Legislature(2021 - 2022)BARNES 124
03/31/2021 03:15 PM House LABOR & COMMERCE
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| Audio | Topic |
|---|---|
| Start | |
| HB126 | |
| HB111 | |
| HB151 | |
| HB111 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 111 | TELECONFERENCED | |
| *+ | HB 126 | TELECONFERENCED | |
| += | HB 151 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
HB 151-UNEMPLOYMENT BENEFITS FOR COVID-19
4:27:50 PM
CO-CHAIR FIELDS announced that the final order of business would
be HOUSE BILL NO. 151, "An Act relating to unemployment benefits
during a period of state or national emergency resulting from a
novel coronavirus disease (COVID-19) outbreak; and providing for
an effective date."
4:28:41 PM
REPRESENTATIVE SPOHNHOLZ moved to adopt Amendment 1, labeled 32-
LS0704\B.4, Wayne, 3/31/21, which read as follows:
Page 2, line 28:
Delete "This"
Insert "Section 1 of this"
Page 2, following line 28:
Insert a new bill section to read:
"* Sec. 5. Section 2 of this Act is repealed
March 31, 2022."
Renumber the following bill sections accordingly.
4:28:44 PM
CO-CHAIR FIELDS objected for the purpose of discussion
4:28:45 PM
REPRESENTATIVE SPOHNHOLZ explained that, because HB 151 was
designed to align with the American Rescue Plan Act of 2021
(ARPA), the original expiration date of all provisions was in
September. However, she said, unemployment rates in Alaska
begin to rise in September, and she expressed wanting the "per
dependent" benefit to extend to one year hence, allowing time
for a broader update of the unemployment insurance (UI) program
in the state. She said that she wants to ensure that people
with children aren't penalized because the proposed legislation
is aligned with a federal act.
4:29:49 PM
CO-CHAIR FIELDS expressed his agreement with Amendment 1 and
withdrew his objection.
4:29:51 PM
REPRESENTATIVES MCCARTY and KAUFMAN objected.
4:30:03 PM
REPRESENTATIVE MCCARTY shared his perspective that HB 151 is
intended to be a "transition" bill to taper the UI program. He
said that there would be later opportunity to draft legislation
to make permanent changes to the UI program.
4:30:38 PM
REPRESENTATIVE KAUFMAN said that his concern is that both HB 151
and Amendment 1 would not incentivize people to go back to work
and business to resume. He characterized actions taken by the
legislature as "doubling down that we are in an emergency" and
expressed concern about detrimental effects on businesses that
are "trying to get people to come back to work." He shared that
he has spoken with business owners who expressed the idea that
people won't return to work because "they're comfortable where
they are for the time that the money's flowing."
4:32:00 PM
REPRESENTATIVE NELSON asked whether Amendment 1 would change the
fiscal note.
4:32:43 PM
LENNON WELLER, Economist, Research and Analysis Section,
Department of Labor and Workforce Development, answered that
modeling the extension through the six-month period of April
through September would add approximately $13.5 million to the
total chargeable benefit costs. If the $75 per dependent
benefit was extended through the end of March 2022, he said, the
total cost would be $21.2 million.
4:34:16 PM
PATSY WESTCOTT, Director, Division of Employment and Training
Services, Department of Labor and Workforce Development,
concurred with Mr. Weller's response.
4:34:35 PM
REPRESENTATIVE NELSON asked whether the $21.2 million would be
reimbursed by the federal government.
MS. WESTCOTT responded that the benefits don't technically come
out of the "state coffers," they come out of the unemployment
insurance trust fund. The resulting impact would be more
dollars out of the trust fund, potentially having an impact on
tax rates in future years. She stressed that the money is not
from the general fund, then deferred to Mr. Weller.
4:35:40 PM
MR. WELLER noted that, given the state's overall costs and
solvency, any additional outlays would impact tax rates in
future years. He said, "Any roughly $10 million draw out of the
fund will bring it down by roughly one-tenth of a percentage
point." He noted that September is an important month because
it's the month used to determine the reserve ratio, and
explained that one-tenth of a percentage point would be directly
added to employers' solvency taxes for the calendar year 2022.
4:37:06 PM
REPRESENTATIVE SPOHNHOLZ pointed out that Mr. Weller said that
the provision would cost an addition $8 million over the course
of six months to prevent a "benefits cliff" for people who have
children and are on unemployment. She also pointed out that the
UI fund is not a public assistance benefit, but an insurance
fund that every employee pays into. She recalled the March 29,
2021, testimony of Nolan Klouda with the Center for Economic
Development at the University of Alaska Anchorage, during which
he expressed that there does exist anecdotal evidence of people
reducing their work because of UI, but statistically speaking,
that is not the case. She said, "Receiving unemployment
insurance benefit does not reduce people's interest in working.
People want to work. Alaskans want to work. You get meaning,
you get dignity that comes with it." She stressed that one-
third of those receiving UI benefits have children and
commensurate expenses. Regarding Representative McCarty's
assertion that the per-dependent benefit under HB 151 is a
"transition piece," she said that under the current draft of the
proposed legislation, the provision would expire in September
and that a special session would be required for the legislature
to act. She stated, "Therefore, I think that it seemed like the
responsible thing to do, to ensure that people with children
continue to get this higher benefit level while we come back and
do a deeper dive on what should an updated unemployment
insurance benefit look like moving forward, this seemed like a
modest compromise."
4:39:25 PM
REPRESENTATIVE SNYDER asked whether it would be correct to say
that, regardless of the repeal date listed, the provision is in
effect so long as there is a national or state emergency due to
the COVID-19 outbreak.
4:40:01 PM
MEGAN HOLLAND, Staff, Representative Ivy Spohnholz, Alaska State
Legislature, responded that HB 151 is drafted in such a way that
the benefits will end on the repeal date. She noted that, as
there is no state emergency declaration in place, an end to the
national emergency would end the benefits.
4:40:36 PM
REPRESENTATIVE NELSON recapped the discussion and asked Ms.
Westcott whether DOLWD supports Amendment 1.
MS. WESTCOTT replied that DOLWD is "neutral" on the proposed
legislation.
REPRESENTATIVE NELSON asked about DOLWD's view of Amendment 1.
MS. WESCOT replied that DOLWD is "neutral" on Amendment 1.
4:42:05 PM
REPRESENTATIVE KAUFMAN restated his earlier remarks about
business owners' belief that people are refusing to return to
work. He opined that it's not the UI benefits that are
incentivizing people to not work, but the cumulative funding,
including emergency relief. He stated that he also has an
"issue" with the existence of a national emergency declaration
because the situation may not affect Alaska, yet would still
"trigger benefits."
4:43:27 PM
CO-CHAIR FIELDS asked Ms. Westcott whether there are statistics
on "refusal to work" issues.
MS. WESTCOTT answered that DOLWD began tracking pandemic-
specific data on March 1, 2020, and she said the department has
received a little over 3,000 reports of what she called "refusal
of suitable work" issues. The vast majority of those were
cleared, she said, because the offer of work was either
unsuitable or it wasn't a genuine offer of work. Of those 3,000
reports, she said, 398 fact-finding investigations concluded
that the offer of work was not suitable, and there have been 208
"refusal of suitable work" issues denied.
4:45:14 PM
REPRESENTATIVE MCCARTY asked Ms. Westcott to confirm the
difference between federal and state UI.
MS. WESTCOTT replied that the Federal Unemployment Tax Act
(FUTA) has provisions providing for the administrative funding
for the UI program, and the collection of tax contributions at
the state level to fund the UI trust fund. Employers in Alaska
pay the FUTA tax, which provides funding for the administration
of the program, and they also pay a state contribution tax,
which supplies the funds to the UI trust fund in order to pay
benefits.
REPRESENTATIVE MCCARTY remarked that he is a business owner, so
he understands. He then asked whether the $13.5 million for the
per-dependent allowance extension would come out of the state UI
trust fund.
MS. WESTCOTT replied yes, and explained that since the allowance
for dependents is a state provision, any benefit that Alaska
pays out would come from the UI trust fund.
REPRESENTATIVE MCCARTY stated his perception that, due to the
COVID-19 pandemic, "the employers' contribution to the
unemployment insurance has gone up almost a full percent to
employers, but not to the employees."
MS. WESTCOTT replied that she doesn't know how much the tax
rates have increased, and deferred to Mr. Weller.
MR. WELLER answered that in 2020 the average rate class for
employers was the statutory minimum of 1 percent, and the
average rate class is 1.41 percent in 2021. He explained that
there are 20 rate classes, ranging from a minimum rate of 1
percent for rate classes one through five, and 2.07 percent for
rate class 20. He said, "It is potentially true that you could
have had a doubling, or a full percentage point increase, in
your tax rate, but you would have had to have been in tax class
20, meaning that you would have had to have some pretty
significant swings, or fluctuations, in your payroll, so you
were likely a highly seasonal employer, meaning your employees,
or former employees, are likely drawing significant dollars from
the fund."
4:49:41 PM
REPRESENTATIVE SPOHNHOLZ clarified that the federal money from
ARPA funds would only apply to the waiver of the one-week
waiting period. She also stated that the committee has heard
research presented that the federal relief funds increased
consumer spending by 44 percent. She then pointed out that the
$600 per week federal wage replacement, which was so concerning
to employers, expired last July. She shared her understanding
that there is an amount that an employers' tax rate for UI can
increase, and that it can only be increased three-tenths of a
percent per increment, so it couldn't double in a short period
of time.
4:51:00 PM
A roll call vote was taken. Representatives Fields, Spohnholz,
Schrage, and Snyder voted in favor of Amendment 1.
Representatives Nelson, Kaufman, and McCarty voted against it.
Therefore, by a vote of 4-3, Amendment 1 was adopted.
4:51:49 PM
CO-CHAIR FIELDS opened public testimony on HB 151.
4:52:03 PM
CARA DURR, Director of Public Engagement, Food Bank of Alaska,
presented a statement [included in the committee packet] in
support of HB 151, which read as follows [original punctuation
provided]:
During the pandemic, hunger has increased
dramatically. Map the Meal Gap, which is a research
project of Feeding America, estimates that food
insecurity in Alaska has increased 32% in 2020.
Looking at children specifically, hunger has increased
44%. The Kulsilvak Census Area has emerged as the most
food insecure region of the country for kids during
the pandemic. Southeast Alaska, which typically
experiences lower levels of food insecurity, has seen
a huge jump in child food insecurity. Skagway, for
example, has seen an estimated 72% increase in child
food insecurity during the pandemic.
To meet these needs, Food Bank of Alaska and our over
150 agency partners statewide have worked incredibly
hard to source and distribute more food than ever
before. Food Bank distributed 43% more pounds of food
in the last six months of 2020, compared with the same
time frame in 2019. We are still experiencing
heightened levels of need, and we have seen record
numbers within multiple programs in just the last few
months. We anticipate that we will continue to see
elevated numbers for quite some time, even as things
related to the pandemic improve, as the economic
impacts will linger.
Hunger does not exist in a vacuum, and a lack of food
is a direct result of a lack of resources.
Unemployment insurance has been a critical resource
for so many Alaskans during this pandemic. Families
have been hit hard during this pandemic, as many have
struggled with the loss of income and a lack of
childcare options. This bill strengthens this resource
in important and targeted ways. While we have many
reasons to feel optimistic about the future, economic
recovery is not going to happen with the flip of a
switch and will likely be experienced unevenly by
different groups of people. The better we can support
Alaskans as we move towards recovery, the faster the
recovery will be, and the shorter our lines at the
food bank will be.
4:53:50 PM
TREVOR STORRS, President and CEO, Alaska Children's Trust,
testified in support of HB 151. He said that one of the most
effective ways of preventing child abuse and neglect is by
addressing the social determinants contributing to an
environment that promotes trauma and discourages building the
skills necessary to manage it. A key social determinant, he
said, is economic well-being. Alaska is ranked thirty-sixth in
the nation for overall child well-being, and thirty-fourth for
family economic well-being. He said that growing up in poverty
is a major barrier to healthy development and increases the
likelihood of poor academic, cognitive, and health outcomes. In
2019, he said, 14 percent of Alaska's children lived at, or
below, the federal poverty level, and 6 percent lived in
families experiencing "extreme" poverty, defined as 50 percent
of the federal poverty level. One quarter of children live in
households with a high housing cost burden, he said, and he
pointed out that these figures are all pre-pandemic. The
pandemic has magnified these issues, he said, and nearly 20
percent of adults living in households with children reported
"little or no confidence" in their ability to pay the next rent
or mortgage payment on time, and nearly 15 percent reported
"sometimes or often" not having enough food. He said that an
average of 38 percent of adults living in households with
children reported having difficulty paying for the usual
household expenses, and over 50 percent have lost their jobs
since March 2020. He said that HB 151 would directly provide a
measure of economic stability to Alaska's most vulnerable
families, and that without it, there would be greater strain on
families, thereby putting children at risk.
4:56:09 PM
CO-CHAIR FIELDS, after ascertaining that no one else wished to
testify, closed public testimony on HB 151.
4:56:23 PM
The committee took a brief at-ease.
4:56:30 PM
REPRESENTATIVE SCHRAGE moved to report HB 151, as amended, out
of committee with individual recommendations and the
accompanying fiscal notes.
4:56:48 PM
REPRESENTATIVE NELSON objected for the purpose of discussion.
REPRESENTATIVE NELSON asked Ms. Westcott whether there would be
an updated fiscal impact forecast.
MS. WESTCOTT said that the committee could be provided with
updated information.
REPRESENTATIVE NELSON said that he would like to wait for the
updated information before voting.
4:57:39 PM
CO-CHAIR FIELDS noted that the committee coordinated with DOLWD
on the fiscal impact of Amendment 1.
4:57:45 PM
MS. HOLLAND pointed out that even without a formal fiscal note,
the fiscal impact is clear. She recounted a conversation with
Mr. Weller and said that he characterized the fiscal impact
resulting from Amendment 1 as a "rather nominal change" from the
original version of the proposed legislation.
4:58:27 PM
CO-CHAIR FIELDS added that the committee looked at different
options for transitioning away from the elevated levels of
benefits, and the provisions in Amendment 1 had a "very modest"
impact on the fund.
MR. WELLER concurred with Co-Chair Fields' statement and said,
"The total difference went from about $13.5 million to $21.2
[million], the difference between the two being roughly $8
million total over that 12-month period." He said that under
either scenario he expects the fund to remain solvent.
CO-CHAIR FIELDS asked what the size of the fund is.
MR. WELLER replied that the latest balance was approximately
$265 million. Without the change, he said, he would expect the
March 2022 balance to be $285.2 million; with the change, the
March 2022 balance should be $263.4 million.
CO-CHAIR FIELDS said that the change would not affect
sustainability.
4:59:40 PM
REPRESENTATIVE KAUFMAN commented that this proposed legislation
would create a "local obligation" and said, "It was noted
earlier that the federal money is available for the first week
... but as amended, so that extends that period into a period
where that first week would not be funded federally." He
restated his perception that business owners are hurting and
that returning to work should be incentivized. He then said,
"There's so much federal money coming that I believe that [if]
it was properly applied, it could do much of the work that's
being expected of this bill, without creating the local
obligation." He stated that, even though he is sympathetic to
those who have lost their jobs, he does not support HB 151.
5:01:00 PM
CO-CHAIR FIELDS asked Ms. Westcott to clarify what would be
covered by federal funds.
MS. WESTCOTT stated that federal funds would continue to cover
the first week of benefits if a state has a waiting week waiver
provision. The way HB 151 was drafted, she said, the first week
of benefits would be federally funded through September 6, 2021.
She stressed that the provision for dependents, not the waiting
week provision, would affect the UI trust fund.
CO-CHAIR FIELDS pointed out that the provision for dependents is
$50 per week, which he characterized as approximately what it
costs to feed a child. He said, "We have an opportunity to
reduce childhood hunger," pointing out that his district has
seen "sharp" increases in child hunger and that it's difficult
for children to do well in school if they're hungry.
5:03:02 PM
REPRESENTATIVE KAUFMAN restated his perception that "there's so
much other money coming," and restated his belief that relief
funds disincentivizes returning to work.
5:03:41 PM
REPRESENTATIVE NELSON asked whether there would be a timeframe
for the updated fiscal note to be available.
MS. WESTCOTT replied that her staff would begin work on the
fiscal note now that the amendment has been adopted. She gave
the approximate timeframe of mid-afternoon the following day.
5:04:28 PM
REPRESENTATIVE SCHRAGE stated that he supports HB 151 and
recounted various points from the testifiers. He said, "I think
there is an argument to be said for making sure that folks are
motivated to get back to work, but given the numbers of families
that we see utilizing the food bank and struggling during this
time, I have a hard time believing that those families would
refuse a job, if offered one." He expressed that the proposed
legislation would allow the flexibility to smoothly navigate the
situation while helping those who most need it.
5:05:49 PM
REPRESENTATIVE MCCARTY stated his support for HB 151 and said,
"I, personally, as an employer, have witnessed two occasions
where people have refused work because they're making
unemployment money bigger than that, or they just like the
unemployment money and not going to work ... I witnessed it, I
have many employers have shared the same stories in my
district."
5:06:56 PM
REPRESENTATIVE KAUFMAN opined that one of the reasons for the
lines at the food banks is because businesses are shut down, and
he said that he's talked to businesses who could have operated
and hired people. He expressed the desire to take a more
"managed risk" to open the economy, and said that while it's
"great" to support people in times of need, what the committee
should be focusing on is commerce and getting businesses "back
to work." He said:
I'm taking the tough decision to say 'We need to start
looking at the differently,' and that goes all the way
from these wholesale disaster declarations which
enabled bills like this, to the concept that get
flowed down to the communities where they're all too
willing to shut things down because of fear, or
whatever the motivation may be. But we need to get
Alaska back to work.
REPRESENTATIVE KAUFMAN said that, with regrets, he cannot
support HB 151 as written or amended.
5:09:46 PM
REPRESENTATIVE SPOHNHOLZ stated that she supports Alaska being
"open for business" and said that no one in the legislature
wants Alaska to be closed. She said that she wants people to
have the opportunity for meaningful work, saying, "I just want
to be really clear that what people are describing when they're
saying that folks are declining work in order to continue to
collect unemployment benefits is, in fact, unemployment
insurance fraud, and that is prosecutable by law." She stated
that establishing a provision to take advantage of federal funds
and allow very modest, sustainable per-dependent benefits does
not enable people to break the law. She stressed that HB 151
would not increase benefits "across the board," but that the
per-dependent benefit would allow those who have children and
are not able to work should be able to get what she
characterized as a "modest" increase.
5:11:09 PM
A roll call vote was taken. Representatives Schrage, Snyder,
Nelson, Spohnholz, Fields, and McCarty voted in favor of
reporting HB 151, as amended, out of the House Labor and
Commerce Standing Committee. Representative Kaufman voted
against it. Therefore, by a vote of 6-1, CSHB 151(L&C) was
reported out of the House Labor and Commerce Standing Committee.