04/15/2004 01:30 PM Senate L&C
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ALASKA STATE LEGISLATURE
SENATE LABOR AND COMMERCE STANDING COMMITTEE
April 15, 2004
1:30 p.m.
TAPE(S) 04-32, 33
MEMBERS PRESENT
Senator Con Bunde, Chair
Senator Ralph Seekins, Vice Chair
Senator Bettye Davis
Senator Hollis French
MEMBERS ABSENT
Senator Gary Stevens
COMMITTEE CALENDAR
^CONFIRMATION HEARINGS
^BRD OF REGIS FOR ARCHITECTS, ENGINEERS AND LAND SURVEYORS
Clifford E. Baker - Kenai
Boyd J. Brownfield - Anchorage
Richard A. Hughes - Fairbanks
Kenneth D. Maynard - Anchorage
^ALASKA LABOR RELATIONS AGENCY
Gary P. Bader - Anchorage
Dennis Niedermeyer - Eagle River
James S. Spalding - Anchorage
CS FOR HOUSE BILL NO. 428(JUD) am
"An Act relating to civil liability for acts related to
obtaining alcohol for persons under 21 years of age or for
persons under 21 years of age being on licensed premises."
SCHEDULED BUT NOT HEARD
SENATE BILL NO. 272
"An Act relating to certain monetary advances in which the
deposit or other negotiation of checks to pay the advances is
delayed until a later date; and providing for an effective
date."
SCHEDULED BUT NOT HEARD
SENATE BILL NO. 358
"An Act relating to the performance of railroad track
construction work for the Department of Transportation and
Public Facilities by the Alaska Railroad Corporation."
MOVED SB 358 OUT OF COMMITTEE
SENATE BILL NO. 377
"An Act relating to the state's mechanical code, to mechanical
contractors and mechanical administrators, to mechanical
standards and inspections involved in certain housing loans, and
to the adoption of the state's mechanical code; and providing
for an effective date."
HEARD AND HELD
CS FOR SPONSOR SUBSTITUTE FOR HOUSE BILL NO. 29(JUD) am
"An Act relating to real estate licensees and real estate
transactions; and providing for an effective date."
HEARD AND HELD
CS FOR HOUSE BILL NO. 91(FIN)
"An Act relating to medical benefits for retired peace officers
after 20 years of credited service."
HEARD AND HELD
PREVIOUS COMMITTEE ACTION
BILL: SB 358
SHORT TITLE: ALASKA RAILROAD TRACK WORK
SPONSOR(s): TRANSPORTATION
03/03/04 (S) READ THE FIRST TIME - REFERRALS
03/03/04 (S) TRA, L&C
03/04/04 (H) TRA AT 1:30 PM CAPITOL 17
03/04/04 (H) -- Meeting Canceled --
03/05/04 (S) TRA RPT 3DP 2NR
03/05/04 (S) DP: WAGONER, COWDERY,THERRIAULT
03/05/04 (S) NR: LINCOLN, OLSON
03/23/04 (S) L&C AT 1:30 PM BELTZ 211
03/23/04 (S) Heard & Held
03/23/04 (S) MINUTE(L&C)
04/01/04 (S) L&C AT 1:30 PM BELTZ 211
04/01/04 (S) <Bill Hearing Postponed>
04/13/04 (S) L&C AT 1:30 PM BELTZ 211
04/13/04 (S) -- Meeting Canceled --
04/15/04 (S) L&C AT 1:30 PM BELTZ 211
BILL: SB 377
SHORT TITLE: STATE MECHANICAL CODE
SPONSOR(s): LABOR & COMMERCE
03/26/04 (S) READ THE FIRST TIME - REFERRALS
03/26/04 (S) L&C, FIN
04/01/04 (S) L&C AT 1:30 PM BELTZ 211
04/01/04 (S) Heard & Held
04/01/04 (S) MINUTE(L&C)
04/15/04 (S) L&C AT 1:30 PM BELTZ 211
BILL: HB 29
SHORT TITLE: REAL PROPERTY TRANSACTIONS/LICENSEES
SPONSOR(s): REPRESENTATIVE(s) ROKEBERG
01/21/03 (H) PREFILE RELEASED (1/10/03)
01/21/03 (H) READ THE FIRST TIME - REFERRALS
01/21/03 (H) L&C, JUD
01/20/04 (H) SPONSOR SUBSTITUTE INTRODUCED
01/20/04 (H) READ THE FIRST TIME - REFERRALS
01/20/04 (H) L&C, JUD
02/04/04 (H) L&C AT 3:15 PM CAPITOL 17
02/04/04 (H) Moved CSSSHB 29(L&C) Out of Committee
02/04/04 (H) MINUTE(L&C)
02/05/04 (H) L&C RPT CS(L&C) 6DP 1NR
02/05/04 (H) DP: CRAWFORD, LYNN, GATTO, ROKEBERG,
02/05/04 (H) DAHLSTROM, ANDERSON; NR: GUTTENBERG
02/18/04 (H) JUD AT 1:00 PM CAPITOL 120
02/18/04 (H) Heard & Held
02/18/04 (H) MINUTE(JUD)
02/20/04 (H) JUD AT 1:00 PM CAPITOL 120
02/20/04 (H) Moved CSSSHB 29(JUD) Out of Committee
02/20/04 (H) MINUTE(JUD)
02/26/04 (H) JUD RPT CS(JUD) 4DP 2NR
02/26/04 (H) DP: SAMUELS, ANDERSON, OGG, MCGUIRE;
02/26/04 (H) NR: GARA, GRUENBERG
03/04/04 (H) TRANSMITTED TO (S)
03/04/04 (H) VERSION: CSSSHB 29(JUD) AM
03/05/04 (S) READ THE FIRST TIME - REFERRALS
03/05/04 (S) L&C, JUD
04/15/04 (S) L&C AT 1:30 PM BELTZ 211
BILL: HB 91
SHORT TITLE: RETIRED PEACE OFFICER'S MEDICAL BENEFITS
SPONSOR(s): REPRESENTATIVE(s) ANDERSON
02/12/03 (H) READ THE FIRST TIME - REFERRALS
02/12/03 (H) L&C, FIN
02/21/03 (H) L&C AT 3:15 PM CAPITOL 17
02/21/03 (H) Moved Out of Committee
02/21/03 (H) MINUTE(L&C)
02/24/03 (H) L&C RPT 4DP 1NR
02/24/03 (H) DP: GATTO, CRAWFORD, GUTTENBERG,
02/24/03 (H) ANDERSON; NR: ROKEBERG
03/18/03 (H) FIN AT 1:30 PM HOUSE FINANCE 519
03/18/03 (H) Heard & Held
03/18/03 (H) MINUTE(FIN)
02/17/04 (H) FIN AT 1:30 PM HOUSE FINANCE 519
02/17/04 (H) Heard & Held
02/17/04 (H) MINUTE(FIN)
02/19/04 (H) FIN AT 1:30 PM HOUSE FINANCE 519
02/19/04 (H) Moved CSHB 91(FIN) Out of Committee
02/19/04 (H) MINUTE(FIN)
02/23/04 (H) FIN RPT CS(FIN) NT 3DP 7NR
02/23/04 (H) DP: CROFT, FATE, WILLIAMS; NR: MEYER,
02/23/04 (H) HAWKER, JOULE, MOSES, CHENAULT, FOSTER,
02/23/04 (H) HARRIS
03/04/04 (H) TRANSMITTED TO (S)
03/04/04 (H) VERSION: CSHB 91(FIN)
03/05/04 (S) READ THE FIRST TIME - REFERRALS
03/05/04 (S) STA, L&C, FIN
03/18/04 (S) STA AT 3:30 PM BELTZ 211
03/18/04 (S) Heard & Held
03/18/04 (S) MINUTE(STA)
04/01/04 (S) STA AT 3:30 PM BELTZ 211
04/01/04 (S) Moved CSHB 91(STA) Out of Committee
04/01/04 (S) MINUTE(STA)
04/02/04 (S) STA RPT SCS 3NR SAME TITLE
04/02/04 (S) NR: STEVENS G, COWDERY, STEDMAN
04/13/04 (S) L&C AT 1:30 PM BELTZ 211
04/13/04 (S) -- Meeting Canceled --
04/15/04 (S) L&C AT 1:30 PM BELTZ 211
WITNESS REGISTER
Clifford E. Baker, Boyd J. Brownfield and Richard A. Hughes,
Boyd J. Brownfield, Richard A. Hughes, Kenneth D. Maynard -
nominees to the Board Of Registration For Architects, Engineers
And Land Surveyors
Gary P. Bader, Dennis Niedermeyer and James S. Spalding,
nominees to the Alaska Labor Relations Agency
Mr. John Guichici
Fairbanks AK
POSITION STATEMENT: Opposes Mr. Spaulding's appointment.
Mr. Jay Quakenbush
Fairbanks AK
POSITION STATEMENT: Opposes Mr. Spaulding's appointment.
Ms. Roberta Demoski
International Brotherhood of Electrical Workers (IBEW)
Anchorage AK
POSITION STATEMENT: Opposed Mr. Spaulding's appointment.
Mr. Paul Weisenberger
Sheet Metal Workers
Anchorage AK
POSITION STATEMENT: Opposes Mr. Spaulding's appointment.
Mr. Scott Bridges
Teamsters Local 959
Anchorage AK
POSITION STATEMENT: Opposes Mr. Spaulding's appointment.
Mr. John Landerfelt
Laborers Local 341
Anchorage AK
POSITION STATEMENT: Opposes Mr. Spaulding's appointment.
Ms. Wendy Lindskoog, Director
External Affairs
Alaska Railroad Association
Anchorage AK
POSITION STATEMENT: Supports SB 358.
Mr. Zack Warwick
Staff to Senator Therriault
Alaska State Capitol
Juneau, AK 99801-1182
POSITION STATEMENT: Commented on SB 377 for sponsor.
Mr. Jeff Robinson
Cliff's Mechanical
Anchorage AK
POSITION STATEMENT: Opposes SB 377.
Ms. Vicki Sterling
Design Professional
No address provided
POSITION STATEMENT: Opposes SB 377.
Mr. Craig Stephenson
International Code Council
No address provided
POSITION STATEMENT: Opposes SB 377.
Mr. Ernie Hetrick
Design Professional
No address provided
POSITION STATEMENT: Opposes SB 377.
Mr. Kelly Nicoleillo
Department of Public Safety
PO Box 111200
Juneau, AK 99811-1200
POSITION STATEMENT: Available to answer technical questions
about SB 377.
Mr. Dale Nelson, President
Alaska Professional Design Council
No address provided
POSITION STATEMENT: Opposes SB 377.
Mr. Dale Nelson, President
Alaska Design Council
Delta AK
POSITION STATEMENT: Opposes SB 377.
Mr. John Knabe, Training Director
UA Local 375 Plumbers and Pipefitters Joint Apprenticeship
Training Committee
Fairbanks AK
POSITION STATEMENT: Supports SB 377.
Mr. Jim Lahti
Pipefitters 375
Fairbanks AK
POSITION STATEMENT: Supports SB 377.
Mr. Rodney Brown
Plumbers and Pipefitters Local 375
Fairbanks AK
POSITION STATEMENT: Supports SB 377.
Mr. David Peet
Fairbanks AK
POSITION STATEMENT: Supports SB 377.
Mr. Dennis Michael, President and Owner
American Mechanical
Fairbanks AK
POSITION STATEMENT: Supports SB 377.
Mr. Dayn Cooper
Chandler Plumbing and Heating
Fairbanks AK
POSITION STATEMENT: Supports SB 377.
Mr. Mark Anderson, Construction Manager
Chandler Plumbing and Heating
Fairbanks AK
POSITION STATEMENT: Supports SB 377.
Mr. Bill Sager, Executive Director
Mechanical Contractors of Fairbanks
Fairbanks, Alaska 99707
POSITION STATEMENT: Supports SB 377.
Mr. Chuck Deerdon
City Building Inspector
City of Ketchikan Gateway Borough
344 Front Street
Ketchikan, Alaska 99901
POSITION STATEMENT: Opposes SB 377.
Mr. Steve Shows
Juneau AK
POSITION STATEMENT: Opposes SB 377.
Mr. Max Mielke, Business Manager
Plumbers and Pipefitters UA Local 262
Juneau AK
POSITION STATEMENT: Supports SB 377.
Mr. Robert Buch
Local 367
Anchorage AK
POSITION STATEMENT: Supports SB 377.
Mr. Gary Hile
Anchorage AK
POSITION STATEMENT: Supports SB 377.
Mr. Harry Devasconcelles
Alaska Oil and Gas Association (AOGA)
Anchorage AK
POSITION STATEMENT: Opposes SB 377.
Mr. Greg Moore
NANA/Colt
Anchorage AK
POSITION STATEMENT: Opposes SB 377.
Mr. Pat Knowles
Mt. Mechanical
Anchorage AK
POSITION STATEMENT: Opposes SB 377.
Mr. Frank Kapelari
Knik Plumbing
Anchorage AK
POSITION STATEMENT: Supports SB 377.
Mr. Colin Maynard
BBFM Engineers
Anchorage AK
POSITION STATEMENT: Opposes SB 377.
Mr. Craig Hately
Local 367
Anchorage AK
POSITION STATEMENT: Supports SB 377.
Mr. Steve Miller
Plumbers Local 367 3 ATC
Anchorage AK
POSITION STATEMENT: Supports SB 377.
Representative Rokeberg
Alaska State Capitol
Juneau, AK 99801-1182
POSITION STATEMENT: Sponsor of HB 29.
Ms. Peggy Ann McConnochie
Alaska Association of Realtors
Juneau AK
POSITION STATEMENT: Supports HB 29.
Mr. Perry Underwood
Alaska Association of Realtors
Eagle River AK 99577
POSITION STATEMENT: Supports HB 29.
Mr. Dave Feeken, Chair
Legislative and Industry Issues
Alaska Association of Realtors
Eagle River AK
POSITION STATEMENT: Supports HB 29.
Mr. Steven Cleary, Executive Director
Alaska Public Interest Research Group (AKPIRG)
Anchorage AK
POSITION STATEMENT: Commented on HB 29.
Ms. Linda Garrison, Owner and Broker
AAR Number 1 Buyer's Agency
Anchorage AK
POSITION STATEMENT: Opposes HB 29.
Mr. Kirk Wickersham
Anchorage AK
POSITION STATEMENT: Supports HB 29.
Representative Tom Anderson
Alaska State Capitol
Juneau, AK 99801-1182
POSITION STATEMENT: Sponsor of HB 91.
Mr. Mike Fox
Public Safety Employees Association (PSEA)
Juneau AK
POSITION STATEMENT: Supports HB 91.
Mr. Chuck Hansen, Correctional Officer
Lemon Creek Correctional Facility
Juneau AK
POSITION STATEMENT: Supports HB 91.
Ms. Melanie Millhorn, Director
Division of Retirement and Benefits
Department of Administration
PO Box 110200
Juneau, AK 99811-0200
POSITION STATEMENT: Deferred testimony on HB 91.
Mr. Dean Baugh, Finance Director
City of Homer
Homer AK
POSITION STATEMENT: Opposes HB 91.
Mr. Maurice Hughes
Alaska State Trooper
Public Service Employees Association (PSEA)
PO Box 802
Kodiak AK
POSITION STATEMENT: Supports HB 91.
Mr. Paul Comolli
Police Officer
Juneau AK
POSITION STATEMENT: Supports HB 91.
Mr. Larry Simmons, Finance Director
City of Kenai
Kenai AK
POSITION STATEMENT: Opposes HB 91.
Mr. Chris Burns
Human Resource Consulting
Seattle WA
POSITION STATEMENT: Available to answer questions.
ACTION NARRATIVE
TAPE 04-32, SIDE A
CHAIR CON BUNDE called the Senate Labor and Commerce Standing
Committee meeting to order at 1:30 p.m. Present were Senators
Bettye Davis, Ralph Seekins, Hollis French and Chair Con Bunde.
Senator Gary Stevens was excused.
CONFIRMATION HEARINGS
ARCHITECTS, ENGINEERS AND LAND SURVEYORS
The first order of business to come before the committee was
confirmation hearings for the Board of Registration for
Architects, Engineers and Land Surveyors - Clifford Baker, Boyd
Brownfield, Richard Hughes and Kenneth Maynard. He asked for
questions, but there were none.
LABOR RELATIONS AGENCY
Next, he took up the Alaska Labor Relations Agency nominees -
Gary Bader, Dennis Niedermeyer and James Spaulding. He noted
there were questions for Mr. James Spaulding.
CHAIR BUNDE asked if Mr. Spaulding had an opening statement.
MR. JAMES SPAULDING said he didn't have a statement, but this
appointment took him by surprise.
I've spent most of my adult life in Alaska and Alaska
has been very good to me. I've worked for both labor
and management in the field of human resources and
labor relations and I feel like I can do a fair and
objective job.
SENATOR HOLLIS FRENCH said that usually these appointments get
very little attention, but he had received 5 to 10 e-mails
opposing his appointment. The tenor of the objections was that a
management person was being appointed to a labor seat on a labor
relations panel. He asked Mr. Spaulding to describe his current
position at Matanuska Electric Association (MEA).
MR. SPAULDING replied that he is the director of Human Resources
and Corporate Affairs and oversees all the human resource (HR)
and labor functions for MEA.
SENATOR FRENCH asked if he represented labor or management.
MR. SPAULDING replied that he represents management.
SENATOR FRENCH asked if he represented labor or management when
he went to arbitrations.
MR. SPAULDING replied that he represents management.
SENATOR FRENCH asked if he reports to management in his current
job.
MR. SPAULDING replied yes.
SENATOR FRENCH asked him, as a management person, to address the
concerns of the folks who are concerned about his being
appointed to a labor seat.
MR. SPAULDING replied that he had worked for a labor
organization in the past and has sat on both sides of the table
in negotiations and grievance investigations. "I feel I have a
pretty good knowledge of labor perspective from both a
management and labor viewpoint." Most folks he dealt with
thought he was very fair.
SENATOR FRENCH asked how long he had worked for MEA.
MR. SPAULDING replied since September 1997.
SENATOR FRENCH asked who he worked for before that.
MR. SPAULDING replied that City of Unalaska.
SENATOR FRENCH asked what he did in Unalaska.
MR. SPAULDING replied that he was the human resources (HR)
manager for the city.
SENATOR FRENCH asked if that was similar to the job he has now.
MR. SPAULDING replied that it is very similar.
SENATOR FRENCH asked how long he worked in Unalaska and who did
he work for.
MR. SPAULDING answered that he worked for three years for the
city as the HR manager; he also worked for three years for
Unisea, a very large seafood processing company in Dutch Harbor.
SENATOR FRENCH asked if that preceded his work for the city.
MR. SPAULDING replied yes, they weren't simultaneous.
SENATOR FRENCH asked if his work for Unisea was in human
relations.
MR. SPAULDING replied yes.
SENATOR FRENCH asked if that was a management position.
MR. SPAULDING replied yes.
SENATOR FRENCH asked if he was correct, then, that since 1991 he
had been basically in management positions in his professional
capacity.
MR. SPAULDING responded that the period of time he worked for
labor was in the mid-80s when he worked for the Alaska Public
Employees Association (APEA) as a senior labor representative.
After that he went to Washington for two years to care for his
father and then he worked for Marine Management in Seattle
there. He moved back to Alaska in 1990 with Unisea.
SENATOR FRENCH asked when the last time was that he held a job
that could be classified as a labor-type perspective job.
MR. SPAULDING replied his position with APEA in the mid-80s.
SENATOR BETTYE DAVIS asked if he was surprised he received this
appointment because he didn't apply for it.
MR. SPAULDING replied that he did apply, but didn't know he
would be considered.
SENATOR DAVIS asked him what he thought his responsibilities
would be and how did he feel about working on the labor side,
since he had been in management so long.
MR. SPAULDING replied that he has a good understanding of what
the board and agency do. He appeared before them several times
when he worked for the City of Unalaska. He understood that the
board is a quasi-judicial body that hears disputes between
public employees and their employers on a variety of issues. He
felt that he still has a pretty good understanding of that and
of the state and could apply that understanding in a fair and
judicious manner.
SENATOR DAVIS asked if he had anything filed against him by some
of the employees and MEA.
MR. SPAULDING replied no, not that he is aware of.
CHAIR BUNDE asked if he believed one had to be a member of a
union to be able to make fair and impartial decisions.
MR. SPAULDING replied no.
CHAIR BUNDE asked if he believed one had to be a member of
management to make fair and impartial decisions.
MR. SPAULDING replied no.
CHAIR BUNDE asked if he was capable of making fair and impartial
decisions.
MR. SPAULDING replied that he thought so, yes.
MR. JOHN GUICHICI, Fairbanks, opposed Mr. Spaulding's
appointment, because there are enough labor organizations in
Alaska that could put forward names of people who are more
oriented toward labor than Mr. Spaulding.
MR. JAY QUAKENBUSH, Fairbanks, expressed his concern about Mr.
Spaulding's appointment.
Seats on boards like this need to have a balanced
view...and certainly the labor seat that this man has
been nominated for should come from someone within
labor, someone who has been active either in the field
or dealing closely with the labor unions on the labor
side of things.
SENATOR SEEKINS asked if he or Mr. Guichici was aware of any
members of organized labor who applied for this position.
MR. GUICHICI replied no. "Usually when a vacancy comes up,
someone within the agency goes and seeks out individuals. I
didn't know there was an open enrollment or application process
for these positions.
SENATOR SEEKINS asked if the commissioner didn't actively
solicit for any applications.
MR.GUICHICI replied, "None whatsoever."
MR. QUAKENBUSH said as president of a building trade, he
received no notification that this seat was open. As a
participant in the Central Labor Council in Fairbanks, he hadn't
heard anything on that level either.
MS. ROBERTA DEMOSKI, International Brotherhood of Electrical
Workers (IBEW), Anchorage, said she had a couple of concerns and
that she deals with Mr. Spaulding on a daily basis in his
capacity at Matanuska Electric Association.
One of the issues I have with his appointment into the
labor seat there on the Labor Board is that Mr.
Spaulding works for an employer - and I believe it's
not secret - that has had a very contentious labor
relations atmosphere and culture. I think it will be
very difficult for anybody in that situation to sit on
a board in a seat that is supposed to be
representative of labor and then on a daily basis go
to an employer who has an anti-labor culture and
atmosphere that's prevalent at that property.
The other thing is I believe that by appointing Mr.
Spaulding to the labor seat on this board [violates]
the intent and spirit of the statute. The panel is
supposed to be comprised of perspectives from
organized labor, a perspective from management and a
perspective from the public sector. I actually sat on
the Labor Relations Board and sat through some
hearings on panels with those three perspectives
presented and I can tell you it is very important in
the decision-making process that all of those
perspectives be brought forward and considered so that
ultimately everybody who shows up at that hearing -
organized labor and the employers - feel like they've
gotten a fair shake. I believe that you will be
nullifying that perception and, maybe, reality [is]
that the fair hearing process is going to go out the
window if you have a management person put in a labor
seat.
I agree with John in Fairbanks. I believe that there
are many up and coming labor leaders in organized
labor that would be a tremendous asset to that board
and have a contribution.
MR. PAUL WEISENBERGER, Sheet Metal Workers, Anchorage, said he
didn't know Mr. Spaulding personally, but did know of the strong
labor animus exhibited by MEA administration and some of the
board members.
I know this from my status as an MEA consumer and
citizen in the Matanuska Valley for many years. I have
received many anti-labor fliers and letters from Wayne
Carmony, who is the director at MEA and who I believe
is Mr. Spaulding's boss. I believe that Mr.
Spaulding's management position at MEA is detrimental
to fairly representing the seat to which he has been
appointed. I hope the board will reconsider this
position and appoint someone who is more suited to the
job from a true labor perspective. Thank you.
MR. SCOTT BRIDGES, Teamsters Local 959, said he has been in
Alaska since 1959 and is an attorney. He is an MEA consumer and
objects to Mr. Spaulding's appointment for all the reasons that
have already been stated.
There is absolutely no way that an individual in his
capacity could serve objectively from a management
perspective. I think this appointment needs to be
withdrawn and I think labor needs to be appropriately
notified and proper candidates need to be appointed to
fill that slot.
MS. JOHN LANDERFELT, Laborers Local 341, opposed Mr. Spaulding's
appointment for all the reasons previously stated and, "most
sincerely because it seems to violate the intent of what a labor
board is supposed to be, which is viewpoints from all sides."
CHAIR BUNDE closed the hearing and said he would hold the
confirmation over for another meeting, probably next week.
SB 358-ALASKA RAILROAD TRACK WORK
CHAIR CON BUNDE announced SB 358 to be up for consideration.
MS. WENDY LINDSKOOG, Director, External Affairs, Alaska Railroad
Corporation (ARRC), said she was asked to try to come up with a
solution with all the different parties involved in this issue.
That is what they did. She offered to go through the highlights.
CHAIR BUNDE said that everyone had read it and there were no
further questions.
SENATOR SEEKINS moved to pass SB 358 from committee with
individual recommendations and attached zero fiscal note.
Senators Bettye Davis, Ralph Seekins, Hollis French and Chair
Con Bunde voted yea; and SB 358 moved from committee.
SB 377-STATE MECHANICAL CODE
CHAIR CON BUNDE announced SB 377 to be up for consideration.
MR. ZACK WARWICK, staff to Senator Therriault, sponsor, said
there seems to be a lot of misunderstanding about this bill.
All it does is grant the adoption authority for the
Mechanical Code to the Department of Labor. It does
not change the code from one brand to the other. It
simply grants the adoption authority to the department
since historically there has been no statutory
adoption authority.... In addition, it does not change
the way the plan inspections or building inspections
are done. The Department of Public Safety will still
be doing the plan inspections with regard to fire and
life safety issues. The Department of Labor will still
do all post-building inspections in regards to
mechanical, plumbing and electrical codes. That's
exactly what's been going on for years.
The bill simply recognizes that the mechanical code
and the plumbing code are closely related because
nearly all mechanical contractors are also plumbing
contractors. Given this relationship and regardless of
which code is adopted, it makes more sense to have
these two closely related codes coordinated within one
single agency. It comes down to basically a policy
call by the Legislature...
CHAIR BUNDE asked if he thought it was possible to alleviate
some of the misunderstanding. "What can we do to lower the level
of anxiety this bill seems to have created?"
MR. WARWICK replied that he has received calls from a number of
different industry groups, Associated Builders and Contractors
as well as the International Code Council. The letter from the
Council does not support SB 377, but it was completely unaware
of what the bill really does. It is being put where all family
codes will receive a fair hearing. He added that he didn't think
it was possible to clear up the misconceptions.
MR. JEFF ROBINSON, Cliff's Mechanical, Anchorage, opposed SB
377. His understanding is that the underlying intent of the
legislation is to bring back the Uniform Mechanical Code (UMC)
just to appease a minority group of contractors.
MR. ROBINSON said he is also a member of the American Society of
Heating, Refrigeration and Air Conditioning Engineers and out of
all the people he has spoken to, no one supports it.
MS. VICKI STERLING, private consultant in the design community,
opposed SB 377 saying it is a life safety issue, which belongs
in the Department of Public Safety.
MR. CRAIG STEPHENSON, International Code Council, opposed SB
377. He has read the actual bill, which has very generic
language. He is concerned that it is just a way to undo codes
that have been adopted. He urged, "What we need to be doing is
taking a very thoughtful look at how codes are adopted in the
State of Alaska that serves Alaska the best."
MR. ERNIE HETRICK, design professional, opposed SB 377. He
thought all codes should be adopted by the same group so they
can be considered together.
MR. KELLY NICOLEILLO, Department of Public Safety, said he was
available to answer technical questions.
MR. DALE NELSON, President, Alaska Professional Design Council,
said he sent the committee a letter dated April 13 stating its
concerns. He added one more concern - that there is no stated
fiscal impact resulting from changing departments.
MR. JOHN KNABE, Training Director, UA Local 375, Plumbers and
Pipefitters Joint Apprenticeship Training Committee, said he is
also chair of the City of Fairbanks Plumbers Examining Board and
that all members support SB 377.
We feel it is a good compromise and will address the
current situation we have of having two different
codes that aren't in harmony with each other,
published by two separate organizations and adopted
and administered by two separate state departments.
This fragmented approach is problematic and
responsible for a great amount of frustration and cost
to the necessary training and certification in our
industries. We have a very good working relationship
with the State Department of Labor. SB 377 will
benefit the public and our industry by insuring
coordination of the plumbing and mechanical codes.
MR. JIM LAHTI, Plumbers and Pipefitters Local 375, said it
trains and maintains a significant workforce to the standards of
the Uniform Plumbing Code. "To help maintain consistency, it's
only logical that both the mechanical and the plumbing codes
should fall under the jurisdiction of the Department of Labor."
MR. RODNEY BROWN, Plumbers and Pipefitters Local 375, supported
SB 377.
MR. RANDY BAYER supported SB 377.
I believe to have both the mechanical code and the
plumbing code under the Department of Labor would
facilitate the enforcement and oversight that this
code provides for the citizens of the State of Alaska.
MR. DAVID PEET, Fairbanks resident, supported SB 377.
It just seems to me that these two codes are related
to our industry and if they are, they should fall
under the jurisdiction of one department.
MR. DENNIS MICHAEL, President and owner, American Mechanical,
thought SB 377 would give the public a better quality product.
There really is no inspection on the jobsite because
the Department of Labor has no authority to look at
mechanical systems when they are already on the job
site looking at plumbing systems....
MR. DAYN COOPER, Chandler Plumbing and Heating, supported SB 377
for the reasons already stated.
MR. MARK ANDERSON, Construction Manager, Chandler Plumbing and
Heating, supported SB 377 for all the previously stated reasons.
MR. BILL SAGER, Executive Director, Mechanical Contractors of
Fairbanks, said his members unanimously support SB 377. "We feel
that since our members have to work under both codes, it just
makes sense for them to be administered out of one department."
MR. CHUCK DEERDON, Ketchikan Building Inspector, said he also is
representing the State Homebuilder's Association. The
Homebuilder's Association opposed SB 377.
One of the reasons is that the IMC, which a lot of
municipalities have adopted, includes the
International Mechanical Code as part and parcel of
that. From the city perspective, the interlocking of
the International Fire Code, the International
Building Code and the International Mechanical Code
are pretty important and they go to the State Fire
Marshall's office for review. I think the system isn't
broken, but I think it could be improved and if you
don't mind, I'd like to offer a suggestion. That would
be that the Governor's Office could possibly get the
State Fire Marshall's Office, which is on the same
level as the Department of Labor, and get a letter of
understanding [so]...one of the state plumbing
inspectors can go out and also do mechanical
inspections. The State Fire Marshall's Office can
still do the plan review including the life safety
issues and then we can tailor the codes to encompass
the training for the mechanical and plumbing
contractors. But, at this point, I don't think that
the issue of the Fairbanks - and I understand their
issues on the Mechanical Plumber Contractor's Union -
I think they have a valid point that the training
could be done better and that they could possibly mix
the codes so that things could work for them....
CHAIR BUNDE agreed with him.
MR. STEVE SHOWS said he would speak on his own behalf. He said
he has 35 years in the construction industry, 25 years have been
in the State of Alaska regulating construction for municipal,
borough, state and federal government. He opposed SB 377
primarily because it doesn't address the big picture issue,
which is the safety of Alaskans in a built environment.
I think there are things related to this topic that
Alaskans do agree on. Number one, the State of Alaska
does not have an effective construction regulation
environment. It just doesn't exist. I believe it is
evident that our municipal governments, each and every
one of them...they do have an effective way of
administering these regulations without conflicts in a
coordinated manner. So, I think we have a roadmap that
the State of Alaska may look to to see how can we get
out of this quagmire, move forward as a team, because,
trust me, building a major building takes a team; it
takes qualified licensed individuals on the job doing
the work. It takes a knowledgeable set of people
reviewing plans and all the nuances and intricacies
those plans have to provide the safety that codes
require. Codes need to be reviewed and adopted by
impartial technically proficient individuals - as many
of them as you can find working together. Beyond that,
as Reagan said, trust, but verify....
So, I leave you with that thought that things are
working well in the plan review area of coordinated
technically adopted codes in public safety. There is
no effective field inspection by the Department of
Labor and I can tell you that for a fact. If a non-
union contractor gets a bid, I may see the state labor
inspector in my town checking up on him. These
partisan interests are understandable. Economic self-
sufficiency is a human drive that's very important,
but we need to understand that and not adopt codes
that limit new technology and material to the
financial benefit of a small group of contractors to
the detriment of the people of the State of Alaska who
look to their legislature and representatives to help
them get the biggest bang for the buck. Life safety is
important. We're probably one of the most seismically
active areas on the world; fire, loss of life is not
something to be swallowed over without the best effort
that we can bring to bear to address it.
CHAIR BUNDE said, "That best effort, then, would be for folks to
forget their turf battles and work together?"
MR. SHOWS replied, "You got it. My personal opinion is to
consolidate these construction regulations in one
department...." [END OF SIDE A]
TAPE 04-32, SIDE B
MR. SHOWS continued:
I've seen the Department of Labor do their best effort
and it falls short and it's one-sided. That's my
personal opinion.
SENATOR SEEKINS asked how much inspection of the mechanical work
is done by the Department of Public Safety (DPS).
MR. SHOWS answered that the DPS reviews plans, but does no field
inspection work that he knows of.
MR. MAX MIELKE, Business Manager, Plumbers and Pipefitters UA
Local 262, said he is also president of the Alaska State Pipe
Trades Association, which represents over 1,000 members who
install mechanical systems every day for mechanical contractors
in Southeast. They all strongly support SB 377. He thought the
issue is basically between the mechanical contractors, the
people who install the mechanical systems and the building
officials.
I want to say one thing in my closing statement. The
IMC is not a consensus code. Only government building
officials are on the review committee when it comes to
the International Code Committee whereas under the
Uniform Mechanical Code, there's a balanced committee
for all industries involved in putting mechanical
contractors and building officials....
CHAIR BUNDE said he wasn't going to move the bill today and a
lot more people wanted to testify. He wanted to go through the
list and have people say yes or no on whether they support SB
377.
MR. ROBERT BUCH, Local 367, supported SB 377.
MR. GARY HILE, Anchorage, supported SB 377.
MR. HARRY DEVASCONCELLES, Alaska Oil and Gas Association (AOGA),
opposed SB 377.
MR. GREG MOORE, NANA/Colt, Anchorage, opposed SB 377.
MR. PAT KNOWLES said he is not a union member and supported SB
377.
MR. FRANK KAPILARI, Knik Plumbing, said he represents the non-
union side of this and supports SB 377.
MR. COLIN MAYNARD, BBFM Engineers, opposed SB 377.
MR. CRAIG HATELY, Local 367, supported SB 377.
MR. STEVE MILLER, Plumbers Local 3673 ATC, supported SB 377.
CHAIR BUNDE thanked everyone for their brevity and said he would
sit on the bill for a while to see if a proper consensus would
arise.
SENATOR SEEKINS said for the record:
I [was] co-chair of the Safety Code Task Force last
summer with Representative Dahlstrom. I've spent
several hundred hours on this matter. I think I'm spun
up about just as much on where the turf war is on any
of it. The one thing that I want to say for
consideration at this point is that under the current
system there is no inspection by the Department of
Public Safety on mechanical applications as they're
applied in the field. Once it's done, it's not
inspected; it's only a plan review. As I understand,
this bill would not eliminate the plan review from
[the Department of] Public Safety. That is a safety
issue that continues in place. But, there is the
matter now that an inspection process would have to
take place from the Department of Labor just as
they're supposed to do. They may not in all cases, but
they're supposed to do it and they're tasked to do it
on the plumbing. So, it appears to me...as I looked at
the review from the Safety Code Task Force that in
order to put in place the mechanism that we came to
some consensus should exist in the overall safety code
system in the State of Alaska, that it's going to take
some time to design it out and work with the different
departments and try to put in place, because of the
autonomy of the cities - Juneau, Anchorage, Fairbanks
- where they have their own department. The code then
applies to pretty much the rest of the state except
that it's a minimum code that those cities have to
meet and if there's any waiver from that, they have to
get approval.
What the co-chair and I said was that it seems logical
that in the long run that we should at least have some
kind of inspection of the mechanical and plumbing on
the same level at the same time and that it seems that
most mechanical contractors are also the plumbing
contractors on the job. So, to have some uniformity
that would be simple, let's just change the
administration of this code from here to here. There
is no, as one person said or alleged, no known
underlying intent from any member of the Legislature
to try to favor one group or the other, but there is
an intent to make sure that we have an efficient
operation that also involves inspection of the
completed work as well as just plan review. We think
that that's best, in the long run, serves the public
interest and the safety of the people in the State of
Alaska....
CHAIR BUNDE reiterated that he would hold the bill and hoped
time would build a consensus.
HB 29-REAL PROPERTY TRANSACTIONS/LICENSEES
CHAIR CON BUNDE announced HB 29 to be up for consideration.
REPRESENTATIVE ROKEBERG, sponsor, said this bill is the
culmination of two years of effort by a task force representing
the Alaska Association of Realtors throughout the state. There
have been some difficulties since the legislature first adopted
statutory language in 1992 requiring the disclosure of agency-
type relationships between clients and the real estate licensees
in the State of Alaska, a needed step forward in terms of
consumer protection. The statutory requirements were found to be
vague and difficult to enforce. This bill redesigns and
clarifies the meaning and duties and provides a foundation for
the promotion of sound and good commerce in the state. The real
estate industry and the associated businesses provide over a
third of the state's domestic product and people need to give it
due consideration. He pointed out that one of the key elements
of consumer protection in this bill requires a pamphlet that
clearly outlines the responsibilities of their relationships.
Vicarious liability is also provided for. One of two amendments
provided to the committee embrace technical changes and one
fills a gap in the area of psychological impairment of property.
The bill clarifies what the duty to investigate is and requires
disclosure of it.
SENATOR SEEKINS asked him to explain the concept of dual agency.
REPRESENTATIVE ROKEBERG replied:
Dual agency is an allowed form of relationship between
a real estate licensee and their clients. What this
bill does is get rid of that, because it's an almost
unworkable concept - where under the principle of
common law, a licensee in this instance would have to
serve two masters simultaneously. That's fundamentally
a difficult thing in terms of the perspective of
fairness and equity in dealing with the clientele....
We solved this by going to what's called the neutral
relationship and witnesses will describe that for you.
SENATOR SEEKINS asked if the real estate industry has a lot of
confusion when someone comes to an agent who represents the
seller.
REPRESENTATIVE ROKEBERG disclosed that he is a licensed real
estate broker in Alaska, but only deals with commercial
properties and deferred the answer to one of his witnesses.
CHAIR BUNDE asked if it was an oversimplification to say that a
real estate agent who lists his house has the responsibility to
get him the highest prices that's practical.
REPRESENTATIVE ROKEBERG replied that is correct.
CHAIR BUNDE asked if it was also the responsibility of the
buyer's agent to get him the lowest price possible.
REPRESENTATIVE ROKEBERG said that's right.
SENATOR FRENCH disclosed that his wife is a licensed real estate
agent and he might have a conflict.
CHAIR BUNDE moved amendment 1, BA.4, 4/9/04 Bannister, and
objected for discussion purposes.
23-LS0189\BA.4
Bannister
A M E N D M E N T 1
OFFERED IN THE SENATE
TO: CSSSHB 29(JUD) am
Page 5, line 11:
Delete all material.
Insert "to imply a duty to
(1) investigate
(A) a matter that the licensee has not
agreed to investigate; or
(B) a matter that is not known by the
seller, prospective buyer, lessor, prospective lessee,
or licensee; or
(2) disclose, unless otherwise provided by law,
events that have occurred on the real estate that might
affect whether a person wants to buy or lease the real
estate."
REPRESENTATIVE ROKEBERG said amendment 1 related to the
psychological impairment issue. Subsection (B) speaks only to
the duty to investigate, not to disclose. Subsection (A)(4) on
page 4, line 17, addresses the disclosure.
SENATOR FRENCH said it makes sense to not have to investigate
something that isn't known by the seller or the buyer, but then
(2) jumps back to (A)(4) which says "it shall not be construed
to imply a duty to disclose, unless provided by law, events that
have occurred that might affect whether or not a person wants to
buy or lease the real estate.
REPRESENTATIVE ROKEBERG replied if a crime had been committed in
the house or if the house had a HIV or AIDS resident, that can't
be disclosed according to federal law. He said a state
disclosure statute says all sellers of a residence have to fully
disclose stipulated items on their disclosure statement. He
emphasized that the seller, not the licensee, is required to
disclose.
SENATOR FRENCH asked for a list of the required disclosures.
CHAIR BUNDE withdrew his motion to adopt amendment 1 until
Senator French had an opportunity to review the list.
REPRESENTATIVE ROKEBERG said he had no objections. He wanted
everyone to understand the bill.
CHAIR BUNDE moved amendment 2, BA.2, and objected for discussion
purposes.
23-LS0189\BA.2
Bannister
A M E N D M E N T 2
OFFERED IN THE SENATE
TO: CSSSHB 29(JUD) am
Page 7, lines 15 - 16:
Delete "if the licensee's broker maintains"
Insert "but the licensee's broker has a duty to maintain
the"
REPRESENTATIVE ROKEBERG explained that it is a clarifying
amendment on page 7, line 15, that says that the broker must
maintain confidentiality.
CHAIR BUNDE removed his objection and amendment 2 was adopted.
He said that a substantial number of people want to testify and
he began with Peggy Ann McConnochie.
MS. PEGGY ANN MCCONNOCHIE, Alaska Association of Realtors, said
she also represented the task force that worked on this bill.
She wanted to touch on four points for the committee.
First of all, we want you to know that every licensee
in the State of Alaska and all over the United States
understands the need for consumer protection. After
all, we are the first ones to deal with a person who
decides to buy a home; we're the people who deal with
somebody who wants to rent a property and we're
dealing with the investor who wants to buy their first
investment. We look into their eyes and see the trust
and we want to make sure that we maintain that trust
and their trust is well placed.
The second topic is representation - how it used to
be. It used to be that every single real estate
licensee, wherever he went, always represented the
seller. It didn't matter if he were going from one
agency and looking at a property that was listed with
another agency, everybody represented the seller. When
in point of fact, that's not the way licensees
necessarily operated or the way the buyer believed.
The buyer thought, 'Gosh, they're spending all this
time with me; they're showing me houses listed by that
other company; they must represent me.'
Thank goodness the law changed. Thanks to
Representative Rokeberg in 1992 we got the law changed
to allow for something called buyer representation
where you could come to buy a house and the agent that
you worked with represented you. That was a very good
thing.
What this legislation is going to move to is a
situation in which, rather than the broker and all the
agents representing every single seller who comes
through that agency to sell a house - it will allow
that broker in the office to designate one licensee in
the office to work with the buyer, one licensee to
work with the seller, and for the broker to set up
firewalls so that confidentiality of all parties is
maintained. As many times as we can get an individual
who wants representation to be represented by the
agents, the better off we're going to be. In other
words, we're going to take away that dual licensee
situation. Our goal by this legislation is to make it
far more fair and more understandable for all parties,
the consumer and the licensees alike.
MS. MCCONNOCHIE said that agency people from all over the state,
residential, commercial and property and association management,
worked on this bill. She said that a lot of research was done
including looking at what other states have done. The states of
Washington, Montana, Nebraska and Colorado have agency laws and
basic tenants that meet much of what Alaska wants.
We also knew that [the law] had to make sense no
matter what type of real estate you're doing.... We
also knew that once we got this law passed, we needed
to have a plan in order to be able to implement it and
we do. Our association, the Alaska Association, is
committed to make this work.
The implementation dates are set very purposely so the public
can be educated about the changes. Association members will also
go out to communities to educate agents and work with the Real
Estate Commission to design the pamphlet telling how licensing
works. They will help brokers to design the changes in their
policy and procedures manuals.
This bill calls for the Real Estate Commission to
design supervision standards for their licensees,
especially when we deal with designated licensees. The
Alaska Real Estate Commission knows that the Alaska
Association of Realtors is going to provide them with
some things to look at; we're going to provide them
with words to look at so they can take it from there
and design those standards. The second thing is we're
going to be also providing them with samples of
potential policy procedure manuals that will help a
broker implement a confidentiality standard for their
office. We do not want to leave any broker in the
lurch wondering how in the world they are going to be
able to implement these policies....
MR. PERRY UNDERWOOD, Alaska Association of Realtors, said he is
also the owner and broker of Coldwell Banker Fortune with
offices in Anchorage, Eagle River and Wasilla. He summed up HB
29 in five major points
First, HB 29 establishes specific requirements as to
when and how a real estate licensee must disclose to
the consumer their relationship....
The second thing HB 29 does - it eliminates dual
agency and the problems that are inherent with dual
agency. Yet, it allows real estate licensee to sell
their own listings.... Real estate licensees can sell
their own listings with the consent and the disclosure
of their customers
The third thing that this bill does - it moves the
relationship with the consumer to the level of a
person who is actually being represented.
Traditionally, the broker is who the relationship is
with, but the broker, in most cases, never sees, meets
or even talks to the consumer. It's being done by the
agents that work underneath this broker.... That
avoids the current situation we have where all
licensees in the company, as well as the broker, are
expected to represent and act on behalf of both
parties.
The fourth thing that this bill does - our current
statute that we operate under provides no duties or
minimum standards under which licensees operate. Our
bill before you, HB 29, sets forth duties and
responsibilities by which all licensees must operate
their business clearly establishing those duties and
what the public on a minimum can expect from us as
professionals.
The fifth thing that this bill does that is very
important - it eliminates vicarious liability.
Vicarious liability, as you may know, is if I, acting
as your representative, go out and say or do something
- it might be by action, neglect or dishonesty - in a
traditional relationship under common law, the
offended party could not only sue me, but sue the
person I was representing who may be totally innocent
in this. This bill protects the consumer from
vicarious liability and the exposure that would come
from dishonest dealings.
MR. DAVE FEEKEN, Legislative and Industry Issues Chair, Alaska
Association of Realtors, said he is also the broker of ReMax on
the Kenai Peninsula. He said the bill had been worked on by
members from all over the state, but he wanted to comment
specifically on amendment 1. The key is the word "investigate."
TAPE 04-33, SIDE A
MR. FEEKEN said it attempts to clarify the issues of an
investigation. The original paragraph came from Washington and
Nebraska statutes. Also, the amendment attempts to insert
language saying the Real Estate Commission can regulate.
MR. STEVE CLEARY, Executive Director, Alaska Public Interest
Research Group (AKPIRG), said he was concerned that consumers
are adequately protected specifically since the common law is
being abrogated. He thought standardization of the forms, the
disclosures and eliminating vicarious liability would help
consumers. However, he failed to understand how a designated
agency isn't a dual agency. Continuing a football game analogy
that was used earlier, if a back-up quarterback and the
quarterback are on the same team, or the agents are in the same
agency, they would supposedly be playing against each other, but
even with firewalls set up, it's hard to believe that the
consumer's best interests would be served if people in one
agency are representing both seller and buyer.
MS. LINDA GARRISON, Owner and Broker, AAR Number 1 Buyer's
Agency, said:
The only thing I'm concerned about is that the bill is
being rushed through. The common law of agency has
worked for hundreds of years in protection of the
consumer. So, any dilution, even partial abrogation or
total abrogation is extremely detrimental to the
consumer.
MS. GARRISON explained that a lawsuit brought the issue to light
and now it is hard to understand. Currently there are two types
of designated agency under common law and dual agency is one,
which demands that the agent alert the consumer up front. It can
exist in two instances, one is when the same agent in a company
represents both the buyer and the seller and the other when one
agent in a company represents the buyer and another agent
represents the seller.
The designated agency is basically a proposal where
the broker will appoint one agent to represent the
seller and another agent to represent the buyer. That
is still dual agency; however, it is undisclosed dual
agency. The public, the buyer and the seller, will
have an agent representing them without being required
to do the protective language that is currently
required in the statute for dual agency. It's the
common law of agency that creates the fiduciary
responsibilities that the agent owes to the consumer.
Those are such responsibilities of confidentiality,
accountability, loyalty, diligence, obedience - very
important.
We run into a potential problem - what if the broker
appoints one experienced agent to represent the seller
and another somewhat inexperienced agent to represent
the seller? It is an internal problem, but remember
the consumer will think they have their own
representation. With dual agency, they know the
ramifications.
In conjunction with that, the limits of the
liabilities - the liability is limited for the
brokerages and for the agents and it does reduce their
remedy in a legal recourse for only actual damages,
which are very difficult to prove. So, when we take
the combination of this - unrelated and not addressed
in this bill - currently, a person can get a real
estate license with only 20 hours of education and
passing a test - so, that in itself is a detriment to
the consumer. This is the largest sale or purchase of
most people's lives. That isn't addressed in the bill.
When we combine that already detrimental [indisc.]
with the consumer with the removal of common law of
agency of all of those responsibilities, we combine it
with the limit of liabilities to broker and limiting
the recourse of the public, the detriment to the
consumer far [outweighs] any benefit....
MS. GARRISON thought the vicarious liability paragraph on page
10 could be handled in a different manner. "When you add all
these things up, consumer protection does not exist in this
bill."
MR. KIRK WICKERSHAM, Anchorage real estate broker and lawyer,
said he served on the task force that helped develop this
legislation. He said this law is a step forward both for the
industry and for the consumer and encouraged the committee to
pass it. It generally follows the trend other states are going
in to come up with alternatives to conventional agency as
defined in the common law statutes. He thought some of the
problem with it is that it approaches the relationship between
the parties and their agents as an adversarial type situation,
but a real estate transaction is not like that. The parties may
disagree, but generally speaking, they are working in a more or
less cooperative fashion to get a transaction completed that
both of them want. "I think this approach is reflective of how
real estate transactions actually work and the type of services
that are provided by real estate professionals."
CHAIR BUNDE thanked him and closed public testimony and promised
that it would be heard again.
HB 91-RETIRED PEACE OFFICER'S MEDICAL BENEFITS
CHAIR CON BUNDE announced CSHB 91(FIN) to be up for
consideration and that it was accompanied by a power point
presentation.
REPRESENTATIVE TOM ANDERSON, sponsor, said that HB 91 is of
great importance to law officers whether they be correction,
firemen or policemen. It is a cost-avoidance bill. Current
policy requires that Tier 2 and Tier 3 peace officers defer
retirement an extra five years to qualify for their medical
benefit. He believed that deferment has a price tag and although
this bill has a fiscal note from the Division of Retirement and
Benefits, the Department of Corrections and the Department of
Public Safety haven't reported in at this juncture.
I think those fiscal notes would basically deplete the
elevated fiscal note from [the Division of] Retirement
and Benefits.... I hope you will consider that. Also,
when a peace officer defers retirement, I think it's
important to note that the operational cost increase
is greater than the actual benefit cost. So, I want
you to think of this, first of all, recognizing that
PERS is managed on the basis of equality among its
members and without this bill passing, there is no
fairness. You're aware of what it does; it gives 20-
year retirement for medical retirement and benefits to
peace officers.... There is a $23,105 savings in base
pay and leave during the first year after a 20-year
correction officer 3 takes normal retirement. So, we
see a savings.... These examples go on and on and
on.... This is important even though there is a fiscal
note, which again, I think can be reconciled down. We
have to defer to the judgment that we want to keep
these peace officers and the old adage I said in the
previous committee, hey, you look at the service...and
the risks and the stress that are involved...20-year
medical retirement doesn't seem that out of kilter
with respect to the career and that choice.
CHAIR BUNDE said he once heard that because the cost of
recruiting and training was so expensive, the state had to keep
these people longer. Now, because of other circumstances, we
want them to leave sooner.
REPRESENTATIVE ANDERSON responded that Mr. Fox's power point
presentation would show that a 20-year career span is as good as
it gets.
MR. MIKE FOX, PUBLIC SAFETY EMPLOYEES ASSOCIATION (PSEA), showed
the committee a power point presentation on HB 91 that
illustrated how HB 91 provides medical benefits for retired
peace officers after 20 years of accredited service instead of
after working five years beyond normal retirement. It removes
the disincentive for peace officers to take normal retirement.
It reestablishes parity with all other PERS members. Mercer's
current experience is that 21 out of 100 peace officers will
make it to retirement.
SENATOR HOLLIS FRENCH asked what Mercer's Human Resources is.
MR. FOX replied that they are the actuaries who are contracted
by the Division of Retirement and Benefits to perform analyses.
He continued that DPS hired 90 troopers in 2002 and 2003, 13
percent per year; Department of Corrections (DOC) hires about 70
[indisc.] per year, about 10 percent to maintain level staffing.
The remaining Tier 1 trooper class had an approximate 62 percent
separation rate. This means that 38 percent of the troopers left
are Tier 1.
MR. FOX explained that only Tier 2 and Tier 3 members would be
affected by this bill. Major medical is already provided to all
Tier 1 recipients. In 1986, Tier 2 was created, which provided
major medical at age 60. In 2001, the current situation was
created where after a 10-year vesting period, major medical is
provided at age 60 or at normal retirement unless you're a peace
officer and then you must work five more years.
The perspective from HB 91 simply removes the five-
year extra requirement for peace officers. That's all
it does. The justification for change - current law
withholds the benefit from peace officer members of
PERS unless an extra five years is worked; it
undermines the intent of peace officers' normal
retirement; it inhibits recruitment and retention and
it causes inequality among PERS members.
HB 91 is a cost-avoidance bill. Current policy intends
to defer retirement of Tier 2 and 3 peace officers.
Operational cost increases from a deferred retirement
are greater than the actual benefit costs. A cost
comparison example - the largest group affected is
correctional officers (CO). A correctional officer 2's
additional base pay and leave costs for one year of
deferred retirement is at least $18,252. DRB advises
that the average benefit cost is $9,670. The current
policy intends to defer retirements for five years.
The choice is to fund the benefit or fund the deferred
retirement cost increase.
COs by years of service - When Tier 2 and 3 COs defer
retirement, the 15 - 20 group will be added to the 20
- 25 group. This shift in the workforce profile will
significantly increase operational costs....
MR. FOX explained the chart for Chair Bunde and reminded the
committee that retirement is cut in half for those who divorce.
CHAIR BUNDE pointed out that he couldn't assume that all the
people in Tier 2 would continue to work after their 20-year
retirement. There would be some reduction.
MR. FOX agreed and added that people drop out all along the
curve. He continued:
Risk - If 20 years are not completed, there is no
benefit change and no new costs. If an officer makes
it to 20, the benefit cost is balanced by the payroll
reduction. There is no risk of a benefit cost without
a corresponding cost-avoidance.
Problems associated with peace officers working past
normal retirement - increased health problems,
increased risk of injury, higher compensation, lower
morale and burnout.
Disability rates were provided by Mercer Human Resources and
show that troopers and correctional officers average about 34
years of age when they are hired and they reach 20 years of
service at approximately age 54. Another graph showed the
increase in disability rates as peace officers age. He noted the
steep increase when retirement is deferred past age 54. The line
representing other employees who are not peace officers is
significantly lower than the peace officers and the gap widens
all the way to age 60.
The graph, using 2002 data for administrative versus officer
positions, illustrated the limited opportunity for peace
officers to move into administrative positions as they age. It
showed 709 corrections officers and 30 administrative jobs, 336
troopers and 33 administrative jobs. "It's impractical to think
a person can continue through their career until they get older
and then move into a desk job."
CHAIR BUNDE asked if he had data that showed typical behavior
for someone who now retires under the Tier 1 at age 54 or 55.
"They don't just play golf, do they?"
MR. FOX replied no, but he didn't have any data to show him. He,
himself, is one of those guys, however, and knows a whole lot of
others like himself. He explained that the PERS mission is not
to provide a living wage for life. It is, after 20 years, to get
45 percent of your average monthly income, at the most. He
elected to buy dental and vision insurance and the long-term
care insurance. He elected to buy a survivor benefit for his
wife. So, his actual monthly benefit is much lower than where it
started out. He did not know of any of his contemporaries who
didn't go on to other employment.
CHAIR BUNDE asked if it was likely that they had health benefits
in their other employment.
MR. FOX replied no. A lot of guys end up doing something that
they have more of an interest in and have the freedom to pursue
even if it pays less money or benefits.
PERS is managed on the basis of equality among
members. Normal retirement is after 20 years for peace
officers and after 30 years for all others. Peace
officers pay a higher contribution rate than all of
the members to maintain equality. Current policy
withholds benefits from peace officer members unless
they work five extra years. HB 91 corrects this
prejudice against peace officers.
The current policy is unfair. If a peace officer beats
the odds, makes it to 20, the current policy is to
defer their retirement. That is accomplished by
unfairly withholding their medical benefit until they
work five years beyond their normal retirement.
In conclusion, the current law undermines the intent
of normal retirement for peace officers and inhibits
the PERS mission to recruit and retain in public
service. HB 91 removes the disincentives to peace
officers to take normal retirement and reestablishes
parity among all PERS members and this bill is good
for peace officers and it's also good policy.
CHAIR BUNDE noted there were no questions and thanked him for
his presentation.
MR. CHUCK HANSEN, Correctional Officer, Leman Creek Correctional
Center, said he has an undergraduate degree in human development
and a master's degree in human services. He represents himself
and fellow correctional officers in Alaska. He is a Tier 1
employee and has been on the job 19 years and 9 months. His job
is part-time, seasonal, and he doesn't get any retirement
benefit for it. He noted the sick behaviors and violence that
make up the daily stresses in his job. The number of prisoners
who are HIV positive or have hepatitis A, B or C is far higher
than the public population, because inmates are often involved
in high-risk activities before they come into the system. This
also puts COs at higher risk than ordinary citizens, resulting
in a potential need for long-term care health benefits.
Correctional officers rarely make the present 20-year
retirement goal. I've watched over 250 floor staff
come and go without reaching that magic time...at
Lemon Creek, alone. I've lost track of about 25 more.
One day, a short time ago, I asked my superintendent,
Dan Carothers, 'In your 27-year career in corrections,
how many floor officers, which are non-management
staff, have you known to complete 20 years with the
Department of Corrections?' Four people. More
recently, a co-worker made it to 20. So, that is a
total of five making it to retirement that Mr.
Carothers knows of. The likelihood that COs will reach
the 20-year mark before retirement is bad enough,
pushing the mark to 25 years for full medical benefits
is next to impossible and demeaning to us when we are
all at risk of serious long-term illness because of
our jobs.
HB 91 will insure an appropriate retirement package
for those of us who make it that far. It is not cost-
effective to continually pay to train new people in
order to replace those who see the 25-year as
unattainable and so they quit early. And yet, that's
exactly what's happening now.
MS. MELANIE MILLHORN, Director, Division of Retirement and
Benefits, deferred her testimony on the fiscal note to let the
large number of citizens testify.
MR. DEAN BAUGH, Finance Director, City of Homer, said he also
represents the Alaska Government Finance Officers Association
(AGFOA). He didn't want to say that police officers don't
deserve this, but right now the PERS systems can't afford it.
If you would have asked me a year ago, I might have
said that is one thing, because my city was 100
percent funded, but if you look at me now, all of a
sudden, I'm $6 million in the hole.
He disputed the fact put forward by Mercer's Human Resources
that 21 percent of the officers would retire at 20 years. He
thought closer to 80 - 100 percent of officers will retire at 20
years, if medical coverage is provided. So, the costs in the
fiscal note are incorrect. He also noted that it is state law
once Tier 2 and 3 are changed again to 20-year retirements with
full medical, it can't be changed again. At this point, PERS is
looking at creating a Tier 4 to keep the budget actuarially
sound.
CHAIR BUNDE asked if the committee changed the tier system today
so that it's not retroactive, would he support it.
MR. BAUGH responded that the issue would be argued all the more
because someone who had been there for 15 years has more
benefits than someone who has been there for one year.
CHAIR BUNDE said the fiscal note was attached to the state's
budget, not the municipalities' budgets.
MR. BAUGH responded that the state has said it would fund it for
the next year, but not forever.
MR. MAURICE HUGHES, Alaska State Trooper, Public Service
Employees Association, said it has approximately 350 members.
The difference between Tier 2 and Tier 3 is that when
Tier 2 was created, the members kept paying the same
percentage for 20-year retirement.
TAPE 04-33, SIDE B
3:55 p.m.
MR. HUGHES continued:
So, in relation to the statement where they would be
going back to paying for 30 years...our members
continue to pay that 7.5 percent....
I would just like to make some statements about our
core message and the message about HB 91 and that is
the policy that's in effect right now - it's
influencing police officers at Tier 2 or Tier 3 to
defer their retirement from a 20-year retirement to
25-year retirement. This is being done by the holding
[back] of a retirement benefit, which is the medical
benefit. The police officer who decides to defer that
retirement, it could be for a good reason. There could
be a good reason that officer wants to stay around,
but if a person is forced to stay to get a medical
benefit that he would otherwise have if he stayed in
some other occupation at his normal retirement, then
that's not right.
It's hard to accept, but when you say old and police
officer, the two don't go together. Police work is a
young man's game. When you get older, you get hurt
easier; it takes a longer time to mend when you do get
hurt. Mike pointed out that you have issues of sleep
deprivation and it's tougher to [do] shift work. The
burnout issue is a real issue, the older you get.
On the other end of the spectrum, with younger
officers coming along, when they get to that 7 - 8
years on the job, they have to make that determination
whether or not they want to stay that extra five years
to receive their medical benefit or to go ahead and
possibly change careers entirely or to go to another
system. The extra five years of working on holidays
and working on weekends and working when your family
is asleep is not a real conceivable goal for someone
to have to work that extra five years....
MR. PAUL COMOLLI, Juneau Police Officer, said he represented
himself and fellow police officers, not the city or the chief.
He related how his long-time friend, Kenai Police Officer John
Watson, was killed in the line of duty while responding to a
welfare check on a citizen, on Christmas Day 2003.
He was searching for a person who reportedly needed
help. He was doing his job on Christmas, trying to
keep you safe, just like we all do - on every shift,
every day and every night.... If John had survived two
more years on the job, he would have been eligible for
normal retirement. Far less than half of us make it to
20. John had only two more to go; he almost beat the
odds.
MR. COMOLLI said the current policy is ill-conceived, unfair and
blatantly prejudicial against peace officers. This bill does
nothing more than reestablish the parity among all PERS members.
I've got my benefits. It's not fair to me to leave my
young brothers and sisters behind me that are going to
step up and continue to do this job without what I
have. It's not too much to ask.
CHAIR BUNDE commented that he has a brother and two nephews who
are police officers and knows what he is talking about.
MR. LARRY SIMMONS, Certified Public Accountant (CPA), said he is
finance director for the City of Kenai, and that he had been
following this bill since last year and at that time the AGFOA
passed a resolution against it. When Tier 2 was created in 1986,
it didn't include medical benefits until members reached the age
of 60, a requirement that stayed in place for 15 years. In 2001,
benefits were changed for police and fire members to receive
medical benefits after 25 years. "Prior to that there were no
medical benefits, period, until age 60." At that time, the PERS
was 106 percent funded, but the following year the PERS system
was funded at 75 percent and the expense for the added medical
benefits are huge. He was very concerned about the fiscal note
for HB 91. It is based on actual experience that only 21 percent
of the eligible members would retire.
Do you think more people will retire when you give
them medical benefits at 20 years than will retire at
20 years if they don't have medical benefits? The
answer is totally obvious and, therefore, that fiscal
note is well understated. I think for the City of
Kenai, it is four times understated....
State funding for the increased benefits can go away when the
next legislature decides to make it go away.
MR. CHRIS BURNS, Mercer Human Resource Consulting, said he would
answer questions.
CHAIR BUNDE noted there were no questions and thanked all who
testified and said HB 91 would be held over. There being no
further business to come before the committee, he adjourned the
meeting at 4:07 p.m.
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