04/25/2003 03:30 PM House L&C

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* first hearing in first committee of referral
+ teleconferenced
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ALASKA STATE LEGISLATURE HOUSE LABOR AND COMMERCE STANDING COMMITTEE April 25, 2003 3:30 p.m. MEMBERS PRESENT Representative Tom Anderson, Chair Representative Bob Lynn, Vice Chair Representative Nancy Dahlstrom Representative Carl Gatto Representative Norman Rokeberg Representative Harry Crawford Representative David Guttenberg MEMBERS ABSENT All members present COMMITTEE CALENDAR HOUSE BILL NO. 111 "An Act extending the termination date of the Regulatory Commission of Alaska; and providing for an effective date." - MOVED CSHB 111(L&C) OUT OF COMMITTEE HOUSE BILL NO. 232 "An Act relating to mercury classics; and providing for an effective date." - MOVED HB 232 OUT OF COMMITTEE HOUSE BILL NO. 242 "An Act relating to licensing of certified public accountants." - MOVED CSHB 242(L&C) OUT OF COMMITTEE HOUSE BILL NO. 199 "An Act removing the annual adjustment to the minimum wage based on the rate of inflation; and providing for an effective date." - MOVED HB 199 OUT OF COMMITTEE HOUSE BILL NO. 56 "An Act relating to the attorney fees and costs awarded in certain court actions relating to unfair trade practices; and, if considered court rule changes, amending Rules 54(d), 79, and 82, Alaska Rules of Civil Procedure." - MOVED CSHB 56(L&C) OUT OF COMMITTEE PREVIOUS ACTION BILL: HB 111 SHORT TITLE:EXTEND REGULATORY COMMISSION OF ALASKA SPONSOR(S): RLS BY REQUEST OF THE GOVERNOR Jrn-Date Jrn-Page Action 02/19/03 0250 (H) READ THE FIRST TIME - REFERRALS 02/19/03 0250 (H) L&C, FIN 02/19/03 0250 (H) FN1: (CED) 02/19/03 0250 (H) GOVERNOR'S TRANSMITTAL LETTER 03/10/03 (H) L&C AT 3:15 PM CAPITOL 17 03/10/03 (H) Heard & Held MINUTE(L&C) 03/17/03 (H) L&C AT 3:15 PM CAPITOL 17 03/17/03 (H) <Bill Hearing Postponed to 3/19> 03/19/03 (H) L&C AT 3:15 PM CAPITOL 17 03/19/03 (H) Heard & Held <Subcommittee Assigned> MINUTE(L&C) 03/27/03 (H) L&C AT 1:00 PM CAPITOL 120 03/27/03 (H) MINUTE(L&C) 04/10/03 (H) L&C AT 2:00 PM CAPITOL 120 04/10/03 (H) -- Meeting Canceled -- 04/15/03 (H) L&C AT 1:00 PM CAPITOL 120 -- Subcommittee meeting -- 04/23/03 (H) L&C AT 3:15 PM CAPITOL 17 04/23/03 (H) Heard & Held MINUTE(L&C) 04/25/03 (H) L&C AT 3:15 PM CAPITOL 17 BILL: HB 232 SHORT TITLE:HOMER MERCURY CLASSIC SPONSOR(S): REPRESENTATIVE(S)SEATON Jrn-Date Jrn-Page Action 04/02/03 0738 (H) READ THE FIRST TIME - REFERRALS 04/02/03 0738 (H) L&C, FIN 04/25/03 (H) L&C AT 3:15 PM CAPITOL 17 BILL: HB 242 SHORT TITLE:EXAM FOR CPA'S SPONSOR(S): REPRESENTATIVE(S)HAWKER Jrn-Date Jrn-Page Action 04/04/03 0769 (H) READ THE FIRST TIME - REFERRALS 04/04/03 0769 (H) L&C, FIN 04/25/03 (H) L&C AT 3:15 PM CAPITOL 17 BILL: HB 199 SHORT TITLE:DELETE MINIMUM WAGE INFLATION - PROOFING SPONSOR(S): RLS BY REQUEST Jrn-Date Jrn-Page Action 03/19/03 0585 (H) READ THE FIRST TIME - REFERRALS 03/19/03 0585 (H) L&C, FIN 04/25/03 (H) L&C AT 3:15 PM CAPITOL 17 BILL: HB 56 SHORT TITLE:UNFAIR TRADE PRACTICES ATTY FEES/COSTS SPONSOR(S): REPRESENTATIVE(S)GARA Jrn-Date Jrn-Page Action 01/21/03 0046 (H) PREFILE RELEASED (1/17/03)

01/21/03 0046 (H) READ THE FIRST TIME - REFERRALS

01/21/03 0046 (H) WITNESS REGISTER REPRESENTATIVE PAUL SEATON Alaska State Legislature Juneau, Alaska POSITION STATEMENT: As sponsor of ACTION NARRATIVE TAPE 03-40, SIDE A Number 0001 CHAIR TOM ANDERSON called the House Labor and Commerce Standing Committee meeting to order at 3:30 p.m. Representatives Anderson, Lynn, Dahlstrom, Gatto, Rokeberg, Crawford, and Guttenberg were present at the call to order. HB Number 0083 CHAIR ANDERSON announced that the first order of business would be HOUSE BILL NO. 111, "An Act extending the termination date of the Regulatory Commission of Alaska; and providing for an effective date." CHAIR ANDERSON closed public testimony, noting the considerable presentations by the public in the last month-and-a-half. He noted that Version I was adopted at a previous meeting and is now before the committee. Number 0112 REPRESENTATIVE GATTO moved to adopt Amendment 1. On page 4, line 10, after (k), delete "An electric or" and Number 0142 REPRESENTATIVE GUTTENBERG objected for purposes of discussion. He asked about the impact of Amendment 1. CHAIR ANDERSON noted that the bill drafter [from Legislative Legal and Research Services] was not present. Chair Anderson said that language on page 4, line 10, subsection (k), deals with [determining] depreciation [rates] for telephone facilities [and equipment]. [Several telephone companies] testified on the disparity in [treatment by the Regulatory Commission of Alaska]. He said the CS focused on telephony issues. REPRESENTATIVE GATTO pointed out that [subsection (k)] also included electric companies. The subcommittee did not want to deal with [the electric industry] in the CS, but that issue can be revisited at a later date. He said he did not think ARECA [Alaska Rural Electric Cooperative Association] or the other electric companies supported that inclusion. Number 0202 REPRESENTATIVE GUTTENBERG withdrew his objection. CHAIR ANDERSON said that hearing no [further] objection, Amendment 1 is adopted. REPRESENTATIVE GUTTENBERG said he prepared an amendment but is not going to offer it at this time. Number 0252 REPRESENTATIVE ROKEBERG moved to report the proposed CS 111, of committee with individual recommendations and the accompanying fiscal note. REPRESENTATIVE CRAWFORD objected. He said he is opposed to moving the bill with extraneous issues, and therefore preferred moving a clean bill that was a simple extension [of the RCA]. He preferred considering these other issues in separate bills. Number 0343 REPRESENTATIVE DAHLSTROM stated for the record that she is supporting the CS in the interest of moving the bill forward. She said that committee members who have additional concerns can work with the next committee [of referral]. REPRESENTATIVE GUTTENBERG explained that the amendment he didn't advance is sustentative, and it deserves a hearing so people can understand its intent. He said he will forward the amendment to finance committee members and participate in the discussion there. The amendment provides for the option of a hearing judge, a single administrative law judge, or a panel of administrative law judges in certain electrical cooperative tariff cases. CHAIR ANDERSON noted his agreement with the concept of this amendment and the [opportunity] for further discussion. REPRESENTATIVE GUTTENBERG said this subcommittee and committee has done a lot of work on this bill; the deliberations reflected a huge learning curve [for members]. These sustentative issues deserve a hearing, which will occur in the House Finance Committee. REPRESENTATIVE CRAWFORD said that due to the situation, he is removing his objection. Number 0486 CHAIR ANDERSON, hearing no other objections, stated 111(L&C) Committee. HB Number 0527 CHAIR ANDERSON announced that the next order of business would be HOUSE BILL NO. 232, "An Act relating to mercury classics; and providing for an effective date." Number 0556 REPRESENTATIVE PAUL SEATON, Alaska State Legislature, as sponsor of HB Classic, which will be operated and administered by the [Homer chapter of the] Boys and Girls Clubs of the Kenai Peninsula ("Boys and Girls Club.") The bill is titled Homer because that's where [the thermometer readings] will be taken. The 300 members of the Boys and Girls Club have looked at a number of fundraisers; they have established a history of working with sophisticated weather equipment that had been certified and would be on the top of their building. This would be similar to the Nenana Ice Classic, he explained. Tickets will be sold for $2. The winner in the fall [would guess] the date and time when the temperature first drops to 15 degrees, and [similarly] in the spring, [the winner would guess] when the temperature reaches 55 degrees. The [club members] are working with GLOBE [Global Learning and Observation to Benefit the Environment], a nationwide educational program of weather-related information, which includes NASA [National Aeronautics and Space Administration] and a number of other organizations. REPRESENTATIVE CRAWFORD asked if the temperatures are on the Fahrenheit or Celsius scales. REPRESENTATIVE SEATON replied Fahrenheit. Number 0658 REPRESENTATIVE ROKEBERG asked Representative Seaton if he has been in contact with the Fairbanks Chamber of Commerce about whether this game encroaches on its [mercury] classic. REPRESENTATIVE SEATON replied that the Fairbanks [Chamber of Commerce has a mercury] hasn't operated for years. REPRESENTATIVE ROKEBERG noted that Fairbanks has an exclusive right in statute to the classic. Therefore, whether the Homer Mercury Classic would encroach on the Fairbanks Mercury classic would be important information to have before the bill gets to the [House] floor. He asked about the effective date of January 1, 2004. REPRESENTATIVE SEATON replied that the Boys and Girls Club was not ready to operate [the classic] this fall, so next spring would be the first occasion [to guess when the temperature] reaches 55 degrees. REPRESENTATIVE GUTTENBERG commented that either temperature is possible between the spring and the fall. He noted that he was also wondering about Representative Seaton's dialogue with the Fairbanks Chamber of Commerce. Number 0840 LAUREN RADCLIFFE, Staff to Representative Paul Seaton, Alaska State Legislature, explained that Jane Tollefsrud, who is prepared to testify, has spoken to the Fairbanks Chamber of Commerce who can currently operate this mercury classic. She related her understanding that the chamber does not currently operate it and never has. JANE TOLLEFSRUD, Assistant Director, Homer Boys and Girls Club; Coordinator, Homer Mercury Classic, said she tried to pursue the Fairbanks aspect of this, but none of the employees of the Fairbanks Chamber of Commerce with whom she spoke had ever heard of it. She added that the Homer Mercury Classic revolves around the first time the temperature falls to 15 degrees in the fall and the first time the temperature reaches 55 degrees in the spring. Number 0924 REPRESENTATIVE DAHLSTROM inquired as to how much revenue the classic will generate. REPRESENTATIVE SEATON said he had no idea because it will depend on how many tickets the 300 members will sell at $2 a piece. [The Boys and Girls Club] will receive half of the money collected. REPRESENTATIVE GATTO asked how fall with be defined, explaining that he was concerned about double payouts. REPRESENTATIVE SEATON noted that the temperature is monitored every hour, continuously. Although he said he wasn't sure when the period starts for measuring, he said he offered to pass this point on for inclusion in the regulations so it's clear that it's the first time the temperature reaches the specified temperature. Number 1018 REPRESENTATIVE GUTTENBERG said that regardless of who [held the exclusive right to a mercury classic], there is no letter of understanding or agreement with the current [authorized group], this proposed mercury classic is placed in a different position. REPRESENTATIVE SEATON pointed out that the Homer Mercury Classic is identified by name specifically in the bill. MS. TOLLEFSRUD said her organization would be more specific on dates about the first time [the temperature rose to 55 degrees] after June 1 or before June 1. Data is collected hourly via computer, so that [time and date] can't be altered. CHAIR ANDERSON, upon determining no one else wished to testify, closed public testimony. Number 1117 REPRESENTATIVE ROKEBERG moved to report HB CHAIR ANDERSON announced that the next order of business would be HOUSE BILL NO. 242, "An Act relating to licensing of certified public accountants." Number 1150 REPRESENTATIVE MIKE HAWKER, Alaska State Legislature, sponsor of HB 242, noted (CPA). He explained that the bill was brought forward at the request of the Alaska Society of Certified Public Accountants (ASCPA) as well as the Division of Occupational Licensing. Relating to testing for CPAs, the bill is necessary because of changes made by the American Institute of Certified Public Accountants (AICPA), which has administered a nationwide standardized test for CPAs since the early 1960s. This uniform examination has been adopted by all jurisdictions in the U.S. The AICPA has changed the format, however, and now will administer the exam via computer using a keyboard; it will be given four times a year, whereas the old paper-and-pencil exams were given twice a year. In addition, there are some other changes that he characterized as "a technical issue." REPRESENTATIVE HAWKER told members that Alaska's statute was written in the early 1960s and says there shall be a written examination. Thus the Division of Occupational Licensing was concerned that it implied a paper-and-pencil examination and that a computerized examination wouldn't qualify. Therefore, on page 1, line 4, the bill deletes the requirement that the examination be written. Furthermore, on page 1, lines 7-11, the bill [specifies that the board shall use] "the Uniform Public Accountant Examination of the American Certified Public Accountants" and grading service, if available." REPRESENTATIVE HAWKER explained that Alaska's statute also codifies the frequency of the exam, the reexamination procedures, and the standards for passing the examination; this is to mirror criteria established by the AICPA. The ASCPA and the Division of Occupational Licensing have requested that those criteria be put into regulation instead; furthermore, those are inconsistent with the new computerized system. Thus the bill deletes them from statute, with the proviso that the Division of Occupational Licensing work with the [Alaska State Board of Public Accountancy] to put those provisions into regulation. There also is a transitional period [in Section 4]; that was taken from language suggested by the AICPA to explain and provide for a transition from the current twice-a-year testing to the four-times-a-year testing, which has different requirements for passing the test. Number 1418 REPRESENTATIVE LYNN inquired about the standard for "good moral character" on page 2, line 16. REPRESENTATIVE HAWKER recalled that when he applied for a license in Alaska he had to sign an affidavit that allowed a background examination and had to complete "a one-inch-thick course and about a half-inch-thick examination in professional ethics." Number 1448 CHAIR ANDERSON suggested it is similar to the ethics examination required as of 1998 of a person who has completed law school, which must be passed in addition to the bar exam. REPRESENTATIVE LYNN said it is similar in real estate, but questioned whether ethics can be taught. "You either have it or you don't have it," he remarked. Number 1464 REPRESENTATIVE GUTTENBERG surmised that the AICPA has its own grading service available. He asked whether the language "if available" is necessary on page 1, line 11. REPRESENTATIVE HAWKER answered that the Uniform Certified Public Accountant Examination [specified in the bill] is a term that describes the examination given by the AICPA; it isn't a change [except that the words aren't capitalized in the statute]. He explained that the exams are taken and administered nationwide by the local accounting organizations, but grading is consistent and centralized in one location in the country. Indicating he'd discussed the wording "if available" with the Division of Occupational Licensing, he said: The sense was that we'd have a statute here that would ... give a priority to require that institute's examination. If something highly unusual happened and that institute ceased to function, we would still be in the position of being able to continue the licensing process for prospective accountants with whatever ... nationalized examination process may [become] available. Number 1546 REPRESENTATIVE GATTO, calling it a minor detail, said there is a difference, to him, between a passing score and a passing grade. For example, there can be grades of A, B, C, D, and F, with C as a passing grade; however, it can be more specific. He asked whether, the intention is to have a passing score rather than a passing grade. REPRESENTATIVE HAWKER answered that [the bill] uses the language and semantics that are "customary and normal in the certified public accounting world." Number 1583 STEVEN R. TAROLA, CPA, Chairman, Alaska State Board of Public Accountancy, testified on behalf of the board in full support of HB 242. public interest by ensuring that only qualified persons are licensed and that appropriate standards of competency and practice are established and enforced. Primary is administration of the uniform CPA exam, which a person must pass in order to obtain a license to practice as a CPA. There is only one exam available, which is the four-part exam prepared by the AICPA and used in all 50 states as well as the District of Columbia, Guam, Puerto Rico, and the U.S. Virgin Islands. MR. TAROLA agreed that the current paper-and-pencil exam is being discontinued and replaced by a computerized version, noting that the "roll-out date" is no later than May 2004. He also agreed that the bill's purpose is to amend Alaska's statutes to accommodate the computerized exam. He added that it provides transitioning to grandfather in candidates who have successfully passed a portion of the paper-and-pencil exam when HB available "numerous times a year" and agreed 242, the computerized version. He urged support of the bill. Number 1652 DAN F. KENNEDY, CPA, MBA, Member, Alaska State Board of Public Accountancy, thanked legislators - Representative Hawker, in particular - for supporting the CPA profession on this important change. He requested that the committee support the bill. CHAIR ANDERSON asked whether anyone else wished to testify. He then closed public testimony. Number 1706 REPRESENTATIVE ROKEBERG began discussion of Conceptual Amendment 1. He referred to the transitional provisions in Section 4, noting that on [page 2, lines 26-28] there is a formula, [the second part of which] relates to "the number of opportunities the applicant had remaining on the day before the effective date of this Act multiplied by six months". An additional provision on lines 30-31 talks about the effective date. He asked why there is no effective date for the bill. REPRESENTATIVE HAWKER answered that this needs to be in effect by the end of the first quarter of 2004. He offered his belief that the automatic passage of this bill into law would allow adequate time. REPRESENTATIVE ROKEBERG pointed out that the effective date would be uncertain because of the time it takes a bill to be engrossed, transmitted to the governor, and then taken up by the governor. It could be August 17 or August 28, for example, which would make the calculations for dates complicated. He noted that if there is no effective date, it becomes effective would be preferable to have a date that begins on the first of some month. REPRESENTATIVE HAWKER indicated legislative drafters had informed him that it was unnecessary, but he said Representative Rokeberg had made a clear and convincing argument. Agreeing with amendment of the bill, he recommended January 1, 2004. Number 1809 REPRESENTATIVE ROKEBERG moved to adopt Conceptual Amendment 1, to add a new Section 5 such that this Act shall take effect on January 1, 2004. REPRESENTATIVE HAWKER asked whether that includes a corresponding title amendment. REPRESENTATIVE ROKEBERG agreed that is a good idea. CHAIR ANDERSON asked whether there was any objection to Conceptual Amendment 1, to adopt a new Section 5 that provides an effective date of January 1, 2004, with a corresponding title change. There being no objection, Conceptual Amendment 1 was adopted. Number 1856 REPRESENTATIVE DAHLSTROM moved to report 242(L&C) Committee. HB Number 1871 CHAIR ANDERSON announced that the next order of business would be HOUSE BILL NO. 199, "An Act removing the annual adjustment to the minimum wage based on the rate of inflation; and providing for an effective date." Number 1909 REPRESENTATIVE ROKEBERG testified as chairman of the House Rules Committee, which is the sponsor of 199 businesses. He noted that committee members' bill packets contain letters of support from many businesses, ranging from the Alaska State Chamber of Commerce to the National Federation of Independent Business, Alaska Chapter. He said there are probably two dozen people and businesses who support This bill is a response to HB repeal the minimum wage. REPRESENTATIVE ROKEBERG stated that the minimum wage does not help the poor; it actually hurts lower income people more than it helps them because any economic theory that pushes the cost of labor up has a tendency to decrease the number of jobs. That's an axiom of economics, he said. When labor costs increase, employers react in several ways. In such a situation, employers typically hire fewer workers; lay off workers; and work people longer hours rather than hire new people. The economic analysis and studies show this to be the case, he commented. Number 2139 REPRESENTATIVE ROKEBERG discussed the groups that are targeted for help by the minimum wage, such as the working single parent with children. However, only 14 percent of the people receiving minimum wage fit that category. Another small group is single or married people with no dependents many [of whom] are younger people working entry level jobs. Representative Rokeberg said that the only thing certain about the formula now in place is that for a small businessperson, the cost of doing business will rise every January. Number 2201 REPRESENTATIVE ROKEBERG anticipated opposition from organized labor on HB pointing out how labor and employers sit down at a table and negotiate. He said he thinks that's one of the country's strengths, that the labor force is represented in many occupations in the job market. However, when TAPE 03-40, SIDE B Number 2351 REPRESENTATIVE ROKEBERG cited the example of the Red Robin franchise in Anchorage. In his March 17, 2003 letter, [the company president] stated that because of the minimum wage increase last year, he shut down the mid-town restaurant, a loss of 54 jobs in Anchorage. He said this is a solid example of one establishment that's already shut down as a direct result of legislative action. He referred committee members to studies about the State of Washington and other economic situations. CHAIR ANDERSON referenced the National Conference of State Legislatures (NCSL), which stated that only two states have a CPI connected to its minimum wage. He posed a hypothetical question in which the minimum wage is $7.15. An employer with automatic CPI, force an increase of $400 a week which amounts to $19,200 a year. He asked if that's the concept: an automatic increase, not based on the merit of the employee. REPRESENTATIVE ROKEBERG agreed to this example. He added that on top of the $19,200 amount, the employer pays another 14.1 percent for payroll taxes. Number 2204 REPRESENTATIVE CRAWFORD commented that Representative Rokeberg's [argument] makes the case for organized labor. He said the minimum wage was raised so much because it had been so long [since the last increase], and the cost of living had gone up so much. Had the cost of living escalator been [included] in a minimum wage [formula], the minimum wage would have ended up at about the same amount, but it would have been a small, gradual increase for the business operators each year, instead of a massive 27 percent increase all at once. This is the business friendly part of [existing law] -- small, graduated increases that can be absorbed over time. He said he would like to have this fight every five years because it draws a lot of votes [to organized labor candidates], but its better for business and better for the minimum wage workers to have gradual wage increases. CHAIR ANDERSON asked about the fairness of wage increases regardless of the employee's aptitude or ability. REPRESENTATIVE CRAWFORD recalled that he was hired before the minimum wage covered food service in 1976. He started at 90 cents an hour and wasn't covered for overtime hours. He recalled once working 112 hours in a week. He said he knows that companies will use an employee as much as the employee allows. However, minimum wage and overtime laws curb those abuses. Number 2056 REPRESENTATIVE GUTTENBERG stated that the minimum wage is supposedly the bottom line. All of these employers [who submitted letters of support for 255 in which the union does represent the little people, not directly, but there's the trickle down affect. He agreed with Representative Rokeberg's statement that if small business can't afford to pay minimum wage, then they're going to have more layoffs, they're going to hire less people and pay them more. He referenced the packet of letters from Alyeska Prince Hotel, Denali Park Resort, Land's End Resort, Alyeska Resort, and Subway, all businesses that are having a hard time with the [increased] minimum wage. [The increase] was $1.50 an hour and [businesses] are feeling it in their pocketbooks because it had been a long time since there was an appropriate raise [in the minimum wage]. He said it is only logical that [businesses] are not liking that. If legislators had been [increasing the minimum wage] year in and year out, [the issue of] inflation-proofing the minimum wage would not be a big deal. Number 1261 REPRESENTATIVE GATTO asked Mr. Sampson if given a choice, would he prefer going for minimum wage increases every few years or [yearly increases under] the CPI. MR. SAMPSON asked why shouldn't his rate of pay be inflation- proofed. He said it has no bearing on the $1.50 pay raise; he deserves both. Number 1169 DON ROBERTS testified against HB 199. alternative where the employees shared in the profits of the business if they agreed to work at a lower minimum wage. Number 1036 BILL BUBBEL, Operator, Pump House Restaurant, testified that the only people in Alaska who make a minimum wage are the food service or hospitality people, and those individuals augment their wages with tips. In his restaurant, the only minimum wage employees are servers; the dishwashers are paid $8.50 an hour. McDonalds [Restaurant] doesn't hire anybody at the minimum wage. He opposed [applying] the CPI to the minimum wage because it really doesn't reflect the state of the economy. He said that most of the minimum wage earners work in tourism, which is substantially down. He said this affects a business person's ability to absorb any additional wage increases. He recommended leaving the minimum wage at the federal level plus $1.50, while removing the CPI from it. Any increase is inflationary because the cost will have to be absorbed by the public. He questioned how much more the public is willing to pay for a meal at the Pump House. His business has just absorbed the minimum wage increase and a huge increase in insurance and [workers'] compensation rates. He reminded committee members that every rise in the minimum wage has an exponential affect on other expenses, increasing costs and squeezing profits even further. Margins in the food business are probably some of the smallest in the nation, he said. Number 0975 MR. BUBBEL said that the minimum wage doesn't apply to Alaska because no one will work for it. He encouraged the committee to create a tip credit as a way of helping the employer, increasing employment, and bringing in more young people. He said as an employer's costs increase, fewer people will be hired. He encouraged the committee to make it easier for an employer to hire lots of staff, provide lots of jobs for young people entering the job market. He said that he doesn't currently use the training wage at the Pump House but if wages go up, he'll have to use it to compensate for these rising costs. Number 0873 FRANK ROSE, President, Alaska Hotel and Lodging Association; Owner, Alaska Lodging Management, testified in favor of The past two years, the industry has been devastated by the decline in visitors to our state. In his case, that's a 20 percent [decline in occupancy]. He explained that occupancy is about 70 percent, and in order to make a profit, the occupancy rate should be around 80 percent when the business is open four months of the year. It's a severe situation, he said. Whether it's the result of the underlying economy or the [the terrorist attacks of September 11, 2001], business is suffering; in contrast to the comments of an earlier witness, he said, things are not that rosy in the Denali [Bluffs Hotel]. To further exacerbate things, his insurance rates have gone up 40 percent. That's a big number given the $100,000 he pays for insurance a year. He pointed out that Alaska has the highest minimum wage in the nation. MR. ROSE said that to not pass HB 199. Number 0732 REPRESENTATIVE ROKEBERG asked Mr. Rose about his 8 percent menu increases and 5 percent staff cut, whether he attributed those to general business conditions or to the increase in the minimum wage. MR. ROSE replied that the restaurant employees are minimum wage earners, even though they're making about $20 an hour. [The increase in those wages] is the area [of the budget] that has been most severely [impacted]. He said the increase in menu prices is directly related to the minimum wage increase. Number 0663 JON FAULKNER, Owner/operator, Land's End Resort, referred to the letter he faxed to the committee members. The resort has a sizable restaurant, he said. He testified in support of He said he believes that minimum wage is a legislative prerogative and needs to remain so. Restaurants in particular are impacted by [changes in the minimum wage]; restaurants are a major part of the economy and a major employer of the entry level people that minimum wage is designed to help. The legislature needs the input of restaurant operators when it deliberates minimum wage increases such as this. There's new information that comes up annually: the economic conditions after[the terrorist attacks of September 11, 2001] sharp increases in insurance, fuel and utility costs. He said the legislature does not know who exactly is affected by minimum wage. Although many restaurant servers are paid minimum wage they earn, on average, well above twice the minimum wage. This information, which changes, certainly should affect the legislature's deliberations, and that information changes. To make [the CPI increase] automatic defies the rationale for having a legislature, he remarked. MR. FAULKNER stated [an annual increase in the minimum wage] is absolutely inflationary. The wages at Land's End constitute 30- [price] will certainly go up. He said, "Is this what we want? I don't think so." He said that raising the minimum wage absolutely reduces jobs. Restaurants operate on a fixed labor budget otherwise they go broke. Furthermore, restaurants are labor intensive and operate on very thin margins. This is not an issue of loyalty to his employees, Mr. Faulkner said. There are many ways that he rewards his employees that are more important to them than minimum wage. He did not agree with an earlier comment that the [certainty of an annual] CPI increase gives employers stability [for planning]. The stability of an automatic increase is not as important to restaurant operators as keeping labor [costs] under control. CHAIR ANDERSON commented on the fact that many businesses are saying that many of their employees [paid at higher than minimum wage] won't be affected [by the CPI increase]. He said these companies are still testifying on behalf of business. Number 0417 REPRESENTATIVE ROKEBERG said the point is that these restaurant workers, because they make tip income, earn twice the minimum wage. They're making $15, $20, $25 an hour, and the legislature gave them a raise they didn't need. Number 0348 JOSE RAMOS, Operator, Don Jose Restaurants, said he operates three restaurants on the Kenai Peninsula and Anchorage. He employees 60-70 employees year round and 107 employees in the summer. He said the increase in the minimum wage had a really big impact in his restaurants. He said his employees were happy to get the raise from $5.65 to $7.15, and he was happy for them. Annual increments will put a lot of businesses in a tough situation. In fact, he said he will probably hire fewer employees and figure out how to adjust his cost of operations. He concluded by noting his support of HB piece of legislation with the intention of making a substantial change in it six months later -- this frustrates the initiative process. The legislature has precluded the public from voting on [the issue]. He urged the legislature to let the [law passed last year] work; it's too early to look at its economic impact. Number 0078 He continued and announced that the AFL-CIO disagrees that the [increased] minimum wage or a subsequent CPI indexing is going to cause job losses. He noted that Representative Rokeberg has provided some [economic] discussions in his paperwork; he said he could provide similar studies on the other side [of the issue]. He recommended that the legislature let the [law] stand for that two-year period, and then review it. If the legislature does not, he predicted the public would present another initiative with more than 50,000 signatures. He predicted a public movement across the state for more of a living wage instead of a minimum wage. He concluded by asking that the legislature not frustrate the [initiative] process, let the process work, and review it at the appropriate time. Number 0200 CHAIR ANDERSON noted that five of the seven members of the committee were not in the legislature [when this bill passed]. He confirmed that the increase in the minimum wage with the CPI passed in the last legislative session. MR. SAMPSON reiterated that if the initiative would have gone to a vote, it would have been in effect for two years. He noted that the courts have not ruled on the question of whether [passing] a substantial change like HB CHAIR ANDERSON announced that the next order of business would be HOUSE BILL NO. 56, "An Act relating to the attorney fees and costs awarded in certain court actions relating to unfair trade practices; and, if considered court rule changes, amending Rules Number 2243 REPRESENTATIVE LES GARA, Alaska State Legislature, spoke as the sponsor of HB sponsored by Senator Dyson. He informed the committee that as of a couple of years ago, Alaska has the smallest Consumer Protection Department in the country, which was because of fiscal constraints. He estimated that there is probably the same amount of fraud in this state as there is in any other state. However, the state isn't able to help those who are victimized by this; the cases tend to be small and the attorney general's office helps those they can. He explained merely says that if the attorney general's office represents someone in a consumer fraud case, the full enforcement costs and full attorney's fees should be rewarded if the [consumer] prevails. Representative Gara viewed this legislation as a smart way to deal with consumer fraud while dealing with budget problems at the same time. The full enforcement costs and attorney's fees can be plowed back into more consumer protection, and hopefully the state will move past the current situation in which [only] one-and-a-half attorneys are working on consumer fraud cases. He recalled 10 years ago when there were about eight attorneys and a host of investigators working on consumer protection cases. This legislation is a way in which for there to be a consumer enforcement presence without an impact on the budget. He noted that the Attorney General's Office supports HB it would like to have a better consumer enforcement presences. Number 2355 REPRESENTATIVE GUTTENBERG moved to adopt TAPE 03-41, SIDE B Number 2367 REPRESENTATIVE ROKEBERG asked if Rule 82 applies now and this legislation would abrogate Rule 82. REPRESENTATIVE GARA confirmed that this legislation would abrogate Rule 82. He explained that currently the state is entitled to Rule 82 fees, which are roughly 20 percent of its fees. Similar to the federal government, in certain areas in which prosecutions are important, laws have been passed to allow the state and federal government to recover full attorney's fees. In federal and state antitrust law and federal and state hazardous waste law, the enforcement authorities receive full attorneys fees; this legislation would be along the same vein. He highlighted that this legislation would be a rule change, and therefore would require a two-thirds vote. REPRESENTATIVE ROKEBERG recalled that he had worked on the legislation that allowed private causes of action and recovery for that. He asked if the aforementioned wasn't working, and therefore the attorney general has to deal with these cases. REPRESENTATIVE GARA explained that in 1997 the legislature passed a law specifying that private individuals who push a consumer right's case on their own can receive full compensation for their attorney's time. Although the private bar has taken quite a few of these cases, the attorney general's office says that many people come to them and they can't help them the way they would like. Therefore, this legislation would allow the attorney general's office to increase its staff a bit in order to take on these cases. [The 1997 legislation] hasn't worked as well as was hoped. REPRESENTATIVE GARA, in response to Representative Gatto, clarified that Rule 82 allows the prevailing party to recover roughly 10-20 percent of attorney's fees. Number 2285 REPRESENTATIVE LYNN asked if this legislation will help consumers and the state's budget situation. REPRESENTATIVE GARA replied yes. Number 2270 REPRESENTATIVE LYNN moved to report CSHB Commerce Standing Committee. ADJOURNMENT There being no further business before the committee, the House Labor and Commerce Standing Committee meeting was adjourned at 5:58 p.m.

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