Legislature(2017 - 2018)SENATE FINANCE 532
04/17/2018 09:00 AM Senate FINANCE
Note: the audio ![]()
and video ![]()
recordings are distinct records and are obtained from different sources. As such there may be key differences between the two. The audio recordings are captured by our records offices as the official record of the meeting and will have more accurate timestamps. Use the icons to switch between them.
| Audio | Topic |
|---|---|
| Start | |
| HB38 | |
| HB400 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | HB 38 | TELECONFERENCED | |
| + | HB 400 | TELECONFERENCED | |
| + | TELECONFERENCED |
SENATE FINANCE COMMITTEE
April 17, 2018
9:04 a.m.
9:04:29 AM
CALL TO ORDER
Co-Chair MacKinnon called the Senate Finance Committee
meeting to order at 9:04 a.m.
MEMBERS PRESENT
Senator Lyman Hoffman, Co-Chair
Senator Anna MacKinnon, Co-Chair
Senator Click Bishop, Vice-Chair
Senator Peter Micciche
Senator Donny Olson
Senator Gary Stevens
Senator Natasha von Imhof
MEMBERS ABSENT
None
ALSO PRESENT
Representative Andy Josephson, Sponsor; Megan Holland,
Staff, Representative Josephson; Marie Marx, Director,
Division of Workers' compensation Department of Labor and
Workforce Development; Scott Jordan, Director, Division of
Risk Management, Department of Administration; Cathy
Schlingheyde, Staff to Representative Kreiss-Tomkins; David
Tyler, Division of Fire and Life Safety, Department of
Public Safety.
PRESENT VIA TELECONFERENCE
Marianne Burke, Self, Anchorage; Kevin Dougherty, Self,
Eagle River.
SUMMARY
CSHB 38(FIN)am(efd fld)
WORKERS' COMP: DEATH;PERM PARTIAL IMPAIR
CSHB 38(FIN) was HEARD and HELD in committee for
further consideration.
HB 400 FEES FOR FIRE PREVENTION MEASURES
HB 400 was HEARD and HELD in committee for
further consideration.
CS FOR HOUSE BILL NO. 38(FIN) am(efd fld)
"An Act relating to the payment of workers'
compensation benefits in the case of permanent partial
impairment; relating to the payment of workers'
compensation death benefits payable to a child of an
employee where there is no surviving spouse; relating
to the payment of workers' compensation death benefits
for an employee without a surviving spouse or child;
and relating to notice of workers' compensation death
benefits."
9:05:36 AM
REPRESENTATIVE ANDY JOSEPHSON, SPONSOR, explained that it
was not unusual for members to get concepts for legislation
from random sources. He recalled that when he was first
elected he met an individual that had wanted him to propose
legislation to ban blue headlights. He discussed the
motivation for sponsoring HB 38, and referenced a 2014
email from a woman who had lost her daughter through an
electrical accident in Midtown Anchorage. The young woman
had died in the workplace, and the Occupational Safety and
Health Administration had fined the employer. The surviving
mother learned that there was no remedy for the family
above funerary expenses up to $10,000 because the deceased
was not married and had no dependent children.
Representative Josephson continued to discuss the genesis
of the bill. He informed that there were 13 to 15 states
that had specified that a death benefit should be paid to
single workers without children. The State of Louisiana was
the highest most generous state for survivor benefits, and
afforded a $140,000 death benefit. He clarified that the
bill addressed deaths at work, which were accidents and
could often occur because of negligence of an employer. He
stated that in the context of workers' compensation, the
issues of negligence and liability were dispensed.
Representative Josephson had been working on the bill for
about 4 years. He recounted that in the House Labor and
Commerce Committee the bill originally had a $130,000
benefit, which had then been reduced to $70,000 as
currently written in the bill. He thought it was important
to note that of the approximately 20 individuals that died
at work in Alaska per year, normally about 3 or 4 of the
individuals were single or childless workers. The total
that would be benefitted through the provision of the bill
was about $210,000.
9:09:53 AM
Representative Josephson continued to discuss his bill. He
did not think the single childless worker provision of the
bill was hugely fiscally impactful. He referenced the
National council on Compensation Insurance (NCCI), which
reviewed the legislation and had concluded that the bill
would only increase workers' compensation four tenths of
one percent in Alaska. In researching the legislation, the
sponsor had found that there was a provision in law that
had not changed since 1968, when it was determined that a
dependent (such as a parent with a disability) of a single
childless individual that died at work would be awarded
$20,000. Considering inflation, the amount would exceed
$100,000; but the bill established the payment as $100,000,
and the death benefit for a single childless person without
dependents was $70,000.
Representative Josephson wanted to give the committee a
sense of whether the proposed benefit amounts were
proportional. He used the hypothetical example of a young
parent with children that would (upon death) receive
approximately $850,000 in workers' compensation payments
over the ensuing years. He pointed out the disparity
between compensation for those with children and those
without. He summarized that the bill would create a death
benefit for single childless people.
Representative Josephson stated that the second more
expensive part of the bill would update the permanent and
partial impairment (PPI) benefit. Currently the state used
the value figure of $177,000; and used a percentage
calculation to determine the value of a loss of limb or
function. He used the example of an injured person that
experienced the loss of an arm. Under current law the
injured person would receive approximately $100,000. Under
the bill, such an individual would receive closer to
$150,000.
9:13:39 AM
Representative Josephson explained that the change would
not make Alaska the most generous state in the event of a
permanent or partial disability; but would put the state in
the average range rather than the bottom third. He
continued discussing the second provision of the bill. He
reiterated that the bill created a death benefit for single
childless people, increased the death benefit for
individuals with dependents other than children, and
increased the PPI.
Senator Stevens understood that under current law, it was
not possible to sue for wrongful death. He wondered if the
bill would open more possibilities for lawsuits.
Representative Josephson answered in the negative. He
relayed that there had been discussion in committee and on
the House floor about opening Title IV (the civil lawsuit
code) and allowing people suffering grievous injuries from
gross negligence to sue. The bill did not change the code,
but simply expanded (for a few people per year) a death
benefit that did not currently exist. He emphasized the
situation in which an unmarried childless person suffered
death at work (potentially through the fault of the
employer) and received no benefits beyond the exclusive
remedy of funeral coverage.
9:17:53 AM
MEGAN HOLLAND, STAFF, REPRESENTATIVE JOSEPHSON, discussed
the presentation "HB 38: WORKERS' COMPENSATION BENEFITS IN
THE CASE OFPERMANENT PARTIAL IMPAIRMENT AND DEATH" (copy on
file).
Ms. Holland informed that Section 1 of the bill named the
legislation in honor an individual that had died in the
workplace.
Ms. Holland turned to slide 3, "PERMANENT PARTIAL
IMPAIRMENT (PPI) INDEX CPI ADJUSTMENT":
Section 2
? AS 23.30.190(a), adjusts the Whole Person Value for
inflation
? Increase of 44.35% from $177,000 to $255,506
? This value was originally set at $135,000 in 1988,
and was last adjusted for inflation 18 years ago
? How are PPI benefits calculated?
? Percentage of disability x $177,000
? Percentage of disability determined by the
American Medical Association Guides to the
Evaluation of Permanent Impairment
Section 3
? Requires that the Whole Person Value used to
calculate PPI benefits be adjusted for inflation on an
annual basis
9:19:54 AM
Ms. Holland showed slide 4, "WHY INCREASE THE PPI INDEX?":
Inflation has degraded this value for 18 years
? Depending on the body part, Alaska ranks around the
30th percentile compared to other states
? The Alaska AFL-CIO unanimously passed a resolution
in 2016 asking the legislature to adjust this value
for inflation
Ms. Holland displayed slide 5, "NOTICE OF DEATH BENEFITS":
Section 4
? Requires that in the case of work-related death, the
employer must notify the personal representative of
the employee's estate of:
1. Compensation available
2. Statute of limitations for obtaining Workers'
Compensation benefits
3. Where to obtain legal and grief counselors
? Requires that the employer notify immediate family
members or dependents if the personal representative
is unknown
Ms. Holland that the requirements outlined in Section 4
were already standard practice.
Ms. Holland reviewed slide 6, "DEATH BENEFIT FOR
FINANCIALLY DEPENDENT FAMILY MEMBERS":
Section 5(4)
? If there is no surviving spouse or financially
dependent children, immediate family members are
eligible for a death benefit of 42% of spendable
weekly wages
? Capped at $20,000
? Has not been adjusted for inflation since 1968
? HB38 conservatively increases this value to
$100,000
? If adjusted for inflation, this value would
fall somewhere between $140,000-150,000
? Why raise the cap?
? $20,000 in wages cannot do in 2018 what it
did in 1968
Ms. Holland spoke to slide 7, "NEW DEATH BENEFIT":
Section 5(6)
? Creates a new death benefit in the case that the
deceased worker has no surviving spouse or children,
and no financially dependent family members
? Currently the only benefit provided to family
members of deceased workers of this type is up to
$10,000 in funeral costs
? $70,000 payable in a lump sum to a surviving parent
if there is one, $35,000 to each if there are two, or
$70,000 divided equally amongst all legal parents if
there are more than two.
? If there are no surviving parents, the estate of the
deceased would receive the $70,000 death benefit
? This amount was taken from a similar benefit
provided in the state of Louisiana
Ms. Holland detailed that there were 13 other states that
had a similar death benefit to what was being proposed in
the bill.
9:23:27 AM
Ms. Holland discussed slide 8, "WHY CREATE A DEATH BENEFIT
FOR WORKERS WITHOUT DEPENDENTS?"
? "Grand Bargain" of Workers' Compensation means
families cannot sue for wrongful death
? Families of all other types of workers receive some
sort of compensation
? 13 other states provide similar death benefits
? Their reason: remaining financial obligations often
follow unexpected death
? Nominal fiscal impact
? Provides a solution without compromising the
existing system of Workers' Compensation
WHY NOT OPEN THIS TO LITIGATION?
? Undermines foundational structure of our Workers'
Compensation system
? Lawsuit already allowed in cases with "intent to
harm"
? No other state allows litigation in Workers'
Compensation cases with gross negligence
? Unfair to employers who pay premiums for protection
against potential financial burden of lawsuit
? Benefits don't "flow" to dependent family members
? Jeopardizes both the stability of employers and
families of the deceased
Ms. Holland spoke to slide 9, "DEATH BENEFITS FOR CHILDREN
OF THE DECEASED":
Section 6
? Under current statute, children of deceased workers
are only eligible for benefits as long as they are
considered a child under AS 23.30.395(8)
? HB38 extends the eligibility for children of the
deceased worker to five years after the person is no
longer consider a child under AS 23.30.395(8)
? Why?
? Widow(er)s receive benefits for 12 years
following the death of the deceased employee
? A child of the deceased may receive benefits
for an incredibly short period of time
Ms. Holland discussed hypothetical scenarios concerning
death benefits for children of deceased workers, and the
need for Section 6 of the bill.
9:27:14 AM
Ms. Holland read slide 10, "FISCAL IMPACTS." She noted that
there were essentially two separate portions of the bill
with differing fiscal impacts.
Ms. Holland turned to slide 11, "PPI INCREASE":
? Increase in Whole Body Value for calculating PPI
payouts by 44.35%
? Based on a 10-year average, this is projected to
increased PPI payouts by $512,850
? Cost passed on via increased receipt authority to
the Division of Risk Management
? DVR would increase its payroll deductions
accordingly to garnish necessary funds
? Subsequent Increase in Second Injury Fund (SIF) fees
of $30,771
? SIF fees calculated as 6% of total benefits paid the
previous FY
? Increase of PPI benefits of $512,850 leads to
increase in second injury fund fees by 6% of $512,000,
or $30,771
? If the SIF were to be phased out, these fees would
continue to decrease until they ceased to be necessary
Ms. Holland directed attention to the fiscal notes and
discussed a projected increased payout of PPI benefits
(based off a 10-year average) which would amount to
$512,850. The cost would be passed on via receipt authority
to the Division of Risk Management, which would increase
its payroll deductions accordingly to cover the cost. She
noted that the bill would affect payouts to the Second
Injury Fund (SIF). The fund fees were calculated at 6
percent of the total benefits payed in the previous fiscal
year. The bill resulted in an increase of SIF fees of
approximately $30,000. She noted that the costs would
decrease if the SIF were phased out.
Representative Josephson referenced HB 79, legislation
which would end the Second Injury Fund (SIF).
Co-Chair MacKinnon asked for the sponsor to give a high
overview of the SIF.
Representative Josephson explained that the SIF created an
incentive to hire previously injured workers.
Vice-Chair Bishop echoed the comments of Representative
Josephson.
9:30:12 AM
Ms. Holland reviewed slide 12, "FATAL DEATH BENEFITS":
1. Death benefit for deceased workers without
surviving spouse, children, or financially dependent
family members:
? Difficult to determine cost by fiscal year can't
predict workplace deaths
? Only one state employee has died due to a work-
related injury in the past five years
? DRM could absorb costs associated with these deaths
due to their infrequency
2. Increase to benefit for financially dependent
family members and extension of eligibility for
children
? Zero fiscal impact
? Fiscal note states zero fiscal impact for fatal
death benefits
Ms. Holland considered that the fiscal impacts for the
death benefit change provision were nominal. She had spoken
with the Division of Risk Management about the newly
proposed death benefit and its potential fiscal impact.
Because workplace deaths were so infrequent, and the bill
only addressed those in the case of unmarried childless
individuals, the division would most likely be able to
absorb the costs of the new benefit without much fiscal
impact. If there were to be a spike in the specific type of
death addressed by the proposed benefit, the fiscal
ramifications would be different.
Senator von Imhof asked how the new provisions would
translate to increased rates for businesses if the bill
were to pass.
Ms. Holland had asked the Division of Workers' Compensation
to prepare a document [entitled " FY19 CORA Projection with
HB38 Additional PPI Cost Estimate] to reflect how increased
costs would be passed to respective departments to cover
the increase (copy on file). She furthered that the
increase was done based on the amount of personnel as well
as the frequency of injury claims. She reviewed various
projected increases for departments. She acknowledged that
the bill would increase the total cost of the system by
approximately 2.3 to 2.8 percent.
9:34:04 AM
Senator von Imhof thought Alaska was the fifth highest
workers' compensation premium state, and the bill would add
more to a very high-cost system. She thought workers'
compensation affected how and when businesses could hire
employees. She asked about a potential increase in monthly
payments.
Representative Josephson stated that NCCI had prepared an
analysis of the bill, which indicated that the combined
fiscal increase from the bill would be 2.3 percent to 2.8
percent. He emphasized that .4 percent was attributed to
the proposed increase in death benefits, and the vast
majority of the increase was contained in the proposed PPI
update. He referenced a supporting document that gave
information on the state's improving status (as a workers'
compensation provider) and the overall decrease in workers'
compensation cost.
Representative Josephson shared the concerns of the
committee regarding the expense of workers' compensation,
and thought it was impacted by the high cost of medical
care in the state for non-workers' compensation injuries.
He thought there was a belief with some merit that workers'
compensation patients could be very lucrative for doctors.
He referenced independent efforts (such as legislation) to
rein in some of the expenses and submitted that the bill
had merit beyond the considerations of expense.
Representative Josephson continued to address Senator von
Imhof's comments. He reminded that the proposed death
benefit provision only affected three families per year.
9:37:52 AM
Senator von Imhof expressed sympathy for the loss of a
child. She stated that she represented small business and
needed to consider things from its viewpoint. She discussed
the state's fiscal challenges. She mentioned the endeavor
to keep a fully funded Permanent Fund Dividend.
Vice-Chair Bishop requested a chart that showed the number
of deaths by occupation. He thought the committee might be
surprised to see the breakdown.
Representative Josephson thought that state employees in
the Department of Transportation and Public Facilities
represented 31 percent of total workers' compensation
claims, while the Department of Health and Social Services
represented almost 20 percent of claims. He mentioned
individuals working at the Alaska Psychiatric Institute
getting injured while working with patients. The Department
of Corrections represented 15 percent of claims; while
Department of Public Safety had almost 9 percent of claims,
which he thought was surprisingly low.
Vice-Chair Bishop appreciated the information but wanted
more information on workers' compensation in various
industries.
Ms. Holland recalled that the effective date had failed to
pass the House floor. The original version of the bill had
an effective date of January 1, 2019. If the legislation
were to pass the legislature, the bill would become
effective much sooner than originally intended, thereby
increasing costs.
9:42:02 AM
Co-Chair MacKinnon asked about the death of an individual
that was single and childless. She asked if the bill
proposed to divide a benefit of $70,000 between parents.
She asked if there was consideration of live-in partners
and other family members that might not be included in the
bill definitions.
Representative Josephson stated that because of increased
marriage freedom, consideration of live-in partners was
less of an issue. He recalled that former Governor Tony
Knowles had required medical coverage for same-sex
partners. He stated that under Title 13 (probate code), it
was possible for people to die with debt, which was a
factor considered in the development of the bill. The bill
would help the family pay debts of the deceased. In the
event that there was no surviving parent, the benefit would
work its way through probate and could possibly go to
siblings. He stated that the bill also worked to conform to
the Title 23 definition of parent. He discussed different
iterations of a parent respective to the deceased.
Co-Chair MacKinnon explained that she was referencing a
potential estrangement from parents, and the bill proposed
a benefit for parents over a chosen partner. She did not
think all the variables were being considered.
Co-Chair MacKinnon discussed the subject of naming
legislation after individuals. She discussed the emotional
content of public testimony and debate, and the challenge
of considering the ramifications of the legislation.
9:47:34 AM
Representative Josephson specified that the named portion
of the bill in Section 1 would be uncodified. He stated he
had not had exposure to the bill topic prior to being
contacted by the parent of a deceased single childless
worker. He reminded that the bill only affected 3 to 4
people per year that passed away at work. He thought the
PPI update was critical.
Representative Josephson thought it was difficult to have a
perfect system in the circumstance of estrangement of
families. He added that other states had similar laws as
the bill proposed with regard to death benefits for
parents.
9:49:17 AM
AT EASE
9:50:12 AM
RECONVENED
Ms. Holland asked to briefly address the subject of a death
benefit to parents of a single childless worker with no
dependent family members. She stated that there were four
options: one surviving parent would receive $70,000, two
surviving parents would each receive $35,000, three or more
legal surviving parents would equally divide $70,000, and
if there were no surviving parents the death benefit would
go to the estate of the deceased. She noted that there
could be an easy fix to the bill. In the State of Wisconsin
there was a similar death benefit, which accounted for
estrangement of parents.
Co-Chair MacKinnon referenced an occurrence in Juneau in
which a man lost his fianc?. She discussed hypothetical
scenarios in which individuals had non-married
relationships that could be more financially involved than
the parents that were designated for survivor benefits.
Co-Chair MacKinnon OPENED public testimony.
9:55:45 AM
MARIANNE BURKE, SELF, ANCHORAGE (via teleconference),
testified in support of the bill. She referenced her visit
to the capital the previous week. She relayed that her
daughter was a new electrical apprentice that had been
electrocuted due to her employer's negligence. She
referenced the United States Constitution and due process.
She lamented the lack of legal remedy for her daughter's
life. She thought HB 38 would give some remedy to families
that lost children to accident or negligence on the job.
She urged the committee to pass the bill.
9:59:58 AM
Ms. Burke addressed the proposed $70,000 death benefit. She
would have used funds to honor her deceased daughter. She
referenced Senator von Imhof's previous remarks about small
business. She asserted that businesses were not paying a
fair share. She stated she had met many injured workers
that were not being satisfactorily compensated.
Ms. Burke referenced Co-Chair MacKinnon's remarks about
extended family and domestic partners. She thought
immediate family was more affected by the death of an
individual. She did not feel she had received due process
for her daughter's death.
Co-Chair MacKinnon expressed sympathy and regret for Ms.
Burke's loss on behalf of the committee.
10:04:14 AM
KEVIN DOUGHERTY, SELF, EAGLE RIVER (via teleconference),
spoke in support of the bill. He noted that he had been
general counsel with the Alaska Laborers Union since 1981.
He was thankful that the rate of fatalities in the state
had decreased. He thought the previous testifier's comments
were valuable. He discussed the issue of single childless
deceased workers. He acknowledged that the committee needed
to consider the cost of the bill. He referenced a document
authored by the Division of Insurance that discussed the
decrease in approved premium rates (copy on file).
Mr. Dougherty referenced NCCI and its consideration of the
bill. He discussed workers' compensation coverage of
children and parents. He discussed Alaska probate law. He
thought it would be a mistake not to move forward with the
bill because of family definitions.
10:09:53 AM
Co-Chair MacKinnon mentioned a letter of support from the
AFL-CIO (copy on file).
Co-Chair MacKinnon CLOSED public testimony.
Co-Chair MacKinnon asked for a high-level overview of the
bill.
Ms. Holland addressed a Sectional Analysis of the bill
(copy on file):
Section 1: Provides that the act may be known as the
Abigail Caudle Act.
Section 2: Increases the base amount for calculating
the compensation for the permanent partial impairment
from $177,000 to $255,506.
Section 3: Provides that the director shall annually
adjust the PPI benefit for inflation.
Section 4: Requires that in the event that an injury
causes death, the employer is required to notify the
employee's personal representative of the compensation
available, the statute of limitations, and where to
obtain a list of legal counsel and grief counselors
who may be able to assist.
Section 5: Increases the maximum aggregate amount of
death benefits payable to parents, grandchildren, or
siblings dependent on the deceased at the time of
injury from $20,000 to $100,000. Adds a new paragraph
providing that in the event there is no surviving
spouse or children, and no eligible financial
dependents of the deceased at the time of injury, that
the amount of death benefits available will be
$70,000, and is payable in a lump sum to the parents
if they are alive, or to the estate of the decedent if
they are not.
Section 6: Extends the timeframe under which a child
of the deceased is eligible for death benefits from
until they are no longer considered a child, to five
years after the person is no longer considered a child
under AS 23.30.395(8).
Co-Chair MacKinnon asked if there was retroactivity in the
bill.
Ms. Holland answered in the negative.
10:13:47 AM
Senator von Imhof wanted to learn more about the "grand
bargain" under which families could not sue for wrongful
death, and the fact that no other states allowed for
litigation in workers' compensation cases for gross
negligence.
MARIE MARX, DIRECTOR, DIVISION OF WORKERS' COMPENSATION
DEPARTMENT OF LABOR AND WORKFORCE DEVELOPMENT, thought it
would be helpful to provide some history on workers'
compensation. She noted that severe injuries had increased
drastically during the industrial revolution. Injured
workers would sue and receive a high reward or receive
nothing. Employers were put out of business by significant
awards to the injured party. Subsequently, 50 states put
forth a contract to keep employers in business while
providing benefits to injured workers. Through workers'
compensation, injured workers receive prompt limited
benefits that cover medical costs, lost wages, reemployment
benefits (if eligible), and death benefits. There was no
allowance for pain and suffering or punitive damages. In
exchange, workers could not sue the employer and it was a
no-fault system.
Ms. Marx explained that the workers' compensation system
was set up to ensure that benefits flowed smoothly and
quickly to injured workers. She thought it worked well in
most cases. She noted that there were about 20,000 injuries
reported each year, and in the vast majority of cases the
benefits flowed to the injured worker. No states allowed to
sue for negligence but suing for intentional conduct was
allowed.
10:17:00 AM
Senator von Imhof asked about the situation of the
testifier when her daughter was electrocuted through
alleged negligence. She asked about a hypothetical scenario
under which the company did not change its policies and the
same negligence caused the death of another worker. She
wondered if a company would be able to continue unsafe
practices to the detriment of workers.
Ms. Marx stated that there were consequences outside of
workers' compensation that addressed employer's standards
of safety. She relayed that there were things in place to
incentivize employers to maintain safe work environments.
She reiterated that workers' compensation was a system of
benefits that was set up only to make sure an injured
worker received medical costs and lost wages and did not
put employers out of business.
Vice-Chair Bishop stated that if negligence was willful,
the matter was treated differently.
Senator von Imhof asked if there were consequences outside
workers' compensation to address negligence.
Ms. Marx answered in the affirmative.
Co-Chair MacKinnon stated that according to the previous
testifier there was not another recourse for her set of
circumstances. She was not sure of the particular set of
circumstances surrounding the loss of life.
Vice-Chair Bishop about the definition of adult under
Section 6.
Ms. Marx stated that the definition of child was defined in
the Workers' Compensation Act.
Vice-Chair Bishop asked at what age was a person no longer
a child.
Ms. Marx stated that unmarried dependent children received
benefits to age 19 or older while in high school or doing
their first four years of trade school, technical school,
or college. The time period could be longer if a child was
dependent through a disability.
10:21:08 AM
Co-Chair MacKinnon asked if the bill proposed to extend the
age up to 24 with the same caveats.
Ms. Marx answered in the affirmative.
Vice-Chair Bishop asked about the estimated cost to the
private sector.
SCOTT JORDAN, DIRECTOR, DIVISION OF RISK MANAGEMENT,
DEPARTMENT OF ADMINISTRATION, was not sure of the increase
would to the private sector.
Co-Chair MacKinnon stated that the committee wanted to
understand how the employer's workers' compensation
payments would be adjusted.
Vice-Chair Bishop agreed.
Ms. Marx stated that the price estimate discussed by the
committee was from NCII, which was an organization that
priced out changes to workers' compensation systems. She
relayed that NCII had priced out a 2.8 percent increase ($8
million total) for the entire bill including private and
public entities.
Co-Chair MacKinnon informed that there was a letter of
opposition in the member's packets (copy on file). She
asked members to reach out to small businesses in their
districts to get feedback.
Ms. Marx clarified that the estimated increase in the base
premiums was 2.8 percent.
Co-Chair MacKinnon stated that the committee would like to
understand the dollar amount impact to employers and how it
was calculated.
Vice-Chair Bishop wanted to illustrate that it was pennies
on the dollar for employee costs in the private sector.
Senator von Imhof stated that it was pennies on the dollar
currently, although Section 3 of the bill provided an
annual increase due to inflation. She thought a chart
reflecting the cost to employers would be helpful, with
consideration of the size of business and inflation. She
asserted that actions taken in the present would have
future consequences.
10:26:56 AM
Co-Chair Hoffman asked if it was true that it was not only
businesses that paid workers' compensation costs, but there
was a portion paid by the employee.
Ms. Marx relayed that workers' compensation was paid to
injured workers by self-insured employers and insurers.
Senator Olson asked if it was true that there were no
recoverable dollars for the family of the deceased in the
case of a death of a worker that was single and childless.
Mr. Jordan stated that the only benefit available for
single childless workers without dependents was a $10,000
funeral expense benefit.
Senator Olson expressed surprise that the statute had not
been changed previously.
Mr. Jordan thought workers' compensation was there to
compensate an employee for an injury; or in the case of a
death, to compensate the dependents of the worker. If there
were no dependents, there was no one to compensate.
10:29:36 AM
Vice-Chair Bishop reminded that no one went to work wishing
to not come home at the end of the day. He had been
severely injured on the job in 1975 and had survived the
injury with the aid of a co-worker.
Co-Chair MacKinnon thanked Vice-Chair Bishop for his story.
Co-Chair MacKinnon acknowledged that there was a balance
between families that suffered great losses and employers
that were trying to put people to work. She thought there
was reluctance to advance legislation because it could be
amended in any way on the floor. She discussed
collaboration and discussed the importance of working to
accomplish positive change.
10:32:53 AM
Co-Chair Hoffman asked what other states had done about
inflation in workers' compensation benefits.
Ms. Marx did not have information what other state statutes
provided for inflation. She offered to provide the
information at a later time.
Co-Chair MacKinnon drew attention to a packet of
information from the Legislative Research Division (copy on
file), which she thought might contain some research
information.
Co-Chair MacKinnon informed that the fiscal note was
inaccurate because the effective date of the bill had not
passed.
Co-Chair MacKinnon set the bill aside. She stated the
committee would work on a new fiscal note as well as issues
that were brought up in committee. She stated that proposed
amendments were due by the following day. She asked members
to inform her of concerns as early as possible. She stated
that she did not support the inflation-proofing concept,
for reasons stated earlier in the meeting. She was
concerned about costs inflating in future years.
CSHB 38(FIN) was HEARD and HELD in committee for further
consideration.
10:36:32 AM
AT EASE
10:37:18 AM
RECONVENED
HOUSE BILL NO. 400
"An Act relating to the collection of fees by the
Department of Public Safety for fire and explosion
prevention and safety services."
10:37:18 AM
Co-Chair MacKinnon informed that the committee was hearing
the bill for the first time.
CATHY SCHLINGHEYDE, STAFF TO REPRESENTATIVE KREISS-TOMKINS,
informed that the bill arose from a statutory
recommendation of the House Finance Subcommittee on the
Department of Public Safety, and was introduced as a House
State Affairs Committee bill. The bill tried to address
concerns in the Division of Fire Safety pertaining to
building inspections. The goal of the division was to
inspect all buildings every two years, however buildings
off the road system were being inspected every 3 to 5 years
due to insufficient travel funding. The bill would allow
the division to collect fees for the spectrum of services
it provided in order to help fund travel. Currently the
division could collect fees for building plan checks, but
not for building inspections or permitting for installation
of fire suppression systems.
Ms. Schlingheyde referenced Section 1 of the bill, which
gave authority to collect the fees, and Section 2 set up
the receipt authority to receive the funds.
Co-Chair MacKinnon asked about the frequency of building
inspections.
Ms. Schlingheyde relayed that the goal of the division was
to inspect buildings every two years.
Co-Chair MacKinnon asked if there was a list of needed
improvements created at the time of inspection. She
considered that building inspections every two years could
be burdensome. She asked how building owners were held
accountable after buildings were inspected.
DAVID TYLER, FIRE MARSHAL, DIVISION OF FIRE AND LIFE
SAFETY, DEPARTMENT OF PUBLIC SAFETY, stated that there was
accountability for building owners, but not to the degree
desired by the division. He discussed the inspection
process, which included a notice to correct and a timeline
if any deficiencies were found. He stated that the only
more severe actions available were a misdemeanor charge or
closing the building down. He stated that it was difficult
to get to remote areas for inspections, and second
inspections were even more difficult.
Mr. Tyler relayed that the division was trying to find more
efficient ways to verify that follow-up work had been done
without having to physically go to the building site. He
stated that the division's goal was 1,500 inspections per
year, and the division was responsible for approximately
3,000 buildings. He thought the division could complete
inspections for 500 buildings in 2018 due to travel
restrictions. In some cases, buildings had gone 6 to 8
years without being inspected, because of the remote
location.
10:41:53 AM
Co-Chair MacKinnon asked about the order to correct.
Vice-Chair Bishop observed that the insurance industry
should be concerned if inspections were not being completed
in a timely manner. He discussed liability.
Mr. Tyler wished there was more interest from the insurance
industry.
Co-Chair Hoffman asked why rural facilities were not
inspected. He wondered if the division had a rotating
schedule for inspections based on the area of the state. He
discussed equity. He thought the disparity should have been
addressed already.
Mr. Tyler asserted that the disparity had been addressed
and recounted that between 2001 and 2007, there had been
over $50 million worth of loss in public schools. He
referenced a fire in Hooper Bay, which was preventable and
started from kids played under the school. He recalled 76
fires during the time period. In 2008, the division had
received an increment to help with travel and had full
staffing. Over the following five years, there had been
$1.4 million worth of loss. Subsequently there were
vacancies and staffing issues, as well as travel cuts. He
stated that there was currently up to over $2 million per
year in fire loss. He wanted additional funding. He
recalled that the division had accomplished 1,300 to 1,400
inspections per year in its most successful period; and
numbers indicated the work was successful preventing fires.
10:45:42 AM
Senator Olson commented on the serious nature of fire in
rural Alaska, where there was not sufficient fire-fighting
capacity. He referenced financial losses, and a large fire
in Hooper Bay. He discussed a fire in Nome at the Polaris
Hotel, in which there was loss of life. He wondered how the
event could have been prevented.
Mr. Tyler stated that the division could have done more
follow up inspection. The division had known that the fire
alarm in the hotel was not functioning. The division had
issued an immediate order to correct and had been assured
that the matter had been corrected by the building owners.
The matter had not been corrected, but he was not able to
go into further detail. The division was taking legal
action on the matter and the case was currently in the
office of special prosecution.
Senator Olson commented that the issue brought up by Mr.
Tyler was very concerning. He referenced an amendment he
had offered to the operating budget, related to fire
prevention. The amendment had been defeated. He thought the
legislature was obligated to look at the possibility of
increasing the amount of funding for inspections to curtail
the loss of life and public facilities that would end up
being paid for by the state.
10:47:56 AM
Co-Chair MacKinnon OPENED public testimony.
Co-Chair MacKinnon CLOSED public testimony.
Vice-Chair Bishop asked if there were any independent third
parties that completed the same inspections as the
division, that would be acceptable to the division.
Mr. Tyler informed that there were companies that did
inspection work and maintenance on fire alarm systems and
fire suppression systems. The division permitted and
licensed the contractors and checked the work of the
contractors.
Co-Chair Hoffman referenced the Nome fire, and asked if it
would have been possible to use the fire chief in Nome to
ascertain whether the correction order had been followed
and completed.
Mr. Tyler stated that the division was working on a process
to work with the local fire authorities. The new system
would allow the division to use an outside company to work
with vendors to do fire inspections. The system would
provide for immediate information on compliance, with no
charge to the state or local communities.
10:50:29 AM
Senator Micciche asked if Mr. Tyler could provide
information on the role of local fire personnel, insurance
inspectors, fire marshals, and gaps he envisioned in the
system. He thought it would be helpful to have a longer
discussion.
Mr. Tyler stated that there was a deferral program for when
communities could complete inspections and fire
investigations. He listed communities (including Ketchikan,
Juneau, Anchorage, Fairbanks) that were participating. He
believed local government could do the work better than the
state could, and the state could do the work better than
the federal government. There was an annual fire building
officials' forum to discuss common issues, which was also
used for co-development process. He thought travel
restrictions were a big hole in the process.
Co-Chair MacKinnon stated the committee would not cover the
fiscal note due to lack of time.
Senator Stevens was distressed to learn of the losses in
public schools in 2001. He considered that raising fees
would only cost the state money. He asked if there was
prioritization of public schools over other structures.
Mr. Tyler stated that the division prioritized schools, and
other higher-risk occupancies (such as daycares, churches,
and community centers) when doing inspections.
Co-Chair MacKinnon asked if the fire marshal provided
notice before arriving to inspect a building.
Mr. Tyler stated that there was a pre-inspection form sent
ahead of time for building owners to consider. The goal of
the division was compliance rather than enforcement.
Co-Chair MacKinnon expressed a concern that the department
was left to itself to set the fees proposed in the bill.
She asked the department to provide a fiscal note that
correctly reflected the revenue.
HB 400 was HEARD and HELD in committee for further
consideration.
Co-Chair MacKinnon set the bill aside.
Co-Chair MacKinnon discussed the agenda for the afternoon.
ADJOURNMENT
10:55:16 AM
The meeting was adjourned at 10:55 a.m.