03/11/2011 03:15 PM House LABOR & COMMERCE
| Audio | Topic |
|---|---|
| Start | |
| HB118 | |
| HB122 | |
| HB155 | |
| Adjourn |
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 155 | TELECONFERENCED | |
| += | HB 122 | TELECONFERENCED | |
| += | HB 118 | TELECONFERENCED | |
| + | TELECONFERENCED |
ALASKA STATE LEGISLATURE
HOUSE LABOR AND COMMERCE STANDING COMMITTEE
March 11, 2011
3:18 p.m.
MEMBERS PRESENT
Representative Kurt Olson, Chair
Representative Craig Johnson, Vice Chair
Representative Mike Chenault
Representative Dan Saddler
Representative Steve Thompson
Representative Bob Miller
MEMBERS ABSENT
Representative Lindsey Holmes
COMMITTEE CALENDAR
HOUSE BILL NO. 118
"An Act relating to a tax credit for corporate income taxes paid
for qualified research and development expenditures; and
providing for an effective date."
-Moved CSHB 118(L&C) OUT OF COMMITTEE
HOUSE BILL NO. 122
"An Act relating to naturopaths and to the practice of
naturopathy; establishing an Alaska Naturopathic Medical Board;
authorizing medical assistance program coverage of naturopathic
services; amending the definition of 'practice of medicine'; and
providing for an effective date."
- HEARD & HELD
HOUSE BILL NO. 155
"An Act relating to public construction contracts."
- HEARD & HELD
PREVIOUS COMMITTEE ACTION
BILL: HB 118
SHORT TITLE: RESEARCH AND DEVELOPMENT TAX CREDIT
SPONSOR(s): RULES BY REQUEST OF THE GOVERNOR
01/24/11 (H) READ THE FIRST TIME - REFERRALS
01/24/11 (H) L&C, FIN
02/18/11 (H) L&C AT 3:15 PM CAPITOL 106
02/18/11 (H) Heard & Held
02/18/11 (H) MINUTE(L&C)
02/25/11 (H) L&C AT 3:15 PM BARNES 124
02/25/11 (H) Scheduled But Not Heard
03/11/11 (H) L&C AT 3:15 PM BARNES 124
BILL: HB 122
SHORT TITLE: NATUROPATHS
SPONSOR(s): MUNOZ
01/26/11 (H) READ THE FIRST TIME - REFERRALS
01/26/11 (H) L&C, HSS, FIN
02/28/11 (H) L&C AT 3:15 PM BARNES 124
02/28/11 (H) Heard & Held
02/28/11 (H) MINUTE(L&C)
03/09/11 (H) L&C AT 3:15 PM BARNES 124
03/09/11 (H) Heard & Held
03/09/11 (H) MINUTE(L&C)
03/11/11 (H) L&C AT 3:15 PM BARNES 124
BILL: HB 155
SHORT TITLE: PUBLIC CONSTRUCTION CONTRACTS
SPONSOR(s): LABOR & COMMERCE
02/11/11 (H) READ THE FIRST TIME - REFERRALS
02/11/11 (H) L&C
02/25/11 (H) L&C AT 3:15 PM BARNES 124
02/25/11 (H) Heard & Held
02/25/11 (H) MINUTE(L&C)
02/28/11 (H) L&C AT 3:15 PM BARNES 124
02/28/11 (H) Heard & Held
02/28/11 (H) MINUTE(L&C)
03/07/11 (H) L&C AT 3:15 PM BARNES 124
03/07/11 (H) Heard & Held
03/07/11 (H) MINUTE(L&C)
03/09/11 (H) L&C AT 3:15 PM BARNES 124
03/09/11 (H) Heard & Held
03/09/11 (H) MINUTE(L&C)
03/11/11 (H) L&C AT 3:15 PM BARNES 124
WITNESS REGISTER
CURTIS THAYER, Deputy Commissioner
Department of Commerce, Community & Economic Development (DCCED)
Juneau, Alaska
POSITION STATEMENT: Testified and answered questions during the
discussion of HB 118.
JOHANNA BALES, Deputy Director
Tax Division, Anchorage Office
Department of Revenue (DOR)
Anchorage, Alaska
POSITION STATEMENT: Testified and answered questions during the
discussion of HB 118.
BILL POPP, President; Chief Executive Officer
Anchorage Economic Development Corporation (AEDC)
Anchorage, Alaska
POSITION STATEMENT: Testified in support of HB 118.
DAN WHITE
Associate Vice Chancellor of Research
University of Alaska Fairbanks (UAF)
Fairbanks, Alaska
POSITION STATEMENT: Testified in support of HB 118.
ALLAN JOHNSTON, Vice-President
Wedbush Morgan Securities
Co-President/Chief Encouragement Officer;
The Entrepreneurs and Mentors Network, Inc.
Anchorage, Alaska
POSITION STATEMENT: Testified in support of HB 118.
TOM GOODE
Homer, Alaska
POSITION STATEMENT: Testified in support of HB 122.
KATY SHERIDAN, Physician; Member
Alaska Academy of Family Physicians (AKAFP)
Soldotna, Alaska
POSITION STATEMENT: Testified in opposition to HB 122.
MARION GRANDHOME, Physician
Family Practice Physician
Bethel, Alaska
POSITION STATEMENT: Testified in opposition to HB 122.
DON ETHERIDGE
Lobbyist
Alaska State AFL-CIO
Juneau, Alaska
POSITION STATEMENT: Testified in opposition to HB 155.
BRETT ALLIO, Manager
International Brotherhood of Electrical Workers (IBEW) 1547
Juneau, Alaska
POSITION STATEMENT: Testified during the discussion of HB 155.
BENJAMIN STEWART
Fairbanks, Alaska
POSITION STATEMENT: Testified during the discussion of HB 155.
SHAWN TUFFORD
Fairbanks, Alaska
POSITION STATEMENT: Testified during the discussion of HB 155.
LINDSEY HILL, Member
Carpenters Local 1243
Fairbanks, Alaska
POSITION STATEMENT: Testified in opposition to HB 155.
ROBIN KELLY, Member
International Brotherhood of Electrical Workers (IBEW) 1547
Fairbanks, Alaska
POSITION STATEMENT: Testified during the discussion of HB 155.
PHILIP ROBERTSON
Wasilla, Alaska
POSITION STATEMENT: Testified during the discussion of HB 155.
DAVID RUIZ
Anchorage, Alaska
POSITION STATEMENT: Testified in opposition to HB 155.
DIANA RUHL, Member
International Brotherhood of Electrical Workers (IBEW) 1547
Anchorage, Alaska
POSITION STATEMENT: Testified in opposition to HB 155.
LARRY TALBERT, Member
Plumbers & Pipefitters
Palmer, Alaska
POSITION STATEMENT: Testified in opposition to HB 155.
PAT FALON, Member
Laborers Local 341
Anchorage, Alaska
POSITION STATEMENT: Testified during the discussion of HB 155.
DAVID MCALLEN, Member
International Brotherhood of Electrical Workers (IBEW) 1547;
Statewide Training Coordinator; Alaska Joint Electrical
Apprenticeship & Training Trust (AJEATT)
Anchorage, Alaska
POSITION STATEMENT: Testified in opposition to HB 155.
JOHN SWORTFIGUER, Member
Laborers Local 942
Fairbanks, Alaska
POSITION STATEMENT: Testified in opposition to HB 155.
ERIC SLAY
Fairbanks, Alaska
POSITION STATEMENT: Testified during the discussion of HB 155.
JUSTIN JACKSON, Member
Carpenters Local 1281
Anchorage, Alaska
POSITION STATEMENT: Testified in opposition to HB 155.
RAYMOND DELL, Member
Carpenters Local 2247
Anchorage, Alaska
POSITION STATEMENT: Testified during the discussion of HB 155.
ACTION NARRATIVE
3:18:42 PM
CHAIR KURT OLSON called the House Labor and Commerce Standing
Committee meeting to order at 3:18 p.m. Representatives Olson,
Thompson, Miller, and Saddler were present at the call to order.
Representatives Chenault and Johnson arrived as the meeting was
in progress.
3:19:00 PM
The committee took an at-ease from 3:19 p.m. to 3:25 p.m.
3:25:50 PM
CHAIR OLSON restarted the meeting after experiencing technical
difficulties.
3:26:09 PM
HB 118-RESEARCH AND DEVELOPMENT TAX CREDIT
3:26:25 PM
CHAIR OLSON announced that the first order of business would be
HOUSE BILL NO. 118, "An Act relating to a tax credit for
corporate income taxes paid for qualified research and
development expenditures; and providing for an effective date."
3:27:00 PM
CURTIS THAYER, Deputy Commissioner, Department of Commerce,
Community & Economic Development (DCCED), stated that innovation
can be expensive and time consuming. It can also spark a chain
reaction of investments and capital that spills over into every
sector of our economy. Forty other states have recognized that
by establishing a tax credit for research and development in
addition to demonstrating economic benefits, gives them a
competitive advantage over Alaska. This bill, HB 118, would
address this issue by establishing a 20 percent tax credit for
qualified research and development conducted by corporate
taxpayers in Alaska. In effect, the research and development
tax credit would stimulate private sector investment,
entrepreneurial activity, and business expansion in Alaska. It
would bring opportunity and sustain long-term benefits to
Alaska's economy. This bill would allow Alaska corporations to
receive a 20 percent tax credit, not to exceed $10 million per
taxpayer, per tax year. The research and development activities
or the employee payroll must take place in Alaska. In a recent
column in the Juneau Empire, University of Alaska Fairbanks
Chancellor Brian Rogers recognized tangible benefits to
incentivize homegrown research and development. He paraphrased
Mr. Roger's comments that the Governor's proposal on research
and development tax credit has the potential to significantly
boost Alaska's economic development in Alaska. Chancellor
Rogers has long recognized the value of partnering the knowledge
and expertise of university researchers with the needs of
communities and private businesses across the state. The
University of Alaska has a robust research program that has led
to technology development in areas directly relating to the
needs of the state's economy including energy, engineering,
geophysics, petroleum, mining, health sciences, and agriculture.
Mr. Rogers explained how UAF's newly created office of
intellectual property and commercialization could augment these
efforts and facilitate new partnerships that will work to
commercialize intellectual property technology created by UAF's
efforts.
3:29:38 PM
MR. THAYER continued. The UAF's efforts will offer a strong
complement to the Governor's proposal. In most states a healthy
private research and development sector work in tandem with
university research. This has not been the case in Alaska since
very little research and development has occurred in Alaska.
The research and development tax credit could change this
dynamic. Independent research and development could create a
ripple effect that benefits more than just the businesses
involved. He referred to a 2005 Federal Reserve Bank of
Cleveland study which examined economic drivers for state per
capita income. The study indicated the greatest factors related
states' innovation and workforce development. A research and
development tax credit would incentivize innovation and
contribute to specialized work forces. In turn this would lead
to an entrepreneurial activity business expansion in the state
that would bring jobs and economic opportunity to Alaskans.
MR. THAYER related that the bill's details indentify the kind of
research which would qualify for the research and development
tax credits. He said it is more important to look at other
states to review how investing research and development has
enhanced their "business friendly" environment and helped them
maintain a competitive edge. He stated that Virginia has been
at the top of Forbes ten best states for business ranking since
it has recognized that promoting science and technology research
and development has had a positive effect on its economy. He
pointed out that North Caroline has also been honored by the
site selection committee in nine of the past 10 years. Over the
years, North Carolina has provided tax incentives to encourage
research and development and increase technology investments.
The state has remained consistent with its support of research
and development tax credits. He said that North Dakota was the
only state which showed growth through the recent recession and
has been high ranked in business climate polls. Research and
development tax credits are of the tools in its tool box. He
concluded that it is time to place Alaska on equal footing with
other states. This bill, HB 118, has the capacity to create job
opportunities for Alaskans, and spur growth for Alaska's
businesses. It's good for the economy. It's good for Alaska's
families and it needs to be part of Alaska's economic toolbox
when Alaska is trying to recruit businesses to Alaska.
3:31:57 PM
MR. THAYER referred to a PowerPoint presentation in members'
packets.
3:32:40 PM
REPRESENTATIVE SADDLER asked whether the oil and gas industry
sector would benefit or to identify which industry would most
benefit from the research and development tax credits.
MR. THAYER related that the bill was modeled after a federal
research and development program.
3:33:14 PM
JOHANNA BALES, Deputy Director, Tax Division, Anchorage Office,
Department of Revenue (DOR), answered that could this bill is
targeted for corporations. Oil and gas companies are
corporations and corporate income taxpayers. In some instances
the oil and gas corporations could receive oil and gas
production tax credits as well as a corporate income tax credits
for the same expenditures, but only in very limited
circumstances. She reiterated that the oil and gas credit on
the production tax side are very limited.
3:33:59 PM
REPRESENTATIVE SADDLER related his understanding that the oil
and gas corporation income tax credit and research and
development tax credits could overlap, but it is not likely or
would happen infrequently.
MS. BALES answered yes. She said that oil and gas would not be
allowed any exploration credit or the research and development
tax credits on exploration activities. However, another oil and
gas credit pertains to capital improvements which may allow for
depreciation on the capital improvements if the equipment being
depreciated is used for research and development. Thus, the
research and development tax credits could apply but only in
very limited circumstances.
REPRESENTATIVE SADDLER asked which industry sector would most
likely take advantage of the program.
MS. BALES related that the oil and gas corporations could avail
themselves of the program to offset their corporate income
taxes, but the governor's intent and focus is to bring in new
industries, such as the mid to larger size multi-state
corporations who could use the research and development tax
credits. She reported that 34 other states offer research and
development tax credits. The state hopes to bring in new
industry to Alaska and this is the first step to incentivize.
REPRESENTATIVE SADDLER pointed out that she identified the size
of the industry that may benefit from the program. He asked for
further clarification on the type of industry.
MS. BALES answered the program would likely target the
technology-based industries since that is the focus on the
federal side.
MS. BALES commented that one area the state has had some success
in the past is cold region research. She related that Alaska is
ideally situated and suited for this type of research.
3:36:31 PM
REPRESENTATIVE MILLER asked whether a single company would
qualify for four or six tax credits for the same work.
MR. THAYER answered no. This bill would apply to new research
and development and would reach beyond what has been budgeted.
He pointed out HB 118 contains a "look back" provision for three
years on the records to identify new research and development
for a company.
REPRESENTATIVE MILLER related his understanding that there would
not be any possibility for tax credit or rebate to develop an
existing oil field. In the meantime the oil corporation would
be conducting research to remove heavier oil. He asked whether
both credits would apply.
MS. BALES referred to page 2, line 8 of HB 118. This provision
provides that a person may not claim a credit under this section
for qualified research and development expenditures which were
either deducted in the calculation of tax liability or utilized
for any other credits. Thus, if the corporation was allowed
another corporation income tax, noting that credit is for
corporate income tax, the tax credit could not be utilized
anywhere else. The expenditures are not allowed to also be
deducted and used in the calculation of any other credit against
corporate income tax, she said.
3:38:53 PM
REPRESENTATIVE SADDLER asked for an estimate of how well this
investment tax credit has worked federally.
MR. THAYER responded that the federal research and development
tax credits have been in place for over 20 years. The federal
program keeps getting extended. He reported that a bill is
currently pending. He pointed to other states, such as North
Carolina, have successfully used this to bring in Caterpiller,
Inc. which provided 1,250 new jobs in North Carolina. He
suggested that the state should also review Virginia's aerospace
industry since Alaska is trying to expand its Kodiak Launch
facility and Ft. Greeley with respect to potential missile
defense.
3:39:58 PM
REPRESENTATIVE THOMPSON moved Amendment 1 labeled 27-GH1951\A.1,
Bullock, 2/17/11, which read as follows:
Page 2, line 12:
Following "year,":
Insert "if three or more taxpayers claim the
credit authorized under this section during the
immediately preceding year,"
Delete "names"
Insert "number"
Page 2, lines 16 - 25:
Delete "Notwithstanding AS 40.25.100 and
AS 43.05.230, a taxpayer claiming the credit under
this section consents to
(1) the public disclosure of its name and
status as a beneficiary of the credit;
(2) inclusion of the amount of the credits
granted to it under this section and the number of
employees conducting the research and development for
which it claims the credit in the cumulative total
calculated by the department for reporting purposes;
and
(3) report on the impact of the credit on
research and development for each year that the credit
is claimed."
CHAIR OLSON objected.
3:40:27 PM
MR. THAYER explained the purpose of Amendment 1 is to protect
confidentiality of the taxpayer. In response to Chair Olson, he
related that the amendment was necessary due to a drafting
error, which was discovered by the Department of Revenue (DOR).
CHAIR OLSON removed his objection. There being no objection,
Amendment 1 was adopted.
3:42:36 PM
BILL POPP, President; Chief Executive Officer, Anchorage
Economic Development Corporation (AEDC), stated that Alaska is
in significant competition with other communities and other
states. He pointed out that the AEDC competes daily with over
4,000 economic development organizations. In the "world of
incentives" a targeted incentive can be powerful to attract
homegrown investments. He explained the AEDC has worked on
research and development projects for industries, including the
cool supply chain, automotive, renewable energy, military
technical, aviation, life science, biotech, and medical
industries. This type of tax credit can be beneficial for
projects often caught in the "valley of death" or in the early
start-up phases in which companies attempt to go beyond the
initial concept phase and move to the prototype phase. Another
important part of the research and development tax credit is
that the credits can help attract research and development
venture capital. This is a very difficult proposition in Alaska
and the tax credit can not only leverage the money the credit
will be applied against, but could generate additional funds
which go beyond that by reducing the risk for the venture
capitalists to become involved in the research and development
startup. He urged support for HB 118.
3:45:05 PM
DAN WHITE, Associate Vice Chancellor of Research, University of
Alaska Fairbanks (UAF), stated that he has been charged to lead
the Office of Intellectual Property and Commercialization at the
University of Alaska Fairbanks. The UAF's goal is to move
technology from the university to the private sector. Applied
research and development used in the private sector gives
businesses a competitive advantage in the global market. The
critical link in economic development is enhanced when
businesses can invest in the research and development itself.
This bill would allow the state to provide a significant
incentive to businesses to take advantage of emerging
opportunities. This bill would contribute to the university's
mission to conduct research and development as well as to help
move research and development forward in the private sector for
long-term economic development. He offered his belief that this
would be particularly true if this bill results in businesses
and industry funded research at the UAF since this could bridge
the two and lead to economic diversification for the state.
ALLAN JOHNSTON, Vice President, Wedbush Morgan Securities,
stated that he is a very strong supporter of the tax credit. He
offered his belief that the tax credits will not be the solution
but represents another tool. Currently, the biggest hurdle in
Alaska is how to build a culture of empowerment. This bill
represents an investment for tomorrow. He said it seems like
just yesterday when Ken Thompson who was President of ARCO
Alaska, Inc. ran television advertisements depicting a female
engineer with a tubular water separator. She indicated that the
technology saved the industry over $100 million dollars. He
described the pride that comes from changing things within the
community instead of waiting for things to happen. Currently,
Alaska seems to be waiting for things to happen. He highlighted
the collective importance of research and development tax
credits to help empower people to make changes. He
characterized this bill as a good start. He stated that he will
also work to support other tools like the ones this bill offers,
as well.
3:48:55 PM
CHAIR OLSON, after first determining no one else wished to
testify, closed public testimony on HB 118.
REPRESENTATIVE JOHNSON remarked that it is about time. Alaska
has been lacking in research and development. He offered his
belief that Alaska has lost intellectual property due to a lack
of opportunities for research. He reiterated that it is about
time.
REPRESENTATIVE JOHNSON moved to report HB 118, as amended, out
of committee with individual recommendations and the
accompanying fiscal notes. There being no objection, the CSHB
118(L&C) was reported from the House Labor and Commerce Standing
Committee.
3:49:32 PM
The committee took an at-ease from 3:49 p.m. to 3:53 p.m.
HB 122-NATUROPATHS
3:53:13 PM
CHAIR OLSON announced that the next order of business would be
HOUSE BILL NO. 122, "An Act relating to naturopaths and to the
practice of naturopathy; establishing an Alaska Naturopathic
Medical Board; authorizing medical assistance program coverage
of naturopathic services; amending the definition of 'practice
of medicine'; and providing for an effective date."
3:53:34 PM
TOM GOODE stated he has been treated by a Naturopathic Doctor
(ND) for the past eight years and expressed his preference for
the naturopathic approach to medicine. He related that
scientific research has been discovering the role nutritional
deficiencies plays in disease. The ND is one who has
extensively studied nutrition whereas 50 percent of medical
schools do not require any nutritional courses to graduate as a
medical doctor (MD). The other 50 percent of medical schools
only require one semester in nutrition, he said. The ND uses
prescription drugs as a last resort, but if all else fails and
they are necessary he would prefer the drugs were prescribed by
his ND. He related a scenario in which he went to the doctor
but was treated by a physician's assistant. He finds it ironic
that physician assistants can treat and prescribe drugs whereas
NDs cannot. He suggested an independent board consisting of
skilled NDs should govern the practice of Naturopathic
profession in Alaska.
3:55:17 PM
KATY SHERIDAN, Physician; Member, Alaska Academy of Family
Physicians (AKAFP), stated she is a lifelong Alaskan who has
practiced family practice medicine in Soldotna for 15 years and
also represents the AKAFP today. She identified three areas she
would address, including patient safety, issues raised during
the prior hearing, and the future of health care in Alaska. She
advised that the AKAFP opposes HB 122, primarily due to concerns
for patient safety and quality of care in Alaska. She recalled
in medical school the saying, "You won't make the diagnosis if
you don't think of the disease." He expressed concern with the
limited training that Naturopaths receive especially in disease
process and treatment of chronic disease. She said it is one
thing to optimize health with nutrition and exercise but it is
another to be ruling out serious disease and planning treatment
for chronic problems. While she would be the first to admit
that allopathic medicine does not have all the answers and
complementary and alternative medicine also have a place, she
thought this bill goes too far to empower naturopaths to
practice beyond their training. She referred to a graph in
members' packets that shows the different in training between
family physicians and naturopaths. She pointed out that family
physician's training is similar to pediatricians and internists,
who also practice primary care medicine. She expressed
significant concern since the bill would allow naturopaths to
prescribe medications, perform preventative and screening
physicals, all of which are opportunities to identify diseases
and develop protocols for preventive care for patients. She
related that the lack of hours of education in disease process
and chronic disease management limits the naturopaths' ability
to provide comprehensive care.
3:58:08 PM
DR. SHERIDAN offered her belief that HB 122 would compromise
health care in Alaska. She recalled earlier testimony on the
bill suggesting that other states have similar bills pending to
allow for NDs to prescribe medicine. She clarified that only
eight states have policies for prescribing and only for natural
substances pursuant to a physician's protocol. Several states
do allow NDs with "birth privileges" to administer some that
deliver can prescribe pitocin and antihemorrhagic drug drugs
pursuant to protocols. In fact, only a few states allow
prescription ability for NDs and then only with limited
guidelines. She recalled testimony that naturopaths focus on
preventive care. As a family physician, she spent considerable
hours of training and continues to provide many hours providing
preventive care counseling and education for her patients. She
recalled testimony that some patients did not have good
experiences with allopathic medicine, but she did not think this
is the norm. The future of health care and the concept of
health care homes necessitate the care that must be given when
considering dispensing rights. She stressed the importance of
considering what constitutes a quality provider to provide full
spectrum health care home needs. She emphasized that empowering
health who are only qualified to care for a portion of a
person's health and not necessarily all aspects could set
ourselves up for reduced levels of health care homes for the
future. She urged members to examine who they would want caring
for their families.
DR. SHERIDAN summarized that the AKAFP strongly oppose the bill
as written primarily on the basis of patient safety and quality
care issues and for the future of health care systems that will
be established for the health care delivery system in Alaska.
4:01:43 PM
REPRESENTATIVE MILLER asked how much training a medical doctor
has in pharmacology or prescribing drugs in the market.
DR. SHERIDAN answered that the number of classes in medical
school addressing pharmacology and medications varies but
medical school also addresses diseases and medications.
Physicians frequently address medical management during their
residency, experience, and continuing education. She related
that medications continually change in health care so MDs must
keep current on the latest medications and potential side
effects. She reported that medical doctors must have 50 hours
of continuing education each year to keep their medical license
current and spend a large portion of their time reviewing
medications.
4:03:15 PM
REPRESENTATIVE MILLER asked for clarification on the source of
information that MDs use to keep current on medications.
DR. SHERIDAN related that the sources of information physicians
use varies but many physicians use electronic sources and pocket
information with the latest downloads. Many physicians confer
with pharmacies and keep current on medications through ongoing
continuing education. She also performs research at the bedside
using technology since medications continually change. She
concluded that the reality is that physicians spend a lot of
time addressing medications.
4:04:47 PM
REPRESENTATIVE MILLER asked where the "body of information
resides" and whether that information would also be available to
all MDs or NDs.
DR. SHERIDAN answered probably much of the information is
available to the public. Many MDs subscribe to UpToDate, which
is an electronic scientific information resource. However, she
stressed the importance that the person reading the information
must have some understanding of how a medication works on the
body or on a particular disease process. Some of this
information can be pretty difficult and challenging to
understand, she said.
REPRESENTATIVE MILLER asked for clarification on the source of
information.
DR. SHERIDAN answered that some scientific forum called
"UpToDate" collects and compiles it.
4:06:28 PM
REPRESENTATIVE SADDLER asked for clarification on the current
standard of care for MDs and NDs in society. He asked how this
would change under the bill.
DR. SHERIDAN answered that would happen through peer pressure.
She related a scenario in which in which someone has a stroke in
Soldotna and ends up in the hospital. The standard of care
would be that the physician would perform an appropriate stroke
work up, including disease modifying treatment for that patient,
depending on the findings. If the patient resides in a more
remote place in Alaska it may be that the standard of care may
also be different. She explained that some communities may have
certain tests readily available or not available, such as a CAT
scans. Thus, the standard of care depends on the resources
available in a community and the other physicians available.
DR. SHERIDAN elaborated that if someone did not provide the
standard of care, mechanisms are available in the hospital to
review and address the matter. She stated that NDs are not lay
midwives. In Soldotna, some people practice midwifery and their
standards may be different from physicians delivering babies in
hospital settings. She highlighted her concern that if NDs are
empowered to prescribe and provide preventive screening the
standard may be lowered since the NDs may provide a different
level of care. She said she has observed this happen with lay
midwives since treatment is given that would not be considered
medically appropriate by MDs, but the physicians have limited
recourse over midwifery practice. She said, "That's a very
serious concern of those of us practicing medicine, especially
in smaller communities in Alaska."
4:09:20 PM
REPRESENTATIVE SADDLER related his understanding that the
standard of care is a community-based descriptive rather than an
objective standard.
DR. SHERIDAN agreed. She stated that Americans have developed a
level of care based on television and the Internet so they have
expectations for a higher level of care. However, it can be
community dependent, she said.
REPRESENTATIVE SADDLER asked whether the standard of care as
practiced by NDs would be factored in to the overall standard of
care and would possibly tend to dilute the level of the standard
of care.
DR. SHERIDAN agreed that would be the AKAFP's concern.
4:10:23 PM
MARION GRANDHOME, Physician, Family Practice Physician, related
that she wanted to echo Dr. Sheridan's comments. She stated
that she is speaking in opposition to HB 122. She expressed
concern about patient safety. She said, "We support
supervision. We support naturopaths but we also strongly
believe in aligning medical providers' scope of practice
appropriately to their training." She indicated that
naturopaths and family physician's training are different in
volume and substance. The average family physician has
completed approximately 21,000 hours of training prior to
practice whereas naturopaths have only completed approximately
6,000 hours. The typical family physician has had five years of
clinical practice in the clinic, hospital, and emergency room
ordering, interpreting labs and X-rays, performing procedures,
and prescribing medication. The typical naturopath spends a
year or less in clinical training, which is necessarily focused
on naturopathic treatments. She questioned whether they have
experience to safely order intravenous therapy or IV therapy or
X-rays. This bill would leave the door open to prescribing
medications which she also questioned. She related that her
specific concerns surround pre-employment school and workplace
physicals, since someone without adequate training could miss
risks. She highlighted that bus drivers and pilots may have
deficits in vision or hearing or low-blood sugar caused by
diabetes or seizures from an uncontrolled seizure disorder. She
pointed out that school sports physicals must evaluate students
for heart disease before sports participation. She remarked on
the tuberculosis outbreak in Southwest Alaska and questioned
whether NDs could identify these risks for personal and public
safety.
4:12:42 PM
DR. GRANDHOME stated that she received five years of training in
IV therapy. She related that starting IVs, prescribing IV
therapy, has serious potential and could easily kill a person by
giving IV saline solution at too high a concentration or too
fast a rate. She referred to a letter from the Osteopaths in
members' packets that indicated 93 percent of the public prefer
the term physician to be limited to licensed medical doctors.
She indicated that it is critical patients know the
qualifications of the person treating them. She concluded by
stating that traditional and naturopathic practices can be
complementary can coexist. However, it is critical for public
safety that all providers are appropriately limited to the scope
of practice consistent with their training.
4:13:35 PM
CHAIR OLSON, after first determining no one else wished to
testify, closed public testimony on HB 122.
[HB 122 was held over.]
4:13:55 PM
The committee took an at-ease from 4:13 p.m. to 4:15 p.m.
HB 155-PUBLIC CONSTRUCTION CONTRACTS
4:15:52 PM
CHAIR OLSON announced that the final order of business would be
HOUSE BILL NO. 155, "An Act relating to public construction
contracts."
4:16:13 PM
DON ETHERIDGE, Lobbyist, Alaska State AFL-CIO, stated that the
AFL-CIO is opposed to HB 155 in its current form. He related
that he has been working with the sponsor's office for
solutions. The topic of the threshold has been "hammered on" so
he will cover another aspect. He also related that the AFL-
CIO's major concern is the definition of "maintenance" since it
could be expanded to cover from Fairbanks to anywhere in the
country. The rate could be zero but could circumvent the Little
Davis-Bacon rates by defining the work as "maintenance."
4:18:10 PM
MR. ETHERIDGE recalled Representative Tammie Wilson's testimony
with respect to the road service areas (RSAs). He explained he
serves on the Juneau Docks and Harbor Board and the process they
use to issue a "time and materials" contract is a similar to the
ones the RSAs use since the contractor may perform some
electrical work today and need plumbing tomorrow. He offered
his belief that the issue that has caused the RSA's concern is
that the project costs are added together and put it under one
contract instead of issuing separate contracts.
4:18:55 PM
MR. ETHERIDGE related that he has held conversations with many
nonunion contractor friends who are not testifying today because
they don't want to lose their jobs. He indicated his friends
have related that they are able to work due to the small
residential remodels between construction seasons but nonunion
workers also count on Little Davis-Bacon (LDB) wages to keep
"their heads above water." He also recalled earlier testimony
on prevailing wages. He reported the first prevailing wages in
Alaska were established in 1960 based on the 1959 changes to law
and at the time the average wage was $5 per hour. Currently the
prevailing wages average $50 per hour, which is a ten-fold jump.
Using those figures, he extrapolated the threshold would be
$20,000, based solely on the wage changes.
4:20:40 PM
CHAIR OLSON recalled reviewing research on the prevailing wages
for 1935 which indicated a range for the prevailing wages from
$.50-$1.50 per hour. He reiterated the last time the threshold
was changed was in 1935.
MR. ETHERIDGE pointed out 1960 was the year when the Alaska
prevailing wage went into effect.
CHAIR OLSON agreed that his office has been working with a
number of the stakeholders, including unions, municipal
organization, and sever municipalities. He reported progress is
being made. He agreed the crux of the issue is the definition
of maintenance.
MR. ETHERIDGE agreed. He hoped for a reasonable solution that
would work for everyone.
4:22:35 PM
REPRESENTATIVE SADDLER inquired as to whether he could give him
a rough idea, a "gut feeling" of the amount of construction in
Alaska is subject to the LDBA and for the amount performed
outside the act.
MR. ETHERIDGE offered his belief that the LDBA projects would
include a minimum of 65-70 percent of the public construction
contracts, but the figure would not include homebuilding or home
remodels.
4:23:39 PM
REPRESENTATIVE MILLER recalled working construction year round
on the East Coast. He asked for an estimate of a long
construction season in Alaska.
MR. ETHERIDGE pointed out that he worked as the business agent
for the laborers union. He indicated the construction period
ran from mid-April to the beginning of September. He offered
that some work such as high-rise construction could be done year
round. He offered his belief that most of the crews were back
in the hall by the mid to the end of September and by end of
April.
REPRESENTATIVE MILLER related his understanding that the
construction season lasts about seven months and workers are
working to make a year's worth of wages during that time.
MR. ETHERIDGE answered yes.
4:25:16 PM
BRETT ALLIO, Manager, International Brotherhood of Electrical
Workers (IBEW) 1547, agreed it is not a union versus nonunion
issue but the issue relates to all of Alaska's workers. He did
not think the issue of contractors coming in from Lower 48 would
be based on a set dollar amount. He pointed out that
contractors come to Alaska to work on big chain stores and since
they are already mobilized would be more likely to bid on other
jobs. He indicated that the cities, state, and municipalities
currently employ maintenance people to perform snow removal,
brushing, and street cleaning. He recalled that in Juneau the
docks & harbors maintenance work is contracted out. He
suggested that the definition of construction includes
maintenance it may not be necessary to have a separate
definition for maintenance.
4:29:07 PM
BENJAMIN STEWART stated that as a retired union employee he
feels like he is in the shadow of death among friends. He said
that he has been a Teamster, an operator, a laborer, but
currently is a road service area (RSA) chairman. He pointed out
that his RCA has 92 lots in his service area which collect
$24,000 in taxes. The road service area (RSA) saved money to
get the road paved, but only one contractor bid under LDBA
wages. He would like to see the threshold raised. He did not
see many larger local construction companies bidding on the
borough service area jobs. He recalled that approximately 107
different service areas exist in Fairbanks. He pointed out that
not all are taxed as high as his service area. He offered that
he cannot obtain a bid for asphalt or diesel since prices have
substantially increased in the past three or four weeks. He
recalled that a load of gravel used to run $150 for D-1 gravel,
but under LDBA provisions it is costing nearly $500 per load so
many service areas do not tax themselves enough to cover
maintenance. He said, "We're one of the luckier service areas.
At the same time, I don't like to see my brothers here out of
work, but when you've got a service area and you need service
work done it's not always some new construction, it's
maintenance. I think that's where a lot of the problems come in
hand." He added he plans to travel to Juneau to personally
discuss this issue.
4:32:30 PM
SHAWN TUFFORD stated that he is an Alaskan resident and
construction worker. He related he researched what happens when
LDBA laws are basically "repealed." He cited his source for
prevailing wages and government contracting costs from the
Institute of Social and Economic Research (ISER) 2008. The
report concluded that an overwhelming preponderance of the
literature shows that prevailing wage regulations have no effect
on the cost to government on contracted public works projects.
Workers on prevailing wage contracts tend to be higher skilled,
better trained, and are less prone to serious and fatal injuries
on the job site. Prevailing wage regulations contribute to
enhanced tax revenues and higher wages support consumer
spending. Prevailing wage regulations discourage unscrupulous
contractors who typically cheat on payroll taxes, employ a low-
skilled workers and skirt health and safety requirements on the
job site. Prevailing wage regulations also help expand
apprenticeship training programs which enrich the community by
offering avenues for residents to secure good paying middle
class jobs. Removing prevailing regulations and thereby
lowering wage and benefit standards shifts substantial costs
onto taxpayers by pushing workers into requiring more subsidies
in health care, housing, and other social services. It also
displaces or diminishes middle class jobs that have
traditionally supported local consumer spending which hurts
local business. In response to Chair Olson, he stated he would
forward copies of the reports to the committee.
4:36:02 PM
LINDSEY HILL, Member, Carpenters Local 1243, testified in
opposition.
4:36:56 PM
ROBIN KELLY, Member, International Brotherhood of Electrical
Workers (IBEW) 1547, stated that he is representing himself, his
family, and his future. He joined the construction industry
since he saw a future in it but that future is unclear with the
proposed adjustment to the LDBA's threshold. He thought the
effect would be to allow the lowest bidding contractor to bring
a labor force from the Lower 48 and pay them a non-competitive
wage. He thought to do so would jeopardize not only his future
but the future of every hard-working Alaskan.
4:37:35 PM
PHILIP ROBERTSON stated he has been employed in the construction
industry for over twenty years as a project supervisor. Many of
the projects he has overseen under $75,000 have been under LDBA
wages. He predicted that lowering the threshold would have the
effect of lowering the standard of living, and reducing workers
wages would also reduce the amount of taxes they pay. He
pointed out that with the short construction season in Alaska
that workers need to make as much money in Alaska during the
summer. He asked the committee who would benefit from the bill.
CHAIR OLSON answered that the municipalities and boroughs have
requested the bill. He pointed out that the threshold has been
amended down to $50,000, which has not been changed since 1935.
The prevailing wage in 1935 was $.50 to $1.50 and the threshold
has not been reviewed in 71 years.
4:39:31 PM
MR. ROBERTSON was still unsure who would benefit. He asked
whether committee members are willing to take a pay cut of 30-40
percent if he is going to be expected to do so if he cannot earn
prevailing wages.
CHAIR OLSON related that the committee is not in the position to
debate but most members took a pay cut when they decided to run
for office.
4:40:08 PM
DAVID RUIZ related that he has been a construction worker for 29
years. He stated he is here to testify in opposition to HB 155
and the effect it will have on Alaska Statutes, Title 36. He
asked members to leave this law alone and do not amend it.
4:41:01 PM
DIANA RUHL, Member, International Brotherhood of Electrical
Workers (IBEW) 1547, stated that she believes this bill will
have a negative effect on working families in Alaska whether
they are union or nonunion. She offered her belief that this
would have a negative effect in communities. She indicated with
a lower threshold on the LDBA wages, the state will lose the
mechanism that encourages and enforces local hire. She
predicted Alaskans will see more money leaving the state for out
of state workers. The residents of Alaska would also have less
ability to provide for families. This proposed change to the
threshold could potentially cost more if lower skilled workers
are used to perform the work and the work ends up needing to be
redone. She expressed her concern about public safety with the
maintenance language changes as part of this bill.
4:42:20 PM
LARRY TALBERT, Member, Plumbers & Pipefitters, urged members to
oppose this bill. He expressed concerns that this house bill as
currently written would have a drastic effect on Alaska's
workers. He related a scenario in which the Atwood Building in
Anchorage had to undergo a domestic water replacement project.
The project would be exempt from the LDBA requirements under the
definition of maintenance even though the overall estimate would
be in excess of $1 million since it would be considered to bring
the structure up to its original condition. He also thought
this bill would open the floodgates for out of state contractors
to the detriment of Alaskan contractors and workers. He
concluded by urging members to oppose the bill.
4:43:59 PM
PAT FALON, Member, Laborers Local 341, stated that he is a
concerned citizen who has worked in the construction industry
for 21 years. He said he has raised his family in Alaska by
working in construction. He also felt blessed that wage and
safety was important to his employers. He urged members to vote
against this bill. He offered his belief that this bill would
only invite out of state more out of state contractors who are
not familiar with Alaska's construction environment. He
suggested that the out of state contractors would have unskilled
work force working on projects which could endanger the public,
including school children. He urged members not to change the
threshold. He stated that this is not a union or nonunion
issue. There is not any reason to "reinvent the wheel." He
concluded by asking members to leave the bill alone.
4:45:16 PM
DAVID MCALLEN Member, International Brotherhood of Electrical
Workers (IBEW) 1547; Statewide Training Coordinator; Alaska
Joint Electrical Apprenticeship & Training Trust (AJEATT),
stated that he is testifying first and foremost as a lifelong
Alaskan. He offered that he is the statewide training director
for the AJEATT, which is the largest apprenticeship in Alaska.
He said, "We hear a lot about fiscal responsibility and we hear
about wise use of state resources." He offered his belief that
paying a fair prevailed wage is a good use of our resource. He
related the 125 employers he represents provide their workers
with a decent wage. He pointed out that these employers
dedicate $.65 of their prevailing wage rates to training and
safety training. In Alaska he represents 400 workers in the
electrical trades who receive an education from a self-funded
self-reliant program. He indicated his bargaining unit has
decided providing this training is an appropriate use of the
money. Collectively journeymen and apprenticeship employees
have elected to pay for cross training and safety training. He
said he thought this was a wise use of our human resources. He
summarized testimony earlier in the week from small communities
concerned about paying $22 per hour of their finite resources.
He emphasized his belief that $22 per hour does not represent a
livable wage and workers are also consumers who buy cars and
groceries in communities. He highlighted that cheaper is not
always better. He did not think the state would be doing the
right thing to seek cheaper labor when it is the public entities
that should pay a livable wage and reinvest in our communities.
He spoke in opposition to HB 155.
4:48:28 PM
JOHN SWORTFIGUER, Member, Laborers Local 942, stated his adamant
opposition to HB 155. He related the LDBA is a Depression Era
piece of legislation, which provided a tool to ensure that
workers a fair wage and provide contractors an opportunity to
bid competitively on local government projects. He did not
understand the motivation to strip wages worker's wages are
barely keeping up. He thought that to "tinker" with this in the
surplus economy is an affront to workers in Alaska. In response
to Representative Miller, he acknowledged the bill originated in
the 1930s to prevent outside workers from taking opportunities
away from local workers. In further response to Representative
Miller, he agreed the current economy does feel depressed. He
pointed out the numerous foreclosures. He characterized the
times as fairly perilous. Worker invests in their communities
and the social integrity of communities should not be toyed with
nor should the livelihood of workers.
4:51:01 PM
ERIC SLAY stated that he is a second generation Alaska Native.
His parents moved to Fairbanks in 1955. He predicted that if
this bill passes wages will plummet for union and nonunion
workers and he may not be able to afford the high cost of living
in this state. He did not think nonunion bids would drop
significantly, just enough to win the bid. He offered his
belief that workers will receive half the pay. The extra money
would be kept by the contractor. He thought out of state
contractors would win bids. He questioned whether some would
even be American citizens. He emphasized that the funds should
stay in Alaska, noting Alaska has resisted the effects of the
recession since the money stays in the state. He said, "Our
state is strong because of our labor and our state is strong
because we keep our money in our state." He asked if anyone in
the legislature is against hiring Alaskan workers or having a
strong economy and if so voiced that if anyone does they do not
belong in this position.
4:52:45 PM
JUSTIN JACKSON, Member, Carpenters Local 1281, spoke in
opposition to HB 155. He stated that opponents have developed
many arguments against the Davis-Bacon Act including increasing
the dollar threshold claiming it is harder to administer,
expensive, and unnecessary. He offered his belief that these
arguments are false. He said that paying workers a prevailing
wage is not expensive but paying workers a low wage is
expensive. He stated that low-wage low-skilled workers often
take longer to perform work and are not as skilled because they
usually have not been trained as well as higher paid workers
whose work often may need to be redone. Low-wage workers must
sometimes rely on government assistance to provide for their
families. They also contribute less to the economy since they
purchase less and pay less in taxes to local and state
government. He asked how a law could be unnecessary when it
requires contractors to pay their workers that are prevailing in
the local area. He quoted U.S. Senator Robert L. Bacon,
Republican, New York, when he proposed his first prevailing wage
bill in 1927 as saying: "It is highly desirable, of course,
that the federal and state building program should not tend to
have the effect of upsetting labor wages and labor conditions in
any community." He related his understanding that this is what
HB 155 would do. The LDBA fulfills the intent to protect local
labor standards by helping to ensure the preservation of a
community's general welfare. He related these are the reasons
for his opposition to HB 155. In response to Representative
Saddler, he answered that he researched U.S. Senator Bacon on
the Internet.
4:55:09 PM
RAYMOND DELL, Member, Carpenters Local 2247, stated that the
effects of HB 155 would adversely affect the quality of life for
all Alaskans and their families actively involved in the
construction trade. He predicted that this bill would allow
cheap outsourced labor to be earned in Alaska and spent
elsewhere. He offered his belief that Alaskan carpenters are
skilled whether they are union or nonunion workers and demand a
high wage to offset the higher cost of living in Alaska. It
also provides the basis for providing the wage scale for
nonunion workers. The prevailing wage laws are a testament to
those who provide the knowledge and skill that built the state's
infrastructure, including schools, government, and highways.
Additionally, the LDBA wages offset the lack of insurance and
retirement for nonunion workers. He also stated that the LDBA
encourages hiring skilled laborers and encourages youth to
become skilled-trades workers. He further stated that
construction workers average wages are $578 week, $30,058 per
year. He pointed out that people claim the Davis-Bacon results
in discriminatory hiring practices and lower wages. The
University of Utah studied nine states that repealed its LDBA
laws, which showed a major decrease in minority enrollment for
apprenticeship programs from 20 to 12.5 percent. The same study
showed a 15 percent increase in serious injuries after the LDBA
was repealed. Additionally, the study showed a 12 percent
increase in "lost work" days which is magnified in Alaska due to
its shorter construction season. Higher wages translates to
higher production and lower costs. He concluded by saying that
higher wage states with LDBA built highways for 18 percent less
than low-wage states.
4:58:48 PM
CHAIR OLSON, after first determining no one else wished to
testify, closed public testimony on HB 155.
[HB 155 was held over.]
4:59:24 PM
ADJOURNMENT
There being no further business before the committee, the House
Labor and Commerce Standing Committee meeting was adjourned at
4:59 p.m.