Legislature(1995 - 1996)
04/04/1996 08:05 AM House STA
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HB 545 - PUB. EMPLOYEE COST OF LIVING DIFFERENTIAL The next order of business to come before the House State Affairs Committee was HB 545. CHAIR JAMES called on Patrick Gullufsen, Department of Law. Number 0800 PATRICK GULLUFSEN, Assistant Attorney General, Governmental Affairs Section, Civil Division, Department of Law, said he was here to answer any questions regarding HB 545. CHAIR JAMES stated HB 545 was intended to preclude the ferry workers that lived outside of Alaska from collecting a cost of living allowance differential (COLA). CHAIR JAMES called on Bruce Cummings, Department of Transportation and Public Facilities. Number 0834 BRUCE CUMMINGS, Labor Relations Specialist, Marine Highway System, Department of Transportation and Public Facilities, said HB 545 was an attempt to clarify the residency requirements and eligibility standards for receipt of a COLA called for in the collective bargaining agreements and statutes. The law required that the system pay for different rates for those residing in Alaska versus outside of Alaska creating controversy. He reiterated the bill would more clearly enunciate the criteria by which people would qualify by following the criteria of the permanent fund dividend qualification. It also allowed for the adoption of regulations under the Administrative Procedure Act (APA) which could vary from the current permanent fund dividend regulations. He explained, at the outset, the system would adopt the permanent fund dividend criteria by reference. Furthermore, organized labor did endorse this idea. Number 0904 CHAIR JAMES said she was distressed by the intent of HB 545. She wondered if the intent was to change the regulations. Number 0928 MR. CUMMINGS replied the bill would allow the Department of Administration to propose, and through the APA, to adopt regulations. He did not know what the regulations would be, however. The criteria for the permanent fund dividend did not cover all of the possibilities of the Alaska Marine Highway System such as the alternative life styles of vessel employees, for example. Therefore, the law would allow for the adoption of additional regulations that could be different from the current permanent fund regulations. Number 0984 CHAIR JAMES said she would feel more comfortable if the bill was more specific than less specific. She understood the need to embellish the criteria, but felt they would need to be changed by law and not regulations. Number 1025 REPRESENTATIVE GREEN wondered how the system would determine a fair differential pay by using the permanent fund dividend requirements. Number 1050 MR. CUMMINGS replied the amount of the differential was currently negotiated by bargaining agreements. Therefore, HB 545 would not affect the amount of the differential. He explained the bill would allow an individual to qualify for the COLA if he qualified as a resident under the permanent fund dividend program. Number 1090 REPRESENTATIVE GREEN asked if the pay was the same for those living anywhere in the state? Number 1097 MR. CUMMINGS replied the answer was both "yes" and "no." Title 39 of the Alaska State Statutes addressed pay for state employees based on where they worked. The Marine Highway System was an anomaly, however. The employees were not paid based on the location of their fixed duty station, they were paid on where they resided. Therefore, there were only two rates of pay - residential and nonresidential. Number 1163 CHAIR JAMES asked Mr. Cummings to explain to the committee members the inefficiency in the system that allowed this to happen. Number 1179 MR. CUMMINGS explained the system was paying the COLA differential on a good faith basis. The system only required a narrative form of eligibility of a name and an address. The system did not have substantial resources to investigate reported eligibility. Therefore, unless there was reasonable suspicion, an investigation was not conducted. It was hard to investigate because of potential "shadow" residencies. Number 1296 CHAIR JAMES asked Mr. Cummings if the department had thought of not including a COLA? Number 1310 MR. CUMMINGS said he could not speak for the department. Therefore, he spoke on behalf of himself. He said he was not convinced the allowance was necessary now, but that was not the sentiment 15 years ago when the statute was enacted. It was enacted to provide an incentive for more vessel employees to live in the state of Alaska. Currently, only about 50 employees out of 700, reside outside of Alaska. He did not know if the numbers would change if there was a differential or not. Number 1404 CHAIR JAMES said she did not see any benefit these days to encourage people to move to Alaska because there were already enough benefits such as no state income tax, for example. Number 1458 REPRESENTATIVE ROBINSON asked Mr. Cummings if the reservation employees were included in HB 545? She was concerned about the employees that had to move to Seattle because that was where the office was according to debate several years ago surrounding the permanent fund eligibility requirements. Number 1489 MR. CUMMINGS replied "no" they were not affected by HB 545. The office no longer existed in Seattle. If there was an office in Seattle their pay would be based on the geographical differentials provided for in AS 39.27.020. He agreed with Chair James that the incentive was much smaller compared to 15 years ago. The cost of living differentials were much smaller for Seattle and Southeast, for example. Number 1548 CHAIR JAMES explained due to time constraints HB 545 would be scheduled for the next hearing on April 9, 1996. There was time for one more witness, however. Number 1563 REPRESENTATIVE IVAN explained he would reserve his questions for the next scheduled hearing. CHAIR JAMES called on the next witness in Juneau, Greg O'Claray, Marine Engineers Beneficial Association. Number 1576 GREG O'CLARAY, Director of Legislative and Governmental Affairs, Marine Engineers Beneficial Association, said the association supported HB 545. He agreed with Chair James, that if the legislature was to eliminate this provision in statute, it would relieve a lot of stress between employees. He explained in 1963 a policy was established to require an employee to move to Alaska within four months of employment. It was considered unconstitutional by the courts, however. Therefore, this had been a problem for the system for years. The law enacted in the 1970's did not adopt criteria for state residency which further contributed to the problems. Number 1693 REPRESENTATIVE GREEN asked Mr. O'Claray if the people living in Alaska received a 20 percent increase or did the people living outside of Alaska receive a 20 percent decrease when the legislation was enacted in the 1970's? Number 1709 MR. O'CLARAY replied an increase was negotiated.
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