Legislature(2005 - 2006)HOUSE FINANCE 519

04/11/2006 01:30 PM House FINANCE


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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
-- Recessed to 08:30 AM 04/12/06 --
+ HB 308 CALLER ID HACKERS TELECONFERENCED
<Bill Hearing Canceled>
+ HB 447 BROADCASTING PROMOTING CHARITABLE GAMING TELECONFERENCED
Moved CSHB 447(FIN) Out of Committee
+= HB 470 MANDATORY USE OF HEADLIGHTS TELECONFERENCED
<Bill Hearing Postponed>
+ HB 475 PUB EMPLOYEE & TEACHER RETIREMENT & SBS TELECONFERENCED
Scheduled But Not Heard
+ Bills Previously Heard/Scheduled TELECONFERENCED
+= HB 485 STATE PHARMACISTS/DOCTORS/AUDITOR EXEMPT TELECONFERENCED
Moved Out of Committee
+= HB 93 DENTISTS AND DENTAL HYGIENISTS TELECONFERENCED
Moved CSHB 93(FIN) Out of Committee
HOUSE BILL NO. 485                                                                                                            
                                                                                                                                
     "An  Act amending  the State  Personnel Act  to place  in                                                                  
     the exempt  service pharmacists  and physicians  employed                                                                  
     in the  Department of  Health and  Social Services  or in                                                                  
     the Department  of Corrections  and corporate  income tax                                                                  
     forensic  auditors   employed  by  the  division  of  the                                                                  
     Department  of Revenue  principally  responsible for  the                                                                  
     collection   and   enforcement   of   state   taxes   who                                                                  
     specialize  in apportionment  analysis  and tax  shelters                                                                  
     of multistate  corporate taxpayers; and providing  for an                                                                  
     effective date."                                                                                                           
                                                                                                                                
Co-Chair Meyer  noted the  seven fiscal  notes  that would  be                                                                  
addressed.                                                                                                                      
                                                                                                                                
JIM DUNCAN,  ALASKA STATE EMPLOYEE  ASSOCIATION, responded  to                                                                  
a question from  Co-Chair Meyer,    Mr. Duncan  commented on a                                                                  
letter  sent to the  administration.    He  noted that  he had                                                                  
only  a  brief  opportunity  to  review  the administration's                                                                   
response.  He related  that the April 6 letter  by Art Chance,                                                                  
Director,  Labor  Relations,  Department   of  Administration,                                                                  
complimented his testimony on the bill.                                                                                         
                                                                                                                                
Mr.  Duncan  stated that  he  did not  believe  that  removing                                                                  
these    jobs    from   the    classification    system    was                                                                  
unconstitutional.   He also  clarified his understanding  that                                                                  
legislators  maintained  the  right  to  move  positions  from                                                                  
classified  service   to  exempt  service.     He  maintained,                                                                  
however,  that  passing a  statute  during a  contract  period                                                                  
moving  positions  from  classified  to  exempt  status  would                                                                  
impair the  contract status.   He recalled that positions  had                                                                  
been moved in the past.                                                                                                         
                                                                                                                                
Mr.  Duncan  questioned  the  policy  reason  for  moving  the                                                                  
positions.   He  asked if  the issue  was rate  of pay  rather                                                                  
than policy.   He spoke  in support of  raising salaries.   He                                                                  
suggested that  to impair a contract was in conflict  with the                                                                  
Alaska  Constitution.   He suggested  that there  should  be a                                                                  
systematic way of amending a job class.                                                                                         
                                                                                                                                
2:37:30 PM                                                                                                                    
                                                                                                                                
Representative  Weyhrauch asked  what the  legal  problem  was                                                                  
with this  method.  Mr. Duncan  pointed to the process  in the                                                                  
contract,  which allows  for positions  to be  moved within  a                                                                  
class, but to do the move by statute is prohibited.                                                                             
                                                                                                                                
Representative  Weyhrauch followed  by  asking   if  the  main                                                                  
issue from  a management  view was to  hire positions  quickly                                                                  
and if the process  was otherwise too cumbersome.   Mr. Duncan                                                                  
again asked  if the goal was to  pay more money. He  suggested                                                                  
that there was  a process that could be started  to reclassify                                                                  
and amend  the pay  plan.   He maintained  that the  situation                                                                  
was not so critical as to impair the contract process.                                                                          
                                                                                                                                
Representative  Weyhrauch asked  if it  was possible  to  open                                                                  
one  segment to  address  this issue.   Mr.  Duncan  commented                                                                  
that in discussions  with Mr. Chance, he had suggested  adding                                                                  
three additional  levels of salary and to pay  the same amount                                                                  
as in exempt service.                                                                                                           
                                                                                                                                
2:40:16 PM                                                                                                                    
                                                                                                                                
Representative  Hawker asked  if to open  a pay plan  could be                                                                  
restricted  to certain jobs,  or if it  would set a  precedent                                                                  
for  others seeking  to raise  their  pay scale.   Mr.  Duncan                                                                  
responded  that  the pay  plan  would only  be  opened to  add                                                                  
three  ranges.   That  would give  latitude  to reexamine  pay                                                                  
scale.  He referred  to reclassification within  job families.                                                                  
He noted that  there should be  care given to which  jobs were                                                                  
compared.                                                                                                                       
                                                                                                                                
Representative  Hawker commented on the level  of belligerence                                                                  
on  the part  of  the administration,  but  expressed  concern                                                                  
over  raising the  level of  pay scale  for  all job  classes.                                                                  
Mr. Duncan noted  that paying a higher rate in  exempt service                                                                  
was  also possible  in  classified  service,  as long  as  the                                                                  
proper process is followed.                                                                                                     
                                                                                                                                
Representative  Hawker reiterated his offense  at the tenor of                                                                  
the  letter  from  the  administration,  and  again  expressed                                                                  
concern over opening up a job classification.                                                                                   
                                                                                                                                
2:43:41 PM                                                                                                                    
                                                                                                                                
Representative  Kerttula observed that even if  the entire job                                                                  
family were  raised, jobs still  needed to be considered  case                                                                  
by case.   Mr.  Duncan concurred,  and added  that he did  not                                                                  
negotiate  ranges, but  rather overall  percentage  increases.                                                                  
He also noted that  it would not open the way  to moving other                                                                  
positions into Ranges 28, 29,30.                                                                                                
                                                                                                                                
2:45:11 PM                                                                                                                    
                                                                                                                                
Representative  Weyhrauch observed that the policy  choice was                                                                  
whether to  create a  new classification  range, or to  simply                                                                  
move  positions into  exempt  service.   He  asked if  another                                                                  
bill  is needed  to accomplish  the  new ranges.   Mr.  Duncan                                                                  
replied that  that is  bargainable and  a letter of  agreement                                                                  
could be  signed.  Representative  Weyhrauch questioned  if it                                                                  
was a  good public  policy decision  to bump specialized  jobs                                                                  
or high demand  positions out of exempt classification.    Mr.                                                                  
Duncan  agreed  that  this  was  the   central  question,  and                                                                  
maintained  he had not  been satisfied  with the argument  for                                                                  
creating the exempt status.                                                                                                     
                                                                                                                                
2:46:51 PM                                                                                                                    
                                                                                                                                
Representative  Hawker asked if anything prevented  crafting a                                                                  
law to  allow additional  salary  ranges in  only certain  job                                                                  
classifications.    Mr.  Duncan  observed  that this  was  the                                                                  
affect of  creating exempt  positions.   He noted that  it was                                                                  
not appropriate  for the legislature  to change the  pay plan,                                                                  
as  it  was  subject  to  collective  bargaining.    He  again                                                                  
cautioned that  the policy decision  to move the positions  to                                                                  
exempt service would set a difficult precedent.                                                                                 
                                                                                                                                
2:48:40 PM                                                                                                                    
                                                                                                                                
Representative  Kelly asked for  clarification  about  whether                                                                  
the Attorney  General agreed with  Mr. Duncan's definition  of                                                                  
the contract process,  and whether it was within  the right of                                                                  
management to change the pay scale.                                                                                             
                                                                                                                                
Mr. Duncan stated  that he would advocate adding  three ranges                                                                  
to the pay scale  for all bargaining units.  He  noted that it                                                                  
would require  using the  process available  to challenge  the                                                                  
statute.   He stressed that he  did not wish to challenge  it,                                                                  
but  felt  clearly   compelled  by  the  Constitution   as  it                                                                  
pertains to contracts.                                                                                                          
                                                                                                                                
2:51:20 PM                                                                                                                    
                                                                                                                                
                                                                                                                                
MILA  COSGROVE, DIRECTOR,  DIVISION  OF PERSONNEL,  DEPARTMENT                                                                  
OF ADMINISTRATION  and  ART CHANCE,  DIRECT, LABOR  RELATIONS,                                                                  
DEPARTMENT OF ADMINISTRATION, testified regarding the bill.                                                                     
                                                                                                                                
Co-Chair Meyer  asked  whether  time  was  critical   in  this                                                                  
matter.   Mr. Chance  responded that  public policy  decisions                                                                  
were made  in the Department  of Revenue,  and stated  that he                                                                  
was  not  concerned with  the  time,  but  the manner  of  the                                                                  
process.                                                                                                                        
                                                                                                                                
Ms. Cosgrove  verified  that the  Department was  not able  to                                                                  
recruit the personnel  needed within the existing  pay plan to                                                                  
accomplish the work forthcoming.                                                                                                
                                                                                                                                
2:53:41 PM                                                                                                                    
                                                                                                                                
Representative  Hawker  asked whether  pharmacists  and  high-                                                                  
grade  accountants,   since  they  shared  a   high  level  of                                                                  
independence,  could  be recruited  privately.   Ms.  Cosgrove                                                                  
stated her  understanding  that pharmacists  must be hired  by                                                                  
the  Department,   although  she   conceded  that   they  were                                                                  
occasionally hired  on a contract basis.  She  maintained that                                                                  
hiring on  a contract basis was  not a good business  practice                                                                  
in the state.                                                                                                                   
                                                                                                                                
Representative   Hawker  asked  if  it  was  possible   as  an                                                                  
immediate  solution,  to   hire  on  a  contract  basis  while                                                                  
bargaining representatives  sought a long-term  solution.  Mr.                                                                  
Chance   commented  that   many  disputes   resulted  in   the                                                                  
contracting  out  of  employees.   He  conceded  that  it  may                                                                  
result in a cost  savings, but questioned whether  it could be                                                                  
done within  correct public  policy.   He emphasized  the need                                                                  
for a public policy decision.                                                                                                   
                                                                                                                                
2:57:00 PM                                                                                                                    
                                                                                                                                
Representative  Kelly reiterated his question  over whether it                                                                  
was  a management  right to  decide and  if it  could be  done                                                                  
immediately.    Mr.  Chance  responded   that,  in  the  past,                                                                  
positions  had been moved  to exempt  service, and that  there                                                                  
was  language allowing  for  it.   He gave  the  example of  a                                                                  
vacancy, and  noted that the  right existed within  a contract                                                                  
to  move a  position.   He  admitted  that they  would  oppose                                                                  
moving the  positions within a  job classification  after they                                                                  
had become  exempt, since they  would become a different  body                                                                  
with  different legal  rights.   He noted  that this  question                                                                  
had not been  answered by any  court, although there  had been                                                                  
disputes  in  past years.    He  stated  that it  was  unclear                                                                  
whether a "contract  bar" existed to prevent moving  positions                                                                  
from classified to exempt.                                                                                                      
                                                                                                                                
2:59:52 PM                                                                                                                    
                                                                                                                                
Representative  Kelly summarized  that   a  management   right                                                                  
existed  and that  it  could occur  immediately.   Mr.  Chance                                                                  
stated  that the management  right  existed with  legislators.                                                                  
He conceded  that since  the positions  were vacant,  a debate                                                                  
could ensue.                                                                                                                    
                                                                                                                                
3:00:56 PM                                                                                                                    
                                                                                                                                
Representative  Kerttula  asked  if  the  wage  increase  were                                                                  
accomplished,  whether  it  would  solve  the  problem.    Ms.                                                                  
Cosgrove  noted that  the  issue was  more  complicated.   She                                                                  
pointed out  the need to compete  with the private  market for                                                                  
these types  of positions.   She also  noted that  pharmacists                                                                  
are primarily in  the supervisory unit and not  represented by                                                                  
Mr.  Duncan's   union.    She  pointed  out  that   classified                                                                  
employees  are  subject  to various  criterion,  and  that  by                                                                  
applying these  criterion to pharmacists, they  were currently                                                                  
accurately classified  at their  salary rate.  She  noted that                                                                  
to  move  a  position   by  seven  salary  ranges   creates  a                                                                  
precedent   problem,  rather   than   seeking  other   medical                                                                  
professions  to create  a new  precedent for  paying a  higher                                                                  
salary.  She  stated that she  does not believe this  could be                                                                  
accomplished in the classified service.                                                                                         
                                                                                                                                
3:03:29 PM                                                                                                                    
                                                                                                                                
Representative  Weyhrauch observed  that  if  these  positions                                                                  
were moved  to exempt  status, many of  the same issues  would                                                                  
still be  in play.   Ms. Cosgrove agreed  that to some  extent                                                                  
that is correct.                                                                                                                
                                                                                                                                
Ms.  Cosgrove  spoke to  good  qualifications  and  licensing.                                                                  
Representative  Weyhrauch said  they would  not be  encumbered                                                                  
by the  collective bargaining  agreement.   Ms. Cosgrove  said                                                                  
correct.                                                                                                                        
                                                                                                                                
3:05:22 PM                                                                                                                    
                                                                                                                                
Representative  Joule  wondered  if exempts  run  the risk  of                                                                  
being  left  out   by  a  new  administration.     Mr.  Chance                                                                  
addressed  the mythology  about exempt  status.  Teachers  are                                                                  
exempt  because  of rights  under  Title  14.   Alaska  Marine                                                                  
Highway  employees are  exempt  because they  were  originally                                                                  
hired out  of Seattle.  Most exempts  are so far removed  from                                                                  
ranges 5-30,  that they can't  be paid without distorting  the                                                                  
scale.  Addressing  the status  of  being  released  by a  new                                                                  
administration,  Mr. Chance reported that almost  no "at will"                                                                  
employees  exist.   Division  directors,  special  assistants,                                                                  
and some  partially exempt  employees can  be dismissed  - the                                                                  
rest have to have probable cause.                                                                                               
                                                                                                                                
Representative  Kelly asked if  exempt people could  organize.                                                                  
Mr. Chance  said they could.   Representative Joule  asked how                                                                  
many people  it takes to organize.   Mr. Chance reported  that                                                                  
there is  no numerical  limit.  A  community of interest  must                                                                  
be demonstrated.                                                                                                                
                                                                                                                                
3:09:04 PM                                                                                                                    
                                                                                                                                
Co-Chair Meyer  addressed the fiscal notes:  zero  fiscal note                                                                  
#1  by the  Department  of Commerce,  Community  and  Economic                                                                  
Development,   fiscal   note   #3   by   the   Department   of                                                                  
Corrections,  three  new  indeterminate  fiscal notes  by  the                                                                  
Department   of  Health  and   Social  Services,  and   a  new                                                                  
indeterminate fiscal note by the Department of Revenue.                                                                         
                                                                                                                                
3:10:47 PM                                                                                                                    
                                                                                                                                
Co-Chair  Chenault  commented on  the  fiscal  notes: all  are                                                                  
zero  for this  year, but  indeterminate  for next  year.   He                                                                  
pointed out the certainty of costs in the future.                                                                               
                                                                                                                                
Co-Chair  Meyer  said  the bill  was  set  aside in  hopes  of                                                                  
organizing  a collective bargaining  process, but that  didn't                                                                  
happen.   The legislature  needs  to take action  soon on  the                                                                  
bill, but it needs additional discussion.                                                                                       
                                                                                                                                
3:13:06 PM                                                                                                                    
                                                                                                                                
Representative   Foster  MOVED  to   REPORT  HB  485   out  of                                                                  
Committee    with   individual    recommendations   and    the                                                                  
accompanying fiscal notes.                                                                                                      
                                                                                                                                
Representative   Hawker  OBJECTED.     Representative   Hawker                                                                  
maintained that  he has heard no  solution for this  issue and                                                                  
that  there  would   be  litigation.    He  said   he  is  not                                                                  
comfortable  with  this  bill.    He  suggested  that  raising                                                                  
classifications   could  accomplish  the  same   goal  without                                                                  
litigation.   He said  he is not endorsing  labor's side,  but                                                                  
taking the least risky route.                                                                                                   
                                                                                                                                
A roll  call vote  was taken on  the motion  to REPORT  HB 485                                                                  
out of committee.                                                                                                               
                                                                                                                                
IN FAVOR: Holm, Kelly, Stoltze, Foster, Chenault, Meyer                                                                         
OPPOSED: Hawker, Joule, Kerttula, Moses, Weyhrauch                                                                              
                                                                                                                                
The MOTION PASSED (6-5).                                                                                                        
                                                                                                                                
HB   485  was   REPORTED   out  of   Committee   with  a   "no                                                                  
recommendation"   and  with  zero   fiscal  note  #1   by  the                                                                  
Department  of Commerce, Community  and Economic  Development,                                                                  
fiscal note  #3 by  the Department of  Corrections, three  new                                                                  
indeterminate  fiscal notes  by the Department  of Health  and                                                                  
Social Services,  and a new  indeterminate fiscal note  by the                                                                  
Department of Revenue.                                                                                                          
                                                                                                                                
Representative  Weyhrauch concurred  with Co-Chair  Chenault's                                                                  
concerns about future costs related to this bill.                                                                               
                                                                                                                                
3:17:44 PM                                                                                                                    
                                                                                                                                

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