Legislature(2007 - 2008)BELTZ 211

03/22/2007 01:30 PM Senate LABOR & COMMERCE


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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
*+ SB 120 UNEMPLOYMENT COMPENSATION BENEFITS TELECONFERENCED
Heard & Held
Bills Previously Heard/Scheduled
+= SJR 4 NATURAL GAS FOR STATE RESIDENTS TELECONFERENCED
Moved CSSJR 4(L&C) Out of Committee
+= SB 121 CRUISE SHIP DISCHARGE TELECONFERENCED
Moved CSSB 121(L&C) Out of Committee
                    ALASKA STATE LEGISLATURE                                                                                  
          SENATE LABOR AND COMMERCE STANDING COMMITTEE                                                                        
                         March 22, 2007                                                                                         
                           1:31 p.m.                                                                                            
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Senator Johnny Ellis, Chair                                                                                                     
Senator Gary Stevens, Vice Chair                                                                                                
Senator Bettye Davis                                                                                                            
Senator Con Bunde                                                                                                               
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Senator Lyman Hoffman                                                                                                           
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
SENATE JOINT RESOLUTION NO. 4                                                                                                   
Urging the attorney general, the  producers of natural gas in the                                                               
Cook Inlet  region, and  the Regulatory  Commission of  Alaska to                                                               
work to secure  long-term and affordable supplies  of natural gas                                                               
for the people and businesses of the state.                                                                                     
     MOVED CSSJR 4(L&C) OUT OF COMMITTEE                                                                                        
                                                                                                                                
SENATE BILL NO. 121                                                                                                             
"An Act relating to discharge  from commercial passenger vessels;                                                               
providing  for  an  effective  date   by  repealing  the  delayed                                                               
effective  date  found  in  sec.  16,  ch.  153,  SLA  2004;  and                                                               
providing for an effective date."                                                                                               
     MOVED CSSB 121(L&C) OUT OF COMMITTEE                                                                                       
                                                                                                                                
SENATE BILL NO. 120                                                                                                             
"An Act relating  to the calculation and  payment of unemployment                                                               
compensation benefits; and providing for an effective date."                                                                    
     HEARD AND HELD                                                                                                             
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
BILL: SJR  4                                                                                                                  
SHORT TITLE: NATURAL GAS FOR STATE RESIDENTS                                                                                    
SPONSOR(s): SENATOR(s) WIELECHOWSKI                                                                                             
                                                                                                                                
03/12/07       (S)       READ THE FIRST TIME - REFERRALS                                                                        
03/12/07       (S)       L&C, RES                                                                                               
03/20/07       (S)       L&C AT 1:30 PM BELTZ 211                                                                               
03/20/07       (S)       Heard & Held                                                                                           
03/20/07       (S)       MINUTE(L&C)                                                                                            
03/22/07       (S)       L&C AT 1:30 PM BELTZ 211                                                                               
                                                                                                                                
BILL: SB 121                                                                                                                  
SHORT TITLE: CRUISE SHIP DISCHARGE                                                                                              
SPONSOR(s): SENATOR(s) ELTON                                                                                                    
                                                                                                                                
03/14/07       (S)       READ THE FIRST TIME - REFERRALS                                                                        
03/14/07       (S)       L&C                                                                                                    
03/20/07       (S)       L&C AT 1:30 PM BELTZ 211                                                                               
03/20/07       (S)       Heard & Held                                                                                           
03/20/07       (S)       MINUTE(L&C)                                                                                            
03/22/07       (S)       L&C AT 1:30 PM BELTZ 211                                                                               
                                                                                                                                
BILL: SB 120                                                                                                                  
SHORT TITLE: UNEMPLOYMENT COMPENSATION BENEFITS                                                                                 
SPONSOR(s): LABOR & COMMERCE                                                                                                    
                                                                                                                                
03/14/07       (S)       READ THE FIRST TIME - REFERRALS                                                                        
03/14/07       (S)       L&C, FIN                                                                                               
03/22/07       (S)       L&C AT 1:30 PM BELTZ 211                                                                               
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
SENATOR WIELECHOWSKI                                                                                                            
Alaska State Capitol                                                                                                            
Juneau, AK  99801-1182                                                                                                          
POSITION STATEMENT: Sponsor of SJR 4.                                                                                         
                                                                                                                                
SENATOR ELTON                                                                                                                   
Alaska State Capitol                                                                                                            
Juneau, AK  99801-1182                                                                                                          
POSITION STATEMENT: Sponsor of SB 121.                                                                                        
                                                                                                                                
PAT SHIRE, Chief                                                                                                                
Employment Security Tax                                                                                                         
Division of Employment Security                                                                                                 
Department of Labor and Workforce Development (DOLWD)                                                                           
Juneau AK                                                                                                                       
POSITION STATEMENT: Commented on SB 120.                                                                                      
                                                                                                                                
JIM WILSON, Unemployment Insurance Actuary                                                                                      
Department of Labor and Workforce Development (DOLWD)                                                                           
Juneau AK                                                                                                                       
POSITION STATEMENT: Commented on SB 120.                                                                                      
                                                                                                                                
VINCE BELTRAMI, President                                                                                                       
AFL-CIO                                                                                                                         
POSITION STATEMENT: Supported SB 120.                                                                                         
                                                                                                                                
DENNIS DEWITT, State Director                                                                                                   
National Federation of Independent Businesses                                                                                   
POSITION STATEMENT: Opposed SB 120.                                                                                           
                                                                                                                                
ROYCE ROCK, Business Manager                                                                                                    
Carpenters Local 1281                                                                                                           
Anchorage AK                                                                                                                    
POSITION STATEMENT: Supported SB 120.                                                                                         
                                                                                                                                
BARBARA HUFF-TUCKNESS, Director                                                                                                 
Governmental and Legislative Affairs                                                                                            
Teamsters Local 959                                                                                                             
Juneau AK                                                                                                                       
POSITION STATEMENT: Supported SB 120.                                                                                         
                                                                                                                                
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
CHAIR JOHNNY ELLIS called the  Senate Labor and Commerce Standing                                                             
Committee meeting to order at 1:31:34  PM. Present at the call to                                                             
order were Senators Stevens, Bunde, Davis and Ellis.                                                                            
                                                                                                                                
CHAIR ELLIS noted  that the committee needed to  sign the letters                                                               
forwarding the confirmations they had reviewed previously.                                                                      
                                                                                                                                
             SJR  4-NATURAL GAS FOR STATE RESIDENTS                                                                         
                                                                                                                                
1:32:51 PM                                                                                                                    
CHAIR ELLIS  announced SJR 4  to be  up for consideration  and it                                                               
had a CS.                                                                                                                       
                                                                                                                                
SENATOR WIELECHOWSKI,  sponsor of  SJR 4, said  the CS  had three                                                               
changes. The  first was on  page 2,  line 11, where  "the state's                                                               
first priority must  be to ensure the  availability of affordable                                                               
natural gas  to meet the  needs of the  people of the  state" was                                                               
changed to  "the state must  have as a priority  the availability                                                               
of affordable natural gas to meet the needs of its people;".                                                                    
                                                                                                                                
The second  change was  on page  2, line  15, ",  in coordination                                                               
with  the  Department  of Natural  Resources,"  was  added  after                                                               
"attorney general" at the request of the department.                                                                            
                                                                                                                                
1:34:16 PM                                                                                                                    
The third change was on page  2, line 16, where "termination" was                                                               
changed to "nonrenewal".                                                                                                        
                                                                                                                                
CHAIR ELLIS  said the  committee had heard  from the  public when                                                               
the bill was originally before the committee.                                                                                   
                                                                                                                                
SENATOR STEVENS  moved to  adopt CSSJR  4(L&C), version  E. There                                                               
were no objections and it was so ordered.                                                                                       
                                                                                                                                
SENATOR BUNDE  said he was  still concerned about  the definition                                                               
of "affordable"  gas and added  that the  gas belongs to  all the                                                               
people in the state and they  shouldn't have to subsidize gas for                                                               
people who  live in  Southcentral Alaska.  He also  remarked that                                                               
SJR 4 was only a  resolution and as Representative Lisa Murkowski                                                               
once said about  resolutions, "Do you think  anybody really reads                                                               
this stuff?"                                                                                                                    
                                                                                                                                
1:36:30 PM                                                                                                                    
SENATOR  STEVENS  asked  Senator   Wielechowski  if  he  saw  any                                                               
indication in the  resolution that the state  would subsidize gas                                                               
for the Southcentral region of Alaska.                                                                                          
                                                                                                                                
SENATOR WIELECHOWSKI replied  no, and that is not  the intent. He                                                               
just  wants the  producers to  work with  the local  utilities to                                                               
find a  way to provide  affordable gas to Southcentral  homes and                                                               
businesses.  He  did  look into  defining  "affordable",  but  it                                                               
turned into a "real rabbit hole" of subjective terminology.                                                                     
                                                                                                                                
1:37:27 PM                                                                                                                    
SENATOR BUNDE pointed out that  the woman from AKPIRG wanted this                                                               
to be  a welfare item  and that meant  it would be  subsidized at                                                               
some point.  If some people  in the state  want to pay  less than                                                               
market  value  for  gas,  that   means  the  rest  of  the  state                                                               
subsidizes it.                                                                                                                  
                                                                                                                                
SENATOR WIELECHOWSKI responded:                                                                                                 
                                                                                                                                
     This is our  gas. This gas belongs to  all Alaskans and                                                                    
     frankly  I  would  rather  provide   low  cost  gas  to                                                                    
     Alaskans than  low cost  gas to  the Japanese.  I don't                                                                    
     think  this  is  a  subsidy;  I  don't  think  this  is                                                                    
     welfare.  This is  Alaskans using  their gas  for their                                                                    
     home and their business heating needs.                                                                                     
                                                                                                                                
1:38:23 PM                                                                                                                    
SENATOR  STEVENS moved  to  pass CSSJR  4(L&C),  version E,  from                                                               
committee with individual recommendations.                                                                                      
                                                                                                                                
SENATOR  BUNDE objected.  A roll  call vote  was taken.  Senators                                                               
Davis, Stevens and  Ellis voted yea; Senator Bunde  voted nay and                                                               
so CSSJR 4(L&C) moved from committee.                                                                                           
                                                                                                                                
                  SB 121-CRUISE SHIP DISCHARGE                                                                              
                                                                                                                              
CHAIR ELLIS announced SB 121 and  a proposed CS, version K, to be                                                               
up for consideration.                                                                                                           
                                                                                                                                
SENATOR  KIM ELTON,  sponsor of  SB  121, explained  that the  CS                                                               
removed former  sections 8  and 9 and  corrected some  typos that                                                               
are currently  in law. On page  4, line 17, "waster"  was removed                                                               
and replaced  with "wastewater" and  "of" was replaced  with "or"                                                               
on line 22.  These sections broaden the title and,  as with other                                                               
law, they would be dealt with in a reviser's bill.                                                                              
                                                                                                                                
He  explained that  the new  section 8  deals with  latitudes the                                                               
department has  for information collection  and was  necessary to                                                               
fully restore the provisions of HB 522.                                                                                         
                                                                                                                                
1:41:13 PM                                                                                                                    
SENATOR HOFFMAN joined the committee.                                                                                           
                                                                                                                                
1:41:37 PM                                                                                                                    
SENATOR STEVENS  moved to adopt  CSSB 121(L&C), version  K. There                                                               
were no objections and the motion carried.                                                                                      
                                                                                                                                
SENATOR  ELTON said  Senator  Bunde  asked if  this  bill made  a                                                               
substantive  change  to  the  initiative.  He  had  been  assured                                                               
previously that it  didn't, but the chair  suggested getting that                                                               
in writing and that was  requested this morning. However, instead                                                               
of  receiving a  memo that  dealt  with a  substantive issue,  he                                                               
received  a  sectional analysis.  In  his  conversation with  the                                                               
drafter this morning,  he was assured again that it  did not make                                                               
a substantive change to the initiative.                                                                                         
                                                                                                                                
SENATOR ELTON  said the Department  of Law suggested  a potential                                                               
amendment to further tighten the  title by inserting "commercial"                                                               
between  "small"  and  "passenger"  on   page  1,  line  2.  This                                                               
definitely clarified that  they are talking about  only one class                                                               
of vessel and he had no objection to it.                                                                                        
                                                                                                                                
1:44:18 PM                                                                                                                    
SENATOR STEVENS moved the amendment.                                                                                            
                                                                                                                                
SENATOR  STEVENS and  DAVIS both  asked what  the difference  was                                                               
between  a  small  commercial  vessel   and  a  small  commercial                                                               
passenger vessel.                                                                                                               
                                                                                                                                
SENATOR ELTON replied that a  small passenger vessel could be his                                                               
16 ft. Boston Whaler.                                                                                                           
                                                                                                                                
     Clearly  this  is not  intended  to  affect my  16  ft.                                                                    
     Boston Whaler;  it's only  small commercial.  And small                                                                    
     commercial  passenger vessels  are otherwise  described                                                                    
     in   law.  My   recollection  is   it's  250   or  less                                                                    
     passengers.                                                                                                                
                                                                                                                                
There were no further objections to  the amendment; and so it was                                                               
adopted.                                                                                                                        
                                                                                                                                
1:46:14 PM                                                                                                                    
SENATOR STEVENS asked  what the small commercial  vessels have to                                                               
do now that they didn't have to do before.                                                                                      
                                                                                                                                
SENATOR  ELTON replied  there really  is no  change. A  couple of                                                               
years ago  a statute  was passed  for small  commercial passenger                                                               
vessels  that are  U.S. flagged  that didn't  have the  capacity,                                                               
simply  because of  size, to  have waste  water treatment  plants                                                               
onboard. An  alternative process was  put in  place in HB  522 so                                                               
that the  small vessels could  comply with state  discharge laws.                                                               
This  just  reinstates   what  the  law  was   before  for  small                                                               
commercial vessels and all parties support it.                                                                                  
                                                                                                                                
SENATOR BUNDE  said he knew  the sponsors of the  initiative made                                                               
some changes and  asked why they didn't make this  change at that                                                               
time.                                                                                                                           
                                                                                                                                
SENATOR  ELTON  replied that  for  the  same reason  the  mistake                                                               
wasn't noticed.                                                                                                                 
                                                                                                                                
CHAIR ELLIS noted two zero fiscal notes.                                                                                        
                                                                                                                                
1:50:14 PM                                                                                                                    
SENATOR STEVENS moved  to pass CSSB 121(L&C)  from committee with                                                               
individual recommendations  and zero fiscal notes.  There were no                                                               
objections and it was so ordered.                                                                                               
                                                                                                                                
           SB 120-UNEMPLOYMENT COMPENSATION BENEFITS                                                                        
                                                                                                                              
1:51:33 PM                                                                                                                    
CHAIR ELLIS announced SB 120 to be up for consideration.                                                                        
                                                                                                                                
DANA OWEN, staff  to Senator Ellis, explained that  this bill was                                                               
brought before them  because of the state's failure  to raise the                                                               
maximum weekly benefit amount  under unemployment insurance since                                                               
1997.                                                                                                                           
                                                                                                                                
Section 1 extends the schedule  of payment amounts and raises the                                                               
maximum weekly benefit  amount from $248 to $370.  Section 2 sets                                                               
out  the method  of  determining  how many  weeks  of benefits  a                                                               
person  is   eligible  for.  It   includes  in  section   3,  for                                                               
eligibility, persons who fall under a new section (h).                                                                          
                                                                                                                                
Section  3 allows  for increases  in the  maximum weekly  benefit                                                               
amounts  as  wages increase  -  specifically  the maximum  weekly                                                               
benefit  increases by  $2 and  the highest  base period  wages by                                                               
$250  -   when  average  wages   have  increased  by   an  amount                                                               
established by  the Department of  Labor. Weekly  benefit amounts                                                               
are capped  at 50  percent replacement  of average  weekly wages.                                                               
This section also provides for  a public notice of these changes;                                                               
but   that   notice   is  exempted   from   provisions   of   the                                                               
Administrative   Procedures   Act   that  normally   apply   with                                                               
regulations.                                                                                                                    
                                                                                                                                
It  also provides  that  if  the average  wage  decreases to  the                                                               
extent  that   adjustments  to  the  benefit   amounts  would  be                                                               
appropriate  to  protect  the trust  fund,  the  commissioner  is                                                               
obliged  to report  to  the governor  and  the legislature.  This                                                               
section also provides a method  of determining the average weekly                                                               
wage.                                                                                                                           
                                                                                                                                
1:53:15 PM                                                                                                                    
Section 4  is transition language  that allows the  department to                                                               
begin  adopting  regulations  immediately.   Section  5  sets  an                                                               
immediate  effective date  for  section  4 and  section  6 has  a                                                               
January 1, 2008 effective date for all of the rest of the bill.                                                                 
                                                                                                                                
1:53:36 PM                                                                                                                    
MR.  OWEN stated  the reason  for the  bill is  that Alaska  lags                                                               
other states  in providing  unemployment insurance  benefits that                                                               
replace  wages  lost when  a  person  loses  his  or her  job.  A                                                               
Department of Labor and  Workforce Development's "Alaska Economic                                                               
Trends" article shows  that Alaska is dead last  among the states                                                               
in the  ability to  replace wages lost  from unemployment.  It is                                                               
ahead of only the District of  Columbia in that regard. He highly                                                               
recommended reading  the article  for further background  on this                                                               
issue.                                                                                                                          
                                                                                                                                
He  further informed  them that  the maximum  benefit amount  has                                                               
been frozen  since 1997. And  since 1984, the  Anchorage Consumer                                                               
Price  Index  has  risen  71.6  percent.  Meanwhile  the  maximum                                                               
benefit amount over that time has risen only 32 percent.                                                                        
                                                                                                                                
1:54:46 PM                                                                                                                    
SENATOR BUNDE  asked if this  version contains any  references to                                                               
actively seeking work.                                                                                                          
                                                                                                                                
MR. OWEN replied that this bill doesn't address that.                                                                           
                                                                                                                                
CHAIR ELLIS added that he was  open to working with Senator Bunde                                                               
and others to include some of  those kinds of improvements to the                                                               
bill.                                                                                                                           
                                                                                                                                
SENATOR  BUNDE mentioned  that Alaska  is one  of the  few states                                                               
that allows  people who are fired  for cause to seek  UI benefits                                                               
and asked if that was addressed here.                                                                                           
                                                                                                                                
1:58:27 PM                                                                                                                    
PAT SHIRE,  Chief, Employment  Security Tax  Division, Department                                                               
of Labor  and Workforce  Development (DOLWD),  said he  wrote the                                                               
"Alaska Economic  Trends" article  the committee  was referencing                                                               
and offered to  answer questions about the  financing or taxation                                                               
provisions of the UI program.                                                                                                   
                                                                                                                                
SENATOR HOFFMAN  asked if this  legislation passed,  where Alaska                                                               
would stand  among the  state rankings  in terms  of unemployment                                                               
insurance (UI) payments.                                                                                                        
                                                                                                                                
MR.  SHIRE  estimated  that  Alaska would  fall  roughly  in  the                                                               
middle.                                                                                                                         
                                                                                                                                
CHAIR  ELLIS noted:  "Not  on top;  not on  bottom;  just a  less                                                               
embarrassing place than we are today."                                                                                          
                                                                                                                                
SENATOR STEVENS stated that the  "Alaska Economic Trends" article                                                               
also  said that  Alaskans  use unemployment  insurance more  than                                                               
most other states do.                                                                                                           
                                                                                                                                
MR. SHIRE  went to page  8 of  the "Trends" publication  and said                                                               
Alaska  has an  extraordinarily high  recipient rate  compared to                                                               
other  states -  53 percent  of  the workers  participate in  the                                                               
program.                                                                                                                        
                                                                                                                                
CHAIR ELLIS asked Mr. Shire to explain how the program works.                                                                   
                                                                                                                                
2:01:45 PM                                                                                                                    
MR. SHIRE  explained that  the division  is charged  with helping                                                               
employers report  and pay the  proper amount of  unemployment tax                                                               
so  there  are sufficient  reserves  according  to AS  23.20.010.                                                               
Using those reserves, money can  go to those local economies when                                                               
people become  unemployed, because  it's not only  the unemployed                                                               
workers who suffer in those  times, but the local business people                                                               
that would otherwise see a greater drop in their income.                                                                        
                                                                                                                                
Employers also tell him that  the UI program helps keep qualified                                                               
workers in  the local economy so  that when it turns  around they                                                               
don't have to look outside the  state or their economic areas for                                                               
workers and  have to  entice them  back in  with even  larger pay                                                               
scales and moving costs.                                                                                                        
                                                                                                                                
SENATOR  STEVENS  asked on  page  7  if  the department  has  the                                                               
ability to  change weekly  benefits without  legislative approval                                                               
and asked Mr. Shire if that was a new provision.                                                                                
                                                                                                                                
MR. SHIRE replied that is a new provision.                                                                                      
                                                                                                                                
SENATOR STEVENS asked him to defend that change.                                                                                
                                                                                                                                
MR. SHIRE replied  that there are reasons to embrace  it and also                                                               
reasons  to examine  it  carefully. The  fact  that it's  indexed                                                               
would keep the  department and legislature free of  the burden of                                                               
having  this  discussion  periodically.  On the  other  hand,  he                                                               
understands that  others are  concerned about  increased benefits                                                               
and  this  is an  opportunity  for  them  to  weigh in  before  a                                                               
legislative body.                                                                                                               
                                                                                                                                
2:04:01 PM                                                                                                                    
SENATOR  BUNDE  rephrased  that   it's  an  opportunity  for  the                                                               
department to do a cost  of living adjustment without involvement                                                               
from the legislature.                                                                                                           
                                                                                                                                
MR. SHIRE replied that it would have that effect.                                                                               
                                                                                                                                
SENATOR BUNDE said he has often  heard that Alaska has the lowest                                                               
benefits, but one  of the more generous and easier  plans to take                                                               
advantage of. He asked if it includes dependent benefits.                                                                       
                                                                                                                                
MR. SHIRE  replied it does  and that approximately 43  percent of                                                               
individuals  who claim  benefits also  claim a  dependent and  10                                                               
percent  of those  claim  the  maximum number  of  three or  more                                                               
dependents.                                                                                                                     
                                                                                                                                
SENATOR  BUNDE asked  if that  is used  to calculate  the average                                                               
benefits compared to other states.                                                                                              
                                                                                                                                
MR. SHIRE deferred that question to his colleague, Jim Wilson.                                                                  
                                                                                                                                
SENATOR  BUNDE said  if  UI  benefits go  up,  it  is likely  the                                                               
employee  contributions would  go up  as well  and that  there is                                                               
probably a hidden tax on the worker as well as the employer.                                                                    
                                                                                                                                
MR. SHIRE  replied yes, "Statutorily, as  close as we can  get to                                                               
20 percent of the cost of the program must be borne by workers."                                                                
                                                                                                                                
CHAIR ELLIS noted  the great seasonality of  the Alaska workforce                                                               
and that  businesses struggle to  pay their taxes.  However there                                                               
is also  a benefit to seasonal  employers to be able  to retain a                                                               
workforce in  the state and not  have "to bring the  college kids                                                               
in or entice them in."   He asked, given the great seasonality of                                                               
our work  force compared to  many other  states, if aspects  of a                                                               
different model  UI system could  better balance  those pressures                                                               
on small  and medium-sized employers  - anything that  would help                                                               
the committee  make this reasonable  legislation from  a worker's                                                               
and an  employer's perspective.  He said the  bill would  be held                                                               
over so those issues could be considered further.                                                                               
                                                                                                                                
MR. SHIRE said he appreciated that.                                                                                             
                                                                                                                                
SENATOR HOFFMAN  asked the average  of the highest pay  range for                                                               
the  four other  states, noting  that SB  120 adds  a range  from                                                               
$26,750 to $42,000. He asked if other states have that range.                                                                   
                                                                                                                                
MR.  SHIRE   said  he  didn't   have  that  information   at  his                                                               
fingertips, but he would get it for him.                                                                                        
                                                                                                                                
CHAIR ELLIS said  he hoped to accomplish something  this year and                                                               
all these  items are  open for discussion.  He was  interested in                                                               
his professional opinions and suggestions for improvement.                                                                      
                                                                                                                                
MR.  SHIRE  commented  that seasonality  isn't  the  only  issue.                                                               
Alaska has  suffered "economic chilling"  in the past  and during                                                               
1985 - 87  when he owned a  business, the UI trust  fund paid out                                                               
$500 million  into economies all  over Alaska. "Depending  on how                                                               
you  measure it,  it was  the third  largest employer."  The fund                                                               
paid out  $100 million more  than it took  in, which is  what the                                                               
reserve  is designed  to do.  He thought  it was  instrumental in                                                               
keeping  many  individuals  hanging  on  until  things  began  to                                                               
improve.                                                                                                                        
                                                                                                                                
2:09:35 PM                                                                                                                    
JIM WILSON,  Unemployment Insurance Actuary, Department  of Labor                                                               
and Workforce  Development (DOLWD), said  he is an  economist and                                                               
author of  the "Alaska  Economic Trends"  Article. He  offered to                                                               
answer questions.                                                                                                               
                                                                                                                                
SENATOR  HOFFMAN  restated  his  question  regarding  what  upper                                                               
limits other states have.                                                                                                       
                                                                                                                                
MR.  WILSON   replied  that  other   states  use  a   variety  of                                                               
calculations to  determine their benefit amounts.  In some manner                                                               
they are  tied to  wages earned.  In some cases  they are  on the                                                               
high quarter  and some  do it  on an annual  basis. He  could get                                                               
that information for them also.                                                                                                 
                                                                                                                                
He  explained that  Alaska has  a corresponding  increase in  the                                                               
benefit  schedule of  $2 for  every  $250 increase  in wages.  It                                                               
starts  at the  bottom where  $1,000 qualifies  a person  for the                                                               
minimum benefit amount  of $44 a week. That goes  up and tops out                                                               
at a  maximum benefit of $248  per week. A few  other states have                                                               
maximum benefit amounts  that are roughly twice  that of Alaska's                                                               
- like Washington and Oregon.                                                                                                   
                                                                                                                                
CHAIR  ELLIS asked  how Alaska  compares to  other states  on the                                                               
West Coast.                                                                                                                     
                                                                                                                                
MR.  WILSON answered  that he  compared Alaska's  maximum benefit                                                               
amount  to Washington,  Oregon, California,  Nevada, and  Hawaii;                                                               
Alaska came in last.                                                                                                            
                                                                                                                                
CHAIR ELLIS asked how often other states adjust their benefit.                                                                  
                                                                                                                                
MR. WILSON  replied that he  frequently sees changes in  the data                                                               
from  other  states;  so  there's  a  constant  revision  in  the                                                               
schedules.                                                                                                                      
                                                                                                                                
SENATOR BUNDE asked  if 20 percent of the UI  program is borne by                                                               
the laborer,  is the other  80 percent  borne by the  employer or                                                               
does interest earnings help support the program.                                                                                
                                                                                                                                
MR. WILSON replied  the way the formula works is  that the system                                                               
tries to  recapture the average  cost of benefits that  have been                                                               
paid  out  for  the  last  several years.  Once  that  amount  is                                                               
determined,  employers basically  are responsible  for paying  80                                                               
percent and  employees 20  percent. The  trust fund  does receive                                                               
interest earnings  on a quarterly  basis; that has the  effect of                                                               
boosting the  value of the  trust fund, which, in  itself becomes                                                               
part of  the tax  calculation -  but only when  the value  of the                                                               
trust fund falls below a target  window. Now they attempt to keep                                                               
the balance of  the trust fund equal to about  3.2 percent of the                                                               
total value of wages in the  Alaska economy. So, as wages grow in                                                               
the Alaska  economy, the ideal is  that the trust fund  will keep                                                               
pace - the idea being the  fund would have sufficient reserves to                                                               
cover a  traumatic episode  like Alaska  experienced in  1986 and                                                               
87.                                                                                                                             
                                                                                                                                
SENATOR BUNDE asked  if the interest of the trust  goes back into                                                               
it until a certain cutoff point.                                                                                                
                                                                                                                                
MR. WILSON replied that any  interest earned on a quarterly basis                                                               
goes back  into the trust fund  and helps to keep  it balanced at                                                               
the level desired by the  financing system. He didn't think there                                                               
was  a tax  relief  feature,  because the  program  is trying  to                                                               
replace the amount of benefit dollars that are paid out.                                                                        
                                                                                                                                
SENATOR BUNDE  asked if he  hoped for  a 10 percent  return, like                                                               
the  Permanent Fund,  with 4  or 5  percent going  back into  the                                                               
trust.                                                                                                                          
                                                                                                                                
MR. WILSON  replied that the  return to  the trust fund  based on                                                               
interest payments  is determined  by the federal  government that                                                               
is  the authority  that  actually  holds the  funds  in the  U.S.                                                               
Treasury.                                                                                                                       
                                                                                                                                
CHAIR ELLIS  asked how he  would characterize the  overall health                                                               
of the fund today.                                                                                                              
                                                                                                                                
MR.  WILSON replied  that  the  fund is  healthy  in general.  He                                                               
explained that  a solvency  element to the  employers' tax  is in                                                               
effect, which meant the value of  the trust fund needs to improve                                                               
slightly.                                                                                                                       
                                                                                                                                
2:17:54 PM                                                                                                                    
SENATOR   STEVENS  asked   him  to   comment  on   advantages  or                                                               
disadvantages  to  giving  the department  the  ability  to  make                                                               
increases  or to  establish a  methodology  to calculate  amounts                                                               
that increase the weekly benefits.                                                                                              
                                                                                                                                
MR. WILSON replied that feature  would be new in Alaska's system.                                                               
One of the advantages would be  similar to what Mr. Shire stated;                                                               
it would relieve  the department and the legislature  of the need                                                               
to come back and have  a discussion about increasing benefits. It                                                               
would  provide  an automatic  adjustment  based  on the  economy,                                                               
specifically  the growth  in wages.  However, he  didn't know  if                                                               
that would be the same as the growth in the CPI.                                                                                
                                                                                                                                
2:19:18 PM                                                                                                                    
CHAIR ELLIS announced that he  was planning on some work sessions                                                               
in a  less formal  setting on  this issue  and trying  to achieve                                                               
some sort of consensus on legislation.                                                                                          
                                                                                                                                
SENATOR BUNDE said  he appreciated the "Trends"  article and went                                                               
to page  10 and asked  Mr. Wilson  if he considered  not allowing                                                               
firing for cause to be eligible for benefits.                                                                                   
                                                                                                                                
MR.  WILSON  replied  that  the   committee  could  look  at  the                                                               
eligibility    provisions   although    he   didn't    have   any                                                               
recommendations.                                                                                                                
                                                                                                                                
2:21:23 PM                                                                                                                    
SENATOR BUNDE  asked whether benefits  to dependents  are figured                                                               
into the national scale.                                                                                                        
                                                                                                                                
VINCE BELTRAMI, President, AFL-CIO, said  this bill is long over-                                                               
due saying,  "Alaska has been stuck  at the bottom of  the barrel                                                               
in terms  of how we've  taken care of our  hard-working employees                                                               
who  find  themselves   out  of  work  and  having   to  rely  on                                                               
unemployment insurance."                                                                                                        
                                                                                                                                
He said that obviously unemployment  income is not intended to be                                                               
a wage  replacement and they  don't want to  create disincentives                                                               
to go to work.                                                                                                                  
                                                                                                                                
     SB 120  goes quite a ways,  I won't say it  goes a long                                                                    
     ways  in   restoring  fairness   and  dignity   of  the                                                                    
     hardships that  result from  lost wages  during periods                                                                    
     of  involuntary unemployment.  And as  I'm sure  all of                                                                    
     you are aware, while  Alaska has enjoyed generally high                                                                    
     wages, we've  slipped over  the years.  We're currently                                                                    
       th                                                                                                                       
     18   in average  weekly earnings  among the  50 states.                                                                    
     Our maximum weekly benefit is  near the bottom and as a                                                                    
     ratio  against the  average weekly  earnings, as  we've                                                                    
     also  heard,  dead  last  amongst  the  50  states.  To                                                                    
     Senator  Hoffman, through  the chair,  you asked  about                                                                    
     where that would put it  for Alaska. With the increase,                                                                    
     if  this bill  were to  pass  in its  present form,  my                                                                    
     simple math puts it at  49.3 percent of weekly earnings                                                                    
     as a  ratio, which would put us  at 29   amongst the 50                                                                    
     states, still not quite the top half.                                                                                      
                                                                                                                                
     And of  course with the sliding  scale that's proposed,                                                                    
     many Alaskans  still wouldn't  qualify for  the maximum                                                                    
     benefit. But SB  120 is definitely a step  in the right                                                                    
     direction....                                                                                                              
                                                                                                                                
     Those statistics are all fine  and dandy, but obviously                                                                    
     as a group of  fiscally responsible legislators, you're                                                                    
     looking at  cost benefit analysis  and the  question is                                                                    
     can we  afford the  increase as a  state at  this time.                                                                    
     And  I think  the answer  is  an emphatic  yes. We  can                                                                    
     afford it  more easily this  time than any time  in the                                                                    
     last several  years from the  research that  I've seen.                                                                    
     UI benefits that I've seen  paid out have been trending                                                                    
     down  since  2003  and  the  trust  fund  deposits  are                                                                    
     significantly up.  If I  look at this  graph I  have in                                                                    
     front of  me that came  out of the  employment security                                                                    
     division,  it looks  like the  fund has  grown in  2003                                                                    
     that it was a little  below $200 million; and right now                                                                    
     it looks like it's roughly around $275 million or so.                                                                      
                                                                                                                                
     The bad news for the  Alaska worker is that despite low                                                                    
     unemployment  generally, the  cost of  living continues                                                                    
     to increase in  a fashion that is  outpacing income and                                                                    
     in some  parts of  the state  and particularly  in some                                                                    
     parts of rural Alaska unemployment  ranges from 50 - 80                                                                    
     percent in some places - which is just an atrocity.                                                                        
                                                                                                                                
     This increase  would help offset  some of that  loss of                                                                    
     purchasing  power  and, in  fact,  one  of the  primary                                                                    
     benefits  an  increase  in  the   UI  income  can  help                                                                    
     stabilize local  economies by  putting more  money into                                                                    
     the economy.                                                                                                               
                                                                                                                                
MR. BELTRAMI  said the  benefit increase  would not  increase the                                                               
employer  contributions  for  potentially several  years.  A  few                                                               
years  ago he  was business  agent at  the IBEW  and a  number of                                                               
electricians from  Washington were  working seasonally.  A number                                                               
of them  wanted to plant roots  here, but they were  unwilling to                                                               
wait the  winter out to  establish their residency when  they had                                                               
qualified  unemployment benefits  at home  that were  double what                                                               
they  would  get here.  At  the  same  time,  a number  of  local                                                               
electricians were also faced with  the option of waiting for work                                                               
through the  winter seasonally and opted  to go to work  that was                                                               
available in Oregon and Washington -  one of the reasons being if                                                               
they were  laid off, they would  have a much better  benefit down                                                               
there -  and they would much  rather sit through the  winter down                                                               
there.  Unfortunately  a  couple  of them  have  yet  to  return,                                                               
because that is what happened.                                                                                                  
                                                                                                                                
He said  at a  time when Alaska  is trying to  figure out  how to                                                               
increase  workforce development  efforts and  bring more  skilled                                                               
workers into  the workforce  to prepare them  to construct  a gas                                                               
pipeline,  it's  imperative  that  some of  these  obstacles  get                                                               
removed that drive people away or lure them to other states.                                                                    
                                                                                                                                
2:27:53 PM                                                                                                                    
CHAIR ELLIS  asked if the UI  benefit is a significant  factor in                                                               
state to state competition for skilled workers.                                                                                 
                                                                                                                                
MR. BELTRAMI replied yes.                                                                                                       
                                                                                                                                
2:28:36 PM                                                                                                                    
DENNIS   DEWITT,   State   Director,   National   Federation   of                                                               
Independent Business, opposed SB 120  and one of the main reasons                                                               
was  that the  cost would  fall to  small employers.  However, he                                                               
suggested some  things that would  make it more neutral  to them.                                                               
Senator Bunde  mentioned several of  them in terms of  the period                                                               
between separation  and payment for those  who choose voluntarily                                                               
to leave  or are discharged  and recognizing the  relationship of                                                               
the  benefit to  the income  derived from  minimum wage  would be                                                               
another. He  did not  want to  see the  UI benefit  exceeding the                                                               
minimum  wage making  it more  advantageous to  not work  that to                                                               
seek employment. He  was also concerned about the  indexing in SB
120 and said he believed  that was a legislative prerogative that                                                               
ought to stay there.                                                                                                            
                                                                                                                                
He said the  probability of a substantial  employment boom around                                                               
the gas pipeline will increase  the average weekly wage in Alaska                                                               
atypically and probably  ought not to be something  that drives a                                                               
change in the UI program through a formula.                                                                                     
                                                                                                                                
2:32:03 PM                                                                                                                    
SENATOR  STEVENS  asked  what  eligibility  provisions  he  would                                                               
suggest.                                                                                                                        
                                                                                                                                
MR.  DEWITT  responded  that  he was  working  on  putting  those                                                               
together.                                                                                                                       
                                                                                                                                
2:32:47 PM                                                                                                                    
ROYCE ROCK,  Business Manager, Carpenters Local  1281, referenced                                                               
the "Trends" article that said the  objective of the UI system is                                                               
economic stability  for both businesses  and individuals  and how                                                               
the Alaska  UI program  with the  amount that  is being  paid now                                                               
isn't  stabilizing anything  right now.  It concerns  him greatly                                                               
when  one  of  his  sons  has  a  $1,200  house  payment  and  an                                                               
unemployment payment that doesn't even cover two-thirds of it.                                                                  
                                                                                                                                
MR.  ROCK said  one of  the  reasons for  making the  adjustments                                                               
automatic is that it would take  politics out of the equation. In                                                               
the  past  years,   especially  in  the  Senate,   there  is  the                                                               
philosophy that someone  would quit a $1,200 - $1,300  a week job                                                               
to draw $248  in unemployment. "This isn't  politics, folks. This                                                               
is people's lives we're dealing with...."                                                                                       
                                                                                                                                
He said this bill does a lot as  far as what the bottom line is -                                                               
$370 versus $248, but the truth  of the matter is in the proposed                                                               
2001 bill  the maximum benefit  amount would have raised  to $284                                                               
with an income of $31,250.  The 2007 proposal before them doesn't                                                               
raise anything from that. What  has really changed is the maximum                                                               
amount one must earn in order to get the highest UI payment.                                                                    
                                                                                                                                
MR. ROCK said, "I'm retiring  from the carpenters. You've wore me                                                               
out. I've  tried everything in my  power to make this  bill pass.                                                               
We  have attempted  to  make a  bill that  helps  both labor  and                                                               
management."                                                                                                                    
                                                                                                                                
He remarked that Mr. DeWitt says  this is increase is a burden on                                                               
small businesses,  but he  remembers when  Mr. DeWitt  worked for                                                               
Representative Mulder who passed a  bill to spend $10 million out                                                               
of  the Unemployment  fund for  the  AVTEC Center  in Seward  and                                                               
Kotzebue.                                                                                                                       
                                                                                                                                
MR. ROCK  said Senator Hoffman  wanted to know where  this change                                                               
would put Alaska  compared to other states, but at  this point he                                                               
said:                                                                                                                           
                                                                                                                                
     You know folks,  I really don't care.  I am embarrassed                                                                    
     that we're at  the bottom of list, but I  think what we                                                                    
     need to  look at is  how this helps our  people instead                                                                    
     of what number  we are, what anything. If  we're at the                                                                    
     bottom of list, then our economy is at the bottom.                                                                         
                                                                                                                                
2:39:15 PM                                                                                                                    
BARBARA  HUFF-TUCKNESS,  Director, Governmental  and  Legislative                                                               
Affairs,  Teamsters Local  959, supported  SB 120.  She said  she                                                               
didn't  need to  add too  much  more to  previous testimony.  She                                                               
thought a  few might take  advantage of  the program even  at the                                                               
maximum  salary of  $370 a  week, but  she didn't  know too  many                                                               
folks who were being  paid $25 or $35 an hour  that would give up                                                               
that kind of a job to receive  that kind of a benefit. It doesn't                                                               
make  sense.   It  even   doesn't  make   sense  at   the  lowest                                                               
denominator.                                                                                                                    
                                                                                                                                
MS. HUFF-TUCKNESS said  everyone needs to remember  the impact is                                                               
out there. It will be an  increase, but it won't be immediate and                                                               
is projected  out over quite a  few years when all  workers would                                                               
be paying  the increase. She said  Alaska is one of  three states                                                               
that  require  working  people   to  pay  into  the  unemployment                                                               
insurance fund.  She personally thought working  people supported                                                               
that as an interim cushion.  She encouraged the committee to work                                                               
through  the  issues  because  it's a  very  important  piece  of                                                               
legislation that she  would be proud as a working  person in this                                                               
state to see pass after 10 years.                                                                                               
                                                                                                                                
CHAIR ELLIS  thanked her  for being with  them. He  adjourned the                                                               
meeting at 2:43:31 PM.                                                                                                        
                                                                                                                                
                                                                                                                                

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