Legislature(2003 - 2004)
05/09/2003 03:40 PM House L&C
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HB 305 - UNEMPLOYMENT COMPENSATION BENEFITS Number 0770 CHAIR ANDERSON announced that the final order of business would be HOUSE BILL NO. 305, "An Act relating to the calculation and payment of unemployment compensation benefits; and providing for an effective date." CHAIR ANDERSON noted that the House Labor and Commerce Standing Committee is the sponsor of HB 305, and made reference the sponsor statement. Number 0844 GREG O'CLARAY, Commissioner, Department of Labor & Workforce Development (DLWD), said: This bill has been long in the coming; ... both bodies of the legislature dealt with a similar bill over the last two years. For reasons unbeknown to most of us, it was not acceptable to folks in the construction industry, on the employers side, and it was hung up in the other body, first in [the Senate Finance Committee] and then in [the Senate Rules Standing Committee]. This is a product, that we bring before you, that's ... a compromise - a total of five meetings with the construction industry representatives, and other employers were also invited to the meetings. ... We didn't have full participation by all of the employers, but those that are impacted the most - the construction industry - [were] involved with organized labor, and this is the compromise piece of legislation. The only difference in the bill that you passed before and this bill is that the effective dates have been moved forward and the last increment, they split the difference between the original bill that didn't pass and this one. So instead of the top line being as high as [it] was, this will be at ... $308. ... The net effect of this bill is that it helps the economy of Alaska by putting more money on the street during the off season when [employees] are unemployed, and it keeps skilled workers in Alaska instead of having to go south to look for other employment or to go to places where their costs of living are much lower - ... in many cases, our skilled workers are not coming back to Alaska. And this moves us from number 47 in the nation in terms of the top weekly benefit, to around 28th or 29th. ... The first actual impact on employers occurs in the year 2006, when their tax rates will be impacted. ... REPRESENTATIVE ROKEBERG asked whether there is a large surplus in the account these funds are placed in. Number 0999 PATRICK SHIER, Employment Security Tax, Division of Employment Security, Department of Labor & Workforce Development (DLWD), replied that the "UI Trust Fund" is "self-balancing" and has a balance of approximately $220 million. In response to other questions, he said that there are 21 different "rate classes," and that employers are assigned to one of those rate classes according to their "experience in prior years." He added: The experience rating depends only on the industry the first year you come to the [DLWD] and sign up for a brand new business where there is no prior experience. As soon as you have four complete quarters in the rating period, then it's based entirely on your experience as an individual. Or, if you acquire a business ..., for rating purposes you will inherit the ... management practices that they may have had in the past. And the good news is, that goes away; as your management skills come to bear on the bottom line, the payroll would be expected to level out, and as those declines in payroll become more distant ... - 12 quarters is when they fall off the edge of the world - ... the current quarters that you're going through now exert more influence on your rate, and that would be ameliorated. REPRESENTATIVE ROKEBERG said he would like information on the range of rates that are charged to businesses. Referring to a handout provided by the DLWD, he asked if the tax rate used on one of the pages is the average tax rate and how a tax rate is calculated. MR. SHIER pointed out that the information being referred to talks about the "average employer tax rate," adding that the lowest rate is "1.0" and the highest is "5.9" and that they are calculated averages that includes the employee portion. He then provided Representative Rokeberg with a few more details on the highest and lowest rates. REPRESENTATIVE GUTTENBERG said he thought that 13 of the states listed in the handout have automatic "escalators," and asked whether those escalators have been considered when calculating what Alaska's rank would be in 2006. COMMISSIONER O'CLARAY offered his belief that those escalators were considered, and indicated that the handout merely provides an estimate of what Alaska's ranking would be with passage of HB 305. Number 1361 JOHN DAVID RAGAN testified in favor of an increase in unemployment benefits, adding that it is of particular importance to those in the construction industry in Alaska. He expressed dissatisfaction that "labor" bills are heard last in the committee, because this results in the people who've come to testify having to leave before getting a chance to speak. MR. RAGAN, in response to a question, said that in the construction industry there are times when there is a lot of work and there are times when there isn't any work; thus a lot of people depend on unemployment benefits. Number 1470 RON PECK, President, Alaska Travel Industry Association (ATIA), relayed some details of the tourism industry, said the ATIA is not opposed to HB 305, and asked that a complete analysis be done on the bill with regard to how it applies to the tourism industry before being moved from committee. Number 1508 PAMELA LaBOLLE, President, Alaska State Chamber of Commerce (ASCC), said that the ASCC has been very involved with this issue the last three years, and suggested that the statistics provided in the past by the DLWD were misleading because of the way they were presented. She noted that Alaska is one of five states that offers an additional "dependent benefit," and opined that if one were to calculate that additional benefit into the statistics presented, Alaska would reach what she called the "national goal of the UI program." She referred to statistics provided two years ago and offered some calculations based on those statistics. MS. LaBOLLE pointed out that although there is a zero fiscal note because there is no cost to the state for this legislation, she has not heard the DLWD offer any information regarding how much the proposed increases will cost employers and employees. She predicted that whatever the increase is, employers will pay for 80 percent of it and employees will pay for the remaining 20 percent. She asked the DLWD to provide her with information regarding the cost to employers and the cost per employee based on the average tax rate. She opined that employers other than those in the construction industry ought to be given the opportunity to weigh in on this issue, and suggested that the bill failed in the past because those in favor of the legislation refused to compromise on the increase amount. CHAIR ANDERSON offered his belief that it is important for this legislation to move forward. MS. LaBOLLE expressed concern that HB 305 would move forward without the committee knowing what the cost will be to employers. REPRESENTATIVE CRAWFORD pointed out that any increase in employer costs would not occur until 2006. He remarked that he is disappointed in HB 305, and relayed that although he had considered sponsoring similar legislation, he'd opted to forego that idea because he'd hoped that the task force which developed HB 305 would have come up with "a fair and equitable return." He suggested that he would support HB 305 if it can get adopted this year, but if it gets delayed in the process, he will go ahead and sponsor legislation more to his liking. He said that he would like to see an increase that allows people to reach the national goal without the addition of the dependant benefit. He added: I know that we're losing good, skilled iron workers because they go down to the Lower 48 and they don't come back because our unemployment is so low here [that] they can't afford to stay through the ... slack times in employment. So we've got to do something about this, and it's gone on too long. Number 1881 REPRESENTATIVE DAHLSTROM moved to report HB 305 out of committee with individual recommendations and the accompanying zero fiscal note. Number 1888 REPRESENTATIVE ROKEBERG objected. He opined that the committee did not yet have enough information regarding costs to the employer. REPRESENTATIVE GUTTENBERG mentioned that although he'd considered sponsoring similar legislation that would have provided for a bigger increase, he too had opted to see what the task force developed. He offered that perhaps the information the ASCC is seeking was presented at the aforementioned task force meetings, but the ASCC chose neither to attend those meetings nor send someone to represent its members. Noting that the ASCC consistently talks about maintaining a competent, qualified workforce, he pointed out that having adequate UI benefits is one small step towards retaining that kind of workforce - it is one small incentive for qualified workers to stay in Alaska during seasons when there is no work. COMMISSIONER O'CLARAY indicated that the DLWD would provide the information requested - to Ms. LaBolle on Monday, and to Representative Rokeberg before HB 305 is heard on the House floor. CHAIR ANDERSON noted that committees often move bills out with the understanding that information will be forthcoming during the process. REPRESENTATIVE ROKEBERG opined that HB 305's next committee of referral will not have time to adequately address the issues that concern him, and suggested that the committee refrain from moving the bill until the requested information is presented to the committee. He relayed that he did not know who attended the aforementioned task force meetings or whether small business was adequately represented. CHAIR ANDERSON announced that that information would also be forthcoming. REPRESENTATIVE GATTO surmised that the bill's next committee of referral will be relying on this committee's recommendations, and relayed that he cannot offer a recommendation at this time because of a lack of information. He added that he would be leaving in order to avoid having to vote on a bill that he doesn't want to see moved yet. Number 2089 A roll call vote was taken. Representatives Guttenberg, Lynn, Dahlstrom, Crawford, and Anderson voted in favor of reporting HB 305 from committee. Representative Rokeberg voted against it. Therefore, HB 305 was reported from the House Labor and Commerce Standing Committee by a vote of 5-1.
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