Legislature(2001 - 2002)
04/03/2001 08:05 AM House STA
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* first hearing in first committee of referral
+ teleconferenced
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+ teleconferenced
= bill was previously heard/scheduled
HB 198-GOV SALARY; PUB OFFICERS RETIREMENT COLA Number 0112 CHAIR COGHILL announced that the first order of business would be HOUSE BILL NO. 198, "An Act relating to a post-retirement pension adjustment and cost-of-living allowance for persons receiving benefits under the Elected Public Officers Retirement System; and increasing the compensation of the governor." Number 0149 REPRESENTATIVE BILL HUDSON, Alaska State Legislature, came forward to testify as sponsor of HB 198. He said HB 198 corrects a long-standing inequity in the retirement benefit calculations for a group of public employees who retired between January 1 and October 14, 1976. Every other person who has retired under the Public Employees Retirement System or Teachers Retirement system has received an automatic cost of living adjustment in retirement benefits based on the consumer price index. But there are about 35 people who retired under the Elected Public Officers Retirement System (EPORS) who have never received a single cost of living increase, and Representative Hudson said that needs to be corrected. "It's basic fairness," he said. Now, an increase of about 40 percent is needed to make up the difference. REPRESENTATIVE HUDSON said the second aspect of the bill is to increase the governor's salary, which has not changed since 1983, when it was increased to $81,648. The intent at that time was to set the governor's salary at a Range 30, Step F. However, when the legislature set the dollar amount, that amount took precedence over the salary schedule. Again, he said, the issue is basic fairness. He noted that the governor's annual salary now is less than that paid to his chief of staff, deputy chief of staff, legislative director, or to a department director. CHAIR COGHILL indicated his intention to hear the testimony of former Governor Jay Hammond that day and then to hold HB 198 for further hearing and discussion on another day. Number 0710 FORMER GOVERNOR JAY HAMMOND came forward to testify in support of HB 198. He said he thinks a good case can be made for correcting what has been largely an oversight. There has been enormous erosion in the value of the retirement benefits he and others receive. He cited a recent AARP report that over the past 17 years, the price of goods bought by the general public rose 73.9 percent while the price of goods bought by seniors rose 85.1 percent. During that entire time, there has been no change in retirement income for those who, like him, retired under EPORS. His retirement salary, worth $80,000 when he retired, is now worth $32,000 in today's dollars. His retirement package provides a reduced benefit to his wife on his demise. Her retirement income now would be worth roughly $6,000, and as she could outlive him by 10-20 years, that income will be worth "virtually nothing." GOVERNOR HAMMOND explained that the problem is compounded because the Elected Public Officials' Retirement System (EPORS) was structured on a formula that adjusted retirement income in relation to the current salary for the retiree's position. Since there has been virtually no change in the governor's salary ... since 1978, the governor's retirement income has eroded much more than that paid to those who retired under the Public Employees' Retirement System (PERS). The PERS employees receive not only the cost of living increments that other state employees receive, but also a 10 percent cost of living differential for living in Alaska. GOVERNOR HAMMOND acknowledged that for any increase to be palatable to the public, it has to be at reasonable expense, equitable, and politically acceptable. He did not know exactly what the cost might be, but said he thought it could be cut substantially if the legislature were to limit eligibility to those who are at least 70 years old or to those who have not received a cost-of-living adjustment for at least 10 years. He thought most people would readily accept the fact that some adjustment might be appropriate for anybody who hasn't received a cost of living increase in 10 years. GOVERNOR HAMMOND said he frankly thinks there ought to be adjustments across the board in regard to "all sorts of things," although HB 198 probably wouldn't be the appropriate vehicle for doing all of it. He noted that there are three co-equal branches of state government. "You would think, then, that the heads of those co-equal branches would be similarly compensated," he observed. Yet the basic judge's salary is $112,000, and "it seems to me at the very minimum the governor ought to get roughly the same as a judge," he said. He also thinks legislators, who serve one-third of the year, ought to have their salaries boosted to one-third of $112,000. GOVERNOR HAMMOND said he believes it would be possible to increase the governor's salary in the manner proposed by HB 198 without it costing the state one nickel. "All you would have to do is say, all right, the governor's salary goes to $110,000 [as per HB 198] provided, however, we're going to charge him $30,000 for room and board and the use of a free vehicle." That would not increase the impact on the state budget at all, he said. He also suggested adjusting the legislative budget so a legislator could take the $6,000 expense accounts as an addition to his or her salary. The same might be done with the per diem allowance, which some people are reluctant to draw. "As a consequence you've got an inequity among how you people are compensated," he noted. "I think to remove some of these inequities and create something that treats everybody essentially the same is well warranted," he said. "And I think it would be well-accepted by the public." However, he said, he did not want to clutter up HB 198 by putting all those elements into it. GOVERNOR HAMMOND said most people think the governor makes at least $100,000 or $120,000, and "they're appalled to find out that it's much less than hundreds if not thousands of public employees," he said. "Anything you can do to remedy this will be gratefully appreciated by all involved." CHAIR COGHILL said according to Representative Hudson, there are 35 people who would be affected by HB 198. REPRESENTATIVE HUDSON expressed hope that HB 198 could be moved forward soon, noting that there are less than six weeks remaining in the session. CHAIR COGHILL suspended the hearing and testimony on HB 198.
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