Legislature(2013 - 2014)HOUSE FINANCE 519
04/09/2013 09:00 AM House FINANCE
| Audio | Topic |
|---|---|
| Start | |
| SB21 | |
| HB63 | |
| HB76 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | SB 21 | TELECONFERENCED | |
| + | SB 18 | TELECONFERENCED | |
| + | SB 7 | TELECONFERENCED | |
| + | SB 57 | TELECONFERENCED | |
| *+ | HR 8 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | HB 76 | TELECONFERENCED | |
| += | HB 63 | TELECONFERENCED | |
HOUSE BILL NO. 76
"An Act relating to electronic filing of certain
information with the Department of Labor and Workforce
Development; relating to surcharges, rate increase
reduction, prohibition on the relief of certain
charges, the unemployment trust fund account, and the
offset of certain unemployment compensation debt under
the Alaska Employment Security Act; relating to the
definition of 'covered unemployment compensation debt'
in the Alaska Employment Security Act; and providing
for an effective date."
Representative Holmes MOVED to ADOPT Amendment 1 to the
legislation. The amendment would change the sunset date
from 2018 to 2016 (page 6, line 3).
Representative Kawasaki OBJECTED for the purpose of
discussion.
Representative Holmes noted that the amendment changed the
5-year sunset date to a 3-year sunset and would provide a
3-year try out period to make sure the bill worked as
intended.
Vice-Chair Neuman asked about the meaning of 291 in
layman's terms. ["291" was most likely made in reference to
AS 23.20.291, which is the statute that Section 6 of the
bill addressed.] Representative Holmes responded that the
commissioner would probably be better suited to answer the
question, but understood that it was associated with a
formula that determined year-by-year whether the tax rates
for the unemployment insurance needed to be raised; Section
6 of the bill gave the Department of Labor and Workforce
Development, in certain circumstances, some discretion that
it did not currently have.
Representative Wilson inquired why the sunset date was
being reduced by 2 years. Representative Holmes replied
that she was not entirely sure what Section 6 did, but that
it used a 3-year average in the formula calculation and
thought that given the level of uncertainty involved, 3
years would provide a feel for how the bill was working
without being too worried about the level of the fund. She
concluded that the 3-year sunset period was not a magic
number.
Representative Wilson inquired if the intent of the
original sunset in 2018 was to do the same look back.
Representative Holmes replied that it was her understanding
that the look back was consistent with Section 6 of the
bill.
Representative Gara noted that he had a question for the
commissioner that was unrelated to the amendment.
Representative Kawasaki WITHDREW his OBJECTION.
There being NO further OBJECTION, Amendment 1 was ADOPTED.
4:52:18 PM
DIANE BLUMER, COMMISSIONER, DEPARTMENT OF LABOR AND
WORKFORCE DEVELOPMENT, deferred the question to Mr. Dick.
Representative Gara queried how much the surplus was
currently, as well as the difference between income coming
in and expenses going out for the past year or two.
PAUL DICK, DIRECTOR, EMPLOYMENT SECURITY DIVISION,
DEPARTMENT OF LABOR AND WORKFORCE DEVELOPMENT, replied that
the fund was a reserve concept and that the idea of a
surplus was not really applicable to the orientation of the
fund; however, the department did believe there was room
for the exercise of discretion that was in Section 6 of the
bill to allow for some reduction in the tax rates so that
the reserve would remain solvent in the short-term and
long-term future.
Mr. Dick inquired what the second part of the question had
been. Representative Gara queried what the surplus was now,
as well as what the expenses and income were. Mr. Dick
responded that the past several years there had been
greater benefits paid out than revenues. He pointed out
that FY12 was the last fiscal year on record and that the
revenues were close to the benefits in that year. He
thought that the department was coming out of a recession
where there was a high cost of benefits, but that the trend
was turning around; he offered that this was a typical
business cycle that the department had seen over the years
for unemployment insurance and claims. He added that there
were years of high benefits that exceeded the revenue, but
that the department was seeing that turning around as the
economy came out of recession.
Representative Gara understood that FY12 was roughly even
in terms of revenues and benefits and inquired how much the
deficit had been the year before, as well as what the
surplus was. Mr. Dick believed the deficit had been
approximately $10 million out of $170 million collected and
that the current trust fund balance was $251 million.
Representative Kawasaki offered that the term surplus was a
misnomer and inquired if the fund had ever been in the
negative since 1983. Mr. Dick replied that the fund had
never been in the negative.
Representative Kawasaki further queried if there had been
years that the fund had put out more money than it had
taken in. Mr. Dick replied in the affirmative.
Representative Kawasaki observed that there were very few
mechanical formulas that had worked successfully, but that
this fund seemed to be one. He observed that the fund
seemed well managed and expressed concern that tinkering
with it would risk its solvency.
4:57:45 PM
Representative Munoz inquired if the suspension of the
increase would ultimately be due from the employer if a
commissioner had determined that the increase was
suspended. She further inquired if the payment would be
ultimately due.
BRYNN KEITH, ACTING DEPUTY COMMISSIONER, DEPARTMENT OF
LABOR AND WORKFORCE DEVELOPMENT, answered that ultimately,
the tax would be collected. What the bill did as designed
was defer that collection during a period of economic
recovery in order to give employers more time to recover;
furthermore, the fund would try to get to the "magical" 3
percent to 3.3 percent reserve rate that included the
surplus that the department talked about. She explained
that the department wanted to be at the surplus when there
was an economic downturn; the system was designed so that
that surplus was a buffer when the fund was paying out more
money than it was taking in.
Representative Munoz requested an explanation of the
training programs that "this" funded. Ms. Keith replied
that the training funds for both the State Training and
Employment Program (STEP) and the Alaska Technical
Vocational Education Program (TVEP) were from taxes that
came off of employees' wages; it was the same amount
irrespective of the unemployment insurance taxation. She
expounded that any changes that would made in terms of the
bill would be moot in relation to the contribution to STEP
and TVEP; what would affect the 2 programs was how many
individuals were working, what the average wage was, and
other factors in the economy.
Representative Costello discussed one zero fiscal note from
the Department of Labor and Workforce Development and one
fiscal impact note from the Department of Labor and
Workforce Development.
Representative Costello MOVED to REPORT CSHB 76 (FIN) out
of committee with individual recommendations and the
accompanying fiscal notes.
There being NO OBJECTION, it was so ordered.
CSHB 76(FIN) was REPORTED out of committee as amended with
a "do pass" recommendation and with one new fiscal impact
note from the Department of Labor and Workforce Development
and one new zero fiscal note from the Department of Labor
and Workforce Development.
5:01:04 PM
AT EASE
5:02:14 PM
RECONVENED