02/14/2008 01:30 PM Senate LABOR & COMMERCE
| Audio | Topic |
|---|---|
| Start | |
| SB183 | |
| SB187 | |
| SB230 | |
| HB233 | |
| Adjourn |
+ teleconferenced
= bill was previously heard/scheduled
| + | HB 233 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | SB 230 | TELECONFERENCED | |
| += | SB 187 | TELECONFERENCED | |
| = | SB 183 | ||
ALASKA STATE LEGISLATURE
SENATE LABOR AND COMMERCE STANDING COMMITTEE
February 14, 2008
1:30 p.m.
MEMBERS PRESENT
Senator Johnny Ellis, Chair
Senator Gary Stevens, Vice Chair
Senator Bettye Davis
Senator Lyman Hoffman
Senator Con Bunde
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
SENATE BILL NO. 183
"An Act repealing the defined contribution retirement plans for
teachers and for public employees; making conforming amendments;
and providing for an effective date."
MOVED SB 183 OUT OF COMMITTEE
SENATE BILL NO. 187
"An Act increasing the minimum wage; creating an annual
adjustment to the minimum wage based on the rate of inflation;
and providing for an effective date."
MOVED SB 187 OUT OF COMMITTEE
SPONSOR SUBSTITUTE FOR SENATE BILL NO. 230
"An Act establishing the film office in the Department of
Commerce, Community, and Economic Development; and creating a
transferable tax credit applicable to certain film production
expenditures incurred in the state."
MOVED CSSSSB 230(L&C) OUT OF COMMITTEE
CS FOR HOUSE BILL NO. 233(L&C)
"An Act relating to giving notice of unclaimed net margin
distributions made by electric and telephone cooperatives."
HEARD AND HELD
PREVIOUS COMMITTEE ACTION
BILL: SB 183
SHORT TITLE: REPEAL DEFINED CONTRIB RETIREMENT PLANS
SPONSOR(s): SENATOR(s) ELTON
05/16/07 (S) READ THE FIRST TIME - REFERRALS
05/16/07 (S) L&C, STA, JUD, FIN
01/29/08 (S) L&C AT 1:30 PM BELTZ 211
01/29/08 (S) Heard & Held
01/29/08 (S) MINUTE(L&C)
02/14/08 (S) L&C AT 1:30 PM BELTZ 211
BILL: SB 187
SHORT TITLE: ALASKA MINIMUM WAGE
SPONSOR(s): SENATOR(s) WIELECHOWSKI, THOMAS, ELTON
01/16/08 (S) PREFILE RELEASED 1/4/08
01/16/08 (S) READ THE FIRST TIME - REFERRALS
01/16/08 (S) L&C, FIN
01/31/08 (S) L&C AT 2:00 PM BELTZ 211
01/31/08 (S) Heard & Held
01/31/08 (S) MINUTE(L&C)
02/12/08 (S) L&C AT 1:30 PM BELTZ 211
02/12/08 (S) <Bill Hearing Rescheduled to 02/14/08>
02/14/08 (S) L&C AT 1:30 PM BELTZ 211
BILL: SB 230
SHORT TITLE: FILM OFFICE/ FILM PRODUCTION TAX CREDIT
SPONSOR(s): SENATOR(s) ELLIS
01/16/08 (S) READ THE FIRST TIME - REFERRALS
01/16/08 (S) L&C, FIN
01/25/08 (S) SPONSOR SUBSTITUTE INTRODUCED-REFERRALS
01/25/08 (S) L&C, FIN
02/05/08 (S) L&C AT 1:30 PM BELTZ 211
02/05/08 (S) Heard & Held
02/05/08 (S) MINUTE(L&C)
02/12/08 (S) L&C AT 1:30 PM BELTZ 211
02/12/08 (S) Heard & Held
02/12/08 (S) MINUTE(L&C)
02/14/08 (S) L&C AT 1:30 PM BELTZ 211
BILL: HB 233
SHORT TITLE: UNCLAIMED PHONE/ELEC COOP DISTRIBUTIONS
SPONSOR(s): RULES
04/11/07 (H) READ THE FIRST TIME - REFERRALS
04/11/07 (H) L&C
04/25/07 (H) L&C AT 3:00 PM CAPITOL 17
04/25/07 (H) Moved CSHB 233(L&C) Out of Committee
04/25/07 (H) MINUTE(L&C)
04/27/07 (H) L&C RPT CS(L&C) 4DP 1NR
04/27/07 (H) DP: GARDNER, LEDOUX, BUCH, OLSON
04/27/07 (H) NR: NEUMAN
05/02/07 (H) TRANSMITTED TO (S)
05/02/07 (H) VERSION: CSHB 233(L&C)
05/03/07 (S) READ THE FIRST TIME - REFERRALS
05/03/07 (S) L&C, FIN
02/14/08 (S) L&C AT 1:30 PM BELTZ 211
WITNESS REGISTER
SENATOR BILL WIELECHOWSKI
Alaska State Capitol
Juneau, AK
POSITION STATEMENT: Sponsor of SB 187.
MAX HENSLEY
Staff to Senator Ellis
Alaska State Capitol
Juneau, AK
POSITION STATEMENT: Explained the CS for SSSB 230 for the
sponsor.
DAMA CHASLE, Production Executive
The Incentives Office
Los Angeles, CA
POSITION STATEMENT: Supported SB 230.
WILLIAM CAVAN, independent video and film producer
Orlando, FL
POSITION STATEMENT: Supported SB 230.
MICHAEL COLLIER, independent film producer
Anchorage, AK
POSITION STATEMENT: Supported SB 230.
KATE TESAR
Alaska Film Group
Juneau, AK
POSITION STATEMENT: Supported SB 230.
DEREK MILLER
Staff to Representative Kelly
Alaska State Capitol
Juneau, AK
POSITION STATEMENT: Commented on HB 233 for the sponsor.
DARREN SCOTT, CEO
Kodiak Electric Association
Kodiak, AK
POSITION STATEMENT: Supported HB 233.
RON VACERA, Director
Member Service
Chugach Electric Association
Anchorage, AK
POSITION STATEMENT: Supported HB 233.
ROBERT WILKINSON, CEO
Copper Valley Electric Association
Valdez, AK
POSITION STATEMENT: Supported HB 233.
MARILYN LELAND, Executive Director
Alaska Power Association
Anchorage, AK
POSITION STATEMENT: Supported HB 233.
RAY CRAIG, Chair
Chugach Consumers and Advocacy Group for Electric Utility
Customers
Anchorage, AK
POSITION STATEMENT: Supported HB 233 with additional
requirements for newspaper advertising.
ACTION NARRATIVE
CHAIR JOHNNY ELLIS called the Senate Labor and Commerce Standing
Committee meeting to order at 1:30:11 PM. Present at the call to
order were Senators Bunde, Davis, Hoffman and Ellis.
SB 183-REPEAL DEFINED CONTRIB RETIREMENT PLANS
1:31:13 PM
CHAIR ELLIS announced SB 183 to be up for consideration.
SENATOR ELTON, sponsor of SB 183, reminded the committee that
this bill hires new employees into Tier III PERS and Tier II
TRS. It gives them a chance to earn a guaranteed benefit pension
and retiree health coverage at no cost to the system. He said
they had talked in the past about how the defined benefit is
expensive and when you aggregate Tiers I, II and III on the PERS
side, it is more expensive, but you have to remember that prior
to the passage of the defined contribution all new employees
were going into Tier III. Now data from the state's actuaries
shows that the Tier III is slightly more expensive on the PERS
side and slightly less expensive on the TRS side so it's kind of
a wash for the state, but it does give new employees a better
benefit.
He stated that most of the state's public employees don't have a
safety net, the defined benefit, of social security under them.
Also our retiree economy in this state is almost $1.5
billion/year. One of the reasons it is so strong is because the
defined benefit plan has a cost of living adjustment (COLA) that
encourages people to stay here and spend the money here. The
defined contribution plan does not have that COLA. He thought
that lack would actually encourage some retirees to move south
especially since one of the consequences of the defined
contribution system is that some families could run through
their health benefit account in as little as 18 months.
SENATOR ELTON ended by saying there are some things this bill
doesn't do. In the review of the defined contribution plan some
things made sense and those things won't change. Among them are
the requirement for a second actuary to check the work of the
first actuary, mandatory experience studies, elected officials
are still out of the system, the ARM board having the important
financial experience of disinterested members, the 2010 buy back
deadline and no employer under this bill paying less than the
normal cost.
CHAIR ELLIS reminded the committee that the bill has a long way
to go. He personally thought the discussion about recruitment
and retention of employees and teachers was worth having because
the state learns more as it goes along and hears not just the
anecdotal experiences, but the statistics as well.
1:36:57 PM
SENATOR DAVIS moved to pass SB 183, version M, from committee
with individual recommendations and attached fiscal notes.
SENATOR BUNDE objected. He said he understood both sides of the
issue, but he opined that in the pipeline era the state couldn't
match salaries so it provided "pretty lucrative benefits" and
we're having to pay for those now.
A roll call vote was taken. Senators Hoffman, Davis, and Ellis
voted yea; Senator Bunde voted nay; so SB 183 passed from
committee.
SB 187-ALASKA MINIMUM WAGE
1:39:17 PM
CHAIR ELLIS announced SB 187 to be up for consideration.
SENATOR BILL WIELECHOWSKI, sponsor of SB 187, recapped that it
would raise the Alaska minimum wage from $7.15 to $8 per hour in
2009 and adjust it annually for inflation. It would also link it
to any increases in the federal minimum wage by requiring that
Alaska be $1 more than the federal minimum wage.
He then answered questions that came up at the last hearing. One
was regarding a supporting statement about where Alaska ranks
th
among the 50 states in cost of living; overall Alaska ranks 47
- meaning we are the fourth highest.
Another question was asked about how many Alaskans this will
affect. There are currently about 14,000 Alaskans in the minimum
wage category. Most are in combinations of food service and
retail trade, educational services and manufacturing areas.
SENATOR WIELECHOWSKI explained that the fulltime worker that
earns minimum wage earns about $14,000 per year, which is barely
above poverty level for a single person and it's $3,000 less for
a family of two. Roughly 58 percent of minimum wage earners are
adults with an average age of 38 years old.
1:40:57 PM
SENATOR STEVENS joined the committee.
1:41:06 PM
SENATOR WIELECHOWSKI said another question was asked about
whether the impact on Alaskans jobs would be negative or
positive. He said Dr. Wolfson testified in the last meeting that
the current body of economic science in this field shows it
would have no negative impacts on jobs or the economy. No one
was able to identify any impacts, particularly when Alaska last
raised its minimum wage in 2002.
SENATOR HOFFMAN asked if any other state has provisions for $1
higher than the federal minimum wage.
SENATOR WIELECHOWSKI answered no, but other states have a higher
minimum wage than Alaska. Alaska's minimum wage is lower than
any other state on the West Coast. Several other states
currently tie theirs to an inflation rate. Ten states adjust
their minimum wage annually for inflation.
1:42:57 PM
CHAIR ELLIS said the state doesn't have an automatic adjustment
and went for a long time without raising the minimum wage. There
was a lot of pent up frustration because of that and a citizen's
initiative got the process going; the legislature stepped in and
got the initiative off the ballot. He asked Senator Wielechowski
to remind them of the state's history on this issue.
SENATOR WIELECHOWSKI recapped that in 2002 raising the minimum
wage to $7.15/hour and having an annual COLA adjustment tied to
the inflation rate was on an initiative signed by 47,000
Alaskans. It was certified by the Lieutenant Governor and was
about to appear on the ballot, but the legislature passed an
identical law. Polls indicated that 80 percent of Alaskans
supported it. His own unscientific survey of people in his
district found over 80 percent supported this proposal.
He said the legislature had already passed a bill similar to
this proposal, but with lower amounts, but before the cost of
living adjustment kicked in for the next year, the legislature
reopened the bill and took it out. This puts it back in. The
$8/hour is a little lower than if the COLA would have been left
in; it might be closer to $8.10 or $8.15.
1:45:25 PM
SENATOR HOFFMAN said he didn't know if he supported everything
in the bill, but he did support moving it on to the next
committee. He moved to pass SB 187 from committee with
individual recommendations and attached fiscal note(s).
1:46:07 PM
SENATOR BUNDE objected. He stated that he understood the intent,
but thought the gains are illusionary because the people who pay
the increased cost of the minimum wage are the people who are
going to be earning the minimum wage. This would bring increased
pressure on people who don't earn minimum wage to say well that
went up, so my salary should go up too, causing an inflationary
spiral. He also opined:
I think as most minimum wage jobs are service jobs,
kind of temporary jobs, that people that are - they'll
get a temporary bump in one pocket and they'll lose it
out of the other. It's illusionary.
1:47:37 PM
A roll call vote was taken. Senators Davis, Hoffman, and Ellis
voted yea; Senators Bunde and Stevens voted nay; so SB 187 moved
to the next committee.
SSSB 230-FILM OFFICE/ FILM PRODUCTION TAX CREDIT
1:48:00 PM
CHAIR ELLIS announced SSSB 230 to be up for consideration. He
said there were concerns about internships and a few other
issues at the last meeting.
MAX HENSLEY, staff to Senator Ellis, sponsor of SSSB 230,
explained new CS SSSB 230 (L&C) 25-LS1275\O. He explained that
in the last hearing they discussed the internship program with
Senator Stevens and as a result on page 2, lines 15 and 16 allow
the film office to certify Alaska film production internship
training programs. To promote the employment of the program
interns by eligible productions this version removes the link
between the internship program and the university and removes
the questions about private industry wishing to maintain
internship programs for individual people wanting to apply to
the film office. The film office has assured him it is well
within its ability to do this kind of certification with
regulation.
MR. HENSLEY said the other change was on page 4, lines 13 - 16,
that has a tighter definition of what the duties of the
independent CPA are regarding verification of the spending done
in the state - in response to Senator Bunde's concerns about
fraud. This language was suggested by the drafters as the most
precise.
1:51:31 PM
SENATOR BUNDE asked if that language guaranteed if something
fraudulent was found beforehand the film office wouldn't have to
seek recourse.
MR. HENSLEY replied that was the intention.
CHAIR ELLIS added that there's always legal recourse for fraud,
but you don't want the incentive to be in danger of being
pulled.
MR. HENSLEY said that is a concern with this kind of
transferable credits. The secondary market for them will be
significantly weakened if there is the potential for a party not
involved in the production who purchases the credits to be
liable for the activity of the producers.
CHAIR ELLIS clarified that this language is for the state's
protection and to avoid the problem.
MR. HENSLEY said the final issue that was raised was the listing
of qualified expenditures on page 4. The language on line 26
says the spending has to happen directly within the state. He
said that some things like technical lighting aren't available
in the state and will have to be transported here. Alaskan
businesses will be involved in that and that would be part of
the qualified expenses.
1:54:13 PM
SENATOR STEVENS said he wasn't sure this language meant what Mr.
Hensley said it did. He asked if it talks only about post-
production expenditures in the state or about everything above
that directly incurred in this state.
MR. HENSLEY responded any of the three - pre-production,
production and post-production expenditures - incurred in the
state of Alaska would qualify.
CHAIR ELLIS and SENATOR BUNDE stated that it was their intent to
include all three.
1:56:41 PM
DAMA CHASLE, production executive, wanted to address some points
from last Tuesday's meeting and urged them to consider the
increased cost of getting equipment to Alaska. She reiterated
that currently Alaska doesn't have adequate infrastructure and
trained crew available. She supported keeping the 30 percent
base tax credit to offset these costs.
She underscored the many jobs that will come to the state as a
result of having this industry, saying a studio film typically
employs several hundred people in high paying, high tech jobs
that last for months. They plow considerable monies into local
economies, from the obvious hotels and rental cars to the less
obvious lumber yards, dry cleaners, teachers for minors who are
on the set, seamstresses, caterers, extras, animal wranglers,
film digital lab processing, et cetera. "And it's always
preferable to hire trained local crew, because of the savings in
travel and living and the local knowledge of the customs and
procedures."
1:58:28 PM
WILLIAM CAVAN, independent video and film producer, Orlando, FL,
commended them on this bill. He said he was presently producing
a low-budget film in Florida, and a few of the people he talks
to recognize Alaska is the place to film this and to hire
locals.
1:59:20 PM
MICHAEL COLLIER, independent Anchorage film producer in
Anchorage, noticed that the crew base in Alaska is dwindling. He
has had many friends who go from college and want to get into
film, but they just decide they can't do it here and go
somewhere else. So when he makes his small projects, it's hard
to find crew, and he imagined it would be even more difficult
for larger productions that would have to hire from other places
outside the state. An incentive to build a crew base up here and
to develop more talent would also bring up more projects that
would develop into a range of films from big to small.
2:01:11 PM
CHAIR ELLIS thanked him for being a part of the response on this
bill. He noted the "avalanche of support from the strangest
corners of Alaska."
2:01:34 PM
KATE TESAR, Alaska Film Group, thanked the committee and noted
that the Cohen Brothers have purchased rights to produce a
recent best seller in Alaska so the timing of this bill could
not be better. She said the bill has become even better with
their help.
SENATOR STEVENS asked if this bill could actually have an impact
on that film.
MS. TESAR responded that they hoped to get regulations written
in this fiscal year.
2:03:43 PM
SENATOR DAVIS moved to adopt CSSSSB 230(L&C), version O. There
were no objections and it was so ordered.
SENATOR BUNDE commented that they are giving transferable tax
credits to an entity that doesn't pay any taxes and he hoped
they wouldn't become an unsustainable drain on the state
treasury and have to be canceled like the previous one. He
thought a more accurate title would be "the film subsidy bill."
CHAIR ELLIS noted that the State of Alaska chooses to operate in
a certain way with its corporate taxation and its personal
taxation, whether it be income tax or sales tax. It chooses to
operate the state on oil revenues; whether that is wise or not
remains to be seen. This is an opportunity for economic
development and employment. The state makes it choices at the
state level, but that may change in the future.
SENATOR BUNDE mentioned that he can't help but think it's
somewhat ironic that they are about to move a bill forward that
provides tax incentives because it will increase development,
when a few short months ago they raised huge taxes on an
industry and said it wouldn't affect its ability to invest at
all.
CHAIR ELLIS said "The proof is in the pudding. We'll see how it
all turns out. And I think we'll be here to take note."
2:07:06 PM
SENATOR STEVENS moved to report CSSSSB 230(L&C) [version O] from
committee with individual recommendations and attached fiscal
note(s). There being no objection, the motion carried.
CSHB 233(L&C)-UNCLAIMED PHONE/ELEC COOP DISTRIBUTIONS
2:07:54 PM
CHAIR ELLIS announced CSHB 233(L&C) to be up for consideration.
DEREK MILLER, staff to Representative Kelly, sponsor of HB 233,
explained that it addresses the sometimes burdensome and
ineffective noticing requirements of unclaimed property law
regarding capital credits of electric and telephone
cooperatives. From time to time these cooperatives receive
excess revenues from its members that exceed the expenses of
operations. They hold funds in member-owned capital accounts
called capital credits (sometimes called "net margins") on
behalf of the member. These coops may refund a portion of these
accumulated credits, but in some cases the cooperative seeking
to refund the capital credits can no longer find the member
through their last known address. As a result, many credits go
unclaimed.
Current unclaimed property law allows the credits to be reverted
back to the cooperative as long as it has mailed a notice to the
last known address at least six months prior to the reversion
and published a notice in a newspaper of general circulation. It
has been found the newspaper notification has not significantly
increased the number of members who cash their capital credits;
as a result the cost of compliance of that part of the law is
significant, while the effectiveness is questionable at best. HB
233 allows cooperatives the option of using the Internet instead
of newspaper publications to notify its members of these
unclaimed capital credits. He noted that Alaska is one of the
most wired states in the nation.
As an example, Mr. Miller noted Alaska Village Electric
Cooperative (AVEC) serves 52 villages and spends many thousands
of dollars to publish in several different newspapers, but they
also have a website where the names of unlocated members are
continuously published.
MR. MILLER said this legislation is supported by the Alaska
Power Association as well as several other rural coops and
individuals.
2:11:07 PM
SENATOR HOFFMAN asked how many newspapers AVEC advertises in.
MR. MILLER didn't know that answer.
SENATOR STEVENS said they are talking primarily about people who
have moved; if they are still customers, it's relatively easy to
locate them. He asked how many people they are talking about.
MR. MILLER said other folks could better answer that. The
problem is that the cost of complying with the law is more than
the actual amounts that are in the accounts.
2:12:27 PM
DARREN SCOTT, CEO, Kodiak Electric Association, supported HB
233. He said the association spends about $4000 per year to
advertise in the newspaper and it's very ineffective. Using the
Internet to contact people works a lot better.
2:13:49 PM
RON VACERA, Director, Member Services, Chugach Electric
Association, supported HB 233. He explained that a lot of
Anchorage people move and Chugach Electric pays capital credits
on a regular basis. It spends about $55,000 annually for
publishing names in the newspaper, and it typically takes up 16-
20 pages in the paper. It ends up issuing 2500 - 3000 checks to
about 15-20 percent of the names listed, which indicates some
success, but a lot are left listed. He said that using the
Internet was much more economical and the list could remain on
line for an extended period of time unlike the newspaper.
2:16:16 PM
ROBERT WILKINSON, CEO, Copper Valley Electric Association,
supported HB 233. He agreed with all the previous testimony in
support of this bill and said they had been advertising for
invalid addresses on their website already for a number of
years. People who work with it have told him it is more
successful than newspaper advertising. He added that a majority
of the Alaska coops use these credits for scholarships for youth
of member owners. Copper Valley Electric over the past 15 years,
had put over $100,000 into scholarships.
2:18:14 PM
MARILYN LELAND, Executive Director, Alaska Power Association,
supported HB 233. She said this process would be more effective
for locating former customers who are owed capital credits. In
addition it would save them and their customers many thousands
of dollars in advertising expense. The current method of
publishing names four times in local newspapers is cumbersome,
expensive and not even terribly effective in most small Alaskan
communities, where even if their names are published, they don't
live there any more and aren't likely to see it.
She said that using the Internet for notice already has some
precedence in Alaska's unclaimed property statutes and that the
Department of Revenue already gives notice to owners of
unclaimed property using an Internet website.
SENATOR BUNDE assumed that the expense of the publishing is
passed on as an operating expense to the consumer.
MS. LELAND answered that was her understanding.
SENATOR STEVENS asked how she tries to contact someone who has
left the community, whose physical address no longer exists, by
using the Internet.
MS. LELAND answered rather than advertising a long list of names
four times there would be a smaller advertisement in the paper
that would direct people to the Internet where they could look
at the names. She mentioned that finding one's name in the
newspaper is a hit or miss proposition, but it would be on the
coops' websites all the time.
2:22:04 PM
RAY CRAIG, Chair, Chugach Consumers and Advocacy Group for
Electric Utility Customers, supported HB 233 for all the
previously mentioned reasons. However he was concerned that it
went too far by not putting any minimum requirements on what
kind of an advertisement the utilities would do. A utility could
possibly bury a fine print ad in the back of the legal notices
of the paper out of the view of the public - in light of the
fact that utilities can keep unclaimed capital credits.
He suggested a possible fix to require a minimum size display ad
four times a year with an attention-getting headline like "Do we
owe you money?" He reminded them that the newspaper advertising
does allow thousands of people to recover their capital credits.
2:25:57 PM
CHAIR ELLIS asked Mr. Miller if he had heard this suggestion
before.
MR. MILLER replied it was new to him, and he offered to work on
it.
CHAIR ELLIS said he would be interested in seeing a CS with a
minimum size ad and possibly a requirement that the utility
collect the email address of the consumers. He held HB 233 in
committee.
There being no further business to come before the committee,
Chair Ellis adjourned the meeting at 2:29:05 PM.
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