Legislature(1995 - 1996)
04/13/1996 10:04 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 CSHB 545(STA) (9-GH2067/C). CHAIR JAMES explained the committee substitute incorporated the provisions of the allowable absences and the determination of state residency of the permanent fund dividend (PFD) program. CHAIR JAMES called on Patrick Gullufsen, Department of Law, to further explain the committee substitute. PATRICK GULLUFSEN, Assistant Attorney General, Government Affairs Section, Civil Division, Department of Law, explained the department liked the original bill better. The department wanted in regulation clarity to decide who was entitled to the cost-of- living differential (COLD). The committee substitute did give clarity. However, the department also wanted flexibility to allow the Department of Administration to refine and adjust by regulation in the event the PFD criteria did not fit the needs of the marine highway system. The committee substitute did not allow that flexibility. The department, therefore, crafted an amendment to establish that flexibility. He explained the department could not regulate away the provisions in a statute, but only clarify the provisions in a statute. There was a basic philosophical difference here that might or might not be worked out. Number 0442 CHAIR JAMES said she expected the department to announce certain provisions did not work today. She was willing to engage in that type of a discussion and remove the provisions that did not work from the committee substitute. Number 0473 REPRESENTATIVE GREEN moved that CSHB 545(STA) (9-GH2067/C) be adopted for consideration. Hearing no objection, it was so adopted. CHAIR JAMES asked Mr. Gullufsen to identify the areas of concern in the committee substitute. MR. GULLUFSEN referred the committee members to page 8 and page 9, subsections (e), (f), and (g). The subsections discussed an absence of five years with no intent to return to Alaska. This regulation obviously pertained to the PFD worth millions of dollars and a situation where an individual might or might not be working. The COLD on the other hand involved employees of the state and whether of not they should receive the COLD because they were living in Alaska. The department suggested deleting the subsections entirely. Number 0568 REPRESENTATIVE PORTER moved that subsections (e), (f), and (g) on page 8 and page 9 be deleted. Hearing no objection, they were so deleted. Number 0598 MR. GULLUFSEN referred the committee members to page 10, subsection (e). The subsection discussed an individual employed by the state while maintaining a home outside of Alaska. The COLD was designed to compensate for the higher cost of living in Alaska. Therefore, the department suggested deleting the subsection entirely. Furthermore, it would cause problems administering the COLD. Number 0628 REPRESENTATIVE WILLIS moved that subsection (e) on page 10 be deleted. Hearing no objection, it was so deleted. Number 0638 REPRESENTATIVE PORTER asked if the COLD applied to other occupations within the state. MR. GULLUFSEN replied it applied to very few other occupations. Mr. Cummings, Department of Transportation and Public Facilities, could answer that question better, however. He explained it was originally passed and designed to apply to the marine highway system employees. Number 0672 CHAIR JAMES said there was no way of knowing if other employees were considered for the COLD when it was established. Therefore, any employee that received a COLD would be affected by this bill. REPRESENTATIVE PORTER said the bill referred to AS 23.40.010. MR. GULLUFSEN stated AS 23.40.010 did not identify which employees qualified for a COLD. CHAIR JAMES said the COLD pertained to Alaskan residents. There was discussion that the COLD was an incentive for individuals to move to Alaska. That was not the case anymore, however. She questioned if the COLD was even needed. Nevertheless, it was part of a union agreement and there would be a lot of objection if it was removed. MR. GULLUFSEN said the department was not suggesting the COLD be removed. Number 0742 REPRESENTATIVE IVAN asked Mr. Gullufsen if there were any penalties for receiving a COLD when a person knew he was not entitled to it? Number 0766 CHAIR JAMES replied there were no penalties addressed in the provisions in the committee substitute. The department was trying to tighten the criteria, however, so that there was not the opportunity to receive a COLD when a person was not entitled to it. Number 0825 MR. GULLUFSEN said, if the department had clear criteria, it would have the authority to discipline an employee who abused it. There was also the ability to take criminal action as long as there was clear criteria for the submission of false information. Number 0855 REPRESENTATIVE OGAN said the department might have the authority, but it was still at the discretion of the department to exercise that authority. He said it would be prudent to include a penalty of some type in statute. CHAIR JAMES said the committee would deal with that suggestion later. She asked Mr. Gullufsen to explain the proposed amendment. Number 0880 MR. GULLUFSEN explained the amendment would be added to Section 2 as subsection (c). "(c) The Department of Administration may adopt regulations under AS 44.62 (Administrative Procedure Act) to the extent necessary to clarify and implement the criteria set out in AS 23.40.195, 23.40.197, and 23.40.198 as applied to employees of the Alaska Marine Highway System." Number 0888 REPRESENTATIVE PORTER wondered what the amendment would achieve. Number 0902 MR. GULLUFSEN said the three subsections that were just deleted would have been removed. CHAIR JAMES asked Mr. Gullufsen if the amendment was necessary now that they had been deleted? MR. GULLUFSEN replied, "I think so." There were still going to be questions when applying the PFD criteria to the COLD, therefore, the authority was still needed to adopt regulations when necessary. Number 0930 REPRESENTATIVE GREEN wondered if by adopting the amendment it returned the committee substitute back to the original bill. Number 948 CHAIR JAMES said it could be construed that way. However, the committee substitute tightened the bill so that the Department of Administration could not undue the specifics in statute. The department could, however, adopt regulations to delineate the process. She did not agree with writing regulations to clarify the laws, but she did admit there were a certain amount of regulations that were needed to establish a process. Number 1022 REPRESENTATIVE GREEN said he thought the intent of the bill was to address the marine highway system. He was concerned about including a caveat to write regulations. He reiterated he wondered if anything had really changed if the amendment was included. CHAIR JAMES asked Mr. Gullufsen to respond to the concerns of Representative Green. Number 1062 MR. GULLUFSEN said the Department of Administration would look at the PFD regulations and apply them accordingly. However, over time the regulations might need to be changed to meet the purpose of the COLD. He cited the 180 days of allowable absence might now work for a marine highway system employee that was gone for six months, for example. Therefore, the department wanted the ability to fix that provision through a regulation. If the provision was established in law, that ability was taken away, requiring further approval from the legislature. The department wanted the ability to adopt the PFD regulations to fit the COLD without having to come back to the legislature. The department was not asking for regulatory authority over a private business enterprise or a business activity. It was asking for broad regulatory authority to increase the salary of those that qualified. Number 1195 REPRESENTATIVE PORTER asserted, "lets do one or the other." Either provide a caveat to allow the Department of Administration to change the provisions, or cite specifics. He did not agree with including both. Number 1221 CHAIR JAMES replied the Department of Administration would not have the authority to change a provision if it was in statute. Therefore, if the department did not want it in the bill it needed to be removed now. Number 1237 MR. GULLUFSEN said the committee substitute would put the 180 days PFD requirement, for example, into statute. The original bill was short and sweat. It gave the authority to the Department of Administration to adopt the PFD regulations to the COLD. The committee substitute would put the criteria into statute with no authority to change them through a regulation. They could only be clarified through a regulation. Number 1328 CHAIR JAMES referred the committee members to page 3, line 18 and suggested completing the blank. She read, "(f) An individual has taken action inconsistent with establishing or maintaining state residency if at any time in the last _____ months, the individual..." MR. GULLUFSEN proposed completing the blank with the number "12." There was no objection. CHAIR JAMES reiterated her intent today was to allow the department to identify those areas of concern in the committee substitute. She stated the language in the original bill was too broad. It did not define the criteria. It left it up to the Department of Administration to define. She understood if it was left to regulations it would return to union negotiations for clarification. Number 1466 MR. GULLUFSEN said the original bill made it clear that the Department of Administration would not bargain the issue any more. He confessed Chair James made a good argument, however. It boiled down to an argument of whether or not the legislature wanted the Administration to have the authority and flexibility, or did it want it to be specified in statute. The department would prefer to have the flexibility and authority. Number 1496 REPRESENTATIVE GREEN asked Mr. Gullufsen how the department would handle an employee's time spent away from home? Number 1536 MR. GULLUFSEN said the state took the position that if while off the ferry one left the state he was not a resident. On the other hand, the individual was actually present in Alaska while on the ferry and that time should be counted towards residency. The issue was in court right now. A decision had yet to be made, however. Number 1602 REPRESENTATIVE PORTER responded this was why the legislature should not try to write a bill to cover all the contingencies. He reiterated the bill should go one way or the other. He preferred the original bill because it gave specific criteria for the interim period while preparing to adopt the regulations. Number 1652 CHAIR JAMES said the original bill did not include specifics either. She would prefer the department outline the criteria needed. If there was a state income tax, it would be very simple to determine who was a resident and who qualified for the cost-of- living differential. She believed the department did not know what criteria it needed. Therefore, she did not want to pass a bill that would allow the Administration to draft regulations. It was too wide open. Number 1753 MR. GULLUFSEN said he understood the concerns of Chair James. He reiterated the original bill allowed the Department of Administration to adopt the PFD regulations and work with them. Therefore, the legislature would have to trust its ability to identify the proper purpose and write regulations that accurately reflected that purpose. If someone did not like them, he could go to the legislature to change them. He explained Chair James preferred the opposite approach of starting with a definite and using the legislature to change the statute to fix the problem. Number 1813 CHAIR JAMES replied the Administration just wanted the authority to fix something unprepared. She reiterated that was too broad for her. She agreed there were serious concerns involved and the legislature should be involved in the process as opposed to just giving the authority to the Administration. Number 1862 REPRESENTATIVE GREEN said he was curious to see the draft regulations. The legislature wanted to streamline the regulatory process and yet the committee substitute just added a lot of pages to the Alaska Statutes. He wondered if the committee substitute fixed the problem or exacerbated it. Number 1910 CHAIR JAMES said she could write the criteria to meet the COLD in two pages. Number 1932 REPRESENTATIVE GREEN asked Mr. Gullufsen what he anticipated the regulations would look like? Number 1938 MR. GULLUFSEN replied the PFD regulations would be used over a period of time to see how they worked. The Administration would immediately look at the 180 days provision and determine how that would affect the COLD program. Number 2011 REPRESENTATIVE GREEN said the Administration could through regulations establish criteria now. He asked Mr. Gullufsen if the Administration really wanted legislative clout to back up the criteria? MR. GULLUFSEN replied, "that's right." There was the argument that the Administration did not have the regulatory authority to establish criteria now, however. Number 2058 REPRESENTATIVE GREEN asked Mr. Gullufsen where would the legislative clout be once the regulations were changed by the Administration? Number 2077 MR. GULLUFSEN replied the clout would be because the legislature told the Administration it could change the regulations. Number 2116 CHAIR JAMES said there was also a time frame issue involved. If the original bill was moved an entire year would pass before the Administration decided how to implement the regulations. She reiterated the more simple approach would be to define the criteria in statute. She cited, as an example of a criterion, an employee was expected to live in the state when he was not working on the ferry. The reasons for an absence would also need to be defined. Number 2218 MR. GULLUFSEN replied the original bill said the Department of Administration adopted the PFD regulations immediately. Over time, it would determine how to change the regulations to fit the COLD. Therefore, there was not a waiting period. Furthermore, the PFD criteria had been tested in application and in court. It was also hoped that they would not be controversial. The Administration would expect controversy if it was to adopt a new definition of residency. Number 2347 CHAIR JAMES replied one of the most controversial issues around were the PFD regulations. The Director, Nanci Jones, said they needed to be fixed because they were not working. She further said it was not clear to her that the PFD regulations would apply to the COLD because an employment benefit and a residency benefit were not the same. Furthermore, she wondered how the program would be affected, if the PFD regulations were changed. TAPE 96-52, SIDE A Number 0000 CHAIR JAMES wondered again if the PFD regulations were the correct ones to be considering. MR. GULLUFSEN said most of the PFD criteria applied to eligibility for the COLD. CHAIR JAMES wondered if the original bill allowed the Department of Administration to adopt regulations that would fit the COLD so that this would not be an arbitrated issue again. MR. GULLUFSEN replied, "yes." CHAIR JAMES said the real criteria was to write regulations so that they were not negotiable. MR. GULLUFSEN replied, "yes." The Administration anticipated that the regulations for the COLD would be similar to the PFD regulations. He reiterated the original bill did ask for the authority to establish criteria for the COLD. Number 0163 CHAIR JAMES said she was concerned about fixing the problem. She wondered if the original bill fixed the problem by giving the Administration the authority to write regulations. Number 0183 REPRESENTATIVE PORTER said that was not exactly correct. It was established upon passage of the original bill that the PFD regulations would be applied immediately. While over time, the Administration would have the ability to craft those regulations to apply specifically to the marine highway system, and to those that it would affect in the future. Number 0236 REPRESENTATIVE OGAN said the issue had been dissected enough. It was time to "fish or cut bait." CHAIR JAMES called on the first witness in Juneau, Bruce Cummings, Department of Transportation and Public Facilities. Number 0292 BRUCE CUMMINGS, Labor Relations Specialist, Alaska Marine Highway System, Department of Transportation and Public Facilities, said he was here to answer any questions of the committee members. Number 0308 REPRESENTATIVE PORTER asked Mr. Cummings who the COLD applied to besides the marine highway system employees? Number 0313 MR. CUMMINGS replied the state paid most employees based on where they worked rather than where they lived. There was legislation before the legislature that addressed an employee's duty location, such as, Anchorage or Fairbanks. In the past there were employees that were stationed in Seattle, for example, that were not necessarily state residents. However, the current collective bargaining law required a pay rate for those residing outside of Alaska for every contract. The other contracts tied pay into where a person worked rather than where a person lived. The vessel employees did not have a fixed duty station, so where they lived was considered their duty station. For everybody else it was assumed they lived and worked in the same place. That was not always true for the vessel employees, however. Number 0439 CHAIR JAMES responded the COLD was to augment the cost of living based on where a person lived. Therefore, that would only be for those that did not qualify for a geographic differential. They were not the same. Number 0467 MR. CUMMINGS replied the intent of the geographic differential and what was in the collective bargaining law was the same. The premise was that the employees would be paid at a rate based on where they lived to compensate them for the cost of living in that geographic area. He cited some of the vessel employees lived down south even though they worked in Alaska. He further cited AS 23.40.210 required a COLD. Number 0552 REPRESENTATIVE PORTER asked Mr. Cummings what body of law covered a state employee that was transferred to Washington D.C., for example? Number 0572 MR. CUMMINGS replied AS 39.27.020, the geographic differential provision. It stated the employee would receive six steps below the rate of pay for those living in Alaska. It was different for a temporary relocation assignment, however. Number 0636 REPRESENTATIVE PORTER asked if there was anything in statute that would affect the official determination of residency in those circumstances? Number 0650 MR. CUMMINGS replied, "no." The other labor agreements addressed where a person was working versus where a person was residing. Therefore, one could work in Seattle, for example, and still qualify for the PFD because he worked for a state of Alaska field office. Number 0700 REPRESENTATIVE GREEN asked Mr. Cummings, if a person that worked in Seattle then moved to Alaska and received the COLD, would he receive a higher rate of pay compared to a person already working and living in Alaska? Number 0729 MR. CUMMINGS replied they would receive the same rate of pay at the time they both lived in Alaska. The person that started working in Alaska would start at a higher rate of pay, however. Number 0741 CHAIR JAMES thanked Mr. Cummings for his testimony. She announced she wanted to talk to the department further before taking any action. She would reschedule the bill for Tuesday, April 16, 1996, for further action. Number 0766 REPRESENTATIVE OGAN said he agreed with Representative Porter after listing to the deliberations. He also shared the same aversion towards regulations as Chair James. However, due to the limited amount of time and the limited amount of information, the Administration would be better off handling the issues involved. Number 0814 CHAIR JAMES said she was not as concerned about the regulations the bill would create. She was concerned because the original bill was not specific enough. The bill should give the Administration guidelines to help write regulations.
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