Legislature(2005 - 2006)HOUSE FINANCE 519
03/14/2006 01:30 PM House FINANCE
| Audio | Topic |
|---|---|
| Start | |
| HB365 | |
| HB366 | |
| HB409 | |
| HB190 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HB 365 | TELECONFERENCED | |
| *+ | HB 366 | TELECONFERENCED | |
| + | HB 190 | TELECONFERENCED | |
| + | HB 409 | TELECONFERENCED | |
| + | HB 471 | TELECONFERENCED | |
| + | TELECONFERENCED |
HOUSE BILL NO. 409
"An Act relating to excluding qualified real estate
licensees from workers' compensation coverage."
REPRESENTATIVE BOB LYNN, sponsor, addressed the purpose of
HB 409, which is to exclude real estate licensees from
workers' compensation coverage. He noted that he is
currently a licensed real estate broker acting as an
associate broker. He related that every state has laws
governing real estate licenses. Most real estate licensees
in Alaska are independent contractors. They are licensed
under a broker, but they operate as "independent
contractors", paying for all of their own expenses. They do
not receive a wage, salary, or benefits. They control and
decide what days and hours they will work and pay for
business expenses such as licensing fees, continuing
education, advertising, long-distance phone calls, and
business insurance on their vehicles. They often pay for
their own computer and other office equipment, and quarterly
estimated income tax and social security tax. Real estate
licensees operate an independent business within a business,
controlling their own hours of work. The IRS recognizes
them as independent contractors and the state should
likewise.
1:54:38 PM
Representative Holm asked for more information about how the
real estate business works with brokers and their
associates. Representative Lynn responded that brokers can
list themselves independently. A sales associate must
operate under a broker. A broker receives a commission,
such as 40 percent of the sales. Representative Holm asked
what the broker offers to the associate broker for their
cut. Representative Lynn replied that the broker oversees
transactions as they apply to state law.
Representative Holm asked how workers' compensation applies
to the hierarchical nature of the industry. He wondered, if
real estate licensees cannot work on their own, why they
wouldn't qualify for workers' compensation. Representative
Lynn explained the difference between a broker's license and
a sales associate license. He emphasized that sales
associates are not employees. Representative Holm restated
the question to compare a sales associate's job to a car
salesman who gets a percentage of the sales. Representative
Lynn clarified that a real estate sales associate does not
get a salary, only a commission.
2:00:48 PM
Representative Kerttula wondered if there has ever been a
workers' compensation claim filed by a licensee.
Representative Lynn said he does not know.
Representative Hawker noted that this situation regarding
independent contractors and workers' compensation is a
pervasive problem. He wondered why the bill was limited to
the real estate industry. Representative Lynn agreed that
other areas could be looked at later. He chose to limit
the bill to real estate licensees.
2:02:50 PM
DAVE FEEKEN, ALASKA ASSOCIATION OF REALTORS, KENAI, stated
that the bill would clarify a confusing issue that his
organization has been working on. He noted that the
Department of Labor recognizes the status of independent
contractors and exempts them from workers' compensation
coverage. The relationship in a brokerage firm between the
broker and licensee meets the standards of independent
contractor. The IRS recognized this relationship for tax
purposes in the 70's as self-employed. The broker does not
withhold taxes on commissions earned by the licensees. The
licensee is responsible for filing quarterly returns. This
does not mean that a brokerage firm would not carry workers'
compensation insurance for staff, personal assistants, and
hourly employees. It only exempts licensees with a written
independent contract agreement with the broker. He
concluded that the Department of Labor, the director of
workers' compensation, and the real estate commission
support the bill.
Representative Kerttula asked if there had ever been any
workers' compensation claims by licensees against realtors.
Mr. Feeken said there have only been a few. He recalled one
instance of a person slipping on the ice when showing a
house and collecting compensation for two weeks.
Representative Kerttula summarized that it seems to be
related to the type of work done, rather than the job title.
2:06:37 PM
PAUL LISANKIE, DIRECTOR, DIVISION OF WORKERS COMPENSATION,
DEPARTMENT OF LABOR, agreed to answer questions.
Representative Kerttula asked if Mr. Lisankie thought there
was a risk, with the passage of this bill, of leaving
employees out who qualified for workers' compensation. Mr.
Lisankie replied that part of the problem is there has to be
a written agreement that identifies the relationship between
the worker and the employee. What happens sometimes is that
people believe, due to the paperwork that they have filled
out, that they have an independent contractor relationship.
But at some later point, someone is unsatisfied with that
view and may want an injury considered by the workers'
compensation board. Another example would be if an
insurance company audits premiums on the office staff
insurance and determines that the associate brokers are
employees and should be subject to a back premium. It is
the uncertainty that causes problems.
Representative Kerttula asked if that is true for many
professions. Mr. Lisanke agreed that it applies to other
occupations as well.
2:10:16 PM
Representative Foster MOVED to REPORT CSHB 409 (L&C) with
individual recommendations and with the accompanying zero
fiscal notes. There being NO OBJECTION, it was so ordered.
CSHB 409 (L&C) was REPORTED out of Committee with a "no
recommendation" and with zero note #1 by the Department of
Commerce, Community and Economic Development and with zero
note #2 by the Department of Labor and Workforce
Development.
2:11:06 PM
HOUSE BILL NO. 471
"An Act amending the Knik Arm Bridge and Toll Authority
Act and the powers and authority of the authority, and
making conforming changes to statutes relating to
issuance, renewal, or reinstatement of driver's
licenses and to levy on permanent fund dividends; and
providing for an effective date."
Representative Stoltze MOVED to ADOPT the work draft to HB
471, labeled 24-LS1670\Y, Kane, 3/3/06. There being NO
OBJECTION, it was so ordered.
REPRESENTATIVE BILL STOLTZE, sponsor, reported that this
bill sets up the mechanisms for when money is provided for
the Knik Arm Bridge project. It does not request funds for
the project, but sets up the bonding and toll mechanisms.
He termed it an innovative means of achieving this public
project by leveraging private sector funds to construct a
toll bridge across the Knik Arm and connect the municipality
of Anchorage and the Matanuska-Susitna.
2:14:30 PM
GEORGE WUERCH, EXECUTIVE DIRECTOR, KNIK ARM BRIDGE & TOLL
AUTHORITY (KABATA), introduced the others who were available
to answer questions. He congratulated the legislature for
adopting the state's first toll authority in 2003. He spoke
of a specific responsibility related to that legislation
which requires KABATA to set a debt ceiling. KABATA
requested a $500 million cap on its debt, an amount in
response to the governor's budget. He suggested it is a
workable number to finance that which is needed to begin the
project.
WILLIAM GREEN, PROJECT COUNSEL, KNIK ARM BRIDGE & TOLL
AUTHORITY, referred to a packet made available to the
members of the committee entitled "Knik Arm Bridge and Toll
Authority Presentation" (copy on file). HB 471 is a product
of several efforts. The CS contains recommendations and
additions made by the State Bond Council. In 2003 the
legislature charge KABATA to build a bridge across Knik Arm.
Federal funds have been made available to this project,
which includes the bridge and all access approaches. It has
always been understood by KABATA that other funding would be
necessary, such as revenue bonds. Visits with other state
Departments of Transportation and toll facilities, and
discussions with senior representatives with the Federal
Highway Administration and their loan programs, have
provided information about other funding sources. He termed
the bill a good and unique toll authority statute. He
offered clear and specific suggestions for financing
options.
2:22:18 PM
Mr. Green clarified the purposes of the bill: to clean up
language in state statutes and to assure and give competence
to public and private financing sectors that KABATA has the
authority it needs to enter into financing arrangements.
The bill serves to "fill in the blank" of the original
statute to request the level of revenue bonds to be issued.
He offered to review the proposed bill: It provides
authority to KABATA to set the amount of the bridge tolls.
It provides authority to enter into public-private
partnerships for the construction, maintenance and operation
of the toll bridge. It authorizes obtaining non-recourse
loans from the U.S. DOT's TIFIA loan program. It sets the
dollar of non-recourse revenue bonds that may be issued and
refunded. It provides means for the collection of tolls and
other obligations owing KABATA in the operation of the toll
bridge. He concluded that it is a housekeeping bill.
2:24:52 PM
TOM BOUTIN, DEPUTY COMMISSIONER, DEPARTMENT OF REVENUE,
offered to answer questions.
Representative Kerttula noted that the statute says that the
bonds issued by the Authority are not going to be a
liability of the state. She wondered what happens if there
was not enough funding within the Authority. Mr. Boutin
described the language as standard, stand-alone, revenue
bond language. The bond holders and KABATA would not have
the ability to give the bond holders a pledge of anything
other than the rates and fees and reserve funds associated
with the facility. There would not be a way to penetrate
the revenues and funds on hand for a bondholder to get the
general fund or any other funds of the state. These bonds
would not carry the moral obligation of the state. They are
stand-alone revenue bonds of a state agency that are
independent.
Representative Kerttula asked for an example of a bond that
does not carry a moral obligation by the state. Mr. Boutin
related that International Airport Revenue Bonds are an
example of stand-alone revenue bonds.
Representative Stoltze summarized that the risk is to the
investor who is buying the bonds. Mr. Boutin agreed.
2:28:37 PM
HOPE LOUISE CERMELJ, ALASKA ELDER VOTERS, spoke about her
participation on the Petition Trail Campaign. She testified
in opposition to HB 471. She termed it a $600 million
project of which $94 million will be appropriated by the
federal government, a large decrease from $240 million. She
referred to the last page of the bill, which states that
persons can lose their permanent fund if their toll is
unpaid. She suggested that the toll could be as high as $12
round trip. She proposed that seniors and veterans receive
a toll exemption or compensation to use this facility. She
spoke about the loss of the longevity bonus.
Co-Chair Meyer noted that gas prices are high, which makes
the toll seem reasonable.
2:32:48 PM
EMILY FERRY, ALASKA TRANSPORTATION PRIORITIES PROJECT,
stated relief that the contract is being tightened down, but
voiced concern about strengthening KABATA's authority to
bond. She referred to a handout of KABATA's 2005 Annual
Report (copy on file) that shows a graph of anticipated
project spending. $200 million would be from the bond
revenue, which is one-third of the cost of the bridge if it
is $600 million. She mentioned that there have been
estimates of up to $1.5 billion for the same project. She
noted $94 million from the federal government and $50
million from the general fund for Mat-Su road improvements.
That still leaves $256 million unfunded. She questioned
where that money would come from. She suggested that other
projects that depend on general fund money may be left
short.
Co-Chair Meyer closed public testimony.
Mr. Wuerch concluded that the issue before the committee is
to grant KABATA the authority to proceed with private and
public financing. The rest of the funding issue would come
later. There will be roughly $100 million in public money.
He pointed out that toll facilities are subject to rigorous
public scrutiny.
2:37:40 PM
Representative Kerttula asked why the right to garnish the
permanent fund dividend was included. Mr. Wuerch replied
that is just a mechanism of collecting debt to the state.
KABATA is not asking for police power, but to set fees.
Agencies can enforce collection of the tolls.
Representative Kerttula cautioned to use good sense when
dealing with permanent funds.
2:38:53 PM
Mr. Green addressed the permanent fund concern and
speculated how high the toll bill would have to be before
collection was enacted. He suggested that discretion would
be used for leans against the PFD. The PFD provisions do
provide for use as a lean for all debts. Representative
Kerttula said she would check into how many state agencies
have that authority.
2:40:09 PM
Representative Foster MOVED to REPORT CSHB 471 (FIN) out of
Committee with individual recommendations and with the
accompanying two new zero fiscal notes. There being NO
OBJECTION, it was so ordered.
2:41:30 PM
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