Legislature(2001 - 2002)

04/30/2002 09:46 AM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                     SENATE FINANCE COMMITTEE                                                                                 
                          April 30, 2002                                                                                      
                              9:46 AM                                                                                         
SFC-02 # 81, Side A                                                                                                             
SFC 02 # 81, Side B                                                                                                             
CALL TO ORDER                                                                                                               
Co-Chair Pete  Kelly convened the meeting at approximately  9:46 AM.                                                            
Senator Pete Kelly, Co-Chair                                                                                                    
Senator Jerry Ward, Vice Chair                                                                                                  
Senator Gary Wilken                                                                                                             
Senator Alan Austerman                                                                                                          
Senator Donald Olson                                                                                                            
Senator Lyda Green                                                                                                              
Senator Loren Leman                                                                                                             
Also Attending:  REPRESENTATIVE  PETE KOTT; JANE WINEINGER, Staff to                                                          
Senator Green; JERRY BURNETT,  Staff to Senator Green; ROBERT REGES,                                                            
Attorney representing the  Alaska Forest Association; DON ETHERIDGE,                                                            
AFL-CIO;   STEFANIE   MADSON,  Vice   President,   Pacific   Seafood                                                            
Processors   Association;    BARBARA   HUFF   TUCKNESS,    Director,                                                            
Governmental and  Legislative Affairs, General Teamsters  Local 959;                                                            
KRIS NOROSZ, Government Affairs, Icicle Seafoods;                                                                               
Attending via  Teleconference:  From Delta Junction:  PETER FELLMAN,                                                          
Staff to  Representative  John Harris; From  Fairbanks: JOHN  BROWN,                                                            
President,   Central  Labor  Council;   DON  LOWREY;  ED   FLANAGAN,                                                            
Commissioner,  Department of Labor  and Workforce Development;  From                                                            
Anchorage:  RICH MASTRIANO,  Director, Division  of Labor  Standards                                                            
and Safety, Department  of Labor and Workforce Development; Off-net:                                                            
ROBERT  WELLS,  Director, Division  of  Agriculture,  Department  of                                                            
Natural Resources                                                                                                               
SUMMARY INFORMATION                                                                                                         
SB 353-AGRICULT. PROG.COORDINATOR/ANIMAL FEED                                                                                   
The Committee  heard from the sponsor and the Department  of Natural                                                            
Resources.  A committee substitute  and an  amendment were  adopted.                                                            
The bill was held in Committee.                                                                                                 
SB 355-LET ME HELP ACCOUNT                                                                                                      
The Committee  heard  from the sponsor  and reported  the bill  from                                                            
HB 504-WAGES FOR WORKERS IN FISHERIES                                                                                           
The Committee  heard from the sponsor,  the Department of  Labor and                                                            
Workforce Development and  representatives from the seafood industry                                                            
and labor unions. The bill was held in Committee.                                                                               
     CS FOR SENATE BILL NO. 353(RES)                                                                                            
     "An Act relating to the labeling of animal and poultry feeds                                                               
     and to the agriculture program coordinator; and providing for                                                              
     an effective date."                                                                                                        
This  was the first  hearing  for this  bill in  the Senate  Finance                                                            
JANE WINEINGER, Staff to  Senator Green, testified this bill relates                                                            
to agricultural  programs  and creates an  Agricultural Coordinator                                                             
position within the Division  of Agriculture to oversee organic crop                                                            
inspections, feed labeling and noxious weeds.                                                                                   
Ms.  Wineinger  noted  Alaska  is  the only  state  without  a  feed                                                            
labeling  process and  that  currently some  feed  imports into  the                                                            
State contain  weed seeds.  She asserted Alaska  has a problem  with                                                            
noxious weeds,  although not as serious  as in other Western  states                                                            
that must spend  millions of dollars on eradication.  She instructed                                                            
how noxious weeds  impact the agriculture lands, railroad  right-of-                                                            
ways, and hunting lands.                                                                                                        
PETER FELLMAN,  Staff to Representative  John Harris, testified  via                                                            
teleconference  from Delta, that the  industry requested  assistance                                                            
in this matter.  He told that as the agriculture industry  has grown                                                            
in the  State, the issue  of noxious weeds  has increased;  however,                                                            
little funding has been provided to the Division of Agriculture.                                                                
Mr.  Fellman  informed  that  the  federal  government  changed  the                                                            
standards regarding  the definition of organic and  this legislation                                                            
would  update State  statutes to  match the  federal provisions.  He                                                            
stated the  Agricultural  Coordinator would  monitor the farmers  to                                                            
ensure they meet the organic standards.                                                                                         
Mr.  Fellman reiterated  Alaska  is  the only  state  that does  not                                                            
monitor the  labeling of feed. He  stressed that with the  outbreaks                                                            
of  mad  cow  disease,  feed  labeling  has  become   important.  He                                                            
expressed intent  to verify that feed producers in  Alaska are using                                                            
the  ingredients  they claim,  as  well as  ensuring  that  rendered                                                            
animal parts, which could include contaminants, are not used.                                                                   
Mr.  Fellman   listed  the   third  purpose   of  the  Agricultural                                                             
Coordinator to control  noxious and invasive weeds. He noted that in                                                            
the  previous  year,  funding  was secured  to  attempt  to  control                                                            
noxious and  advancing weeds. He specified  Canadian Sow  Thistle, a                                                            
hearty three  to six foot  tall rhizome plant  that is difficult  to                                                            
eradicate  and kills grass.  He noted the  plant has migrated  north                                                            
and is  present in  the Fairbanks  area. He  expressed concern  that                                                            
this weed would endanger native plant species.                                                                                  
Mr. Fellman  warned that addressing  the problem immediately  is the                                                            
only  way to  control  these  weeds without  expending  millions  of                                                            
dollars.  He indicated  efforts  have begun,  but  that a  statewide                                                            
coordination  is  necessary.  He also  spoke  of the  importance  of                                                            
documenting  the  presence  of  invasive  weeds  to  obtain  federal                                                            
funding to address the matter.                                                                                                  
Mr. Fellman admitted  the fiscal note is significant,  but cautioned                                                            
that if the  problems are not controlled  the long-term costs  would                                                            
be considerably higher.                                                                                                         
Senator Ward  moved to adopt  CS SB 353,  22-LS1663\J, as a  working                                                            
Senator Olson objected.                                                                                                         
Senator  Olson asked  the  number  of mill  feed operations  in  the                                                            
Mr. Fellman listed  three and noted Alaska Mill and  Feed has voiced                                                            
support of this legislation.                                                                                                    
ROBERT  WELLS,  Director, Division  of  Agriculture,  Department  of                                                            
Natural  Resources, testified  via  teleconference  from an  off-net                                                            
site  in Palmer  to note  there  might be  an additional  mill  feed                                                            
Senator Olson asked about input from other operators.                                                                           
Mr.  Wells answered  that  the only  business  that  has offered  an                                                            
opinion on this legislation has been Alaska Mill and Feed.                                                                      
Mr. Wells did not anticipate  any opposition from the manufacturers,                                                            
noting they  currently label products  in accordance to the  laws of                                                            
the State of  Washington. He assured  the Division "is committed  to                                                            
working  with  the  feed  producers,"   and  he  was  confident  the                                                            
Department  could establish an effective  working relationship  with                                                            
industry and  not impose onerous regulations  on the businesses.  He                                                            
emphasized the feed labeling  issue has arisen due to concerns about                                                            
rendering plants and the  contents of food fed to animals. He shared                                                            
that  the  Federal  Drug  Administration  has  indicated  the  State                                                            
Division  should have  greater participation  in  the monitoring  of                                                            
feed manufacturers.                                                                                                             
AT EASE 9:58 AM / 10:01 AM                                                                                                      
Senator Olson  stated his intent to  hear directly from industry  on                                                            
this legislation, as it  is their livelihood that is affected by the                                                            
feed they produce.                                                                                                              
Co-Chair Kelly  asked if Senator Olson had specific  objections with                                                            
the provision in the proposed committee substitute.                                                                             
Senator   Olson  had  no   specific  objection   to  the   committee                                                            
A roll call was taken on the motion.                                                                                            
IN FAVOR: Senator  Ward, Senator Wilken, Senator Austerman,  Senator                                                            
Green,  Senator  Hoffman, Senator  Leman,  Senator  Olson,  Co-Chair                                                            
Donley and Co-Chair Kelly                                                                                                       
OPPOSED: none                                                                                                                   
The motion PASSED (9-0)                                                                                                         
The committee substitute was ADOPTED as a working draft.                                                                        
Senator  Ward  expressed he  was  unsure  whether he  clarified  his                                                            
motion to adopt  the committee substitute as a working  document and                                                            
surmised this caused confusion.                                                                                                 
Senator  Hoffman understood  that  Senator Olson's  concern is  with                                                            
passing  this  bill  from Committee  without  input  from  the  feed                                                            
Co-Chair  Kelly announced  he would  hold the bill  in Committee  to                                                            
allow  members  an   opportunity  to  solicit  opinions   from  feed                                                            
Senator  Green  referenced  a University  of  Alaska  report  titled                                                            
"Strategic  Plan  for Noxious  and  Invasive  Plants  Management  in                                                            
Alaska".  She stressed did  not want the  weed situation to  advance                                                            
and become as serious as in other states.                                                                                       
Co-Chair  Kelly asked  if there  is a  similar bill  pending in  the                                                            
House of Representatives.                                                                                                       
Senator Green affirmed.                                                                                                         
Senator  Austerman asked  if this  legislation  also addresses  seed                                                            
products  imported to the  State for planting  and whether  it would                                                            
provide for  certification  of the absence  of noxious weed  seed in                                                            
these products.                                                                                                                 
Senator Green affirmed.                                                                                                         
Mr. Wells  furthered that  the Division  "encourages" that  imported                                                            
seed be certified. He understood  that feed labeling requirements in                                                            
other states require disclosure  of purity and germination rates. He                                                            
noted that farmers are  "pretty cautious" about the seeds planted to                                                            
avoid weed infestation in their fields.                                                                                         
Senator  Leman commented  he is  "skittish" about  adding new  State                                                            
positions,  especially  those established  in statute.  However,  he                                                            
understood the  necessity of this position and the  importance of it                                                            
serving an  advisory function  rather than  having the authority  to                                                            
close an industry.  He hoped this position could be  shared with the                                                            
University   of  Alaska,   Cooperative  Extension   Service,   Plant                                                            
Materials Center,  to allow maximized  resource and minimized  cost.                                                            
He expressed intent to pursue this option.                                                                                      
Amendment  #1:  This  amendment  provides  that Section  7  of  this                                                            
committee substitute,  which stipulates  that this legislation  does                                                            
not apply to meat,  fish or poultry, take effect July  1, 2002. This                                                            
amendment also  inserts a new Section 14 to provide  that Section 8,                                                            
AS 03.60.006.  Agriculture  program  coordinator,  of the  committee                                                            
substitute take effect January 1, 2003.                                                                                         
Senator Leman moved for adoption.                                                                                               
There was no objection and the amendment was ADOPTED.                                                                           
Co-Chair Kelly suggested  Senator Olson communicate with Mr. Fellman                                                            
regarding  his concerns  about the  impacts of  this legislation  on                                                            
industry. Co-Chair Kelly  appreciated Senator Olson's considerations                                                            
for their interests.                                                                                                            
Co-Chair Kelly ordered the bill HELD in Committee.                                                                              
     SENATE BILL NO. 355                                                                                                        
     "An Act establishing an account in the general fund to receive                                                             
     general gifts, donations, and bequests to the State of                                                                     
This  was the first  hearing  for this  bill in  the Senate  Finance                                                            
JERRY  BURNETT,   Staff  to  Senator  Green,  testified   this  bill                                                            
establishes  a new account  in the  general fund  titled the  Let Me                                                            
Help Account  to allow  those who  want to pay  taxes, or  otherwise                                                            
increase State  revenues, to contribute. He noted  the funds donated                                                            
to the State of Alaska  would be treated as a charity and deductible                                                            
from federal taxes.                                                                                                             
Senator  Ward asked if  the bill  contains a provision  to allow  an                                                            
applicant  for a  permanent  fund dividend  to donate  the  dividend                                                            
directly to the State treasury  by an indication on the application.                                                            
Mr. Burnett replied  that currently there is not,  that the dividend                                                            
check  must  be  received  then donated.  He  noted  this  has  been                                                            
discussed, as  well as a provision that would transfer  funds to the                                                            
Let  Me Help  Account  in  the  amount  of the  dividends  of  those                                                            
qualifying residents who do not apply for a dividend.                                                                           
Senator  Leman liked  the idea. He  relayed a  conversation at  West                                                            
High School whereby students  expressed to him that they would forgo                                                            
dividends  for the benefit  of the  school and  their education.  He                                                            
stated  that he produced  a basket  to collect  dividend checks  and                                                            
announced he would  forward the funds to the Department  of Revenue.                                                            
He informed that at the  end of this gathering, the basket contained                                                            
no checks.  He opined, however, that  he is supportive of  providing                                                            
an opportunity for those who wish to contribute.                                                                                
Senator  Leman  asked  if  these  funds  when  appropriated  by  the                                                            
legislature would  be considered general funds or  receipt supported                                                            
Mr. Burnett replied  the funds would be transferred  from the Let Me                                                            
Help  Account  to the  general  fund. He  pointed  out  that if  the                                                            
legislature  appropriated the funds  before this transfer  occurred,                                                            
they could be accounted as non-general funds.                                                                                   
Senator Green  explained the reason she sponsored  this legislation.                                                            
She told of  varying correspondence  she receives requesting  either                                                            
significant  taxation  no taxation,  and she  realized  there is  no                                                            
consensus  on the  issue.  She asserted  that  if donators  wish  to                                                            
designate  the contribution  for education,  medical care,  or other                                                            
specific services, this option should be available.                                                                             
Senator  Olson  asked if  there  is a  limit of  how  much could  be                                                            
Senator Green thought the amount would be limitless.                                                                            
Mr. Burnett clarified there  are limits to the amount that qualifies                                                            
for federal tax  credit. He understood this amount  to be 50 percent                                                            
of gross annual  income. However,  he assured that any amount  could                                                            
actually be contributed.                                                                                                        
Senator Olson clarified the donators could designate the funds.                                                                 
Mr. Burnett corrected  that the bill does not currently  provide for                                                            
Senator  Green offered  a motion  to "move  Senate Bill  355 out  of                                                            
Committee with individual recommendations."                                                                                     
Without  objection SB  355 with  Department of  Administration  zero                                                            
fiscal note, dated 4/10/02, MOVED from Committee.                                                                               
     CS FOR HOUSE BILL NO. 504(FIN) am                                                                                          
     "An Act relating to the wages of people working in the                                                                     
     fisheries business."                                                                                                       
This  was the first  hearing  for this  bill in  the Senate  Finance                                                            
[This legislation  authorizes certain  seafood processors  to deduct                                                            
room  and board  expenses  from employees'  salaries  under  certain                                                            
REPRESENTATIVE  PETE KOTT  testified  this legislation  would  "go a                                                            
long way" help the "ailing"  fishing industry in that it would allow                                                            
fish  processors  operating  in  remote  areas,  to  "penetrate  the                                                            
minimum wage".  He explained this  would require a union-negotiated                                                             
contract between  the employer and the employee in  an amount not to                                                            
exceed  $15 per day,  and the employee  must work  minimum of  eight                                                            
hours before the deduction could be made.                                                                                       
Representative  Kott gave a history  of this issue beginning  with a                                                            
statute written  in 1959, which stipulates  that on an occupational                                                             
basis, the  Department [which  department  is not specified,]  could                                                            
allow employers  to pay salaries below  the minimum wage.  He stated                                                            
this has been  applied to cannery  workers when, in accordance  with                                                            
federal regulations, alternative public housing is available.                                                                   
Representative  Kott  pointed   out  that  in  many  remote  seafood                                                            
processor   locations,  alternative   housing   is  not   available.                                                            
Therefore,  he stated this legislation  would "in essence…  redefine                                                            
occupation"  in  that it  clarifies  whether  an  employee  is in  a                                                            
"remote" or "non-remote" position.                                                                                              
Representative  Kott opined this legislation  "has brought  fairness                                                            
back to the  table". He reminded that  seafood processors  operating                                                            
in  a non-remote  area  has the  ability to  deduct  room and  board                                                            
expenses from employees' salaries.                                                                                              
Representative  Kott noted  that debate on  this legislation  in the                                                            
House of Representatives  established  that a charge of $15  per day                                                            
for room  and board in  seafood processing  camps is reasonable.  He                                                            
stated  the  employer could  deduct  a  higher  amount if  it  could                                                            
demonstrate that  a higher amount is "more reasonable."  However, he                                                            
predicted the  employers would not undertake the effort  required to                                                            
make such a demonstration.                                                                                                      
Senator Wilken  asked if premiums  are paid to employees  working in                                                            
remote locations.                                                                                                               
Representative  Kott did not think  so, although he deferred  to the                                                            
seafood processor representatives.  He understood salary is based on                                                            
market  factors. He  surmised  that most  employees  who select  the                                                            
remote  locations  do so  to ensure  "they are  not  engaged in  any                                                            
extra-curricular activities  where they might spend their earnings,"                                                            
as their purpose  is to work as many  hours as possible to  earn the                                                            
highest amount possible.                                                                                                        
Senator Wilken  asked if other industries  in Alaska practice  this.                                                            
Representative Kott understood  the other industries that are exempt                                                            
from the  Wage and  Hour Act are  listed in statutes,  and that  the                                                            
seafood processor industry  does not have a total exemption. He knew                                                            
of no other  industry located  in remote areas  that pays workers  a                                                            
salary below the minimum  wage, with the exception of a housecleaner                                                            
working at a remote lodge.  He commented that loggers, guides, etc.,                                                            
are usually paid higher salaries.                                                                                               
Senator  Wilken  asked  what entity  would  make  the determination                                                             
whether an  employer could deduct  more than $15 for room  and board                                                            
per day.                                                                                                                        
Representative  Kott answered the Department of Labor  and Workforce                                                            
Development through a formal application process.                                                                               
Senator  Olson shared  that he  had worked  a "slime  line" to  earn                                                            
money  for  college.  He  asked what  provisions  are  made  for  an                                                            
employee  who might  chose other arrangements,  such  as "live  in a                                                            
tent next to the  facility." He remembered that some  facilities did                                                            
not have enough housing for all employees.                                                                                      
Representative  Kott predicted that  most processors would  "want to                                                            
take care of their  employees." He spoke of the free  market and the                                                            
intent for  the employee  to remain with the  same employer  for the                                                            
duration of the season.  He stressed that processors compete against                                                            
each  other  and that  $15  is  the maximum  amount  that  could  be                                                            
deducted  and suggested  that actual  rates could  be significantly                                                             
lower. He  agreed an employee  could forgo  the employer's  food and                                                            
lodging and sleep in a tent.                                                                                                    
Senator Olson  noted the competitive nature is primarily  the market                                                            
price. Therefore,  he did  not agree there  is a competitive  nature                                                            
that would benefit the employees.                                                                                               
Representative  Kott  replied  that  an employer  must  hire  enough                                                            
employees  in the  event of  a large "run".  He stated  that if  the                                                            
amount of seafood received  in an area were inadequate, the employer                                                            
would relocate  the workers  to another area  experiencing  a higher                                                            
harvest.  He  described seafood processing  employees as  wanting to                                                            
work  and make  as  much money  in  as short  a  period  of time  as                                                            
possible  as  well  as  having  an  opportunity   to  visit  Alaska.                                                            
Therefore,  he  surmised  potential  employees  would  consider  the                                                            
salary  and room  and board  deductions  offered  by each  employer,                                                            
which he stated is the competition.                                                                                             
Senator  Austerman furthered  the  competitiveness  is due to  short                                                            
fishing  seasons  and  the need  to  staff  all  seafood  processing                                                            
facilities  during the  same period  of time. He  predicted that  if                                                            
salmon prices  rebounded,  employers would  not charge for  room and                                                            
board because  of the competitive nature of obtaining  and retaining                                                            
Senator Wilken addressed  the fiscal note and asked the savings this                                                            
legislation would provide for seafood processors.                                                                               
Representative  Kott estimated  "in the millions  of dollars"  given                                                            
the  proposal  to  increase  the  State's  minimum  wage.  He  again                                                            
deferred to representatives  of the seafood processing  industry for                                                            
more precise figures. He  relayed that in conversations with seafood                                                            
processors and through  his research in the issue, he learned that a                                                            
few of  the processors  would go  out of business.  He stressed  the                                                            
"biggest  looser"  in these  cases  are the  communities  where  the                                                            
facilities are located because of the loss of the tax base.                                                                     
ROBERT REGES,  Attorney, testified  on behalf  of the Alaska  Forest                                                            
Association,  that this  legislation  does not  distinguish  between                                                            
rural and urban work locations  with the exception of positions paid                                                            
below  the  minimum  wage.  He  understood  the  necessity  of  this                                                            
legislation, as the proposed  room and board deductions would reduce                                                            
an employee's wage below  the statutory minimum amount. He noted the                                                            
logging industry  deducts room and board expenses  from the salaries                                                            
of its employees  working in remote locations; however,  he stressed                                                            
these deductions  do  not impact minimum  wage as  the workers  earn                                                            
higher salaries.                                                                                                                
Mr.  Reges expressed  concern  about  testimony presented  in  other                                                            
legislative  committees  by the Department  of  Labor and  Workforce                                                            
Development,  which  "suggests  that  the  urban/rural  distinction                                                             
exists even if  the deduction does not penetrate the  minimum wage."                                                            
 He pointed out  that neither State statute nor federal  law provide                                                            
such a rural/urban distinction.                                                                                                 
Mr. Reges asserted  that this legislation  is not inappropriate  for                                                            
those industries  that pay workers  a minimum wage, but stressed  it                                                            
should  not  create   an  urban/rural  distinction.   He  asked  the                                                            
Committee to "set  the record straight" on this issue.  He clarified                                                            
he does not request changes to the bill.                                                                                        
Mr. Reges cited  a poll conducted by the Alaska Forest  Association,                                                            
and concluded  that the practice of charging a nominal  fee for room                                                            
and board in the camps  has been a historical practice and currently                                                            
is "virtually universal".  He furthered that during a review of this                                                            
matter, he  talked to "all  the other industries  in the State"  and                                                            
found that  at one time,  Southeast Stevedoring  had taken  room and                                                            
board deductions  in remote locations and that currently  surveyors,                                                            
fishery workers and loggers pay toward room and board expenses.                                                                 
Senator Leman  noted the witness was  given the opportunity  to "set                                                            
the record  strait" regarding the  intent that this legislation  not                                                            
impact  the forestry  industry,  which he  just did.  Senator  Leman                                                            
therefore   surmised  it   not  necessary   for  the  Committee   to                                                            
specifically do so.                                                                                                             
SFC 02 # 81, Side B                                                                                                             
Senator Olson asked if the witness favors or opposes the bill.                                                                  
Mr. Reges reiterated that  although Alaska Forest Association is not                                                            
directly impacted  by this fisheries-related  legislation,  there is                                                            
concern by the precedent it could establish.                                                                                    
DON ETHERIDGE,  AFL-CIO of Alaska,  testified in Juneau against  the                                                            
bill. He  explained the  organization's position  that the  industry                                                            
should  not  attempt  to  meet its  "bottom  line  on  the  workers,                                                            
especially  the workers that are just  barely scrapping by  now." He                                                            
realized this legislation  resulted from pending efforts to increase                                                            
the minimum wage.  However, he pointed out that because  legislation                                                            
to increase  the minimum wage has  not passed, this bill  should not                                                            
Senator Wilken  asked if this bill  would go into affect  regardless                                                            
of whether separate legislation  to increase the minimum wage passes                                                            
the Legislature this session.                                                                                                   
[An unidentified speaker answered yes.]                                                                                         
STEFANIE  MADSON,   Vice  President,   Pacific  Seafood   Processors                                                            
Association,   testified   in  Juneau   and  described   the   trade                                                            
association  and its 11 members.  She noted  the Association  had 13                                                            
members  the prior year  but that  a salmon  processor operating  in                                                            
Larson Bay  has ceased operations,  and a "floater", which  operated                                                            
in Bristol  Bay and the  Aleutian Islands,  has chosen to remain  in                                                            
Seattle for the season.                                                                                                         
Ms.  Madson relayed  the Association  has  been contacted  by  State                                                            
agencies  and  some  legislators,   asking  what  efforts  could  be                                                            
undertaken  to assist the seafood  industry. She listed tax  credits                                                            
as one consideration, but  noted a business must first be profitable                                                            
in  order  to pay  taxes.  She  informed  that  other  options  were                                                            
considered,  but dismissed  due to  the significant  expense to  the                                                            
State. She asserted however,  that this legislation would be "a tool                                                            
in the tool  box" for processors to  react to market conditions  and                                                            
to the "changing nature of the seafood industry."                                                                               
Ms.  Madson  compared  this  tool to  requests  made  by  commercial                                                            
fishers  to authorize  the  formation  of associations  to  purchase                                                            
commercial fishing permits  from fishers. She qualified that neither                                                            
tool would  be utilized by all of  the seafood processors  or all of                                                            
the commercial fishers,  but stressed the option would be available.                                                            
She  was unsure  of  the number  of seafood  processors  that  would                                                            
utilize  the room  and board  deduction  authorization  and to  what                                                            
extent  it  would be  used.  She reiterated   Representative  Kott's                                                            
assertions regarding the  competitive nature of employee recruitment                                                            
for seafood processors.                                                                                                         
Ms.  Madson noted  this  bill has  been amended  to  insert the  $15                                                            
maximum  daily deduction  and the  provision that  an employee  must                                                            
work a minimum  of eight hours each  day the deduction is  made. She                                                            
stated  these   changes  resulted   from  concerns  raised   by  the                                                            
Department of Labor and  Workforce Development about the possibility                                                            
of employees  earning  a "zero  paycheck working  for the  so-called                                                            
company store".                                                                                                                 
Ms. Madson pointed out  many industries have been exempted from wage                                                            
and hour  mandates,  including:  shrimp pickers,  many agricultural                                                             
positions,  baby-sitters,  workers on  fishing  vessels, and  at-sea                                                            
seafood  processors.  Therefore,  she surmised  this legislation  is                                                            
not a "red herring"  and is rather a "correction to  what we believe                                                            
is an inequity in regulations."                                                                                                 
Ms. Madson addressed concerns  voiced about the distinction of wages                                                            
paid to workers  operating in remote  and non-remote locations.  She                                                            
asserted, "The  seafood industry cannot  be described with  the same                                                            
adjectives."  She listed  the differences in how the various seafood                                                            
processors operate:  a salmon processor operating  only in Southeast                                                            
Alaska; a salmon processor  with facilities located in many areas of                                                            
the  State,  some remote  and  some  non-remote;  or a  ground  fish                                                            
processor operating  in the Aleutian  Islands that does not  process                                                            
salmon.  She furthered  that each  company  handles transportation,                                                             
laundry facilities, medical  expenses, and other issues differently.                                                            
She noted the  "package" of an employer  is designed to attract  and                                                            
retain employees,  and that an employee  accepts a package  based on                                                            
the needs of that employee.                                                                                                     
Ms.  Madson emphasized  the  seafood  processors industry  is  labor                                                            
intensive  and employs  many workers.  She  added it  is one of  the                                                            
remaining industries with  entry-level positions available for those                                                            
with  no education  or  work  history  to develop  skills  that  are                                                            
transferable to other industries.                                                                                               
Ms.  Madson shared  that the  Association's  goal  is to  contribute                                                            
further to the  State's economy by developing value-added  products.                                                            
She cautioned this would  be difficult to accomplish if the industry                                                            
is not  provided the  necessary  tools that  provide flexibility  to                                                            
adopt operations to the changing market needs.                                                                                  
Ms.  Madson  maintained   that  commercial  fishers   would  not  be                                                            
adversely  impacted  by this  legislation,  although  she could  not                                                            
guarantee  they would  be  paid higher  amounts.  She asserted  this                                                            
matter is a processor issue, not a harvester issue.                                                                             
Senator Wilken  repeated his earlier  question regarding  the amount                                                            
the seafood processors  would save if this legislation were adopted.                                                            
Ms. Madson estimated the  amount to be "in the millions" of dollars,                                                            
noting  the  cost of  a  minimum  wage  increase  would be  tens  of                                                            
millions  of dollars to one  of the largest  seafood processors,  as                                                            
indicated  in written  testimony  provided  to the  House Labor  and                                                            
Commerce   Committee  [copy   not  provided].   She  qualified   the                                                            
ramifications  are unknown  and exampled the  deduction of  room and                                                            
board expenses  from federal taxes.  She stated, "So we're  not sure                                                            
exactly what  the benefit  will be other than  we know we need  some                                                            
tools to help  us get through this  difficult time." She  offered to                                                            
report to the  Legislature in the future, how the  industry has been                                                            
able to "take advantage" of the provisions in the legislation.                                                                  
Senator Wilken  asked if this legislation would be  implemented this                                                            
Ms.  Madson replied  that  because  the hiring  process  is  already                                                            
underway to recruit workers  for the Summer 2002 fishing season, the                                                            
new  provisions would  not  be implemented  until  the January  2003                                                            
Co-Chair  Kelly clarified  this legislation  is not linked  to other                                                            
legislation  that increases  the minimum wage  because of  potential                                                            
legal  issues. He  reminded  that a  ballot initiative  proposes  to                                                            
increase the minimum  wage. He suggested this bill  could be held in                                                            
the Senate Rules Committee  to allow the Senate Finance Committee to                                                            
hear the minimum wage legislation.                                                                                              
Co-Chair  Donley agreed  with the  witness that  there are  numerous                                                            
exemptions to the minimum  wage laws, many of which he concluded are                                                            
"archaic" and  some are "bad public policy". Therefore,  he asserted                                                            
it is unacceptable  to argue in favor  of this legislation  based on                                                            
the existence  of other exemptions. He opined that  this bill should                                                            
"rise or  fall on its own  merit and not based  on the fact  that we                                                            
have a mucked-up, messy existing law."                                                                                          
BARBARA  HUFF  TUCKNESS,  Director,  Governmental   and Legislative                                                             
Affairs,  General  Teamsters  Local  959, referred  a  letter  dated                                                            
4/29/2002,  from Gerald  Hood, Secretary-Treasurer  [copy on  file].                                                            
She explained the Teamsters  and AFL-CIO are on record opposing this                                                            
legislation,  although few seafood  processor employees are  members                                                            
of either  labor  organization, because  the  organizations have  an                                                            
interest  in  the  conditions  of  all workers  in  the  State.  She                                                            
stressed  that from  a  political and  corporate  perspective,  this                                                            
legislation establishes  a position regarding a multi-million dollar                                                            
industry,  with   many  owners  residing  out  of   the  State.  She                                                            
understood salmon  catch numbers are reduced, but  pointed out other                                                            
fisheries, such  as Pollock harvests, have increased.  She urged the                                                            
Committee  to consider  the message  sent to  minimum wage  workers,                                                            
"that even  though you're  going to be working  16 hours a day  on a                                                            
slime line,  if you're lucky to get  that many hours…" She  disputed                                                            
statements  that the majority  of these workers  are "college  kids"                                                            
from the Lower 48, citing  information provided by the Department of                                                            
Labor  and  Workforce Development   indicating  the average  age  of                                                            
workers in this field is 30 years.                                                                                              
Ms.  Tuckness noted  that  with a  collective  bargaining  agreement                                                            
process, there  is the opportunity to renegotiate  in a few years if                                                            
an employer  is experiencing  financial difficulty.  She added  that                                                            
the employer must  provide proof as to the financial  situation. She                                                            
remarked that  this legislation instead  establishes this  provision                                                            
into law.                                                                                                                       
Ms.  Tuckness requested  the  Committee  consider other  options  to                                                            
assist  the  seafood  processing   industry  "if  indeed  there  are                                                            
problems."  She disagreed that taking  deductions from minimum  wage                                                            
workers is appropriate action.                                                                                                  
JOHN  BROWN,  President,   Central  Labor  Council,   testified  via                                                            
teleconference from Fairbanks  against this legislation. He asserted                                                            
it is  wrong of industry  to ask  those who are  least able  to help                                                            
i.e., workers paid the minimum wage.                                                                                            
DON LOWREY, Business  Representative, [organization  name inaudible]                                                            
testified  via teleconference  from Fairbanks  in opposition  to the                                                            
bill. He  remarked that  workers in  the fishing  industry are  hard                                                            
working, many have families,  and that it would be wrong for them to                                                            
"loose  money"  by  working  in rural  locations.  He  surmised  the                                                            
companies "should  feel blessed" that people are willing  to work in                                                            
remote locations.                                                                                                               
RICH MASTRIANO,  Director, Division  of Labor Standards and  Safety,                                                            
Department  of  Labor  and  Workforce  Development,   testified  via                                                            
teleconference  from  Anchorage  that  he  is  available  to  answer                                                            
ED  FLANAGAN,  Commissioner,  Department   of  Labor  and  Workforce                                                            
Development   testified  via   teleconference   from  Fairbanks   to                                                            
"strenuously"  opposite the bill,  as it is "bad public policy".  He                                                            
disagreed with  the sponsor's testimony regarding  the intent of the                                                            
first Alaska  State Legislature in  1959 in establishing  the Alaska                                                            
Wage and  Hour Act. While  he agreed the  statute provides  that the                                                            
Department "may develop  regulations that would govern the deduction                                                            
of  room and  board  on an  occupation  basis,"  he pointed  out  no                                                            
regulations   were   adopted   during   the   eight   gubernatorial                                                             
administrations,  three political  parties  and 12 commissioners  to                                                            
support such a deduction  in remote locations. He noted the offer of                                                            
room  and board  provisions  is to  the  benefit of  the  operators,                                                            
because  if room and  board were  not available,  there would  be no                                                            
workers.  He also agreed  that in 1985 regulations  were enacted  to                                                            
establish a  process for the deduction  of room and board  expenses;                                                            
however,  it "codified the  practice of the  Department" to  exclude                                                            
remote locations with no alternative housing available.                                                                         
Mr. Flanagan qualified  that the Department's position  is that room                                                            
and board expenses  in remote locations should not  be deducted from                                                            
workers' salaries  regardless of whether the worker  earns a minimum                                                            
wage. He informed  that Mr. Reges and the Alaska Forest  Association                                                            
is involved  in lawsuit, which would  determine the legality  of the                                                            
Department's position.                                                                                                          
Mr.  Flanagan  stressed   that  certain  seafood  and  agricultural                                                             
positions are specifically  exempted from minimum wage laws with the                                                            
intent  to   protect  seafood-processing   workers.  He   noted  the                                                            
processors   would  benefit  from   the  proposed  room   and  board                                                            
deductions by  millions of dollars and pointed out  this money would                                                            
come from  the lowest  paid workers.  He asserted  that in the  year                                                            
1999, 19,784  people were employed  in Alaska as "cannery  workers",                                                            
and that 6,350  of these were Alaska residents with  a median age of                                                            
32 years.  Therefore,  he asserted  the sub-minimum  wage would  not                                                            
only be inflicted on guest workers.                                                                                             
Mr. Flanagan  spoke  of efforts by  the Department  and the  seafood                                                            
processing  industry  to increase  the  number of  Alaska  residents                                                            
employed in  the industry. He appreciated  this, but disapproved  of                                                            
this legislation that would  "help the industry on the backs of some                                                            
of the lowest paid workers in the State."                                                                                       
Mr. Flanagan  expressed  concern with  the expressed  intent of  the                                                            
House Labor and Commerce  Committee that this legislation be enacted                                                            
immediately to  allow processors to implement the  deductions in the                                                            
current year.  He noted the minimum  wage increase would  not yet be                                                            
in effect,  and the salary  of workers currently  earning $5.65  per                                                            
hour would be reduced to $4.65 per hour or less.                                                                                
Mr. Flanagan  addressed  the competition  for  employees,  surmising                                                            
that  if the  salmon  prices  increased,  the processors  would  not                                                            
discontinue  the room and board deductions.  He pointed out  that as                                                            
prices increase,  the fishers, processors  and the communities  earn                                                            
more; however, the cannery workers are paid the same low wages.                                                                 
KRIS  NOROSZ,  Government Affairs,  Icicle  Seafoods,  testified  in                                                            
Juneau about  the US-owned  company founded  in Petersburg  in 1965.                                                            
She supported  the bill as it is an  extension of "the current  tool                                                            
that  we have"  to deduct  room  and board  expenses  in  non-remote                                                            
locations.  She pointed out the language  is permissive rather  than                                                            
Ms. Norosz commented  on Mr. Flanagan's statement  that this bill is                                                            
"riding on  the backs of  the lowest paid  worker." She told  of her                                                            
employment  history  with the  company  and the  reduced  retirement                                                            
benefits and  bonus payments that  are made at the upper  management                                                            
level first  and to entry-level  workers last.  She spoke about  the                                                            
position  of the  chief executive  officer  that  every employee  is                                                            
important in  making the company successful  and she noted  he began                                                            
working for the company in an entry level position.                                                                             
Ms. Norosz  stated the  seafood processing  industry is competitive                                                             
and that it  is expensive to replace  workers mid-season,  therefore                                                            
it behooves  processors to  provide incentives  to retain  employees                                                            
for the entire season.                                                                                                          
Co-Chair Kelly  asked the average amount workers have  earned at end                                                            
of a season.                                                                                                                    
Ms. Norosz  responded the  amount varies  depending on the  fishery,                                                            
such as salmon or crab.                                                                                                         
Co-Chair  Kelly  asked  the example  given  to  potential  employees                                                            
during recruitment.                                                                                                             
Ms. Norosz estimated $5,000.                                                                                                    
Co-Chair Kelly asked the length of the season.                                                                                  
Ms. Norosz  answered  the season in  Petersburg  begins in June  and                                                            
concludes the end of August.                                                                                                    
Ms.  Madson  clarified   the  Department  of  Labor  and   Workforce                                                            
Development   estimates  of   13,000  seafood   processor   workers,                                                            
indicates the amount to be approximately $7,000.                                                                                
Co-Chair  Kelly pointed  out this is  for three  months of work  and                                                            
asserted it  is therefore unfair to  claim that this legislation  is                                                            
"doing anything on the backs of the lowest paid workers."                                                                       
Senator  Leman referenced  earlier testimony  that  the cost of  the                                                            
minimum  wage increase  would be millions  of dollars  and that  the                                                            
impact of this  legislation would  be millions of dollars.  He asked                                                            
if this  legislation  does not  pass, whether  adjustments would  be                                                            
made to the  price paid to fishers  to account for the minimum  wage                                                            
increase paid to cannery workers.                                                                                               
Ms. Norosz replied,  "I guess what I've been trying  to point out is                                                            
that I don't think  there's any more fat to cut."  She noted that in                                                            
locations  where processors  are authorized  to make room and  board                                                            
deductions, the amounts  deducted do not cover the cost. She pointed                                                            
out  that  minimum  wage  earners  in non-seafood   processing  jobs                                                            
located in Anchorage  and other non-remote locations  must "still go                                                            
home and feed  themselves." She predicted it would  be difficult for                                                            
these  workers to  provide  three  to four  hot meals  of  unlimited                                                            
choices and amounts of food at a cost of $15 per day.                                                                           
Senator Leman  was equally  concerned about  fishers seeking  a fair                                                            
price. He noted that of  all reductions made by Icicle Seafoods, the                                                            
witness failed to list the reduced prices paid to fishers.                                                                      
Ms. Norosz responded  that adjustments have been made  to the prices                                                            
paid to fishers and to services provided, including tenders.                                                                    
Co-Chair Kelly asked if  gloves and raingear are provided to seafood                                                            
processing workers.                                                                                                             
Ms.  Norosz  answered  that  Icicle  Seafood   provides  this  gear,                                                            
although she was unsure about other companies.                                                                                  
Co-Chair  Kelly listed the  benefits to  seafood processing  workers                                                            
paying $15  for three meals  and rent, and  receiving gear,  whereas                                                            
workers  in  other  fields  must  purchase   room,  board  and  gear                                                            
Co-Chair  Kelly expressed  intent  to address  separate legislation                                                             
relating to the minimum wage.                                                                                                   
Co-Chair Kelly ordered the bill HELD in Committee.                                                                              
Co-Chair Pete Kelly adjourned the meeting at 11:16 AM                                                                           

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