Legislature(2001 - 2002)
03/19/2001 09:09 AM Senate FIN
| Audio | Topic |
|---|
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
MINUTES
SENATE FINANCE COMMITTEE
March 19, 2001
9:09 AM
TAPES
SFC-01 # 46, Side A
SFC 01 # 46, Side B
SFC 01 # 47, Side A
CALL TO ORDER
Co-Chair Pete Kelly convened the meeting at approximately 9:09 AM.
PRESENT
Senator Dave Donley, Co-Chair
Senator Pete Kelly, Co-Chair
Senator Jerry Ward, Vice Chair
Senator Loren Leman
Senator Lyda Green
Senator Gary Wilken
Senator Lyman Hoffman
Senator Donald Olson
Senator Alan Austerman
Also Attending: SENATOR GENE THERRIAULT; SENATOR JOHNNY ELLIS;
SENATOR JOHN TORGERSON; JANE DEMMERT, Executive Director, Alaska
Commission on Aging; ROSEMARY HAGAVIG, Executive Director, Catholic
Community Services; SUZANNE PRICE Executive Director, Fairbanks
Community Mental Health Center and representative of Mental Health
Providers Association of Alaska; RICHARD RAINERY, Acting Executive
Director, Alaska Mental Health Board; JAY LIVEY, Deputy
Commissioner, Department of Health and Social Services; MARY
JACKSON, staff to Senator Torgerson; REMOND HENDERSON, Director,
Division of Administrative Services, Department of Labor and
Workforce Development
Attending via Teleconference: From Homer: JIM BRADY, Kenai
Peninsula Independent Living Center; From Fairbanks: DAVID
JACOBSON, State Independent Living Council; RUTH L'HOMMIDIEU,
Chair, State Independent Living Council; NADINE HARGESHIEMER,
Fairbanks North Star Borough; From Mat-Su: TIM ANDERSON, Senior
Service Provider and Director, Wasilla Area Seniors; RICHARD TUBBS,
Executive Director, Palmer Senior Center; From Anchorage: STEVE VAN
SANT, State Assessor, Division of Community and Business
Development, Department of Community and Economic Development
SUMMARY INFORMATION
SCR 7-HEALTH CARE COST REVIEW TASK FORCE
The Committee heard from the sponsor, the Department of Health and
Social Services, and took public testimony. The bill was held in
Committee.
SB 4-MUNICIPAL PROPERTY TAX EXEMPTION
The Committee heard from the sponsor, the Department of Community
and Economic Development and the Fairbanks North Star Borough. A
committee substitute was considered but not adopted. The bill was
held in Committee.
SB 137-ALASKA HUMAN RESOURCE INVESTMENT COUNCIL
The Committee heard from the sponsor, and the Department of Labor
and Workforce Development. An amendment was considered and adopted.
The bill was held in Committee.
SB 6-MOBILE HOME PARK EVICTION NOTICE
The Committee heard from the sponsor and the bill was held in
Committee.
SENATE CONCURRENT RESOLUTION NO. 7
Establishing a Health Care Cost Review Task Force.
This was the first hearing for this resolution in the Senate
Finance Committee.
Senator Green announced that while the Department of Health and
Social Services Budget Subcommittee was addressing that
department's budget, the members were "surprised" at the growth of
the Medicaid program. She emphasized the increasing costs and
subsequent impacts to both the federal and state governments. She
spoke of continued proposals for new matching fund programs, but
stated that the question is how to continue to pay for existing
Medicaid programs.
Senator Green informed that the Medicaid program in Alaska expends
approximately $10 million a week of combined state and federal
funds. She calculated this equals about one-half billion dollars
annually. She pointed out that Medicaid is the second largest state
program behind education. She ascertained several state agency
budgets could be combined and still cost less than the cost of a
month of Medicaid expenses.
Senator Green expressed the difficulties in examining the Medicaid
expenses because there are "various layers" of service providers,
vendors, agencies, departments, individuals and nonprofit groups
that rely on Medicaid funds as a part of their on-going operations.
Senator Green stated the intent of this resolution is to establish
a group to investigate the reasons for the high costs and possibly
identify cost containing alternatives. This, she said would include
determining whether the state is participating in programs not
mandated by the federal government, finding out if any programs
could be restructured or privatized to have less impact on the
state general fund and perhaps build a better program.
Senator Green stressed there is no intent to "negatively impact the
Medicaid budget."
Co-Chair Kelly commented that any attempt to reduce the budget is
beneficial.
JIM BRADY, Kenai Peninsula Independent Living Center, testified via
teleconference from Homer to request the Committee keep in mind the
costs required to care for disabled people. He stressed that for
many, Medicaid is the only method of health insurance. He noted
that providing care at the early stages of a condition could save
considerable money in the long run. He referenced the "buy-in"
option that allows disabled individuals to pay for continued
Medicaid coverage once they are employed.
Co-Chair Kelly noted that the discussion at this time is to
determine whether or not to form the task force. He stated there
would be another opportunity to debate the issues before the task
force.
DAVID JACOBSON, Member, State Independent Living Council, testified
via teleconference from Fairbanks in appreciation that the
Committee was not yet setting the agenda for the task force.
However, he emphasized that Medicaid is an essential program. He
also spoke of the necessity of treating illnesses in their early
stages rather then waiting for the condition to become more
serious. He spoke of the savings to the state in allowing the
elderly to remain in their community rather than an institution. He
supported a proposed language change prepared by the Department of
Health and Social Services. He explained this language addresses
specific needs of the disabled and elderly and also gives
recommendations on the membership of the task force to include
consumers. He commented on the Long-Term Care Task Force,
commending the representation by all factions of the community.
TIM ANDERSON, Senior Service Provider and Director, Wasilla Area
Seniors, testified via teleconference from Mat-Su about the various
services provided to the elderly by Medicaid. He estimated that 30
percent of Medicaid costs in his community go to pay for senior
services.
RICHARD TUBBS, Executive Director, Palmer Senior Center, testified
via teleconference from Mat-Su that he understood the reasons the
state wishes to reduce costs, but emphasized the necessity of home
community based senior services. He referenced a state conducted
study that found that community based services cost much less than
nursing home care. He urged that the task force include
representation from the senior care community.
JANE DEMMERT, Executive Director, Alaska Commission on Aging,
testified in Juneau about the Long-Term Care Task Force. She stated
that there were recommendations of this task force that remains
unimplemented. She suggested the new task force consider the work
and structure of the earlier task force. She stressed the lack of
flexibility of insurance for elderly care.
ROSEMARY HAGAVIG, Executive Director, Catholic Community Services,
testified in Juneau to echo the remarks of the previous testifiers.
She also noted that Alaska is one of only a few states that does
not provide Medicaid for Alzheimer disease, which she stressed is a
growing portion of elderly needs. She spoke of the benefits of
providing care in the early stages of this disease. She hoped the
task force would consider this.
SUZANNE PRICE Executive Director, Fairbanks Community Mental Health
Center and representative of Mental Health Providers Association of
Alaska, testified in Juneau sharing the message that cost-
containment has been included in the organization's practice for a
number of years. She offered the groups input in the task force's
efforts. She warned of the "domino effect" when a task force makes
cost-containment decisions. She stressed, "Cost containment is a
tricky issue." She said that the providers association has
knowledge in this area and she requested they be allowed to
participate in the task force.
Senator Green noted that there would be a decrease in federal
participation in Medicaid funding in the year 2002. She said it
needed to be decided how the state's general funds would be
prioritized. She ascertained that additional programs would be
introduced, making the need to prioritize greater.
RUTH L'HOMMIDIEU, Chair, State Independent Living Council,
testified via teleconference from Fairbanks, to advise the
Committee to proceed with caution in establishing the task force.
She stated that Medicaid is the number one form of medical
insurance for people with disabilities. She recommended expanding
the Medicaid buy-in option. She listed the annual cost of nursing
home treatment as $96,809 per person. She stressed the need to
ensure people can remain in their own community, and return to
work. She supported the Department of Health and Social Services'
proposed language.
RICHARD RAINERY, Acting Executive Director, Alaska Mental Health
Board testified in Juneau to reiterate other points raised. He
agreed that the proposed task force membership excludes several
factions. He opined that health care users, payers and providers
should be included in the primary membership instead of ad hoc
members. He predicted that the task force would learn that Medicaid
is a "very complex subject" and he was concerned that the timeframe
allowed would be inadequate. He warned that the impacts on access
to health care should be carefully considered, in the mental health
field. He spoke of the reliance on Medicaid by many community
mental health care providers and the limited ability to replace
that funding from other sources. He pointed out that Alaska does
not have a health insurance parody clause, so private insurance is
not required to include mental health coverage.
JAY LIVEY, Deputy Commissioner, Department of Health and Social
Services, testified in Juneau to voice concerns about the
resolution. He expressed that the task force is "narrowly charged"
in that it is only directed to review cost containment. He
emphasized the "interrelationships and complexity of health care"
He stated that the department supports cost containment and he
agreed that the cost of health care is rising. However, he said,
"cost containment itself does not exist entirely in a vacuum."
Mr. Lively shared there are three ways to reduce costs within a
health care program. He listed them as reducing the number of
participants, lowering the reimbursement rate and reducing the
amount of services. He pointed out that each of these would have
other ramifications on the health care system. He stressed that
many elderly and disabled patients do not have other health
insurance options, due to preexisting conditions, lack of income to
purchase private insurance, and other factors.
Mr. Lively spoke of the connection between publicly funded health
care programs and local health care economies. He explained that in
many smaller communities, there is a connection between Medicaid
funding for long-term care and the economic viability of small
rural hospitals. He stated that the Medicaid portion of long-term
care funding keeps the hospitals operational. He also noted that
Medicaid funding for disabled patients provides funding to maintain
many mental health care programs. While he acknowledged that these
programs do not serve Medicaid eligible patients exclusively,
without the Medicaid funding, there would not be adequate private
funding income to provide the services to any patients.
Senator Green asked if the witness was addressing the impact of
private insurance and subsidized Medicaid in providing lower rates
to those individuals that pay for services without insurance.
Mr. Livey agreed there is an interrelationship between Medicaid
payments and the health care economy. He explained that if an
individual does not have health care coverage, and must seek
medical care, "somebody has to pay for that." He said that the
"somebody" is "the rest of the public that pays the health care
bill."
Mr. Lively qualified that "the worst" would not necessarily happen,
but stressed that because of the complexity of the issue, if the
task force only addresses cost containment, "it is going to miss
some of these connections. He was concerned that unless the scope
of the task force is broadened to include access, the impact on
other health care economies and other providers, unintended
consequences could result.
Mr. Livey concluded suggesting that the task force membership
should include additional representation from recipients, families
of recipients or advocates for recipients as well as additional
membership for the Administration.
Co-Chair Kelly ordered the bill HELD in Committee.
CS FOR SENATE BILL NO. 4(CRA)
"An Act relating to a mandatory exemption from municipal
property taxes for certain residences; and providing for an
effective date."
This was the first hearing for this bill in the Senate Finance
Committee.
SENATOR GENE THERRIAULT, sponsor, stated the intent is to offer
more flexibility for establishing and setting local property taxes
and tax relief. He noted that current statutes contain a provision
to allow local governments to offer a ten-percent property tax
exemption for residents with property within the government's
boundaries by "a package of an ordinance" that is voted on by the
general populous.
Senator Therriault shared that the Senate Community and Regional
Affairs committee substitute proposes to increase that amount to a
total cap of $50,000 worth of valuation. He referred to a proposed
committee substitute, 22-LS0190\P, saying it reduces this amount to
$40,000. He also noted the proposed committee substitute addresses
a concern that was raised by service areas in the Fairbanks North
Star Borough (FNSB). He explained if the local government exercised
an increased residential property tax exemption, the revenue to the
service area would decrease. To rectify this, he said, the
proposed committee substitute would adjunct the service area mil
rate from the residential property tax exemption. Therefore, he
said as the local government chose to shift the property tax
exception, there would be no impact on the amount of money
generated by the service areas. He noted that many service areas in
the Fairbanks area operate on "very thin budgets" and that it was
not his intent to impact them.
Senator Therriault addressed a concern raised by Senator Torgerson
in the Senate Community and Regional Affairs Committee that there
would be adverse impact to the state treasury. Senator Therriault
explained the issue regarding communities that have a portion of
the Trans Alaskan Pipeline passing through it, referring to a
drawing showing the service area and borough. [Copy on file.] He
stated that the local property tax is credited against the oil and
gas property taxes owed to the state treasury. He stated that the
total cap on oil and gas properties is 20-mils.
Senator Therriault noted that some boroughs, such as the FNSB, are
considering alternate revenue sources such as a sales tax or user
fees. However, he stressed that the service area does not have
those options to shift lost revenues and could only collect
property taxes. He proposed excluding the extra mils intended for
the service areas from the residential property tax exemptions. He
concluded that this would mitigate Senator Torgerson's concerns.
Senator Therriault then noted that Section 1 of the proposed
committee substitute is added to provide senior citizens and
veterans tax exemptions, which he said are in current statute. He
detailed that a residence owned by a senior or veteran that
receives the property tax exemption and that is sold during the
calendar year to a buyer that does not qualify for the exemption,
is still exempted from the tax during that year. He said the local
government has no method to collect property taxes from the new
owner for the remainder of the year. He stated that the proposed
committee substitute allows local governments to assess and collect
property taxes from the new owner for the partial year. He pointed
out that this language is permissive and does not require the local
government to comply.
Senator Wilken moved to adopt CS SB 4, 22-LS0190\P as a working
draft.
Co-Chair Donley objected. He stated that he prefers the Senate
Community and Regional Affairs committee substitute.
Co-Chair Kelly asked if the reason Co-Chair Donley objected is
because the language in version "P" is "not strong enough" to
preclude the possibility that state revenues would drop because of
the exemption.
Co-Chair Donley affirmed that was one of his concerns.
Co-Chair Kelly shared that concern.
Senator Therriault spoke to Section 1 of version "P" that allows
the local government to assess part of the annual tax if the
property transfers from a senior citizen to a person who does not
qualify for a tax exemption. He elaborated the original version of
the bill states, "shall" and the proposed language reads "may".
Senator Therriault next addressed Section 2 of the proposed
committee substitute, saying it "offers a tool." He explained that
this provision does not mandate the local government increase the
personal property tax exemption. He stated that the local
governments have the option of offering a tax break to residential
property owners and recoup the lost revenue "anyway they see fit."
He noted the amount was set in statute in 1974, and has not been
increased since then.
Senator Therriault emphasized that there would be little impact to
the state treasury. He elaborated that because of the failed
property tax cap ballot proposal, he did not think that local
governments would provide a tax exemption for some residents then
raise the overall mil rate. He expressed that this would shift the
tax burden from residents to businesses and rental property, which
he did not think local governments would want to do. He suggested
that if local governments proposed this, there would be opposition
from business owners and renters and such a measure would require
voter approval.
SFC 01 # 46, Side B 09:56 AM
Senator Wilken addressed Co-Chair Donley's objection. Senator
Wilken stressed that without Section 2 of the proposed committee
substitute, "the bill is essentially dead." He shared that the FNSB
was attempting to respond to the failed ten-mil property tax cap
ballot measure from the previous election. He expressed his desire
for the legislature to assist local governments in their revenue
efforts. He listed two things that would not happen in the FNSB. He
said the assembly would not increase mil rates to make up for this
exemption nor would it drastically reduce services to respond to
lost revenues. He predicted the legislation would encourage local
governments to consider alternative revenue sources. He estimated
there is a "significant amount of people" who "think we ought to
spread the burden" of government funding to more than just property
owners.
Co-Chair Donley requested the Department of Revenue comment before
the Committee adopt the committee substitute. He opined that this
legislation is a "substantive issue" and a "major policy
consideration" as far as it affects the state's ability to collect
revenue.
Co-Chair Kelly noted an attempt was underway to reach a
representative of the department to join the meeting.
Co-Chair Donley pointed out there are other boroughs that may "find
this an opportunity to significantly increase their ability to tax
oil and gas property or other properties that may be at the expense
of the state." Because of this, he stressed there are other
considerations besides the FNSB.
Senator Therriault addressed the fiscal note, saying the original
fiscal note projected a possible impact of $1.6 million on the
state treasury if all local governments that currently exercise the
$10,000 property tax exemption took full advantage of the
provisions in the bill and increased the exemption to $50,000. He
stressed that he does not think this would happen and instead,
local governments would consider other revenue sources. He also
noted the proposed committee substitute reduces the exemption
amount to $40,000 in part to address these concerns. He understood
Co-Chair Donley's desire to hear from the Department of Revenue,
but Senator Therriault did not think the department could
accurately predict the impact to the state treasury since the
language is permissive rather than mandatory.
Senator Therriault stated that local governments and the state
could offset reduced revenues with a sales tax, user fees or
cutting expenditures and increased efficiencies.
Senator Ward shared that currently the Kenai Peninsula Borough
(KPB) taxes the refineries and the petroleum industry in Nikiski.
Nikiski, he pointed out, does not have a local service area with
the exception of fire service and there has been debate whether to
form some type of local government. He asked what would be the
impact if a local service area in Nikiski were not formed and the
revenue needed to be increased in that area. He predicted the local
government would increase taxes to the petroleum industry to offset
the lost revenue. He stressed this would actually impact the
employees of the industry.
Senator Therriault responded saying if local government decided to
raise the mil rate on those oil and gas properties, it would have
to raise those property taxes on all property including houses and
stores. He explained that oil and gas properties could not be taxed
at a different rate than other properties. He continued that if a
service area formed and levied a one-mil property tax to provide
for the service area functions, exercising of the exemption option
of this committee substitute would not impact the revenues derived
from the one-mil tax.
Senator Ward shared that it was unclear whether the community of
Nikiski was ready to form a service area. He asked if the service
area were not formed and the borough chose to implement the
exemption, if the petroleum industry would have to pay.
Senator Therriault answered this would be correct if the borough
decided to increase the general government mil rate.
Senator Ward remarked that the KPB seems to consider this first.
Senator Therriault repeated that a mil rate increase would raise
taxes for all property owners and that the matter would have to go
before the voters.
Senator Ward thought the KPB would decide to reduce services
instead of raising the mil rate.
Senator Green wanted to know if there is any crossover implication
to the education foundation funding formula and whether the
Department of Education and Early Development should be consulted.
Senator Therriault did not think there would be an impact on
education funding, noting that the Department of Education and
Early Development has not submitted a fiscal note to the bill.
NADINE HARGESHIEMER, Fairbanks North Star Borough, testified via
teleconference from Fairbanks in support of the bill. She relayed
the increased exemption option would be helpful as the borough
seeks alternative sources of revenue. She informed that the FNSB
operates under a revenue cap. She noted the formation of an
alternative revenue commission to investigate sources of revenue.
She expressed the intent is to match any additional revenue against
reductions to residential property taxes.
Ms. Hargeshiemer stated that service areas have separate tax rates
borough-wide and if the residential tax exemption was applied to
service areas, those areas would lose revenue. As a result she said
the burden could be placed on commercial entities and undeveloped
parcels that would not qualify for the exemption. She remarked that
the borough does not want to do this nor would it be "politically
palatable." Therefore, she said omitting the service areas from the
property tax exemption the mil rates would not need to be raised
for the commercial and other nonresidential property.
Ms. Hargeshiemer next pointed out that current state law allows the
borough to tax the Alyeska Pipeline up to 20 mils. She said that if
the borough's mil rate is less than 20, the difference goes to the
state.
Ms. Hargeshiemer then addressed the impact of this legislation on
education funding, saying the FNSB is required by law to provide at
least four mils but actually provides 8.83 mils. She stated that
she did not see how this residential property tax exemption would
impact education funding since the borough currently provides more
than double the requirement.
Ms. Hargeshiemer recognized there might be other issues with
different boroughs, but pointed out the tax exemption is optional
and requires voter approval. She expressed the FNSB funds the
existing level of services "in a way that makes sense for
everybody."
Senator Therriault referenced a letter addressed to him from the
Alaska Municipal League dated February 7, 2001 in support of the
bill. [Copy on file.]
Co-Chair Donley noted the Department of Revenue fiscal note does
not apply to the proposed committee substitute and Senator Green's
request for input from the Department of Education and Early
Development. He stated that he would like an analysis of the
committee substitute from both departments.
Co-Chair Kelly asked if the four-mil requirement for education
funding is based on the assessed value of the borough property
regardless of any exemptions.
Senator Wilken answered that the four-mils is based on the state
assessed full and true value before exemption.
STEVE VAN SANT, State Assessor, Division of Community and Business
Development, Department of Community and Economic Development,
testified via teleconference from Anchorage as the drafter of the
original Department of Revenue fiscal note. He affirmed that the
fiscal note assumed the exemption would increase to $50,000 and
also assumed that all municipalities currently operating with a
residential exemption would adopt the maximum $50,000 exemption. He
continued that the fiscal note also assumed that the municipalities
with oil and gas properties would increase their mil rate to make
up for the lost revenues and thus cause a reduction of state
revenue of $1.6 million. He stressed this assumes that no other
revenue would be used by local municipalities. He qualified that if
Fairbanks instituted a sales tax there would be a reduction on the
state impact.
Mr. Van Sant addressed the possible effect on education funding
summarizing that this legislation would not have a major impact.
Mr. Van Sant then spoke to the provision in Section 1 regarding
exempt residents selling their residence in the middle of the year
to a nonqualified buyer. He interpreted the language to read that
the senior citizen would not get an exemption in that year.
Co-Chair Donley maintained his objection. He supported the change
from "shall" to "may" in Section 1 but suggested it could be
addressed as an amendment. He also suggested that Section 2 be
considered as an amendment rather than in a committee substitute.
AT EASE 10:14 AM / 10:16 AM
Senator Wilken WITHDREW his motion to adopt the committee
substitute, Version "P" as a working draft. There was no objection.
Co-Chair Kelly requested the sponsor work to address the concerns
raised.
Senator Therriault agreed to meet with members in order to
understand the concerns, but expressed that most of the concerns
are addressed in the proposed committee substitute or by the local
voter control.
Co-Chair Kelly ordered the bill HELD in Committee.
SENATE BILL NO. 137
"An Act relating to the allocation of money appropriated to
the Alaska Human Resource Investment Council; and providing
for an effective date."
This was the first hearing for this bill in the Senate Finance
Committee.
MARY JACKSON, staff to Senator Torgerson, testified that this bill
extends the first year funding provision, or allocation provision,
of the previous legislative session's SB 289. She detailed that the
provision allocated funding for the newly created program through
the University of Alaska, the Kotzebue Technical Center and the
Alaska Vocational and Technical Center (AVTC) because the program
itself was not yet established in a manner to receive funding.
Ms. Jackson shared that these institutions provide technical and
vocational programs in both urban and rural areas of Alaska. She
stated that a review of the uses of the funds, "showed how
necessary those funds were." She referred to supporting
documentation from AVTC.
Ms. Jackson explained that these funds allow the institutions to
"properly prepare" for the influx of new students into their
systems.
Co-Chair Donley asked if the funds for this program come from the
Unemployment Insurance (UI) fund.
Co-Chair Kelly affirmed.
Amendment #1: This amendment to Section 1 (a), page 1, lines 12-14,
changes the distribution of the allocations between the three
vocational technical facilities as follows.
Delete:
University of Alaska 52 percent
Kotzebue Technical Center 16 percent
Alaska Vocational Technical Center 32 percent
Insert:
University of Alaska 67 percent
Kotzebue Technical Center 11 percent
Alaska Vocational Technical Center 22 percent
Senator Wilken moved for adoption.
Senator Austerman objected for the purpose of discussion.
Senator Wilken stated this amendment corrects a drafting error. He
said that the existing percentage breakdown was a part of SB 289
and was determined by the intent to allocate $1 million to AVTC and
$500,000 to Kotzebue Technical Center, with the remainder allocated
to the University of Alaska system. He said the percentage change
is necessary to continue funding the same fixed amounts to AVTC and
Kotzebue Training Center.
Ms. Jackson stated that the sponsor supports the amendment.
Senator Leman asked if the intent is to fund the technical centers
a fixed amount then why percentages were listed in the language
instead of the allocations. He predicted changes would continue to
be necessary in future years.
Ms. Jackson replied, "The dollar values are always going to be
approximate" She explained the actual allocation to AVTC the
previous year was $1,032,000 and the projected amount for the
current year is $1,001,000 out of a total allocation to the program
of $4.5 million.
Senator Leman again asked why the language contains the
percentages, which require changing.
Ms. Jackson answered that the previous allocation was not for the
"full funding year" due to the inception of the program after the
fiscal year began.
Senator Leman asked if the expectation were therefore that the
amended percentage amounts would be accurate in future years.
Ms. Jackson affirmed.
Senator Green expressed that she did not support the project the
previous session and would not support it again this year either.
She opined, "I think it's a misdirection of funds that were very
clearly laid out how they were supposed to be used." She stressed
that this legislation "goes totally against" the UI program.
Senator Austerman removed his objection to adoption of the
amendment.
Senator Olson stated the UI fund is an employer contribution
intended to have "a positive action" on employees. He did not
understand why the University of Alaska was receiving the "lion's
share" of the funds for this program. He predicted the university
would continue to receive larger percentages of this fund and would
eventually expect to receive all of the funds. He stressed that the
emphasis of the program is for vocational and technical training
and that the percentage shifts would take away from the original
intention. He spoke of the preparations for a gas pipeline and the
need to train Alaskans throughout the state for the jobs this
project would bring. He saw this amendment as reducing funding for
"the only technical institution in my area." As a result, he stated
that he objected to its adoption.
Senator Olson opined this amendment "polarizes", "separates the
haves from the have-nots" and causes "a bigger burden to be placed
upon those of us that are already overburdened by the lack of
availability of training."
Senator Olson expressed that the intent of the legislature is to
provide a consensus and "a more even playing field." He saw this
amendment as divisive.
Co-Chair Kelly noted that the funds would be directed to vocational
pursuits and therefore be used to help Alaskans develop the
necessary skills for jobs, such as with the proposed gas pipeline.
He stressed that this amendment does not change the amount
originally intended for the university, but rather corrects
language to allow it.
Senator Wilken explained that the amount funded the program the
previous year was only enough to fund three-fourths of the year
because the program started after the fiscal year had begun.
Senator Olson understood this, but stressed the need to provide
training in rural areas of the state.
Co-Chair Kelly recalled the original intent was to provide funding
to the vocational training centers and that this amendment
continues to do this.
Senator Hoffman suggested that the intent of the program is to
provide training for jobs in technical areas and that the
university is an institution of higher learning. He said the
question is actually whether the allocation to the university is
appropriate.
Senator Green reminded that there was "great heated debate" on SB
289 during the previous session about the method of changing the
use of the UI funds. She remarked, "That's not what this money was
intended for, it's not why the money was collected. It was not go
to institutions. It was to got to individuals who had specific
needs." While she understood the fund has a surplus, she argued
that this money should go to individuals. She stated that SB 289
was "supposed to be a one-year budget fix."
Co-Chair Kelly did not remember SB 189 as a "one-year budget fix."
Senator Green asked if it was not, why the issue was before the
Committee this session.
Co-Chair Kelly recalled the original discussions included
statements that the program would be on-going.
Senator Wilken also did not remember the program as a "one-year
budget fix." He stressed that funding for this program is not
collected from the employee but rather from the employer's matching
funds. He found it appropriate to train unemployed workers so they
could qualify for other jobs, which would be an appropriate use of
UI funds. He added that the University of Alaska is included in the
program because it has a "statewide reach." He noted that while
AVTC and Kotzebue Training Center are located in two rural areas,
there are campuses of the University of Alaska in several more
rural communities. He pointed out that University of Alaska
President Hamilton understands the need to provide vocational and
technical training.
Co-Chair Kelly stated, "There is no reallocation of dollars from
one institution to another." He stressed that this is a technical
amendment. He reiterated that the university is the statewide
entity able to funnel these funds into rural Alaska for vocational
training.
Senator Austerman asked for a breakdown of how the university spent
the funds allocated to it for this program.
Co-Chair Kelly stated this information is available on the
Internet.
Senator Green expressed, "the university [has] done a fine job"
with the funds allocated for this program. She cited the "major
emphasis" at the Mat-Su campus on vocational technical studies.
However she repeated that the intended use of the UI fund was not
for institutions, but rather to individuals with specific needs.
She stated that the funds could be given to unemployed workers to
pay for tuition at one of the institutions.
Co-Chair Donley remembered the argument that was held during the
Senate debate on SB 289 the previous session regarding employer-
matching funds comprising the allocation to this program. He asked
for an explanation of how the source of these funds affects the
"bottom line." He understood that the "bottom line" is money
available to pay benefits to unemployed Alaskans who contributed to
the fund. He surmised that using UI funds for the vocational and
technical training programs would reduce the amount available to
unemployed Alaskans regardless of whether the funds were collected
from the employer contribution or the employees.
Senator Wilken recalled a chart referenced during the previous
discussions, which he no longer possessed. He remembered that the
unemployment benefits were based on the demand of the available
money. He explained that the funds allocated to the vocational
technical training program are "over and above" the demand and
would not affect the benefits. He qualified that in the previous
session, the Department of Labor and Workforce Development warned
that using the excess amount in the fund for other purposes would
affect benefits. He remarked that this was found to be untrue and
that the excess balance has grown despite the withdrawal of funds
for the vocational technical training program.
Co-Chair Donley stated that it does not matter whether the funds
allocated to the vocational and technical training program come
from the employee or the employer share of the payments to the UI
fund. He expressed that any usage of the fund for other purposes
affects the amount available to pay unemployment benefits. He said
this is because of the presupposition that the status quo is the
proper policy call. He stated that the amount paid unemployed
workers in benefits is "some of the most miserable lacking benefits
in the nation." He suggested that the policy should actually be
whether to increase the amount of benefit payments or direct the
funds to other projects such as the vocational and technical
training program.
Senator Wilken disagreed and emphasized that the amount allocated
from the UI fund to the vocational and technical training program
is excess money in that fund, which constitutes a reserve. He
stated that Co-Chair Donley's suggestion to increase benefit
payments would need to be addressed as separate legislation.
Senator Wilken admitted that while it could be stated that Alaska
has "miserable" unemployment insurance, the state has other
"extraordinary" benefits that compensate for this.
Co-Chair Donley argued that the benefit payment issue is directly
relevant to the legislation before the Committee. This, he stressed
is because other usage of the UI funds "cuts off the availability,"
or impedes the flexibility to improve the benefits paid to
uninsured Alaskans.
Senator Wilken countered the bill does not address the possibility
of using employer and employee contributions to the UI fund to
increase the amount of benefits paid to individuals. He stressed
that this bill allocates funds collected "over and above" the
amount paid out in benefits and establishes the amount of reserve
funds necessary.
Co-Chair Kelly agreed Co-Chair Donley's concern is a subject for
another bill. He explained that the existing structure of the UI
fund enables payments for vocational programs without impacting the
benefits paid to individuals.
Senator Wilken noted that the matter is complicated, just as it was
when it was first discussed the prior year. He asked that the
Department of Labor and Workforce Development explain the issues.
Co-Chair Kelly ordered the bill HELD until later in the hearing.
The motion to adopt Amendment #1 remained on the table.
CS FOR SENATE BILL NO. 6(L&C)
"An Act relating to required notice of eviction to mobile home
park dwellers and tenants before redevelopment of the park."
This was the first hearing for this bill in the Senate Finance
Committee.
SENATOR JOHNNY ELLIS testified this legislation increases the
notification requirement when residents are evicted from mobile
home parks from 180 days under the landlord-tenant law, to 365
days. He noted that the legislation allows for a shorter notice
period in which the landlord pays $5,000 for relocation fees. He
pointed out that this matter was brought to him by Archbishop
Francis Hurley and Dennis McMillian of the United Way as a result
of a task force convened to address the "scores of families
becoming homeless" and subsequent pressures on the "social safety
net" caused by redevelopments of mobile home parks.
Senator Ellis shared that Senator Leman supports this bill and has
suggested statutes providing a vehicle for "pooling of resources"
to help cover the various relocation costs to multiple residents in
a mobile home park. Senator Ellis explained that under this
provision, the developer could provide a set amount of funds to a
non-profit entity for relocation costs. The non-profit
organization, he continued would allocate funds based on need.
Co-Chair Kelly asked if Senator Leman's proposal would be addressed
as a committee substitute.
Senator Ellis was unsure if Senator Leman wanted to offer an
amendment or a committee substitute.
Co-Chair Kelly ordered the bill HELD in Committee.
SB 137-ALASKA HUMAN RESOURCE INVESTMENT COUNCIL
[The Committee continued deliberations from earlier in the hearing.
A motion to adopt Amendment #1 remained on the table.]
Co-Chair Donley restated his objection to the bill as the same
reason he voted against similar legislation the previous year. He
expressed that this legislation utilizes funds that would "more
appropriately" be used in improving the unemployment benefits to
those workers who have paid into the system. He asserted that this
is the "purpose of the system" and that the current benefit
schedule is "sub par" and does not adequately compensate unemployed
workers. He noted that the intended purposes contained in the
legislation are worthy.
Co-Chair Kelly reminded that the Committee debate has been whether
this bill could adversely affect the potential to increase
unemployment payments.
SENATOR JOHN TORGERSON affirmed Co-Chair Donley's assertion that
this legislation "intercepts" unemployment insurance (UI) funds.
Senator Torgerson listed this amount as one-tenth of one percent of
the amount paid into the fund by the employee. He remarked that the
UI trust fund is "the most lucrative it has been in the history of
our state" with a balance of approximately $220 million. He said
the average balance is between $160 million and $180 million. He
noted there is other legislation before this legislature that would
increase the UI benefits. He stressed that if at any time the
benefits need exceeds the balance of the UI trust, the employer
would pay the difference. Therefore, he assured that the trust is
never compromised.
Senator Torgerson made the case that by providing funding for
training facilities the number of workers reliant on UI benefits is
reduced. In fact, he pointed out, these workers were instead
employed and therefore contributing to the UI fund. He noted that
this theory was also agreed upon when establishing the State
Training Employment Program (STEP) several years earlier and as a
result, the balance of the trust increased.
Senator Ward referenced the amendment and asked if its necessity
was caused by a mistake in SB 289, which set the original
allocation percentages.
Senator Torgerson replied, "this was actually driven by money" and
that his intention was to allocate $3 million to the University of
Alaska. He stated this was because the House of Representatives did
not fund the full request in the FY 01 operating budget. He noted
that other legislation was pending that could have accomplished
this, but that SB 289 was chosen to also provide funds to AVTEC and
Kotzebue Technical Center.
Senator Ward asked the projected amount appropriated to the
university under this amendment.
Senator Torgerson answered, $3,051,046.
SFC 01 # 47, Side A 10:44 AM
Senator Leman requested that the debate return to the amendment
before the Committee.
Co-Chair Kelly pointed out that the amendment is a technical
correction, but noted there was objection to the amendment based
upon the program. He emphasized that the program continues, whether
the amendment is adopted or not, but warned that if the amendment
is not adopted, the program does not continue as intended in SB
289. He surmised that while this debate could be "healthy" it does
not pertain to the amendment or the legislation before the members.
He reiterated that the amendment adjusts the percentages to reflect
a full fiscal year rather than the three-quarter year funded in the
first year of the program.
Senator Leman concluded that this amendment is "a fix that is
necessary to get us to where we intend to be." He appreciated
Senator Olson's comments but disagreed that this takes from the
"have-nots" and gives to the "haves". Senator Leman did not think
the redistribution was in a manner that would be detrimental to the
Kotzebue Training Center. He supported the amendment because it is
consistent to the intent of SB 289. He stated that like Co-Chair
Donley and Senator Green, he objected to the use of the UI funds
for an education program in the previous session and that he voted
against the original legislation. He qualified that he did not
oppose funding vocational technical programs. However, he stated
that this amendment is appropriate given that the program is in
place.
Senator Olson moved to amend the amendment, changing the
percentages to 61 percent to the University of Alaska, 13 percent
to the Kotzebue Technical Center and 26 to the Alaska Vocational
Technical Center. He said he offered this as a compromise saying it
would provide a 40 percent increase to each institution.
Co-Chair Kelly understood the amendment as stated but did not think
it gave a 40 percent increase over what was requested in the prior
year.
Senator Torgerson pointed out that the Kotzebue Training Center is
estimated to receive $516,000 under the previous year's
appropriation and would receive $500,019 in the current year. He
continued that AVTC was projected to receive $1,032,000 and would
receive $1,001,000. He suggested that the percentages could be
changed slightly to make up for these reductions. He stressed that
the intent is to provide the same amount to each facility as in the
prior year and for the university to receive the maximum amount
possible.
Co-Chair Kelly stated that because the actual amount would
fluctuate every year, he did not support adjusting the percentages
based on the previous year's funding.
A roll call was taken on the motion to amend the amendment.
IN FAVOR: Senator Hoffman and Senator Olson
OPPOSED: Senator Wilken, Senator Austerman, Senator Leman, Senator
Ward, Co-Chair Donley and Co-Chair Kelly
ABSENT: Senator Green
The motion FAILED (2-6-1)
The amendment FAILED to be adopted.
Senator Leman expressed that Senator Torgerson raised a
"compelling" argument in that these numbers are not exact and
suggested that a one-half percent adjustment would accomplish this.
He surmised changing the Kotzebue Training Center percentage to
11.5, changing the AVTC percentage to 22.5 and the University of
Alaska percentage to 66, would achieve the same funding amounts for
each of the three facilities.
Co-Chair Kelly stressed that although this might make the amounts
the same as the previous year, they would be different in future
years. He did not recommend adjusting the percentages to align
exactly with the previous year's amounts, but rather supported
establishing a percentage breakdown.
Senator Torgerson affirmed that the actual amounts are fluctuating
depending on the amount paid into the UI trust fund.
Senator Leman stated that he would no offer this as an amendment to
the amendment.
A roll call was taken on the motion to adopt the amendment.
IN FAVOR: Senator Leman, Senator Ward, Senator Wilken, Senator
Austerman, Co-Chair Donley and Co-Chair Kelly
OPPOSED: Senator Hoffman and Senator Olson
ABSENT: Senator Green
The motion PASSED (6-2-1)
The amendment was ADOPTED.
Co-Chair Donley stated that there was confusion as to whether this
bill is necessary in order to extend the program. He referred to
the sponsor statement; "…SB 137 extends the date of the direct
allocations to named institutions for two more years." He asked if
the bill accomplishes two functions, adjust the percentage levels
and also extend the effect of SB 289 for two years.
Senator Torgerson responded that SB 289 established a grant program
that would be given to accredited institutions in Alaska based upon
grant criteria. He stated that he introduced the current
legislation because the Department of Labor and Workforce
Development has not issued any regulations, nor has the Alaska
Human Resource Investment Council (AHRIC) taken steps to issue
these grants. Henceforth, he remarked, this legislation provides a
direct grant to the three institutions, rather than require the
institutions apply for the grants.
Co-Chair Donley asked how this legislation with the set
percentages, relates to the operating budget. He noted that because
it does not set specific amounts, it is not an appropriations bill.
He wanted to know if it is a guide or formula to be used when
preparing the operating budget.
Senator Torgerson replied that this legislation has nothing to do
with the operating budget and that a forthcoming fiscal note will
reflect the percentage breakdowns to each institution.
Co-Chair Donley referred to an outdated zero fiscal note that
stated the bill appropriates $4.5 million to the program.
REMOND HENDERSON, Director, Division of Administrative Services,
Department of Labor and Workforce Development, testified that a
fiscal note would be necessary to appropriate the intended $4.5
million into the department's budget. This, he stated is because
the funds are not included in the budget under the House of
Representative's version of the FY 02 operating budget. He admitted
that this request should have been submitted with the governor's
proposed operating budget but was omitted. He stressed that if this
bill passes without the related fiscal note, the department would
not have the necessary $4.5 million to issue in grants to the three
institutions.
Senator Torgerson stated his intent to reflect the funds in a
fiscal note in the event that the governor vetoes the bill. He
explained that if the veto occurred, the funds would not be
available for the department to expend otherwise and would be held
for future appropriation.
Co-Chair Kelly announced the Committee would wait for a proper
fiscal note.
Senator Torgerson offered to write the fiscal note.
Co-Chair Kelly ordered the bill HELD in Committee.
ADJOURNMENT
Co-Chair Pete Kelly adjourned the meeting at 10:58 AM.
| Document Name | Date/Time | Subjects |
|---|