02/10/2004 01:31 PM Senate L&C

          SB 276-ALASKA INSURANCE GUARANTY ASSOCIATION                                                                      
                                                                                                                              
CHAIR CON BUNDE announced SB 276 to be up for consideration.                                                                    
                                                                                                                                
SENATOR GARY  STEVENS moved to  adopt CSSB 276(L&C),  version 23-                                                               
GS2105\H.                                                                                                                       
                                                                                                                                
SENATOR FRENCH objected for purposes of discussion.                                                                             
                                                                                                                                
CHAIR BUNDE recapped that, from  the insurance point of view, Ms.                                                               
Hall had  told the  committee about  the necessity  for spreading                                                               
the premium  as wide  as possible, even  requiring people  who do                                                               
not directly  benefit from the  Guaranty Fund to  contribute. The                                                               
proposed CS  removes any additional  assessment and has  a letter                                                               
of intent  suggesting that the  shortfall be made up  from excess                                                               
earnings  of  the  Permanent  Fund.  It  is  the  intent  of  the                                                               
Legislature  to   spread  the  appropriations  to   the  Workers'                                                               
Compensation program over  the course of five years  to cover the                                                               
projected  shortfalls:  $5,800,000  for 2004  and  $8,800,000  in                                                               
2005. This year's fiscal note is for $8,890,700.                                                                                
                                                                                                                                
SENATOR  FRENCH continued  his objection  stating that  he shared                                                               
their desire  to solve  this problem, but  the general  fund and,                                                               
ultimately,  the Constitutional  Budget Reserve  (CBR) would  pay                                                               
for the shortfall.                                                                                                              
                                                                                                                                
CHAIR BUNDE responded that going  to the general fund seemed more                                                               
logical than dunning people who  can't directly benefit. He said,                                                               
"It may  be also an  illustration of a personal  philosophy about                                                               
how those monies in the earnings  reserve really ought to be used                                                               
for."                                                                                                                           
                                                                                                                                
SENATOR STEVENS said he has  heard from many communities that are                                                               
self insured  in joint insurance  arrangements who would  be very                                                               
seriously  affected   by  paying   additional  premiums   and  he                                                               
appreciated their being taken out of the mix.                                                                                   
                                                                                                                                
MS.  HALL  commented  that for  philosophical  reasons,  she  had                                                               
presented  him  with  alternatives  that  didn't  draw  on  state                                                               
monies.                                                                                                                         
                                                                                                                                
     These are unpopular; they are  controversial and I hear                                                                    
     from those same people  that Senator Stevens refers to.                                                                    
     That  to me  is a  public policy  call that  I think  I                                                                    
     would prefer  not to  comment on.... I  want to  have a                                                                    
     piece in our legislation to  make sure we never go back                                                                    
     where we are.  I don't want the letter  again that says                                                                    
     we're   going   to    prorate   workers'   compensation                                                                    
     claims.... I would  like to keep the  ability, at least                                                                    
     of   the  Alaska   Industrial   Development  &   Export                                                                    
     Authority (AIDEA)  to guarantee  a loan should  we ever                                                                    
     get in a  situation again if there were  changes to the                                                                    
     bill.                                                                                                                      
                                                                                                                                
CHAIR BUNDE said he would be  happy to put the reference to AIDEA                                                               
back into the bill.                                                                                                             
                                                                                                                                
SENATOR FRENCH  said he maintains  his objection to  the proposal                                                               
although he understands the chair's intention.                                                                                  
                                                                                                                                
CHAIR  BUNDE said,  because  two members  of  the committee  were                                                               
missing, he  would like to  wait until  next Tuesday to  pass the                                                               
bill out, but wanted to vote on the adoption of the CS.                                                                         
                                                                                                                                
Senators Stevens  and Bunde voted  yea; Senator French  voted nay                                                               
and CSSB 276(L&C) was adopted.                                                                                                  
                                                                                                                                
CHAIR BUNDE  said that he would  hold the letter of  intent until                                                               
next week, as well.