Legislature(1993 - 1994)
04/13/1993 09:30 AM Senate FIN
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* first hearing in first committee of referral
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+ teleconferenced
= bill was previously heard/scheduled
MINUTES
SENATE FINANCE COMMITTEE
April 13, 1993
9:30 a.m.
TAPES
SFC-93, #56, Side 1 (415-500)
SFC-93, #58, Side 1 (000-end)
SFC-93, #58, Side 2 (end-255)
CALL TO ORDER
Senator Drue Pearce, Co-chair, convened the meeting at
approximately 9:30 a.m.
PRESENT
In addition to Co-chair Pearce, Senators Jacko, Kelly,
Kerttula, Rieger, Sharp, and were present. Co-chair Frank
arrived while the meeting was in progress.
ALSO ATTENDING: Senators Robin Taylor and Randy Phillips,
Jerry Burnett, staff to Senator Phillips; Sherrie Goll,
Alaska Women's Lobby & KIDPAC; Donna Schultz, Associate
Coordinator, Division of Family and Youth Services,
Department of Health & Social Services; Mark Hickey,
Contract Lobbyist, Alaska Railroad Corporation; David
Skidmore, staff to Co-chair Frank; Jim Coate, Unemployment
Insurance Program Manager, Division of Employment Security,
Department of Labor; Judy Knight, Director, Division of
Employment Security; Randy Welker, Legislative Auditor,
Legislative Audit Division; Shelby Stastny, Director, Office
of Management & Budget; Mike Greany, Director and David
Tonkovich, Jeff Hoover, and Karen Rehfeld, Fiscal Analysts,
Legislative Finance Division; and aides to committee
members.
SUMMARY INFORMATION
CSSB 45(HES)- An Act relating to persons under 21 years of
age; providing for designation of shelters
for runaway minors; relating to the detention
and incarceration of minors; and providing
for an effective date.
Testimony was heard by Senator Randy
Phillips, sponsor of SB 45, in support of the
bill. Sherrie Goll, Alaska Women's Lobby and
KIDPAC, voiced concern over sections 3-8.
Donna Schultz, Associate Coordinator,
Division of Family and Youth Services; gave
information in regard to the bill. Senator
Frank MOVED a conceptual amendment regarding
the non-custodial parent. CSSB 45(FIN) as
amended was MOVED out of committee with
individual recommendations.
SB 162 - An Act relating to the implementation of the
federal emergency unemployment compensation
program; making changes relating to
unemployment compensation under the extended
benefits program and the supplemental state
benefits program; and providing for an
effective date.
Testimony was heard by Judy Knight, Director,
Employment Security Division, and Jim Coate,
Unemployment Program Manager, Employment
Security Division, Department of Labor, in
support of SB 162. Discussion was had by
Senators Kelly and Kerttula in regard to
federal moneys, and questioned additional
cost to the state. Amendment 1 was ADOPTED.
CSSB 162(FIN) as amended was MOVED out of
committee with individual recommendations.
CSSB 148(TRA)- An Act relating to legislative approval of
certain acts of the Alaska Railroad
Corporation; taxation of certain property of
the Alaska Railroad Corporation; members of
the board and chief executive officer of the
Alaska Railroad Corporation; meetings of the
board of directors of the Alaska Railroad
Corporation; and providing for an effective
date.
Testimony was heard by Mark Hickey, Contract
Lobbyist, Alaska Railroad Corporation, and
David Skidmore, staff to Senator Frank
regarding an amendment offered by Senator
Frank. Amendment 3 was ADOPTED. Discussion
was held between Co-chairs Pearce and Frank
and Senator Kelly regarding changes to the
railroad board as set forth in the bill.
CSSB 148(TRA) was held in committee.
CSSB 128(STA)- An Act relating to legislative audits.
The committee RESCINDED its action PASSING
the bill out of committee. Discussion was
held between Randy Welker, Legislative
Auditor, Legislative Audit Division; Shelby
Stastny, Director, Office of management &
Budget; Senator Kelly, Co-chairs Pearce and
Frank, regarding a new fiscal note from
Office of Management & Budget in the amount
of $210.6. CSSB 128(STA) was held in
committee until April 14, 1993.
The following bills were scheduled but not heard:
SB 76 - CHARITABLE GAMING RESTRICTIONS
SB 88 - CAPITAL PROJECT GRANTS
SB 106 - AUTHORIZING POWER TRANSMISSION INTERTIES
SB 126 - APPROP: POWER TRANSMISSION INTERTIES
SB 129 - POWERS OF CHIEF PROCUREMENT OFFICER
SB 163 - POWER COST EQUALIZATION
CS FOR SENATE BILL NO. 45(HES):
An Act relating to persons under 21 years of age;
providing for designation of shelters for runaway
minors; relating to the detention and incarceration of
minors; and providing for an effective date.
CO-CHAIR DRUE PEARCE announced that CSSB 45(FIN) work draft
"K" was before the committee. SENATOR GEORGE JACKO MOVED
for adoption of the "K" version of CSSB 45(FIN) work draft.
Hearing no objections, IT WAS SO ORDERED.
JERRY BURNETT, staff to Senator Phillips, sponsor of SB 45,
spoke to the CSSB 45(FIN) work draft "K". He said that the
amendment adopted at the last Senate Finance meeting had
been incorporated into this work draft. In Section 14,
changes were made giving a police officer discretion in
deciding whether a minor should be given a choice of going
home or entering a runaway home or program.
End SFC-93 #56, Side 1
Begin SFC-93 #58, Side 1
SHERRIE GOLL, Alaska Women's Lobby & KIDPAC, spoke to CSSB
45(FIN). She said that the bill seeks to address the
growing, serious problem of homeless youth in many
communities of the state. She spoke in support of the
system of safe homes this bill would create. However, she
said that she had serious concerns with Sections 3 through 8
which pertain to the emancipation of a minor, and said these
sections carried a serious policy change for the state. She
explained that in these sections, parents may emancipate
their child at 16 years of age, basically divorcing them
when they become a teenager. She explained that this can be
done without the consent of the minor and is a serious
change in Alaska statute and spoke in opposition to it. Ms.
Goll felt that the a non-custodial parent should be
contacted and that option should be included in the
legislation.
CO-CHAIR STEVE FRANK asked Senator Phillips to speak to
Sections 3 through 8. SENATOR RANDY PHILLIPS said he
recognized that CSSB 45(FIN) was not perfect but was an
intent to address a problem, and try to balance the rights
of the parent and child in difficult situations.
Co-chair Pearce said that she shared Ms. Goll's concern.
She said she understood that the judge would continue to go
through the same procedure even if this legislation should
pass and that the minor would not be emancipated without
being included in the procedure. The judge would decide if
it was in the best interests of all parties involved. What
this bill did was add the ability of a parent to petition
for emancipation of a minor child. Co-chair Frank said that
his understanding was that the Office of Public Advocacy
would continue to represent children's interests before the
court. He asked if the Office of Public Advocacy would
represent the minor in these situations. Senator Phillips
said that he did not know but felt that they would do that.
DONNA SCHULTZ, Associate Coordinator, Division of Family and
Youth Services, Department of Health & Social Services, said
she felt that a minor would have a right to an attorney.
Ms. Goll said that Section 7, which is part of the current
statutes, does say that the court may appoint an attorney or
a guardian. She said that in earlier legislation the Office
of Public Advocacy would not have been able to represent
minors. She was opposed to such legislation since minors
would be even more in need of representation. She wanted to
point out that during the children's caucus meeting, the
Tough Love organization had given a presentation. It seemed
that even in their description of a case with a difficult
minor, this organization was committed to keeping the family
together and would not want to exacerbate the problem of
homeless youth.
SENATOR JAY KERTTULA said he understood that the Office of
Public Advocacy could handle a whole range of problems. He
would not want the organization to be removed. He said that
he might offer a letter of intent to this effect on the
floor.
Co-chair Frank MOVED a conceptional amendment to say that
"in granting the emancipation, the court shall first
consider the non-custodial parent's willingness and ability
to assume custody." No objections being heard, the
amendment was ADOPTED.
Co-chair Frank MOVED for passage of CSSB 45(FIN) as amended
from committee with individual recommendations. No
objections being heard, CSSB 45(FIN) was REPORTED OUT of
committee with a "do pass," and with three zero fiscal notes
for the Department of Law, Department of Public Safety, and
Department of Labor, and fiscal notes for the Department of
Health & Social Services for $74.0, and for the Alaska Court
System for $20.1. Co-chairs Frank and Pearce, Senators
Kelly, Jacko, Rieger, and Sharp voted "do pass." Senator
Kerttula voted "no recommendation."
SENATE BILL NO. 162:
An Act relating to the implementation of the federal
emergency unemployment compensation program; making
changes relating to unemployment compensation under the
extended benefits program and the supplemental state
benefits program; and providing for an effective date.
Co-chair Peace announced that SB 162 was before the
committee. SENATOR TIM KELLY voiced his support of the bill
but asked for clarification in terms of state dollars. Co-
chair Pearce invited Jim Coate, Unemployment Insurance
Program Manager, Division of Employment Security, Department
of Labor, and Judy Knight, Director, Division of Employment
Security, to join the members at the table and speak to the
bill.
JUDY KNIGHT said that SB 162 did three main things. It
would allow the state to continue its participation in the
emergency unemployment compensation program which Congress
has enacted and amended for the fourth time. Prior
legislation allowed the department to participate in that
program and the participation was limited to two years,
ending December 1993. Currently Congress has extended the
program to pay benefits through the middle of January 1994.
Secondly, the other provisions allow the state law to
conform with federal law in the extended benefits program
(changes made last year by Congress). The third item is an
optional trigger allowing the department to pay the extended
benefits program when the employment rate reaches a certain
level. She explained emergency unemployment compensation is
financed 100 percent by federal revenues. It is being paid
because of high unemployment throughout the nation. When an
individual becomes unemployed, they first draw regular
benefits for 16 to 26 weeks, and during a period of high
unemployment, they may be eligible for extended benefits.
Since Congress passed the emergency unemployment
compensation program, we have bypassed the extended benefit
program and used the federal program.
Senator Kelly asked which fund would pay those extended
benefits. Ms. Knight said that in Alaska, like other
states, there is an unemployment insurance trust fund.
Employers and employees are taxed and the money goes into
that fund. Regular unemployment benefits are paid out of
that fund. Emergency unemployment compensation is drawn
from the U.S. Department of Labor fund. Senator Kelly asked
if the state fund had a surplus. Ms. Knight said that there
was not a surplus but a sufficient balance to maintain
solvency. This balance was equal to 3 percent of the
state's total wages. She explained, in case of a severe
recession, employers' taxes would not have to be increased
to maintain solvency of the fund.
JIM COATE said that the formula that determines tax rates
has what is called a solvency adjustment. That solvency
adjustment is both positive and negative. As the balance in
the trust fund gets too large, by formula, a negative tax is
applied to the overall tax rate, reducing it. It is an
automatic and controlled balance.
Senator Kelly asked if SB 162 would pass this session, how
much federal money would be distributed throughout Alaska.
Ms. Knight said that over $100 million had already been paid
out since the state started the emergency unemployment
compensation program. It is expected that an additional $40
million would be paid out between now and January 1994. Ms.
Knight said that the state would save approximately $20
million in the coming year because claims would be paid
under the emergency program and not under the state's
extended program. There are other provisions that the state
must pass to coincide with federal law. If the state does
not pass these statutes to meet federal law, then the
Secretary of Labor, through a hearing process could find the
state out of compliance, and the state would lose
administrative funds. The administrative funds are all the
federal employment and training dollars that come into the
state. Those funds come from the U.S. Department of Labor
for administrative costs for unemployment insurance, the
employment service and training partnership.
In answer to Senator Kelly, Mr. Coate said that the statute
changes in order to come into federal compliance would not
cost any state dollars. However, the six weeks of benefits
that the state would not be able to pay, if SB 162 does not
pass, would be a loss of about $1.5 million to the state.
The danger is that federal law mandates extended benefits be
paid through January 15, 1994, and state law would stop
payments in the first part of December 1993. The compliance
issue with the federal government could cost the state $25-
30 million in administrative funds that are expected to come
into the state to pay for the administrative part of the
three programs.
Ms. Knight said that the Labor and Commerce Committee had
requested an amendment that would repeal the emergency
compensation provisions and that was provided to the
committee as amendment 1.
Senator Kelly MOVED amendment 1. No objections being heard,
amendment 1 was ADOPTED.
Discussion was had by Mr. Knight and Senator Kelly regarding
additional costs to the state regarding the extended
compensation.
Senator Kerttula MOVED for passage of CSSB 162(FIN) as
amended from committee with individual recommendations. No
objections being heard, CSSB 162(FIN) as amended was
REPORTED OUT of committee with a "do pass," and a zero
fiscal note for the Department of Labor. Co-chairs Frank
and Pearce, Senators Kelly, Rieger, and Kelly voted "do
pass." Senators Jacko and Sharp were absent from the meeting
and did not sign.
CS FOR SENATE BILL NO. 128(STA):
An Act relating to legislative audits.
Co-chair Pearce said that CSSB 128(STA) was before the
committee. She announced that Shelby Statsny, Director,
Office of Management & Budget, Office of the Governor, had
wanted to prepare a fiscal note for the bill. Co-chair
Frank asked if follow-up was being required so that audit
recommendations can be implemented.
RANDY WELKER, Legislative Auditor, Legislative Audit
Division, said that CSSB 128(STA) would establish a
recommendation monitoring system providing, once
recommendations are made, a system to follow up the numerous
recommended implementations, and report back to the
committee. The basic purpose of the bill is to provide a
mechanism to keep the items before the Budget and Audit
Committee. He said the fiscal note prepared by the Office
of Budget and Audit Committee was an overstatement. He felt
it is an important proposal and would hate to see it get
buried by the department's fiscal note. Senator Kerttula
asked if one staff person could accomplish this follow-up
task. Mr. Welker said that one position within the division
would be a good start in establishing a system so the impact
on the division could be determined. He felt it could be
handled in house.
Co-chair Frank said that follow-up on audits by the Office
of Management & Budget is a good idea but would have to be
done on a priority basis. The really dramatic situations
that need attention should be top priority. He felt that
this bill would give the department another tool to
accomplish what they are already required to do. He felt it
was not an additional responsibility.
SHELBY STATSNY, Director, Office of Management & Budget,
Office of the Governor, said that he was in support of SB
128. However, he argued that the bill was an additional
mandate and it would take more employees. He felt that his
department had worked hard this last year to come up with a
program to follow-up on their own audits. There is a
schedule that a minimum of six months after an audit, a
follow-up is done with the audited department to insure that
recommendations have been done. He did not want his
department to become a division of Legislative Audit.
In answer to Senator Kelly, Mr. Statsny said that his
department's auditors served at the pleasure of the
Governor. Senator Kelly felt that was the reason
Legislative Audit had been established outside the Officer
of the Governor. Senator Kelly pointed out that in the
past, auditors had been fired if the Governor had disagreed
with the audit.
End SFC-93 #58, Side 1
Begin SFC-93 #58, Side 2
Co-chair Frank said he was in support of reducing the scope
of SB 128 so that additional employees were not required.
He asked Mr. Welker if that would be possible. Mr. Welker
said that could be accomplished through Budget & Audit
policy and procedure in developing and reviewing what items
they choose to forward for follow-up.
Co-chair Frank MOVED to rescind the committee action of
April 12, 1993 reporting CSSB 128(STA) from committee. No
objections being heard, CSSB 128(STA) was returned to
committee.
Co-chair Pearce announced that Co-chair Frank, Mr. Welker
and Mr. Statsny would work together on amending CSSB
128(STA), and the bill was held in committee.
CS FOR SENATE BILL NO. 148(TRA):
An Act relating to legislative approval of certain acts
of the Alaska Railroad Corporation; taxation of certain
property of the Alaska Railroad Corporation; members of
the board and chief executive officer of the Alaska
Railroad Corporation; meetings of the board of
directors of the Alaska Railroad Corporation; and
providing for an effective date.
Co-chair Pearce announced that CSSB 148(TRA) was before the
committee. Co-chair Frank said that amendment 3 further
clarifies the definition of non-transportation activity.
DAVID SKIDMORE, staff to Co-chair Frank, spoke to amendment
3. He said that points A and B were identical to the
original definition that was in the transportation CS. He
said point C is the clarifying point which provides that the
railroad is prohibited from obtaining an equity position in
an activity that occurs before or subsequent to the
movement, handling, or distribution of people or personal
property not withstanding activities that were conducted by
the corporation on the date of transfer to the state or
activities that are directly related to the movement,
handling, or distribution of people or personal property.
Mr. Skidmore said that the amendment was acceptable to Mark
Hickey.
Senator Kelly asked if the railroad corporation was
grandfathered in the equity position in the existing hotel
somewhere in the bill. Mr. Skidmore said that action had
not been taken regarding the existing hotel.
MARK HICKEY, Alaska Railroad Corporation, said that in CSSB
148(FIN) work draft, page 4, lines 21 through 24, addresses
specific activities engaged in by the railroad corporation
and "does not apply to specific activities in which the
corporation is engaged on the effective date of this
section..."
Co-chair Pearce announced that CSSB 148(FIN) work draft
dated April 12, 1993 had been adopted by the committee.
Co-chair Frank MOVED for adoption of amendment 3. No
objections being heard, amendment 3 was ADOPTED.
Co-chair Frank MOVED for passage of CSSB 148(FIN) from
committee with individual recommendations. Senator Kelly
OBJECTED. He questioned the filling of a vacancy on the
board of directors for the railroad corporation by this
legislation.
Co-chair Pearce said that the next vacancy of the board
would come up this fall. She said the railroad would have
to appoint an outside director at that time. She went on to
explain the Governor's role in the appointments and his
options. Senator Kelly voiced his opposition to a change in
the board. Co-chair Pearce explained that there never had
been an expectation that the CEO of the railroad would also
hold the position of outside railroad expert. She felt that
outside expert should be someone other than the CEO. Since
there was a seat that was becoming vacant, she felt it was a
good opportunity to accomplish this change.
Senator Kelly asked Mr. Hickey what the fee was for board of
directors of the railroad. Mr. Hickey said the law provided
for $400 a day plus per diem. Co-chair Pearce said that it
was the highest paid board in the state. It was pointed out
that it was modeled after the permanent fund board of
director's fees.
Senator Kelly reiterated his opposition to a change in the
board of directors for the railroad corporation.
Co-chair Frank withdrew his motion to move CSSB 148(FIN) out
of committee. Co-chair Pearce announced that CSSB 148(FIN)
would be held in committee.
ADJOURNMENT
The meeting was adjourned at approximately 10:32 a.m.
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