Legislature(2003 - 2004)
05/15/2003 08:39 AM House FIN
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE BILL NO. 305
An Act relating to the calculation and payment of
unemployment compensation benefits; and providing for
an effective date.
REPRESENTATIVE TOM ANDERSON explained that HB 305 would
provide for an 8.2% increase to the maximum weekly
unemployment benefit amount. The increase, phased in over a
three-year period, minimizes the impact to employers,
employees, and the Unemployment Insurance (UI) Trust Fund.
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Alaska currently ranks 47 in the nation with a maximum
weekly benefit of $248 dollars. Alaska would rank at an
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estimated 28 in the nation when the maximum weekly benefit
is increased to $308 in 2006. The fully increased maximum
benefit amount would be available to claimants earning
$34,250 or more per year.
Representative Anderson pointed out that the full impact of
the increase in benefit costs would not be reflected in the
employer tax rates until 2010. When the cumulative impact
of the increased benefit costs is included in the tax rate
calculation by 2010, the average employer tax rate would
increase by 0.17% and the average employee tax rate would
only increase by 0.04%.
Alaska's unemployment benefits assist Alaskans who find
themselves temporarily without work. The benefits are
distributed back into the local economy, which in turn
maintains economic stability for communities, business, and
workers. HB 305 will enable Alaskan workers to weather
periods of economic downturn and alleviates skill shortages
by keeping trained workers in State.
GREG O'CLARAY, COMMISSIONER, DEPARTMENT OF LABOR AND
WORKFORCE DEVELOPMENT, spoke to the legislation. He noted
that the bill before the Committee was identical to the one
that overwhelmingly passed the House two years ago except
for the effective date. The last increase had been cut in
half. The Governor requested a compromise. The handout
outlines the amount of dollars that would potentially re-
enter the economy from the unemployment program.
He referenced the handout. (Copy on File). Unemployment
payments total $40 million dollars per year for only the
Anchorage municipality; in Mat-Su Borough that number totals
nearly $50 million dollars. He pointed out that nearly $28
million dollars goes out of State. Much of that money
results from skilled workers who cannot afford to stay in
Alaska because of high costs. One of the Department's
directives from the Governor was to focus on creating good
jobs with good pay for the Alaskan workforce. Commissioner
O'Claray advised that over the next five years, 30% of the
skilled workforce would be retiring. The new Division of
Business Partnerships was created to help address the
concerns for training workers in Alaska.
HB 350 was crafted by a coalition of labor and management.
He pointed out that two sectors choose not to attend because
of conflict. Those are the parties that are holding the
legislation up in the "other body". The bill proposes a
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modest increase. The State of Alaska currently ranks 47 of
the 50 states in the amount paying toward UI benefits. The
proposed amounts do not include a "dependant allowance" of
$24 dollars per dependant with a maximum of 3. Commissioner
O'Claray emphasized that the proposed legislation was part
of the economic plan to retain skilled workers.
Co-Chair Harris noted that he supports the bill. He asked
for a breakdown of who pays for the benefits. Commissioner
O'Claray explained that the employer pays 80% of the costs
while the employees contribute 20%. The first increase
would not take affect until 2005; the maximum an employer
pays with the increase would be about $5 dollars per year
per employee.
Co-Chair Harris pointed out that the sponsor statement
indicates that Alaska ranks 47th in the nation in the rate
paid for UI benefits and that with passage of the bill,
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Alaska could rank around 27. The estimated cost-of-living
differential in the State of Alaska ranges around 22.5%. He
admitted that there is speculation regarding the number as
it differs throughout the country.
JOHN BROWN, PRESIDENT, FAIRBANKS CENTRAL LABOR COUNCIL,
FAIRBANKS, testified that the Labor Council is in "strong"
support of HB 305. He noted that it is important to have a
viable unemployment system to help retain qualified workers.
It is very important to have people trained in running
equipment. Without a viable UI system, the State will loose
qualified workers. Mr. Brown urged passage of the bill from
Committee.
DON ETHERIDGE, ALASKA AFL-CIO, JUNEAU, voiced strong support
for the proposed legislation. He reiterated that all
interested parties had an opportunity to come to the table
to work out concerns. Everyone that participated reached an
agreement.
Co-Chair Harris asked when the last unemployment benefit had
been raised. Mr. Etheridge thought that it was five or six
years ago.
Representative Stoltze asked who had not come to the
negotiating table. Mr. Etheridge replied that the Alaska
State Chamber did not participate.
JEFF ACHERMAN, OPERATING ENGINEERS & ANCHORAGE CENTRAL
COUNCIL, ANCHORAGE, testified that they do support passage
of the bill. Construction work is seasonal employment. The
legislation will help people throughout the State that work
in construction, fishing and tourism industry by providing a
much-needed increase.
PAM LABOLLE, PRESIDENT, ALASKA STATE CHAMBER OF COMMERCE,
JUNEAU, clarified that the State Chamber had not boycotted
the meetings. The meetings were scheduled at the same times
that the House Judiciary and Senate Judiciary committees
met. Ms. LaBolle indicated that the Chamber would support
an increase; however, on the third step, they would
recommend that it only be increased ½ way.
Ms. LaBolle identified the increase costs to the employers.
At the current tax rate, the increase would be 8%, which
would be $44 dollars per employee by the time the full
increase was in effect. She understood that the State was
self insured for unemployment insurance costs. The Alaska
Railroad has indicated that the proposed increase would cost
them around $550 thousand dollars.
Ms. LaBolle spoke to the dependent benefit amount. The goal
of the UI program nationally is that 50% of the wage be
replaced by the benefit amount. With the benefit amount
included for three dependents, Alaska would be at the $320
per week amount. With the increase, Alaska will rank in the
top 25%. She pointed out that 44% of the dependents claimed
received benefits this past year. Alaska is one of only 12
states that offer dependant coverage. She stated that the
lower amount would be adequate since Alaska is one of the
easiest State's to get UI benefits from, which differs from
other State's I which claimants must show that they are
actively seeking employment.
Ms. LaBolle stated that the State Chamber would support some
increase, however, the proposed amount places a burden on
the employer.
Representative Berkowitz pointed out that at one time, the
Chamber supported the $320 maximum. Ms. LaBolle explained
that was the amount proposed last year and that the Chamber
did not support it, but instead would have supported the
first step around $273 dollars.
Representative Berkowitz questioned why no one from the
Chamber had participated in any of the discussions. Ms.
LaBolle reiterated that she was the only staff person that
the State Chamber has that could address this type of issue.
A new employee was hired at the end of session for
specifically attending these types of activities. The State
Chamber has a small staff.
Representative Stoltze questioned which issue was more
important to the State Chamber, the Consumer Price Index
(CPI) increase or HB 305. Ms. LaBolle listed issues of
importance: the UI increase, the CPI and HB 255.
Representative Stoltze asked if there were concerns that
would affect the membership more drastically. Ms. LaBolle
responded that the impact for the proposed increase would be
felt within 2 to 6 years; the more immediate impact would be
the CPI.
Co-Chair Harris inquired when the CPI index would take
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effect. Commissioner O'Claray replied on January 1, 2004.
Representative Hawker asked what the State Chamber believes
the appropriate increment should be. Ms. LaBolle advised
that last year, they had agreed to go ½ through the second
step. The proposed bill would take the State ½ through the
rd
3 step. Ms. LaBolle added that there has been no fiscal
note prepared to indicate the impact on the State.
Representative Hawker acknowledged that the level proposed
by the State Chamber was substantially less than proposed
through the legislation. He noted his concern that if the
Chamber had felt so strongly on the issue, why hadn't they
rearranged their priority schedule to be able to attend the
meetings. Ms. LaBolle explained that only three people from
management had been invited to participate. Those areas
were construction, tourism services and the State Chamber.
The first two have the greatest turnover in employment. She
did not know the ultimate plan and noted that she had no
input for scheduling the meetings.
BARBARA HUFF TUCKNESS, DIRECTOR OF LEGISLATIVE AND
GOVERNMENT AFFAIRS, GENERAL TEAMSTERS, LOCAL 959, ANCHORAGE,
advised that she had been present for the discussions on the
bill. The meetings attempted to attain a compromise for
unemployed workers. She pointed out that the bill was a
compromise. It has received full support from the general
teamsters. She added that she had participated in some of
the meetings via teleconference. Ms. Huff Tuckness
acknowledged that everyone was busy at that time of year but
realized that the message from the Department of Labor was
one of compromise.
The unemployment insurance program offers an economic buffer
against the ripple effect of unemployment. In Alaska, the
maximum weekly benefits have increased four times in the
last 20 years. The last increase was in 1997 and the
payments are made to eligible participants. There are
specific eligibility requirements that must be met to
qualify for the benefits. The benefit is not intended to
replace the wage but does act as a partial benefit intended
to cover shelter, food and clothing for those workers. She
addressed the economic benefits to the State.
Representative Stoltze asked if the Alaska UI program had a
requirement to show that people were actively looking for
work. Ms. Huff Tuckness understood that there was an
eligibility requirement both by the State and federal. She
deferred the question to the Department of Labor & Workforce
Development.
ROYCE ROCK, (TESTIFIED VIA TELECONFERENCE), CARPENTERS
UNION, ANCHORAGE, spoke in support of the bill. He advised
that Alaska is one of the few states in which the employees
pay a part of their UI benefit. He urged that the bill pass
from Committee.
DICK CATTANAUGH, (TESTIFIED VIA TELECONFERENCE), EXECTUTIVE
DIRECTOR, ASSOCIATION OF GENERAL CONTRACTORS, ANCHORAGE,
noted that he was part of the committee that worked on the
legislation and that the process had been fair. The cost
will amount to about a 1% increase per year. He encouraged
the Committee to support the bill.
Vice-Chair Meyer noted that he did support the UI program,
however, voiced concern with the combination to increase
minimum wage, a potential sales tax, alcohol tax, increase
to business license fees and with this legislation an
increase to the unemployment compensation. He warned it
could create an unbalanced situation, shifting too much
economic burden to the small business.
Commissioner O'Claray advised that it is the Governor's
intent to grow the State's economy by producing good jobs
with good pay. HB 305 does not register much to employer
costs. The first increment of cost on average would be $5
dollars per employee per year.
Vice-Chair Meyer MOVED to report HB 305 out of Committee
with individual recommendations and with the accompanying
fiscal note. There being NO OBJECTION, it was so ordered.
HB 305 was reported out of Committee with a "do pass"
recommendation and with zero note #1 by Department of Labor
& Workforce Development.
TAPE HFC 03 - 95, Side B
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