Legislature(2017 - 2018)BELTZ 105 (TSBldg)
04/14/2018 01:30 PM Senate LABOR & COMMERCE
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| Audio | Topic |
|---|---|
| Start | |
| HB301 | |
| HB170 | |
| HB142 | |
| SJR7 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | SJR 7 | TELECONFERENCED | |
| += | HB 170 | TELECONFERENCED | |
| += | HB 142 | TELECONFERENCED | |
| += | HB 301 | TELECONFERENCED | |
| + | TELECONFERENCED |
HB 142-UNEMPLOYMENT INSURANCE BENEFITS
4:04:11 PM
CHAIR COSTELLO reconvened the meeting and announced the
consideration of HB 142 relating to unemployment insurance
benefits. She requested a motion to adopt the proposed committee
substitute (CS).
4:04:38 PM
SENATOR MEYER moved to adopt the work draft Senate CS for CSHB
142, labeled 30-LS0530\T, as the working document.
4:04:52 PM
SENATOR GARDNER objected.
CHAIR COSTELLO noted who was available to answer questions, and
asked Ms. McClanahan to go through the explanation of changes.
4:05:39 PM
NATASHA MCCLANAHAN, Staff, Senator Mia Costello, Alaska State
Legislature, Juneau, Alaska, stated that she would introduce the
CS and then walk through the explanation of changes document.
She explained that the CS for HB 142 increases the current
maximum weekly benefit from $370 to $434. It also raises the
total gross income an individual must earn over two calendar
quarters of the base period from $2,500 to $3,000. These changes
strike a balance in providing additional benefits to the
unemployed while recognizing the impacts to the economy when
businesses face higher taxes.
MS. MCCLANAHAN paraphrased the following explanation of changes
document for HB 142, version R to version T:
Page 1, line 5 & Page 2, line 4
Changes the base required for eligibility to $3,000
from $2,500 for the base period covered by this
chapter. As the benefit is increased, the base for
eligibility is also increased to offer balance to
employees and employers who are the premium payers.
Page 8, lines 8 & 9
Changes the increase in the maximum qualifying wage
scale to $50,000. This allows for an increase to those
unemployed who qualify for benefits while lessening
the fiscal impact to employees and employers. Alaska
would move to the top half of states' maximum
benefits.
Version T removes Section 2 of version R regarding the
automatic calculation and administration of yearly
increases to the state's maximum weekly benefit
amount. This preserves the Legislature's authority to
examine increases.
4:07:21 PM
SENATOR GARDNER removed her objection.
CHAIR COSTELLO found no further objection and version T was
adopted. She opened public testimony on version T of HB 142.
4:08:06 PM
AL TAMAGNI Sr., Chair, Alaska Chapter of the National Federation
of Independent Businesses stated support for the proposed
changes appearing in version T of HB 142.
SENATOR MICCICHE asked if he was stating support for the changes
or the bill itself.
MR. TAMAGNI clarified that NFIB supports the Senate CS for HB
142, version T.
4:10:37 PM
HEIDI DRYGAS, Commissioner, Department of Labor and Workforce
Development, Juneau, Alaska, said she appreciates that the
committee recognizes that the current maximum weekly benefit
amount is insufficient, but the $64 increase reflected in the CS
is woefully inadequate, particularly when there is no provision
for upward adjustment. It means that Alaska will go from 52nd in
the nation on the wage replacement ratio to 49th. This is the
first increase in 10 years and it could be another 10-12 years
before the legislature addresses this issue again. Further,
increasing the minimum amount of the base year wages from $2,500
to $3,000 basically means that 100 Alaskans who would have
received a maximum weekly benefit of $56, will now get nothing.
She highlighted that the department's economist calculated that
the latter change wouldn't result in much savings to the trust
fund.
4:12:34 PM
SENATOR MEYER asked about the current status of the trust fund.
COMMISSIONER DRYGAS deferred the question to Mr. Weller.
SENATOR MEYER asked, based on the CS, how much more an employee
who makes $100,000 a year will have withdrawn from their check
each month.
COMMISSIONER DRYGAS deferred the question to Mr. Weller.
SENATOR MEYER said he'd be concerned if employees take a big hit
each month.
4:14:15 PM
LENNON WELLER, Economist and Actuary for the Unemployment
Insurance System, Research and Analysis Section, Department of
Labor and Workforce Development (DOLWD), Juneau, Alaska, advised
that the fund was solvent. At the end of February the trust fund
had a balance of $442.7 million. That equates to a 3.64 percent
reserve ratio. He reminded members that the goal was to have
between 3 percent and 3.3 percent of wages in reserve. He opined
that the current balance was sufficient to cover the array of
potential costs that the system may face.
SENATOR MEYER asked how the change proposed in the CS impacts
the trust fund.
MR. WELLER explained that changing the maximum weekly benefit
from $370 to $434 will not change employer and employee costs
for the next two years. In 2021, an employer will pay a maximum
additional $52 per employee making at or above the taxable wage
base. This is reduced to $47 in 2022 and increases to a $128
maximum difference in 2023.
SENATOR MEYER asked if that was per month.
MR. WELLER clarified it would be an annual difference. He
continued saying that the maximum difference between their base
line projection with this change is about $116 per employee
making at or above the taxable wage base for the average rate
tax class, which is classes 10 and 11.
SENATOR MEYER asked the additional amount an employee making
$100,000 in 2021 would pay.
MR. WELLER explained that wages are only taxed up to the taxable
wage base so the foregoing is the maximum they would pay for the
average tax class.
4:18:24 PM
COMMISSIONER DRYGAS added that Alaska's Unemployment Insurance
(UI) Trust Fund has been healthy since it was created. The way
the rates are calculated and solvency is determined has been
used as a model by other states. "It is a very well operating
trust fund."
SENATOR MEYER asked if in her opening comments she said that the
CS may jeopardize the health of the trust fund.
COMMISSIONER DRYGAS replied she did not say that. The trust fund
will remain healthy if the maximum weekly benefit is either $434
or $510.
4:19:42 PM
SENATOR MICCICHE calculated that the annual wages in Alaska are
somewhere around $12.159 billion if the $442.7 million in the UI
fund represents 3.641 percent of wages.
MR. WELLER agreed.
SENATOR MICCICHE asked if funding to 3 percent to 3.3 percent
was based on a national model.
MR. WELLER said a 3 percent to 3.3 percent reserve ratio was
determined to be adequate based on Alaska's history with
unemployment insurance.
He explained that the federal Department of Labor uses two
official values for trust fund adequacy. One is an average high
cost multiple that determines whether the reserves are
sufficient to handle three of a state's highest cost years as a
percentage of wages. The other value is the high cost multiple
which is essentially the year in which a state had the highest
costs as a percentage of wages covered throughout its entire
history. For Alaska, it was about 4.2 percent in the mid-1970s.
But over the last 30 years, the 3 percent to 3.3 percent reserve
ratio has been sufficient to handle the claims loads the UI
System has experienced. He opined that the targets for fund
solvency and financing have stood the test of time.
4:23:08 PM
SENATOR MICCICHE commented that recessions obviously matter
because statewide earnings are down about $1.5 billion over the
last couple of years.
4:23:36 PM
SENATOR STEVENS said he appreciates the Commissioner's concern
that the CS only boosts Alaska from 52nd to 49th in the nation
on the wage replacement ratio. He asked what it would take to be
25th in the nation.
MR. WELLER calculated that the average replacement rate would
th
need to be 42 percent to rank 25. He noted that the current
average replacement rate was just under 29 percent. With the CS,
the replacement rate would be 32 percent to 33 percent.
4:26:08 PM
At ease
4:26:13 PM
CHAIR COSTELLO reconvened the meeting and asked Ms. Kloster to
comment on the CS.
4:26:48 PM
KENDRA KLOSTER, Staff, Representative Chris Tuck, Alaska State
Legislature, Juneau, Alaska, said she agreed with Commissioner
Drygas's assessment of the CS. She expressed appreciation that
the committee recognized that UI benefits need to be increased.
However, the sponsor was concerned about removing Section 2 (the
automatic adjustment for wage replacement) because it had only
been updated once in 22 years. He was also concerned about
changing the base rate from $2,500 to $3,000. It will affect
about 100 Alaskans, mostly from rural areas.
CHAIR COSTELLO said your comments are noted.
4:28:21 PM
SENATOR MEYER moved to report the Senate CS for CSHB 142,
version T, from committee with individual recommendations and
attached fiscal note(s).
4:28:46 PM
CHAIR COSTELLO found no objection and SCS CSHB 142(L&C) moved
from the Senate Labor and Commerce Standing Committee.
| Document Name | Date/Time | Subjects |
|---|---|---|
| SCS CSHB170(L&C) Ver. R.pdf |
SL&C 4/14/2018 1:30:00 PM |
HB 170 |
| SCS CSHB170(L&C) Explanation of Changes Ver. O to R.pdf |
SL&C 4/14/2018 1:30:00 PM |
HB 170 |
| SCS CSHB142 (L&C) Version T.pdf |
SL&C 4/14/2018 1:30:00 PM |
HB 142 |
| SCS CSHB142 (L&C) Version R to T.pdf |
SL&C 4/14/2018 1:30:00 PM |
HB 142 |
| CS SJR 7 Version D.pdf |
SL&C 4/14/2018 1:30:00 PM |
SJR 7 |
| CS SJR 7 Explanation of Changes Ver. A to D.pdf |
SL&C 4/14/2018 1:30:00 PM |
SJR 7 |
| Supporting Document SCS CSHB142(L&C).pdf |
SL&C 4/14/2018 1:30:00 PM |
HB 142 |