Legislature(2001 - 2002)

03/22/2002 09:38 AM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                              MINUTES                                                                                         
                     SENATE FINANCE COMMITTEE                                                                                 
                          March 22, 2002                                                                                      
                              9:38 AM                                                                                         
                                                                                                                                
                                                                                                                                
TAPES                                                                                                                       
                                                                                                                                
SFC-02 # 40, Side A                                                                                                             
                                                                                                                              
CALL TO ORDER                                                                                                               
                                                                                                                                
Co-Chair Pete  Kelly convened the meeting at approximately  9:38 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 Alan Austerman                                                                                                          
Senator Donald Olson                                                                                                            
Senator Lyman Hoffman                                                                                                           
                                                                                                                                
Also  Attending:   REPRESENTATIVE  FRED  DYSON;  DEBORAH  GRUNDMANN,                                                          
Staff to  Senator Ben Stevens;  PAUL GROSSI,  Director, Division  of                                                            
Workers'   Compensation,   Department   of   Labor   and   Workforce                                                            
Development                                                                                                                     
                                                                                                                                
Attending  via  Teleconference:     There  were  no  teleconference                                                           
participants.                                                                                                                   
                                                                                                                                
SUMMARY INFORMATION                                                                                                         
                                                                                                                                
HB 349-AGENCY PROGRAM AND FINANCIAL PLANS                                                                                       
                                                                                                                                
The  Committee   heard  from  the  sponsor.  The  bill   moved  from                                                            
Committee.                                                                                                                      
                                                                                                                                
SJR 38-CONST AM: PRIORITY OF EXPENDITURES                                                                                       
                                                                                                                                
The Committee heard from  the sponsor of HB 349. The bill moved from                                                            
Committee.                                                                                                                      
                                                                                                                                
SCR 29-HIRING FREEZE                                                                                                            
                                                                                                                                
The  Committee   heard  from  the  sponsor.  The  bill   moved  from                                                            
Committee.                                                                                                                      
                                                                                                                                
SJR 37-CONST AM: HIRING FREEZE                                                                                                  
                                                                                                                                
The  Committee   heard  from  the  sponsor.  The  bill   moved  from                                                            
Committee.                                                                                                                      
                                                                                                                                
SB 299-WORKERS' COMPENSATION BOARD PANELS                                                                                       
                                                                                                                                
The Committee  heard from  the sponsor and  the Department  of Labor                                                            
and Workforce Development.  An amended amendment was adopted and the                                                            
bill moved from Committee.                                                                                                      
                                                                                                                                
SB 338-INELIGIBILITY FOR PFD/ CRIME VICTIMS COMP                                                                                
                                                                                                                                
The Committee  heard from  the sponsor. A  committee substitute  was                                                            
adopted and the bill moved from Committee.                                                                                      
                                                                                                                                
                                                                                                                                
     HOUSE BILL NO. 349                                                                                                         
     "An Act relating to agency programs and financial plans."                                                                  
                                                                                                                                
                                                                                                                                
This was  the second  hearing for  this bill in  the Senate  Finance                                                            
Committee.                                                                                                                      
                                                                                                                                
REPRESENTATIVE  FRED DYSON commented that nothing  has changed since                                                            
the previous  meeting except  that he has  become more convinced  of                                                            
the "wisdom" of the Administration prioritizing budget requests.                                                                
                                                                                                                                
Representative  Dyson  reminded of  Senator Wilken's  suggestion  to                                                            
rate  priorities  in categories  rather  than a  "strict"  numerical                                                            
ranking of all department activities, which he supported.                                                                       
                                                                                                                                
Representative  Dyson  also supported  the  proposed constitutional                                                             
amendment  that   would  allow  the  Legislature  to   enforce  this                                                            
legislation.                                                                                                                    
                                                                                                                                
Co-Chair  Donley offered a  motion to report  HB 349 from  Committee                                                            
with a  zero fiscal note  from the Office  of Management and  Budget                                                            
for all state agencies.                                                                                                         
                                                                                                                                
Without objection the bill MOVED from Committee.                                                                                
                                                                                                                                
                                                                                                                                
     SENATE JOINT RESOLUTION NO. 38                                                                                             
     Proposing amendments to the Constitution of the State of                                                                   
     Alaska    relating    to   information    regarding    proposed                                                            
     expenditures.                                                                                                              
                                                                                                                                
                                                                                                                                
This  was the  first  hearing  for  this resolution  in  the  Senate                                                            
Finance Committee.                                                                                                              
                                                                                                                                
Co-Chair  Kelly  noted  this  constitutional  amendment  allows  the                                                            
previous bill, HB 349, to be implemented.                                                                                       
                                                                                                                                
Representative   Dyson  relayed  his  experiences   serving  on  the                                                            
Anchorage  Assembly where  a similar  prioritization  process  is in                                                            
use.  He noted  this  process  was never  codified  in  law, but  is                                                            
nonetheless effective and had been "greatly refined".                                                                           
                                                                                                                                
Representative  Dyson shared  discussions on  this legislation  with                                                            
Annalee McConnell,  former  leader of the  budget department  in the                                                            
Municipality  of  Anchorage  and current  director  of  the  state's                                                            
Office  of Management  and Budget.  He noted they  talked about  the                                                            
process employed  in the Municipality,  whereby the budget  analysts                                                            
were required  to calculate  the "exact cost  of every component  of                                                            
every  output  of every  department."  He  relayed  Ms. McConnell's                                                             
concerns  that these  efforts were  wasted for  those programs  that                                                            
were of either  very high priority, and would not  be eliminated, or                                                            
low priority and would  not receive funding. He countered there is a                                                            
benefit for the legislative  body to know the cost of all operations                                                            
regardless   of  whether   those  functions   were  considered   for                                                            
reductions.                                                                                                                     
                                                                                                                                
Senator Ward  asked how the items  in the Municipality of  Anchorage                                                            
budget are prioritized.                                                                                                         
                                                                                                                                
Representative  Dyson  replied  that the  services  and outputs  are                                                            
ranked from most valuable to least valuable by the departments.                                                                 
                                                                                                                                
Senator Olson  asked about  transferring this  method from  a single                                                            
municipality to the state, which has more complexity.                                                                           
                                                                                                                                
Representative  Dyson  replied   this  principal  is  universal,  is                                                            
practiced   by  individuals   and  businesses,   and  is   therefore                                                            
reasonable to expect of the state.                                                                                              
                                                                                                                                
Representative Dyson noted  the municipality system identifies those                                                            
expenditures   that   are  statutory   required,   those  that   are                                                            
constitutionally  mandated,  and those  that are  supported by  user                                                            
fees.  He suggested  the state  employ  this method  as well.  These                                                            
functions, he stressed,  would become higher priorities. He stressed                                                            
his  intention  is not  to  "take  a sledgehammer  or  meat  cleaver                                                            
approach" but rather one that is thoughtful and rational.                                                                       
                                                                                                                                
Senator  Austerman asked  what timeframe  would be  provided to  the                                                            
Administration   to  allow   this  prioritization   process   to  be                                                            
undertaken within the normal budget cycle.                                                                                      
                                                                                                                                
Co-Chair Kelly  responded this constitutional amendment  only allows                                                            
the  Legislature  the authority  to  require the  Administration  to                                                            
perform  prioritization.  He  stated  that  statutes  would  be  the                                                            
appropriate  venue to provide  for an implementation  timeframe.  He                                                            
anticipated  statutory  changes would  be necessary  to "refine  the                                                            
process".                                                                                                                       
                                                                                                                                
Senator Green offered a  motion to report SJR 38 from Committee with                                                            
a $1,500 fiscal  note from the Office  of the Governor, Division  of                                                            
Elections.                                                                                                                      
                                                                                                                                
The bill MOVED from Committee without objection.                                                                                
                                                                                                                                
                                                                                                                                
     SENATE CONCURRENT RESOLUTION NO. 29                                                                                        
     Relating to urging the Governor to institute a hiring freeze                                                               
     on state government.                                                                                                       
                                                                                                                                
                                                                                                                                
This  was the  second  hearing for  this  resolution  in the  Senate                                                            
Finance Committee.                                                                                                              
                                                                                                                                
Co-Chair  Kelly  noted  this resolution  would  implement  a  hiring                                                            
freeze  identical to  one implemented  in  1999. He  was unsure  the                                                            
effects of the  earlier freeze, but stressed it is  reasonable for a                                                            
governor  to  implement  a  hiring  freeze  when  there  are  budget                                                            
difficulties similar to the current situation.                                                                                  
                                                                                                                                
Co-Chair  Kelly   mentioned  a  similar   hiring  freeze   currently                                                            
occurring in the  State of Washington and noted other  Governors are                                                            
implementing similar hiring freezes.                                                                                            
                                                                                                                                
Co-Chair  Kelly commented  that the current  Administration,  in the                                                            
face of budget  gaps, has actually proposed increasing  expenditures                                                            
and has not  made an adequate effort  to manage the budget  problem.                                                            
                                                                                                                                
Co-Chair Kelly  referenced a 1999  press release issued by  Governor                                                            
Tony Knowles  when  he implemented  the earlier  hiring freeze,  and                                                            
articles   from  the  Seattle   Post  Intelligence   regarding   the                                                            
Washington State hiring freeze [copies on file.]                                                                                
                                                                                                                                
Senator Green offered a motion to report SCR 29 from Committee.                                                                 
                                                                                                                                
There was no objection and the bill MOVED from Committee.                                                                       
                                                                                                                                
                                                                                                                                
     SENATE JOINT RESOLUTION NO. 37                                                                                             
     Proposing an amendment to the Constitution of the State of                                                                 
     Alaska relating to officers and employees of the executive                                                                 
     branch.                                                                                                                    
                                                                                                                                
                                                                                                                                
This  was the  first  hearing  for  this resolution  in  the  Senate                                                            
Finance Committee.                                                                                                              
                                                                                                                                
Co-Chair  Kelly testified  this constitutional  amendment gives  the                                                            
Legislature authority to  "cross the separation of powers lines" and                                                            
direct the Executive  Branch to implement a hiring  freeze. He noted                                                            
this would  not affect the current  Governor, but could be  utilized                                                            
by future legislatures during budget shortfalls.                                                                                
                                                                                                                                
Co-Chair  Kelly spoke  to the use  of hiring  freezes during  budget                                                            
crises by "managers  all over the  world" and "governments  all over                                                            
the country".                                                                                                                   
                                                                                                                                
Senator Ward  offered a motion to  move from Committee, SJR  37 with                                                            
$1,500  fiscal note  from the Office  of the  Governor, Division  of                                                            
Elections.                                                                                                                      
                                                                                                                                
Without objection the bill MOVED from Committee.                                                                                
                                                                                                                                
                                                                                                                                
     SENATE BILL NO. 299                                                                                                        
     "An  Act  relating  to  the  establishment   of  an  additional                                                            
     southcentral  panel to the Alaska  Workers' Compensation  Board                                                            
     and  to  appointments  to  that panel;  and  providing  for  an                                                            
     effective date."                                                                                                           
                                                                                                                                
                                                                                                                                
DEBORAH GRUNDMANN, Staff  to Senator Ben Stevens, Chair of the Labor                                                            
and Commerce Committee,  testified this legislation  would amend the                                                            
Workers'  Compensation Act  to provide for  an additional panel  for                                                            
the Alaska Workers' Compensation  Board in the "southcentral venue".                                                            
She referenced a map of the affected area [copy on file.]                                                                       
                                                                                                                                
Ms. Grundmann  stated this  legislation is  necessary to allow  more                                                            
hearings to occur in that  area of the state and subsequently reduce                                                            
the  "lag time"  between the  date  a worker  files a  claim, and  a                                                            
hearing date.  She noted it would  also relieve a growing  caseload.                                                            
                                                                                                                                
Senator  Leman  asked  if these  hearing  panels  function  for  the                                                            
duration of one  hearing then disband, or whether  they are standing                                                            
committees that address multiple cases.                                                                                         
                                                                                                                                
PAUL   GROSSI,  Director,   Division   of   Workers'  Compensation,                                                             
Department of Labor and  Workforce Development, explained the panels                                                            
are comprised  of  members of the  Workers'  Compensation Board.  He                                                            
detailed how  the members are appointed  by the Governor,  confirmed                                                            
by the Legislature and serve a term of office.                                                                                  
                                                                                                                                
Senator Olson  asked how this legislation would benefit  the "common                                                            
worker", aside from timely resolution of claims.                                                                                
                                                                                                                                
Mr. Grossi  answered  the worker  benefits from  decisions  rendered                                                            
sooner.   He   noted  this   also   benefits   employers   in   that                                                            
administrative  and  legal  expenses  are incurred  over  a  shorter                                                            
period  of time and  additionally  benefits the  Department in  that                                                            
fewer resources  are necessary. He explained this  legislation would                                                            
impact the disputed cases.                                                                                                      
                                                                                                                                
Senator  Olson spoke  to the high  cost of  workers compensation  to                                                            
employers.  He asked if  small businesses  and small municipalities                                                             
would be adversely impacted financially by this legislation.                                                                    
                                                                                                                                
Mr. Grossi  replied  this legislation  would have  no impact  on the                                                            
panel.  He stated that  if the time  lag were  reduced, the  overall                                                            
costs would be somewhat reduced as well.                                                                                        
                                                                                                                                
AT EASE 10:00 AM / 10:25 AM                                                                                                     
                                                                                                                                
Amendment  #1  as AMENDED:  This  amended  amendment  deletes  "take                                                            
effect"  and  inserts "be  made"  and  deletes  "July 1,  2002"  and                                                            
inserts "January  1, 2003" on page  2, line 6. The amended  language                                                            
reads as follows.                                                                                                               
                                                                                                                                
          TERMS AND INITIAL APPOINTMENTS. (a) The governor shall                                                                
     expeditiously    make   initial   appointments   to   the   new                                                            
     southcentral  panel of the Alaska Workers' Compensation  Board,                                                            
     authorized  by sec. 1 of this Act. The appointments  made under                                                            
      this subsection may not be made before January 1, 2003.                                                                   
                                                                                                                                
This amendment also deletes  Sections 3 and 4, relating to effective                                                            
dates, on page 2, lines  14 and 15 and inserts a new bill section to                                                            
read as follows.                                                                                                                
                                                                                                                                
          Sec. 3. This Act takes effect January 1, 2003.                                                                        
                                                                                                                                
Senator Leman  offered a friendly amendment the original  amendment,                                                            
which did not include "take"  in language to be deleted from page 2,                                                            
line 6. He moved for adoption of the amended amendment.                                                                         
                                                                                                                                
Without objection the amended amendment was ADOPTED.                                                                            
                                                                                                                                
Senator  Wilken  spoke  as  a  business  operator,   stressing  that                                                            
workers' compensation  is one of the  most expensive aspects  of his                                                            
business.  He  expressed   he  would  do  whatever  he  could  as  a                                                            
legislator to make the  workers' compensation process more efficient                                                            
and less  burdensome, while  also recognizing  that injured  workers                                                            
must be compensated.                                                                                                            
                                                                                                                                
Senator  Green  offered  a motion  to  move  CS  SB 299  (FIN)  from                                                            
Committee with  $5,000 fiscal note from the Department  of Labor and                                                            
Workforce Development.                                                                                                          
                                                                                                                                
The bill MOVED from Committee with no objection.                                                                                
                                                                                                                                
                                                                                                                                
     SENATE BILL NO. 338                                                                                                        
     "An  Act  making   certain  individuals  convicted   of  crimes                                                            
     ineligible  for  permanent   fund  dividends  and  relating  to                                                            
     certain   payments  of  compensation  from  the   crime  victim                                                            
     compensation fund; and providing for an effective date."                                                                   
                                                                                                                                
                                                                                                                                
This was  the second  hearing for  this bill in  the Senate  Finance                                                            
Committee.                                                                                                                      
                                                                                                                                
Co-Chair Donley spoke to  a proposed committee substitute to address                                                            
language   in  the   original  bill   that  he   was  informed   was                                                            
unconstitutional relating  to the Child Support Enforcement Division                                                            
in the Department of Revenue.  He explained the committee substitute                                                            
provides  that  the  Division  retains   access  to  permanent  fund                                                            
dividends of those Alaskans who owe child support.                                                                              
                                                                                                                                
Co-Chair Donley  moved for adoption  of CS SB 338, 22-LS1190\S  as a                                                            
working draft.                                                                                                                  
                                                                                                                                
Senator  Green clarified  that Section  10 is  current practice  and                                                            
would not be  perceived as the Legislature  "taking money"  from the                                                            
Division.                                                                                                                       
                                                                                                                                
Co-Chair  Donley affirmed  and explained  this is  the same  process                                                            
applicable  to  funds "reprogrammed"  from  convicts'  dividends  to                                                            
Alaska  Council on  Domestic  Violence and  Sexual  Assault and  the                                                            
Victims' Compensation Fund.                                                                                                     
                                                                                                                                
Co-Chair  Donley  anticipated new  fiscal  notes for  the  committee                                                            
substitute.                                                                                                                     
                                                                                                                                
Co-Chair  Donley offered  a motion to  report CS  SB 338 (FIN)  from                                                            
Committee  with forthcoming  fiscal  notes  from the  Department  of                                                            
Administration,  Department  of  Education  and  Early Development,                                                             
Department  of Law, Department of  Public Safety, and Department  of                                                            
Revenue.                                                                                                                        
                                                                                                                                
The bill MOVED from Committee without objection.                                                                                
                                                                                                                                
ADJOURNMENT                                                                                                                 
                                                                                                                                
Co-Chair Pete Kelly adjourned the meeting at 10:32 AM                                                                           

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