SENATE BILL NO. 33 "An Act relating to the Task Force on Privatization; and providing for an effective date." This was the fifth hearing for this bill in the Senate Finance Committee. Co-Chair John Torgerson noted that the Committee had adopted a committee substitute, Version "N" as a Workdraft in an earlier hearing but there was a new proposed committee substitute before members for consideration. Co-Chair John Torgerson reminded the Committee that the first committee substitute amended the language relating to items not subject to bargaining and the unrestricted authority of the employer to enter into contracts with the private sector to perform certain public functions. He also noted that two amendments proposed by Senator Loren Leman were adopted. Senator Loren Leman detailed the changes made by the amendments, saying one amendment inserted "or to perform more efficiently" after each provision relating to debt consolidation. The other amendment, he noted, allows the commissioner to appoint an unpaid advisory council. Co-Chair John Torgerson pointed out that the proposed committee substitute incorporates those amendments. Senator Sean Parnell moved for adoption as a Workdraft, CS SB 33, 1-LS0317/S, 3/25/99. The committee substitute was adopted without objection. MARK HODGINS, staff to the bill sponsor, Senator Jerry Ward testified. He noted that the legislation had evolved from establishing a task force to a commission, but reassured the Committee that the committee substitute is compatible with the sponsor's intent for privatization of services and savings for the State. He stated that several individuals wished to testify on this legislation but have been unable due to the rescheduling of hearings. Therefore, he presented written testimony from some of those people. He referred to a letter supporting the bill from The Alliance dated March 18, 1999 and a resolution in support of the bill from the Alaska State Chamber of Commerce adopted December 4, 1998. (Copies on file) Tape: SFC - 99 #78, Side B JUANITA HENSLEY, Department of Administration, testified to the section of the committee substitute that amends the Public Employee Relations Act (PERA). She stated that the Administration has concerns with the PERA changes and believed that at this time, making changes of this magnitude affects the ability to enter into negotiations in the remaining term contract. She stressed the Administration's first priority in negotiation of contracts is cost containment and attempting to reach a zero cost contract. Changing PERA in the middle of the contract negotiations, she warned, could jeopardize the cost objectives. She added that the current contract with the state employees does not prohibit the State from outsourcing services if cost effectiveness for the State can be shown. She used the Division of Motor Vehicles as an example of the State entering a partnership with the private sector to enhance services to the public. Senator Lyda Green referred to the practice of outsourcing Division of Motor Vehicle services saying that the division could not expand privately administered services into the Mat-Su area was because of an inadequate cost savings as required under current statute. Juanita Hensley responded that the division outsources services when it can be shown to be cost effective. She listed Tok, Talkeetna and Glennallen as communities where the private sector is providing the services and the division has been able to eliminate the government positions. Senator Gary Wilken supported the legislation but was concerned that it contains an item that caused a similar bill to be vetoed the previous year. Co-Chair John Torgerson explained that the item in question is a provision allowing the governor to appoint a member to the commission. Senator Gary Wilken referred to the governor's veto message raising concerns about the separation of powers. Senator Gary Wilken hoped this bill would not be vetoed for the same reason and stressed that the Committee needs to recognize that possibility and perhaps address the issue. Co-Chair John Torgerson commented that the previous legislation gave subpoena power to the commission, which caused concern for the governor. He assured that provision is not in the current bill. He added that if the governor chooses to not participate in the process by vetoing this bill, it sends a strong message that the governor is not interested in working toward consolidation or privatization. Senator Loren Leman offered a motion to report from Committee, CSSB 33 (FIN) and without objection it was reported out with an indeterminate fiscal note from the Office of the Governor. Co-Chair John Torgerson noted the Committee would stand in recess and come back to order if someone arrived wishing to testify on the long-range budget situation. AT EASE 9:20AM/10:22AM Co-Chair Sean Parnell noted there was no one present to testify. ADJOURNED Co-Chair Sean Parnell adjourned the meeting at 10:22 AM. SFC-99 (16) 4/1/99