MINUTES  SENATE FINANCE COMMITTEE  April 18, 2000  9:09 AM TAPES SFC-00 # 96, Side A   CALL TO ORDER Co-Chair John Torgerson convened the meeting at approximately 9:09 A.M. PRESENT Co-Chair John Torgerson, Senator Loren Leman, Senator Randy Phillips, Senator Gary Wilken, Senator P. Kelly, Co-Chair Parnell, Senator Adams, Senator Green, Senator Donley. Also Attending: REPRESENTATIVE NORMAN ROKEBERG; CAROL CARROLL, Director, Division of Administrative Services, Department of Military and Veterans Affairs; RON HULL, Deputy Director, Division of Employment Security, Department of Labor. Attending via Teleconference: GENERAL THOMAS WESTALL, Alaska National Guard/Naval Militia/Defense Force, Department of Military and Veterans Affairs; MAJOR RICHARD THOMAS, Assistant Chief of Staff, Alaska Army National Guard, Department of Military and Veterans Affairs. SUMMARY INFORMATION HB 37-CIGARETTES:SALES/EDUC & CESSAT'N PROGRAM SCS CS HB 37 (FIIN) was reported out of Committee with a "do pass" recommendation and with a fiscal note by Senate Finance Committee. HB 331-AK NATL GUARD/NAVAL MILITIA/DEFENSE FORCE CS HB 331 (MVL) was reported out of Committee with a "do pass" recommendation and with a fiscal note by the Department of Military and Veterans Affairs. HB 337-AMTS OWED ON UNEMPLOYMENT TAX: CLM V. PFD SCS CS HB 337 (FIN) was reported out of Committee with a "do pass" recommendation and with fiscal notes by Department of Revenue dated 2/8/00 and Department of Labor and Workforce Development dated 1/12/00. HB 378-FEES FOR WORKERS COMP AND WORKER SAFETY SCS CS HB 378 (FIN) was reported out of Committee with a "no recommendation" and with three fiscal notes by Department of Labor and Workforce Development dated 4/17/00, Department of Administration dated 4/14/00, Office of Management and Budget dated 4/14/00, University of Alaska dated 3/6/00 and Department of Community & Economic Development dated 2/2/00. HJR 22-AK NATIVE ON PACIFIC SALMON COMMISSION Co-Chair Torgerson noted that HJR 22 was SCHEDULED but would not be heard. It was rescheduled for a latter time. CS FOR HOUSE BILL NO. 331(MLV) "An Act relating to compensation of members of the Alaska National Guard and Alaska Naval Militia in active service; changing the name of the Alaska State Militia to the Alaska State Defense Force; relating to compensation and work status for members of the Alaska State Defense Force; and providing for an effective date." CAROL CARROLL, Director, Division of Administrative Services, Department of Military and Veterans Affairs, addressed the three changes the legislation would make to existing law: · The bill would streamline the process for paying members of the Guard and Naval Militia when called to active duty ensuring timely and accurate pay for the soldiers. · The bill would change the name of the Alaska State Militia to the Alaska State Defense Force, the name commonly used to refer to the volunteer force. · The bill would clarify the status of the Alaska State Defense Force when called to State active duty ensuring that the Defense Force has Title 26 job protection and subject to military command and discipline. Co-Chair Torgerson questioned the zero fiscal note given the proposed pay increase. Ms. Carroll responded, currently, the Alaska National Guard is paid basic federal pay scale, which increases, by the number of years in service. Additionally, they are paid an allowance for cost of living. The bill clarifies that the basic pay would be multiplied by 200% and no longer would the pay allowances be given. The State's impact would be that some members would be paid a little less and others, the exact same for most members on duty. The 200% would be an attempt to match what is currently paid. She reiterated that the impact to the State would be minimal. Co-Chair Torgerson noted that it was based on the federal government basic pay and asked if the State could be out of balance if they increase the pay rate. Ms. Carroll explained that the State would always be nearing what the federal government pays as it is based on the federal basic minimum pay. Co-Chair Torgerson asked what had been added in Sections 6 & 7. Ms. Carroll commented that both groups would be eligible for workman's compensation when brought on State's active duty. Those sections speak to the workman's comp situation. Senator Leman questioned why Section 5 was not being changed. Ms. Carroll replied that it was left the same because over the years, as the concept has changed, other things were applicable. The Department believed that would be safer since the impact was not known. Senator Leman did not understand the retroactivity clause and how that would make a difference. Ms. Carroll agreed that it would make sense to change it, however, the State attorney had recommended leaving that language the same. MAJOR RICHARD THOMAS, (Testified via Teleconference), Assistant Chief of Staff, Alaska Army National Guard, Department of Military and Veterans Affairs, offered to answer any questions the Committee had regarding pay concerns. GENERAL THOMAS WESTALL, (Testified via Teleconfernce), Alaska National Guard/Naval Militia/Defense Force, Department of Military and Veterans Affairs, offered to answer any questions from the Committee regarding the history of the defense force and why the bill was so important to the Department. Senator Leman recommended that the Committee identify what the minimum pay is for the current fiscal year and determine what an appropriate multiplier would be. Co-Chair Torgerson countered that he would prefer to move the bill from Committee and address that concern on the floor. Co-Chair Parnell MOVED to report CS HB 331(MLV) out of Committee with individual recommendations and with the accompanying fiscal note. There being NO OBJECTION, it was so ordered. CS HB 331 (MVL) was reported out of Committee with a "do pass" recommendation and with a fiscal note by the Department of Military and Veterans Affairs. HOUSE JOINT RESOLUTION NO. 22 Relating to the membership of the Pacific Salmon Commission. Co-Chair Torgerson noted that HJR 22 was scheduled but would not be heard. The bill was rescheduled for a latter time. CS FOR HOUSE BILL NO. 337(JUD) "An Act relating to claims against permanent fund dividends to pay amounts owed to the Department of Labor and Workforce Development under the Alaska Employment Security Act and to fees for processing certain claims against permanent fund dividends; and providing for an effective date." RON HULL, Deputy Director, Division of Employment Security, Department of Labor, explained that his work included the collection of taxes from Alaska's employers and the paying out of benefits to Alaskans who are temporarily out of work. Last year over $129 million dollars were paid out in benefits. Inherent in the responsibility of administering the program is the protection of the Unemployment Insurance (UI) Trust Fund. By protection, Mr. Hull indicated that he meant detection, prevention, and the collection of improperly paid benefits. Mr. Hull continued, as of 12/31/99, the overpayment balances were as follows: *Fraud $4,912,384 *Non-Fraud $1,516,688 *Penalty $3,145,620 (penalty for fraud) He noted that the bill would speed the recovery of overpaid UI benefits that are currently a debt to the State. The overpaid benefits would be returned to the Trust Fund, which have a beneficial effect on the employers' UI tax rates. The penalty amount would be deposited into the General Fund. Mr. Hull added that with passage of the legislation, the Department estimates in the first year a return of over $1.5 million dollars to the Trust Fund, and over $750 thousand dollars to the General Fund. Every year thereafter, it is estimated between $700 - $800 thousand dollars would be returned to the Trust Fund and between $400 - $500 thousand dollars would be deposited in the General Fund. Mr. Hull concluded that passage of the bill would be good for the UI Trust Fund, the General Fund and for Alaska's employers. Co-Chair Torgerson asked what currently happens with the debt. Mr. Hull noted that much of the balance goes uncollected. The method most used for collecting is in the case of someone reapplying for benefits in the future, then they can be tracked. Co-Chair Torgerson asked why it is not taken to Small Claims Court. Mr. Hull advised that sometimes it is taken to Small Claims Court and from time to time to Criminal Court. Senator Adams pointed out that the limit had been raised to $20 thousand dollars. He asked if that could be used for the State's advantage. Mr. Hull did not know. He reminded members that this work is labor-intensive and the problem continues of getting the money to the Trust or General Fund. Co-Chair Torgerson countered that if the case went to court, the judgement could be taken and filed against the Permanent Dividend check. Co-Chair Torgerson observed that then the bill would provide for no court action, and instead, go directly to the attachment. Mr. Hull explained that it would but the Department wants to be in the same category as other State agencies so as to levy these funds. Co-Chair Parnell questioned the need of the State to continue to expand the scope of the State's ability to assume action on the PFD. Mr. Hull stressed that arrangement is "good" for all State Divisions. Co-Chair Parnell questioned what is "good" State policy, while not going through "due process". Mr. Hull replied that all agencies are required to go through that process, referencing the Child Support Enforcement Agency (CSEA). Mr. Hull questioned why it was not "good" policy to collect State debt. Senator Parnell repeated his question of why the State should be allowed to take action without going to court. Mr. Hull responded that it was a debt to the State. Senator Wilken asked how it was determined who would file against the PFD for money in dispute. Mr. Hull stated if any amount was in dispute, the agency would not be allowed to move forward as written in current statute. He noted that there exists an administrative appeals process for court actions. Co-Chair Torgerson referenced Page 2, Lines 9-13, asking if those actions would be addressed through the use of social security numbers. He questioned the "broad based" language used. Mr. Hull explained that the language would bring the Department in compliance with requirements that the Department of Revenue had established. Co-Chair Parnell pointed out that for PFD purposes, often a birthdate is needed. Some people do not have social security numbers yet and that alternate forms of identification can be used. Co-Chair Torgerson assumed that the people referenced in the legislation would be old enough to be working; otherwise, the provision would not apply to them. Co-Chair Torgerson inquired if the notices were sent registered mail. Mr. Hull replied that they are sent through regular mail. Senator Parnell asked if the State indicates notice of the "right to appeal". Mr. Hull explained that there are a number of documents sent. The first document is send to the claimant and the employer. If funds are owed, the claimant receives a letter of determination, which contains that document. Senator Parnell reiterated his question, if the claimant received notice of the right to appeal for any decision. Mr. Hull advised that the claimant does receive such a packet, which explains how to place those appeals. Senator Leman offered three minor technical amendments. Page 3, Line 26, delete "interpret"; Page 3, Line 29, transpose the words "only include"; Page 4, Line 6 & 7, delete "interpret for". Senator Leman MOVED to adopt those language changes. There being NO OBJECTION, the amendments were incorporated. Co-Chair Parnell MOVED to report SCS CS HB 337 (FIN) out of Committee with individual recommendations and with fiscal notes by Department of Revenue and Department of Labor and Workforce Development. There being NO OBJECTION, it was so ordered. Co-Chair Torgerson stated that SCS CS HB 337 (FIN) was reported out of Committee with a "do pass" recommendation and with fiscal notes by Department of Revenue dated 2/8/00 and Department of Labor and Workforce Development dated 1/12/00. SENATE CS FOR CS FOR HOUSE BILL NO. 37(JUD) "An Act relating to restricting sale of cigarettes, to enforcement of certain laws relating to sales of cigarettes, and to smoking education and cessation programs administered by the Department of Health and Social Services." REPRESENTATIVE NORMAN ROKEBERG testified that the legislation would authorize a comprehensive smoking education, tobacco use prevention and tobacco control program. It would ensure that non-State contractors administer the tobacco education prevention. Approximately $816 million dollars in tobacco settlement monies will be forthcoming to the State. He noted that the Department of Health and Social Services would monitor private tobacco settlement contracts. Representative Rokeberg stated that HB 37 outlines a comprehensive tobacco control program based on the Center for Disease Control guidelines. The bill would prohibit sales of cigarettes in-groups of less than 20, not in their original packaging, and not properly labeled for sale in the states. He noted that it was his intent that upon passage of the bill, contractual agreements would be made with organizations such as the American Cancer Society, to implement the program. The Department of Health and Social Services would be responsible for the oversight. Representative Rokeberg stated that the State of Alaska does not need to contribute government bureaucracy by burdening the State with additional programmatic duties. Senator Wilken questioned the fiscal note. He asked if the hire of one full time equivalent was necessary. Representative Rokeberg replied that there was another fiscal note that he and Senator Parnell had prepared a note that zeroed out that position. Co-Chair Torgerson understood that the Department of Health and Social Services would like to have more money in that program, which the fiscal note reflects. Co-Chair Parnell spoke to Amendment #1, 1-LS0247/B.1, Ford, 4/13/00. He stated that the amendment would address language on Page 5, Line 5, deleting "more than one organization" and inserting "one or more organizations". Representative Rokeberg voiced his support for the amendment. Senator Leman stated that he would support the amendment with the current dollar amount. He clarified that he supported competition for securing the contract. Senator Green stated that she could not support the amendment. She believed that there are organizations currently in place that should be eligible to directly receive funding and should not be required to go through another agency or beneficiary. Co-Chair Parnell noted that was possible with the proposed amendment language. Senator Green OBJECTED to Amendment #1. A roll call vote was taken on the motion. IN FAVOR: Donley, Leman, Adams, Wilken, Phillips, Parnell, Torgerson OPPOSED: P. Kelly, Green The MOTION PASSED (7-2). Co-Chair Parnell MOVED to adopt the fiscal note dated 4/15/00 as provided by the Senate Finance Committee. There being NO OBJECTION, it was adopted. Co-Chair Parnell MOVED to report SCS CSHB 37 (FIN) out of Committee with individual recommendations and with the accompanying fiscal note. There being NO OBJECTION, it was so ordered. SCS CS HB 37 (FIIN) was reported out of Committee with a "do pass" recommendation and with a fiscal note by Senate Finance Committee. SENATE CS FOR CS FOR HOUSE BILL NO. 378(FIN) "An Act relating to the establishment of, assessment of, collection of, and accounting for service fees for state administration of workers' compensation and workers' safety programs; establishing civil penalties and sanctions for late payment or nonpayment of the service fee; and providing for an effective date." Co-Chair Torgerson commented that at the previous Committee meeting, there had been no motion to move HB 378 out of Committee. He asked if there was any Committee member that wanted to move the bill from the Committee at this time. Co-Chair Parnell MOVED to report SCS CS HB 378 (FIN) out of Committee with individual recommendations and with the accompanying fiscal notes. There being NO OBJECTIONS, it was so ordered. SCS CS HB 378 (FIN) was reported out of Committee with a "no recommendation" and with three fiscal notes by Department of Labor and Workforce Development dated 4/17/00, Department of Administration dated 4/14/00, Office of Management and Budget dated 4/14/00, University of Alaska dated 3/6/00 and Department of Community & Economic Development dated 2/2/00. ADJOURNED Senator Torgerson adjourned the meeting at 9:50 A.M.