Legislature(1993 - 1994)
03/01/1994 01:45 PM L&C
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
SENATE LABOR AND COMMERCE COMMITTEE March 1, 1994 1:45 P.M. MEMBERS PRESENT Senator Tim Kelly, Chairman Senator Steve Rieger, Vice-Chairman Senator Bert Sharp Senator Georgianna Lincoln Senator Judith Salo MEMBERS ABSENT None COMMITTEE CALENDAR SENATE BILL NO. 289 "An Act making appropriations to satisfy the agreed-upon monetary terms of certain collective bargaining agreements for certain public employees; and providing for an effective date." SENATE BILL NO. 338 "An Act relating to the issuance of revenue bonds for acquisition and construction of the Alaska Discovery Center for the Ship Creek Project in Anchorage; relating to a study of the feasibility and financial viability of the Alaska Discovery Center; relating to construction of the Alaska Discovery Center; and providing for an effective date." SB 300 (HOURS SPENT UNDERGROUND BY MINERS) WAS SCHEDULED, BUT NOT HEARD THIS DATE. PREVIOUS ACTION SB 289 - See Labor & Commerce minutes dated 3/1/94. SB 338 - See Judiciary minutes dated 3/1/94. WITNESS REGISTER Nancy Usera, Commissioner Department of Administration P.O. Box 110200 Juneau, Ak. 99811-0200 POSITION STATEMENT: Commented on SB 289. Mila Doyle, Labor Relations Analyst Department of Administration Division of Personnel P.O. Box 110220 Juneau, Ak. 99811-0220 POSITION STATEMENT: Commented on SB 289. Josh Fink, Legislative Aide Senator Tim Kelly State Capitol Juneau, Ak. 99801-1182 POSITION STATEMENT: Commented on SB 338. Mark LoPatin Ship Creek Landing 6960 Orchard Lake Rd., Ste 239 West Bloomfield, Michigan 48322 POSITION STATEMENT: Commented SB 338. Ken Vasser Wolforth, Argetsinger, Johnson, and Brecht 900 W. 5th, Ste 600 Anchorage, Ak. 99501 POSITION STATEMENT: Commented on SB 338. Mark Hickey Alaska Railroad Corporation 211 4th Street #108 Juneau, Ak. 99801 POSITION STATEMENT: Commented on SB 338. Bob LeResche John Nuveen & Co. 4270 Glacier Hwy. Juneau, Ak. 99801 POSITION STATEMENT: Commented on SB 338. ACTION NARRATIVE TAPE 94-12, SIDE A Number 001 CHAIRMAN KELLY called the Senate Labor and Commerce Committee meeting to order at 1:45 p.m. and announced SB 289 (APPROP: COST OF OF CERTAIN LABOR AGREEMENTS) to be up for consideration. COMMISSIONER NANCY USERA, Department of Administration, said there is one correction to the Funding Information section which should say General Fund $92,000 and Other Funds, which are Marine Highway Funds, should be $276,630. She said there was a packet for each of them that contained summaries of the two agreements. In the Alaska Vocational Technical Center Teachers (AVTEC) agreement, she said, they are changing to a new teacher based salary schedule and are eliminating the automatic 3% salary increases. Included in some of the changes was a management rights clause which gives much more latitude to management in terms of determining key things like overtime, work rules, and hours. Layoff procedures were clarified and sabbaticals for teachers were only at the employer's discretion and only after 7 years of service. In terms of their goal to provide greater flexibility and more productivity and accountability, there was a conversion. The annual leave provision was eliminated and replaced with 5 personal leave days instead. The dispute resolution procedure was clarified. This contract also delineates that additional education credits have to be job related. On health insurance they were able to get all of the units to make a choice either on the employer provided plan which will be provided or they could convert to a trust of a comparable amount of money and the union can provide its own insurance to its members. SENATOR SALO asked if this was an entirely contribution defined plan. COMMISSIONER USERA answered that it was before. SENATOR SALO asked if the employee has any protection from the plan becoming absolutely watered down? COMMISSIONER USERA said no and explained that each unit was given their choice as she mentioned. She said she believes that there is no benefit more important to an employee than their health benefits. Her interest is in trying to provide the best, most meaningful benefits within the funds available to do that. She recognizes that benefits of a laborer would be different from those of a worker behind a desk. SENATOR RIEGER asked if it was the state's policy to target a cost to the employer for his plan? COMMISSIONER USERA answered no and said the state's contribution was currently at $423.50. One change now is that everyone has to pay something to go to the doctor which has made a big difference in cost containment. SENATOR RIEGER asked if it was policy to not increase the $423.50? COMMISSIONER USERA said she couldn't imagine a plan that would pay more than that. She said there will be more and more effort towards cost containment because of national concern with health care. As for the Licensed Alaska Marine Highway Engine Room Employees (MEBA) agreement, she said, $38,800, an amalgamation of small things, is a supplemental associated with the current fiscal year. They have also eliminated management's obligation to negotiate permissive subjects of bargaining. MEBA has three shore-side port engineers that are represented by MEBA who are actually shore-side personnel and there were a number of changes to their contract which better represents their hybrid situation. For instance they reduced paid holidays from 12 to 11, they eliminated penalty pay for early call back from vacation, and eliminated overtime except for preapproved hours only. They firmed up the language on the drug testing policy. Maintenance and care went from $40 to $45 per day. Personal leave is tied to a reopener of wages in the fall of 1994. The theme for these labor contracts has been to try to contain the costs of each of these bargaining units, but to allow as much flexibility as possible in trying to rearrange the wages and benefits to increase productivity for the employers and still provide meaningful benefits for the employee. Rather than lock in a cost of living increase, they tied a reopener this year on wages to the leave issue so if there would be an increase in wage there would be a decrease in the leave associated with that. For health insurance, they were able to get them onto the employer plan with a reopener in the fall of 1994. The 2.9% cost of living increase goes into effect the first of September. COMMISSIONER USERA said she believed these agreements very effectively represent a cost containment, increases in productivity, and changes in some areas or incremental reductions. Number 309 SENATOR SHARP asked what kind of work week the MEBA people were on? MILA DOYLE, Labor Relations Analyst, said it depends on which system they are assigned. Southeast employers work 84 hours pay periods, week on, week off. The southwest system employees work 120 and 186 hours - essentially every day on and a comparable amount of time off. SENATOR SHARP asked how many hours annually they worked. MS. DOYLE answered she couldn't give him an exact figure on that. SENATOR SHARP said he would like to see what the average hours worked would be for a fifteen year employee. SENATOR LINCOLN asked if she could explain the discipline for drug testing. COMMISSIONER USERA explained that a lot of the controversy lies in not having the language clear. SENATOR SHARP moved to adopt CSSB 289(L&C). There were no objections and it was so ordered. SENATOR KELLY moved to pass CSSB 289(L&C) from Committee. There were no objections and it was so ordered. Number 378 SENATOR KELLY announced SB 338 (ALASKA RR REVENUE BONDS:SHIP CREEK) K) to be up for consideration. JOSH FINK, Aide to Senator Kelly, reviewed the proposed CS to SB 338. MR. FINK said he ran the finance section by the municipal bond bank people and the people at AIDA and they indicated that the provisions should insure the bonds negligibly, if at all, affect the state's financial rating. He said the differences between SB 338 and the CS are that it's not the Alaska Discovery Center, but the Northern Crossroads Discovery Center, so the title has been changed to reflect that. The language referring to the Board of Directors was tightened up. and the performance bond in section 3 was changed to read "payment and performance bond." Number 408 MARK LOPATIN, John Nuveen and Co., testified that one of the most exciting things about this project is the opportunity to bring international travelers, from London and Tokyo, to Anchorage. The area they are developing is at Ship Creek. He said this bill is for the Discovery Center and nothing else in that project. He pointed out the features of the proposed center. He said there was already ICT money identified for the walkway. SENATOR LINCOLN asked if this was the money Alaska had already received this year. MR. LOPATIN said the walkway was a request from the Municipality of Anchorage to the state which, then, becomes a request to the federal government. SENATOR KELLY asked if he had permission from the Anchorage Assembly for the project. MR. LOPATIN answered yes and they had made all the corrections that were required in planning and zoning. SENATOR KELLY asked him why he wanted to take the bonds into the private sector? MR. LOPATIN said first of all it is a $54 million project which is a very specialized use. Railroad property, specifically, cannot be subordinated or pledged to a mortgage. The facility generates $41.6 million to the area economy. It was clear creative financing tools were needed and Railroad bonds are very unique - being sold on a tax exempt basis for private purposes. SENATOR KELLY asked about the state's credit risk if the project didn't get completed or didn't perform to expectations. KEN VASSER, testifying via teleconference, explained that the bonds are payable from revenues from the project and are not obligations of the State of Alaska. SB 338 goes further and requires that the bonds state on their face that they're are not a legal or moral debt of the state. Number 561 SENATOR SHARP asked what would be the difference with AIDA bonds? MR. VASSAR said that AIDA also has language saying the bonds are not obligations of the state of Alaska. SENATOR SHARP asked if the Railroad would be doing this and would the bonds be insured? MARK HICKEY, Alaska Railroad, said he didn't know if the Railroad had any other outstanding bonds at the time. TAPE 94-12, SIDE B Number 580 SENATOR RIEGER asked if the Railroad would pledge any assets to back the bonds. MR. LOPATIN explained that the only assets or revenue of the Railroad's that will be pledged to repay the bonds will be from this project. SENATOR RIEGER asked who would own the Discovery Center. MR. LOPATIN said the entity would own it. SENATOR KELLY asked how confident he was that he could sell the bonds. MR. HICKEY explained he was convinced it couldn't be financed more traditionally. Therefore, the financing has to be creative and this project makes sense. Economic Research Associates was hired to come up with figures the market would bear and The Northern Crossroad Discovery Center was developed from those figures. He said he felt comfortable that this project would be financed. SENATOR LINCOLN asked why they are discussing the legislation now instead of letting the Alaska Railroad Board first review it. SENATOR KELLY said he thought the legislature would have to pass authorizing legislation before the LoPatin group would commit the kind of money it would take to do a serious feasibility study. SENATOR LINCOLN also commented that she hoped it wasn't his intent to just benefit the educated and well to do in Anchorage as it says in the handout for the Northern Crossroads Discovery Center. She also wondered what they meant by "person" to do the feasibility study. MR. HICKEY apologized and explained that Anchorage and Alaska have a very high per capita income for the tourists who come here, compared to other tourist locations. That is what those comments were in reference to. He said the facility is designed to accommodate 60% of the tourists who arrive during a three month period. The facility has to be large enough to move that many people through in a short period of time. During the other eight and a half months the facility would still accommodate some tourists and more area residents, as well. Rates would drop substantially. The area residents would pay less. The project would be marketed differently for them. SENATOR LINCOLN asked if there was another way to get funding for the moving walkway if the ICT money doesn't come through. MR. HICKEY said he didn't have final figures, but it will be dropped if it can't be accommodated. SENATOR LINCOLN said she was concerned that the people employed by the Center would be Alaskans. MR. HICKEY said there would be approximately 350 employees and there was no reason to bring people in from out of state. They would hire native Alaskans to go along with the mythology part of the package. This would also be a union construction. A representative of the Union said they supported the project. SENATOR SALO asked about the time line with the construction. MR. HICKEY said that construction would start in 1995 with an opening in 1997. Number 460 BOB LERESCHE, John Nuveen & Co., said the bonds this legislation would authorize would be high yield bonds for a non-government project. It's an extremely common type of bond in the market today. The bonds will probably be required to have reserves to cover things like a year's debt service, capitalized interest, working capital reserves, and insurance. What the market will look for in deciding how much to pay for these bonds are basically a feasibility study, conducted by someone with whom the bond market is familiar, predicting the revenues would be more than sufficient to cover debt service at a certain coverage level. The bond market also would look at who would manage the project and at the Alaska tourism industry. SENATOR LINCOLN said she needed clarification of page 2, line 30 stating the Railroad is not obligated to pay the bond or the interest, except for the revenue stream or assets pledged for the bond. MR. HICKEY answered that the revenue is admission tickets and the assets are the Discovery Center itself - the brick and mortar. MR. LERESCHE said the Railroad will pay these bonds by passing the money through their system, but they're obliged to pay no more than they get from the owner of the Discovery Center. SENATOR KELLY moved to add the words "or firm" to "shall select the person." There were no objections and it was so ordered. SENATOR KELLY moved to add flexibility to go lower by inserting "not more than" before "$55 million". There were no objections and it was so ordered. SENATOR RIEGER moved to adopt the CS with the two amendments to SB 338. There were no objections and it was so ordered. SENATOR RIEGER moved to pass CSSB 338 (L&C) from Committee with individual recommendations. SENATOR LINCOLN objected. SENATORS KELLY, RIEGER, SHARP, and SALO voted yes; SENATOR LINCOLN voted no. The motion to pass CSSB 338(L&C) out of committee carried. SENATOR KELLY adjourned the meeting at 2:55 p.m.