Legislature(2005 - 2006)
04/22/2005 02:48 PM House FIN
| Audio | Topic |
|---|---|
| Start | |
| HB275 | |
| HB53 | |
| HB12 | |
| HB7 | |
| HB101 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE BILL NO. 7
An Act relating to the calculation and payment of
unemployment compensation benefits; and providing for
an effective date.
REPRESENTATIVE HARRY CRAWFORD, SPONSOR, stated that HB 7
would increase the maximum weekly benefit available through
unemployment insurance from $248 to $336.
Alaska's current benefits fall short in helping families
cover living expenses during periods of unemployment.
Alaska's maximum weekly unemployment insurance benefit of
$248 is the fourth lowest in the nation. Increasing the
maximum weekly benefit is not only overdue, it is essential
in alleviating skill shortages by ensuring Alaskan workers
and their families survive periods of unemployment.
Representative Crawford added that the average weekly
benefit amount of $248 dollars is only 35% of Alaska's
average weekly wage, the third lowest percentage in the
country. Other western states provide a much higher
percentage of average weekly earnings in their maximum
weekly benefit amount: Washington-67%; Hawaii-66%; Oregon-
63%; and Idaho-59%. Retaining a well-trained Alaskan
workforce is essential for a strong economy. Providing an
overdue increase in the weekly benefit amount is necessary
to keep Alaska's workers in Alaska. Linking the method for
future benefit calculations to average weekly earnings will
ensure any changes are in concert with Alaska's economy.
4:53:35 PM
Vice-Chair Stoltze asked if Alaska had a provision for
family members. Representative Crawford replied the State
does and that it is in the amount of $24 dollars per week
per dependant up to three dependants. That has been in
structure since the beginning of Alaska employment law here.
4:54:36 PM
Vice-Chair Stoltze asked if the statistical size of an
average family had been factored into that number and
compared to the other states. Representative Crawford
replied there were higher wages paid in Alaska, however,
that has been ameliorated over the years.
4:56:27 PM
Representative Holm referred to the costs to the employers
at $64 dollars per employee per year. Representative
Crawford explained that it would be spread over five years
and would amount to an increment of $10 for five years.
Those calculations were based on numbers from the Department
of Labor and Workforce Development; a determination needed
to keep the Unemployment Insurance (UI) Trust Fund intact.
4:58:36 PM
WAYNE STEVENS, PRESIDENT, ALASKA STATE CHAMBER OF COMMERCE,
stated that the Alaska State Chamber of Commerce understands
the need to raise the benefits paid through the unemployment
insurance program. The State Chamber understands that the
Unemployment Insurance (UI) benefit payments are second to
the lowest in the nation. However, the additional cost to
business, combined with the rapidly rising costs of Workers
Compensation Insurance and the ever escalating costs of
health care insurance for employees, together make it
extremely difficult for businesses to survive without making
dramatic cuts to employee costs. After a cursory review of
the UI program, it appears that the costs of providing the
new level of benefits envisioned in HB 7 is estimated to be
$12.4 million dollars annually. In calendar year 2004,
Alaska paid a total of $135.7 million dollars in
Unemployment Insurance benefits.
Mr. Stevens suggested that business could support the
increase in UI benefits if there were adjustments made in
other areas of the program that would make the cost of the
increases, revenue neutral to business. Alaska is one of
very few states that allow a worker to separate from
employment without good cause and then after a six-week
disqualification period, is able to collect unemployment
insurance. Alaska is also one of a few states, to pay
dependent benefits. Currently, a claimant may claim
dependants' allowance of $24 per child up to 3 children per
week in addition to the base benefit. The dependants'
allowance cost the program, totaled $12.8 million dollars in
2004. To neutralize the increased cost to business, the
State Chamber encourages extending the separation-waiting
period to 12 weeks. Another option would be to delete the
dependent benefit. The changes would pay for the increased
UI benefits without adding to the already escalating
insurance and workers compensation cost affecting business.
5:02:14 PM
BILL KRAMER, CHIEF, UNEMPLOYMENT INSURANCE, DIVISION OF
EMPLOYMENT SECURITY, ALASKA DEPARTMENT OF LABOR AND
WORKFORCE DEVELOPMENT, responded to queries by Vice Chair
Stoltze regarding the child benefit. If the State takes the
$12.8 million dollars paid in dependence allowance in 2004
and divided it equally amongst all weeks paid, it would
increase the average weekly payment by $18.73. The maximum
benefit amount without the allowance factored in shows
th
Alaska ranking 48 compared to the other states. Including
nd
the dependence allowance places Alaska at 42.
Representative Holm asked if it was intended to change the
percentage paid amount.
PATRICK SHIER, ACTING DEPUTY DIRECTOR, EMPLOYMENT SECURITY
TAX, DIVISION OF EMPLOYMENT SECURITY, ALASKA DEPARTMENT OF
LABOR AND WORKFORCE DEVELOPMENT, noted that the federal rate
was in excess of 6% percent against which Alaskan employers
enjoy a credit of almost 100%. The average employer rate is
around 3% percent. In 2006, the average rate for the
employer portion moved to 2.08%; in Alaska, employees
contribute ½ of 1%. The State would be looking at an
increase of slightly over 10% over six years. Some
employers will see their rate staying lower. An employer
that has fluctuations in their payroll might see their rate
increase beyond that percentage.
5:09:27 PM
Representative Holm worried about the adverse effect for
those employers with seasonal employees.
Mr. Shier advised that the employers with a lowest level
would see less of a rate increase that those at the higher
end. The decline of payroll from one quarter to the next
drives the higher rate from one quarter to the next. For
those employers that do not have that experience, their
increase would be real from 1% percent to 1.05% percent in
the out years up until 2012.
5:10:57 PM
Co-Chair Chenault MOVED to ADOPT Amendment #1. (Copy on
File). Vice-Chair Stoltze OBJECTED for the purpose of
discussion.
Mr. Stevens spoke to the amendment. He explained that the
cost of the program portion that allows people to quit for
no reason or be fired with cause, waiting period be changed
from 6 to 12 weeks. He emphasized that might balance the
cost of the program.
5:13:14 PM
Representative Crawford spoke against the amendment. He
explained that the average amount of time for a person to be
unemployed in the State of Alaska is 11 weeks. He concluded
that the average person would never collect a check.
Workers would be squeezed to the point where they would not
remain in the State. He believed that Alaska business has
been given a break over the past years, since the
unemployment rates have not increased. The average weekly
benefit paid out with the dependents is $194.04, placing
th
Alaska in 49 position nationwide. He maintained that the
amendment would create incentives for firing employees when
work becomes slack. He spoke against the amendment.
5:17:07 PM
Mr. Shier clarified that the affect of the amendment would
increase the period from 6 weeks to 12 weeks. The
Department of Labor and Workforce Development would support
the bill with the amendment as it would reduce the cost of
unemployment insurance for employers and would raise the
dollar amount of the weekly benefit to help employees.
5:19:14 PM
Vice-Chair Stoltze inquired if "discharged for misconduct"
meant more than being fired. Mr. Kramer advised that the
language of the amendment duplicates current statute in
regard to that provision.
Vice-Chair Stoltze wondered if the legislation would
encourage firing employees, asking if legal protections were
in place to prevent such action.
5:21:25 PM
Mr. Shier responded that there have been many discussions
regarding that issue. There is a process to allow employees
to challenge a decision on their employment status. Mr.
Shier noted that the Appeal Tribunal would render a decision
based on the facts.
5:23:36 PM
Representative Croft stated that the amendment undermines
the purpose of the program. There are many reasons to leave
a job.
A roll call vote was taken on the motion.
IN FAVOR: Holm, Kelly, Moses, Chenault
OPPOSED: Croft, Joule, Stoltze
Representatives Foster, Hawker, Meyer were absent from the
vote.
The MOTION FAILED (4-3).
5:26:38 PM
Representative Kelly requested to amend Amendment #2. (Copy
on File). The change would be to Page 6, Line 23, insert
"$33,250" and delete "$33,000".
Representative Kelly MOVED to ADOPT the amended Amendment
#2. Co-Chair Chenault OBJECTED for discussion purposes.
Representative Kelly explained that the amendment would
adjust the bill to reflect a weekly ceiling to $300 dollars
rather than the proposed $336 dollars.
Representative Croft questioned if additional changes were
needed. Mr. Shier indicated that Amendment #2 would place
th
Alaska 35 nationally.
5:31:44 PM
Representative Crawford stated his intent was to increase
the amount of unemployment received as much as possible.
Co-Chair Chenault WITHDREW his OBJECTION. There being NO
further OBJECTIONS, Amendment #2 was adopted.
Representative Hawker MOVED to REPORT CSHB 7 (FIN) out of
Committee with individual recommendations and with the
accompanying revised fiscal notes. There being NO
OBJECTION, it was so ordered.
CS HB 7 (FIN) was reported out of Committee with a "do pass"
recommendation and with a new note by the Department of
Administration, a new zero note by the Department of Labor &
Workforce Development and fiscal note #2 by the Department
of Administration.
5:34:36 PM
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