Legislature(2013 - 2014)SENATE FINANCE 532
04/12/2013 01:30 PM Senate FINANCE
| Audio | Topic |
|---|---|
| Start | |
| HB129 | |
| HB76 | |
| HB23 | |
| SB90 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | SB 90 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | HB 129 | TELECONFERENCED | |
| += | HB 23 | TELECONFERENCED | |
| += | SB 13 | TELECONFERENCED | |
| += | HB 76 | TELECONFERENCED | |
CS FOR HOUSE BILL NO. 76(FIN)
"An Act relating to electronic filing of certain
information with the Department of Labor and Workforce
Development; relating to fund solvency adjustments,
rate increase reduction, prohibition on the relief of
certain charges, the unemployment trust fund account,
and the offset of certain unemployment compensation
debt under the Alaska Employment Security Act;
relating to the definition of 'covered unemployment
compensation debt' in the Alaska Employment Security
Act; and providing for an effective date."
1:47:52 PM
GREG CASHEN, ASSISTANT COMMISIONER, DEPARTMENT OF LABOR AND
WORKFORCE DEVELOPMENT, testified that HB 76 would do four
things:
· allow for electronic filing of reports
· improve the department's ability to recoup fraudulent
unemployment insurance payments
· adopt minor changes to bring the department into
compliance with federal law
· change how unemployment tax rates are set in an effort
to keep money in the hands of employers and employees;
keeping money circulating through the economy while
protecting the integrity of the trust fund
1:49:09 PM
PAUL DICK, DIRECTOR, EMPLOYMENT SECURITY DIVISION,
DEPARTMENT OF LABOR AND WORKFORCE DEVELOPMENT, highlighted
the sections of the bill.
Section 1 adds a new section, AS 23.05.055,
authorizing the commissioner to allow the use of
electronic filing methods in place of paper filing.
Section 2 adds a new section, AS 23.20.021,
authorizing the legislature to appropriate money into
the unemployment trust fund account.
Section 3 adds a new section, AS 23.20.279, to bring
the state into conformity with federal law, Public Law
112-40, by prohibiting the relief of charges to
employers when an erroneous payment of unemployment
insurance benefits is made due to an established
pattern of the employer, or an agent of the employer,
for failing to respond timely or adequately to a
documented request for information relating to a claim
for unemployment compensation. This section defines
"erroneous payment" as a payment made that would not
have otherwise been paid, but was due to the failure
of the employer to respond timely or adequately. This
section also defines "pattern of failing" as two or
more times or 2% or more of all requests, whichever is
greater, during the prior year.
Mr. Dick noted that conforming to the federal requirements
was necessary for the state to qualify for the 90 percent
Federal Unemployment Tax Act (FUTA) credit. He said that
the tax credit was 6 percent and that Alaskan employers
received a 90 percent credit. He shared that employers paid
10 percent of the tax, .6 percent, rather than the full 6
percent. He warned that losing the credit would result in
an additional yearly payment total of $378, per employee,
collectively resulting in a $115 million hit to Alaska's
economy. He said that an additional benefit of the credit
was that it required the state to deposit 30 percent of
penalty collections into the unemployment insurance trust
fund. He explained that currently, 100 percent of the
penalties went into the General Fund; the 30 percent
provision would result in more money in Alaska's
unemployment insurance trust fund, which would ultimately
help employers.
Mr. Dick continued with the sectional analysis:
Section 4 amends AS 23.20.290(c) by adding the word
"surcharge" following the words "fund solvency
adjustment".
Mr. Dick explained that when calculating the unemployment
insurance checks the department used a base calculation
that examined the state's benefits over the prior three
years. He said that there was additional provision in
statue that had a target of 3 to 3.3 percent for the trust
fund. He relayed that the two components added together
determined the unemployment insurance tax rate for the
state. He continued:
Section 5 repeals and reenacts AS 23.20.290(f),
replacing a table method for determining fund solvency
adjustment surcharges with a more precise calculation
method. It also eliminates the 0.3 limitation on fund
solvency adjustment surcharge decreases in a single
year.
Mr. Dick relayed that the section removed a table currently
in statute and replaced it with verbiage took the
calculation of the solvency adjustment for .10 percent to
.100 percent. He said that would make the trust fund
solvency adjustment consistent with the base rate as
calculated to the .100 percent. He added that it would make
for more precise calculations and would remove the current
0.3 decrease limitation. He shared that Alaska was one of
three states where the employee and the employer paid into
the unemployment trust fund. He underscored that the bill
would not affect the amount of training funds that went
into the Statewide Training and Employment Program (STEP)
and the Technical Vocational Education Program (TVEP)
training funds.
Mr. Dick continued with the sectional analysis:
Section 6 adds a new section, AS 23.20.291,
authorizing the commissioner to suspend, in whole or
in part, increases in unemployment tax rates when the
"average high cost multiple," a measure of solvency
calculated by the U.S. Department of Labor, Employment
and Training Administration, is 0.8 or greater and
after consultation with the department's actuary.
Mr. Dick explained that the suspension would not be
automatic and would require the action of the commissioner
to suspend the increase. He said that this would allow for
flexibility to adjust rates when the trust fund was
healthy. He said that the fund was currently at $251
million. He noted the sunset date in Section 10.
Mr. Dick continued with the sectional analysis:
Section 7 amends AS 23.20.390(f) to bring the state
into conformity with federal law, Public Law 112-40,
by removing the department's authority to waive the
collection of a penalty established due to
misrepresentation and requires that a minimum of 30%
of the unemployment insurance penalties collected due
to misrepresentation be deposited into the state's
unemployment trust fund account.
Section 8 adds new section, AS 23.20.486 to authorize
the department to offset unemployment compensation
debt against a claimant's federal income tax refund.
This section would allow the state to participate in
the federal treasury offset program.
Mr. Dick said that the change would allow the state to
offset federal tax income tax returns against unemployment
insurance liabilities. He shared that the department
estimated $500,000 in additional collections.
Mr. Dick stated that the remaining sections pertained to
effective dates:
Section 9 amends AS 23.20.520, by adding a new
paragraph to define "covered unemployment compensation
debt" in accordance with the federal statutory
definition.
Section 10 effective July 1, 2016 repeals AS
23.20.291, added by section 6 of this bill.
Section 11 amends state uncodified law by specifying
that AS 23.20.279, added by section 3 of this bill,
applies to overpaid benefits established after October
21, 2013.
Section 12 specifies that the department will adopt
necessary regulations to implement changes.
Regulations will not be effective prior to July 1,
2013.
Section 13 establishes that section 12 takes effect
immediately.
Section 14 establishes the effective date for the
remaining sections of this Act as July 1, 2013.
1:59:32 PM
Senator Hoffman asked whether the 30 percent deposit into
the unemployment insurance was fixed.
Mr. Dick replied that federal law required a least 30
percent.
2:00:11 PM
Senator Hoffman wondered whether other states had
contemplated a higher percentage.
Mr. Dick responded that he was not aware what other states
were doing.
2:00:18 PM
Senator Hoffman queried why the minimum of 30 percent had
been chosen.
Mr. Dick deferred the question to Ms. Pallesen.
2:00:44 PM
AESHA PALLESEN, ASSISTANT ATTORNEY GENERAL, STATE OF
ALASKA, ANCHORAGE (via teleconference), understood that the
30 percent amount was chosen because that was the number
necessary to meet federal requirements. She said that she
had advised the department to choose 30 percent in order to
meet federal compliance.
2:01:52 PM
Senator Hoffman probed the additional benefits if the state
paid a higher percentage.
Ms. Pallesen was unsure that increasing the percentage rate
of what went into the trust fund would result in the state
receiving additional federal monetary benefits.
2:02:28 PM
Senator Hoffman thought that if the funds went into the
trust fund, rather than the general fund, there could be
more dollars for the STEP and TVEP programs.
Ms. Pallesen responded that under the federal regulations
the 30 percent of penalties collected could not go into the
general fund.
2:03:28 PM
Senator Hoffman responded that he understood. He believed
that it the percentage were to be raised then there would
be more money to invest in training programs, instead of
going into the General Fund, which would benefit the
state's workforce.
Ms. Pallesen deferred the question to the Department of
Labor and Workforce Development.
2:04:09 PM
Senator Hoffman restated his question.
Mr. Dick stated that the training program funds came from
the employee contributions and that the monies under
discussion were penalty funds.
Senator Hoffman asked where the 30 percent would go.
Mr. Dick replied that currently, all of the money collected
just on the penalties went into the General Fund. Under the
legislation, 30 percent of the collections would go into
the unemployment insurance trust fund, and 70 percent would
go to the General Fund.
Senator Hoffman asked if employer rates could be reduced.
2:05:36 PM
Mr. Dick responded in the affirmative. He said that an
increase in the rate would increase revenues into the trust
fund and mitigate the tax rates.
2:06:03 PM
Senator Bishop asked which section of the bill the
department could live without.
Mr. Dick responded the department felt that all of the
provisions of the bill were critical.
2:07:10 PM
Co-Chair Meyer asked if there was a time constraint on the
legislation.
Mr. Dick replied that state conformance was required by
October 21, 2013.
2:07:35 PM
Vice-Chair Fairclough asked how long the state had been out
of compliance.
Mr. Dick replied that the state was not out of compliance
until October 21, 2013. He stated that the federal
government understood that the changes would need to go
through the legislative process and gave states 2 years to
meet compliance.
2:08:29 PM
Co-Chair Meyer wondered what would happen if the state did
not comply.
Mr. Dick responded that the state would lose the FUTA tax
credit, which was 90 percent of the tax rate and equated to
$378 per employee, per year.
2:09:30 PM
Co-Chair Meyer OPENED public testimony.
Co-Chair Meyer CLOSED public testimony.
2:10:02 PM
Vice-Chair Fairclough discussed the two fiscal notes
attached to the bill. She noted the increase in $500,000
FY14 through FY19. She wondered if the note should be
updated to reflect the changing of the sunset date to 2016.
Vice-chair Fairclough MOVED to REPORT CS HB 76(FIN) out of
committee with individual recommendations and the
accompanying fiscal notes. There being NO OBJECTION, it was
so ordered.
CS HB 76(FIN) was REPORTED out of committee with a "do
pass" recommendation and with previously published fiscal
impact note: FN4 (LWF); and previously published zero
fiscal note: FN3 (LWF).
2:12:06 PM
AT EASE
2:19:32 PM
RECONVENED
| Document Name | Date/Time | Subjects |
|---|---|---|
| SB 13 30068 - DOTPF KABATA Final Digest.pdf |
SFIN 4/12/2013 1:30:00 PM |
SB 13 |
| SB 13 KABATA Audit Conclusions Findings and Recommendations.pdf |
SFIN 4/12/2013 1:30:00 PM |
SB 13 |
| SB 13 KABATA Audit.pdf |
SFIN 4/12/2013 1:30:00 PM |
SB 13 |
| SB 13 Traffic Study FAQ April 2013 (2)1.pdf |
SFIN 4/12/2013 1:30:00 PM |
SB 13 |