Legislature(1999 - 2000)
01/28/1999 03:29 PM STA
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
SENATE STATE AFFAIRS COMMITTEE January 28, 1999 3:29 p.m. MEMBERS PRESENT Senator Jerry Ward, Chairman Senator Jerry Mackie Senator Randy Phillips Senator Kim Elton MEMBERS ABSENT Senator Lyda Green COMMITTEE CALENDAR SENATE BILL NO. 33 "An Act relating to the Task Force on Privatization; and providing for an effective date." -MOVED SB 33 OUT OF COMMITTEE SENATE BILL NO. 36 "An Act relating to state procurement of certain computer-related contracts." -HEARD AND HELD SENATE JOINT RESOLUTION NO. 3 Proposing an amendment to the Constitution of the State of Alaska relating to the repeal of regulations by the legislature. -MOVED SJR 3 OUT OF COMMITTEE PREVIOUS SENATE COMMITTEE ACTION SB 33 - No previous Senate action. SB 36 - No previous Senate action. SJR 3 - No previous Senate action. WITNESS REGISTER Mark Hodgins, Committee Aide Senate State Affairs Committee Alaska State Capitol Juneau, AK 99801-1182 POSITION STATEMENT: Presented SB 33 and SB 36 Kathleen Strasbaugh Department of Law PO Box 110300 Juneau, AK 99811-0300 POSITION STATEMENT: Opposed to SB 33 Don Etheridge Local 71 710 W 9th St. Juneau, AK 99801 POSITION STATEMENT: Commented on SB 33 David Koivuniemi Assistant Commissioner Department of Administration PO Box 110200 Juneau, AK 99811-0200 POSITION STATEMENT: Commented on SB 33 Senator Robin Taylor Alaska State Capitol Juneau, Alaska 99801-1182 POSITION STATEMENT: Sponsor of SJR 3 Pam Labolle, President Alaska State Chamber of Commerce 217 Second St. Juneau, Alaska 99801 POSITION STATEMENT: Supports SJR 3 ACTION NARRATIVE TAPE 99-1, SIDE A Number 001 CHAIRMAN WARD called the Senate State Affairs Committee to order at 3:28 p.m. Present were Senators Ward, Phillips and Elton. The first order of business to come before the committee was SB 33. SB 33-TASK FORCE ON PRIVATIZATION MARK HODGINS, aide to the Senate State Affairs Committee, presented SB 33 for the sponsor, Senator Ward. SB 33 was introduced to establish a task force to review functions of state government that could be easily transferred to the private sector. The task force will be comprised of members from the public and the legislative and executive branches. The task force will take the first all- encompassing look at privatization of governmental services in Alaska. Some form of privatization of governmental services has taken place in 48 other states. When enacted, SB 33 will evaluate which services can be provided more efficiently by the private sector, as well as highlight those services that are better provided by the government. The report should provide a road map for reducing the size and cost of state government without reducing services, while providing options for the future. SB 33 will also look into the state's contracting procedures to ensure that Alaskans are getting the most out of their contracting dollars. Number 048 SENATOR PHILLIPS asked which two states have not privatized any government services. SENATOR WARD answered the States of Massachusetts and New Jersey. SENATOR ELTON pointed out the fiscal note refers to last year's bill. He questioned whether costs will be higher since SB 33 requires more task force members. MR. HODGINS explained he provided the fiscal note from last year's bill to use as a reference. The narrative on that fiscal note suggests that the costs are indeterminate because the Department of Administration (DOA) did not know which departments will be affected. Number 073 SENATOR ELTON questioned why SB 33 restricts, to some extent, the ability of the Senate President and Speaker of the House to select the co-chairs of the task force. SENATOR WARD replied this legislation was copied from a document that created a similar task force in the State of Wyoming. Number 111 KATHLEEN STRASBAUGH, assistant attorney general, Department of Law (DOL), gave the following testimony. The Administration opposes SB 33 for the same reason it vetoed similar legislation recently passed by the Legislature. The Administration supports the concept of investigating this matter, would provide information, participate, and help the committee in any way it could; however, it feels there is a separation of powers issue associated with bringing together the two branches. It prefers that the Legislature accomplish the same objective by setting up its own committee with a resolution. SENATOR MACKIE asked if the Governor would support SB 33 if he did not have to appoint any task force members. MS. STRASBAUGH was unable to describe what type of structure the Governor would like to see. The Administration's position on the last bill was that it is more appropriate to accomplish this task by committee rather than by statute. Number 136 SENATOR MACKIE asked what the Administration has done in this area under its own powers. MS. STRASBAUGH replied all contracts are currently up for negotiation, but the state previously negotiated with the union the ability to contract out certain kinds of functions if found to be appropriate in a feasibility study. Some litigation has taken place related to that agreement. SENATOR MACKIE asked Ms. Strasbaugh if the Administration is opposed to the bill because it does not want to participate with the Legislature in this type of a task force because it believes there are two separate branches of government, regardless of what the issue is. MS. STRASBAUGH said that is correct, and repeated that the Legislature can accomplish its objective by passing a resolution to form a committee. Number 159 DON ETHERIDGE, representing Local 71, testified in opposition to SB 33 and expressed concern that certain functions of state government have been pre-targeted for contracting. Local 71 has been trying to protect certain jobs within the Department of Transportation and Public Facilities (DOTPF). Local 71 workers have been able to do the jobs at a lower cost, but DOTPF has been under political pressure to contract the work out: Local 71 fears SB 33 will add additional pressure. Local 71 has provisions in its contract that require the Administration to do feasibility studies. If the Administration can prove the work can be done cheaper through contracts, Local 71 will not litigate. During this time of budget reductions, Local 71 sees no point in funding a task force when a process already exists to serve the same purpose. Number 190 SENATOR PHILLIPS asked Mr. Etheridge who Local 71 believes is targeting its workers. MR. ETHERIDGE replied Local 71's major fear is that it is not sure where the threat is coming from. Contractors have been putting pressure on the Administration and legislators to contract out Local 71's positions, specifically pipeline drillers. When pipeline construction began, the state did not have any drillers on its payroll. DOTPF eventually put together its own drilling crew, and now that the pipeline work has slowed down, those drillers may be laid off but expected to hang around in case a gas line is built. SENATOR PHILLIPS asked who will execute the task force's recommendations. SENATOR WARD replied the recommendations are reported to the Legislature and the Administration, and the power of appropriations remains with the Legislature. He stated he has discussed with Mr. Etheridge his concern for two years. SENATOR WARD stated his intent is to review all departments to determine what services can be performed at a reduced cost by contracting, and that it is not his intention to remove one state employee. He does support a hiring freeze, however. Number 250 SENATOR PHILLIPS maintained members of Local 71 are some of the most important state employees. He asked Mr. Etheridge why he thought Local 71 employees would be the easiest to target. MR. ETHERIDGE responded all of the highway maintenance was contracted out in British Columbia, without success. SENATOR WARD said he wanted to establish a task force two years ago so that it could make thoughtful decisions without the added pressure of a financial crisis. Number 265 SENATOR MACKIE said last year's discussions revolved around labor group representation on the task force. He noted downsizing could occur at anytime. He stated his intent to support SB 33 because the task force report will not list positions that should be cut; it will recommend ways to make government more efficient and less costly. The Legislature is now forced to ask the Governor for suggested reductions and to downsize, and many of those decisions are made off the cuff. He asked Mr. Etheridge if he was more comfortable with the new bill, in terms of the composition of the task force. MR. ETHERIDGE said yes, and that his concern about the short time frame has also been resolved. He explained Local 71 came out in support of the bill when it was first introduced two years ago, but in conversations with staff last year, he became nervous. Local 71 and the Administration did a job study this past year and reclassified positions in an attempt to reduce costs: 200 positions will be downgraded and 16 will be upgraded. Number 325 SENATOR MACKIE assured Mr. Etheridge he has no preconceived notions about which jobs should be contracted out. He thanked Mr. Etheridge for his testimony. Number 335 DAVID KOIVUNIEMI, Assistant Commissioner of the Department of Administration (DOA), testified that the collective bargaining agreements require that feasibility studies be done if work is to be contracted out. According to the past fiscal note, feasibility studies cost $50,000. DOA is willing to cooperate and provide any information it has available to the task force. SENATOR MACKIE moved SB 33 out with individual recommendations. SENATOR ELTON objected. The motion carried with Senators Mackie, Phillips and Ward voting "Yea," and Senator Elton voting "Nay." SB 36-YEAR 2000 COMPLIANCE REQUIREMENT MR. HODGINS presented SB 36 for Senator Ward, the sponsor. SB 36 will require any new State of Alaska government computer hardware or software purchases to be Y2K compatible. Each product or item to be delivered or developed under a state contract must be able to interact or accurately process data from, into, during, and between the 20th and 21st centuries when used in accordance with the documentation provided by the contractor. SENATOR ELTON referred to language on line 11, and asked if SB 36 may have the unintended consequence of affecting existing contracts for professional services by requiring those contractors who use computer systems to comply and certify that all of their systems are Y2K compatible. MR. HODGINS replied the intent of the language is that only new purchases and services will be affected. Number 398 SENATOR WARD explained that the language in SB 36 is from the National Conference of State Legislatures but the bill does not include language to hold the state harmless. SENATOR MACKIE thought Senator Elton was referring to the contractors themselves having to be certified since line 11 refers to "each product or service." He stated the intent should be the equipment or the software or hardware programs, not the individuals selling the programs. SENATOR WARD announced he would hold SB 36 in committee to check with the legal drafter about the intent of the language on line 11 on page 1. SJR 3-REPEAL OF REGULATIONS BY LEGISLATURE SENATOR ROBIN TAYLOR, sponsor of SJR 3, stated SJR 3 is not a new concept; it has been voted on by the people of Alaska three times. The separation of powers established in the Constitution has, unfortunately, created a turf battle between the Governor's Office and the Legislature. The executive branch writes regulations to carry out the law, however the Legislature sees some of those regulations as a distortion of the law. The Legislature's only recourse in such situations is to change the enabling statute itself. The Alaska Administrative Code is a very complex network of rules of law, and the public is frustrated that state government is involving itself in all aspects of people's lives. SJR 3 allows the public to amend the Constitution so that the Legislature can pass a simple resolution requiring a majority vote of each house to repeal regulations that are inconsistent with its enabling statute. SENATOR MACKIE questioned what will happen to a particular program, or whatever is being regulated, when the Legislature repeals the regulations it operates by. He asked whether the program will be suspended until the Administration writes new regulations, and what will happen if the Legislature disagrees with the new regulations. Number 516 SENATOR PHILLIPS recalled that the Department of Environmental Conservation (DEC) adopted a regulation dealing with water quality control in the early 1980's. Former Senator Ziegler introduced a resolution regarding those regulations which DEC promptly changed. He suggested that the mere introduction of the resolution will prompt similar action. SENATOR MACKIE repeated his concern about what will happen to a program after regulations are repealed. SENATOR TAYLOR responded departments can impose emergency regulations and do so frequently. He noted the Department of Fish and Game opens and closes most fisheries by emergency regulation. He thought debate about the impact that a repeal of regulations would have could be healthy. He assumed each resolution would contain language suggesting how the problem could be corrected. Number 548 SENATOR PHILLIPS said he has seen the introduction of resolutions prompt changes in regulations over a dozen times. SENATOR MACKIE asked why the Legislature no longer has the ability to repeal regulations. SENATOR PHILLIPS explained the Supreme Court decided in the Lie (ph) case that the Legislature can only change regulations through a bill that has three readings, not through a resolution. SENATOR MACKIE asked if that is why a constitutional amendment is required. SENATOR PHILLIPS said that is correct. He noted that although he intends to support SJR 3, he does not believe the public understands its impact, as it has been voted down three times. Number 561 SENATOR ELTON discussed three concerns he has with the legislation. He felt the process to repeal a regulation will be much less rigorous than the process it takes to adopt a regulation which involves all segments of Alaskans. He expressed concern that SJR 3 could create instability for a person starting a business who must rely on stable regulations to develop a business plan. Additionally, the regulatory web is complex, therefore repeal of one regulation could have a ripple effect on others. Finally, he expressed concern that SJR 3 does not require the Legislature to outline the problems with the repealed regulation so that it can be rewritten satisfactorily. TAPE 98-1, SIDE B Number 000 SENATOR TAYLOR responded the only choice the Legislature has at this point is to change the statute on which many regulations are based, even though 90 percent of the regulations are satisfactory. He felt that action would be very disruptive to a department's operations and the Legislature has seldom acted to change regulations for that reason. SENATOR TAYLOR did not believe passage of SJR 3 would cause instability for new businesses, because a problem regulation is usually only in place for one or two years before the public becomes aware of its impact. He added the rigorous public process that is in place to adopt a regulation is "a joke." The bureaucracy writes the regulation, gives public notice, and those who have the time and inclination to follow the process write or testify at a public hearing, yet the adopted regulation does not reflect any of the testimony provided. SENATOR PHILLIPS asked if the type of resolution should be specified on page 1, line 8. SENATOR TAYLOR replied it was left as a simple resolution so that each house could introduce and pass them separately. Number 535 SENATOR PHILLIPS expressed concern that opponents of this measure will look for a legal technicality to keep this measure off the ballot. SENATOR TAYLOR stated that language difference is the only change from previous bills that have passed. He said his intent was to make it as easy as possible for the state's policy-making body to establish what the policy is. He added he had no objection to specifying what type of resolution is required. SENATOR PHILLIPS said under the existing system, the Governor can veto a bill that repeals regulations and he would most likely be advised to do so by his department heads. Number 497 SENATOR TAYLOR informed committee members the Independent Businesses of Alaska did a poll of its 3,000+ membership asking whether the Legislature should be given authority to repeal regulations found to be improper or inconsistent with the law. Survey results reported 73 percent were in favor, 15 percent were opposed, and 12 percent were undecided. Regulation review and change is a top priority of the Alaska Chamber of Commerce. SENATOR ELTON expressed concern that on line 6, the process used to make the finding is not defined. He thought it was misleading and that simply saying the Legislature can repeal regulations with a finding would be adequate. SENATOR MACKIE disagreed that the language is misleading because the Legislature will have to hold hearings to make the finding. SENATOR TAYLOR said his concern with that provision was that the finding should be embodied within the resolution. Number 454 PAM LABOLLE, President of the Alaska State Chamber of Commerce, stated regulatory reform is the Chamber's second priority, second only to fiscal planning. The Chamber has supported the concept of SJR 3 for several years now. The body that makes the laws should have the authority to repeal regulations that do not carry out the legislative intent. This ballot issue failed to pass because of the way it was put forth and because of confusion over the separation of powers. The Chamber is committed to informing the public if SJR 3 is on the ballot again. SENATOR MACKIE moved SJR 3 from committee with individual recommendations and then withdrew his motion. SENATOR ELTON offered an amendment to page 1, line 9, to insert a new sentence to read: The resolution shall explain why the Legislature finds the regulation inconsistent with its enabling statute. Number 381 SENATOR TAYLOR opposed the amendment because he believed it was redundant. SENATOR ELTON stated it is often difficult to determine legislative intent from committee hearings because all sides of an issue might be presented. If the resolution states why the Legislature believes the regulation is inconsistent, the agency that has to redraft it will understand the problem. SENATOR MACKIE added that statutes do not contain intent language, and that most resolutions contain a findings section. SENATOR TAYLOR repeated the Legislature can only repeal a regulation after finding that it is inconsistent with its enabling statute, therefore the resolution will have to contain a findings provision stating the reasons for the inconsistency. SENATOR ELTON withdrew his amendment. Number 362 SENATOR PHILLIPS suggested changing line 6 to read, "The Legislature may, after a stated finding that a...." After further discussion, SENATOR ELTON offered to work with the sponsor. SENATOR MACKIE moved SJR 3 from committee with individual recommendations. SENATOR ELTON objected. The motion carried with Senators Mackie, Phillips, and Ward voting "Yea," and Senator Elton voting "Nay." There being no further business to come before the committee, CHAIRMAN WARD adjourned the meeting at 4:40 p.m.