03/21/2014 09:00 AM Senate FINANCE

SENATE BILL NO. 182                                                                                                           
                                                                                                                                
     "An Act  relating to  salary differences  in collective                                                                    
     bargaining agreements subject  to the Public Employment                                                                    
     Relations Act  that are  based on  a difference  in the                                                                    
     cost  of  living outside  the  state  and the  cost  of                                                                    
     living  in the  state; and  providing for  an effective                                                                    
     date."                                                                                                                     
                                                                                                                                
9:27:50 AM                                                                                                                    
                                                                                                                                
Vice-chair Fairclough MOVED to  ADOPT the proposed committee                                                                    
substitute  for  SB  182,  Work  Draft  28-LS1432\O  (Wayne,                                                                    
3/19/14). There being NO OBJECTION, it was so ordered.                                                                          
                                                                                                                                
Ms. Marasigan explained the two  changes made in the CS. She                                                                    
noted  the first  change found  on page  2; section  3 where                                                                    
additional language  was included under  "transition, salary                                                                    
differences  and  collective   bargaining  agreements."  The                                                                    
change  allowed  a  person  eligible on  June  30,  2014  to                                                                    
receive  a cost-of-living  differential  under AS  23.40.210                                                                    
that shall  remain eligible on  and after July 1,  2014. She                                                                    
noted that the  second change included a  new effective date                                                                    
of July 1, 2014.                                                                                                                
                                                                                                                                
Co-Chair  Meyer  understood that  the  changes  in the  bill                                                                    
would only affect new employees.                                                                                                
                                                                                                                                
Ms.   Marasigan  concurred.   She  stated   that  additional                                                                    
testimony   was    available   from   the    Department   of                                                                    
Administration.                                                                                                                 
                                                                                                                                
Co-Chair Meyer asked the sponsor for comments about the CS.                                                                     
                                                                                                                                
SENATOR FRED DYSON (via  teleconference), commented that the                                                                    
bill  caused  angst  for  employees  of  the  Alaska  Marine                                                                    
Highway System. The perception was  the employees would lose                                                                    
a significant  portion of their  salary benefit  package. He                                                                    
hoped that the CS would  lessen the anxiety for the existing                                                                    
employees.  He  opined  that  the  changes  resulted  in  an                                                                    
improvement in the legislation for existing employees.                                                                          
                                                                                                                                
9:31:03 AM                                                                                                                    
                                                                                                                                
Senator Olson asked  about the fiscal impact  of the changes                                                                    
made in the bill.                                                                                                               
                                                                                                                                
Senator Dyson stated that he  did not have an updated fiscal                                                                    
note for the  CS. He stated that  the administration brought                                                                    
the problem to the attention  of his office. He mentioned an                                                                    
anomaly  in  the  state  law;  three  bargaining  units  had                                                                    
established  the  Cost  of  Living  Differential  (COLD)  in                                                                    
statutes based  on the difference  in the cost of  living of                                                                    
Alaska to  Seattle. The administration pointed  out that the                                                                    
differential  was obsolete  and  the intention  was for  all                                                                    
Alaskan bargaining units utilized  the same differential. He                                                                    
mentioned   anomalies   that   were   unjustified   by   the                                                                    
differences in the  cost of living leading  to greater state                                                                    
expense. He  noted that bargaining with  renewable contracts                                                                    
were in process.                                                                                                                
                                                                                                                                
Senator  Dyson acknowledged  that  employees were  concerned                                                                    
with   the   loss.   He  expressed   confidence   that   the                                                                    
administration  would  provide   a  competitive  salary/wage                                                                    
benefit  package.  He  discussed various  measures  of  good                                                                    
management. He  believed that  North America  realized great                                                                    
competition  for employment  in  the  maritime industry.  He                                                                    
discussed  the large  amount  of freight  moving  by sea  to                                                                    
Alaska. He noted  that the current statute  was obsolete and                                                                    
differed greatly from other bargaining units.                                                                                   
                                                                                                                                
9:35:20 AM                                                                                                                    
                                                                                                                                
Senator  Olson   requested  an  example  of   an  antiquated                                                                    
statute.  He  assumed that  COLD  displayed  that living  in                                                                    
Alaska was more expensive than Seattle.                                                                                         
                                                                                                                                
Senator Dyson  concurred. He noted  that using Seattle  as a                                                                    
base was no longer valid.                                                                                                       
                                                                                                                                
Senator  Olson  asked  for  an   example  of  an  antiquated                                                                    
statute.                                                                                                                        
                                                                                                                                
Senator Dyson  replied that  the bill  addressed the  law in                                                                    
statute on the basis for the regional COLD.                                                                                     
                                                                                                                                
9:36:37 AM                                                                                                                    
                                                                                                                                
NICKI  NEAL,  DIRECTOR,  DIVISION  OF  PERSONNEL  AND  LABOR                                                                    
RELATIONS introduced herself to the committee.                                                                                  
                                                                                                                                
NANCY  SUTCH, DEPUTY  DIRECTOR,  DIVISION  OF PERSONNEL  AND                                                                    
LABOR  RELATIONS,  DEPARTMENT OF  ADMINISTRATION  introduced                                                                    
herself to the committee.                                                                                                       
                                                                                                                                
Ms. Neal  replied to Senator  Olson's questions  regarding a                                                                    
comparison  between Seattle  and Alaska.  She mentioned  the                                                                    
most  recent  geographic  differential study  in  2008  that                                                                    
determined no  significant difference between  Anchorage and                                                                    
Seattle.                                                                                                                        
                                                                                                                                
9:37:57 AM                                                                                                                    
                                                                                                                                
Vice-Chair Fairclough  asked about a presentation  about the                                                                    
benefit  package  to  compare different  mechanisms  of  the                                                                    
proposed contracts.                                                                                                             
                                                                                                                                
Ms.  Neal   replied  that  she   was  happy  to   provide  a                                                                    
presentation if requested by the committee.                                                                                     
                                                                                                                                
Vice-Chair  Fairclough revealed  that  the  CS would  garner                                                                    
less  opposition  if   greater  explanations  occurred.  She                                                                    
recalled recent presentations used  to educate the committee                                                                    
and public. She requested  further details for the contracts                                                                    
and how  they compare  to other state  collective bargaining                                                                    
contracts. She  believed that the committee  was responsible                                                                    
for reviewing  all payrolls  to better  understand statewide                                                                    
collective bargaining agreements and obligations.                                                                               
                                                                                                                                
9:39:50 AM                                                                                                                    
                                                                                                                                
Ms.   Neal  offered   to  provide   presentations  for   the                                                                    
committee.                                                                                                                      
                                                                                                                                
Co-Chair Meyer  believed that the concerning  aspects of the                                                                    
bill were altered with the most recent CS.                                                                                      
                                                                                                                                
Senator  Olson  asked  about  the  reason  for  the  initial                                                                    
statute.                                                                                                                        
                                                                                                                                
Ms.  Neal replied  that language  in  the current  statutory                                                                    
provision  spoke   to  creating  the   differential  between                                                                    
Seattle and Alaska.  At the time of  the statute's creation,                                                                    
the  cost   of  living   between  Seattle  and   Alaska  was                                                                    
significantly different.                                                                                                        
                                                                                                                                
Senator Olson asked how many  employees of the Alaska Marine                                                                    
Highway System lived in Anchorage.                                                                                              
                                                                                                                                
Ms. Neal replied that she was unable to give exact figures.                                                                     
                                                                                                                                
9:41:16 AM                                                                                                                    
                                                                                                                                
Senator  Olson  asked  where   most  Alaska  Marine  Highway                                                                    
employees lived.                                                                                                                
                                                                                                                                
Ms. Neal  replied that approximately  29 percent  of members                                                                    
of the  Marine Engineer Beneficial Association  lived out of                                                                    
state,  while 71  percent  lived in  state.  In the  Masters                                                                    
Mates and  Pilots Union, approximately 23  percent lived out                                                                    
of  state,  while  77  resided   in  state.  In  the  Inland                                                                    
Boatmen's Union, 91 percent of  the members lived in Alaska,                                                                    
while 9 percent lived out of state.                                                                                             
                                                                                                                                
Senator Dunleavy asked if the  fiscal note would be adjusted                                                                    
with the CS.                                                                                                                    
                                                                                                                                
Co-Chair Meyer stated  that a new fiscal  note would reflect                                                                    
the CS.                                                                                                                         
                                                                                                                                
9:42:48 AM                                                                                                                    
                                                                                                                                
Senator Bishop  discussed the art of  collective bargaining.                                                                    
He  understood   that  the  administration   was  undergoing                                                                    
negotiations.                                                                                                                   
                                                                                                                                
Ms. Neal  concurred that the administration  was negotiating                                                                    
with all three bargaining units.                                                                                                
                                                                                                                                
Senator Bishop observed that the  bill might stress the good                                                                    
faith efforts made in the negotiation process.                                                                                  
                                                                                                                                
Co-Chair Meyer asked how the negotiations were proceeding.                                                                      
                                                                                                                                
Ms. Neal  discussed proposals made  to each  union including                                                                    
grandfathering  in   current  employees.  She   stated  that                                                                    
agreements  had  not  yet   been  reached.  She  appreciated                                                                    
Senator Bishop's observations.                                                                                                  
                                                                                                                                
9:44:43 AM                                                                                                                    
                                                                                                                                
Senator Dyson addressed the question  about the state having                                                                    
a law in  process that changed the rules.  He mentioned that                                                                    
a lawyer  from Department  of Law  specialized in  labor law                                                                    
spoke about federal employment laws.  He recalled that there                                                                    
was  no problem  with  the state  changing  statutes in  the                                                                    
midst  of  negotiations.  He recalled  that  contract  dates                                                                    
would be  completed in  negotiations before  the law  was in                                                                    
effect. The law in place  when the contracts were signed was                                                                    
most  applicable.   He  discussed the  question  of COLD  in                                                                    
state  statute   as  a  fair  method   of  establishing  the                                                                    
geographical cost-of-living differentials.                                                                                      
                                                                                                                                
JOSHUA BANKS,  STAFF, SENATOR DYSON, stated  that an opinion                                                                    
letter  from  the  Department  of  Law  civil  division  was                                                                    
provided in  members' packets. He stated  that the assistant                                                                    
attorney general  provided a letter.  He offered  to provide                                                                    
additional copies.                                                                                                              
                                                                                                                                
9:47:36 AM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
9:49:23 AM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
Co-Chair  Meyer apologized  that public  testimony would  be                                                                    
rescheduled  for  next  week. He  explained  that  committee                                                                    
members had  been called to  the Senate Floor. He  wished to                                                                    
continue  public  testimony for  SB  182  on Monday  of  the                                                                    
following  week. He  hoped  that  committee member  concerns                                                                    
were addressed in the CS.                                                                                                       
                                                                                                                                
SB 182 was HEARD and HELD in committee for further                                                                              
consideration.