TIME -                                                                        
                                   REFERRALS                                                                                    
03/05/03     0432       (H)        L&C, FIN                                                                                     
03/05/03     0433       (H)        FN1: (CED)                                                                                   
03/05/03     0433       (H)        GOVERNOR'S TRANSMITTAL LETTER                                                                
03/12/03                (H)        L&C AT 4:00 PM CAPITOL 17                                                                    
03/12/03                (H)        Heard & Held                                                                                 
03/12/03                (H)        MINUTE(L&C)                                                                                  
03/28/03                (H)        L&C AT 3:15 PM CAPITOL 17                                                                    
03/28/03                (H)        <Bill Hearing Postponed to                                                                   
                                   04/04/03                                                                                     
04/04/03                (H)        L&C AT 3:15 PM CAPITOL 17                                                                    
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
DICK CATTANACH, Executive Director                                                                                              
Associated General Contractors                                                                                                  
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Offered five suggested changes to the                                                                      
proposed committee substitute (CS) for HB 155.                                                                                  
                                                                                                                                
GREG O'CLARAY, Commissioner                                                                                                     
Department of Labor & Workforce Development                                                                                     
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Supported the proposed CS to HB 155 and                                                                    
commented on suggestions offered by other witnesses.                                                                            
                                                                                                                                
RON TRUINI                                                                                                                      
Ironworkers Local 751                                                                                                           
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Suggested several revisions to the proposed                                                                
CSHB 155.                                                                                                                       
                                                                                                                                
VINCE BELTRAMI                                                                                                                  
IBEW Local 1547                                                                                                                 
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Asked whether payroll reports will continue                                                                
to be sent to the department under the proposed CSHB 155;                                                                       
expressed concern  that new  user fees will  not be  dedicated to                                                               
enforcement of the prevailing wage program.                                                                                     
                                                                                                                                
CHRIS TUCK                                                                                                                      
IBEW Local 1547                                                                                                                 
Anchorage, Alaska                                                                                                               
POSITION  STATEMENT:     Supported  proposed  revisions   in  the                                                               
proposed  CSHB  155  regarding contractors,  subcontractors,  and                                                               
employers.                                                                                                                      
                                                                                                                                
CHUCK WIEGERS                                                                                                                   
ABC [Associated Builders and Contractors] Alaska                                                                                
Fairbanks, Alaska                                                                                                               
POSITION STATEMENT:   Testified on the proposed  CSHB 155, noting                                                               
that current law still gives  the department the teeth to enforce                                                               
the prevailing wage laws.                                                                                                       
                                                                                                                                
JOHN BROWN, President,                                                                                                          
Fairbanks Central Labor Council                                                                                                 
Fairbanks, Alaska                                                                                                               
POSITION STATEMENT:   During his  testimony on the  proposed CSHB
155, stressed  the importance  of user fees  flowing back  to the                                                               
department to support enforcement activities.                                                                                   
                                                                                                                                
NANCY PETERSON                                                                                                                  
City of Valdez                                                                                                                  
Valdez, Alaska                                                                                                                  
POSITION STATEMENT:   Supported the changes in  the proposed CSHB
155,  particularly retaining  the  department  as the  collection                                                               
point for the certified payroll reports.                                                                                        
                                                                                                                                
DON ETHERIDGE, Lobbyist                                                                                                         
for Alaska State AFL-CIO                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION  STATEMENT:    Testified   on  the  proposed  CSHB  155,                                                               
supporting the sending  of payroll reports to  the department and                                                               
urging  the  dedication  of  user  fees  to  support  enforcement                                                               
activities.                                                                                                                     
                                                                                                                                
PAULA SCAVERA, Special Assistant                                                                                                
Office of the Commissioner                                                                                                      
Department of Labor & Workforce Development                                                                                     
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:   During testimony on the  proposed CSHB 155,                                                               
explained how a department "form" can be paper or electronic.                                                                   
                                                                                                                                
RICK URION, Director                                                                                                            
Division of Occupational Licensing                                                                                              
Department of Community & Economic Development (DCED)                                                                           
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Answered questions on HB 162.                                                                              
                                                                                                                                
DON JOHNSON, Fishing Charter Operator                                                                                           
Kenai, Alaska                                                                                                                   
POSITION STATEMENT:  Expressed concerns with HB 162.                                                                            
                                                                                                                                
JOSH APPLEBEE, Staff                                                                                                            
to Representative Tom Anderson                                                                                                  
House Labor and Commerce Standing Committee                                                                                     
Alaska State Legislature                                                                                                        
POSITION  STATEMENT:   Provided  information with  regard to  fee                                                               
changes under HB 162.                                                                                                           
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
TAPE 03-28, SIDE A                                                                                                            
Number 0001                                                                                                                     
                                                                                                                                
CHAIR TOM ANDERSON  called the House Labor  and Commerce Standing                                                             
Committee  meeting  to  order  at   3:19  p.m.    Representatives                                                               
Anderson, Lynn,  Dahlstrom, Gatto,  and Crawford were  present at                                                               
the  call to  order.   Representative Guttenberg  arrived as  the                                                               
meeting was in progress.                                                                                                        
                                                                                                                                
HB 155-PUBLIC CONSTRUCTION PROJECT REQUIREMENTS                                                                               
                                                                                                                                
Number 0060                                                                                                                     
                                                                                                                                
CHAIR ANDERSON announced  that the first order  of business would                                                               
be HOUSE  BILL NO.  155, "An  Act relating  to the  submission of                                                               
payroll information by  contractors and subcontractors performing                                                               
work  on a  public construction  contract; and  providing for  an                                                               
effective date."                                                                                                                
                                                                                                                                
Number 0083                                                                                                                     
                                                                                                                                
REPRESENTATIVE DAHLSTROM  moved to  adopt the  proposed committee                                                               
substitute (CS) for HB 155,  Version 23-GH1119\D, Craver, 4/3/03,                                                               
as the  working document.   There being  no objection,  Version D                                                               
was before the committee.                                                                                                       
                                                                                                                                
CHAIR ANDERSON  noted that  this CS resolves  many of  the issues                                                               
raised during  testimony at the  earlier hearing.  Section  1 was                                                               
revised so that submission of  certified payroll reports is every                                                               
two weeks  instead of weekly,  and it removes the  requirement to                                                               
submit the reports to the contracting agencies.                                                                                 
                                                                                                                                
CHAIR ANDERSON  noted that Section  2 of  the CS states  that the                                                               
general contractor  will pay all  fees for the entire  project at                                                               
the beginning of  the project -- the contractor's fee  plus a fee                                                               
for each subcontractor.   The second part of Section  2 creates a                                                               
sliding  scale for  the  fee  based on  the  contract amounts  as                                                               
follows:   under $5,000 - no  fee; $5,000 to $10,000  - $100 fee;                                                               
$10,000 to  $50,000 - $150 fee;  $50,000 to $500,000 -  $200 fee;                                                               
$500,000 to $1 million  - $250 fee; and $1 million  and up - $300                                                               
fee.   The  maximum fee  to be  paid by  the contractor  would be                                                               
$5,000.  He noted  that Sections 3 and 4 of  the CS are unchanged                                                               
from  the original  bill.   Section 5  directs the  Department of                                                               
Labor  &  Workforce  Development to  computerize  the  submission                                                               
process for certified payroll reports.                                                                                          
                                                                                                                                
Number 0250                                                                                                                     
                                                                                                                                
CHAIR ANDERSON  described Conceptual  Amendment 1, which  read as                                                               
follows:                                                                                                                        
                                                                                                                                
   1. Need exemption for emergencies (such as the wind disaster                                                                 
     in Anchorage) to allow work to begin and then file notice                                                                  
     of intent to pay prevailing wage.                                                                                          
   2. Clarify that jobs under $5,000 are exempt from the fee but                                                                
     not from filing notice of intent and an affidavit of                                                                       
     compliance.                                                                                                                
   3. Make language consistent (e.g. the terms "contractor" and                                                                 
     "subcontractor" need to be used consistently instead of                                                                    
     "employer").                                                                                                               
                                                                                                                                
Number 0319                                                                                                                     
                                                                                                                                
CHAIR ANDERSON  moved to  adopt Conceptual Amendment  1.    There                                                               
being no objection, it was so ordered.                                                                                          
                                                                                                                                
The committee took an at-ease from 3:25 to 3:27 p.m.                                                                            
                                                                                                                                
Number 0497                                                                                                                     
                                                                                                                                
DICK   CATTANACH,   Executive    Director,   Associated   General                                                               
Contractors (AGC), Anchorage, noted  that construction is a cost-                                                               
pass-through  industry, so  the AGC  can support  the concept  of                                                               
[the fees in] this bill.  He  said that the costs would be passed                                                               
on  to  the  ultimate  owners,  in  this  case,  the  state,  the                                                               
municipality, and  the various political  subdivisions.   He said                                                               
he will  suggest ways to make  CSHB 155 work better.   In Section                                                               
1,  which requires  the submission  of certified  payroll reports                                                               
every second  Friday, a company  with numerous jobs could  end up                                                               
reporting  every week.   He  suggested  reporting all  previously                                                               
unreported payroll on  the second and fourth  Fridays, then every                                                               
contractor would  be reporting consistently  on the  same Friday.                                                               
This would help reduce paperwork, he said.                                                                                      
                                                                                                                                
Number 0578                                                                                                                     
                                                                                                                                
MR.  CATTANACH   recommended  in  Section  2   that  the  minimum                                                               
[threshold  for contracts  for purposes  of calculating  fees] be                                                               
changed from  $5,000 to  at least $25,000.   He  also recommended                                                               
that the  fee be a percentage  of the contract amount,  up to the                                                               
maximum of $5,000.   For example, a contract  between $50,000 and                                                               
$500,000 would result  in a fee between $500 and  $5,000 per job.                                                               
This avoids  burdening the contractor with  additional accounting                                                               
just to figure out how much he has to pay.                                                                                      
                                                                                                                                
CHAIR ANDERSON  asked how  it was  a burden to  add up  the total                                                               
amounts of a job.                                                                                                               
                                                                                                                                
Number 0660                                                                                                                     
                                                                                                                                
MR.  CATTANACH replied  that depending  on the  size of  the job,                                                               
general  contractors   have  from   five  to   fifteen  specialty                                                               
contractors working under them; he  would have to aggregate those                                                               
subcontracts to see how much he  would have to pay.  He suggested                                                               
its  simpler to  take a  percentage on  the general  contractor's                                                               
total  rather   than  the  general  contractor's   job  plus  the                                                               
associated  subcontractors.   He suggesting  taking a  simple one                                                               
percent  if the  goal of  this section  of the  bill is  to raise                                                               
money.                                                                                                                          
                                                                                                                                
MR.  CATTANACH pointed  out problems  with Section  2, subsection                                                               
(c), on  page 3, lines  3-7, which appears  to hold up  the final                                                               
payment  if  one  subcontractor   has  not  signed  the  required                                                               
affidavit of  compliance.   He said that  this holds  hostage all                                                               
the  good  subcontractors  who  have  signed  the  affidavit  and                                                               
followed  the  law.    The  provision  puts  enforcement  on  the                                                               
contractor and  that's not where it  belongs, he said.   He asked                                                               
that this subsection be deleted or reconsidered.                                                                                
                                                                                                                                
MR.  CATTANACH  questioned the  purpose  of  Section 4,  page  3,                                                               
starting on line 18 [which  states that contractors starting work                                                               
before the  July 1, 2003, effective  date] must file a  notice of                                                               
intent but no  fee.  He said  he didn't see what  the state gains                                                               
with  this  section.    Rather,  he  suggested  leaving  existing                                                               
contracts out of  the bill, and making the bill  apply to all new                                                               
contracts issued on or before July  1, 2003, and making it a part                                                               
of the  required contract  language.   He suggested  allowing for                                                               
electronic reporting to the extent possible.                                                                                    
                                                                                                                                
Number 0899                                                                                                                     
                                                                                                                                
MR. CATTANACH,  at the  request of  Chair Anderson,  restated his                                                               
five suggested changes to the CS.   1) In Section 1, file reports                                                               
the second  and fourth Friday of  the month for all  payroll that                                                               
has been  incurred since the  last reporting period,  rather than                                                               
every two weeks.   2A) In Section 2, change  the minimum contract                                                               
size from $5,000  to $50,000.  2B) For contracts  from $50,000 to                                                               
$500,000, calculate a  simple fee of 1 percent  calculated on the                                                               
general contractor's  contract.  3) Delete  Section 2, subsection                                                               
(c)  because it  allows  one subcontractor  who  doesn't sign  an                                                               
affidavit to  hold up payments  to all other subcontractors.   4)                                                               
Delete Section 4  because it requires a notice of  intent from an                                                               
ongoing project.   5) Expand the concept of  electronic filing of                                                               
certified payroll  reports and allow  those to be filed  with the                                                               
affidavits.                                                                                                                     
                                                                                                                                
Number 1083                                                                                                                     
                                                                                                                                
REPRESENTATIVE CRAWFORD noted his  agreement with Mr. Cattanach's                                                               
points.   He said, however,  that HB 155  is a smoke  and mirrors                                                               
way of raising revenue; all it does  is add to the cost of public                                                               
construction,  which  will be  paid  by  the public  entity  that                                                               
contracts to build a school or a  road.  This money won't flow to                                                               
the Department of  Labor & Workforce Development; it's  not a fee                                                               
to  help fund  their  programs.   If  it's  a  tax, he  suggested                                                               
calling it a tax.   He said he doesn't agree  with the premise of                                                               
the bill.                                                                                                                       
                                                                                                                                
Number 1179                                                                                                                     
                                                                                                                                
GREG  O'CLARAY, Commissioner,  Department  of  Labor &  Workforce                                                               
Development,  stated  that the  CS  is  an improvement  over  the                                                               
original HB  155.  The  department supports  Conceptual Amendment                                                               
1.  He  said he disagreed with Mr.  Cattanach's suggested $50,000                                                               
as a  minimum size contract;  he preferred using $25,000  for the                                                               
minimum size  of contracts.  He  said he agreed with  using the 1                                                               
percent  to calculate  the general  contractor's fee  because the                                                               
fee increases with the size of the contract.                                                                                    
                                                                                                                                
Number 1316                                                                                                                     
                                                                                                                                
CHAIR  ANDERSON summarized  Commissioner  O'Claray's response  to                                                               
Mr.  Cattanach's five  points.   1) Commissioner  O'Claray agreed                                                               
with filing  certified payroll reports  on the second  and fourth                                                               
Fridays.    2)  He  preferred  starting  the  fees  with  $25,000                                                               
contracts and a 1 percent  fee to calculate the contractor's fee.                                                               
3)  He did  not agree  with deleting  subsection 2(c)  because it                                                               
gives the  department teeth to  enforce the prevailing  wage law,                                                               
especially with  a general contractor  who is out  of compliance.                                                               
He said there  should be a way for the  department to address the                                                               
problem  of a  subcontractor who  is  out of  compliance so  that                                                               
others would not  be penalized.  4) He agreed  that Section 4 can                                                               
be  deleted  because  current law  requires  reporting,  and  the                                                               
effective date of  the bill will determine when the  new fees are                                                               
collected.                                                                                                                      
                                                                                                                                
MR. CATTANACH  clarified his fifth point  about electronic filing                                                               
and noted that it's already contained in the CS.                                                                                
                                                                                                                                
Number 1591                                                                                                                     
                                                                                                                                
REPRESENTATIVE GUTTENBERG asked about  holding a prime contractor                                                               
responsible for  a subcontractor filing  on time.  He  noted that                                                               
it's a set of teeth to keep the subcontractor in line.                                                                          
                                                                                                                                
COMMISSIONER O'CLARAY  said he agreed  in concept but  was trying                                                               
to avoid  holding up a  payment to  a prime contractor  because a                                                               
bad subcontractor had "gone south."   He said he wants to be able                                                               
to hold up payment to the subcontractor.                                                                                        
                                                                                                                                
Number 1688                                                                                                                     
                                                                                                                                
MR. CATTANACH described a typical  final pay request on a project                                                               
that  might have  15 subcontractors.    This bill  would hold  up                                                               
payment  to  the  single  subcontractor   who  hasn't  filed  the                                                               
affidavit  of  compliance  as  well  as  payments  to  the  prime                                                               
contractor and  the 14 other  subcontractors.  He  suggested that                                                               
if  contractors don't  comply with  the rules,  disbar them,  and                                                               
don't allow them  to bid on any more projects  until they comply.                                                               
He asked why  one would penalize the contractors who  play by the                                                               
rules.                                                                                                                          
                                                                                                                                
REPRESENTATIVE GUTTENBERG said he'd  support an amendment to deal                                                               
with this issue.                                                                                                                
                                                                                                                                
REPRESENTATIVE CRAWFORD  said he  wholeheartedly agreed  with the                                                               
need to disbar people who  violate the Little Davis-Bacon Act [AS                                                               
36.05].    He  said  he has  investigated  several  instances  of                                                               
companies that  do this repeatedly.   But he said it's  not clear                                                               
how to incorporate that issue into this bill.                                                                                   
                                                                                                                                
Number 1782                                                                                                                     
                                                                                                                                
REPRESENTATIVE GATTO asked  what happens if it  is the contractor                                                               
who   goes   south   [thereby  holding   up   payments   to   the                                                               
subcontractors].                                                                                                                
                                                                                                                                
COMMISSIONER O'CLARAY  explained that is exactly  the issue being                                                               
debated.    The  bill  gives  the  department  the  authority  to                                                               
withhold  payment in  order to  force compliance  with the  newly                                                               
required reports.   He said the bill gives  the department enough                                                               
teeth to  keep the  contractor from  going south.   He  said he'd                                                               
prefer to  see CSHB 155  move out  of committee, and  perhaps the                                                               
disadvantage to the subcontractor could  be addressed by a future                                                               
committee.                                                                                                                      
                                                                                                                                
Number 1861                                                                                                                     
                                                                                                                                
RON TRUINI,  Ironworkers Local 751,  proposed several  changes to                                                               
clarify payroll reports and employers.                                                                                          
                                                                                                                                
REPRESENTATIVE  CRAWFORD noted  that Mr.  Truini's concerns  were                                                               
already covered in Conceptual Amendment 1.                                                                                      
                                                                                                                                
Number 1958                                                                                                                     
                                                                                                                                
VINCE  BELTRAMI, IBEW,  [International Brotherhood  of Electrical                                                               
Workers]  Local 1547,  asked for  confirmation that  the proposed                                                               
CSHB 155 will continue having  the contractors send the certified                                                               
payroll reports directly  to the Department of  Labor & Workforce                                                               
Development.  He also confirmed  that contractors can continue to                                                               
submit written payroll  reports after the July  1, 2004, deadline                                                               
when  the department  starts accepting  electronic  reports.   He                                                               
expressed  concern regarding  whether  this  bill raised  revenue                                                               
earmarked  for the  department.   He  asked  the commissioner  to                                                               
comment about whether these funds  will prevent cuts to the Title                                                               
36 [wage enforcement programs].                                                                                                 
                                                                                                                                
Number 2052                                                                                                                     
                                                                                                                                
COMMISSIONER O'CLARAY responded that  he could not guarantee that                                                               
the money  raised by  CSHB 155  would flow  to the  Department of                                                               
Labor & Workforce  Development.  The user fees  will be deposited                                                               
to the  general fund.   He said he  hoped that these  funds would                                                               
[prevent]  future   cuts  to  the  enforcement   section  of  the                                                               
[Division of  Standards and  Safety].  He  said he  will advocate                                                               
for  retaining the  funding for  this program.   He  responded to                                                               
another  question  from  Mr.  Beltrami,  saying  that  the  House                                                               
Finance  Standing Committee  will be  making decisions  about the                                                               
governor's proposed FY  04 budget.  There's  always the potential                                                               
that Title [36] programs could be impacted, he said.                                                                            
                                                                                                                                
Number 2161                                                                                                                     
                                                                                                                                
CHRIS TUCK, IBEW  Local 1547, stated that his  concerns have been                                                               
voiced by previous speakers.   He confirmed that the language for                                                               
contractors and subcontractors in the  proposed CSHB 155 has been                                                               
amended.                                                                                                                        
                                                                                                                                
MR. TRUINI  suggested on  page 1, line  8, deleting  "wages paid"                                                               
and inserting "payroll reports".                                                                                                
                                                                                                                                
REPRESENTATIVE  CRAWFORD noted  that the  wording in  question is                                                               
the current  statute that has been  in effect for quite  a while.                                                               
He reiterated that  all of Mr. Truini's concerns  have been dealt                                                               
with in Conceptual Amendment 1.                                                                                                 
                                                                                                                                
Number 2267                                                                                                                     
                                                                                                                                
CHUCK WIEGERS, ABC [Associated  Builders and Contractors] Alaska,                                                               
Fairbanks, noted  that his  issues have been  addressed.   He did                                                               
note  that under  the current  law,  the department  can ask  the                                                               
attorney general  to prosecute any  contractor who is  not paying                                                               
the prevailing wage; the teeth are still present in the law.                                                                    
                                                                                                                                
Number 2287                                                                                                                     
                                                                                                                                
JOHN  BROWN,   President,  [Fairbanks]  Central   Labor  Council,                                                               
stressed that  the department needs  the funds necessary  to make                                                               
the prevailing wage  law work.  Enforcement  activities have been                                                               
underfunded, he said.                                                                                                           
                                                                                                                                
REPRESENTATIVE CRAWFORD  responded that  if these user  fees were                                                               
designated  as program  receipts,  the money  could  be used  for                                                               
enforcement.   As the  bill is  written, all  this money  will go                                                               
directly into the  general fund, so the [proposed  CSHB 155] will                                                               
raise the cost  of construction but won't really  help the budget                                                               
of the department.                                                                                                              
                                                                                                                                
Number 2348                                                                                                                     
                                                                                                                                
NANCY PETERSON,  City of Valdez,  expressed appreciation  for the                                                               
changes in Section  1 of CSHB 155, keeping  the certified payroll                                                               
reports  flowing   to  the  Department   of  Labor   &  Workforce                                                               
Development.  She noted concerns  with Section 2, subsection (c),                                                               
withholding of  final payment because  it will place a  burden on                                                               
the  local contracting  agency  that will  have  to pay  interest                                                               
while  the department  determines  whether  all the  requirements                                                               
have been met.                                                                                                                  
                                                                                                                                
TAPE 03-28, SIDE B                                                                                                            
Number 2375                                                                                                                     
                                                                                                                                
REPRESENTATIVE GUTTENBERG asked where  Valdez will find the funds                                                               
to pay the fees that the contractor will pass on to the city.                                                                   
                                                                                                                                
MS. PETERSON  said the fees being  charged [and passed on  to the                                                               
City  of  Valdez by  the  contractors]  will  result in  a  small                                                               
increase in  the cost of the  project.  She said  she was pleased                                                               
to  see  that  the  changes   in  the  proposed  CS  require  the                                                               
department  to  monitor  the   certified  payrolls  [rather  than                                                               
assigning the task to the contracting agencies].                                                                                
                                                                                                                                
Number 2284                                                                                                                     
                                                                                                                                
DON  ETHERIDGE,  Lobbyist  for  Alaska  State  AFL-CIO  [American                                                               
Federation of  Labor and  Congress of  Industrial Organizations],                                                               
said his  group supports  the changes in  the proposed  CSHB 155,                                                               
especially with the certified payroll  reports remaining with the                                                               
department.   He also urged a  method directing the user  fees to                                                               
the department, which he acknowledged is a different battle.                                                                    
                                                                                                                                
CHAIR  ANDERSON  pondered  the   need  for  a  second  conceptual                                                               
amendment   which  incorporates   the  commissioner's   suggested                                                               
changes.    These  changes  would  be:   Changing  Section  1  to                                                               
reporting  on  the second  and  fourth  Fridays for  all  payroll                                                               
incurred; changing Section 2, raising  the minimum contract limit                                                               
from  $5,000  to  $50,000  [per  Mr.  Cattanach]  or  $25,000  as                                                               
recommended  by  the commissioner;  use  a  1 percent  figure  to                                                               
calculate  the fee  above  $50,000 instead  of  a sliding  scale;                                                               
leaving   in  the   notice  element   in  Section   4,  per   the                                                               
commissioner, or removing it, per Mr. Cattanach.                                                                                
                                                                                                                                
Number 2181                                                                                                                     
                                                                                                                                
REPRESENTATIVE  GATTO suggested  clarifying  the interim  periods                                                               
between the  second and fourth  Friday deadlines of  every month.                                                               
He  suggested deleting  "two weeks"  and inserting  "the previous                                                           
reporting period" on page 1, line 12.                                                                                         
                                                                                                                                
COMMISSIONER  O'CLARAY   agreed  that  "the   previous  reporting                                                               
period" is a good clarification.                                                                                                
                                                                                                                                
Number 2099                                                                                                                     
                                                                                                                                
CHAIR  ANDERSON  reviewed  the possible  changes  for  Conceptual                                                               
Amendment 2.                                                                                                                    
                                                                                                                                
REPRESENTATIVE GATTO  reiterated his suggestion of  deleting "two                                                             
weeks" and inserting  "the previous reporting period"  on page 1,                                                           
line 12.                                                                                                                        
                                                                                                                                
CHAIR  ANDERSON confirmed  that  the second  change  [on page  2,                                                               
lines 19-28] would  set the minimum contract at  $25,000, per the                                                               
commissioner's preference, and use  the 1 percent calculation for                                                               
the fees instead  of the stepped amounts.  He  confirmed that the                                                               
committee  did not  want to  delete subsection  2(c) because  the                                                               
commissioner opposed this action.                                                                                               
                                                                                                                                
Number 2007                                                                                                                     
                                                                                                                                
REPRESENTATIVE CRAWFORD  said he  hated that [the  final payment]                                                               
could be  held up  because of  one bad actor,  but the  law needs                                                               
teeth to do the right thing.                                                                                                    
                                                                                                                                
CHAIR ANDERSON  said he  believes Section  4 of  the CS  needs to                                                               
remain in place and thinks it has  been misread.  If not, he said                                                               
he's willing  to work to  change it before  it goes to  the House                                                               
finance committee.                                                                                                              
                                                                                                                                
REPRESENTATIVE  GATTO  asked  whether  the language  "on  a  form                                                             
provided by"  on page  2, line 1,  refers to a  paper form  or an                                                             
electronic  form.   He noted  that the  CS uses  both "form"  and                                                               
"electronic filing".                                                                                                            
                                                                                                                                
Number 1933                                                                                                                     
                                                                                                                                
PAULA  SCAVERA, Special  Assistant, Office  of the  Commissioner,                                                               
Department of Labor  & Workforce Development, said  that the word                                                               
"form", found in various state laws, means paper or electronic.                                                                 
                                                                                                                                
Number 1901                                                                                                                     
                                                                                                                                
CHAIR ANDERSON summarized Conceptual Amendment 2 as follows:                                                                    
                                                                                                                                
   1. Page 1, line 12 - After the word "previous", delete "two                                                                  
     weeks" and insert "reporting period".                                                                                      
   2. In Section 2 adjust the minimum contract price to $25,000.                                                                
     Additionally, the sliding scale needs to be removed and                                                                    
     replaced with a flat 1 percent of the total contract price                                                                 
     for all qualifying jobs.                                                                                                   
                                                                                                                                
REPRESENTATIVE GATTO asked for clarification on whether the                                                                     
contract total refers to the sum total or only the amount above                                                                 
$25,000.                                                                                                                        
                                                                                                                                
CHAIR ANDERSON confirmed the amount is the total contract.                                                                      
                                                                                                                                
Number 1856                                                                                                                     
                                                                                                                                
CHAIR ANDERSON moved to adopt Conceptual Amendment 2.  There                                                                    
being no objection, it was so ordered.                                                                                          
                                                                                                                                
Number 1836                                                                                                                     
                                                                                                                                
REPRESENTATIVE DAHLSTROM [moved to adopt Amendment 3, 23-                                                                       
GH1119\A.1, Craver, 3/19/03, with line numbers on page 3 hand-                                                                  
corrected to reflect Version D of HB 155] which read as follows:                                                                
                                                                                                                                
     Page 1, line 1, following "relating to":                                                                                 
          Insert "the definition of 'public construction'                                                                     
     for purposes of paying prevailing wages, and to"                                                                         
                                                                                                                                
     Page 3, lines 1 - 3:                                                                                                       
          Delete all material and insert:                                                                                       
          "Sec. 36.05.900. Definitions.  In this chapter,                                                                     
               (1)  "contracting agency" means the state or                                                                     
     a political subdivision of the state that has entered                                                                      
     into a public construction contact with a contractor;                                                                      
               (2)  "public construction" does not include                                                                      
     rehabilitation,   alteration,  extension,   or  repair,                                                                    
     structural  or otherwise,  undertaken by  tenants of  a                                                                    
     building  owned   or  controlled   by  the   state  for                                                                    
     government   or   public    use   after   the   initial                                                                    
     construction  or acquisition  of  the  building by  the                                                                    
     state, notwithstanding AS 36.95.010."                                                                                      
                                                                                                                                
REPRESENTATIVE DAHLSTROM explained that she was presenting                                                                      
Representative Rokeberg's amendment because he was not able to                                                                  
attend today's meeting.   She referred to  his accompanying cover                                                               
memo in each member's bill packet.                                                                                              
                                                                                                                                
Number 1753                                                                                                                     
                                                                                                                                
REPRESENTATIVE CRAWFORD objected to Amendment  3.  He stated that                                                               
this would  be a  huge change  in [AS 36.05,  Wages and  Hours of                                                               
Labor] and  would not have  the general agreement of  the various                                                               
parties who  worked on  the CS.   He said it's  a huge  change to                                                               
remove rehabilitation,  alternations, extensions, or  repairs [of                                                               
buildings]  from  the  Little  Davis-Bacon   Act.    No  one  has                                                               
contemplated  this kind  of a  change in  the law,  he said.   He                                                               
explained  that he  has worked  on a  rehabilitation of  a public                                                               
building that was worth many millions of dollars.                                                                               
                                                                                                                                
COMMISSIONER O'CLARAY acknowledged that  Amendment 3 would have a                                                               
major  negative   impact  on  the   prevailing  wage   rate  law.                                                               
[Renovations  of  buildings]  account  for about  50  percent  of                                                               
construction  projects,  he  said.    The  department  could  not                                                               
support this  amendment, and it  would be  a deal breaker  on the                                                               
CS.                                                                                                                             
                                                                                                                                
REPRESENTATIVE GUTTENBERG  stated that adopting  this [amendment]                                                               
would make the  legislation a different bill.  It  is an entirely                                                               
new concept with an entirely  new constituency that would want to                                                               
testify.    [This amendment]  goes  to  the  core issues  of  the                                                               
prevailing wage law,  he said.  It would be  a disservice to this                                                               
bill and  the work  accomplished by the  various players  to open                                                               
the bill up to a [change] this large and wide.                                                                                  
                                                                                                                                
Number 1570                                                                                                                     
                                                                                                                                
A roll  call vote was taken.   No Representatives voted  in favor                                                               
of proposed  Amendment 3.  Representatives  Guttenberg, Crawford,                                                               
Dahlstrom,   Gatto,  Lynn,   and  Anderson   voted  against   it.                                                               
Therefore, Amendment 3 failed by a vote of 0-6.                                                                                 
                                                                                                                                
CHAIR ANDERSON closed testimony and debate on the bill.                                                                         
                                                                                                                                
Number 1560                                                                                                                     
                                                                                                                                
REPRESENTATIVE DAHLSTROM  moved to  report CSHB 155,  Version 23-                                                               
GH1119\D,  Craver,  4/3/03, as  amended,  out  of committee  with                                                               
individual  recommendations  and  the accompanying  fiscal  note.                                                               
There being  no objection,  CSHB 155(L&C)  was reported  from the                                                               
House Labor and Commerce Standing Committee.                                                                                    
                                                                                                                                
HB 162-INCREASE BUSINESS LICENSE FEE                                                                                          
                                                                                                                                
Number 1529                                                                                                                     
                                                                                                                                
CHAIR ANDERSON announced  that the final order  of business would                                                               
be HOUSE  BILL NO. 162,  "An Act increasing  the fee for  a state                                                               
business license; and providing for an effective date."                                                                         
                                                                                                                                
CHAIR  ANDERSON reminded  the  committee that  at  the March  12,                                                               
2003,  hearing HB  162  was  amended to  tier  the  fee costs  as                                                               
follows:                                                                                                                        
                                                                                                                                
     0-5 employees       - $50 per year                                                                                         
     6-25 employees      - $100 per year                                                                                        
     26-plus employees   - $200 per year                                                                                        
                                                                                                                                
CHAIR  ANDERSON  noted  that  committee  members  should  have  a                                                               
spreadsheet in  which the groupings [of  employees] were slightly                                                               
revised as  follows:   0-4, 5-19, and  20-plus.   The spreadsheet                                                               
illustrates what  the governor's legislation will  yield with the                                                               
various changes  in fees.  He  asked members to review  the chart                                                               
and  decide whether  there  should be  another  amendment to  the                                                               
legislation  in order  to  increase the  amount  or whether  this                                                               
tiered approach is sufficient.                                                                                                  
                                                                                                                                
Number 1379                                                                                                                     
                                                                                                                                
RICK  URION,   Director,  Division  of   Occupational  Licensing,                                                               
Department   of   Community   &  Economic   Development   (DCED),                                                               
acknowledged that [the  design of the bill]  is the legislature's                                                               
decision.   However, he remarked  that it  would be best  to keep                                                               
the  [fee  system]  simple.   Mr.  Urion  highlighted  that  this                                                               
legislation  does bring  in a  lot of  revenue and  most business                                                               
owners don't mind paying that fee.                                                                                              
                                                                                                                                
Number 1350                                                                                                                     
                                                                                                                                
DON  JOHNSON, Fishing  Charter Operator,  informed the  committee                                                               
that he  has a charter operation  on the Kenai River  and that in                                                               
the 1980s  there were no fees.   Mr. Johnson pointed  out that he                                                               
is  now paying  between  $3,000-$5,000  to put  his  boat in  the                                                               
water.   This ongoing  disregard of  the public's  willingness to                                                               
pay fees is a mistake, he  said.  This [increase] in the business                                                               
license fee  is a generic tax  on the state's residents  who want                                                               
to do business, and it discourages  business.  All these fees get                                                               
passed on  to the consumer.   Mr. Johnson said, in  the end, this                                                               
[increase] will really hurt the fisheries industry.                                                                             
                                                                                                                                
REPRESENTATIVE GUTTENBERG asked  Mr. Johnson what he  viewed as a                                                               
reasonable fee for a business license for a year.                                                                               
                                                                                                                                
MR.  JOHNSON clarified  that he  works in  a fishing  and hunting                                                               
guide business.   He noted  that this industry has  experienced a                                                               
tremendous  increase  in  fees,  and  every  time  [there  is  an                                                               
increase or a  new fee] the comment is made,  "No one will mind."                                                               
He informed  the committee that  currently he  has to take  out a                                                               
loan to pay all the fees  before [starting his season].  Although                                                               
he understands trying to fill in  the fiscal gap with a user fee,                                                               
he indicated that  the fee structure would  undermine the fishing                                                               
industry.  A lot of businesses  have more than four, five, or ten                                                               
employees, and  those businesses  will get  hammered on  this, he                                                               
warned.                                                                                                                         
                                                                                                                                
Number 1155                                                                                                                     
                                                                                                                                
REPRESENTATIVE GATTO  pointed out that  20 years ago,  when there                                                               
were no  fees, 2  million barrels  of oil were  produced   on the                                                               
pipeline.  However, today there  are just about 1 million barrels                                                               
of  oil produced.    This reduction  in revenue  is  part of  the                                                               
reason for this  increase as is the desire to  control the amount                                                               
of use  on the rivers,  which indirectly helps those  involved in                                                               
commercial hunting and fishing.                                                                                                 
                                                                                                                                
MR. JOHNSON reiterated that he  thought generating revenue with a                                                               
user fee  is good, but he  stressed the person wanting  to access                                                               
the   lake  or   river  should   be  charged   rather  than   the                                                               
businessperson.                                                                                                                 
                                                                                                                                
CHAIR ANDERSON  turned to  a chart  provided by  committee staff.                                                               
He explained that  the first section lays out [the  income for HB
162, as proposed by the  governor], with detail for each category                                                               
of employees  targeted by  [the committee].   The  second section                                                               
desplays the  three tiers of income  under HB 162, as  amended by                                                               
the committee,  and it  illustrates a  decrease in  total income.                                                               
The  third  section  reflects  the  increase  in  income  if  the                                                               
business  license [fee  for small  employers]  was increased  [to                                                               
$75] per  year.  The  fourth section  reflects the income  if the                                                               
business license [fee  for the small employers]  was increased to                                                               
$100 per  year; it moves  the [revenue] closer to  the governor's                                                               
annual target of $7 million.                                                                                                    
                                                                                                                                
Number 0970                                                                                                                     
                                                                                                                                
JOSH APPLEBEE, Staff to Representative  Tom Anderson, House Labor                                                               
and  Commerce  Standing   Committee,  Alaska  State  Legislature,                                                               
informed the committee that if  the 20-plus category of employees                                                               
was charged $500  for a business license and the  0-4 category of                                                               
employees  was charged  $75, there  would be  new revenue  in the                                                               
amount of $4,244,900.                                                                                                           
                                                                                                                                
CHAIR ANDERSON  highlighted the need  for a balanced  approach so                                                               
that small  companies aren't  [favored] while  [large] businesses                                                               
continue to  pay their share.   He emphasized that  the committee                                                               
must develop a reasonable fee that also generates revenue.                                                                      
                                                                                                                                
REPRESENTATIVE  CRAWFORD pointed  out that  [when a  company pays                                                               
for] a business  license, it obtains a name that  no one else can                                                               
use, which is  worthwhile and for which [there should  be a fee].                                                               
He  said  he disagrees  with  the  governor's legislation,  which                                                               
charges a  $200 fee regardless of  the size of the  business.  He                                                               
said he favors a modest change in the business fee.                                                                             
                                                                                                                                
Number 0862                                                                                                                     
                                                                                                                                
CHAIR ANDERSON proposed the following:                                                                                          
                                                                                                                                
     0-4 employees       - $75                                                                                                  
     5-19 employees      - $100                                                                                                 
     20-plus employees  - $200                                                                                                  
                                                                                                                                
He inquired  as to how  much more  revenue would be  generated by                                                               
changing the 0-4  employees category to $75,  as specified above.                                                               
He  noted  that  the  current legislation  before  the  committee                                                               
[example two on the spreadsheet] yields $2,133,675.                                                                             
                                                                                                                                
MR. APPLEBEE informed  the committee that the  above change would                                                               
result in total annual revenue of $3.611 [million].                                                                             
                                                                                                                                
CHAIR ANDERSON explained that [this  fee structure] would provide                                                               
another $1.5  million and  would [reach]  half of  the governor's                                                               
target.                                                                                                                         
                                                                                                                                
Number 0772                                                                                                                     
                                                                                                                                
REPRESENTATIVE CRAWFORD pointed out  that there are many seasonal                                                               
jobs that  have great fluctuations  in the numbers  of employees.                                                               
When the fee is based  on the number of employees, Representative                                                               
Crawford said he believes those  businesses that temporarily hire                                                               
larger numbers of employees will be hurt the worst.                                                                             
                                                                                                                                
REPRESENTATIVE  GATTO   asked  if  there  is   a  breakdown  that                                                               
addresses  sole   proprietorships  [separately]  with   the  next                                                               
category being 2-5 employees.                                                                                                   
                                                                                                                                
Number 0660                                                                                                                     
                                                                                                                                
REPRESENTATIVE  GUTTENBERG agreed  that  there are  lots of  sole                                                               
proprietorships.     He   also   concurred  with   Representative                                                               
Crawford's warning about the impact on seasonal businesses.                                                                     
                                                                                                                                
MR. URION said that although the  division has the number of sole                                                               
proprietors, sole  proprietors can  have employees.   With regard                                                               
to determining the number of  employees, Mr. Urion specified that                                                               
those employers who  file a quarterly report  with the Department                                                               
of Labor  would be charged  a fee on the  basis of the  number of                                                               
employees  [specified  in  the  quarterly  report].    Therefore,                                                               
seasonal [businesses]  will have  to pay  a fee  at the  high end                                                               
[based on the number of employees during their busiest season].                                                                 
                                                                                                                                
Number 0504                                                                                                                     
                                                                                                                                
REPRESENTATIVE CRAWFORD  posed a  situation in which  an employee                                                               
works  for  a  single  contractor [on  and  off]  numerous  times                                                               
[during the  year].  He asked  if that employee would  be counted                                                               
once or each time the person was rehired.                                                                                       
                                                                                                                                
CHAIR ANDERSON  pointed out that  a contractor wouldn't  obtain a                                                               
business  license  for   each  job  but  rather   for  the  year.                                                               
Therefore,  he assumed  that the  contractor's maximum  number of                                                               
employees  for one  year would  be [the  number considered]  when                                                               
purchasing the business license the next year.                                                                                  
                                                                                                                                
MR.  URION, in  response  to  Representative Crawford,  explained                                                               
that  an employee  would [only  be counted  once], no  matter the                                                               
number of times the employee worked for the employer in a year.                                                                 
                                                                                                                                
Number 0398                                                                                                                     
                                                                                                                                
REPRESENTATIVE LYNN  informed the  committee that  he is  a [real                                                               
estate] broker associate  for a large company in  Anchorage.  The                                                               
company  employs   probably  100   agents  who   are  independent                                                               
contractors.   He asked what  would happen  if the broker  of the                                                               
large company  had his  business license based  on his  number of                                                               
employees and each  of the independent contractors  had their own                                                               
license.                                                                                                                        
                                                                                                                                
MR.  URION assumed  that  a  real estate  [broker]  would have  a                                                               
business license.                                                                                                               
                                                                                                                                
Number 0318                                                                                                                     
                                                                                                                                
REPRESENTATIVE LYNN said  that he didn't have  a business license                                                               
and  he  didn't believe  anyone  [in  his position]  did  either.                                                               
Representative  Lynn  explained  that all  his  commissions  come                                                               
through  the broker,  although he  is  an independent  contractor                                                               
rather than an employee.                                                                                                        
                                                                                                                                
MR. URION related  his belief that an  independent contractor had                                                               
to  have  a business  license.    Furthermore,  one can't  be  an                                                               
independent contractor and an employee,  the individual is one or                                                               
the other.                                                                                                                      
                                                                                                                                
REPRESENTATIVE LYNN requested that Mr. Urion check on that.                                                                     
                                                                                                                                
CHAIR ANDERSON  informed the committee  that he has  provided Mr.                                                               
Applebee  with various  scenarios to  plug into  his spreadsheet.                                                               
Chair  Anderson  proposed a  hypothetical  scenario  in which  an                                                               
employer of  0-4 employees  paid $75,  5-19 employees  paid $150,                                                               
and 20-plus employees  paid $300.  Chair  Anderson reiterated the                                                               
need  for balance,  but mentioned  that every  other state  has a                                                               
higher business license  fee than Alaska.  He  expressed the need                                                               
to develop a number that brings  in additional revenue to pay for                                                               
the program and [ease] the budget deficit.                                                                                      
                                                                                                                                
Number 0113                                                                                                                     
                                                                                                                                
REPRESENTATIVE GUTTENBERG  asked if  20 employees is  the highest                                                               
number  that  is  tracked.    He  remarked  that  it  would  seem                                                               
appropriate to  increase the  fee for employers  with 50  or more                                                               
employees.                                                                                                                      
                                                                                                                                
CHAIR ANDERSON said that's something to consider.                                                                               
                                                                                                                                
REPRESENTATIVE GATTO mentioned a $25 fee plus $10 per employee.                                                                 
                                                                                                                                
TAPE 03-29, SIDE A                                                                                                            
Number 0077                                                                                                                     
                                                                                                                                
MR.  URION  indicated  that  90 percent  of  the  businesses  [in                                                               
Alaska] have 0-4  employees.  The businesses on the  high end [of                                                               
employees] are  so few  that it would  make little  difference in                                                               
[total revenue if fees for those few businesses were higher].                                                                   
                                                                                                                                
Number 0142                                                                                                                     
                                                                                                                                
CHAIR ANDERSON gave the committee  aide another set of figures to                                                               
enter  into his  computer spreadsheet:   $75  for 0-4  employees,                                                               
$150  for 5-19  employees, and  $200 for  20-plus employees.   He                                                               
noted that it would total  $3,866,575, which is $1.7 million more                                                               
than  the  current  amended  version of  the  bill,  assuming  no                                                               
"dropouts" -  people who refuse to  pay the fee.   Chair Anderson                                                               
referred to the  spreadsheet in committee packets  that shows the                                                               
amounts under HB 162  as currently amended, in  addition to other                                                               
scenarios including the governor's  proposal under which everyone                                                               
would pay $200.   He explained that he'd like the  total to be at                                                               
least $3.5  million, half the  revenue requested by  the governor                                                               
in the original bill.  He sought members' input.                                                                                
                                                                                                                                
Number 0219                                                                                                                     
                                                                                                                                
REPRESENTATIVE  GUTTENBERG suggested  seeing  how  much would  be                                                               
generated if the  fee were $500 for 20-plus  employees under that                                                               
scenario.                                                                                                                       
                                                                                                                                
CHAIR  ANDERSON  mentioned  seasonal  businesses  and  so  forth,                                                               
noting that it is quite a jump from the current $25.                                                                            
                                                                                                                                
REPRESENTATIVE GUTTENBERG withdrew his suggestion.                                                                              
                                                                                                                                
CHAIR  ANDERSON said  there was  merit in  that thought  process.                                                               
However, as Mr. Urion had  said, 90 percent of Alaskan businesses                                                               
have  the smaller  number  of employees,  and  the higher  amount                                                               
would  apply to  so few  [businesses] that  it wouldn't  increase                                                               
revenue much.                                                                                                                   
                                                                                                                                
Number 0323                                                                                                                     
                                                                                                                                
REPRESENTATIVE DAHLSTROM expressed concern  that $3 million isn't                                                               
what  the  governor  asked  for  and  that  he'll  make  [budget]                                                               
adjustments elsewhere without the legislature's input.                                                                          
                                                                                                                                
CHAIR  ANDERSON asked  Mr.  Urion whether  he  believes the  $3.8                                                               
[million] would be more acceptable than the $2.1 million.                                                                       
                                                                                                                                
MR. URION said every [increase in revenue] is appreciated.                                                                      
                                                                                                                                
REPRESENTATIVE   DAHLSTROM   reiterated    her   concern   [about                                                               
additional budget cuts].                                                                                                        
                                                                                                                                
Number 0431                                                                                                                     
                                                                                                                                
CHAIR  ANDERSON  said [this  bill]  reminded  him of  the  [sharp                                                               
increase] in  the alcohol tax last  year.  He suggested  the need                                                               
to [increase revenues] in "baby steps" out of fairness.                                                                         
                                                                                                                                
Number 0440                                                                                                                     
                                                                                                                                
REPRESENTATIVE  CRAWFORD  mentioned   the  300  percent  increase                                                               
originally proposed  for the  alcohol tax.   He pointed  out that                                                               
the governor's  proposal [for the  business license] would  be an                                                               
800 percent increase.                                                                                                           
                                                                                                                                
REPRESENTATIVE DAHLSTROM  highlighted Mr. Urion's  testimony that                                                               
this is the first increase in 50  years.  She said it will affect                                                               
her personally too.                                                                                                             
                                                                                                                                
REPRESENTATIVE  CRAWFORD   pointed  out  that  it   won't  affect                                                               
[legislators] nearly as much as  it will affect people who aren't                                                               
[as well-off financially].                                                                                                      
                                                                                                                                
Number 0508                                                                                                                     
                                                                                                                                
CHAIR ANDERSON  returned attention to his  recommendation of $75,                                                               
$150, and $200.  He explained  that the biggest increase would be                                                               
for businesses with more than 20  employees.  They would pay $175                                                               
more  a year,  whereas businesses  with 0-4  employees would  pay                                                               
only $50  more.  Acknowledging Representative  Dahlstrom's point,                                                               
he added,  "We're trying to work  with the governor to  cut costs                                                               
and generate revenue."                                                                                                          
                                                                                                                                
Number 0557                                                                                                                     
                                                                                                                                
REPRESENTATIVE GATTO  suggested that $200  was too close  [to the                                                               
$75 and  $150 fees].  He  proposed $250 or even  $300, indicating                                                               
it  should account  for the  major  difference in  the number  of                                                               
employees.                                                                                                                      
                                                                                                                                
CHAIR ANDERSON indicated he was  asking the committee aide to run                                                               
a  scenario for  $75  and  $150, and  inquired  about  $250.   He                                                               
expressed dislike  for $300, saying  he wouldn't support  such an                                                               
amendment.                                                                                                                      
                                                                                                                                
MR.  APPLEBEE  said  [increasing  the fee  for  large  employers]                                                               
changes the revenue to $4,022,675.                                                                                              
                                                                                                                                
REPRESENTATIVE DAHLSTROM noted that it is a $400,000 increase.                                                                  
                                                                                                                                
CHAIR ANDERSON  said he believes  a $275  increase a year  [for a                                                               
$300 fee  for large employers] is  too much and thus  he wouldn't                                                               
support it because some seasonal  companies have 4 or 5 employees                                                               
in  the  winter but  20-plus  in  the  summer.   He  referred  to                                                               
Representative   Guttenberg's  remarks   and  pointed   out  that                                                               
[ExxonMobil  Corporation],  for  example,   is  in  that  20-plus                                                               
category.    He suggested  perhaps  the  House Finance  Committee                                                               
could look at [setting a fee for the large employers] further.                                                                  
                                                                                                                                
Number 0643                                                                                                                     
                                                                                                                                
REPRESENTATIVE LYNN raised the possibility  of a graduated system                                                               
that changes to a percentage of  the gross or net revenue after a                                                               
certain point.                                                                                                                  
                                                                                                                                
MR. URION surmised that NFIB  [National Federation of Independent                                                               
Business] would object and that  many businesses wouldn't want to                                                               
have to "disclose that to that degree."                                                                                         
                                                                                                                                
CHAIR  ANDERSON agreed  it is  a  good idea  to look  at ways  to                                                               
capitalize  on the  larger companies  without making  the smaller                                                               
companies incur debilitating  fees.  He asked  whether anyone had                                                               
an amendment  to raise  the fees  at some level  in order  to get                                                               
closer to the governor's requested  revenue.  He reminded members                                                               
that an amendment was adopted at  the March 12 meeting that would                                                               
bring in $2,133,675.                                                                                                            
                                                                                                                                
Number 0760                                                                                                                     
                                                                                                                                
CHAIR ANDERSON  moved to adopt  a conceptual amendment  such that                                                               
$75 would be the fee for 0-4  employees a year, $150 would be the                                                               
fee for  5-19 employees a  year, and  $200 would be  retained for                                                               
20-plus employees  a year; that  would yield $3,866,575  if there                                                               
were  no "dropouts,"  and would  raise revenue  over the  amended                                                               
bill by  another $1,700,000.   He  said he'd like  to raise  it a                                                               
little closer to the amount desired by the governor.                                                                            
                                                                                                                                
Number 0840                                                                                                                     
                                                                                                                                
REPRESENTATIVE GUTTENBERG  objected.  He said  the committee aide                                                               
had  done  a good  job,  but  he  recalled  asking for  a  larger                                                               
spreadsheet  to  show  some different  numbers  at  the  previous                                                               
meeting.  He suggested it would  have helped to have had multiple                                                               
scenarios "already built in to  something."  He expressed concern                                                               
about  the disproportionate  burden on  [companies with]  0-4 and                                                               
15-19  employees   compared  with   [large  oil   companies  like                                                               
ExxonMobil  Corporation,   for  example].    He   also  mentioned                                                               
[companies with] seasonal  employees and the need  to build those                                                               
concerns  into [the  committee's solution].   He  said he  didn't                                                               
think there was a simplistic answer.                                                                                            
                                                                                                                                
CHAIR ANDERSON agreed.                                                                                                          
                                                                                                                                
Number 0919                                                                                                                     
                                                                                                                                
REPRESENTATIVE  DAHLSTROM reiterated  that this  will affect  her                                                               
and several members of her  family, but expressed confidence that                                                               
the governor  will come up with  the $7 million.   She said she'd                                                               
rather  know exactly  where it  will  come from,  rather than  be                                                               
surprised later.                                                                                                                
                                                                                                                                
Number 0961                                                                                                                     
                                                                                                                                
REPRESENTATIVE   CRAWFORD  acknowledged   that   it  isn't   "fun                                                               
business" to close  a budget gap.  He  referred to Representative                                                               
Guttenberg's comments  and said this [amendment]  doesn't address                                                               
a lot of concerns.  For  example, a sole proprietor or a business                                                               
with  one  employee could  earn  $1  million  a year,  whereas  a                                                               
company with 100 employees in a  year could do only a few hundred                                                               
thousand dollars in business.  He  pointed out that there will be                                                               
millions   of  dollars   more  to   [raise]   in  future   years.                                                               
Representative  Crawford suggested  the  need  for a  broad-based                                                               
plan  that addresses  the whole  problem with  a phased  approach                                                               
over  a number  of years.    He said  he  will wait  for a  good,                                                               
honest-to-goodness fiscal plan.                                                                                                 
                                                                                                                                
CHAIR ANDERSON  agreed and said  he is  wearing "two hats."   One                                                               
[of his concerns] is that there  is a budget deficit that must be                                                               
addressed immediately.   Noting  that this  is one  targeted area                                                               
[in which  to raise  revenues], he said  businesses should  pay a                                                               
little more  "business tax," but  asked what "a little  bit more"                                                               
should be.   He said he was pleased that  the committee passed an                                                               
amendment to reduce what the  governor proposed, but he now finds                                                               
himself in  a quandary  coming back to  the committee  and asking                                                               
for an amendment  that would generate revenue closer  to what the                                                               
governor  targeted.   He said  that he  doesn't hear  anyone else                                                               
recommending this approach and said  that if nobody supports this                                                               
amendment, he  will withdraw it and  pass on the bill  as amended                                                               
previously.   He  acknowleged  Representative Guttenberg's  point                                                               
about  how  the  numbers  were  arrived  at,  but  surmised  that                                                               
"everybody has an idea on what the categories could be."                                                                        
                                                                                                                                
Number 1118                                                                                                                     
                                                                                                                                
REPRESENTATIVE  LYNN commented  that  no  combination of  numbers                                                               
would  please  everyone and  that  there  is no  perfect  answer.                                                               
Mentioning  a  desire  to  provide  the  revenue  sought  by  the                                                               
governor, he said it doesn't  seem feasible when [the majority of                                                               
the  businesses] are  mom-and-pop [operations].   Noting  that he                                                               
does photography on the side and  has gladly paid $50 [for a two-                                                               
year license]  to show his  photographs at a Saturday  market, he                                                               
said he might not have been  so eager to do that "hobby business"                                                               
if he'd had  to pay $75, $150,  or $200 [a year].   He admitteded                                                               
that the  burden falls on  those businesses [with  0-4 employees]                                                               
because there  are more of  them.  He expressed  reluctance about                                                               
doing that, however, and said it  is too bad the committee cannot                                                               
find a way to match [the  business license fee] to the income [of                                                               
the particular business].  He  pointed out that everyone turns in                                                               
a tax return, but acknowledged that it is confidential.                                                                         
                                                                                                                                
Number 1201                                                                                                                     
                                                                                                                                
REPRESENTATIVE  GATTO offered  that  sole  proprietors are  smart                                                               
people  and will  [adapt];  for example,  they  may combine  with                                                               
others  and  obtain one  license  for  the amalgamated  business.                                                               
"You're going  to wind  up with  less money  than you  think," he                                                               
predicted,  indicating the  numbers  proposed  by Chair  Anderson                                                               
were acceptable.   He compared Alaska  favorably with California,                                                               
which is $35 billion in the hole  and already has a sales tax and                                                               
income tax.                                                                                                                     
                                                                                                                                
Number 1254                                                                                                                     
                                                                                                                                
CHAIR  ANDERSON withdrew  his amendment.   He  explained that  he                                                               
believes  businesses  under the  current  amended  bill would  be                                                               
paying enough.   He suggested revisiting  [business license fees]                                                               
in the  future if the  department indicates that the  state isn't                                                               
"imposing enough  business tax  to operate."   He  suggested that                                                               
the committee members concur with  the witnesses like Mr. Johnson                                                               
who say that  businesses, with this hike, are paying  enough.  He                                                               
requested a motion to move  the bill from committee, stating that                                                               
the message  from the committee  will be:   "This is all  we want                                                               
businesses  to pay  at this  stage, and  it can  be revisited  by                                                               
another legislature at another date."                                                                                           
                                                                                                                                
Number 1299                                                                                                                     
                                                                                                                                
REPRESENTATIVE GATTO moved  to report HB 162, as  amended, out of                                                               
committee  with individual  recommendations and  the accompanying                                                               
fiscal  notes.   There  being  no  objection, CSHB  162(L&C)  was                                                               
reported from the House Labor and Commerce Standing Committee.                                                                  
                                                                                                                              
ADJOURNMENT                                                                                                                   
                                                                                                                                
There being no further business before the committee, the House                                                                 
Labor and Commerce Standing Committee meeting was adjourned at                                                                  
5:20 p.m.                                                                                                                       

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