Legislature(2017 - 2018)GRUENBERG 120
01/31/2017 03:00 PM House STATE AFFAIRS
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| Audio | Topic |
|---|---|
| Start | |
| HB71 | |
| HB7 | |
| HB31 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HB 71 | TELECONFERENCED | |
| *+ | HB 7 | TELECONFERENCED | |
| *+ | HB 31 | TELECONFERENCED | |
| + | TELECONFERENCED |
HB 71-NO ST. EMPLOYEE PAY INCREASE FOR 2 YRS
3:05:24 PM
CHAIR KREISS-TOMKINS announced that the first order of business
would be HOUSE BILL NO. 71, "An Act relating to compensation,
merit increases, and pay increments for certain public
officials, officers, and employees not covered by collective
bargaining agreements; and providing for an effective date."
3:06:30 PM
SHELDON FISHER, Commissioner, Department of Administration
(DOA), presented HB 71 on behalf of the House Rules Standing
Committee, sponsor, by request of the governor. Mr. Fisher used
a PowerPoint presentation, titled "Salary Freeze for Nonunion
Employees," for his presentation. He referred to Slide 1,
titled "What Does the Bill do?" and relayed that the governor's
budget included a pay freeze for employees not covered by
collective bargaining agreements. He noted that the governor
also requested the Department of Administration (DOA) to
negotiate similar language [as in HB 71] with each of the
bargaining units, as agreements come up for negotiation. He
maintained HB 71 was introduced to respond to the state's fiscal
challenges. He stated that the governor expressed that it was
appropriate to freeze the automatic employee salary increases
for a period of time, considering he has asked citizens of the
state to accept a reduced permanent fund distribution. The
proposed legislation freezes the Cost of Living Allowance (COLA)
for the nonunion employee group, and he added that no COLAs have
been given in the current administration. The proposed
legislation also freezes merit increase pay increments and any
bonuses. He stated that HB 71 would reduce the governor's
salary by one-third. He explained that the governor could gift
a portion of his salary back to the state treasury but would
have to pay taxes on the full salary. Through HB 71, the
governor would avoid paying taxes on the amount he returns to
the treasury.
3:08:51 PM
MR. FISHER, in response to Representative Wool's request for
clarification, reiterated that the governor would receive a
reduced salary and would only pay taxes on the reduced amount.
He said that absent HB 71, the governor would be forced to
receive and pay taxes on the full amount, then return some
portion.
REPRESENTATIVE JOHNSON asked if the "net" would be the same.
MR. FISHER responded, "The net could be orchestrated to be the
same," but the governor wished to reduce his salary by a third,
and if he wants his take-home pay to be the same, it would have
to be "something less than a third," and he doesn't feel he
should be paying the federal government taxes on some amount of
money that he is not receiving.
REPRESENTATIVE TUCK asked, "What is the governor's salary?"
MR. FISHER answered he believed it to be $150,000 per year.
REPRESENTATIVE BIRCH asked if HB 71 would affect future
governors.
MR. FISHER responded that HB 71 would sunset in two years;
therefore, it would not last beyond the governor's term of
office.
MR. FISHER continued his presentation with Slide 2, titled "Who
Does the Bill Include?" He said HB 71 would include employees
not covered by a collective bargaining agreements in the
executive branch, and employees of boards, commissions, and
authorities. He added that it would include employees in the
legislative branch, employees at the University of Alaska not
covered by collective bargaining agreements, the governor,
lieutenant governor, department heads, and legislators. He
stated that it would not include the court system, citing the
separation of powers as the reason.
MR. FISHER turned to Slide 3, titled "Why is the Bill Needed?"
and offered that merit pay and pay increments are included in
statute; therefore, DOA does not have the flexibility to
implement the freezes absent legislation. He said, as well,
that these freezes were part of the governor's budget package
and are intended to address the [fiscal] shortfalls the state is
facing.
MR. FISHER concluded with Slide 4, titled "Estimated Savings,"
and said that HB 71 would affect approximately 5,000 state
employees, or 23 percent of the workforce, and over the two-year
period save about $4.2 million.
3:12:46 PM
REPRESENTATIVE LEDOUX asked why including the courts was a
separation of powers issue, but including the legislature was
not.
MR. FISHER explained that HB 71, if enacted, would be a law that
was adopted by the legislature and signed by the governor;
therefore, both the legislative and executive branches would
have accepted the legislation. Since the court system is
outside this process, he said, the legal view is that it would
be an impermissible intrusion into their operations to include
them in the legislation.
REPRESENTATIVE LEDOUX asked Mr. Fisher if he was saying that the
legislature has no say in employee compensation for the court
system.
MR. FISHER said that since the legislature is the appropriating
body, appropriating the court system's budget is subject to its
discretion. He said he believed that under the separation of
powers, there are limitations on the extent to which the
legislature and governor can collectively work together to
manage or dictate salaries in the court system.
REPRESENTATIVE LEDOUX asked, "If you chose not to freeze the
merit increases, would there be anything that would keep you
from simply changing the range[s] of people?" She cited that
the legislature capped the salary of legislative staff to a
range 22, with a few exceptions, in the Twenty-Ninth Alaska
State Legislature, 2015-2016.
3:16:09 PM
BILL MILLS, Assistant Attorney General, Department of Law (DOL),
said that by statute, the State of Alaska does have a salary
cap, and the ranges are determined by the salary schedule that
is established by the legislature. The administration
determines what jobs fit into what ranges through classification
analyses. He said, "Just saying we want to save money and we'll
change a range, I'm not really sure if that's something that the
executive could do." He reiterated that a statute does
establish the salary ranges.
REPRESENTATIVE LEDOUX asked, "So nobody who's ever been ... at a
range 23 has ever gone to a range 22 or a range 21?"
MR. FISHER responded he is sure that has happened, but offered
his understanding that what Mr. Mills is saying is that in cases
where it has happened, it is consistent with the merit
principles, such as, the job function changed. He stated what
he believed to be the real question: "Could there be a
wholesale direction to reduce salaries or cap and would that be
consistent with the merit principle established in the
constitution?" He added, "That would be the analysis that we'd
have to think more seriously about."
3:19:40 PM
REPRESENTATIVE KNOPP stated he had a serious level of discomfort
with HB 71. He opined there were serious inequalities: House
staff at ranges 23 and 24 have been moved down to range 22;
Senate staff ranges have not been lowered; and some departments
have negotiated wages with no step and COLA increases. He asked
if the 5,000 employees that would be affected by HB 71 include
those across the university system and all departments.
MR. FISHER responded yes, the 5,000 employees that would be
affected are in the executive branch, the legislature, the other
corporations, and the university, but the court system would not
be included.
REPRESENTATIVE KNOPP identified other inequalities: teachers,
represented by bargaining units, would continue to receive COLA
and merit increases, but under HB 71, university teachers would
not. He offered, "This is not a bad concept, but the problem is
it's not shared equally ...." He mentioned that the
administration has discussed negotiating freezes in future
collective bargaining agreements, but he opined that there are
no guarantees. He asked if the House could enact that there
would be no negotiated merit or COLA increases in the collective
bargaining agreements for two years.
MR. FISHER said DOA negotiates about one-third of the collective
bargaining agreements each year. He said that any change takes
a number of years to be adopted across the spectrum of
bargaining units. He opined, "It's important to start somewhere
and ... it's not unreasonable to start with our uncovered
employees, as the governor has proposed." He stated his belief
that the legislature could dictate, by statute, prohibiting DOA
from negotiating increases. He added that DOA brings all of the
collective bargaining agreements to the legislature for its
approval.
3:23:41 PM
REPRESENTATIVE WOOL queried why fiscal year 2019 (FY 19) savings
were less than those of FY 18 [as shown on Slide 4.]
MR. FISHER said the reason was that pay increments are awarded
every year but merit increments every other year.
REPRESENTATIVE WOOL requested clarification that HB 71 would
result in a freeze and not range reductions, as mentioned by
Representative LeDoux.
MR. FISHER responded yes, under HB 71, there would be a freeze
of their salaries.
REPRESENTATIVE WOOL asked if other groups of state employees
have been subject to a salary freeze since the current fiscal
crisis began.
MR. FISHER answered no, this is the first salary freeze that DOA
has introduced.
REPRESENTATIVE WOOL asked if the group of employees referred to
in HB 71 was the only group not subject to collective
bargaining. He also asked if other state employees, such as
teachers and university professors, are under collective
bargaining agreements; therefore, imposing a salary freeze on
them would be harder.
MR. FISHER said yes, the majority of state employees are subject
to collective bargaining; therefore, DOA has been instructed by
the governor to negotiate a comparable freeze as collective
bargaining agreements are up for re-negotiation.
3:26:07 PM
REPRESENTATIVE BIRCH said that if 5,000 employees represent 23
percent of the total employment population, then the total
employee population would be about 21,700. He went on to say
that if a salary freeze for 23 percent of employees would yield
$4.2 million in savings, then a freeze applied to all employees
would save an amount approaching $20 million. He urged DOA to
negotiate a salary freeze for all of the labor contracts. He
asked if the eleven collective bargaining agreements have all
been negotiated, or if they are coming up for negotiation.
MR. FISHER answered that DOA is currently in negotiations with
the Public Safety Employees Association (PSEA), the three Alaska
Marine Highway bargaining units, the Alaska Vocational Technical
Center Teachers' Association (AVTECTA), and the Teacher
Education Association of Mt. Edgecumbe (TEAME). He said there
will be more agreements negotiated next year.
3:27:25 PM
REPRESENTATIVE TUCK asked how the court system's wages and
benefits are determined.
MR. FISHER responded that the court system adopts its own rules
and policies for wages and benefits.
REPRESENTATIVE TUCK asked if the rules and policies were set by
regulation.
MR. FISHER said he didn't know and would provide the committee
with information as to whether it is through a handbook or a
formal regulatory process.
REPRESENTATIVE TUCK cited Article XII, Section 6, of the Alaska
State Constitution and read, "The legislature shall establish a
system under which the merit principle will govern the
employment of persons by the State." He stated, "The question I
have is the definition of merit." He offered that if employees
are not under a collective bargaining agreement, then merit
means a salary could "go up or go down." He asked, "How is it
that you wouldn't be able to do that already based on the
constitution?"
MR. FISHER stated his understanding that the question was:
"Could we freeze people at a particular level?" He brought up
an example of a highly skilled doctor whose range 29 salary is
frozen at a range 20, which is comparable to someone with much
less education and skill. He said the question implied by the
clause Representative Tuck read is: "Are we being consistent
with the merit principle if we treat those two people at a range
20 and don't acknowledge the additional education, skill, and
capabilities of that doctor, in this example?" Mr. Fisher
relayed that he is not denying that DOA could do what
Representative Tuck suggested but reiterated Mr. Mills's point
regarding a more sophisticated analysis to determine if the
merit principle is being followed.
REPRESENTATIVE TUCK offered that the legislature would have to
look to case law definition on merit principle. He acknowledged
the separation between the legislative branch and the executive
branch. He asked since the legislature oversees the budget for
all three branches, why under the merit system general provision
court system employees would be excluded, when the constitution
says "will govern the employment of persons by the State."
MR. FISHER gave an example to explain the basic principle of
separation of powers as it related to the court. He asked the
committee to imagine a scenario where the legislature did not
like the opinions that were being issued by the Alaska Supreme
Court and concluded that Alaska Supreme Court justices should be
paid a dollar per year. He said even though the legislature has
appropriated ample money to the court system, the court system
still needs to have flexibility to manage its own affairs in
order to remain independent of the legislative and executive
branches. He added that the court system has aggressively
managed costs, including reduced salary and hours.
REPRESENTATIVE TUCK conceded that a similar situation has
occurred between the executive and legislative branches, wherein
the legislature, not liking a governor's appointment, tried to
"zero out" the appointee's position control number (PCN). He
wondered aloud how the separation can be made between the
judicial and legislative branches but not between the executive
and legislative branches.
3:34:04 PM
REPRESENTATIVE JOHNSON asked what portions of HB 71, in regard
to salary freezes and salary reduction, are already under the
governor's control.
MR. FISHER answered that the governor cannot institute a salary
freeze without proposed legislation.
REPRESENTATIVE JOHNSON asked if the governor could accomplish
what is proposed in HB 71 internally, because the merit pay can
go "up or down."
MR. FISHER responded that the merit pay is a defined amount
based on employee performance, and there is no discretion as
currently structured.
3:36:14 PM
REPRESENTATIVE LEDOUX referred to Mr. Fisher's example about the
Alaska Supreme Court justices and expressed her belief that
judges' salaries are constitutionally guaranteed for the time of
their service.
MR. FISHER repeated the basic principle of separation of powers,
as it relates to HB 71. If passed, HB 71 would be adopted by the
legislature and signed by the executive branch; therefore,
application of HB 71 to those two branches of government is
appropriate and doesn't offend the separation of powers
principle in the constitution. He added that to extend the
statute to include the court system would be viewed as
troublesome, because the court system is not part of the
legislative process and has no way to protect itself.
[HB 71 was held over.]