05/18/1999 01:21 AM Senate FIN

                                                                                                                                
 HOUSE BILL NO. 87                                                                                                              
"An Act relating to money credited to the account of                                                                            
the state in the unemployment trust fund by the                                                                                 
Secretary of the Treasury of the United States; and                                                                             
providing for an effective date."                                                                                               
                                                                                                                                
                                                                                                                                
This was the second hearing for this bill in the Senate                                                                         
Finance Committee. The bill was held awaiting information                                                                       
to be provided by Rebecca Gamez, Director, Division of                                                                          
Employment Security, Department of Labor, regarding the                                                                         
Reed Act. That information was now before the members.                                                                          
(Copy on file.)                                                                                                                 
                                                                                                                                
Co-Chair John Torgerson briefly overviewed the answers to                                                                       
the Committee's earlier questions posed to Ms. Gamez. The                                                                       
first question asked if the Reed Act funds need to be                                                                           
appropriated annually to cover the three year (1999, 2000,                                                                      
2001) distributions. Ms. Gomez answered, "No. The bill                                                                          
provides for an effective date when it is signed into law                                                                       
and a sunset date of September 30, 2000. The fiscal note                                                                        
indicates should Alaska accept the federal Reed Act                                                                             
distribution, it will go into capital expenditures. We                                                                          
expect to expend the Reed Act distributions over a three-                                                                       
year period on our $2.6 million CIP project (UI Tax                                                                             
Redesign) that was approved by both legislative bodies this                                                                     
session. Should the distributions not cover the entire CIP                                                                      
project, the remainder will be covered by our operations                                                                        
budget."                                                                                                                        
                                                                                                                                
Co-Chair John Torgerson referred to another question he had                                                                     
asking if other unemployment insurance program funds would                                                                      
be available for re-appropriation if this bill passes. To                                                                       
answer, he quoted from a Directive issued by the US                                                                             
Department of Labor entitled "Unemployment Insurance                                                                            
Program Letter No. 44-97", which was provided by Ms. Gamez.                                                                     
(Copy on file.) The directive states, "States will need to                                                                      
amend their laws to implement the special Reed Act                                                                              
transfers.." Co-Chair John Torgerson continued quoting                                                                          
elsewhere in the directive, "Reed Act moneys transferred                                                                        
with respect to these fiscal years may be used only to pay                                                                      
expenses incurred by the state for the administration of                                                                        
its UC law. Unlike previous Reed Act transfers, states are                                                                      
prohibited from using the amounts transferred with respect                                                                      
to these three years for the payment of UC or the                                                                               
administration of state public employment offices."                                                                             
                                                                                                                                
There was no further discussion on the bill.                                                                                    
                                                                                                                                
Co-Chair Sean Parnell offered a motion to report HB 87 from                                                                     
Committee.  There was no objection and the bill was                                                                             
REPORTED OUT with individual recommendations and                                                                                
accompanying zero fiscal note from the Department of Labor.