Legislature(2005 - 2006)

04/30/2005 02:15 PM L&C


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                    ALASKA STATE LEGISLATURE                                                                                  
          HOUSE LABOR AND COMMERCE STANDING COMMITTEE                                                                         
                         April 30, 2005                                                                                         
                           2:06 p.m.                                                                                            
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Tom Anderson, Chair                                                                                              
Representative Pete Kott                                                                                                        
Representative Gabrielle LeDoux                                                                                                 
Representative Bob Lynn                                                                                                         
Representative Norman Rokeberg                                                                                                  
Representative Harry Crawford                                                                                                   
Representative David Guttenberg                                                                                                 
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
All members present                                                                                                             
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
HOUSE BILL NO. 271                                                                                                              
"An  Act  relating  to limitations  on  overtime  for  registered                                                               
nurses in health care facilities;  and providing for an effective                                                               
date."                                                                                                                          
                                                                                                                                
     - MOVED HB 271 OUT OF COMMITTEE                                                                                            
                                                                                                                                
HOUSE BILL NO. 286                                                                                                              
"An Act amending  the manner of determining  the royalty received                                                               
by the state  on gas production by directing  the commissioner of                                                               
natural  resources to  accept, under  certain circumstances,  the                                                               
transfer price of the gas  if established by transfer price order                                                               
of  the Regulatory  Commission of  Alaska; and  providing for  an                                                               
effective date."                                                                                                                
                                                                                                                                
     - MOVED HB 286 OUT OF COMMITTEE                                                                                            
                                                                                                                                
SENATE BILL NO. 137                                                                                                             
"An Act  providing that  an institution  providing accommodations                                                               
exempt from  the provisions of  the Uniform  Residential Landlord                                                               
and  Tenant Act  may  evict tenants  without  resorting to  court                                                               
proceedings under AS 09.45.060 - 09.45.160."                                                                                    
                                                                                                                                
     - MOVED HCS CSSB 137(L&C) OUT OF COMMITTEE                                                                                 
                                                                                                                                
SENATE BILL NO. 158                                                                                                             
"An Act prohibiting the imposition of municipal sales and use                                                                   
taxes on state construction contracts and certain subcontracts;                                                                 
and providing for an effective date."                                                                                           
                                                                                                                                
     - MOVED SB 158 OUT OF COMMITTEE                                                                                            
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
BILL: HB 271                                                                                                                  
SHORT TITLE: LIMIT OVERTIME FOR REGISTERED NURSES                                                                               
SPONSOR(S): REPRESENTATIVE(S) WILSON                                                                                            
                                                                                                                                
04/15/05       (H)       READ THE FIRST TIME - REFERRALS                                                                        
04/15/05       (H)       L&C, HES, FIN                                                                                          
04/30/05       (H)       L&C AT 1:00 PM CAPITOL 17                                                                              
                                                                                                                                
BILL: HB 286                                                                                                                  
SHORT TITLE: VALUE OF ROYALTY ON GAS PROD./ TAX CREDIT                                                                          
SPONSOR(S): REPRESENTATIVE(S) SAMUELS                                                                                           
                                                                                                                                
04/26/05       (H)       READ THE FIRST TIME - REFERRALS                                                                        
04/26/05       (H)       O&G, L&C                                                                                               
04/28/05       (H)       O&G AT 5:00 PM CAPITOL 124                                                                             
04/28/05       (H)       Moved Out of Committee                                                                                 
04/28/05       (H)       MINUTE(O&G)                                                                                            
04/29/05       (H)       O&G RPT 5DP                                                                                            
04/29/05       (H)       DP:    KERTTULA,    SAMUELS,    MCGUIRE,                                                               
                         ROKEBERG, KOHRING                                                                                      
04/30/05       (H)       L&C AT 1:00 PM CAPITOL 17                                                                              
                                                                                                                                
BILL: SB 137                                                                                                                  
SHORT TITLE: EVICTIONS FROM UNIV. STUDENT HOUSING                                                                               
SPONSOR(S): SENATOR(S) SEEKINS                                                                                                  
                                                                                                                                
03/08/05       (S)       READ THE FIRST TIME - REFERRALS                                                                        
03/08/05       (S)       L&C, JUD                                                                                               
03/22/05       (S)       L&C AT 1:30 PM BELTZ 211                                                                               
03/22/05       (S)       Heard & Held                                                                                           
03/22/05       (S)       MINUTE(L&C)                                                                                            
03/24/05       (S)       L&C AT 2:00 PM BELTZ 211                                                                               
03/24/05       (S)       Moved  SB 137 Out of Committee                                                                         
03/24/05       (S)       MINUTE(L&C)                                                                                            
03/29/05       (S)       L&C RPT  3DP                                                                                           
03/29/05       (S)       DP: BUNDE, DAVIS, STEVENS B                                                                            
04/05/05       (S)       JUD RPT 3DP 1NR                                                                                        
04/05/05       (S)       DP: SEEKINS, THERRIAULT, HUGGINS                                                                       
04/05/05       (S)       NR: GUESS                                                                                              
04/05/05       (S)       JUD AT 8:30 AM BUTROVICH 205                                                                           
04/05/05       (S)       Moved SB 137 Out of Committee                                                                          
04/05/05       (S)       MINUTE(JUD)                                                                                            
04/12/05       (S)       TRANSMITTED TO (H)                                                                                     
04/12/05       (S)       VERSION: SB 137                                                                                        
04/13/05       (H)       READ THE FIRST TIME - REFERRALS                                                                        
04/13/05       (H)       L&C, JUD                                                                                               
04/22/05       (H)       L&C AT 3:15 PM CAPITOL 17                                                                              
04/22/05       (H)       <Bill Hearing Postponed to 4/25>                                                                       
04/25/05       (H)       L&C AT 3:15 PM CAPITOL 17                                                                              
04/25/05       (H)       Heard & Held                                                                                           
04/25/05       (H)       MINUTE(L&C)                                                                                            
04/29/05       (H)       L&C AT 3:15 PM CAPITOL 17                                                                              
04/29/05       (H)       -- Meeting Canceled --                                                                                 
04/30/05       (H)       L&C AT 1:00 PM CAPITOL 17                                                                              
                                                                                                                                
BILL: SB 158                                                                                                                  
SHORT TITLE: MUNI TAX ON STATE CONSTRUCTION CONTRACTS                                                                           
SPONSOR(S): SENATOR(S) HUGGINS                                                                                                  
                                                                                                                                
04/01/05       (S)       READ THE FIRST TIME - REFERRALS                                                                        
04/01/05       (S)       CRA, FIN                                                                                               
04/06/05       (S)       CRA AT 1:30 PM BELTZ 211                                                                               
04/06/05       (S)       Moved  SB 158 Out of Committee                                                                         
04/06/05       (S)       MINUTE(CRA)                                                                                            
04/07/05       (S)       CRA RPT  2DP 2NR                                                                                       
04/07/05       (S)       DP: STEVENS G, STEDMAN                                                                                 
04/07/05       (S)       NR: WAGONER, KOOKESH                                                                                   
04/13/05       (S)       FIN AT 9:00 AM SENATE FINANCE 532                                                                      
04/13/05       (S)       Heard & Held                                                                                           
04/13/05       (S)       MINUTE(FIN)                                                                                            
04/15/05       (S)       FIN RPT  4DP 1DNP                                                                                      
04/15/05       (S)       DP: WILKEN, GREEN, DYSON, STEDMAN                                                                      
04/15/05       (S)       DNP: OLSON                                                                                             
04/15/05       (S)       FIN AT 9:00 AM SENATE FINANCE 532                                                                      
04/15/05       (S)       Moved SB 158 Out of Committee                                                                          
04/15/05       (S)       MINUTE(FIN)                                                                                            
04/21/05       (S)       TRANSMITTED TO (H)                                                                                     
04/21/05       (S)       VERSION: SB 158                                                                                        
04/22/05       (H)       READ THE FIRST TIME - REFERRALS                                                                        
04/22/05       (H)       L&C, FIN                                                                                               
04/29/05       (H)       L&C AT 3:15 PM CAPITOL 17                                                                              
04/29/05       (H)       -- Meeting Canceled --                                                                                 
04/30/05       (H)       L&C AT 1:00 PM CAPITOL 17                                                                              
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
REPRESENTATIVE PEGGY WILSON                                                                                                     
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Spoke as the sponsor of HB 271.                                                                            
                                                                                                                                
REBECCA BOLLING, RN, President                                                                                                  
Alaska Nurses Association                                                                                                       
Ketchikan, Alaska                                                                                                               
POSITION STATEMENT:  Testified in support of HB 271.                                                                            
                                                                                                                                
DAVE WILLIAMS, Project Coordinator                                                                                              
Department of Health and Social Services                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Testified on HB 271.                                                                                       
                                                                                                                                
KATHLEEN GETTYS, RN, President                                                                                                  
Providence Registered Nurses Bargaining Unit;                                                                                   
Delegate, American Nurses Association                                                                                           
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Urged the committee's support of HB 271.                                                                   
                                                                                                                                
DIANE O'CONNEL                                                                                                                  
Alaska Nurses Association                                                                                                       
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Urged the committee's support of HB 271.                                                                   
                                                                                                                                
LONNIE HOSLEY (PH), RN                                                                                                          
(No address provided)                                                                                                           
POSITION STATEMENT:  Testified in support of HB 271.                                                                            
                                                                                                                                
CAROL WIDMAN, RN                                                                                                                
(No address provided)                                                                                                           
POSITION STATEMENT:  Testified in support of HB 271.                                                                            
                                                                                                                                
GREY MITCHELL, Director                                                                                                         
Division of Labor Standards & Safety                                                                                            
Department of Labor & Workforce Development                                                                                     
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  During hearing of HB 271, answered                                                                         
questions.                                                                                                                      
                                                                                                                                
REPRESENTATIVE RALPH SAMUELS                                                                                                    
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Spoke as the sponsor of HB 286.                                                                            
                                                                                                                                
JIM POSEY, General Manager                                                                                                      
Municipal Light & Power                                                                                                         
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Provided specifics on HB 286.                                                                              
                                                                                                                                
KATE GIARD, Commissioner/Chair                                                                                                  
Regulatory Commission of Alaska                                                                                                 
Department of Commerce, Community, & Economic Development                                                                       
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Testified that HB 286 is in keeping with                                                                   
the agreement RCA had when ML&P purchased the Beluga River                                                                      
Field.                                                                                                                          
                                                                                                                                
MARTIN SCHULTZ, Audit Section                                                                                                   
Division of Oil and Gas                                                                                                         
Department of Natural Resources                                                                                                 
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Testified in support of HB 286.                                                                            
                                                                                                                                
ANDY LEIMAN                                                                                                                     
Municipal Light & Power                                                                                                         
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Testified in support of HB 286.                                                                            
                                                                                                                                
JOE MICHEL, Staff                                                                                                               
to Senator Ralph Seekins                                                                                                        
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Explained the changes encompassed in HCS                                                                   
CSSB 137, Version F.                                                                                                            
                                                                                                                                
SENATOR CHARLIE HUGGINS                                                                                                         
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Spoke as the sponsor of SB 158.                                                                            
                                                                                                                                
DAVID LANTZ, General Manager/Owner                                                                                              
Dimond Electric;                                                                                                                
Board Member, National Electrical Contractors Association -                                                                     
Alaska Chapter                                                                                                                  
(No address provided)                                                                                                           
POSITION STATEMENT:  During hearing of SB 158, urged the                                                                        
committee to level the playing field regarding what's taxed on a                                                                
state project throughout the state.                                                                                             
                                                                                                                                
DENISE MICHELS, Mayor                                                                                                           
City of Nome                                                                                                                    
Nome, Alaska                                                                                                                    
POSITION STATEMENT:  Testified in opposition to SB 158.                                                                         
                                                                                                                                
DEBORAH GRUNDMAN, Staff                                                                                                         
to Senator Huggins                                                                                                              
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Offered additional information on SB 158.                                                                  
                                                                                                                                
KATHIE WASSERMAN                                                                                                                
Alaska Municipal League                                                                                                         
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Testified in opposition to SB 158.                                                                         
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
                                                                                                                                
CHAIR TOM ANDERSON  called the House Labor  and Commerce Standing                                                             
Committee  meeting  to  order at  2:15:49  PM.    Representatives                                                             
Anderson,  Lynn, Crawford,  and  Guttenberg were  present at  the                                                               
call  to  order.   Representatives  Kott,  LeDoux,  and  Rokeberg                                                               
arrived as the meeting was in progress.                                                                                         
                                                                                                                                
HB 271-LIMIT OVERTIME FOR REGISTERED NURSES                                                                                   
                                                                                                                                
CHAIR ANDERSON announced  that the first order  of business would                                                               
be  HOUSE  BILL NO.  271,  "An  Act  relating to  limitations  on                                                               
overtime  for registered  nurses in  health care  facilities; and                                                               
providing for an effective date."                                                                                               
                                                                                                                                
REPRESENTATIVE PEGGY  WILSON, Alaska State  Legislature, sponsor,                                                               
explained  that HB  271 prohibits  mandatory overtime  for nurses                                                               
because  it causes  significant  problems for  both patients  and                                                               
health  care  workers.   "Forcing  nurses  to work  beyond  their                                                               
regularly  scheduled shift  has  been linked  to increased  error                                                               
rates  in  providing patient  care;  it's  also increased  injury                                                               
rates for  both patients  and health  care workers,"  she stated.                                                               
For  health care  workers, the  abuse of  mandatory overtime  has                                                               
been  associated with  unhealthy  weight gain,  increased use  of                                                               
alcohol  and tobacco,  and lower  levels  of functional  ability.                                                               
Representative  Wilson highlighted  that for  nurses, errors  and                                                               
mistakes  can  cause  life-threatening situations  for  both  the                                                               
patient  and the  nurse.   Furthermore, errors  and mistakes  can                                                               
lead to  lawsuits that could  result in  the loss of  license and                                                               
increases in malpractice insurance rates.   "The evidence is very                                                               
strong  that  prolonged  work hours  and  fatigue  effect  worker                                                               
performance," she stated.                                                                                                       
                                                                                                                                
REPRESENTATIVE  WILSON  informed  the  committee  that  the  U.S.                                                               
Department  of   Health  and   Human  Resources   authorized  the                                                               
Institute of Medicine  to study nurse work hours  and health care                                                               
errors.   The study provided  compelling evidence  supporting the                                                               
belief that nurses  working long hours have an  adverse effect on                                                               
patient  safety.    Representative Wilson  highlighted  that  the                                                               
study estimated  that between  44,000-98,000 hospital  deaths can                                                               
be  attributed  to medical  errors  each  year.   She  said  that                                                               
mandatory overtime  is a serious  contributing factor to  some of                                                               
these  errors.   The  study,  she  related, recommends  that  all                                                               
overtime should be curtailed altogether.                                                                                        
                                                                                                                                
2:18:46 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  WILSON informed  the committee  that when  nurses                                                               
had to  work shifts longer than  12 hours, the risk  of making an                                                               
error  was three  times higher.    Furthermore, working  overtime                                                               
increased the  odds of making  at least one error,  regardless of                                                               
the length  of the originally  scheduled shift.   Moreover, about                                                               
12  percent  of the  absences  reported  by  a random  sample  of                                                               
Canadian nurses was directly correlated to overtime.                                                                            
                                                                                                                                
REPRESENTATIVE WILSON pointed out  that mandatory overtime is one                                                               
of  the major  factors causing  nurses to  leave the  profession.                                                               
However, in  the face of  a severe nursing shortage,  nurses need                                                               
to  be kept  at the  bedside.   She informed  the committee  that                                                               
surveys  have  shown  that  the exodus  of  various  health  care                                                               
providers and  [other support staff] is  directly attributable to                                                               
difficult  working  conditions,  including  inadequate  staffing,                                                               
mandatory overtime, and insufficient compensation.                                                                              
                                                                                                                                
2:19:51 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  WILSON  specified  that  HB  271  won't  prohibit                                                               
nurses  from working  overtime,  although it  will discourage  an                                                               
employer  from assigning  mandatory overtime.   Furthermore,  the                                                               
legislation  will  prohibit  an   employer  from  threatening  or                                                               
retaliating against  a nurse who  refuses to work overtime.   She                                                               
noted   that  10   states   have   already  enacted   legislation                                                               
prohibiting mandatory overtime and another  20 are in the process                                                               
of  doing so.    Representative Wilson  concluded by  emphasizing                                                               
that this is not an overtime  issue but rather a safety issue for                                                               
both patients and nurses.                                                                                                       
                                                                                                                                
CHAIR ANDERSON turned  attention to the fiscal note for  a Wage &                                                               
Hour Investigator  I, which  he assumed  would cover  the state's                                                               
nurses.                                                                                                                         
                                                                                                                                
2:21:18 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE LYNN inquired  as to what happens  in an emergency                                                               
situation  in  which  a  nurse  becomes sick,  but  no  one  will                                                               
volunteer.  He  asked if mandatory overtime could  be required in                                                               
that situation.                                                                                                                 
                                                                                                                                
REPRESENTATIVE   WILSON  pointed   out   that   there  are   five                                                               
exemptions,  which include  the  aforementioned  situation.   The                                                               
exemptions are listed on page 2, lines 14-20.                                                                                   
                                                                                                                                
2:23:04 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  ROKEBERG   turned  attention  to   the  exemption                                                               
allowing a nurse to voluntarily work  overtime.  He asked if that                                                               
could  be problematic  in terms  of what's  voluntary and  what's                                                               
not.                                                                                                                            
                                                                                                                                
REPRESENTATIVE  WILSON related  her belief  that the  nurse would                                                               
know whether  she can handle additional  hours and how many.   In                                                               
further  response  to   Representative  Rokeberg,  Representative                                                               
Wilson  said that  parts of  HB 271  are based  on statutes  from                                                               
other states.                                                                                                                   
                                                                                                                                
2:24:47 PM                                                                                                                    
                                                                                                                                
REBECCA  BOLLING,  RN,   President,  Alaska  Nurses  Association,                                                               
informed  the  committee  that   the  Alaska  Nurses  Association                                                               
represents  over  6,000 registered  nurses  in  the state.    She                                                               
related her support for HB 271.   Ms. Bolling turned attention to                                                               
the  national  nursing  shortage,  which is  expected  to  be  of                                                               
greater proportions  than those  of the past.   She  reviewed the                                                               
many  reasons  for the  nursing  shorting,  included the  growing                                                               
elderly population, fewer individuals  choosing a nursing career,                                                               
and  the growing  trend of  nurses  planning to  and leaving  the                                                               
profession.   Many  surveys have  documented that  as many  as 20                                                               
percent of  nurses are  planning to  leave the  profession within                                                               
the  next  five  years.     She  echoed  Representative  Wilson's                                                               
comments  regarding  the reports  from  surveys  that nurses  are                                                               
leaving  the  profession  primarily due  to  working  conditions,                                                               
siting  mandatory  overtime  as  one   of  the  top  reasons  for                                                               
dissatisfaction.    Furthermore,   mandatory  overtime  has  been                                                               
associated  with poor  health  of the  nurse  and most  certainly                                                               
causes  family,  marital,  and  childcare  problems.    Moreover,                                                               
mandatory  overtime  contributes  to  poor quality  of  care  and                                                               
mistakes that can and do have disastrous results.                                                                               
                                                                                                                                
MS. BOLLING  said that the  answer to the nursing  shortage isn't                                                               
mandatory  overtime,  rather  it  will  worsen  the  shortage  by                                                               
driving  away more  nurses.   She  noted that  other states  have                                                               
tackled  this  issue.   She  also  noted  that nurses  do  suffer                                                               
retaliation from  employers when they refuse  overtime hours, and                                                               
therefore legislation  to ban  mandatory overtime  for registered                                                               
nurses  (RNs)   is  important.    Ms.   Bolling,  in  conclusion,                                                               
applauded  the effort  to protect  the profession  of nursing  in                                                               
Alaska and the  safety of the state's patients  by moving forward                                                               
on HB 271.                                                                                                                      
                                                                                                                                
2:29:09 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  GUTTENBERG inquired  as to  how this  legislation                                                               
would apply  to nurses performing administrative  work as opposed                                                               
to direct care.                                                                                                                 
                                                                                                                                
MS. BOLLING  related her belief  that it wouldn't apply  to those                                                               
nurses  doing administrative  work  primarily  because those  are                                                               
contracted services that are salary  positions.  Staff nurses are                                                               
paid on an hourly wage and are impacted by mandatory overtime.                                                                  
                                                                                                                                
2:30:05 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  LEDOUX  drew attention  to  the  exemption for  a                                                               
critical access hospital, and inquired as to what it is.                                                                        
                                                                                                                                
REPRESENTATIVE WILSON  opined that there are  only five hospitals                                                               
in the  state that are  critical access hospitals,  including the                                                               
hospitals in Wrangell, Petersburg,  and Cordova.  Those hospitals                                                               
are located in  areas in which the population  has decreased, but                                                               
the federal government has provided  help in order to continue to                                                               
provide services because  without the hospital there  would be no                                                               
access  to  health  care.    There was  an  indication  that  the                                                               
definition  of "critical  access  hospital" is  specified in  the                                                               
U.S. code.                                                                                                                      
                                                                                                                                
2:32:27 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  LEDOUX expressed  concern  for  hospitals with  a                                                               
limited  number of  employees because  she surmised  that such  a                                                               
hospital  would  be  most  likely  to  force  unwanted  overtime.                                                               
Therefore, the  exemption would seem  to undo the  good intention                                                               
of the legislation.                                                                                                             
                                                                                                                                
REPRESENTATIVE WILSON noted  that in talking with  nurses and the                                                               
Alaska Nurses Association, she gathered  that the only facilities                                                               
making people work overtime are  the Alaska Psychiatric Institute                                                               
(API), some  of the Pioneers'  Homes, and within  [the Department                                                               
of] Corrections.                                                                                                                
                                                                                                                                
[Due to  a technical difficulty,  the committee took a  brief at-                                                               
ease.]                                                                                                                          
                                                                                                                                
2:34:51 PM                                                                                                                    
                                                                                                                                
DAVE  WILLIAMS, Project  Coordinator,  Department  of Health  and                                                               
Social  Services  (DHSS),  informed  the  committee  that  he  is                                                               
representing  the pioneers'  and veterans'  homes.   Mr. Williams                                                               
stressed the importance  of RNs, without which  the pioneers' and                                                               
veterans' homes  cannot work.   He noted that the  department has                                                               
found difficulty in finding RNs to  even interview for all of the                                                               
shifts and  locations, there  are six  different homes  to staff.                                                               
Therefore,  when a  facility  is short,  it  asks for  volunteers                                                               
first.   He related  his impression  that generally  the requests                                                               
for volunteers satisfy  the need, although that's  not always the                                                               
case.                                                                                                                           
                                                                                                                                
MR. WILLIAMS  surmised that  under HB  271, more  attention would                                                               
have  to be  paid to  be  sure that  [the first  request was  for                                                               
voluntary  overtime].   Therefore, he  surmised that  whether the                                                               
overtime was mandatory or voluntary  would need to be recorded in                                                               
some  fashion.   Mr.  Williams said  that he  should  be able  to                                                               
provide the committee  with a fiscal note next week  after he has                                                               
time to  check with  each administrator  regarding the  amount of                                                               
voluntary and mandatory overtime.   He commented that if there is                                                               
a need to request mandatory  overtime, but [the administrator] is                                                               
not allowed  to do so  [under HB  271] then an  alternative would                                                               
have  to be  sought.   He mentioned  the possibility  of contract                                                               
nursing, which is  already being used.   The aforementioned would                                                               
probably  be reviewed  for the  fiscal note.   However,  he noted                                                               
that contract  nurses aren't  easily found,  and in  fact locally                                                               
contract nurses  are now being  hired from Canada.   Mr. Williams                                                               
concluded  by stating  that  the nationwide  shortage  of RNs  is                                                               
quite a challenge.                                                                                                              
                                                                                                                                
2:38:34 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  GUTTENBERG asked  if  the RN  shortage is  mainly                                                               
[attributable] to salaries  and benefits or are  there merely not                                                               
enough trained people in Alaska.                                                                                                
                                                                                                                                
MR. WILLIAMS  said that  he couldn't  speak to  the cause  of the                                                               
shortage, although  he agreed  with earlier  statements regarding                                                               
people  not choosing  [nursing]  as  a line  of  work.   Although                                                               
higher  wages could  attract more  people, it's  such a  shortage                                                               
that  there will  still be  difficulty finding  RNs.   In further                                                               
response to Representative Guttenberg,  Mr. Williams said that he                                                               
didn't know  the compensation differential between  the state and                                                               
the private sector.                                                                                                             
                                                                                                                                
2:39:18 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE CRAWFORD  inquired as to whether  Mr. Williams had                                                               
data regarding the  average amount of overtime hours  an RN would                                                               
work in [the pioneers' and veterans' homes].                                                                                    
                                                                                                                                
MR. WILLIAMS replied  no, although he offered to  provide that to                                                               
the committee as it will be utilized for the fiscal note.                                                                       
                                                                                                                                
2:40:40 PM                                                                                                                    
                                                                                                                                
KATHLEEN  GETTYS,  RN,  President, Providence  Registered  Nurses                                                               
Bargaining  Unit; Delegate,  American Nurses  Association, echoed                                                               
earlier  testimony  regarding  the   concern  the  Alaska  Nurses                                                               
Association  and the  American Nurses  Association has  regarding                                                               
the  impact  of  mandatory  overtime.   Both  organizations,  she                                                               
related, believe that the elimination  of mandatory overtime is a                                                               
critical  success factor  in efforts  to improve  the quality  of                                                               
health  care   and  conditions  for  nurses.     Therefore,  both                                                               
organizations oppose the use of  mandatory overtime as a staffing                                                               
tool.   Overtime,  whether mandatory  or voluntary,  is the  most                                                               
common method used  to cover staffing insufficiencies.   In fact,                                                               
some employers  have described mandatory  overtime as  a staffing                                                               
model.  She noted the  various states in which mandatory overtime                                                               
was  the  central  issue  in  RN  strikes.    "Strictly  limiting                                                               
mandatory overtime  for nurses  is a  critical step  in improving                                                               
the  quality of  health care  and reducing  medical errors,"  she                                                               
opined.  She reiterated the  findings of the study Representative                                                               
Wilson discussed  earlier.  "Unlike many  industries where public                                                               
safety  is a  concern,  health care  is  exempt from  regulations                                                               
which limit the  use of overtime as a staffing  tool" she pointed                                                               
out.  She  questioned why one would want a  nurse to provide care                                                               
for  someone  when it  has  been  clearly illustrated  that  long                                                               
working hours increase the likelihood of medical errors.                                                                        
                                                                                                                                
MS.  GETTYS  stated that  API  is  placed  at a  disadvantage  in                                                               
recruiting  nurses due  to working  conditions and  below-average                                                               
salaries.  However,  API can't turn away patients  and can't deny                                                               
hospitalization.   She noted that  API has lost  numerous nurses.                                                               
The combination of mandatory overtime  and working short has left                                                               
nurses  with  no  other  option than  to  seek  other  employment                                                               
opportunities.   Therefore,  Ms. Gettys  concluded by  urging the                                                               
legislature   to   prohibit   mandatory   overtime,   which   she                                                               
characterized as unethical, in Alaska.                                                                                          
                                                                                                                                
2:46:17 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  ROKEBERG  inquired  as   to  how  the  RNs  labor                                                               
agreement deals with mandatory overtime at Providence Hospital.                                                                 
                                                                                                                                
MS.  GETTYS  specified  that RNs  [at  Providence  Hospital]  are                                                               
covered by  a collective bargaining agreement  in which mandatory                                                               
overtime isn't  used.  However,  there are situations in  which a                                                               
case in the operating room runs  long.  Providence Hospital has a                                                               
large pool  of nurses and it  takes great effort to  find someone                                                               
to replace that nurse in the aforementioned situation.                                                                          
                                                                                                                                
2:47:24 PM                                                                                                                    
                                                                                                                                
DIANE   O'CONNEL,  Alaska   Nurses   Association,  informed   the                                                               
committee that  many organizations have worked  on developing the                                                               
language   in  HB   271,  including   the   Laborers  Local   341                                                               
representing  the nurses  at Anchorage's  Regional Hospital,  the                                                               
Teamsters representing  nurses located  in Kodiak and  Homer, and                                                               
the Alaska State Employee's Association  for API and other nurses                                                               
employed  by the  state.   Ms.  O'Connell  urged the  committee's                                                               
support for HB 271.                                                                                                             
                                                                                                                                
2:48:44 PM                                                                                                                    
                                                                                                                                
LONNIE HOSLEY (PH), RN, informed  the committee that she has been                                                               
a nurse for over  20 years and currently works at  API.  She said                                                               
that she  fully agrees  with the  statements of  her peers.   She                                                               
expressed hope that  the committee would [forward]  HB 271, which                                                               
she said she supports.                                                                                                          
                                                                                                                                
2:49:18 PM                                                                                                                    
                                                                                                                                
CAROL WIDMAN,  RN, informed  the committee that  she, too,  is an                                                               
employee of API and has been  forced to work overtime.  She urged                                                               
the committee to pass HB 271.                                                                                                   
                                                                                                                                
2:49:58 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  GUTTENBERG  referred  to  page 3,  line  10,  and                                                               
inquired as to  what happens if a complaint  alleging a violation                                                               
isn't filed with the commissioner within three business days.                                                                   
                                                                                                                                
GREY MITCHELL,  Director, Division  of Labor Standards  & Safety,                                                               
Department of Labor & Workforce  Development (DLWD), assumed that                                                               
it would  be the  department's failure and  the case  wouldn't be                                                               
pursuable at that point.                                                                                                        
                                                                                                                                
REPRESENTATIVE  ROKEBERG asked  if  testimony earlier  indicating                                                               
that health care  workers are exempt from the Alaska  Wage & Hour                                                               
Act is correct.                                                                                                                 
                                                                                                                                
MR. MITCHELL answered that there  is an exemption for most health                                                               
care  employees such  that those  employees  who provide  medical                                                               
services to patients  and are employed by an  over night hospital                                                               
are  exempt from  the Alaska  Wage  & Hour  Act.   Administrative                                                               
employees  aren't  included  nor   are  clinics  and  physician's                                                               
offices.                                                                                                                        
                                                                                                                                
CHAIR ANDERSON, upon  determining no one else  wished to testify,                                                               
closed public testimony.                                                                                                        
                                                                                                                                
2:52:06 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GUTTENBERG  urged Representative Wilson  to review                                                               
his earlier  question [regarding the failure  of the commissioner                                                               
to file a complaint within the specified time].                                                                                 
                                                                                                                                
REPRESENTATIVE  KOTT noted  that  he too  is  concerned with  the                                                               
provision addressing the failure to file  a complaint.  If it's a                                                               
failure from the  department, then he wasn't sure  that it should                                                               
restrict  the complaint  from  proceeding.   Representative  Kott                                                               
then  turned to  the fine  imposed on  state facilities  that are                                                               
found  not to  be  in  compliance.   He  surmised  that the  fine                                                               
remitted by  the state  facility would be  from the  general fund                                                               
dollars  it receives  and thus  the  fine would  be general  fund                                                               
dollars  that  would  be  deposited back  in  the  general  fund.                                                               
However,  that's not  clear in  the legislation.   Therefore,  he                                                               
requested that the sponsor review that issue.                                                                                   
                                                                                                                                
2:54:00 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE LEDOUX  moved to  report HB  271 out  of committee                                                               
with  individual  recommendations  and  the  accompanying  fiscal                                                               
notes.  There being no objection, it was so ordered.                                                                            
                                                                                                                                
HB 286-VALUE OF ROYALTY ON GAS PROD./ TAX CREDIT                                                                              
                                                                                                                                
CHAIR ANDERSON  announced that the  next order of  business would                                                               
be  HOUSE  BILL   NO.  286,  "An  Act  amending   the  manner  of                                                               
determining the royalty  received by the state  on gas production                                                               
by  directing the  commissioner of  natural resources  to accept,                                                               
under certain  circumstances, the  transfer price  of the  gas if                                                               
established by transfer price order  of the Regulatory Commission                                                               
of Alaska; and providing for an effective date."                                                                                
                                                                                                                                
REPRESENTATIVE RALPH SAMUELS,  Alaska State Legislature, sponsor,                                                               
explained  that  HB  286 is  housekeeping  legislation  that  was                                                               
brought  forth   by  Municipal  Light   &  Power  (ML&P).     The                                                               
legislation  addresses the  method  for  determining the  royalty                                                               
received by  the state  [on gas production].   The  Department of                                                               
Natural Resources (DNR)  calculates the royalty value  based on a                                                               
contract between  ML&P and Shell.   Then ML&P bought  an interest                                                               
in the Beluga River Field from  Shell and DNR agreed to allow the                                                               
rate as if the contract were  still in place.  The aforementioned                                                               
contract expires in  2005.  Therefore, HB 286 would  allow DNR to                                                               
use the  gas transfer price  set by the Regulatory  Commission of                                                               
Alaska (RCA)  much like DNR used  for the contract price  for the                                                               
gas.                                                                                                                            
                                                                                                                                
2:55:45 PM                                                                                                                    
                                                                                                                                
JIM POSEY,  General Manager, Municipal  Light &  Power, specified                                                               
that HB  286 allows a matrix  of calculations for the  price that                                                               
ML&P pays royalty on  to be first done through the  RCA.  If that                                                               
rate is  sufficient for royalty  purposes, then it  passes muster                                                               
for  DNR.   However, if  DNR  determines later  that the  royalty                                                               
value is lower,  then a second matrix through the  DNR process is                                                               
utilized in  order to establish a  royalty for the gas  ML&P uses                                                               
to run  its turbines.   Mr. Posey echoed  Representative Samuels'                                                               
earlier comment that HB 286  is a housekeeping measure that keeps                                                               
two competing agencies from having concurrent jurisdiction.                                                                     
                                                                                                                                
2:57:37 PM                                                                                                                    
                                                                                                                                
KATE GIARD, Commissioner/Chair,  Regulatory Commission of Alaska,                                                               
Department  of   Commerce,  Community,  &   Economic  Development                                                               
(DCCED), informed  the committee  that the  RCA has  reviewed the                                                               
statutory  revision,   which  is   in  keeping  with   the  RCA's                                                               
understanding of its responsibilities in  terms of opining on the                                                               
transfer price on  an annual basis.  There is  no additional cost                                                               
to the RCA for this legislation  because it's part of the process                                                               
ordered  in U9636,  the  docket when  ML&P  purchased the  Beluga                                                               
Field; order 39 describes the methods for calculating.                                                                          
                                                                                                                                
2:58:22 PM                                                                                                                    
                                                                                                                                
MS.  GIARD, in  response  to  Representative Rokeberg,  explained                                                               
that the  formula takes  the actual cost  of production  less the                                                               
sales, which  is then  multiplied by  a margin.   The  margin for                                                               
[ML&P]  is 1.6,  which  is ML&P's  debt  service coverage  ratio.                                                               
Therefore, the  calculations are  based on the  actual production                                                               
costs.                                                                                                                          
                                                                                                                                
MARTIN  SCHULTZ,   Audit  Section,  Division  of   Oil  and  Gas,                                                               
Department  of Natural  Resources,  related DNR's  support of  HB
286.  He informed the  committee that when DNR determines royalty                                                               
value under  state leases, it  reviews either the  contract price                                                               
the producer receives for the gas  or what other producers in the                                                               
same area  receive.   The aforementioned is  referred to  as "the                                                               
higher  of" comparison  in which  the  state is  entitled to  the                                                               
higher of those  two values.  He explained  that AS 38.05.180(aa)                                                               
allows a  producer that  sells to  a gas  or electric  utility to                                                               
have royalty value certainty.                                                                                                   
                                                                                                                                
3:00:00 PM                                                                                                                    
                                                                                                                                
MR. SCHULTZ  said that  HB 286  would expand  the coverage  of AS                                                               
38.05.180(aa)  to  include  a  transfer  price  that  a  producer                                                               
receives  on gas  deliveries  to an  affiliated  gas or  electric                                                               
utility.   Therefore,  it's consistent  with the  current statute                                                               
and DNR supports the legislation.                                                                                               
                                                                                                                                
3:00:37 PM                                                                                                                    
                                                                                                                                
ANDY LEIMAN, Municipal  Light & Power, related  ML&P's support of                                                               
HB 286.                                                                                                                         
                                                                                                                                
3:01:02 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE ROKEBERG moved  to report HB 286  out of committee                                                               
with  individual  recommendations  and  the  accompanying  fiscal                                                               
notes.  There being no objection, it was so ordered.                                                                            
                                                                                                                                
SB 137-EVICTIONS FROM UNIV. STUDENT HOUSING                                                                                   
                                                                                                                                
CHAIR ANDERSON  announced that the  next order of  business would                                                               
be SENATE  BILL NO.  137, "An Act  providing that  an institution                                                               
providing  accommodations  exempt  from  the  provisions  of  the                                                               
Uniform  Residential Landlord  and Tenant  Act may  evict tenants                                                               
without  resorting  to court  proceedings  under  AS 09.45.060  -                                                               
09.45.160."                                                                                                                     
                                                                                                                                
3:01:33 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE KOTT  moved to adopt  HCS CSSB 137, Version  G, as                                                               
the working document.                                                                                                           
                                                                                                                                
The committee took a brief at-ease.                                                                                             
                                                                                                                                
3:03:01 PM                                                                                                                    
                                                                                                                                
CHAIR ANDERSON objected.                                                                                                        
                                                                                                                                
REPRESENTATIVE KOTT  then moved  to adopt  HCS CSSB  137, Version                                                               
24-LS0739/F,  Kurtz, 4/27/05,  as  the working  document.   There                                                               
being no objection, Version F was before the committee.                                                                         
                                                                                                                                
JOE  MICHEL,  Staff  to  Senator   Ralph  Seekins,  Alaska  State                                                               
Legislature, explained that  in order to allay  some concerns the                                                               
word  "institution"  is  no  longer  included  in  the  title  or                                                               
throughout Version  F.   Furthermore, Version  F only  applies to                                                               
student  housing at  the University  of Alaska.   In  response to                                                               
Representative Lynn, Mr. Michel  confirmed that the references to                                                               
nursing homes and hospitals were removed.                                                                                       
                                                                                                                                
REPRESENTATIVE  ROKEBERG commented  that  the title  and the  act                                                               
seem to be at odds.  He  suggested that perhaps there is a syntax                                                               
error.                                                                                                                          
                                                                                                                                
3:04:36 PM                                                                                                                    
                                                                                                                                
CHAIR ANDERSON opined that he believes it's correct.                                                                            
                                                                                                                                
REPRESENTATIVE  ROKEBERG  specified  that  his  concern  is  with                                                               
regard  to  the  title  language   "without  resorting  to  court                                                               
proceedings  under" specific  statute  that  is civil  procedure.                                                               
However, in  order to  evict someone, [the  landlord] has  to use                                                               
the civil procedures.                                                                                                           
                                                                                                                                
CHAIR ANDERSON  inquired as  to the  possibility of  deleting the                                                               
language:    "without resorting  to  court  proceedings under  AS                                                             
09.45.060 - 09.45.160." on page 1, line 3.                                                                                    
                                                                                                                                
REPRESENTATIVE ROKEBERG  said that  he wouldn't  make a  big deal                                                               
about  it, which  he  characterized as  bad  syntax, because  the                                                               
legislation  has  been improved.    He  suggested that  the  next                                                               
committee  of  referral  review   the  incongruence  between  the                                                               
language in the title and the body of the legislation.                                                                          
                                                                                                                                
3:07:19 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  LEDOUX  inquired  as  to how  a  student  can  be                                                               
evicted without going through a formal eviction procedure.                                                                      
                                                                                                                                
MR. MICHEL  noted that there is  a long appeals process  when the                                                               
student is removed  from student housing.  The main  goal of this                                                               
legislation is  that once that  process is complete,  the student                                                               
can be removed,  which usually means that the  locks are changed.                                                               
The legislation means that the  university wouldn't have to go to                                                               
court to obtain a court order to forcible remove the student.                                                                   
                                                                                                                                
3:08:09 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE LEDOUX pointed  out that in one of  the cases that                                                               
she was aware of, the university  didn't go to court to evict the                                                               
[student].   Instead,  the  troopers were  called  and the  court                                                               
simply   dismissed  the   misdemeanor   complaint  against   [the                                                               
student].  Representative LeDoux said  that she wasn't opposed to                                                               
moving  the legislation,  but she  said she  wasn't sure  that it                                                               
solved  the problem  desired.   She opined  that even  under this                                                               
legislation,  a  court would  probably  still  say that  somebody                                                               
couldn't be convicted of a  criminal offense without some sort of                                                               
due process.                                                                                                                    
                                                                                                                                
3:09:23 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE ROKEBERG said that  he agrees with the legislation                                                               
as well as Representative LeDoux.   He said that the problem with                                                               
the landlord tenant  law is that if "it's not  for rent, you have                                                               
to  go through  like  30 days  to mitigate  the  situation."   He                                                               
maintained  that  the  title  still   doesn't  seem  to  fit  the                                                               
legislation.                                                                                                                    
                                                                                                                                
3:10:13 PM                                                                                                                    
                                                                                                                                
CHAIR ANDERSON  reminded the committee  that SB 137  was assigned                                                               
to  this  committee  because of  the  landlord-tenant  aspect  of                                                               
commerce.    He  related  his understanding  that  the  committee                                                               
concurs  with the  concept [of  the legislation],  although there                                                               
may be  a problem with the  title.  Therefore, he  suggested that                                                               
the  aforementioned  be  discussed  with  Legislative  Legal  and                                                               
Research  Services  before  it's  heard in  the  House  Judiciary                                                               
Standing Committee.                                                                                                             
                                                                                                                                
3:10:44 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE KOTT  moved to  report HCS  CSSB 137,  Version 24-                                                               
LS0739\F,  Kurtz,  4/27/05,  out  of  committee  with  individual                                                               
recommendations and  the accompanying  fiscal note.   There being                                                               
no  objection, HCS  CSSB  137(L&C) was  reported  from the  House                                                               
Labor and Commerce Standing Committee.                                                                                          
                                                                                                                                
3:10:57 PM                                                                                                                    
                                                                                                                                
The committee took a brief at-ease.                                                                                             
                                                                                                                                
SB 158-MUNI TAX ON STATE CONSTRUCTION CONTRACTS                                                                               
                                                                                                                                
3:11:47 PM                                                                                                                    
                                                                                                                                
CHAIR ANDERSON announced  that the final order  of business would                                                               
be SENATE  BILL NO.  158, "An Act  prohibiting the  imposition of                                                               
municipal  sales and  use taxes  on state  construction contracts                                                               
and certain subcontracts; and providing for an effective date."                                                                 
                                                                                                                                
SENATOR  CHARLIE  HUGGINS,  Alaska  State  Legislature,  sponsor,                                                               
began  by saying  that  SB  158 represents  the  interest of  the                                                               
citizens of  Alaska.   This legislation  will maintain  what most                                                               
believe  is already  the case.   He  posed a  situation in  which                                                               
there  is  a state  airport  project  for  $8  million.   In  the                                                               
process, a  subcontractor is subjected  to a 5 percent  sales tax                                                               
on  that  subcontractor's  $400,000 contract,  which  amounts  to                                                               
about  $21,000.    However,  that wasn't  the  process  when  the                                                               
subcontractor  bid on  the project.   In  discussions with  folks                                                               
about  this,  [subcontractors]  didn't  view  the  aforementioned                                                               
scenario as appropriate and even  inquired as to how much [money]                                                               
a  community  wants  from  them.   Therefore,  SB  158  has  been                                                               
introduced.                                                                                                                     
                                                                                                                                
SENATOR  HUGGINS  informed  the  committee that  SB  158  doesn't                                                               
preclude  taxation on  the equipment  leased in  the locale.   He                                                               
emphasized that  this legislation isn't about  "rural" or "urban"                                                               
areas but rather about how the  state does business.  In a normal                                                               
year,   the  state   has  about   $350-$400   million  worth   of                                                               
construction  contracts.    If  the  state  doesn't  take  action                                                               
similar to what's encompassed in  SB 158, an unstable environment                                                               
will be  created.  He  informed the committee  that he has  an e-                                                               
mail from the  Alaska Municipal League (AML)  that indicates that                                                               
communities using a certain law  firm have a policy of collecting                                                               
sales tax  from subcontractors doing  business in  the community,                                                               
regardless of the funding source.                                                                                               
                                                                                                                                
3:15:43 PM                                                                                                                    
                                                                                                                                
SENATOR HUGGINS  said that when  talking with state  agencies, it                                                               
was  foggy  at best  regarding  the  state's position  on  taxing                                                               
authority.   This  legislation clarifies  the aforementioned  and                                                               
provides a predictable business environment.                                                                                    
                                                                                                                                
3:16:17 PM                                                                                                                    
                                                                                                                                
CHAIR ANDERSON  noted that his  research has determined  that the                                                               
impact of  [such taxation practices]  is de minimis,  although he                                                               
acknowledged  that it  adversely impacts  the City  of Nome.   He                                                               
asked if there is a  way to grandfather in current infrastructure                                                               
where there  are taxes, or would  that defeat the purpose  of the                                                               
legislation.                                                                                                                    
                                                                                                                                
SENATOR  HUGGINS  indicated  that  from  his  conversations  with                                                               
average Alaskans,  the question is  how much is enough.   Senator                                                               
Huggins  emphasized  that  [allowing  the  current  situation  to                                                               
continue] will  drive up  the cost of  contracting and  will cost                                                               
all Alaskans.   In  response to  Chair Anderson,  Senator Huggins                                                               
said, "Where we're  going out to enhance that  community, that to                                                               
reach out and carve  money out of that and drive  up the price of                                                               
contracting is not right."                                                                                                      
                                                                                                                                
3:17:39 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE CRAWFORD inquired as to  what the contract was for                                                               
that cost  the subcontractor  in the  earlier example  $21,000 in                                                               
taxes.                                                                                                                          
                                                                                                                                
SENATOR HUGGINS explained that it  was an electrical contract for                                                               
$400,000  and the  community imposed  a  5 percent  tax on  that.                                                               
Senator Huggins reiterated that such a practice isn't right.                                                                    
                                                                                                                                
REPRESENTATIVE   CRAWFORD   posed   a  situation   in   which   a                                                               
[subcontractor]  had  a  contract  to construct  a  fence  at  an                                                               
airport.   If  that [subcontractor]  miscalculated the  amount of                                                               
fencing necessary and  purchased the remainder of  the fencing in                                                               
the location  of the construction, would  that [subcontractor] be                                                               
charged the sales tax.                                                                                                          
                                                                                                                                
SENATOR  HUGGINS replied  yes.   In the  case that  prompted this                                                               
legislation, the electrical company spent  just shy of $80,000 in                                                               
the community on things from hotel  rooms to rental cars and paid                                                               
tax on those items.  The legislation doesn't [change that].                                                                     
                                                                                                                                
3:19:28 PM                                                                                                                    
                                                                                                                                
SENATOR HUGGINS, in response  to Representative LeDoux, clarified                                                               
that  even under  SB 158  the  [subcontractor] in  Representative                                                               
Crawford's example would pay the  tax on the fencing purchased in                                                               
the  location  of  the  construction.   In  further  response  to                                                               
Representative  LeDoux, Senator  Huggins  informed the  committee                                                               
that at least  two boroughs or cities, Sand Point  and Nome, have                                                               
levied the tax  [on a state contract] at least  once.  Both those                                                               
communities are advised by the same  law firm.  He mentioned that                                                               
Unalaska may  potentially be the  third such community.   Senator                                                               
Huggins remarked  that the specific communities  aren't important                                                               
because  without something  like SB  158, this  business practice                                                               
will spread  throughout the state.   He noted that in  the Senate                                                               
only three members didn't agree with this legislation.                                                                          
                                                                                                                                
3:20:46 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE LEDOUX  related her  understanding that a  city or                                                               
borough can't tax the state.                                                                                                    
                                                                                                                                
SENATOR  HUGGINS answered  that  it's not  clear.   Although  the                                                               
state assessor would  agree that a city or borough  can't tax the                                                               
state,  he would  include  a  "but" clause.    Therefore, SB  158                                                               
clarifies the situation.                                                                                                        
                                                                                                                                
3:21:23 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE LEDOUX inquired as to how this occurs now.                                                                       
                                                                                                                                
SENATOR HUGGINS specified  that the city or  borough merely taxes                                                               
the  subcontractor.   He  reiterated  that SB  158  is about  the                                                               
people of Alaska and whether the  desire is to increase the price                                                               
of  contracting or  establish a  mechanism such  that across  the                                                               
state purchases at the location of the project would be taxed.                                                                  
                                                                                                                                
3:22:50 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE LEDOUX  inquired then  as to how  this legislation                                                               
is different from the current practice.                                                                                         
                                                                                                                                
CHAIR  ANDERSON clarified  that  Senator  Huggins is  delineating                                                               
between  tangible  items [such  as  the  purchase of  nails]  and                                                               
providing a service [the subcontractor's work].                                                                                 
                                                                                                                                
3:23:31 PM                                                                                                                    
                                                                                                                                
SENATOR HUGGINS explained  that in the example  with the airport,                                                               
the contract was  to fix the airport to a  standard the community                                                               
would like.  When [the  subcontractor] purchases something in the                                                               
community, there would be a tax on that purchase.                                                                               
                                                                                                                                
REPRESENTATIVE  LEDOUX surmised  then that  under SB  158 if  the                                                               
subcontractor  was  located in  the  community  and sold  his/her                                                               
services to someone,  not to a contractor on a  state project, in                                                               
the community,  then there would  be a  sales tax.   However, the                                                               
subcontractor who sells  his/her services to the  contractor on a                                                               
state project  would not be  taxed, even if the  subcontractor is                                                               
located in the community.  Representative LeDoux specified:                                                                     
                                                                                                                                
     You  could have  a contractor  come in  from Anchorage,                                                                    
     for example, but then they  hire somebody from ... Nome                                                                    
     to be the  subcontractor on it.  Now  normally, if that                                                                    
     subcontractor  were selling  to  anybody  else in  Nome                                                                    
     there would  be a tax on  that.  So, how  would this be                                                                    
     different, then?                                                                                                           
                                                                                                                                
SENATOR HUGGINS  expressed his desire  that both  contractors and                                                               
subcontractors  for   the  state   would  be  taxed   [for  items                                                               
purchased]  and  not  be  penalized  by  the  location  of  their                                                               
business.                                                                                                                       
                                                                                                                                
3:25:45 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  ROKEBERG  said  that  he  finds  the  concept  of                                                               
potential double  taxation very compelling and  thus he expressed                                                               
his support  of SB 158.   However, Representative LeDoux  makes a                                                               
good  point  in  regard  to  whether there  is  a  definition  of                                                               
subcontractor  in statute.   Furthermore,  he questioned  whether                                                               
there  is  a  distinction  between the  service  component  of  a                                                               
subcontractor and a  supplier of materials that  would be taxable                                                               
in the  local municipality.  Representative  Rokeberg opined that                                                               
there  is  the desire  to  avoid  the  double taxation,  but  the                                                               
legislation  shouldn't be  used  to avoid  the  payment of  local                                                               
taxes  that  would  occur  under  normal  circumstances  for  the                                                               
purchase of an item.                                                                                                            
                                                                                                                                
SENATOR  HUGGINS agreed  that there  will be  a tax  on materials                                                               
purchased in a community.                                                                                                       
                                                                                                                                
REPRESENTATIVE ROKEBERG posed a situation  in which the supply of                                                               
materials is subcontracted out.                                                                                                 
                                                                                                                                
SENATOR HUGGINS specified that materials aren't exempt.                                                                         
                                                                                                                                
3:27:35 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  ROKEBERG   returned  attention  to   the  earlier                                                               
hypothetical regarding  the fencing  project, and inquired  as to                                                               
the tax  ramifications if the  subcontractor merely  supplied the                                                               
material.                                                                                                                       
                                                                                                                                
SENATOR HUGGINS said that he didn't know.                                                                                       
                                                                                                                                
3:29:25 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  GUTTENBERG  related  his understanding  that  the                                                               
contractor isn't  taxed, but the  subcontractor is taxed  for the                                                               
total  value, regardless  of  services.   He  then  asked if  all                                                               
subcontractors  are  taxed, regardless  of  the  location of  the                                                               
business.                                                                                                                       
                                                                                                                                
SENATOR    HUGGINS   reiterated    that    this   [taxation    on                                                               
subcontractors] will  spread throughout  the state if  nothing is                                                               
done.   However, he agreed  that there should be  assurances that                                                               
there  shouldn't be  a way  to circumnavigate  [appropriate local                                                               
taxation].  Senator  Huggins said that he would  obtain an answer                                                               
for Representative Guttenberg.                                                                                                  
                                                                                                                                
REPRESENTATIVE GUTTENBERG  inquired as to  whether this is  a new                                                               
practice or ordinance.                                                                                                          
                                                                                                                                
SENATOR HUGGINS specified that this is a new practice.                                                                          
                                                                                                                                
3:32:00 PM                                                                                                                    
                                                                                                                                
DAVID  LANTZ,  General   Manager/Owner,  Dimond  Electric;  Board                                                               
Member,  National  Electrical  Contractors Association  -  Alaska                                                               
Chapter  (NECA), informed  the  committee that  he  bid the  Nome                                                               
project in August 2001 and performed  the work in 2002.  He noted                                                               
that Dimond Electric  had done work on the Nome  airport over the                                                               
course of the last 15 years.   During those 15 years, the tax had                                                               
never been  an issue  because by definition  it's a  retail sales                                                               
tax.   Dimond Electric purchased  some $75,000 worth  of services                                                               
and goods in the city and paid  taxes on those.  The company also                                                               
paid the  sales tax on the  gross amount of the  subcontract, and                                                               
therefore Dimond  Electric was double  taxed on the  portion paid                                                               
on  the items  and services  purchased in  the city.   Mr.  Lantz                                                               
highlighted that  it wasn't  until 2002 that  [the City  of Nome]                                                               
applied the  sales tax to  Department of Transportation  & Public                                                               
Facilities projects, and thus there  was a change in the [city's]                                                               
interpretation of how to apply the tax.                                                                                         
                                                                                                                                
3:34:26 PM                                                                                                                    
                                                                                                                                
MR.  LANTZ opined  that Dimond  Electric was  caught by  surprise                                                               
with the change,  and therefore the company paid  some $20,000 in                                                               
taxes  as well  as  another $10,000  or so  in  attorney fees  to                                                               
resolve the issues.   As a NECA board member,  Mr. Lantz informed                                                               
the  committee that  research discovered  that  there were  other                                                               
instances,  beyond  the  Nome  project,  in  which  the  [double]                                                               
taxation occurred.  Mr. Lantz expressed  the need to have a known                                                               
playing field  with regard to  what's taxed on state  projects in                                                               
communities across the state.                                                                                                   
                                                                                                                                
3:36:51 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GUTTENBERG asked if, in  a normal bid document for                                                               
a state  project, [the  subcontractor] would  receive all  of the                                                               
taxation policies that would apply.                                                                                             
                                                                                                                                
MR. LANTZ, drawing on his 20  years of working on state projects,                                                               
that  subcontractors worked  under the  assumption that  they, as                                                               
well as  the general contractor,  were not subject to  sales tax.                                                               
Therefore, it hasn't  been an issue on state  projects because in                                                               
practice state projects have been exempt from the sales tax.                                                                    
                                                                                                                                
3:37:53 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE LEDOUX surmised that the  real problem is that Mr.                                                               
Lantz's company was caught between  the changes made between 2001                                                               
and  2002.    Therefore,  if the  subcontractor  now  knows,  she                                                               
inquired  as to  how  difficult it  would be  to  check with  the                                                               
communities regarding taxation just as  they would check fuel and                                                               
material prices.                                                                                                                
                                                                                                                                
MR. LANTZ  said that he  didn't want to see  communities changing                                                               
their mind about taxation [between the  time a project is bid and                                                               
the work is performed].                                                                                                         
                                                                                                                                
3:39:13 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  ROKEBERG  asked  whether the  general  contractor                                                               
paid a tax as well as Mr. Lantz.                                                                                                
                                                                                                                                
MR. LANTZ explained that the  general contractor didn't pay a tax                                                               
on its contract, although he did  pay taxes on the local services                                                               
purchased  in the  community.    Several subcontractors  received                                                               
bills from the city.                                                                                                            
                                                                                                                                
3:39:54 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  CRAWFORD asked  whether a  private contractor  in                                                               
the City of  Nome would be charged sales tax  on the total amount                                                               
of a non-state contract.                                                                                                        
                                                                                                                                
MR.  LANTZ related  his belief  that tax-exempt  status has  only                                                               
been applied  to state contracts  and thus contractors  pay local                                                               
taxes on private work in the City of Nome.                                                                                      
                                                                                                                                
3:40:48 PM                                                                                                                    
                                                                                                                                
DENISE MICHELS,  Mayor, City  of Nome,  noted that  the committee                                                               
should have a  copy of her three-page letter in  opposition to SB
158.    This  legislation,  she opined,  unfairly  restricts  the                                                               
city's ability to raise revenues  for services.  She informed the                                                               
committee that most  of the revenue received by the  City of Nome                                                               
is through property and sales taxes.   However, 40 percent of the                                                               
property in Nome is exempt,  yet those [residents] use the city's                                                               
services  like  everyone else.    When  contractors work  in  the                                                               
community,  they  too  use  the   city's  services.    Therefore,                                                               
collecting a  sales tax on  the subcontractors helps pay  for the                                                               
use of  those services.   Mayor Michels pointed out  that whether                                                               
or not  to charge  the sales  is an option.   She  indicated that                                                               
larger communities don't apply the  sales tax in this way because                                                               
they have a larger tax base.                                                                                                    
                                                                                                                                
MAYOR MICHELS highlighted that the  rules of engagement differ in                                                               
each  community, and  in  fact the  state  request for  proposals                                                               
recommends  contacting the  local  government regarding  possible                                                               
fees.  She then turned attention  to the recent lack of municipal                                                               
revenue sharing, which she indicated  was a [contributing factor]                                                               
for  the City  of Nome  in 2004  to raise  its sales  tax from  4                                                               
percent  to  5  percent  in  order  to  help  offset  the  rising                                                               
operating  costs for  the  community.   Mayor  Michels said  that                                                               
taking away  this taxation  option would hurt  the City  of Nome.                                                               
She informed  the committee  that the  contractor is  exempt from                                                               
the sales tax  [on state projects] and obtains  a building permit                                                               
that provides  tax-exempt status on  purchases in the town.   The                                                               
subcontractor can also apply for a building permit.                                                                             
                                                                                                                                
3:44:12 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE ROKEBERG inquired as  to whether the tax exemption                                                               
for  a  general  contractor  is  in  the  City  of  Nome's  local                                                               
ordinance.                                                                                                                      
                                                                                                                                
MAYOR MICHELS indicated that it's state law.                                                                                    
                                                                                                                                
DEBORAH  GRUNDMAN,   Staff  to  Senator  Huggins,   Alaska  State                                                               
Legislature,  pointed  out  that  due to  the  state's  sovereign                                                               
immunity, the  state is immune  from taxation except when  it has                                                               
expressly been  waived by the  state.  Nothing in  statute waives                                                               
the state  from taxation, she  said.  Therefore, the  problem is:                                                               
"there's a  contract and a  subcontractor is tied right  to that,                                                               
defined as an  entity to whom the contractor sublets  part of the                                                               
contract."    Practices  such  as  in Nome  raise  the  price  of                                                               
construction projects.                                                                                                          
                                                                                                                                
3:45:30 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE ROKEBERG  returned to  the earlier mention  that a                                                               
subcontractor  could apply  for  a building  permit  in order  to                                                               
receive an exemption from the sales and use tax.                                                                                
                                                                                                                                
MAYOR MICHELS  clarified that the  holder of the  building permit                                                               
would not  have to  pay tax  on the  supplies purchased  in town.                                                               
She noted that most contractors  and subcontractors ship in their                                                               
materials to Nome.                                                                                                              
                                                                                                                                
3:46:10 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE   ROKEBERG  surmised   then  that   Mayor  Michels                                                               
believes that the issue of  double taxation could've been avoided                                                               
if  the subcontractors  had applied  for a  building permit.   He                                                               
inquired as to the fee for a permit on a $400,000 contract.                                                                     
                                                                                                                                
MAYOR MICHELS answered  that the fee is based on  a percentage of                                                               
the project.                                                                                                                    
                                                                                                                                
3:46:41 PM                                                                                                                    
                                                                                                                                
KATHIE  WASSERMAN, Alaska  Municipal League  (AML), related  that                                                               
AML is  opposed to  SB 158,  which is outlined  in a  letter that                                                               
should  be in  the committee  packet.   Ms.  Wasserman said  that                                                               
AML's   main   concern   is  that   the   legislature   and   the                                                               
administration, through various actions,  have made it clear that                                                               
municipalities  will have  to survive  on  their taxing  ability.                                                               
She related  that AML  believes that  taxing decisions  should be                                                               
left to those at the local level.                                                                                               
                                                                                                                                
REPRESENTATIVE  CRAWFORD inquired  as to  how Ms.  Wasserman felt                                                               
about the same construction dollars being taxed twice.                                                                          
                                                                                                                                
3:49:01 PM                                                                                                                    
                                                                                                                                
MS.  WASSERMAN, recalling  her experience  as a  contractor, said                                                               
that  when she  wasn't [working]  on  a state  project, she  paid                                                               
sales tax  on her contract as  well as the services  she incurred                                                               
while in the  community.  Ms. Wasserman highlighted  that in many                                                               
communities there are  state buildings that aren't  taxed at all,                                                               
while the  state receives the  same services as all  the property                                                               
taxpayers in the community.                                                                                                     
                                                                                                                                
3:49:52 PM                                                                                                                    
                                                                                                                                
SENATOR   HUGGINS   characterized   this  practice   [of   taxing                                                               
subcontractors  on state  projects]  as being  viewed as  revenue                                                               
sharing by  those communities  using it.   However,  he indicated                                                               
that doing  so drives  up the price  of contracting.   Therefore,                                                               
Senator  Huggins opined  that it's  a simple  question.   Senator                                                               
Huggins suggested  that people  could be charged  for the  use of                                                               
the local services, but "don't  go after the contractor" [because                                                               
either way  they pay  for the  services used].   He  reminded the                                                               
committee  that SB  158  would create  a  stable environment  and                                                               
contain the price of contracting.                                                                                               
                                                                                                                                
3:52:32 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE KOTT  announced that he  has a conflict  in voting                                                               
because   SB   158   could  potentially   impact   his   business                                                               
environment.                                                                                                                    
                                                                                                                                
CHAIR ANDERSON  said that Representative  Kott would  be required                                                               
to vote.                                                                                                                        
                                                                                                                                
3:53:02 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GUTTENBERG said that  he's torn between both sides                                                               
of this issue.                                                                                                                  
                                                                                                                                
CHAIR  ANDERSON  said  that  although   he,  too,  is  torn,  the                                                               
legislation should move forward.   He also recognized the dilemma                                                               
that municipalities face with budgeting.                                                                                        
                                                                                                                                
3:54:28 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  CRAWFORD  opined  that there  are  two  questions                                                               
here.   One is whether  there should be municipal  assistance and                                                               
revenue sharing  and the other  is whether state  projects should                                                               
be  taxed by  a  municipality.   He  noted  that  he believes  in                                                               
municipal assistance and revenue sharing,  but that's not what SB
158 is  about.   He recalled testimony  that the  local community                                                               
benefits when the state spends  state dollars in a community, and                                                               
therefore  he  opined  that those  dollars  shouldn't  be  taxed.                                                               
Representative  Crawford concluded  by announcing  that he  would                                                               
advance SB 158.                                                                                                                 
                                                                                                                                
3:55:11 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  LEDOUX  said  that   she  wouldn't  hold  up  the                                                               
legislation.  However,  she reiterated that she  has some serious                                                               
problems with  it because she  didn't see any  difference between                                                               
the state  having a  contractor and  the municipality  taxing the                                                               
subcontractor or a private individual.                                                                                          
                                                                                                                                
REPRESENTATIVE LYNN moved to report  SB 158 out of committee with                                                               
individual  recommendations  and  the  accompanying  zero  fiscal                                                               
note.  There being no objection, it was so ordered.                                                                             
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
There being no  further business before the  committee, the House                                                               
Labor and  Commerce Standing Committee  meeting was  adjourned at                                                               
3:56:21 PM.                                                                                                                   

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