04/26/2022 03:30 PM Senate STATE AFFAIRS

           SB 195-PAY INCREASES FOR EXEMPT EMPLOYEES                                                                        
                                                                                                                                
3:54:16 PM                                                                                                                    
CHAIR SHOWER announced the consideration of SENATE BILL NO. 195                                                                 
"An  Act   relating  to  the   compensation  of   certain  public                                                               
officials,  officers, and  employees  not  covered by  collective                                                               
bargaining agreements; and providing for an effective date."                                                                    
                                                                                                                                
CHAIR  SHOWER asked  the sponsor  to  give the  committee a  high                                                               
level summary of the bill.                                                                                                      
                                                                                                                                
3:54:37 PM                                                                                                                    
SENATOR JESSEE  KIEHL, Alaska State Legislature,  Juneau, Alaska,                                                               
sponsor of SB  195, stated that this is a  catchup bill for state                                                               
workers who  are not represented by  a union. It provides  a five                                                               
percent pay increase  spread equally over two  years. This brings                                                               
the pay for  these state workers up to the  last round of general                                                               
government  employee  pay  increases.  This  will  be  the  first                                                               
adjustment  these employees  have received  since 2015.  He noted                                                               
that during  a previous  hearing he  incorrectly stated  that the                                                               
bill  affects all  Department of  Law (DOL)  employees. The  bill                                                               
would cover all the attorneys at the Department of Law; the non-                                                                
attorneys in that department are mostly represented by a union.                                                                 
                                                                                                                                
SENATOR REINBOLD recalled a similar  bill in 2014 and the average                                                               
cost  was $10  million.  She  relayed her  concern  was that  the                                                               
private  sector  was  struggling  and their  voice  wasn't  being                                                               
heard. She  said she was  reserving judgment pending a  review of                                                               
the fiscal note.                                                                                                                
                                                                                                                                
3:57:23 PM                                                                                                                    
SENATOR KIEHL  responded that  there are  just over  2,800 exempt                                                               
and partially  exempt employees statewide. The  fiscal note shows                                                               
an $8.6  million cost the first  year, $5.78 million of  which is                                                               
unrestricted general fund  (UGF). The total cost  the second year                                                               
is  $8.8  million.  These  costs reflect  a  modest,  total  five                                                               
percent, increase for  workers who have not had  a pay adjustment                                                               
since 2015.                                                                                                                     
                                                                                                                                
SENATOR  KIEHL said  he  was pleased  to see  that  wages in  the                                                               
private sector  were increasing because  it was past due.  He was                                                               
also pleased  to see that  the economy was beginning  to recover.                                                               
He agreed that  private sector business have  been struggling and                                                               
they deserve empathy.  He said it's noteworthy that  even as they                                                               
struggle, many  are raising  wages for  their employees,  and for                                                               
more than  what is  proposed in  SB 195.  He reiterated  that the                                                               
bill is  a catch  up, but not  on par with  the increases  in the                                                               
private sector.                                                                                                                 
                                                                                                                                
SENATOR REINBOLD  spoke about the  disparity between a  37.5 hour                                                               
week  job  with  benefits  and  the  relentless  hours  and  huge                                                               
responsibilities for the owner of  a private sector business. She                                                               
recalled hearing that  about 75,000 jobs were lost  over the last                                                               
two years  due to COVID-19,  and noted  that she wasn't  aware of                                                               
even one  "bureaucratic job"  that was  lost. She  questioned the                                                               
timing of the proposal.                                                                                                         
                                                                                                                                
4:01:36 PM                                                                                                                    
SENATOR KIEHL  said he  didn't disagree  that the  private sector                                                               
had struggled,  but he did  not agree  with the point  that these                                                               
exempt and partially exempt state  employees work just 37.5 hours                                                               
a week. These  employees are not represented by a  union, a large                                                               
majority   are  not   overtime  eligible,   many  of   them  work                                                               
significantly more than  the 37.5 hour state  contract work week,                                                               
and that additional time is not compensated.                                                                                    
                                                                                                                                
SENATOR  KIEHL  clarified that  he  was  not  trying to  draw  an                                                               
equivalence. SB  195 is about  how the legislature, as  the board                                                               
of directors  for the State  of Alaska, addresses an  inequity in                                                               
the pay  of legislative  and some  executive and  judicial branch                                                               
employees.                                                                                                                      
                                                                                                                                
SENATOR  REINBOLD responded  that her  point was  that union  and                                                               
non-union workers  were getting raises while  small businesses in                                                               
the  state were  getting wiped  out. She  agreed that  many state                                                               
employees work  more than  37.5 hours per  week, but  that wasn't                                                               
her point.  The point  was that  private sector  businesses don't                                                               
have anybody  looking out for  them and  it's not wise  to ignore                                                               
their needs.                                                                                                                    
                                                                                                                                
SENATOR KIEHL restated that Senator  Reinbold was not wrong about                                                               
the suffering  in the private  sector. He  expressed appreciation                                                               
for the  legislative efforts  to reopen  tourism and  opined that                                                               
everyone  in  the room  was  focused  on  and committed  to  work                                                               
together on economic recovery.                                                                                                  
                                                                                                                                
4:04:13 PM                                                                                                                    
SENATOR HOLLAND  noted that  the fiscal  note reflected  the $8.6                                                               
million cost  for the  first 2.5 percent  increase in  FY2023 and                                                               
$8.8 million  for the second  2.5 percent increase in  FY2024. He                                                               
asked whether the  reason that FY2024 didn't  show the cumulative                                                               
cost of  $17.4 million was that  the first year cost  would be in                                                               
the base budget in the second year.                                                                                             
                                                                                                                                
SENATOR KIEHL replied  that his analysis was  correct. When fully                                                               
implemented,  the total  cost of  the five  percent increase  was                                                               
about $17 million.                                                                                                              
                                                                                                                                
4:05:47 PM                                                                                                                    
CHAIR SHOWER stated  he would hold SB 195 in  committee to ensure                                                               
all the committee member's questions were answered.                                                                             
                                                                                                                                
SENATOR KIEHL said he would be  happy to answer any questions the                                                               
members  may  have  either  in  the office  or  during  the  next                                                               
hearing.