Legislature(2001 - 2002)

05/04/2001 10:52 AM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                     SENATE FINANCE COMMITTEE                                                                                 
                           May 04, 2001                                                                                       
                             10:52 AM                                                                                         
SFC-01 # 95, Side A                                                                                                             
SFC 01 # 95, Side B                                                                                                             
CALL TO ORDER                                                                                                               
Co-Chair Pete Kelly convened  the meeting at approximately 10:52 AM.                                                            
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 Alan Austerman                                                                                                          
Senator Donny Olson                                                                                                             
Senator Lyman Hoffman                                                                                                           
Also  Attending:     SENATOR  JOHN  COWDERY;  KURT  PARKAN,   Deputy                                                          
Commissioner,  Department of Transportation  and Public Facilities;                                                             
DEVON  MITCHELL,  Debt  Manager,  Treasury  Division  and  Executive                                                            
Director,  Alaska  Municipal  Bond  Bank  Authority,  Department  of                                                            
Revenue; DENISE  HENDERSON, staff  to Representative Pete  Kott; GUY                                                            
BELL, Director,  Division of Retirement and Benefits,  Department of                                                            
Administration;   TIM  ROGERS,  Legislative   Program  Coordinator,                                                             
Municipality  of  Anchorage;  JIM NORDLUND,  Director,  Division  of                                                            
Public  Assistance,  Department   of  Health  and  Social  Services;                                                            
REPRESENTATIVE JOHN COHGILL, JR.; AV GROSS;                                                                                     
Attending  via Teleconference:   From Anchorage:  DAVID EBERLE,  PE,                                                          
Regional Director, Central  Region, Department of Transportation and                                                            
Public Facilities;                                                                                                              
SUMMARY INFORMATION                                                                                                         
SB 218-AIRPORTS:BONDS/CONSTR.FUND/FACILITY CHARG                                                                                
The  Committee   heard   from  the   sponsor,   the  Department   of                                                            
Transportation and Public  Facilities and Department of Revenue. The                                                            
bill moved from Committee.                                                                                                      
HB 242-TRS & PERS REEMPLOY & MED BENEFITS; COLA                                                                                 
The  Committee   heard   from  the   sponsor,   the  Department   of                                                            
Administration  and  the  Municipality  of  Anchorage.  A  committee                                                            
substitute was adopted and the bill was held in Committee.                                                                      
HB 142-AK TEMP. ASSISTANCE PROGRAM AMENDMENTS                                                                                   
The Committee  heard  from the  Senate Health  Education and  Social                                                            
Services  Committee   and  the  Department  of  Health   and  Social                                                            
Services. The bill moved from Committee.                                                                                        
HB 193-MODIFIED BLANKET PRIMARY ELECTION                                                                                        
The Committee  heard from  the sponsor and  a former state  Attorney                                                            
HB 234-TOBACCO SETTLEM'T: BONDS & SMOKING PROGRAM                                                                               
This bill  was not in Committee  in time  for the scheduled  hearing                                                            
and therefore was not heard.                                                                                                    
     CS FOR SENATE BILL NO. 218(TRA) am                                                                                         
     "An Act  relating to international  airports revenue  bonds and                                                            
     requiring   that  the  spending  plan  for  the  International                                                             
     Airports  Construction   Fund  include  information  about  the                                                            
     amounts  spent  during   the  previous  fiscal  year  for  cost                                                            
     overruns  on certain  projects and the  identification  of time                                                            
     delays  on  certain projects;  relating  to  customer  facility                                                            
     charges  to  fund  facilities  in airports  to  be constructed                                                             
     without   using  international   airport  revenue  bonds;   and                                                            
     providing for an effective date."                                                                                          
This  was the first  hearing  for this  bill in  the Senate  Finance                                                            
SENATOR JOHN  COWDERY testified  that the bill  raised the  limit of                                                            
the bonding authority  of the airports to $477,900,000.  He reminded                                                            
the Committee  of legislation  from a few  sessions back related  to                                                            
airport bonds, which he  said, was on-going. He shared that "all the                                                            
airlines" support  SB 218. He pointed out this legislation  requires                                                            
no tax  dollars  and instead,  the  airlines would  contribute  from                                                            
their revenues generated from landing fees.                                                                                     
Senator  Austerman noted  that the cost  of the  project at  the Ted                                                            
Stevens International Airport  in Anchorage has continued to "spiral                                                            
up" and  he wanted to know  if this legislation  would apply  to the                                                            
existing project and related  cost overruns or toward a new project.                                                            
He pointed  out that  although the  revenue for  these bonds  is not                                                            
received through  taxes, the landing fees are considered  a business                                                            
expense and the  cost is passed along to the consumer  in the ticket                                                            
Senator Cowdery  answered that this bill does not  apply to previous                                                            
projects,  but rather new  projects. He noted  that the airports  in                                                            
both Fairbanks  and Anchorage would  qualify for funding  under this                                                            
legislation.  He stated that the purpose  of this legislation  is to                                                            
utilize the  revenues collected  from landing  fees by the  airlines                                                            
for new projects.  Otherwise, he explained, these  revenues would be                                                            
spent on  the existing  upgrade project.  He noted this legislation                                                             
allows the  funds to be received earlier  than the fifteen  years it                                                            
would take if not for this legislation.                                                                                         
KURT PARKAN, Deputy  Commissioner, Department of Transportation  and                                                            
Public  Facilities,  added  that this  legislation  provides  for  a                                                            
bonding  package  to fund  the annual  capital  improvement  project                                                            
(CIP) at the  airport system. He explained  this package  was agreed                                                            
upon during  the previous year's negotiations  between the  airlines                                                            
and the department  in which the airlines requested  a five-year CIP                                                            
for their  consideration and  the authority  to issue bonds  to fund                                                            
these improvements rather  then the current method of "cash funding"                                                            
the projects each year.                                                                                                         
Mr.  Parkan detailed  the  funding for  these projects  include  the                                                            
costs of environmental  procedures, securing taxiways  and equipment                                                            
purchases.   He pointed out the general  annual CIP is unrelated  to                                                            
the on-going  terminal upgrade  project with  the exception  of four                                                            
projects that are similar  to the terminal project but were not part                                                            
of the original project's  "scope". He referred to a letter from the                                                            
Department  of  Transportation  and  Public  Facilities  to  Senator                                                            
Cowdery that identifies these key projects.                                                                                     
Mr.  Parkan shared  that  the  agreement  upon this  debt  financing                                                            
method  for CIP projects  was reached  because  the airlines  wanted                                                            
some certainty  as to their  annual costs.  He noted that under  the                                                            
current system,  the airlines incur "spikes" in landing  fees, which                                                            
would not happen  under the proposed method.  He informed  this is a                                                            
method of financing  utilized for many airports across  the country.                                                            
Senator  Austerman  asked  the  status  of  the  existing  five-year                                                            
terminal upgrade project.                                                                                                       
Mr.  Parkan  responded  that  the  proposed  bond  package  in  this                                                            
legislation  would fund  the first  two years of  the five-year  CIP                                                            
plan; the first  year being FY 01.  He explained that approximately                                                             
$142,000,000 would  be added to existing debt to cover  these costs.                                                            
Senator  Austerman asked  if the  legislature would  then return  to                                                            
this issue  within three years to  consider authorizing an  increase                                                            
to the bonding limit for this project.                                                                                          
Mr. Parkan  affirmed a second request  would be made to issue  bonds                                                            
to fund the final three years of the CIP project.                                                                               
Senator Ward asked  if any projects contained in this  bond proposal                                                            
replace any  of the anticipated bond  proposals under the  extension                                                            
of the airport bonds.                                                                                                           
Mr. Parkan answered  a question of Senator Ward, repeating  that the                                                            
proposed bond  package contains no projects that are  currently part                                                            
of the on-going  airport extension  and upgrade project.  He relayed                                                            
testimony  he gave to  the Senate Transportation  Committee  stating                                                            
that there  are several  proposed  projects that  relate to the  on-                                                            
going terminal  upgrade, but that do not replace a  current project.                                                            
He  explained  these projects  were  not  included in  the  original                                                            
expansion  but are  planned to  coincide with  the current  terminal                                                            
projects.  He  gave  an  example  of  hazardous  material   asbestos                                                            
abatement, noting the extent  of the asbestos found when the upgrade                                                            
construction began was  not anticipated. He said $5 million has been                                                            
incorporated  into the  proposed bond  package  to address  asbestos                                                            
removal.  He  noted  an access  control  system,  a  medium  voltage                                                            
project and  some furnishings,  are other  projects related  to, but                                                            
not replacements of, the on-going terminal upgrade project.                                                                     
Senator Ward asked if Senator  Cowdery has the same understanding of                                                            
this legislation as Mr. Parkan testified.                                                                                       
Senator Cowdery  reminded that  he has been  working on this  matter                                                            
for several  years  and had  sponsored the  legislation authorizing                                                             
bond  issuance  for the  original  terminal  expansion  and  upgrade                                                            
project.  He told that the  department had  estimated the amount  of                                                            
asbestos that  might be present, however much more  was found during                                                            
demolition.    He stated  it  was  not  his intention  to  "pay  for                                                            
anything  that we'd  authorized  before"  however,  there were  cost                                                            
overruns with the on-going project.                                                                                             
Senator Ward opined, "That's  the heart of the thing." He emphasized                                                            
the $5 million  cost overrun was not  due to earthquakes,  footings,                                                            
etc. He  qualified he was  unsure if the overruns  were a result  of                                                            
fast-tracking  the  project. He  stressed  he wanted  to ensure  the                                                            
proposed bond package is  not funding mistakes that were made during                                                            
the original  project. He  was concerned if  this were so,  it would                                                            
not be possible to identify and rectify those mistakes.                                                                         
Mr. Parkan  understood Senator Ward's  concerns and noted  that this                                                            
legislation  does not  cover any of  the costs  associated with  the                                                            
delays encountered over  the permitting and errors in seismic design                                                            
work. He  expressed  the intent to  provide full  disclosure  of the                                                            
four or  five proposed  projects that  are related  to the  terminal                                                            
project to the  legislature. He assured that the remaining  projects                                                            
in the bond package are  unrelated to the terminal upgrade and could                                                            
not be changed  because the bonds would be issued  specific to those                                                            
projects.  He informed  that  the department  has  relayed the  same                                                            
assurances to the airline companies.                                                                                            
Senator Cowdery  continued that he understood the  problems with the                                                            
terminal  upgrade  project are  eight  to nine  months  old and  are                                                            
related to delays.  He recalled that during legislation  authorizing                                                            
bond issuance for the terminal  project, the department assured that                                                            
$10 million of  insurance was purchased to cover any  delays. He was                                                            
uncertain  whether $10 million  would be adequate  to cover  all the                                                            
costs  and he did  not know  where the  remaining  funds would  come                                                            
from. He surmised  that Senator Ward  was concerned that  funds from                                                            
the new bond package would be utilized to cover these.                                                                          
Senator Hoffman  requested a copy  of the list of proposed  projects                                                            
in the bond package.                                                                                                            
Mr. Parkan  distributed a letter the  department sent to  the Senate                                                            
Transportation Committee. [Copy on file.]                                                                                       
Senator  Austerman  expressed concern,  saying  he  did not  support                                                            
moving the bill from Committee  without documentation that shows the                                                            
projects  funded in  the original  bond  package,  and the  proposed                                                            
projects that would be funded through this legislation.                                                                         
Mr.  Parkan  responded  that  the  letter  should   address  Senator                                                            
Austerman's concerns.  He stated the "whole purpose  of this package                                                            
is as a result  of the airlines' request that we use  debt financing                                                            
for the annual CIP."                                                                                                            
Senator  Austerman  did not  oppose this  method  of financing,  but                                                            
stressed  he did  not have  enough information  to  make a  decision                                                            
regarding the bill.                                                                                                             
Senator  Leman questioned  the fiscal  note from  the Department  of                                                            
Revenue.  He  wanted  to  know  if  the  sale  of  these  bonds  was                                                            
considered  in relationship   to a  $52,000 request  for  the FY  02                                                            
DEVON  MITCHELL,  Debt  Manager,  Treasury  Division  and  Executive                                                            
Director,  Alaska  Municipal  Bond  Bank  Authority,  Department  of                                                            
Revenue, answered  that the $52,000  is a FY 01 Supplemental  budget                                                            
request related  to the Alaska Municipal Bond Bank  Authority, which                                                            
he informed is a separate entity.                                                                                               
Senator Leman  next asked  why the travel  and contractual  services                                                            
were funded with general funds.                                                                                                 
Mr. Mitchell  replied these  expenses are  anticipated prior  to the                                                            
issuance of the  bonds and are to cover the costs  of the efforts to                                                            
market and sell the bonds.                                                                                                      
Senator  Leman asked  if the Department  of  Revenue recovers  these                                                            
funds after bonds are sold.                                                                                                     
Mr. Mitchell answered it does not.                                                                                              
Co-Chair  Donley  asked  if the  Department  of  Transportation  and                                                            
Public Facilities  testimony  is that none  of the bonding  proceeds                                                            
would be used to pay for  corrections to the problems experienced to                                                            
date with the terminal project.                                                                                                 
Mr.  Parkan  referred  to  material  distributed  that  lists  those                                                            
proposed projects  that are related  to the terminal upgrade.  [Copy                                                            
on file.] He clarified  some of the proposed projects,  such as with                                                            
the hazardous materials are related to the on-going project.                                                                    
Co-Chair  Donley   asked  how  the  additional  costs,   related  to                                                            
compliance  with  building  codes, that  are  part of  the  terminal                                                            
project are being paid.                                                                                                         
DAVID EBERLE,  PE, Regional Director, Central Region,  Department of                                                            
Transportation  and Public Facilities, testified via  teleconference                                                            
from  Anchorage  as the  project  manager  on the  terminal  upgrade                                                            
project. He stated that  the deficiency corrections are being funded                                                            
from the overall  program contingency, which he said  is part of the                                                            
original program.  He noted the department  has an insurance  policy                                                            
to cover design  flaws and that a  claim would be filed.  He assured                                                            
of  the department's  intent  of "vigorously  pursuing  recovery  of                                                            
those costs" but cautioned this would take time.                                                                                
Co-Chair Donley asked if  all the legal fees related to the problems                                                            
with the terminal  project were covered  under the insurance  policy                                                            
or  if  there would  be  a  supplemental  budget  request  the  next                                                            
Mr. Eberle  answered that the legal  fees are currently funded  from                                                            
the existing  project's  budget. He  stated that  how much of  these                                                            
costs  are  recovered  depends  upon  the  bids  submitted  for  the                                                            
remaining work  on the project and subsequently, whether  there is a                                                            
supplemental budget request.                                                                                                    
Senator Ward  asked for an explanation  of the insurance  policy and                                                            
the process  of determining  the  responsible  party and  recovering                                                            
expenses from that party.                                                                                                       
Mr. Eberle  detailed that insurance  policy was purchased  to "cover                                                            
the entire  project" and  explained it covers  any design errors  or                                                            
omissions  related  to the  engineering  work.  He shared  that  the                                                            
design firms are denying  responsibility, which he said is standard.                                                            
He  stated that  the  insurance company  has  been notified  of  the                                                            
intent  to file the  claim. He  stressed the  department intends  to                                                            
pursue  the responsible  party  with  assistance from  the  Attorney                                                            
General's Office  and outside counsel. He estimated  it would be two                                                            
years before the matter is concluded.                                                                                           
Senator  Ward asked  if the department  is also  accounting for  the                                                            
cost of lost  revenue due to delay  of the project in its  claim. He                                                            
noted the additional  retail and airline  space the expansion  is to                                                            
Mr. Eberle responded that  those costs could be calculated after the                                                            
terminal is operational and revenue is earned.                                                                                  
Senator Ward  requested an estimate  of the amount of lost  revenue,                                                            
particularly for  the nine months to date that the  opening has been                                                            
delayed. He  understood that exact  figures could not be  calculated                                                            
but wanted an estimate within $400 to $500.                                                                                     
Senator  Austerman  referenced  the letter  from the  Department  of                                                            
Transportation  and Public Facilities  listing the $8.7 million  for                                                            
the projects that relate  to the terminal upgrade. He noted there is                                                            
a remaining amount of $134,200,000  and asked if for a detail of the                                                            
planned expenditures of these funds.                                                                                            
Mr.  Parkan noted  that  this item  is  included in  the  governor's                                                            
proposed  FY 02  Capital  Budget  legislation  and stated  he  would                                                            
provide  that information.  He  noted  some projects  are  partially                                                            
funded  through federal  international  airport  improvement  funds,                                                            
others are  bond funded and  a few are  revenue-funded projects.  He                                                            
pointed out  environmental  expenses could  not be funded with  bond                                                            
revenues because  they are not considered  an asset. He shared  that                                                            
the  bond revenue  would  be used  for state  match  of the  federal                                                            
Senator Austerman  requested identification  of this information  in                                                            
relation to the bill.                                                                                                           
AT EASE 11:14 AM / 11:17 AM                                                                                                     
Senator Austerman asked  why this bill was not introduced earlier in                                                            
the legislative  session  since the  projects are  contained in  the                                                            
capital budget.                                                                                                                 
Mr.  Parkan   responded   this  bill,   sponsored   by  the   Senate                                                            
Transportation  Committee  is  similar  to  one  introduced  by  the                                                            
governor in January 2001.                                                                                                       
Co-Chair  Kelly noted  the governor's  bill has  been in the  Senate                                                            
Finance  Committee  since the  first two  weeks of  the legislative                                                             
Senator Ward added  that there has been extensive  discussion on the                                                            
matter  of  funding sources,  responsibility   for the  delays,  and                                                            
whether the terminal expansion  project would essentially need to be                                                            
done twice.  He expressed  that although  it would  be at least  two                                                            
years  before the  responsible  party  is determined,  the  citizens                                                            
would pay the price of the project delays and increased costs.                                                                  
Senator  Ward stressed  that  Senator Cowdery  insisted  on the  new                                                            
legislation,   not  the  Senate  Transportation   Committee,   which                                                            
sponsored it.                                                                                                                   
Senator Hoffman  noted SB 218 lists the amount of  $142.9 million as                                                            
the bonding authority,  but the fiscal note increases this amount by                                                            
$5 million. He asked for an explanation.                                                                                        
Mr. Parkan  directed attention to  a more current fiscal  note dated                                                            
May  2, 2001.  He shared  that  the airline  industry  requested  $5                                                            
million be  changed from bond funding  to revenue funding,  which he                                                            
said reduces  the bond amount.  It was determined  that this  fiscal                                                            
note was not in possession of the Committee at this time.                                                                       
Mr.  Parkan  detailed  the  $5  million   in  question  is  for  the                                                            
relocation   costs  of  the  airlines   and  was  included   in  the                                                            
negotiations  between the  Department of  Transportation and  Public                                                            
Facilities and the airline companies.                                                                                           
Co-Chair Donley  wanted to know where  the funding comes  from if it                                                            
is not bonded.                                                                                                                  
Mr. Parkan responded the  monies are from the International Airports                                                            
Revenue fund. He detailed  the list of proposed projects attached to                                                            
the   aforementioned   letter,  explaining   the   various   funding                                                            
mechanisms for each.                                                                                                            
Mr. Eberle  established  for  Co-Chair Donley,  that he  is not  the                                                            
project manager  of the terminal extension  project, but  rather the                                                            
overall program director.                                                                                                       
Co-Chair Donley shared  that he has learned that the project manager                                                            
of the terminal  project is the same  project manager of  the Alaska                                                            
Center for the  Performing Arts in Anchorage. He asked  if this were                                                            
Mr.  Eberle  replied  that the  project  manager  for  the  terminal                                                            
project  is a Department  of  Transportation  and Public  Facilities                                                            
employee.  He  noted a  variety  of consultants  are  working  under                                                            
contract with  the state on this project. One of those  consultants,                                                            
he informed  is Rise  Alaska  and the owner  of this  firm had  been                                                            
involved  in construction  of  the performing  arts  center under  a                                                            
different company name.                                                                                                         
Co-Chair  Donley  asked  if the  contracts  were  competitively  bid                                                            
contracts or sole source.                                                                                                       
Mr. Eberle answered the proposals are all competitively bid.                                                                    
Co-Chair Donley  shared concerns with others in Anchorage  about the                                                            
cost  overruns incurred  during  construction  of the  arts  center.                                                            
These  concerns,   he  said,  grow   because  the  same   contractor                                                            
responsible for those delays is involved in the airport project.                                                                
Mr. Eberle responded that  Co-Chair Donley could review the terms of                                                            
the contract at any time.                                                                                                       
Co-Chair  Donley  expressed  he  also  wanted  details  of  the  bid                                                            
criteria  and  whether  any  consideration  is  given  to  the  past                                                            
performance of a contractor.                                                                                                    
Mr. Eberle stated  he would provide the evaluation  criteria and the                                                            
scores given for these bids.                                                                                                    
Senator  Leman clarified  that "contractor"  used  in this  context,                                                            
applies  to professional  management, engineers  or other  technical                                                            
service providers.                                                                                                              
Senator  Green  pointed  out  that  in  the  future  many  of  these                                                            
questions would be answered  in accordance to the provisions on page                                                            
2  of  the  committee  substitute.  These,  she  explained   address                                                            
reporting  requirements  of expenditures,  cost  overruns, etc.  She                                                            
stated her support of these provisions.                                                                                         
Senator Green  offered a  motion to move from  Committee, CS  SB 218                                                            
(TRA) with $25,000 fiscal note from the Department of Revenue.                                                                  
There was no objection and the bill MOVED from Committee.                                                                       
AT EASE 11:26 AM / 11:39 AM                                                                                                     
     CS FOR HOUSE BILL NO. 242(FIN)                                                                                             
     "An Act  relating to reemployment  of and medical benefits  for                                                            
     retired members  of the teachers' retirement  system and public                                                            
     employees'  retirement  system;  relating to  the inclusion  of                                                            
     cost-of-living   differentials  on  compensation  and  benefits                                                            
     under  the public employees'  retirement system; and  providing                                                            
     for an effective date."                                                                                                    
This  was the first  hearing  for this  bill in  the Senate  Finance                                                            
DENISE HENDERSON, staff  to Representative Pete Kott, testified read                                                            
a statement into the record as follows.                                                                                         
     Basically,  what House Bill 242  is designed to provide  a tool                                                            
     to  bring  back  retired  employees  into  the  public  service                                                            
     workforce  as well as retain those who are about  to retire and                                                            
     possibly aide in the  further recommendation and recruitment of                                                            
     younger, qualified employees.                                                                                              
     The bill  itself will make a  modest improvement to  the Alaska                                                            
     retirement  statutes  to assist  Alaska's  public employers  in                                                            
     attracting   and  retaining  qualified  workers   as  workforce                                                            
     shortages  become  more pronounced.  Employers  throughout  the                                                            
     state  now are having difficulty  in filling certain  vacancies                                                            
     and   this  is   occurring  at   all  levels:   the   teaching,                                                            
     professional, technical and clerical.                                                                                      
GUY BELL, Director, Division  of Retirement and Benefits, Department                                                            
of Administration detailed  the bill, noting that Sections 1,2,4 and                                                            
6 - relate to  the teachers retirement system. He  pointed out these                                                            
sections  contain  segments  equivalent  to those  in  SB 149,  that                                                            
passed the Senate a week prior.                                                                                                 
Mr. Bell detailed Section  1, which permits school districts to hire                                                            
retired  teachers   after  a  declaration   of  a  shortage   or  an                                                            
anticipated  shortage by  a school  district.  He  shared that  this                                                            
section also allows  those retired teachers an option  of continuing                                                            
to  receive  their  retirement  benefits   during  their  return  to                                                            
teaching,  but no  long accrue  an additional  benefit during  their                                                            
return. He pointed out  there is a sunset provision of the year 2006                                                            
to  these  provisions.  He  qualified  that   a proposed   committee                                                            
substitute changes this date to the year 2005.                                                                                  
Mr. Bell informed  that Section 6 relates to a "modest  enhancement"                                                            
to medical  benefits  for Tier  II teachers.  He  explained this  is                                                            
designed  as a  retention  plan in  that  it provides  full  medical                                                            
coverage  paid by  the Teachers  Retirement  System  (TRS) after  25                                                            
years of teaching.  He noted that currently a teacher  is allowed to                                                            
retire  after 25  years, but  does not  become eligible  to  receive                                                            
medical  benefits until  age 60, when  the system  pays half  of the                                                            
costs. He  also noted there  is a "modest"  cost to the TRS  fund of                                                            
.17 percent.  He calculated the additional  cost based on  a $40,000                                                            
annual salary to be $68 per teacher per year.                                                                                   
Mr. Bell  next addressed  Sections 7 and  8, which makes  equivalent                                                            
changes to the Public Employees  Retirement System (PERS). He listed                                                            
this applies  to state  as well  as political  subdivision, such  as                                                            
municipal  government employees,  peace officers,  professional  and                                                            
technical employees, and "other workers."                                                                                       
Mr.  Bell   stated  that   Section  10   similar  provides   similar                                                            
enhancement  of   medical  benefits  to  public  employees   as  TRS                                                            
employees, as detailed above.                                                                                                   
Mr. Bell concluded with  Section 11, which simplifies the method the                                                            
geographic  pay differential  is included  in the  calculation  of a                                                            
retirement  benefit and applies to  state employees. He shared  this                                                            
is related to legislation  adopted in 1986, which required employees                                                            
hired after that date to  spend at least 50 percent of their time in                                                            
a pay  differential area  in order  for the pay  differential  to be                                                            
included in the  calculation of their retirement benefits.  He noted                                                            
this legislation  also included a  provision requiring a  comparable                                                            
amount or  "equivalent steps"  in the total  service to qualify  for                                                            
the retirement  pay differential.  He stressed the confusing  second                                                            
portion is  hard to interpret  and explain  to members, which  makes                                                            
career  planning  difficult. He  relayed  concerns  from the  Alaska                                                            
State Troopers  and the Department  of Fish  and Game because  these                                                            
agencies tend  to transfer employees  across the state during  their                                                            
careers.  He  stated   that  HB  242  changes  the  geographic   pay                                                            
differential  provision  to only  require  an employee  to spend  at                                                            
least  50 percent  of their  career in  a pay  differential area  to                                                            
qualify for the increased benefits in their retirement.                                                                         
Senator  Austerman asked  if this legislation  applies to  employees                                                            
who  retired under  the Retirement  Incentive  Plan  (RIP) or  other                                                            
early retirement efforts.                                                                                                       
Mr. Bell  answered that  this bill specifically  prohibits  an early                                                            
retiree  from  returning  to  work  and also  does  not  allow  such                                                            
employees to receive  these additional considerations.  He explained                                                            
an  employee must  have  a "full  service"  retirement  in order  to                                                            
qualify for the added benefits.                                                                                                 
Co-Chair  Kelly announced  that because members  have not had  ample                                                            
opportunity  to review this  legislation, he  planned to keep  it in                                                            
the Committee.                                                                                                                  
Senator Leman  moved to adopt  CS HB 242,  22-LS0885\J as a  working                                                            
Co-Chair  Kelly  asked  if  the  sponsor  supported   the  committee                                                            
Ms. Henderson answered yes.                                                                                                     
Without objection, the committee substitute was ADOPTED.                                                                        
TIM  ROGERS,  Legislative   Program  Coordinator,  Municipality   of                                                            
Anchorage, testified  in support of the bill. He told  of the "brain                                                            
drain"  of  qualified  teachers  and  the  economic   necessity  for                                                            
teachers to retire from  teaching and work in a second career rather                                                            
than continue to teach.                                                                                                         
Co-Chair Kelly ordered the bill HELD in Committee.                                                                              
AT EASE 11:52 AM / 11:56 AM                                                                                                     
     SENATE CS FOR CS FOR HOUSE BILL NO. 142(HES)                                                                               
     "An Act relating to the Alaska temporary assistance program;                                                               
     and providing for an effective date."                                                                                      
This  was the first  hearing  for this  bill in  the Senate  Finance                                                            
Senator Green  indicated this legislation  allows the Department  of                                                            
Health and Social  Services to reduce benefits during  the months of                                                            
July, August and September  for two-parent families participating in                                                            
the Alaska  Temporary Assistance Program  (ATAP). She discussed  how                                                            
this relates  to out-dated  language from  the discontinued  welfare                                                            
assistance  program that was included  in ATAP when it was  created.                                                            
She assured,  "This is the  piece they need.  This is all they  need                                                            
this year" in order for the department to be in compliance.                                                                     
Co-Chair  Donley noted that  the Senate Health  and Social  Services                                                            
committee  substitute does  not include all  the items mentioned  in                                                            
the governor's transmittal letter. [Copy on file.]                                                                              
JIM NORDLUND,  Director, Division  of Public Assistance,  Department                                                            
of Health and  Social Services, testified  the committee  substitute                                                            
is  a  "stripped  down"  version  of  the  bill  introduced  at  the                                                            
beginning of the session.  He informed that the committee substitute                                                            
contains an "urgent"  provision that places the state  in compliance                                                            
with federal Temporary  Assistance for Needy Families (TANF) statute                                                            
that exempts  welfare  recipients  living in  certain Alaska  Native                                                            
villages from the 60-month limit on benefits.                                                                                   
[Teleconference equipment temporally interrupted the meeting.]                                                                  
Mr.  Nordland  explained  that other  provisions  contained  in  the                                                            
original  bill yet  removed from  the committee  substitute, have  a                                                            
deadline of June 2002 and could therefore be postponed.                                                                         
SFC 01 # 95, Side B 12:01 PM                                                                                                    
Mr.  Nordland  informed  the  Committee  that  the  other  remaining                                                            
provision  in the committee  substitute  is in response  to a  court                                                            
case challenging  statutory language, which had been  taken from the                                                            
laws governing  the previous public  assistance program,  but became                                                            
ambiguous  when  incorporated   in  the  ATAP  laws.  This  language                                                            
addressed   the  seasonal  reduction   of  benefits  to   two-parent                                                            
households. He described  the "carried over" language stipulates the                                                            
department must  identify the principal wage earner  in a family and                                                            
the employment status of that wage earner.                                                                                      
Mr. Nordland stressed the  legislative and Administrative intent was                                                            
to require  that  all two-parent  families,  with  the exception  of                                                            
those with one  parent disabled, should have their  benefits reduced                                                            
during the  summer months.  He explained the  rationale was  that in                                                            
two-parent  families, one  parent should  be able  to work and  also                                                            
because there  are more employment  opportunities during  the summer                                                            
season. However,  he continued, the  courts did not consider  intent                                                            
but rather  the "letter of  the law" and  ruled that the  department                                                            
had  failed  to  perform   and  eligibility  determination   of  the                                                            
principal wage earner and that parent's employment status.                                                                      
Mr. Nordland stated Section  2 of the committee substitute, "removes                                                            
that antiquated  law" and allows the  department to reduce  benefits                                                            
to all able-bodied two-parent families in the summer.                                                                           
Senator  Green offered  a motion to  move SCS CS  HB 142 (HES)  from                                                            
Committee  with   accompanying  Department  of  Health   and  Social                                                            
Services zero fiscal note.                                                                                                      
There was no objection and the bill MOVED from Committee.                                                                       
AT EASE 12:03 PM / 12:05 PM                                                                                                     
     SENATE CS FOR CS FOR HOUSE BILL NO. 193(JUD)                                                                               
     "An Act relating to the primary election and to the nomination                                                             
     of candidates for the general election; and providing for an                                                               
     effective date."                                                                                                           
REPRESENTATIVE  JOHN COHGILL, JR. shared that he has  been following                                                            
this bill since  it was heard in the House State Affairs  Committee,                                                            
which he chairs. He pointed  out the most substantive change made to                                                            
the governor's original  version of the bill is the insertion of "to                                                            
vote the  party's ballot  if the voter is  permitted by the  party's                                                            
bylaws"  in Section  3,  Subsection  b on  page 2,  line  21 of  the                                                            
committee substitute.  He expressed this, "is really  getting to the                                                            
heart of the issue."                                                                                                            
Representative  Coghill informed that the legislation  requires that                                                            
each political  party have  a primary election  ballot. He  compared                                                            
the  Senate  Judiciary  committee  substitute  to  the  House  State                                                            
Affairs committee  substitute and  alluded to differences  regarding                                                            
the inclusion of nonpartisan and undeclared party candidates.                                                                   
Representative  Coghill relayed that  the issue of filing  petitions                                                            
was raised in the Senate  Judiciary Committee and pertinent language                                                            
is contained  in  Section 5  on beginning  on page  3 of the  Senate                                                            
Judiciary  committee substitute.  He pointed  out the June  1 filing                                                            
date for candidacy  and that the petition certification  deadline is                                                            
the date of the primary election.                                                                                               
Representative  Coghill expressed the reason he was  presenting this                                                            
bill  was  due to  a  commitment  he  made to  the  House  Judiciary                                                            
Committee chair.                                                                                                                
Representative  Coghill emphasized,  "I really strongly believe…the                                                             
party should have the right  to select its primary candidate through                                                            
the  primary  election  selection  process."  He  stated  that  this                                                            
committee  substitute allows  the political  parties to chose  their                                                            
candidates,  and if  they so  choose, to  invite those  who are  not                                                            
affiliated  with their party. He said  the version of the  bill that                                                            
passed the  House of Representative  provided that the parties  must                                                            
include   the  undeclared   and  nonpartisans   unless  that   party                                                            
specifically chooses to exclude them.                                                                                           
Representative Coghill  opined that this legislation should follow a                                                            
United States  Supreme Court ruling  on California Democratic  Party                                                          
vs. Jones, giving the parties  the right to chose whether undeclared                                                          
and nonpartisans are included.  "However, I have to confess to you,"                                                            
he qualified,  "that I know  that my caucus,  the other side  of the                                                            
aisle, would  much rather  favor the mandated  open to the  'U's and                                                            
'N's and let the parties  exclude them if they so wish." He stressed                                                            
this is a policy call.                                                                                                          
Representative  Coghill  again spoke  to the  United States  Supreme                                                            
Court  case, which  resulted from  an initiative  pertaining to  the                                                            
blanket primary, and where  the court found that the blanket primary                                                            
is unconstitutional  and "the right  to association was given  then,                                                            
to the parties."                                                                                                                
Representative  Coghill emphasized  the Senate Finance Committee  is                                                            
the last forum to determine  whether the inclusion of undeclared and                                                            
nonpartisans  is  mandated  or  optional.    He stated  this  is  to                                                            
"protect  the party's  right  to associate  freely and  put forth  a                                                            
candidate  that  they so  chose."  He  noted  that the  House  State                                                            
Affairs  committee substitute  would also  be acceptable because  it                                                            
allows a political party to exclude.                                                                                            
Representative  Coghill  told how  the  political parties  could  be                                                            
required  to submit  their  by-laws to  the Division  of  Elections,                                                            
stating whether they would  include the undeclared and nonpartisans.                                                            
He noted another option  would be to default to exclusion unless the                                                            
political parties  specified otherwise.  He stressed that  he wanted                                                            
the Senate Finance  Committee to make this determination  because he                                                            
understood  that a  closed ballot  is "a  major policy  call in  the                                                            
State of Alaska."                                                                                                               
Representative  Coghill commented  that the  blanket primary  system                                                            
has not worked  well for the political party system.  He summarized,                                                            
"should  we allow the  parties to  chose their  own candidates?"  He                                                            
pointed  out  that  undeclared  and  nonpartisan  comprise  a  large                                                            
portion of voters  in the state. This legislation,  he stated, would                                                            
require these voters to  make a choice as to whether they wish to be                                                            
"involved in the  party or lobby the party to allow  them to vote on                                                            
their primary  ballot." He remarked, "I think that's  right. I think                                                            
that's proper."                                                                                                                 
Senator Wilken  asked if the Senate  Judiciary committee  substitute                                                            
excludes undeclared  and nonpartisan unless specifically  allowed in                                                            
the  political   party's  by-laws,   and  that  a  draft   committee                                                            
substitute,  prepared  by the  testifier,  includes  undeclared  and                                                            
nonpartisan unless specifically excluded in the party's by-laws.                                                                
Representative Coghill affirmed.                                                                                                
Senator  Wilken  established  that the  draft  committee  substitute                                                            
contains  similar  language as  the  House State  Affairs  committee                                                            
substitute, which passed the House of Representatives.                                                                          
Representative  Coghill  reaffirmed and  noted  the draft  committee                                                            
substitute  contains language  from the  Senate Judiciary  committee                                                            
substitute pertaining to petitions for candidacy.                                                                               
Senator Ward  asked if a  party could restrict  a member of  another                                                            
party from voting its ballot.                                                                                                   
Representative Coghill affirmed.                                                                                                
Senator  Hoffman  asked  how  voters  registered  as  undeclared  or                                                            
nonpartisan  would  vote in  the primary  if the  political  parties                                                            
decided to  exclude them.  He predicted some  would become  angry if                                                            
they could not participate in the primary election.                                                                             
Representative  Coghill agreed  and said this  is a policy  call. He                                                            
noted  that   undeclared  and  nonpartisan   voters  have   had  the                                                            
opportunity  to choose  candidates  from political  parties  without                                                            
joining  that party.  He read  from the  Supreme  Court ruling  "the                                                            
voters desire  to participate  does not become  more weighty  simply                                                            
because the  state supports it."   He continued reading,  "the voter                                                            
who feels himself disenfranchised  should simply join the party that                                                            
may  put  him to  a  hard  choice  but it  is  not  a state-imposed                                                             
restriction  upon  his  freedom, of  association  that  is…  Whereas                                                            
compelling  party members to accept  the selection of nominees  is a                                                            
state-imposed restriction upon theirs."                                                                                         
Senator Olson  asked about instances  where several candidates  from                                                            
one party have filed, but  few, if any have filed for another party.                                                            
He asked if there is a mechanism to address this.                                                                               
Representative  Coghill replied, "That's  what the general  election                                                            
process  is all about."  He stated  that one party  should have  the                                                            
right to select  from several candidates of its party  even if there                                                            
are no other candidates outside that party                                                                                      
AVRUM GROSS testified in  Juneau as chair of "a taskforce to rewrite                                                            
the state's  primary laws  after it became  clear that the  existing                                                            
law was  unconstitutional."  He listed the  taskforce membership  as                                                            
including  all the former  lieutenant governors  of the state,  both                                                            
Republican  and  Democrat,  and two  former  Attorneys  General.  He                                                            
described  the taskforce's  charge to draft  legislation  addressing                                                            
the matter.                                                                                                                     
Mr. Gross  detailed  the issues  was because  Alaska  had a  blanket                                                            
primary, which  he defined as one  ballot containing all  candidates                                                            
from all  political  parties and thus  allowing  voters to select  a                                                            
candidate from  any party for each office regardless  of the voter's                                                            
party  affiliation.  He  noted  that  the  U.S.  Supreme  Court,  in                                                            
California Democratic  Party versus Jones, ruled that  a party could                                                          
chose to restrict  the people who  could vote for its candidates  in                                                            
the  primary election.  He  informed  there has  to  be a  mechanism                                                            
whereby the state recognized  the desire of the parties to limit the                                                            
people who could participate in selecting its candidates.                                                                       
Mr.  Gross relayed  that  the  taskforce  heard testimony  from  the                                                            
political  parties, then  drafted a  law that was  "as close  to the                                                            
existing  law as we  could" and  yet incorporate  the Supreme  Court                                                            
decision. The  resulting legislation, he said, proposes  a "modified                                                            
blanket primary  law", which  provides that  a ballot lists  all the                                                            
candidates  from all  the parties  and  was available  to any  voter                                                            
unless a party  decided in its by-laws that it did  not wish certain                                                            
people to participate  in the selection of that party's  candidates.                                                            
Mr. Gross detailed  the taskforce's  recommendation to have  ballots                                                            
that  contain the  candidates  from all  parties not  excluded  by a                                                            
specific  political  party.  He  gave  an  example,  saying  if  the                                                            
Democratic  Party determined  that members  of the Republican  Party                                                            
should  not vote  for  their candidates,  no  Democratic  candidates                                                            
would  appear  on  the  ballot  available  for  Republican   voters.                                                            
However, he continued,  candidates from other political parties that                                                            
have not made  such a decision with regard to the  Republican Party,                                                            
would  appear  on  the ballot  available  to  Republican  voters  in                                                            
addition  to  the  Republican  candidates.  He  explained  that  all                                                            
ballots  would  contain  candidates  from  all  parties  except  for                                                            
ballots available  to a party in which another party  has determined                                                            
should not  be allowed to vote for  its candidates. In this  manner,                                                            
he said, candidates from  some parties could appear on more than one                                                            
Mr. Gross  surmised that  this method recognizes  the Supreme  Court                                                            
case,  by allowing  parties to  limit the  people who  vote for  its                                                            
candidates. However,  he pointed out, this does not  prohibit people                                                            
from voting  for candidates  of different parties  in some  races if                                                            
that party allowed  them to. He emphasized this retains  the blanket                                                            
Mr. Gross expressed the  taskforce's intent to encourage the maximum                                                            
amount of public  participation in  the primary election  process to                                                            
the  extent  that  parties  do  not  prohibit   it.  He  shared  the                                                            
taskforce's understanding  that the more races a voter is allowed to                                                            
participate  in, the more  encouraged they  would be to vote  in the                                                            
primary election.                                                                                                               
Mr. Gross told the Committee  that the version of the bill passed by                                                            
the  House  of Representatives   is no  longer  a  blanket  primary.                                                            
Instead,  he stated, the  House State Affairs  committee  substitute                                                            
establishes  a set of closed  primaries, each  party having  its own                                                            
ballot.  He pointed  out  that the  only voters  who  can receive  a                                                            
ballot are  members of the political  party or those who  that party                                                            
has  determined  are allowed  that  ballot.  He stressed  that  this                                                            
method  does  not   allow  nonpartisan  and  undeclared   voters  to                                                            
participate in  different primary races. He explained  that the only                                                            
candidates a nonpartisan  or undeclared voter can chose are from the                                                            
one party included on the  ballot. He added that this applies to all                                                            
Mr.  Gross  noted  the  governor   had  no  input  in  the  original                                                            
legislation  other than introducing  what  the taskforce drafted  to                                                            
the legislature.  He  stated, "We  thought a  closed primary  system                                                            
would  really shut  down the  process and  not encourage  people  to                                                            
participate."  He  remarked  that  even  with  the  current  blanket                                                            
primary system,  voter participation  has reduced  and as a  result,                                                            
"we were fundamentally  opposed-and I mean Republicans and Democrats                                                            
alike on this  commission, this isn't a partisan effort-  to setting                                                            
up  a  closed   primary.  That  was   the  universal  view   of  the                                                            
Mr. Gross asserted  the House State Affairs committee  substitute is                                                            
a "seriously  restricted  bill.  It changes  the  primary system  of                                                            
Alaska radically."  He stated  it is, "giving  parties control  over                                                            
the  system;  control  not  mandated   by  the  Supreme  Court."  In                                                            
addition,  he  said,  "This  is a  totally  different  concept."  He                                                            
expressed that  besides affecting  voter participation, "in  the end                                                            
the state sets up the process  by which candidates are nominated for                                                            
the general election.  If the state sets it up, it  should allow, it                                                            
seems to me, the  maximum number of citizens to participate  in that                                                            
process."  He  remarked   that  the  committee  substitute   instead                                                            
minimizes citizen participation  by discouraging their participation                                                            
in the primary  system. He stated,  "You can do this in the  name of                                                            
partisan  politics if  you want, but  at the same  time, the  voters                                                            
don't have any other way to make their views known."                                                                            
Mr. Gross  pointed  out that  over sixty  percent of  the voters  in                                                            
Alaska are  not registered  to a political  party. He stressed  that                                                            
the  task force  objected  to a  primary  system directed  only  for                                                            
political parties,  and that encourages voters to  join parties they                                                            
otherwise do not want to join.                                                                                                  
Senator  Austerman referenced  language  inserted to  Section  6, on                                                            
page 4, line  31 and page 5, lines  1 and 2 of the Senate  Judiciary                                                            
committee substitute. This language reads as follows.                                                                           
                (17) if the candidacy is for the office of the                                                                
     governor, the name of the candidate for lieutenant governor                                                              
     running jointly with the candidate for governor.                                                                         
     New Text Underlined                                                                                                      
Senator Austerman asked the witness to comment on this language.                                                                
Mr. Gross replied  that the taskforce  never addressed this  matter.                                                            
Representative  Coghill  noted  this  was not  included  in  earlier                                                            
versions  of  the  bill  and  that   he  had  no  knowledge  of  any                                                            
discussions  on the  matter. He  explained the  language relates  to                                                            
provisions  for  a candidate  seeking  nomination  by  petition  and                                                            
stipulates  that a gubernatorial and  lieutenant governor  candidate                                                            
are listed together on a filing petition.                                                                                       
Senator Ward  asked if undeclared  and nonpartisan voter  could vote                                                            
any ballot under this bill.                                                                                                     
Representative Coghill  responded that the parties would chose which                                                            
voters could  receive a ballot containing  that party's candidates.                                                             
Senator Wilken  asked which version of the bill Mr.  Gross supports.                                                            
Mr.  Gross  responded  he  supports   the  original  bill  that  was                                                            
introduced  by the governor in the  House of Representatives,  which                                                            
he pointed out is completely different than any version here.                                                                   
Co-Chair Kelly ordered the bill HELD in Committee.                                                                              
Co-Chair Pete Kelly recessed the meeting at 12:31 PM.                                                                           

Document Name Date/Time Subjects