Legislature(2001 - 2002)

04/28/2001 09:06 AM L&C

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                     ALASKA STATE LEGISLATURE                                                                                   
                 SENATE LABOR & COMMERCE COMMITTEE                                                                            
                          April 28, 2001                                                                                        
                             9:35 a.m.                                                                                          
                                                                                                                                
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Senator Randy Phillips, Chair                                                                                                   
Senator Alan Austerman                                                                                                          
Senator Loren  Leman                                                                                                            
Senator John Torgerson                                                                                                          
Senator Bettye Davis                                                                                                            
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
All Members  Present                                                                                                            
                                                                                                                              
COMMITTEE CALENDAR                                                                                                            
                                                                                                                              
SENATE BILL  NO. 202                                                                                                            
"An Act  relating to the  employment of persons  14 years of  age or                                                            
older and  under 21  years of  age on licensed  premises,  including                                                            
hotels,  restaurants,  or eating  places;  relating  to possession,                                                             
control, or consumption  of alcoholic beverages by a person under 21                                                            
years  of age; and  relating  to hours of  work of  minors under  16                                                            
years of age."                                                                                                                  
                                                                                                                              
     SCHEDULED BUT NOT HEARD                                                                                                    
                                                                                                                              
SENATE BILL  NO. 189                                                                                                            
"An Act relating  to motor vehicles; and providing  for an effective                                                            
date."                                                                                                                        
                                                                                                                              
     HEARD AND HELD                                                                                                             
                                                                                                                                
SENATE BILL  NO. 151                                                                                                            
"An Act relating  to the Bristol Bay  Salmon Classic; and  providing                                                            
for an effective date."                                                                                                         
                                                                                                                                
     MOVED SB 151 OUT OF COMMITTEE                                                                                              
                                                                                                                                
HOUSE BILL NO. 212                                                                                                              
"An Act relating  to an employer's liability for providing  workers'                                                            
compensation coverage."                                                                                                         
                                                                                                                                
     HEARD AND HELD                                                                                                             
                                                                                                                                
SENATE BILL NO. 132                                                                                                             
"An Act relating to minimum wages."                                                                                             
                                                                                                                                
     HEARD AND HELD                                                                                                             
                                                                                                                                
SENATE BILL NO. 46                                                                                                              
"An Act relating to increasing the minimum hourly wage under the                                                                
Alaska Wage and Hour Act; and providing for an effective date."                                                                 
                                                                                                                                
     HEARD AND HELD                                                                                                             
                                                                                                                                
CS FOR HOUSE BILL NO. 186(L&C)                                                                                                  
"An Act relating to a municipal enhanced 911 surcharge on wireless                                                              
telephones."                                                                                                                    
                                                                                                                                
     MOVED CSHB 186 (L&C) OUT OF COMMITTEE                                                                                      
                                                                                                                                
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
SB 189 - See Labor and Commerce minutes dated 4/19/01.                                                                          
                                                                                                                                
SB 151 - No previous action to consider.                                                                                        
                                                                                                                                
HB 212 - No previous action to consider.                                                                                        
                                                                                                                                
SB 132 - No previous action to consider.                                                                                        
                                                                                                                                
SB 46 - No previous action to consider.                                                                                         
                                                                                                                                
HB 186 - See Community and Regional Affairs minutes dated                                                                       
         4/27/01.                                                                                                               
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
Mr. Steve DeVries, Assistant Attorney General                                                                                   
1031 W 4th St.                                                                                                                  
Anchorage AK 99501                                                                                                              
POSITION STATEMENT:  Commented on SB 189.                                                                                     
                                                                                                                                
Ms. Luanne Pelagiu, Executive Director                                                                                          
Bristol Bay Native Corporation Education Foundation (BBNCEF)                                                                    
P.O. Box 202243                                                                                                                 
Anchorage AK 99520                                                                                                              
POSITION STATEMENT: Supported SB 151.                                                                                         
                                                                                                                                
Mr. Frank Hill, President                                                                                                       
Bristol Bay Native Corporation Education Foundation                                                                             
12321 Audubon Circle                                                                                                            
Anchorage AK  99516                                                                                                             
POSITION STATEMENT: Supported SB 151.                                                                                         
                                                                                                                                
Mr. Paul Grossi, Director                                                                                                       
Division of Worker's Compensation                                                                                               
Department of Labor & Workforce                                                                                                 
  Development                                                                                                                   
PO Box 21149                                                                                                                    
Juneau, AK 99802-1149                                                                                                           
POSITION STATEMENT: Commented on SB 151.                                                                                      
                                                                                                                                
Mr. Al Wilson, Chairperson                                                                                                      
Alaska State Homebuilders Association                                                                                           
No address provided.                                                                                                            
POSITION STATEMENT: Commented on HB 212.                                                                                      
                                                                                                                                
Mr. Charlie  Miller                                                                                                             
Alaska National Insurance Co.                                                                                                   
P.O. Box 102286                                                                                                                 
Anchorage AK  99510                                                                                                             
POSITION STATEMENT: Commented on HB 212.                                                                                      
                                                                                                                                
Ms. Sheila Gardener, Staff                                                                                                      
Senator Bettye Davis                                                                                                            
State Capitol Bldg.                                                                                                             
Juneau AK 99811                                                                                                                 
POSITION STATEMENT:  Commented on SB 132.                                                                                     
                                                                                                                                
Commissioner Ed Flanagan                                                                                                        
Department of Labor and Workforce Development                                                                                   
PO Box 21149                                                                                                                    
Juneau, AK 99802-1149                                                                                                           
POSITION STATEMENT:  Supported SB 46.                                                                                         
                                                                                                                                
Mr. John Brown, President                                                                                                       
Fairbanks Central Labor Council                                                                                                 
819 1st Avenue                                                                                                                  
Fairbanks AK  99701                                                                                                             
POSITION STATEMENT: Supported SB 46.                                                                                          
                                                                                                                                
Mr. Steven  Joswiak                                                                                                             
United Food and Commercial Workers Local 1496                                                                                   
59 College Rd., Suite 201                                                                                                       
Fairbanks AK  99709                                                                                                             
POSITION STATEMENT: Supported SB 46.                                                                                          
                                                                                                                                
Mr. Jim Sampson                                                                                                                 
1000 Bennett Road                                                                                                               
Fairbanks AK  99709                                                                                                             
POSITION STATEMENT: Supported SB 46.                                                                                          
                                                                                                                                
Mr. Don Ethridge                                                                                                                
AFL-CIO                                                                                                                         
710 W. 9th St.                                                                                                                  
Juneau AK 99803                                                                                                                 
POSITION STATEMENT: Supported SB 46 and SB 132.                                                                               
                                                                                                                                
Mr. Marvin Jones, President                                                                                                     
Hotel and Restaurant Employees Union Local 878                                                                                  
530 E 4th Ave.                                                                                                                  
Anchorage AK  99501                                                                                                             
POSITION STATEMENT: Supported SB 46 and SB 132.                                                                               
                                                                                                                                
Mr. Jim Calhoun                                                                                                                 
10905 Kamishak Bay Circle                                                                                                       
Anchorage AK  99515                                                                                                             
POSITION STATEMENT:  Supported SB 46 and SB 132.                                                                              
                                                                                                                                
Ms. Tora Gerrick, Secretary/Treasurer                                                                                           
Hotel and Restaurant Employees Union Local 878                                                                                  
530 E 4th                                                                                                                       
Anchorage AK  99501                                                                                                             
POSITION STATEMENT: Supported SB 46 and SB 132.                                                                               
                                                                                                                                
Mr. Jack Amoun, President                                                                                                       
Alaska Restaurant and Beverage Association                                                                                      
627 W 3rd Ave.                                                                                                                  
Anchorage AK  99501                                                                                                             
POSITION STATEMENT: Opposed SB 46 and SB 132.                                                                                 
                                                                                                                                
Mr. Alonzo Patterson                                                                                                            
American Baptist Church                                                                                                         
3727 William St.                                                                                                                
Anchorage AK  99508                                                                                                             
POSITION STATEMENT:  Supported SB 46 and SB 132.                                                                              
                                                                                                                                
Mr. Mee Son Chong                                                                                                               
7000 Chad St.                                                                                                                   
Anchorage AK  99508                                                                                                             
POSITION STATEMENT:  Supported SB 46 and SB 132.                                                                              
                                                                                                                                
Mr. Mano Fry, President                                                                                                         
AFL-CIO                                                                                                                         
2501 Commercial Dr.                                                                                                             
Anchorage AK  99501                                                                                                             
POSITION STATEMENT: Supported SB 46.                                                                                          
                                                                                                                                
Ms. Fay Gavin                                                                                                                   
2121 W 8th                                                                                                                      
Anchorage AK  99517                                                                                                             
POSITION STATEMENT: Supported opposed tip credits.                                                                            
                                                                                                                                
Mr. Ray Lacey                                                                                                                   
1473 W 25, #23                                                                                                                  
Anchorage AK 99503                                                                                                              
POSITION STATEMENT: Supported SB 46 and SB 132.                                                                               
                                                                                                                                
Ms. Sue Bailey                                                                                                                  
4205 Garfield                                                                                                                   
Anchorage AK 99503                                                                                                              
POSITION STATEMENT: Supported SB 132.                                                                                         
                                                                                                                                
Ms. Angela Lipton, Director                                                                                                     
Department of Justice                                                                                                           
Catholic Archdiocese of Anchorage                                                                                               
No address provided                                                                                                             
POSITION STATEMENT: Supported SB 46.                                                                                          
                                                                                                                                
Ms. Mary Jo Audecte                                                                                                             
Sheraton Hotel Server                                                                                                           
No address provided                                                                                                             
Anchorage AK                                                                                                                    
POSITION STATEMENT: Supported SB 46.                                                                                          
                                                                                                                                
Ms. Lucy Vincent                                                                                                                
Sheraton Hotel Worker                                                                                                           
No address provided                                                                                                             
Anchorage AK                                                                                                                    
POSITION STATEMENT: Supported SB 46.                                                                                          
                                                                                                                                
Mr. Darrel Tseu                                                                                                                 
Inlandboatmen's Union of the Pacific                                                                                            
3017 Clinton Dr., #201                                                                                                          
Juneau AK 99801                                                                                                                 
POSITION STATEMENT: Supported SB 46.                                                                                          
                                                                                                                                
Ms. Caren Robinson                                                                                                              
Alaska Women's Lobby                                                                                                            
P.O. Box 33702                                                                                                                  
Juneau AK 99803                                                                                                                 
POSITION STATEMENT: Supported SB 46 and SB 132.                                                                               
                                                                                                                                
Ms. Berit Eriksson                                                                                                              
Inlandboatmen's Union                                                                                                           
3017 Clinton Dr., #201                                                                                                          
Juneau AK 99801                                                                                                                 
POSITION STATEMENT: Supported SB 46.                                                                                          
                                                                                                                                
Ms. Pam LaBolle, President                                                                                                      
State Chamber of Commerce                                                                                                       
217 Second Street, #201                                                                                                         
Juneau AK 99801                                                                                                                 
POSITION STATEMENT: Commented on minimum wage issues.                                                                         
                                                                                                                                
Mr. Jim Nordlund, Director                                                                                                      
Division of Public Assistance                                                                                                   
Department of Health &                                                                                                          
  Social Services                                                                                                               
PO Box 110601                                                                                                                   
Juneau, AK  99801-0601                                                                                                          
POSITION STATEMENT: Supported SB 132 and SB 46.                                                                               
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
TAPE 01-22, SIDE A                                                                                                            
Number 001                                                                                                                      
              SB 189-MOTOR VEHICLE SALES AND DEALERS                                                                        
                                                                                                                              
CHAIRMAN  RANDY   PHILLIPS  called  the  Senate  Labor   &  Commerce                                                          
Committee  meeting to  order  at 9:35 a.m.  and  announced that  the                                                            
sponsor of SB 202 asked  him to hold the bill and that the committee                                                            
would take up SB 189 for consideration.                                                                                         
                                                                                                                                
MR. STEVE DEVRIES,  Assistant Attorney  General, said the  House was                                                            
currently   working  on   the  House   version   with  dealers   and                                                            
manufacturers  and he hoped a compromise  could be made.  He thought                                                            
this version was the one  that could realistically meet the concerns                                                            
of the Department of Law.                                                                                                       
                                                                                                                                
There were no questions from the committee.                                                                                     
                                                                                                                                
CHAIRMAN  PHILLIPS announced  they would hold  SB 189 for a  further                                                            
hearing.                                                                                                                        
                                                                                                                                
                 SB 151-BRISTOL BAY SALMON CLASSIC                                                                          
                                                                                                                              
CHAIRMAN PHILLIPS announced SB 151 to be up for consideration.                                                                  
                                                                                                                                
MR. TIM GRUSSENDORF, Staff  to Senator Hoffman, said SB 151 adds the                                                            
Bristol Bay Native  Corporation Education Foundation  (BBNCEF) to an                                                            
existing  law,  which authorizes   salmon classics  and  allows  the                                                            
Foundation to raise money for scholarships.                                                                                     
                                                                                                                                
MS. LUANNE  PELAGIU, Executive Director,  BBNCEF, supported  SB 151.                                                            
She said they  currently do fund raising  and that it would  provide                                                            
additional  opportunities  for fund  raising and  revenue for  their                                                            
scholarship program.                                                                                                            
                                                                                                                                
MR. FRANK  HILL, President,  BBNCEF, supported  SB 151 and  said the                                                            
primary purpose of the  bill was to allow them to have other options                                                            
for fundraising to develop the Foundation.                                                                                      
                                                                                                                                
SENATOR  TORGERSON  moved   to  pass  SB  151  from  committee  with                                                            
individual recommendations  with the accompanying fiscal note. There                                                            
were no objections and it was so ordered.                                                                                       
                                                                                                                                
         HB 212-WORKERS' COMP:CONTRACTORS & SUBCONTRACTOR                                                                   
                                                                                                                                
CHAIRMAN PHILLIPS announced HB 212 to be up for consideration.                                                                  
                                                                                                                                
REPRESENTATIVE  LISA  MURKOWSKI, sponsor,  explained  that  statutes                                                            
don't  require  sole  proprietors  to  have  worker's  compensation                                                             
insurance and this has  caused problems when the Worker's Comp Board                                                            
makes  a  determination  that  an employee  or  sole  proprietor  is                                                            
construed  to  be an  employee  of  the general  contractor.  "As  a                                                            
consequence, there  are assessments to the general  for the worker's                                                            
compensation  insurance,   it causes   uncertainty  in  the  bidding                                                            
process…"                                                                                                                       
                                                                                                                                
She said this issue has  been a problem for quite some time and that                                                            
a state wide task  force had been set up to look into  it. HB 212 is                                                            
the result  of that  compromise.  It requires  that sole  proprietor                                                            
entities  maintain  worker's  comp  insurance,  which  will  add  an                                                            
increased cost to that sole proprietor.                                                                                         
                                                                                                                                
SENATOR AUSTERMAN asked how "sole proprietor" is defined.                                                                       
                                                                                                                                
REPRESENTATIVE   MURKOWSKI  replied   that  it  is  defined   as  an                                                            
individual  or an entity  that is working  for himself. They  are an                                                            
independent contractor. This has been part of the problem.                                                                      
                                                                                                                                
SENATOR AUSTERMAN  asked if  there was any  discussion about  a sole                                                            
proprietor who had no employees.                                                                                                
                                                                                                                                
REPRESENTATIVE  MURKOWSKI replied that he would be  required to have                                                            
worker's comp coverage.                                                                                                         
                                                                                                                                
SENATOR AUSTERMAN  said he understood  that a sole proprietor  could                                                            
have 40 employees.                                                                                                              
                                                                                                                                
REPRESENTATIVE MURKOWSKI  responded that was correct and that a sole                                                            
proprietor business is owned by the individual.                                                                                 
                                                                                                                                
SENATOR AUSTERMAN asked  if there was discussion about making a sole                                                            
proprietor with no employees exempt from this requirement.                                                                      
                                                                                                                                
REPRESENTATIVE   MURKWOSKI  replied  that  they  didn't   have  that                                                            
discussion in committee.                                                                                                        
                                                                                                                                
SENATOR LEMAN  said if this represents  a compromise, what  were the                                                            
other proposals. He thought  it seemed to be an aggressive move into                                                            
an area where they hadn't gone.                                                                                                 
                                                                                                                                
MR.  PAUL  GROSSI,  Director,  Division  of Worker's  Compensation,                                                             
clarified  that this only  deals with subcontractors.  It isn't  for                                                            
all  sole proprietors.  "A  sole  proprietor  by definition  has  no                                                            
employees."                                                                                                                     
                                                                                                                                
He said  this bill just deals  with a narrow  focus when you  have a                                                            
subcontractor  situation. The problem  is when you try to  determine                                                            
if that person  is an employee or  truly a subcontractor.  "That's a                                                            
pretty  gray area  -  especially if  the  contractor  has an  actual                                                            
employee doing basically the same work."                                                                                        
                                                                                                                                
MR. GROSSI  said the  problem is that  there is  risk out there.  He                                                            
said  they don't  have that  many  claims, but  insurance  companies                                                            
audit a  contractor and tell  the state they  should have covered  a                                                            
person  because  they  could  be  construed   as  an  employee.  The                                                            
insurance company, then,  backcharges for premium. This is after the                                                            
contract has already  been let and the funds can't  be recovered. He                                                            
said  that all  this does  is recognize  that  there is  a risk  and                                                            
allows for it to be covered  through contracts and things like that.                                                            
                                                                                                                                
He explained  that the compromise  came in when they decided  how to                                                            
do a waiver.  You really can't get  rid of all risk. A person  could                                                            
sign a waiver and still  come in and say they were required to do it                                                            
by  the contractor.   They could  go  to  the courts  even  if  they                                                            
couldn't go to the board.                                                                                                       
                                                                                                                                
SENATOR LEMAN  asked if this covered  all subcontract relationships                                                             
in all professions.                                                                                                             
                                                                                                                                
MR. GROSSI  replied that  it would. He said  their primary  problems                                                            
have come from home builders and construction.                                                                                  
                                                                                                                                
SENATOR  LEMAN asked  why they didn't  limit it  to the professions                                                             
where they had problems.                                                                                                        
                                                                                                                                
MR. GROSSI responded that  the risks would be out there for anybody.                                                            
Basically  it  was easier  to  see  the relationship  when  using  a                                                            
contractor/subcontractor   standard. For  instance,  if a  homeowner                                                            
contracted to  have their house painted, the board  would never rule                                                            
that is a subcontractor  situation. Basically the  homeowner is just                                                            
a consumer. That would be true in most contract situations.                                                                     
                                                                                                                                
SENATOR LEMAN  said that most medical doctors and  dentists  are set                                                            
up as their own  professional corporations or sole  proprietorships.                                                            
He wanted to know if this reached into those areas.                                                                             
                                                                                                                                
MR. GROSSI  answered that he didn't  think most of those  situations                                                            
were subcontractors.                                                                                                            
                                                                                                                                
SENATOR  LEMAN  asked about  situations  where  they  contract  with                                                            
someone to fill a spot  and it's not done on an employee basis. That                                                            
person operates independently  and makes independent judgments. They                                                            
are under some  master clinic like  the Alaska Native Tribal  Health                                                            
Consortium.                                                                                                                     
                                                                                                                                
SENATOR  AUSTERMAN  said he  couldn't  imagine that  this  insurance                                                            
would be cheap.                                                                                                                 
                                                                                                                                
MR.  GROSSI   responded  that  this   wouldn't  cover  a   homeowner                                                            
purchasing a carpet  and having it put into their  homes. He said an                                                            
example  of a  carpet and  vinyl installer  premium  was $1,467  per                                                            
year.                                                                                                                           
                                                                                                                                
REPRESENTATIVE  MURKOWSKI reaffirmed that there would  be nothing in                                                            
the bill that would specifically exempt the medical community.                                                                  
                                                                                                                                
MR. AL WILSON,  Chairperson, Alaska State Homebuilders  Association,                                                            
said their problems  arise when their audits are done  at the end of                                                            
the year. He  explained if his cabinet  maker sends his crew  out to                                                            
install the cabinets, they  are required to be covered with worker's                                                            
compensation.  When  the sole  proprietor  is on  his  job site,  he                                                            
wanted to know if he was  an employee since his policy doesn't cover                                                            
him. "It  ends up on my  policy and more  importantly at the  end of                                                            
the year, my insurance  carrier comes back and picks  those guys out                                                            
and  get to  pay the  premium  on them….We  are  not wholeheartedly                                                             
behind this, but it takes care of the problems."                                                                                
                                                                                                                                
MR. WILSON  said his  framing subcontractors  pay  $2,500 per  year.                                                            
This  is  an  insurance   policy  that  if  they   were  to  buy  it                                                            
independently  as health insurance, it would cost  them a minimum of                                                            
twice as much  and it would only cover them when they're  not on the                                                            
job.  Another  benefit  of the  policy  is  that  if it's  in  place                                                            
regardless of  what claims come out of employees or  subcontractors,                                                            
that's the  end of it right  there. It doesn't  work its way  up the                                                            
chain.                                                                                                                          
                                                                                                                                
SENATOR  LEMAN  said  he thought  the  coverage  he  described  only                                                            
covered  work  related  injuries and  did  not  extend to  a  health                                                            
problem outside of work.                                                                                                        
                                                                                                                                
MR. WILSON said that was correct.                                                                                               
                                                                                                                                
Number 1600                                                                                                                     
                                                                                                                                
REPRESENTATIVE  OGAN  said he  got into  government  because he  was                                                            
frustrated with all the  things government imposes on small business                                                            
people. He recently slipped  on some ice and broke his leg and if he                                                            
was less than  an honorable person, he might have  put in a worker's                                                            
compensation  claim. A  lot of  sole proprietors  don't have  health                                                            
insurance and  he thought they needed to consider  the potential for                                                            
fraudulent  claims. This bill would  create a whole lot of  outlaws,                                                            
because a lot  people simply won't get the insurance.  He offered to                                                            
work with the sponsors.                                                                                                         
                                                                                                                                
MR. CHARLIE MILLER, Alaska  National Insurance Company, said the two                                                            
ways  to handle  this are  to  clarify in  statute  somehow that  no                                                            
matter what the cause,  a sole proprietor who has taken advantage of                                                            
this  exemption   for  the  requirement  of  worker's  compensation                                                             
insurance,  never has coverage.  That is a  very difficult  thing to                                                            
craft in statute  and isn't good public  policy. If a subcontractor                                                             
is forced by an  unscrupulous contractor to declare  sole proprietor                                                            
status to get work and  then work only on that job using their tools                                                            
under the  other job  conditions that  are set  up for an  employee,                                                            
there  should be  coverage  for him.  "The task  force  came to  the                                                            
conclusion  that the only  way to handle this  is to come up  with a                                                            
requirement of coverage…"                                                                                                       
                                                                                                                                
He explained  that the audits need  to be flexible so the  amount of                                                            
premium  changes if  the job is  longer or  shorter than  originally                                                            
estimated.  If  an   unscrupulous  proprietor  decides   to  file  a                                                            
fraudulent claim, that money comes out of people's pockets.                                                                     
                                                                                                                                
     The  only way  we could  come up,  as a task  force,  with                                                                 
     something  that was fair to everyone was to dictate,  take                                                                 
     the ambiguity  out of it, the unpredictability  out of it,                                                                 
     and  dictate  coverage.  The coverage  available  to  sole                                                                 
     proprietors  is very  limited  in the market.  It's  often                                                                 
     impossible to get it. That  is why the State of Alaska set                                                                 
     up an  assigned risk pool. So  that anyone that can't  get                                                                 
     coverage  is assigned  to a carrier  that writes worker's                                                                  
     compensation in the State  of Alaska and they get a policy                                                                 
     that  is basically  subsidized.  They are all  put into  a                                                                 
     pool  for  economies  of  scale  and  are  assigned  to  a                                                                 
     carrier.  The administrative  carrier  takes  care of  the                                                                 
     premium, does the claims  management if there is an injury                                                                 
     on the job and it's handled that way.                                                                                      
                                                                                                                                
     They are  not paying the same  rate as a regular employer                                                                  
     either - because they pay  a minimum premium that has been                                                                 
     established  at $20,000. So,  as a contractor, if you  pay                                                                 
     someone  $100,000 at the carpenter  rate, you pay for  the                                                                 
     entire  $100,000   formula.  As  a  sole  proprietor,   at                                                                 
     $20,100,  your payroll stops  and everything you are  paid                                                                 
     after that is taken out  of the equation. So, you only pay                                                                 
     an insurance  premium as if you were paid $20,000  for the                                                                 
     entire  year,  no matter  how  much you  work.  So, if  an                                                                 
     employer  hires someone  to do the exact  same work,  they                                                                 
     pay the rate at the full  payroll, which may be five times                                                                 
     as  much. So,  the sole proprietors  are  not providing  a                                                                 
     windfall to insurance carriers  and they're not losing any                                                                 
     kind  of competitive  edge.  All  they're doing  is  being                                                                 
     asked  to  be responsible  as  everyone  else is  and  not                                                                 
     slough  their  costs off  on other  participants  in  this                                                                 
     whole project.                                                                                                             
                                                                                                                                
     So, we spent  a lot of time trying to figure out  a way to                                                                 
     make  it an  option for  sole  proprietors,  but the  only                                                                 
     thing  you can do that  is to put additional  risk on  the                                                                 
     general  contractor  and their  carriers.  We don't  think                                                                 
     that's  fair. If the legislature  can find a way to  do so                                                                 
     and relieve  everyone else from  this unpredictable  risk,                                                                 
     we  would be glad  to entertain  it. But  a lot of people                                                                  
     spent a lot  of time trying to do that and they  couldn't.                                                                 
     This  is the  best possible  solution in  our opinion  for                                                                 
     everyone involved including the sole proprietor.                                                                           
                                                                                                                                
CHAIRMAN PHILLIPS thanked him for his testimony and said he would                                                               
hold the bill for further work.                                                                                                 
                                                                                                                                
                SB  46-INCREASE MINIMUM HOURLY WAGE                                                                         
                        SB 132-MINIMUM WAGE                                                                                 
                                                                                                                              
CHAIRMAN PHILLIPS announced they would take up Senator Davis' bill                                                              
first, SB 132.                                                                                                                  
                                                                                                                                
MS. SHEILA GARDNER, Staff to Senator Davis, explained that SB 132                                                               
seeks to raise Alaska's minimum wage, currently $5.65 per hour.                                                                 
Washington,  Oregon and California  all have minimum wages  that are                                                            
set higher than  Alaska's. While Alaska's minimum  wage has risen in                                                            
terms of actual  dollars, it has failed to keep up  with the rate of                                                            
inflation.  Over time, this has dramatically  hurt Alaska's  working                                                            
poor. "CSSB 132, while  not inflation proofing Alaska's minimum wage                                                            
will require  that employers  pay employees  at a  rate of not  less                                                            
than $6.90  an hour or $1 an hour  more than the prevailing  federal                                                            
minimum wage.  By making this change, Alaskans currently  working at                                                            
the  minimum  wage will  have  a chance  at  making  livable  wages.                                                            
                                                                                                                                
She said further:                                                                                                               
                                                                                                                                
     Why increase  Alaska's minimum  wage? In 1999, Alaska  had                                                                 
     approximately  47,000  men, women and  children living  on                                                                 
     minimum  wage  incomes.  The  myth is  that  minimum  wage                                                                 
     earners  are  mostly teenagers  who  work to  earn pocket                                                                  
     money. Yet,  according to statistics released  by Alaska's                                                                 
     Department  of  Labor,  most  minimum   wage  earners  are                                                                 
     adults.  In  1996,  U.S.  Labor  Secretary,  Robert  Rice,                                                                 
     remarked the vast majority  of time the majority of us are                                                                 
     content  to allow  the market  to dictate  who should  get                                                                 
     what  and  how much.  Capitalism  works  best when  it  is                                                                 
     unfettered,  but there are times and there are  conditions                                                                 
     when we  insist on minimum standards  of fairness. Alaska                                                                  
     can and  should do more to help  our fellow Alaskans  live                                                                 
     with respect  and dignity by  helping them attain a  level                                                                 
     of economic  independence. Raising  the minimum wage  will                                                                 
     help achieve  the goal. I would respectfully ask  for your                                                                 
     support of SB 132.                                                                                                         
                                                                                                                                
COMMISSIONER  ED  FLANNIGAN,  Department   of  Labor  and  Workforce                                                            
Development,  said this is an important  issue that should  be acted                                                            
upon by  the legislature.  He said  when the  Governor first  raised                                                            
this issue, there  was a gratifying consensus that  something needed                                                            
to be done and 106 days later, they are "almost stuck on go."                                                                   
                                                                                                                                
He said further  that Senator Davis's  staff had covered  the larger                                                            
issues, but he wanted to mention a couple of particulars:                                                                       
                                                                                                                                
     Anybody  working  at  the minimum  wage  in the  State  of                                                                 
     Alaska,  and there are people  that do this, working  at a                                                                 
     level  that  would  keep  that  at  poverty  even  with  a                                                                 
     substantial  raise. This is not  right and we hope we  can                                                                 
     address,  through  the legislation,  getting  our minimum                                                                  
     wage  more on track  to represent some  basic standard  of                                                                 
     sustainable  living for folks  that are in the low income                                                                  
     brackets.                                                                                                                  
                                                                                                                                
     We  have some  survey data  from 1998  that approximately                                                                  
     14,000 workers  or 5.5 % of wage and salary employment  in                                                                 
     this  state received  hourly  wages under  $6.75. We  have                                                                 
     ranges  and that's  the best  we could  do as  far as  how                                                                 
     particular  between $5.65 and $6.74. That was  in a fourth                                                                 
     quarter,  so  those numbers  would  presumably  be higher                                                                  
     during the  seasonal summer quarter. There has  been a lot                                                                 
     said and I would certainly be available…                                                                                   
                                                                                                                                
COMMISSION FLANAGAN  said the main reason the bill  has been held up                                                            
is opposition from primarily  the restaurant industry over the issue                                                            
of a tip credit  which was before the legislature  a couple of years                                                            
ago. He said:                                                                                                                   
                                                                                                                                
     It is  true that a majority of  states have a tip credit.                                                                  
     There  are few, if any  states on the  west coast, Alaska                                                                  
     has never  had it. Governor Knowles, who speaks  with some                                                                 
     authority  with  30  years  of  meeting  the  payroll  and                                                                 
     employing   people  in  the   food  service  industry   is                                                                 
     adamantly opposed to a tip  credit and feels that it's not                                                                 
     a proper thing to include  in any legislation and ask your                                                                 
     consideration…                                                                                                             
                                                                                                                                
He said  the Governor's bill  proposes a tie  to the consumer  price                                                            
index to keep  the wages from falling. "Right now  the only indexing                                                            
is a  tie to  the federal  minimum  wage.  We're 50  cents over  the                                                            
federal. That was set in  1959 when the federal minimum wage was $1.                                                            
So, we had a 50  percent differential for Alaska and  now we're down                                                            
to less than a 10 percent differential."                                                                                        
                                                                                                                                
Number 2300                                                                                                                     
                                                                                                                                
MR. JOHN BROWN, President,  Fairbanks Central Labor Council, said he                                                            
supported SB  46. "Many people who  come to work every day  and work                                                            
hard deserve  a living  wage.  It's the  right thing  to do. At  the                                                            
current minimum  wage, that's  just not happening.  This is  a level                                                            
wage. It doesn't  make any business  any less competitive.  Everyone                                                            
comes up together."                                                                                                             
                                                                                                                                
TAPE 01-22, SIDE B                                                                                                            
                                                                                                                                
MR. BROWN urged  the committee to pass the bill containing  indexing                                                            
to the consumer  price index, which  would hopefully keep  them from                                                            
having to address this  again. He supported the Governor's bill, but                                                            
said that SB 132 would be better than nothing.                                                                                  
                                                                                                                                
MR. STEVE JOSWIAK,  United Food and  Commercial Workers Local  1496,                                                            
said  he supported  the Governor's  bill,  SB 46. "There  are a  lot                                                            
people  out there  who are  working, not  just kids  who are  making                                                            
minimum wage, but adults.  I think the Governor's bill is the way to                                                            
go tied  in with the  CPI…It's been  too long to  see any raises  of                                                            
minimum wage.  If we could have the  CPI in there, we don't  have to                                                            
come back to the table and do this every five or six years…"                                                                    
                                                                                                                                
MR. JIM SAMPSON,  Fairbanks resident, supported any  movement by the                                                            
Alaska  legislature  to  increase  the  minimum  wage  for  Alaska's                                                            
workers. He said he is  one of three sponsors on a petition that was                                                            
recently certified  and they plan on being successful  in collecting                                                            
28,000 signatures  to put it on the  ballot in the November  general                                                            
election.   He  said  their   initiative   mirrors  the   Governor's                                                            
legislation  that would increase the  minimum wage to $7.15  an hour                                                            
and index it every year  thereafter. "The only difference is that we                                                            
have one small  change. Currently, Alaska law says  that our minimum                                                            
wage will be 50  cents over federal minimum wage.  Our petition pegs                                                            
that at $1 over minimum wage…"                                                                                                  
                                                                                                                                
MR. DON ETHRIDGE,  AFL-CIO, said they also support  increases to the                                                            
minimum wage. Their preference  is the indexing method, but he said,                                                            
"We'll take what we can get at this time."                                                                                      
                                                                                                                                
MR. MARVIN  JONES, President, Hotel  and Restaurant Employees  Union                                                            
Local 878, opposed a tip  credit for Alaskans. He personally knows a                                                            
large  number of  employees  who work  two or  three  jobs in  order                                                            
maintain  a decent life.  A tip credit would  lessen the quality  of                                                            
life for all Alaskans.                                                                                                          
                                                                                                                                
MR. JIM CALHOUN said he  worked at the Sheraton Anchorage Hotel as a                                                            
tipped employee  and supported the  no tip credit language  in SB 46                                                            
and SB 132. He said, "As  a tipped employee in the Anchorage, I have                                                            
two children and one on  the way. I work two jobs to allow my family                                                            
to live a lower middle  class life style. I speak for many people in                                                            
the Anchorage  area when I say that  we will fight passionately  any                                                            
attempt to institute a  tip credit or a two tier minimum wage system                                                            
for tipped employees."                                                                                                          
                                                                                                                                
MS.  TORA   GERRICK,  Secretary/Treasurer,   Hotel  and   Restaurant                                                            
Employees Union  Local 878, supported the no tip credit  language in                                                            
both  of  the bills.  They  prefer  SB  46 and  are  supporting  the                                                            
petition  effort.   "I  want  to   implore  the  Senate   and  House                                                            
representatives,  as  well as  the Governor,  to  please not  punish                                                            
working people from doing a good job via a tip credit."                                                                         
                                                                                                                                
MR.  JACK AMOUN,  owner  of  Marx Brothers  Café,  said  he is  also                                                            
President of  the Alaska Restaurant  and Beverage Association.  They                                                            
are strongly  opposed  to both  increases  in the  minimum wage.  He                                                            
testified:                                                                                                                      
                                                                                                                                
     While  on the surface raising  the starting wage may  seem                                                                 
     like a simple thing to do,  the effects of a mandated wage                                                                 
     hike  are far more  complex especially  in regards to  the                                                                 
     restaurant  industry….I  think  it  is important  that  we                                                                 
     dispel  the  misconceptions  about  who the  minimum  wage                                                                 
     earners  are in restaurants and  we should look at how  it                                                                 
     affects  the two segments of  our industry, both in  table                                                                 
     service  restaurants  and in  quick service  or fast  food                                                                 
     operations.   In  table  service  restaurants,   the  only                                                                 
     minimum wage  workers are, in fact, our tip employees  who                                                                 
     do receive  a major portion of  their wages in tips.  I've                                                                 
     described  the  tips  as  wages  because  to  the federal                                                                  
     government  and  IRS  tips are,  in  fact, wages  and  are                                                                 
     treated as such for withholding as payroll taxes.                                                                          
                                                                                                                                
     Employees  are required  to report all  tips received  and                                                                 
     employers  are  required  to  insure  compliance.  We  are                                                                 
     subject  to  audits  and  there  have  been  cases   where                                                                 
     employers  have been held liable  for unreported tips  and                                                                 
     assessed   fines  and   penalties  by   the  IRS.  In   my                                                                 
     restaurant, tipped income  reported by my servers averages                                                                 
     between  $13 -  $25 per hour….  Red Robin  and Applebee's                                                                  
     servers averaged $12 - $20  per hour in tipped income. Our                                                                 
     hostesses  and busboys  are all  paid above  minimum  wage                                                                 
     with prevailing wages for  dishwashers and prep cooks from                                                                 
     $7 - $12 per  hour. The federal government recognizes  how                                                                 
     tip income  works and allows employers to apply  a portion                                                                 
     of  that to  offset  minimum wage  requirements.  The  tip                                                                 
     credit  is currently law  in 43 states.  Alaska is one  of                                                                 
     only seven states with no tip credit.                                                                                      
                                                                                                                                
     As written,  both of these bills would force employers  to                                                                 
     give raises  to our most highly compensated employees  and                                                                 
     the effect  of this is often  a freeze in the back of  the                                                                 
     house  wages. Our kitchen staff  often bears the brunt  of                                                                 
     this.                                                                                                                      
                                                                                                                                
     The  increase in labor  costs cannot be  made up in  sales                                                                 
     and price  increases. After the last wage hike,  La Mex in                                                                 
     Anchorage  was forced  to limit its  health insurance  for                                                                 
     its  employees and  Red Robin eliminated  paid vacations.                                                                  
     Operations  are  often  forced  to freeze  wages  paid  to                                                                 
     kitchen staff.                                                                                                             
                                                                                                                                
     Restaurants  operate on slim profit margins. According  to                                                                 
     a  National  Restaurant  Association industry  operations                                                                  
     survey,  net returns  for successful  restaurants average                                                                  
     between 5  - 8 percent of gross revenues. The  restaurants                                                                 
     are labor  intensive and table  costs run between 25  - 30                                                                 
     percent of gross.                                                                                                          
                                                                                                                                
     The  quick service segment  of the  industry provides  the                                                                 
     first  job for  over 60  percent of  America's teenagers.                                                                  
     These  first  time  employees  enter  the  workplace  with                                                                 
     little  or no skills.  Training costs  are high. In  fact,                                                                 
     studies  done  by  the  National  Restaurant  Association                                                                  
     reveal  that the majority of  minimum wage earners are  in                                                                 
     fact  teenagers  with  a household  income  in  excess  of                                                                 
     $50,000 per  year. Employees do not stay at this  starting                                                                 
     wage for  long. Again, the federal  government recognizes                                                                  
     the role restaurants play  in starting young people in the                                                                 
     workforce by providing a training wage.                                                                                    
                                                                                                                                
     Federal  statutes  allow employers  to pay  new employees                                                                  
     under 18 a  lower than minimum wage for the first  90 days                                                                 
     of  employment.  Alaska  has  a  training  wage,  but  the                                                                 
     requirements  are so  restrictive that  it's not feasible                                                                  
     for employers to take advantage of it.                                                                                     
                                                                                                                                
     Another impact  on the fast food industry and  restaurants                                                                 
     in general  has to do with salaried management  personnel.                                                                 
     Under Alaska labor law,  if we have a management personnel                                                                 
     on salary that has to do  front line employee tasks for 20                                                                 
     percent  or greater of their  time, they are paid two  and                                                                 
     half  times the minimum  wage. Currently,  these salaries                                                                  
     are  in the  $29,000  per  year range.  That  would  force                                                                 
     increases  to the $34,000 per  year. I don't know another                                                                  
     industry  that is  paying people  close  to $30,000  where                                                                 
     they are considered minimum wage employees.                                                                                
                                                                                                                                
     In summation,  an increase in  the starting wage will  hit                                                                 
     restaurants  hard.  We'll  be forced  to raise  wages  for                                                                 
     employees  currently earning  between $15 - $20 per  hour.                                                                 
     Quick  service restaurants  will have  a tough time  being                                                                 
     able  to give young  persons a start.  I encourage you  to                                                                 
     oppose  both of these bills.  Thank you very much and  I'd                                                                 
     be happy to answer questions.                                                                                              
                                                                                                                                
SENATOR DAVIS  said that he mentioned he had dishwashers  making $10                                                            
- $12 an hour  and asked if they were  full-time employees  or part-                                                            
time and  what kind of benefits  did he provide  if they were  full-                                                            
time.                                                                                                                           
                                                                                                                                
MR. AMOUN responded that  sometimes they are full-time and sometimes                                                            
part-time. They  offer a group health insurance plan  that employees                                                            
can elect to  participate in. Due  to rising health insurance  costs                                                            
and increased  labor costs, they can no longer cover  at 100%, so it                                                            
requires  a contribution  on  the part  of the employee.  They  also                                                            
offer a one-week  paid vacation after anyone has been  with them for                                                            
one year.                                                                                                                       
                                                                                                                                
SENATOR  DAVIS asked  if most  of the  people he  employees at  that                                                            
level are part-time.                                                                                                            
                                                                                                                                
MR. AMOUN answered that  it varies. He has a small operation. He has                                                            
a  full-time prep  cook,  a  full-time dishwasher  and  a  part-time                                                            
dishwasher.                                                                                                                     
                                                                                                                                
SENATOR DAVIS  said it is true that  many teenagers come  into these                                                            
jobs, but in  Anchorage lately, she  sees more seniors work  in some                                                            
of the fast food restaurants  than young people. She asked if he had                                                            
that problem.                                                                                                                   
                                                                                                                                
MR. AMOUN  replied that was  not a problem  for him, but he  thought                                                            
this was an  important bill. He said  he could have other  operators                                                            
come forward like Larry  Baker from Burger King, Jay Southerland who                                                            
owns Wendy's and a former McDonalds owner.                                                                                      
                                                                                                                                
MR. ALONZO PATERSON said  he represents the American Baptist Church,                                                            
the Alaska  Right  to Leadership  Conference and  other groups  that                                                            
deal with  low-income wage  earners across  the State of Alaska.  He                                                            
supported  the  minimum  wage  increase,  because  of  a  number  of                                                            
reasons. His church's constituents  run the gamut in terms of income                                                            
wage earners.  Many of them are low-income wage earners  and border-                                                            
line  survivors.  Many people  who  are returning  to  society  from                                                            
correction  are forced to return to  crime because the income  is so                                                            
low they are unable to survive.                                                                                                 
                                                                                                                                
He said  his church  is at the  entrance of  a low-income  community                                                            
where they  live and work  with many people.  He said they  see many                                                            
people who  have to see people trying  to survive each day.  He said                                                            
further:                                                                                                                        
                                                                                                                                
     I think they are being used  or manipulated by the society                                                                 
     because  they are allowed  to be deprived  of an adequate                                                                  
     income.  While I  recognize that  this increase  will  not                                                                 
     satisfy  all of the needs of  my constituents, it will  go                                                                 
     far to help in alleviating much of the burden.                                                                             
                                                                                                                                
     If you look at the rental  costs, the full costs and other                                                                 
     costs  in  our society  today,  this  kind of  income  set                                                                 
     provokes,  in my opinion, criminal  behavior for survival                                                                  
     or cheating  or many other devious means that  sustain the                                                                 
     prisoners. Again, many inmates  who come out are unable to                                                                 
     live,   as  people  who  know   they  have  been  in   the                                                                 
     institution  use them  because they are  able to get  away                                                                 
     with it.  Our church is one of  the work stations for  the                                                                 
     Department  of Corrections and  many of those persons  who                                                                 
     are  coming out of [indisc.],  we do  try to help them  in                                                                 
     getting jobs and work experience.                                                                                          
                                                                                                                                
     We also work a lot with  the Brother Francis Shelter where                                                                 
     many of these people end  up at the bottom of the rung and                                                                 
     again  they become  a  breeding ground  for  all kinds  of                                                                 
     behavior  that is consistent  with the  efforts to try  to                                                                 
     survive.                                                                                                                   
                                                                                                                                
     I believe  that raising the minimum wage will  relieve the                                                                 
     burden  first  of  all  on Alaska  housing,  particularly                                                                  
     Section 8  housing where many of these people  who live at                                                                 
     the cutting  edge of poverty  and deprivation will have  a                                                                 
     chance  to  at  least  get  minimum  housing  rather  than                                                                 
     looking to the state to provide housing.                                                                                   
                                                                                                                                
     I also believe  that the passing of this legislation  will                                                                 
     lower,  somewhat, the crime rate.  That may be optimistic                                                                  
     on my part,  but I just believe that if people  can get an                                                                 
     adequate income,  they are able to get better  housing and                                                                 
     have a better  living and be less tempted to go  back into                                                                 
     crime.                                                                                                                     
                                                                                                                                
     Finally, I  believe that the raising of this minimum  wage                                                                 
     would give families more  pride in themselves because they                                                                 
     do not  have to live  as beggars of  our society and  they                                                                 
     will  have the  opportunity to  hold their  heads up,  buy                                                                 
     adequate  cloths  for their  children, adequate  food  for                                                                 
     nourishment  and will at least be able to live  with their                                                                 
     neighbors  without  having to  drop their  heads. I  fully                                                                 
     support this bill.                                                                                                         
                                                                                                                                
CHAIRMAN PHILLIPS  asked if he liked one bill better  than the other                                                            
or just liked the concept.                                                                                                      
                                                                                                                                
MR. PATTERSON  replied  that he  came to  support SB  132, but  at a                                                            
minimum, he fully supported SB 46.                                                                                              
                                                                                                                                
MS. MEE  SON CHUNG  said he is a  housekeeper. He  used to have  two                                                            
jobs, but now  he is older and has one. When he sees  people working                                                            
in restaurants,  he knows they cannot survive like  that. He thought                                                            
they needed to raise the minimum.                                                                                               
                                                                                                                                
MR. MANO FRY,  President, AFL-CIO,  asked Dr. Patterson if  he would                                                            
help them with their petition  initative to get enough signatures to                                                            
get the issue  on the ballot in 2002. He then thanked  the committee                                                            
for hearing  this bill and  strongly supported  the effort  to raise                                                            
the minimum wage. "It's critically important to this state."                                                                    
                                                                                                                                
He said that  in SB 46 the Governor  mentions at the current  level,                                                            
if a  single parent  of a  family of  three works  full-time at  the                                                            
current minimum wage, they're at 66% of poverty level.                                                                          
                                                                                                                                
     Under the  same scenario, if it increases his  rate of pay                                                                 
     to $7.15 an  hour, it would take that same person  up to a                                                                 
     bit below  84% of the poverty level, still well  under the                                                                 
     poverty  level for a  person working  full-time. It's  not                                                                 
     like we're  trying to shoot for  the moon. The Governor's                                                                  
     effort is a two-step process as is Senator Davis'…                                                                         
                                                                                                                                
MR. FRY said  their petition effort  is similar to what they  did in                                                            
1999 when their  signature numbers fell short of qualifying  for the                                                            
ballot.  They have  mirrored the  governor's effort  of pegging  the                                                            
minimum wage  at $7.15 an hour. The  biggest difference between  the                                                            
governor's  bill and Senator Davis'  bill is that his is  indexed to                                                            
the consumer price index after the second raise.                                                                                
                                                                                                                                
MR. FRY explained:                                                                                                              
                                                                                                                                
     Those  employees that  receive tips,  the more the tipped                                                                  
     employees earn, the better  off the owners have to be. And                                                                 
     if the tipped  employees are making $50 an hour,  it can't                                                                 
     mean  anything but good  for the owner,  because it  means                                                                 
     that people are being taken  care of and you're being able                                                                 
     to reward  those that mean the most to your establishment                                                                  
     in not  just bringing in additional  business, but having                                                                  
     repeat  business.  It boggles  my mind not  paying tipped                                                                  
     employees at least a minimum wage…                                                                                         
                                                                                                                                
MS. GARDENER  clarified  that a CS  had been offered  on SB  132 and                                                            
those were the statistics she quoted in her presentation.                                                                       
                                                                                                                                
SENATOR DAVIS said that  she appreciated Mr. Fry's testimony and she                                                            
also supported  the governor's bill. Her bill was  supposed to be 50                                                            
cents above  the federal level, which  hasn't been raised  in a long                                                            
time  ('60s). This  has  made our  state one  of the  lowest  paying                                                            
states in the Northwest.                                                                                                        
                                                                                                                                
MS. FAY GAVIN  said that she works at the Sheraton  in Anchorage and                                                            
wanted to go on  the record as opposing any tip credit  in any bill,                                                            
but she agrees  with a living wage.  "I do not agree with  a minimum                                                            
wage, because a minimum wage keeps people in poverty."                                                                          
                                                                                                                                
Number 960                                                                                                                      
                                                                                                                                
MR. RAY LACEY  said he works at the  West Coast International  Hotel                                                            
as a  porter and  said, "I'm adamantly  opposed  to the tip  credit.                                                            
I've  seen too  many waiters  and  waitresses actually  loose  money                                                            
working an eight-hour shift."                                                                                                   
                                                                                                                                
CHAIRMAN PHILLIPS  asked if he supported  the concept of  the bills.                                                            
                                                                                                                                
MR. LACEY said he does.                                                                                                         
                                                                                                                                
MS. SUE  BAILEY said she  works at the Hotel  Captain Cook and  is a                                                            
member of  Local 878 and  she fully supported  the governor's  bill.                                                            
She adamantly  opposed any  introduction of  a tip credit.  It's not                                                            
right to let the  customers pay for the wage. "We're  tipped because                                                            
of good service!"                                                                                                               
                                                                                                                                
MS.  ANGELA  LIPTON,  Director,  Department   of Justice,   Catholic                                                            
Archdiocese of Anchorage,  said, "There is a concern that both bills                                                            
maintain families at a  poverty level, particularly now that we work                                                            
so diligently  to move families  from welfare  to work. It's  hardly                                                            
fair to then maintain those families in poverty."                                                                               
                                                                                                                                
However, Ms. Lipton said  that SB 46 seemed to be the more long-term                                                            
solution.                                                                                                                       
                                                                                                                                
     By  indexing   the  wage  to  the  consumer  price   index                                                                 
     employees  have  the  security  of  knowing  they needn't                                                                  
     depend  on politics of the day  to maintain a decent  wage                                                                 
     and  it also  allows  businesses  to project  their  labor                                                                 
     costs  in modest increments.  We feel  that employment  is                                                                 
     the first  line of defense against  poverty, but makes  no                                                                 
     sense at all  if workers are maintained below  the poverty                                                                 
     level.  I encourage  you to  act on behalf  of low-income                                                                  
     workers and support SB 46. Thank you.                                                                                      
                                                                                                                                
MS. MARY JO AUDECTE  said she is a part-time server  at the Sheraton                                                            
Hotel and  has worked in  a state that has  a tip credit.  She said,                                                            
"It is  very disheartening  to  work in  that situation.  I am  very                                                            
supportive of  the governor's minimum wage bill and  very opposed to                                                            
the tip credit."                                                                                                                
                                                                                                                                
MS. LUCY  VINCENT said she  works for the  Anchorage Sheraton  Hotel                                                            
and supported SB 46 and opposed the tip credit.                                                                                 
                                                                                                                                
MR. DARRELL TSEU,  Inlandboatmen's Union, supported  SB 46. He said:                                                            
                                                                                                                                
     In  a past life,  I also  worked just  above minimum  wage                                                                 
     with a  wife and a child. I had  about 45 cents more  than                                                                 
     minimum wage. Unfortunately,  that wage did not support my                                                                 
     family. I  was on rent subsidy and food stamps  and it was                                                                 
     really embarrassing  for me as a Republican to  be in that                                                                 
     position…                                                                                                                  
                                                                                                                                
He said that his  philosophy is that an employee is  not a liability                                                            
to a business; he's a resource.  As a food and beverage manager of a                                                            
hotel, he  realized that  it costs the company  money every  time it                                                            
loses an employee.  "Whenever you pay someone a lower  wage, they're                                                            
always going to be seeking a higher wage…"                                                                                      
                                                                                                                                
He said  it  takes up  more of  his time  to train  someone new  and                                                            
setting up their  accounts, etc. He talked with state  officials and                                                            
found that the average  marine employee costs the state about $3,000                                                            
to train in keep in employment.                                                                                                 
                                                                                                                                
CHAIRMAN PHILLIPS asked him how he came to testify today.                                                                       
                                                                                                                                
MR. TSEU replied  that he is interested  in both the governor's  and                                                            
Senator  Davis' bills.  "Because  I have  experienced  it myself  at                                                            
first hand, it is important for me."                                                                                            
                                                                                                                                
MS. CAREN ROBINSON,  Alaska Women's Lobby, supported  both SB 46 and                                                            
SB 132. She said the most  important thing from their standpoint is:                                                            
                                                                                                                                
     The single  mother who, either through domestic  violence,                                                                 
     divorce,  or  death   in the  family   is  back  into  the                                                                 
     workforce and I don't think  any of us should be under any                                                                 
     notion that even at the  rate we're raising this that it's                                                                 
     going  to bring women  and children in  this state out  of                                                                 
     poverty.                                                                                                                   
                                                                                                                                
She said that as an owner  of three small businesses, she never paid                                                            
her staff just  the minimum wage.  She understands that any  kind of                                                            
increase adds  to the cost of doing business, but  she has seen that                                                            
she spends  a lot of time  and energy on  retraining and  recruiting                                                            
and starting  all over again. "I can  see how keeping someone  happy                                                            
in the  workforce really  makes a difference  in keeping your  costs                                                            
down."                                                                                                                          
                                                                                                                                
MS. BERIT ERIKSSON, Inlandboatmen's  Union, said that previously she                                                            
worked as a waitress  for many years and worked in  a state with tip                                                            
credit.  She  is very  much  in favor  of  the governor's  bill  and                                                            
opposed tip credits.                                                                                                            
                                                                                                                                
     Working  under a tip  credit system,  I was working  seven                                                                 
     days  a week, split  shifts and hardly  making ends  meet.                                                                 
     Not  everyone  works in  a  high-ticket  restaurant.  Most                                                                 
     people work  in your average everyday restaurant  and it's                                                                 
      very hard to make ends meet under those circumstances.                                                                    
                                                                                                                                
MS. PAM LABOLLE,  President, Alaska State Chamber  of Commerce, said                                                            
that  she  did  a  survey  of  the  membership  on  this  issue  and                                                            
discovered of the respondents  that only six percent of them pay the                                                            
minimum wage for a starting  wage; 69 percent pay $8 an hour or more                                                            
for starting employees.                                                                                                         
                                                                                                                                
     So, this was not as critical  an issue to them as it is to                                                                 
     some  other   organizations  with  a  different   kind  of                                                                 
     membership. They were surveyed  on the governor's bill and                                                                 
     were evenly split; one-third  felt that we should increase                                                                 
     the minimum  wage to $6.40 next  year, 32 percent said  no                                                                 
     we  shouldn't and  28 percent  were undecided.  As far  as                                                                 
     raising  it to  $7.15 the next  year, 49  percent did  not                                                                 
     agree with that…                                                                                                           
                                                                                                                                
MS. LABOLLE  said that the State Chamber  does not like the  idea of                                                            
tying things  to an  index. They  feel that  the legislature  should                                                            
make those decisions with  input from the public based on conditions                                                            
of the day. They would like that to continue.                                                                                   
                                                                                                                                
MR.  JIM  NORDLUND,   Director,  Division   of  Public  Assistance,                                                             
supported both bills. He said:                                                                                                  
                                                                                                                                
     As  you  know,  Alaska  has  gone  through  a  remarkable                                                                  
     transformation in welfare  services in the past six years.                                                                 
     Based on the law that was  passed in 1996 under the banner                                                                 
     of welfare  reform, we replaced the old AFDC program  with                                                                 
     the  Alaska Temporary  Assistance  Program  (ATAP) and  in                                                                 
     doing  that we ended  the entitlement  to cash assistance                                                                  
     benefits  for poor people. We  require them to go to  work                                                                 
     and we  added a provision in  law that made work pay.  The                                                                 
     result  of that  over the past  six years  has been  quite                                                                 
     remarkable.  We have  seen the  caseload come  down by  42                                                                 
     percent; we've saved millions  of dollars in benefits that                                                                 
     would have otherwise been  paid out to recipients. We have                                                                 
     shown over  the years that we can effectively  move people                                                                 
     into the  workforce and it is  our hope to continue  to do                                                                 
     that and to help people stay off of welfare…                                                                               
                                                                                                                                
TAPE 01-23, SIDE A                                                                                                            
                                                                                                                              
He said that this  is still 36 percent below the poverty  level. Mr.                                                            
Fry's used  last year's  figures,  he was using  this years'.  Their                                                            
fiscal note is based on  Senator Davis' legislation, but they figure                                                            
there are about 300 ATAP  recipients that earn between $5.65 - $6.40                                                            
an hour.  That would  mean a savings  in welfare  benefits of  about                                                            
$376,000 per year. The  governor's bill has savings in the fifth and                                                            
sixth years  approaching $1 million.  He said they would  prefer the                                                            
governor's  inflator, but  they support  Senator  Davis' bill  if it                                                            
would pass without the inflator.                                                                                                
                                                                                                                                
CHAIRMAN PHILLIPS announced a recess at 11:10 am.                                                                               
                                                                                                                                
HB186                                                                                                                           
                                                                                                                                
            HB 186-911 SURCHARGE ON WIRELESS TELEPHONES                                                                     
                                                                                                                                
CHAIRMAN PHILLIPS  called the meeting  back to order at 2:06  pm and                                                            
announced HB  186 to be up for consideration.  A motion was  made to                                                            
pass HB 186  from committee with individual  recommendations.  There                                                            
were no objections and it was so ordered.                                                                                       
                                                                                                                                
CHAIRMAN PHILLIPS adjourned the meeting at 2:06 pm.                                                                             

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