Legislature(2003 - 2004)

05/19/2003 08:03 AM L&C

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                    ALASKA STATE LEGISLATURE                                                                                  
          SENATE LABOR AND COMMERCE STANDING COMMITTEE                                                                        
                          May 19, 2003                                                                                          
                           8:03 a.m.                                                                                            
MEMBERS PRESENT                                                                                                               
Senator Con Bunde, Chair                                                                                                        
Senator Ralph Seekins, Vice Chair                                                                                               
Senator Gary Stevens                                                                                                            
Senator Hollis French                                                                                                           
MEMBERS ABSENT                                                                                                                
Senator Bettye Davis                                                                                                            
COMMITTEE CALENDAR                                                                                                            
CS FOR HOUSE BILL NO. 195(L&C) am                                                                                               
"An Act relating  to coverage offered under  an individual policy                                                               
of health care insurance; relating  to the state health insurance                                                               
plan; and providing for an effective date."                                                                                     
     MOVED SCS CSHB 195(L&C) OUT OF COMMITTEE                                                                                   
SENATE CONCURRENT RESOLUTION NO. 7                                                                                              
Suspending Rules  24(c), 35, 41(b),  and 42(e), Uniform  Rules of                                                               
the  Alaska  State Legislature,  concerning  House  Bill No.  71,                                                               
relating to the Board of Certified Direct- Entry Midwives.                                                                      
     MOVED SCR 7 OUT OF COMMITTEE                                                                                               
HOUSE BILL NO. 199                                                                                                              
"An Act removing the annual  adjustment to the minimum wage based                                                               
on the rate of inflation; and providing for an effective date."                                                                 
     MOVED HB 199 OUT OF COMMITTEE                                                                                              
CS FOR HOUSE BILL NO. 10(HES)                                                                                                   
"An  Act  relating  to pooling  by  employers  and  self-employed                                                               
individuals  for   purposes  of   group  health   insurance;  and                                                               
providing for an effective date."                                                                                               
     MOVED CSHB 10(HES) OUT OF COMMITTEE                                                                                        
HOUSE BILL NO. 270                                                                                                              
"An Act relating to the licensure of pharmacists; and providing                                                                 
for an effective date."                                                                                                         
     MOVED HB 270 OUT OF COMMITTEE                                                                                              
CS FOR HOUSE BILL NO. 252(STA)                                                                                                  
"An Act relating to the terms and duties of the members of the                                                                  
State Board of Registration for Architects, Engineers and Land                                                                  
     MOVED SCS CSHB 252(L&C) OUT OF COMMITTEE                                                                                   
HOUSE BILL NO. 305                                                                                                              
"An Act relating to the calculation and payment of unemployment                                                                 
compensation benefits; and providing for an effective date."                                                                    
     HEARD AND HELD                                                                                                             
PREVIOUS ACTION                                                                                                               
HB 195 - See Labor and Commerce minutes dated 5/15/03.                                                                          
SCR 7 - No previous action to consider.                                                                                         
HB 199 - No previous action to consider.                                                                                        
HB 10 - See State Affairs minutes dated 5/17/03.                                                                                
HB 270 - See HESS minutes dated 5/16/03.                                                                                        
HB 252 - No previous action to consider.                                                                                        
HB 305 - No previous action to consider.                                                                                        
WITNESS REGISTER                                                                                                              
Ms. Heather Nobrega                                                                                                             
Staff to Representative Rokeberg                                                                                                
Alaska State Capitol                                                                                                            
Juneau, AK  99801-1182                                                                                                          
POSITION STATEMENT: Commented on HB 195 and HB 199.                                                                           
Ms. Katie Campbell, Life and Health Actuary                                                                                     
Division of Insurance                                                                                                           
Department of Community & Economic Development                                                                                  
PO Box 110800                                                                                                                   
Juneau, AK 99811-0800                                                                                                           
POSITION STATEMENT: Commented on HB 195 and HB 10.                                                                            
Ms. Michelle Cassano, President                                                                                                 
American Diabetes Association                                                                                                   
801 W. Fireweed #103                                                                                                            
Anchorage AK 99503                                                                                                              
POSITION STATEMENT: Commented on HB 195.                                                                                      
Ms. Laura Sarcone                                                                                                               
Alaska Nurse Practitioner's Association                                                                                         
1444 Hillcrest Dr.                                                                                                              
Anchorage AK 99503                                                                                                              
POSITION STATEMENT: Commented on HB 195.                                                                                      
Mr. Don Etheridge                                                                                                               
710 W 9th St.                                                                                                                   
Juneau AK 99801                                                                                                                 
POSITION STATEMENT: Opposed HB 199.                                                                                           
Ms. Pam LaBolle, President                                                                                                      
Alaska State Chamber of Commerce                                                                                                
217 2nd Street                                                                                                                  
Juneau AK 99801                                                                                                                 
POSITION STATEMENT: Supported HB 199.                                                                                         
Mr. Chip Wagoner                                                                                                                
Alaska Catholic Conference                                                                                                      
3294 Pioneer Ave.                                                                                                               
Juneau AK 99801                                                                                                                 
POSITION STATEMENT: Opposed HB 199.                                                                                           
Mr. Jay Sutherland, President                                                                                                   
Alaska Restaurant and Beverage Association                                                                                      
POSITION STATEMENT: Supported HB 199.                                                                                         
Ms. Robin Phillips                                                                                                              
Staff to Representative Nancy Dahlstrom                                                                                         
Alaska State Capitol                                                                                                            
Juneau, AK  99801-1182                                                                                                          
POSITION STATEMENT: Commented on HB 270.                                                                                      
Ms. Margaret Sodden, President                                                                                                  
Alaska Board of Pharmacy                                                                                                        
PO Box 61328                                                                                                                    
Fairbanks AK 99706                                                                                                              
POSITION STATEMENT: Supported HB 270.                                                                                         
Mr. Barry Christensen, Chairman                                                                                                 
Alaska Pharmacists Association                                                                                                  
POSITION STATEMENT:  Supported HB 270.                                                                                        
Ms. Lauren Wickersham                                                                                                           
Staff to Representative Lesil McGuire                                                                                           
Alaska State Capitol                                                                                                            
Juneau, AK  99801-1182                                                                                                          
POSITION STATEMENT: Commented on HB 252.                                                                                      
Mr. Robert E. Miller, Chairman                                                                                                  
Alaska Board of Registration for Architects, Engineers and Land                                                                 
7729 Anne Circle                                                                                                                
Anchorage AK 99504                                                                                                              
POSITION STATEMENT: Supported HB 252.                                                                                         
Mr. Sam Kito III                                                                                                                
Alaska Professional Design Council                                                                                              
PO Box 21192                                                                                                                    
Juneau AK 99801                                                                                                                 
POSITION STATEMENT:  Commented on HB 252.                                                                                     
Representative Tom Anderson                                                                                                     
Alaska State Capitol                                                                                                            
Juneau, AK  99801-1182                                                                                                          
POSITION STATEMENT: Sponsor of HB 305.                                                                                        
Commissioner Greg O'Claray                                                                                                      
Department of Labor & Workforce                                                                                                 
PO Box 21149                                                                                                                    
Juneau, AK 99802-1149                                                                                                           
POSITION STATEMENT: Supported HB 305.                                                                                         
Mr. Patrick Shier, Chief                                                                                                        
Employment Security Tax                                                                                                         
Division of Employment Security                                                                                                 
Department of Labor & Workforce                                                                                                 
PO Box 21149                                                                                                                    
Juneau, AK 99802-1149                                                                                                           
POSITION STATEMENT: Commented on HB 305.                                                                                      
Ms. Barbara Huff-Tuckness, Director                                                                                             
Legislative and Governmental Affairs                                                                                            
Local 959                                                                                                                       
520 E 34th                                                                                                                      
Anchorage AK 99503                                                                                                              
POSITION STATEMENT:  Supported HB 305.                                                                                        
Mr. Ron Peck, President                                                                                                         
Alaska Travel Industry Association                                                                                              
POSITION STATEMENT:  Opposed HB 305.                                                                                          
ACTION NARRATIVE                                                                                                              
TAPE 03-37, SIDE A                                                                                                            
          CSHB 195(L&C)am-STATE HEALTH INSURANCE PLAN                                                                       
CHAIR CON  BUNDE called  the Senate  Labor and  Commerce Standing                                                             
Committee meeting  to order  at 8:03  a.m. Present  were Senators                                                               
Stevens,  Seekins  French and  Bunde.  The  Chair announced  CSHB
195(L&C)am to be up for consideration.                                                                                          
SENATOR  GARY STEVENS  moved to  adopt SCS  CSHB 195(L&C).  There                                                               
were no objections and it was adopted.                                                                                          
CHAIR BUNDE explained that the  committee substitute (CS) removed                                                               
all  the  language about  the  optional  programs that  had  many                                                               
people  concerned and  leaves some  language that  allows federal                                                               
MS. HEATHER NOBREGA, staff to  Representative Rokeberg, said that                                                               
was correct.                                                                                                                    
CHAIR BUNDE asked  about the language on page  2, subsection (b),                                                               
which  discusses people  who are  not eligible  for coverage.  He                                                               
asked  for  an  explanation  of  the  statement  "including  self                                                               
insured plans, health care trusts and welfare trusts".                                                                          
MS.  KATIE  CAMPBELL, Life  and  Health  Actuary, explained  that                                                               
section is language from existing law.  It was used because it is                                                               
an eligibility requirement that  was misplaced under "Exclusions"                                                               
in  the  initial legislation.  If  someone  is eligible  for  the                                                               
federal programs  under the  federal law, that  person has  to be                                                               
let into the plan.                                                                                                              
MS. MICHELLE  CASSANO, President, American  Diabetes Association,                                                               
said  she is  very concerned  about what  would happen  with this                                                               
coverage if someone  opts out of chronic-disease  coverage and is                                                               
then diagnosed.                                                                                                                 
CHAIR  BUNDE  explained that  all  of  the optional  language  in                                                               
section  1 was  deleted from  the committee  substitute that  the                                                               
committee just adopted.                                                                                                         
MS. CASSANO responded that she  would not comment further in that                                                               
case, but would be a resource for the committee.                                                                                
MS. LAURA SARCONE, Alaska  Nurse Practitioners' Association, said                                                               
deleting section 1 took care of  her concerns also. She wanted to                                                               
make  sure that  reimbursement for  nurse midwifery  coverage for                                                               
obstetrical care was not made optional.                                                                                         
CHAIR BUNDE affirmed that language was gone.                                                                                    
SENATOR SEEKINS moved to pass  SCS CSHB 195(L&C), version V, from                                                               
committee  with individual  recommendations  and attached  fiscal                                                               
SENATORS STEVENS,  FRENCH, SEEKINS  and BUNDE  voted yea  and SCS                                                               
CSHB 195(L&C) moved from committee.                                                                                             
             SCR  7-SUSPEND UNIFORM RULES FOR HB 71                                                                         
CHAIR CON  BUNDE announced SCR  7 to  be up for  consideration to                                                               
address a title change.                                                                                                         
SENATOR RALPH  SEEKINS moved  to pass SCR  7 from  committee with                                                               
individual recommendations.  There were no objections  and it was                                                               
so ordered.                                                                                                                     
         HB 199-DELETE MINIMUM WAGE INFLATION-PROOFING                                                                      
CHAIR CON BUNDE announced HB 199 to be up for consideration.                                                                    
MS. HEATHER  NOBREGA, staff  to Representative  Rokeberg, sponsor                                                               
of  HB  199,  explained  that this  bill  repeals  the  automatic                                                               
inflation index  that was  implemented last  year along  with the                                                               
minimum  wage  increase.  When the  minimum  wage  is  increased,                                                               
inter-level employers  eliminate jobs  and reduce  working hours.                                                               
With the  last increase, benefits,  such as health  insurance and                                                               
matching 401K plans, are being cut.                                                                                             
Evidence indicates  that constant  increases don't help  the poor                                                               
but  eliminate their  needed jobs.  One  restaurant in  Anchorage                                                               
closed already  and another is  not going to expand  to Fairbanks                                                               
because of the hikes in labor  costs. A casual examination of the                                                               
increases indicates  that they fail  to target the  families that                                                               
they are intended to help.                                                                                                      
The increases should not be  automatic because the industry needs                                                               
to have  a seat at the  table each year to  discuss the economies                                                               
of what is happening in every day business.                                                                                     
SENATOR HOLLIS  FRENCH asked her  to explain why she  thought the                                                               
automatic indexing fails  to target the families  it was intended                                                               
to help.                                                                                                                        
MS. NOBREGA answered  that the theory behind the  minimum wage is                                                               
that it  will help  families support  themselves by  providing an                                                               
adequate  wage that  will help  them do  that. Studies  show that                                                               
when the  minimum wage is  automatically increased,  you actually                                                               
eliminate  those  entry-level jobs.  So,  the  families they  are                                                               
trying to help aren't going to  get help because those jobs won't                                                               
be available for them.                                                                                                          
MR. DON ETHERIDGE,  AFL-CIO, opposed HB 199 and  told members the                                                               
AFL-CIO  got  signatures  for  the  initiative  process  and  was                                                               
looking forward to  putting this question on the  ballot, but the                                                               
legislature took  action to prevent it  from doing so. If  it had                                                               
been put  on the ballot,  it could  have been adjusted  after two                                                               
years. He maintained:                                                                                                           
     Now, it hasn't even gone  into effect and we're already                                                                    
     looking at repealing it. We're  under the hopes that it                                                                    
     could  at least  happen  once before  it's repealed  so                                                                    
     that we  would know whether  or not it works.  We don't                                                                    
     know  if  it's  going   to  work  and  they're  already                                                                    
     hollering  that  everybody  is going  out  of  business                                                                    
     because of  it. They're  going out of  business because                                                                    
     of poor  locations - one of  them that I know  of - the                                                                    
     restaurant and I can understand  where a $1.50 increase                                                                    
     on most of  these businesses really hit  hard. We asked                                                                    
     for three  years running  to step  the minimum  wage up                                                                    
     and there  was no action taken  on it. The only  way we                                                                    
     could make it happen  is through the initiative process                                                                    
     and we went out and gathered 50,000 signatures to get                                                                      
     it on the ballot....                                                                                                       
     At the  current rate  that we're  looking at  right now                                                                    
     for the cost  of living index - it's going  to be about                                                                    
     a  14-cents per  hour raise.  If you  get 14-cents  per                                                                    
     hour for a couple, three  years, that doesn't hurt near                                                                    
     as bad as $1.50...                                                                                                         
CHAIR BUNDE  stated, for  the record,  that he  counseled against                                                               
legislative action to preempt the initiative.                                                                                   
SENATOR GARY STEVENS asked Mr.  Etheridge to respond to the issue                                                               
of the elimination of entry-level jobs.                                                                                         
MR. ETHERIDGE replied  that those jobs have to be  there and it's                                                               
one of those  threats that can be  used all the time.  He said he                                                               
has seen restaurants  come and go in Juneau without  any raise in                                                               
the minimum  wage. It's  just what  the economy  is doing  at the                                                               
time that  affects those  jobs and that's  why they  fluctuate so                                                               
SENATOR FRENCH  said if  they are  taking into  consideration one                                                               
anecdotal story  about a restaurant  closing, they  should really                                                               
look at what  the economy is doing and what  the total job market                                                               
is in the state.                                                                                                                
MS. PAM LABOLLE,  Alaska State Chamber of  Commerce, supported HB
199. It's the Chamber's belief  that the reason they have elected                                                               
representatives  is that  those representatives  can see  what is                                                               
happening in  the economy  and make decisions  based on  that big                                                               
SENATOR STEVENS asked her to  comment on the issue of eliminating                                                               
entry-level jobs.                                                                                                               
MS.  LABOLLE replied  that it  would  eliminate entry-level  jobs                                                               
because  employers  are  going  to  look  for  people  with  more                                                               
experience. If  they are going to  pay the higher wage,  they are                                                               
not willing to take on people who aren't trained.                                                                               
SENATOR SEEKINS  asked if  any other  states index  their minimum                                                               
MS. LABOLLE replied that she didn't have those statistics.                                                                      
MR. CHIP  WAGONER, Alaska  Catholic Conference,  said of  all the                                                               
bills  before the  legislature  this one  disturbs  him the  most                                                               
because of  the initiative that never  made it to the  ballot and                                                               
because  he doesn't  believe all  the  facts and  figures he  has                                                               
heard. He told members:                                                                                                         
     There are  two different  organizations out  there that                                                                    
     do a  lot of work  on minimum wage  and one of  them is                                                                    
     basically paid  for by the restaurant  industry and the                                                                    
     other one is paid for by  the labor unions. I have read                                                                    
     their studies  and I  don't believe  them. If  you read                                                                    
     anything  from the  Employment Policies  Institute, not                                                                    
     to be  confused with  the Employment  Policy Institute,                                                                    
     it's basically  from the  restaurant industry  and they                                                                    
     will never  say anything  good about the  minimum wage.                                                                    
     Also,  if   you  look   at  the   economic  opportunity                                                                    
     institute  -  again,  not  to   be  confused  with  the                                                                    
     economic  policy  institute,  this  is  primarily  from                                                                    
     labor and  they will never  say anything bad  about the                                                                    
     minimum wage.                                                                                                              
     So, what I  did is that I went to  those states that do                                                                    
     have indexing and  there [are] three to  my knowledge -                                                                    
     Oregon, Washington and Alaska.                                                                                             
     I'll  start with  Washington State.  I talked  with Bob                                                                    
     Wagner, Manager  of the Research and  Analysis Unit for                                                                    
     the Unemployment  Insurance Division of  the Employment                                                                    
     Security Department  of the State of  Washington and he                                                                    
     said,   "There  does   not  appear   to  be   a  direct                                                                    
     correlation between  the indexed  minimum wage  and the                                                                    
     number  of jobs  in the  food service,  drinking places                                                                    
     I  picked that  industry because  that's primarily  the                                                                    
     one  -  the fast  food  people  and  others -  who  are                                                                    
     against this automatic indexing.                                                                                           
     I  also  talked  with  Art Air,  the  State  Employment                                                                    
     Economist  for  the  Oregon Employment  Department.  He                                                                    
     said it's  probably impossible to identify  an increase                                                                    
     in  the unemployment  rate and  tie it  to the  minimum                                                                    
     wage at  least at the state  level. He said at  a local                                                                    
     level, you may be  able to identify specific employers,                                                                    
     such as the Red Robin,  who have reduced employment due                                                                    
     to a  variety of factors including  minimum wage. Those                                                                    
     companies  are probably  already  on the  ropes. So,  I                                                                    
     also looked at  the figures from our  own Department of                                                                    
     Labor and in that  particular industry, you would think                                                                    
     if jobs  were going to  be lost, they wouldn't  be lost                                                                    
     because  of indexing,  which would  have increased  the                                                                    
     wages by  14 cents. You  would have thought  they would                                                                    
     have lost  the jobs  when the  minimum wage  in January                                                                    
     shot  up  by $1.50  because  what  happens is,  without                                                                    
     indexing you  have the purchasing  power of  our unseen                                                                    
     working  poor  continue  to   drop,  drop,  drop  until                                                                    
     finally  the  legislature  or by  initiative  it  jumps                                                                    
     That's not good for business  and it's not good for the                                                                    
     working poor  who see their purchasing  power decrease.                                                                    
     So, you would  think that is where the  jobs would have                                                                    
     been lost. And jobs were  lost in December of 2002 till                                                                    
     January of 2003. When it  took effect, we lost 1,000 in                                                                    
     the food service restaurant industry.  But, if you look                                                                    
     at  a  year  ago,  when   there  was  no  minimum  wage                                                                    
     increase, the drop  is just about the  same. It dropped                                                                    
     from 16,100  to 15,200.  In other  words, they  ramp up                                                                    
     for  the holidays  with their  employees and  then they                                                                    
     ramp down  after the  holidays and now  if you  look at                                                                    
     the figures,  they've probably started  to ramp  up for                                                                    
     the tourism season...                                                                                                      
     It's the  total economy that  affects the jobs  in this                                                                    
MR. WAGONER said there is a  flip side to allowing the industry a                                                               
seat at  the table;  the unseen  working poor  would also  like a                                                               
seat  at  the  table.  He  said  the  legislature  could  address                                                               
indexing every year if it wanted  to. He told members, "This bill                                                               
really, really bothers me; it's just unfair."                                                                                   
MR.  JAY SUTHERLAND,  President, Alaska  Restaurant and  Beverage                                                               
Association, said  it's a little bit  more than a 5%  increase to                                                               
pay for  the 26% increase in  the cost of labor.  Employers would                                                               
look at  closing restaurants  and laying  off staff.  Slowly, but                                                               
surely, they have  been looking at how to do  more with less. Job                                                               
loss last year was similar to  this year. 9-11 brought tourism to                                                               
a crashing  halt in 2001 and  the tourist seasons have  been slim                                                               
since then.  Folks will be  looking at investments  in technology                                                               
and different  restaurant equipment to replace  labor. He pointed                                                               
out that people  just entering the work force need  to be trained                                                               
to do even  the simplest things and he thought  it is unfair that                                                               
industry  has to  take on  that additional  burden. He  noted the                                                               
other two  states with  a CPI  are taking very  huge hits  in the                                                               
restaurant industry. That  could be due to the economy  or to the                                                               
SENATOR SEEKINS commented  that his experience as  an employer is                                                               
that  most  of  his  minimum wage  employees  are  students  just                                                               
getting  started and  he has  a hard  time keeping  anybody worth                                                               
their  salt if  he  tries to  keep  them at  a  minimum wage.  He                                                               
doesn't get  a lot  of people  who are really  trying to  raise a                                                               
family  on  minimum wage.  He  stated,  "If  they are,  there  is                                                               
another serious problem somewhere...."                                                                                          
SENATOR  SEEKINS  moved  to  pass  HB  199  from  committee  with                                                               
individual recommendations.                                                                                                     
SENATOR FRENCH  objected and  said that  he felt  the legislature                                                               
should let  this law  go into  effect at least  once to  see what                                                               
happens -  out of  good faith. Testimony  has indicated  that the                                                               
CPI would  produce about a  14-cent increase in the  minimum wage                                                               
and that's  fairly miniscule. Some  people think  the legislature                                                               
passed  this law  to preempt  the initiative  and keep  a lot  of                                                               
lower income  people from going to  the polls to vote  last year.                                                               
He questioned,  "I have to  wonder today whether  that initiative                                                               
has been  preempted had this  inflation-proofing not been  in the                                                               
He  said this  law  takes into  account  a possible  deflationary                                                               
economy.  This is  a flexible  tool that  the legislature  passed                                                               
just one year ago.                                                                                                              
SENATOR SEEKINS  said he doesn't think  it is right to  kill this                                                               
bill  in committee  and that  he didn't  see anything  wrong with                                                               
allowing it to go to the entire body for discussion.                                                                            
CHAIR BUNDE  said he shares the  concern that the public  did not                                                               
get a chance to vote on this issue.                                                                                             
SENATORS  SEEKINS, STEVENS  and BUNDE  voted yea;  SENATOR FRENCH                                                               
voted nay; and HB 199 passed from committee.                                                                                    
    CSHB 10(HES)- GROUP HEALTH INSURANCE FOR PRIVATE GROUPS                                                                 
CHAIR BUNDE announced CSHB 10(HES) to be up for consideration.                                                                  
MS.  HELEN BEDDER,  staff to  Representative Cheryl  Heinze, said                                                               
this bill  is very different from  it original version. It  had a                                                               
large  fiscal  note  and the  Department  of  Administration  was                                                               
involved.  Currently,  the  bill  has  no  fiscal  note  and  the                                                               
department is  no longer involved. A  key feature of the  bill is                                                               
that  it really  works  to help  non-profit organizations  obtain                                                               
insurance. The  [non-profits] have  a commitment from  the Mental                                                               
Health Trust  Authority to  provide funding  to help  them obtain                                                               
insurance  through this  type of  policy and  they are  currently                                                               
very actively  working with Dennis  McMillan in Anchorage  to get                                                               
CHAIR BUNDE said  one comment in the  health insurance purchasing                                                               
cooperative reports says  that in many instances  state laws have                                                               
prohibited insurers from offering co-op  premiums at a lower rate                                                               
than those  charged to  employers outside a  co-op. He  asked why                                                               
states  would have  laws  against trying  to  provide the  lowest                                                               
possible insurance depending on the market.                                                                                     
MS. BEDDER replied that she didn't know the answer to that.                                                                     
MS. KATIE  CAMPBELL, Division of Insurance,  explained that state                                                               
laws differ,  but most states  have small employer  reforms where                                                               
you  have to  guarantee issue  to a  small employer.  Most states                                                               
define  a small  employer as  one with  2 to  50 employees.  Most                                                               
states with  cooperatives have required  the premiums  within the                                                               
pool  to be  somewhat  nearer the  outside  to prevent  selection                                                               
problems where only the healthier  or the sicker people remain in                                                               
one  area or  the  other. She  pointed out,  "You  don't want  to                                                               
disadvantage one market for the other."                                                                                         
CHAIR BUNDE  said they don't  insure on personal risk  but rather                                                               
on the risk of the group.                                                                                                       
MS. CAMPBELL replied that is true.                                                                                              
SENATOR  FRENCH  asked  her  to   explain  the  following  bullet                                                               
       Under HB 10, a health care insurer may decline to                                                                        
      cover or may restrict the coverage offered to a self-                                                                     
     employed  individual under  an  association plan.  This                                                                    
     applies only to a  self-employed individual who joins a                                                                    
     group, but not  for employees of either  large or small                                                                    
MS. CAMPBELL replied that is  a complicated issue. Initially they                                                               
weren't able to include the self-employed  in this kind of a plan                                                               
because  of  the  fear  that  individuals  who  are  particularly                                                               
unhealthy would attempt to join the  pools and cause the rates to                                                               
go  up.  In  order  to  avoid  that  problem,  this  bill  allows                                                               
insurance  companies  to  look at  the  individual  self-employed                                                               
people  separately from  employees  of an  employer. By  allowing                                                               
that,  the insurer  can prevent  a particularly  unhealthy person                                                               
from increasing  the rates  for everybody  else. With  this bill,                                                               
the insurer  can actually decline  coverage or put  a restriction                                                               
on the  coverage for that  individual self-employed  person only.                                                               
It doesn't affect anyone else.                                                                                                  
CHAIR  BUNDE asked  if  that  is because  there  are fewer  self-                                                               
employed people than there are employees.                                                                                       
MS. CAMPBELL  replied the issue  is the self-employed  are really                                                               
not  a group;  they are  individuals.  When insurers  come in  to                                                               
offer insurance  to a market,  they look  at the market  they are                                                               
going to insure and get a volume discount.                                                                                      
SENATOR FRENCH said:                                                                                                            
     It  sounds like  a compromise  and a  way of  balancing                                                                    
     risk for the insurance company  to be able to stop this                                                                    
     one  sick individual  from joining  the  pool, but  not                                                                    
     being able to stop this group that wants to get in...                                                                      
CHAIR BUNDE  added, "Who might  have a sick individual,  but will                                                               
have hundreds  of other  people whose premiums  will make  up for                                                               
the sick one."                                                                                                                  
MS. CAMPBELL responded, "That's about right."                                                                                   
SENATOR SEEKINS  moved to pass  CSHB 10(HES) from  committee with                                                               
individual  recommendations   and  zero  fiscal   note.  SENATORS                                                               
STEVENS, FRENCH,  SEEKINS and  BUNDE voted  yea and  CSHB 10(HES)                                                               
passed from committee.                                                                                                          
                  HB 270-PHARMACIST LICENSING                                                                               
CHAIR CON BUNDE announced HB 270 to be up for consideration.                                                                    
MS.  ROBIN PHILLIPS,  staff  to  Representative Nancy  Dahlstrom,                                                               
sponsor  of  HB  270,  explained  that  currently  the  Board  of                                                               
Pharmacy cannot  deny a license  to an  applicant who may  have a                                                               
questioned background,  like a felony  drug conviction or  a drug                                                               
abuse  problem.   That  puts  public  safety   and  the  pharmacy                                                               
profession   at  risk.   The  right   to  deny   a  license   was                                                               
unintentionally left  out of the  statute when it  was originally                                                               
drafted. HB 270  gives the Board the authority to  deny a license                                                               
to  a  new  applicant  if  the  board  finds  the  applicant  has                                                               
committed fraud, deceit, falsely  advertised, been convicted of a                                                               
felony or  is guilty  of other offenses  listed in  AS 08.80.261.                                                               
All   members  of   the  Board   of  Pharmacy   and  the   Alaska                                                               
Pharmaceutical Association support this legislation.                                                                            
MS. MARGARET  SODDEN, President,  Alaska Board of  Pharmacy, said                                                               
this  bill  really  needs  to   pass  because  the  board  cannot                                                               
currently deny  a license  to someone  who does  not have  a good                                                               
background.  She added  that a  person  would have  the right  to                                                               
appeal a denial.                                                                                                                
MR. BARRY CHRISTENSEN,  Chairman, Alaska Pharmacists Association,                                                               
supported HB 270 for all the reasons previously stated.                                                                         
SENATOR RALPH  SEEKINS moved to  pass HB 270 from  committee with                                                               
individual  recommendations and  the attached  zero fiscal  note.                                                               
270 passed from committee.                                                                                                      
     CSHB 252(STA)- OCC LICENSING: TERMS OF BD & CONT. EDUC                                                                 
CHAIR  CON   BUNDE  announced   CSHB  252(STA)   to  be   up  for                                                               
TAPE 03-37, SIDE B                                                                                                            
MS.  LAUREN WICKERSHAM,  staff to  Representative Lesil  McGuire,                                                               
said  HB 252  was introduced  at the  request of  the Architects,                                                               
Engineers and  Land Surveyors (AELS) Board.  The bill essentially                                                               
does  two things.  It modifies  existing statutory  language with                                                               
regard to board  members who may serve  partial terms. Currently,                                                               
if a  board member serves any  portion of a remaining  term, that                                                               
service counts for a full  four-year term. The modification would                                                               
allow a board  member who is filling a partial  term of less than                                                               
two years to AELS serve up to  two full terms or eight years. The                                                               
amendment offered in  Labor and Commerce would  clarify that this                                                               
change in term  limits applies only to the AELS  Board and not to                                                               
other boards and commissions.                                                                                                   
Second,  HB 252  offers  the AELS  Board  statutory authority  to                                                               
adopt  regulations concerning  continuing  education. An  October                                                               
2000  audit   by  the  Legislative  Budget   and  Audit  division                                                               
recommended the  AELS Board be  given this authority in  order to                                                               
help  implement and  maintain high  standards in  the professions                                                               
they  oversee.   They  will  work   closely  with   all  relevant                                                               
professional   societies  before   adopting  or   developing  any                                                               
MR. ROBERT E. MILLER, Chairman,  Alaska Board of Registration for                                                               
Architects,  Engineers and  Land Surveyors  (AELS), supported  HB
252. The  AELS regulates multiple  professions, which  requires a                                                               
high level  of both professional  expertise and  board experience                                                               
in terms of reviewing applications  to insure that people who are                                                               
admitted  to  their  professions are  qualified.  The  continuing                                                               
education  is also  a provision  the board  has decided  it would                                                               
like  to  have  the  discretion   to  be  able  to  use,  perhaps                                                               
implementing them in stages for the different professions.                                                                      
MR. SAM KITO, III, Alaska  Professional Design Council, supported                                                               
HB  252. He  said the  director of  the Division  of Occupational                                                               
Licensing  had  a   suggestion  regarding  continuing  education.                                                               
Recently, issues  have come up  with respect to  reinstatement of                                                               
people with licenses and he suggested  that item 6 be changed to,                                                               
"establishing  continuing  education   requirements  for  persons                                                               
regulated  by  this chapter"  and  removing  the balance  of  the                                                               
sentence. That  would allow the  AELS Board to have  authority to                                                               
adopt   continuing  education   requirements  for   any  of   the                                                               
situations that may be required.                                                                                                
CHAIR BUNDE offered that as an amendment.                                                                                       
SENATOR HOLLIS  FRENCH wanted clarification on  how the amendment                                                               
would work.                                                                                                                     
MR. KITO  explained that it would  allow the AELS Board  to adopt                                                               
continuing   education   regulations   for   both   renewal   and                                                               
reinstatement  of  expired  certificates.   So,  if  an  engineer                                                               
stopped practicing and  then did not pay dues, but  wanted to get                                                               
reinstated, in order  to do so the board could  then require that                                                               
engineer or architect to show  proof of continuing education on a                                                               
case-by-case basis.                                                                                                             
There  were no  further objections  to the  amendment and  it was                                                               
SENATOR SEEKINS  moved to pass  SCS CSHB 252(L&C)  from committee                                                               
with  individual  recommendations   and  attached  fiscal  notes.                                                               
SENATORS  STEVENS,  SEEKINS,  FRENCH,  and BUNDE  voted  yea  the                                                               
motion carried.                                                                                                                 
CHAIR BUNDE announced that he was  turning the gavel over to Vice                                                               
Chair Seekins, as he had to go to another committee meeting.                                                                    
8:55 to 8:58 a.m. - at ease                                                                                                     
           HB 305-UNEMPLOYMENT COMPENSATION BENEFITS                                                                        
VICE CHAIR SEEKINS announced HB 305 to be up for consideration.                                                                 
REPRESENTATIVE TOM  ANDERSON, sponsor  of HB 305,  explained that                                                               
the  bill  provides  an  8.12% increase  to  the  maximum  weekly                                                               
unemployment benefit  amount. This increase would  be phased over                                                               
a  three-year  period  and minimizes  the  impact  to  employers,                                                               
employees and the  UI trust fund. He introduced  the bill because                                                               
Alaska ranks 47th in the nation  with a maximum weekly benefit of                                                               
$248.  With   the  changes   in  the   bill,  Alaska   will  rank                                                               
approximately  28th in  the nation.  The fully  increased maximum                                                               
benefit amount  would be available  to claimants  earning $34,250                                                               
or more  per year. The  full impact  of the increase  in benefits                                                               
will not  be reflected  in employer tax  rates until  2010, which                                                               
was a  concern in the  House. When  the cumulative impact  of the                                                               
costs is included in a tax  rate calculation by 2010, the average                                                               
employer tax rate will increase  by .17% and the average employee                                                               
tax rate will only increase by .04%.                                                                                            
COMMISSIONER  GREG O'CLARAY,  Department  of  Labor, pointed  out                                                               
that the amount  of money that goes into the  state's economy per                                                               
year  (for   2002)  was  nearly  $127   million  in  unemployment                                                               
insurance checks.  In the North  Star Borough,  $13,719,440 worth                                                               
of  unemployment checks  were cashed  in 2002.  In the  Anchorage                                                               
Mat-Su  area,  $55  million  goes into  the  local  economy.  The                                                               
increase they  are looking at  only affects about 3.28%  of those                                                               
that actually collect benefits within the state. He noted:                                                                      
     I think that's important  for you to underscore because                                                                    
     you'll  hear  those  who  oppose  this  bill  and  this                                                                    
     increase...because   employers    cannot   stand   this                                                                    
     increase.  Believe me,  this is  a compromise  piece of                                                                    
He said this  bill moves the effective date to  January 1 of each                                                               
year and  that assists employers  in adjusting costs in  terms of                                                               
their taxes. It will not have  any effect in FY04 and the maximum                                                               
it will cost per employee in 2005 is $5 per year.                                                                               
COMMISSIONER O'CLARAY said:                                                                                                     
     We  are  mainly  concerned about  keeping  our  skilled                                                                    
     workers  in  Alaska and  we're  starting  to lose  them                                                                    
     because they cannot afford  to maintain their residency                                                                    
     in Alaska  during the slow-down  in work in  the winter                                                                    
     when they  would draw  their UI  benefits and  they are                                                                    
     migrating to other portions of  the United States where                                                                    
     the cost of living is  cheaper. That is a major problem                                                                    
     for the construction industry because,  if we are - and                                                                    
     this  governor has  indicated he  wants  to build  some                                                                    
     roads - and  I support that - we're going  to be seeing                                                                    
     some heavy  construction. We  need those  craftsmen in-                                                                    
     state -  because the other  concern our  department has                                                                    
     is  with respect  to the  amount of  non-residents that                                                                    
     come to  Alaska that  work in our  high paying  jobs in                                                                    
     the construction  industry. Those dollars all  go south                                                                    
     and so it's our goal  in the department to increase the                                                                    
     amount of resident  workers and to not  only build, but                                                                    
     maintain  our  resident work  force  in  Alaska. So,  I                                                                    
     would encourage the committee to move this bill.                                                                           
SENATOR  FRENCH asked  how  they  will put  off  the increase  of                                                               
benefit costs and keep them  from being reflected in employer tax                                                               
rates until 2010.                                                                                                               
MR.  PATRICK  SHIER,  Chief, Employment  Security  Tax  Division,                                                               
explained that  the whole  rating system  is a  look-back system.                                                               
When rates are set  for 2004, they look back at  half of 2003 and                                                               
SENATOR FRENCH said this bill has  a three-year phase in at 2003.                                                               
He thought  the whole  increase would  be phased  in by  2006 and                                                               
asked if it will use a four-year look-back period.                                                                              
MR. SHIER  added that  there is  also a  mechanism in  the rating                                                               
system  that  depresses  any  called-for  increase  by  using  an                                                               
average  of the  prior three  years. He  surmised, "So,  the full                                                               
effect,  yes, is  not expected  to  be fully  represented in  the                                                               
rating process until 2010."                                                                                                     
SENATOR FRENCH  asked if  this is  the way  most UI  programs are                                                               
administered in other states.                                                                                                   
MR. SHIER replied that they are everywhere. He told members:                                                                    
     For   example,  in   1985-87,  we   were  having   some                                                                    
     difficulty  here in  the state  of Alaska  and employer                                                                    
     rates did  not go up  until we had actually  turned the                                                                    
     corner and begun  to come out of there  because of this                                                                    
     statutory  rating  process   that  takes  a  three-year                                                                    
VICE CHAIR  SEEKINS asked where  the money comes from  that comes                                                               
out in  UI benefits. He questioned,  "Doesn't it come out  of the                                                               
economy before it goes back into the economy?"                                                                                  
COMMISSIONER O'CLARAY replied yes and explained:                                                                                
     Obviously, 80% of the rate  comes out of the employer's                                                                    
     pocket  and  20%  of  the  UI  tax  comes  out  of  the                                                                    
VICE CHAIR SEEKINS responded:                                                                                                   
     As an  employer, I  tell you  it all  comes out  of the                                                                    
     employee's pocket. It comes out  of his pocket, because                                                                    
     if I wasn't paying it in,  I'd be giving it to him more                                                                    
     than likely. It  would be negotiable for  him. It's his                                                                    
He added that he thought  the construction industry had been that                                                               
way historically  in Alaska  but is probably  better now  than it                                                               
ever was  in the past because  of new technology. He  pointed out                                                               
he has  seen buildings being built  in tents in Anchorage  in the                                                               
wintertime.  When he  worked in  construction, workers  were laid                                                               
off in the wintertime.                                                                                                          
COMMISSIONER O'CLARAY  responded that there have  been good years                                                               
in  construction and  this  looks like  another  good year.  With                                                               
highway construction, there could be even better years. He said:                                                                
     The  main   impact,  though,  is  not   necessarily  on                                                                    
     construction trades.  The service industry is  one that                                                                    
     gets hit  very heavily, especially in  tourism, because                                                                    
     of the seasonality of that type of work.                                                                                   
SENATOR STEVENS  commented that  Alaska would  be ranked  28th in                                                               
2006,  but   that's  assuming  no   other  states   change  their                                                               
unemployment rates.                                                                                                             
MR.  SHIER explained  the differences  in the  charts before  the                                                               
committee and said there would  be some movement in the rankings.                                                               
It  is not  an  absolute  scale. He  did  not include  dependents                                                               
allowance in the calculations.                                                                                                  
VICE CHAIR SEEKINS asked if  they are talking about families with                                                               
dependents allowance.                                                                                                           
COMMISSIONER  O'CLARAY  responded  that   there  is  a  dependent                                                               
allowance of $24  per week per dependent with a  maximum of three                                                               
paid to claimants.                                                                                                              
MR. DON ETHERIDGE, AFL-CIO, supported HB 305.                                                                                   
VICE CHAIR SEEKINS said that years  ago, an operator made more on                                                               
an  Alaska job  than  elsewhere because  they  knew they  weren't                                                               
going  to have  that employment  in the  wintertime. He  asked if                                                               
that is still the case.                                                                                                         
MR.  ETHERIDGE  replied  that  is   still  the  case,  but  "It's                                                               
tightening up more all the time."                                                                                               
MS.  PAM LABOLLE,  President, Alaska  State Chamber  of Commerce,                                                               
said  this  bill  is  a  compromise  of  another  bill  that  was                                                               
introduced  and discussed  two years  ago. The  Chamber supported                                                               
the first step  then, of $24 and halfway with  the second step (a                                                               
12%  increase from  what the  bill  is proposing  now). Almost  a                                                               
third of the  UI payments were at the maximum  amount in 2001 and                                                               
nearly half included some dependent  allowance. Eleven percent of                                                               
claimants were paid the full dependent allowance.                                                                               
MS. LABOLLE reminded the committee  that there was also a minimum                                                               
wage increase last year and  an increase in business license fees                                                               
that would  impact employers  as well. She  said further  that 16                                                               
states have a  rule that if you're unemployed during  the time of                                                               
your seasonal work, that's when  you can collect benefits, but if                                                               
you  are unemployed  out of  season for  that seasonal  work, you                                                               
can't receive  benefits. She stated,  "Alaska is very  lenient in                                                               
that they  pay unemployment insurance  benefits when the  kind of                                                               
work you do isn't even available."                                                                                              
She encouraged  the committee to get  a full picture of  what the                                                               
full  cost  is  both  to  the tax  rated  employers  and  to  the                                                               
reimbursable  employers before  they pass  this legislation.  She                                                               
said it would  immediately impact the state's  budget and thought                                                               
taking it half  way would still have Alaska in  the upper quarter                                                               
of the maximum weekly benefit amount compared to other states.                                                                  
VICE CHAIR  SEEKINS asked Commissioner O'Claray  about the fiscal                                                               
impact  of the  change on  the  state treasury.  One fiscal  note                                                               
indicated   zero,   which   he   thought  meant   the   cost   of                                                               
administration of the  program would not increase as  a result of                                                               
a change in the rate.                                                                                                           
COMMISSIONER O'CLARAY said that was correct.                                                                                    
VICE CHAIR SEEKINS  asked if there was an estimate  of the impact                                                               
a change would have on the treasury.                                                                                            
COMMISSIONER  O'CLARAY replied  that  the bill  that didn't  pass                                                               
last  year or  the  year  before had  an  increase  on the  first                                                               
increment of $175,000 to the state  for FY03. That was for half a                                                               
year. He  explained, "If  you follow  that number,  your increase                                                               
for 12 months in 2004 would  be under $300,000. He questioned the                                                               
correctness of Ms. LaBolle's figures for the Alaska Railroad.                                                                   
He said  he was  trying to  avoid getting  into an  argument with                                                               
advocates from the  Chamber of Commerce, because in  the 38 years                                                               
he had  been coming  before this legislature,  he had  never once                                                               
seen the Alaska  State Chamber of Commerce agree  to any increase                                                               
in benefits to workers.                                                                                                         
VICE CHAIR SEEKINS asked Ms.  LaBolle if the information from the                                                               
Alaska Railroad  Corporation information was correct  and said if                                                               
it is, then a fiscal note should reflect that.                                                                                  
COMMISSIONER  O'CLARAY responded  that  is correct,  but he  also                                                               
knew of  the game that is  played with fiscal notes.  He stuck by                                                               
the numbers he had just quoted.                                                                                                 
MS.    BARBARA   HUFF-TUCKNESS,    Director,   Legislative    and                                                               
Governmental  Affairs for  Teamsters Local  959, said  during the                                                               
last  20 years,  unemployment  insurance  has actually  increased                                                               
four times. The last time was in 1997. She said:                                                                                
     I would like to reiterate on  record that we are one of                                                                    
     three  states  that  actually  has  employees  that  do                                                                    
     contribute  along  with  employers to  this  particular                                                                    
     benefit  program. Additionally,  I would  also like  to                                                                    
     reiterate that  it is a partial  wage reimbursement. It                                                                    
     does benefit  those workers who are  in the unfortunate                                                                    
     situation of  being unemployed temporarily -  that they                                                                    
     can have  a partial  wage benefit that's  going towards                                                                    
     covering  those  life  necessities out  there  such  as                                                                    
     shelter,  utilities,  food   and  clothing,  which,  of                                                                    
     course, does go back into the business community.                                                                          
She said that  sometimes workers don't plan to  be unemployed and                                                               
having a  benefit designed  to protect them  during that  time is                                                               
something she wanted the legislature  to support. For the record,                                                               
she was a  participatory member of the quasi-task  force that had                                                               
six  meetings  over  the  last  two  or  three  months  prior  to                                                               
introduction  of this  legislation  and there  is strong  support                                                               
from  AGC,  VECO  and  others.  She reiterated  that  this  is  a                                                               
compromise  bill  and   is  not  the  one  they   wanted  to  see                                                               
introduced, but they are supportive of it.                                                                                      
MR.  RON PECK,  President,  Alaska  Travel Industry  Association,                                                               
said the vast majority of  the businesses he represents are small                                                               
and have  had a challenging  last season. The prospects  for next                                                               
year are not much better. He  noted, "All sectors of our business                                                               
are in a  state of decline." He said that  labor costs comprise a                                                               
significant  portion of  their business  operations and  they are                                                               
facing  an increasing  minimum wage.  These are  very challenging                                                               
times for Alaskan  tourism. He thanked them  for this opportunity                                                               
to speak.                                                                                                                       
VICE  CHAIR SEEKINS  said  the last  time  this legislation  came                                                               
through  it had  a  fiscal  note and  this  time  it doesn't.  He                                                               
announced an  at-ease to  find out  what the  leadership's intent                                                               
9:40 to 9:56 a.m. - at ease                                                                                                     
VICE-CHAIR SEEKINS  said that a  fiscal note was needed  and that                                                               
they  would hold  the bill  in committee  until the  commissioner                                                               
prepared it for them.                                                                                                           
TAPE 03-38, SIDE A                                                                                                            
SENATOR FRENCH asked if this  bill has a Senate Finance Committee                                                               
referral.  He  suggested  in  the   interest  of  efficiency  the                                                               
committee send the bill there to wait for the fiscal note.                                                                      
VICE  CHAIR SEEKINS  said leadership  preferred that  it stay  in                                                               
this committee.  There being no  further business to  come before                                                               
the committee, he adjourned the meeting at 10:00 a.m.                                                                           

Document Name Date/Time Subjects