Legislature(2017 - 2018)GRUENBERG 120
03/30/2017 03:00 PM House STATE AFFAIRS
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| Audio | Topic |
|---|---|
| Start | |
| Presentation: Vote by Mail by the Anchorage Municipal Clerk's Office | |
| HB181 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
| + | TELECONFERENCED | ||
| += | HB 181 | TELECONFERENCED | |
| += | HB 163 | TELECONFERENCED | |
HB 181-LEGISLATURE PER DIEM AND TRAVEL ALLOWANCE
3:45:10 PM
CHAIR KREISS-TOMKINS announced that the final order of business
would be HOUSE BILL NO. 181, "An Act relating to per diem for
legislators; relating to a travel allowance for legislators and
legislative employees; and relating to the State Officers
Compensation Commission." [Before the committee, adopted as a
work draft on 3/28/17, was the proposed committee substitute
(CS) for HB 181, Version 30-LS0717\J, Gardner, 3/28/17,
hereafter referred to as Version J.]
3:45:47 PM
BERETT WILBER, Staff, Representative Jonathan Kreiss-Tomkins,
Alaska State Legislature, on behalf of Representative Kreiss-
Tomkins, prime sponsor of HB 181, referred to the email,
included in the committee packet, stating answers to questions
that were posed in the House State Affairs Standing Committee
meeting of 3/28/17.
MS. WILBER relayed question 1: "How does the State Officer's
Compensation Commission (SOCC) recommendation process work, and
what does the SOCC consider?" She mentioned that Kate Sheehan
[Director, Division of Personnel and Labor Relations (DPLR),
Department of Administration (DOA)] relayed during the 3/28/17
committee meeting that the SOCC systematically considers each
group for which it is charged with making recommendations at its
meetings: the governor and the lieutenant governor;
legislators; and department commissioners. After considering
each position or group of positions, it decides whether to make
recommendations. She indicated that in the event it chooses not
to make recommendations, it sends a letter stating that it has
chosen not to make recommendations to change salaries or
compensation. She said that all the information - including
minutes of the SOCC hearings, public testimony, and SOCC reports
- can be found on the SOCC website and is accessible through a
link on the Alaska State Legislature's Bill Action & Status
Inquiry System (BASIS).
MS. WILBER stated question 2: "If SOCC currently has legal
authority to set legislative per diem, why does the Legislative
Council Joint Committee (Legislative Council) still set the
policy?" She explained that in 2009 - a year after the SOCC had
been formally established - it issued its first set of
recommendations. The SOCC recommended that Legislative Council
should continue to set moving expenses and per diem allowances
for legislators in addition to salary increases for legislators
and commissioners. She stated that since the legislature took
no action to reject those recommendations, they were adopted "as
law." She added that AS 24.10.130(c) requires Legislative
Council to set a per diem policy for legislators in accordance
with whatever the SOCC recommends. Since the SOCC recommended
that Legislative Council continue to set legislative per diem,
Legislative Council, following the letter of the law, has
continued to do so.
3:49:15 PM
REPRESENTATIVE WOOL asked for clarification on the answer to
question 2. He stated his understanding that former
Representative Mike Doogan intended the SOCC to set per diem;
the SOCC was tasked with setting per diem; the recommendation by
the SOCC was that Legislative Council continue to set per diem;
therefore, Legislative Council agreed to continue to set per
diem.
MS. WILBER responded that under the 2008 authorizing
legislation, the SOCC was required to set policies on
allowances, benefits, and salary. She relayed that per diem
falls under those policies; however, there was no specific
mandate that the SOCC set a rate of per diem. She added that it
was fully within the authority of the SOCC to ask Legislative
Council to continue to recommend per diem rates.
REPRESENTATIVE WOOL referred to the statutes and commented that
the direction regarding establishing per diem "seemed kind of
circular." He suggested that the SOCC could set per diem,
transmit it in a recommendation, and it would be acceptable.
MS. WILBER answered yes.
REPRESENTATIVE WOOL asked what the necessity is for the proposed
legislation; the SOCC already has the authority to set per diem,
even though it hasn't chosen to do so.
MS. WILBER replied, "That is true." She said the SOCC currently
has the authority to set legislative per diem; it has chosen to
pass that task on to Legislative Council. She offered that
under Version J, the SOCC would be required to recommend per
diem, and Legislative Council no longer would have the authority
to set a policy in accordance with the SOCC's recommendations.
The policy for per diem would be that which was recommended by
the SOCC.
REPRESENTATIVE WOOL asked if under Version J, the SOCC would
have to set the per diem - a definitive actual dollar amount -
and not be allowed to defer to Legislative Council for the per
diem recommendation.
MS. WILBER responded that Representative Wool's assessment was
not quite correct. She stated that the SOCC does not have to
set a precise numerical rate for per diem under Version J; it
would be responsible for setting the policy. She relayed a
hypothetical example: the SOCC recommends that the per diem
rate be 200 percent of the federal per diem rate. She
reiterated that it does not have to set a precise numerical
rate.
REPRESENTATIVE WOOL offered his understanding that under Version
J, the SOCC could not, as policy, recommend that some other
entity recommend a per diem rate.
MS. WILBER replied that Version J states that legislators may
receive per diem allowance during the legislative sessions as
recommended by the SOCC. She said that the mechanism that
legally allowed Legislative Council to set policy in accordance
with what the SOCC recommended would be taken out of statute
under Version J. She referred to page 1, line 14, of Version J
and pointed out that the proposed legislation deletes "an
applicable per diem allowance policy" from the section allowing
Legislative Council to set policy in accordance with what the
SOCC recommends. She mentioned that she would get a legal
opinion on this point; however, she offered her understanding
that Legislative Council's authority to set per diem does not
exist under Version J.
3:55:44 PM
REPRESENTATIVE KNOPP paraphrased from the answer to question 2
regarding legal authority to set per diem, which read as follows
[original punctuation provided]:
The SOCC's recommendations, along with salary
increases for legislators and commissions, included
the following instructions:
Session per diem, travel expenses, moving
allowances, and office expense accounts shall not
be considered compensation. (AS 24.10.100.)
The Legislative Council shall set the amount and
rules governing moving expense and per diem
allowances. (AS 24.10.130.)
REPRESENTATIVE KNOPP asked if the SOCC currently has the
authority to set per diem, since the SOCC is a compensation
commission and the statute clearly says per diem is not
compensation.
MS. WILBER explained that the language that Representative Knopp
cited is from the 2009 recommendation of the SOCC, not state
statute. She said that AS 24.10.130 does not specifically say
that "Legislative Council shall set the amount and rules
governing moving expenses and per diem allowances"; the SOCC
cites AS 24.10.130 as the authority under which Legislative
Council can continue to do so.
3:58:10 PM
REPRESENTATIVE WOOL repeated the first sentence under
"instructions" [in the answer to question 2 in the e-mail],
which read [original punctuation provided]: "Session per diem,
travel expenses, moving allowances, and office expense accounts
shall not be considered compensation. (AS 24.10.100.)" He
suggested that the implication is that the language immediately
preceding the reference is included in that statute.
MS. WILBER apologized for the lack of clarity. She stated that
the SOCC included a reference to AS 24.10.100 within its policy
recommendations; the sentence before it does not refer to the
statutory language of AS 24.10.100, which read:
Sec. 24.10.100. Salary of legislators.
Legislators shall receive a monthly salary under AS
39.23. The president of the senate and the speaker of
the house of representatives may receive additional
compensation under AS 39.23 during tenure of office.
REPRESENTATIVE WOOL asked who makes the decision that per diem
is not compensation. He offered his understanding that per diem
is for room and board and not to be considered compensation even
if it is more than expenses.
MS. WILBER replied that in her research on this issue, she
discovered inconsistency in "what group decides what
compensation is." She deferred the question to Jessica Geary,
Finance Manager, Legislative Administrative Services (LAS)
[Legislative Affairs Agency (LAA)].
REPRESENTATIVE WOOL restated his question regarding who decided
that per diem is not compensation? He asked if per diem not
being considered compensation was for Internal Revenue Service
(IRS) purposes.
4:01:06 PM
JESSICA GEARY, Finance Manager, Legislative Administrative
Services(LAS), Legislative Affairs Agency(LAA), stated that
there are two ways to look at compensation: taxable
compensation and untaxable compensation. She said that per diem
is a reimbursement of expenses; the IRS states that if the
amount does not exceed the maximum federal rate, one does not
have to pay taxes on that per diem and it is deemed
"substantiated." She stated that is the rule the agency
follows; the Alaska Society of Certified Public Accountants
(ASCPA) prepares a legislator tax guide each year, which reviews
the rates and other issues. She reiterated that per diem is
reimbursement for expenses.
4:02:17 PM
REPRESENTATIVE JOHNSON expressed her understanding that the
federal government has declared per diem non-taxable.
MS. GEARY responded that there is a special section of IRS code,
which is 162(h), that applies specifically to state legislators.
She said that it covers different circumstances; legislators
participating in a legislative session can receive per diem
allowance up to the maximum federal rate for every day that the
legislature is in session.
REPRESENTATIVE JOHNSON asked for clarification that the amount
up to the federal rate is non-taxable.
MS. GEARY replied that is correct as long as the maximum federal
rate is not exceeded.
REPRESENTATIVE JOHNSON asked if per diem is referred to as
compensation if it is taxable. She added, "... but maybe it's
just a matter of semantics."
MS. GEARY answered that's accurate. She said in one case it is
considered reimbursement; in another it is considered income.
She added that even if you are taxed on the amount, it is
reimbursement for expenses. She offered that if a per diem rate
exceeding the federal rate was authorized, part would be
reimbursement and the excess would be income; to the legislators
it is still referred to as "session per diem."
4:04:00 PM
REPRESENTATIVE WOOL asked if legislators have always received
100 percent of federal per diem.
MS. GEARY replied that they have received the maximum federal
rate since 1994, when the federal rate was established.
REPRESENTATIVE WOOL mentioned the different situation of the
Juneau legislators: they get per diem, but it is taxed; and
they do not receive housing reimbursement. He asked if their
per diem is not considered compensation.
MS. GEARY responded that it depends on how it is viewed. She
said it is compensation, because it is taxed; however, it is
also session per diem.
4:05:35 PM
REPRESENTATIVE KNOPP restated that any amount over the federal
maximum rate is taxable, and legislators currently receive the
federal rate while the legislature is in session. He said the
federal rate is comprised of the short-term rate for 30 days or
less and the long-term rate for 31 days to 180 days. He stated
that legislators are receiving the short-term rate, even when
they exceed 30 days. He asked if the difference between the
short-term rate, which is $275, and the long-term rate, which is
about $206, is taxable income.
MS. GEARY explained that the long-term rate established by the
federal government in November 2014 applies to those traveling
under the federal travel policy. She mentioned that the federal
government has strict rules in its travel policy, which the
legislators are not required to follow; Alaska's legislators are
not required to use the federal long-term rates. She concluded
by saying that if the legislative per diem rate does not exceed
the federal maximum per diem rate, it will not be taxed.
4:07:43 PM
MS. WILBER continued by stating question 3: "How does per diem
work for State of Alaska (SOA) executive branch employees?" She
relayed that SOA employees have different per diem rates than
legislators and legislative employees; the rates are set by the
commissioner of the Department of Administration (DOA) or by
collective bargaining. She referred to additional documents
further detailing SOA employee per diem rates, which can be
accessed digitally through the links on the e-mail: "State
travel office"; "one-pager on the SOA rates"; and "Alaska
Administrative Manual section on travel."
4:09:24 PM
MS. WILBER relayed question 4: "How does taxation on per diem
rates work?" She mentioned that the IRS allows legislators
whose permanent residences are greater than 50 miles from the
state capitol to receive up to the federal maximum rate of per
diem without being taxed on it. She said Alaska's policy is
that legislators who reside within the 50 miles receive 75
percent of the federal per diem rate, and the money they receive
is subject to taxation by the IRS.
4:10:11 PM
MS. WILBER stated question 5: "What kind of per diem do
legislative staff receive?" She said that legislative staff are
eligible to receive per diem when they are traveling for work;
they do not receive a "session per diem" as do legislators; and
they are entitled to reimbursement for lodging, meals, and
travel when they are traveling to the state capital or returning
to their places of residence after the session. She cited the
2006 Alaska Supreme Court case, Benavides v. State, which
definitively determined that legislative aides would not receive
session per diem at the same rate as legislators.
MS. WILBER relayed question 6: "How does the pay for
legislative staffers compare with the pay in the other branches
of [state] government?" She mentioned that this question was
about Representative Wool's suggestion during the 3/28/17 House
State Affairs Standing Committee meeting that salaries for
legislative staff are adjusted and therefore do not match the
salaries for similar positions in other branches of government.
She relayed that in consulting with Ms. Geary, she learned that
positions in the different branches are not necessarily
comparable. Ms. Geary explained that political staffers are
paid at a rate two or four ranges higher [than a comparable
executive branch employee] to compensate them for not receiving
overtime pay or per diem and because their positions tend to be
more "volatile" than non-political positions.
4:12:41 PM
REPRESENTATIVE BIRCH expressed his appreciation for the
information presented.
REPRESENTATIVE WOOL concurred. He asked for the number of
states in which the legislators decide their own salaries
through legislation.
MS. WILBER replied that she did not know but would provide that
information.
4:13:56 PM
REPRESENTATIVE JOHNSON asked what year the legislature
transitioned from an all-year session to a 120-day session.
MS. WILBER responded that she did not know the history of the
length of the legislative session in Alaska.
REPRESENTATIVE WOOL expressed his belief that in 2006, a law was
passed to reduce the session from 120 days to 90 days; however,
the Alaska Constitution [allows for the 120 days].
4:15:05 PM
REPRESENTATIVE BIRCH referred to the increase in legislative
salaries from $24,000 to [$50,400] in 2006. He said that prior
to that, legislators were pro-rating interim per diem; when the
salary was increased, interim per diem was eliminated.
REPRESENTATIVE WOOL stated that Representative Birch's comments
refer to changes in salary and per diem structures. He
suggested that there was a change in the Alaska Constitution
making the session 120 days. He mentioned a time well in the
past in which session was "open-ended" and lasted well into the
summer.
REPRESENTATIVE JOHNSON recollected there being long legislative
sessions when she was a child, and there were breaks. She said
that at some point, session was reduced to 120 days, then to 90
days. She offered that she was trying to find a correlation
between the length of the session and the per diem and salary
rates. She noted that from 1983 to 1987, the legislative salary
was $3,900 per month, but she has no information on the rate of
per diem at that time.
4:17:30 PM
REPRESENTATIVE KNOPP expressed his appreciation for the
legislative history presented in the packet. He referred
Representative Johnson to the information in the packet
reflecting the Juneau and non-Juneau legislative rates and the
Legislative Council rate adjustments.
MS. WILBER stated that the document entitled "Session and
Interim Per Diem History" was provided by the LAA staff. She
also pointed out that the Interim per diem and the salary raise,
which was discussed, occurred in 2009 with the first set of
recommendations from the SOCC.
4:19:43 PM
REPRESENTATIVE KNOPP stated that he does not support the
proposed legislation. He offered that the issue being addressed
by HB 181 is: Is it appropriate for Legislative Council -
members of the legislative bodies - to set per diem rates for
legislators? He said that Legislative Council meets about every
two years, and the federal government has adjusted compensation
rates three times in the last 15 months. He pointed out the
many times Legislative Council has adjusted legislative per diem
rates to react to the federal government's actions. He
suggested that the amount of work necessary for Legislative
Council to set the rates is "incredible"; he is concerned with
the SOCC arbitrarily setting the rates; and he mentioned the
extensive work by the federal government to determine the rates.
He stated that he preferred that the long-term federal rate be
adopted and would support a concurrent resolution by both bodies
to do so.
MS. WILBER responded that every year since its inception in 2009
the SOCC has issued either recommendations or transmittals that
there would be no recommendations, excluding 2010. She
mentioned that Legislative Council set legislative per diem at
the federal rate in 1994, and it does not do any additional work
when the rate changes. The LAA accounting staff makes the
adjustment.
REPRESENTATIVE KNOPP conceded that the additional work would be
performed by LAA staff; however, in using the federal rate, the
work already would have been done. He expressed his belief that
it would be difficult for the SOCC to determine the per diem
rate and said that he suspects the SOCC would use the federal
rate to set per diem. He opined that the short-term rate is
"over the top" and the long-term rate would be more appropriate
compensation.
4:25:50 PM
REPRESENTATIVE WOOL said that he concurred with Representative
Knopp. He suggested that using the maximum federal rate of per
diem has been easy to calculate and set. He mentioned that the
SOCC has met almost annually; it has made recommendations on
salaries, excluding those of the legislators, which has not
changed since 2008; and it has statutory authority to make
recommendations, but has deferred to Legislative Council. He
stated that the proposed legislation would mandate that the SOCC
set the rate instead of Legislative Council. He offered that
the effect of the proposed legislation would be slight and said
he is "okay with the status quo as long as it doesn't get
abridged." He said, "I'm not sure it's as broken as people
think, except it gets politicized a lot. Hopefully, if the
system is working, it will stay within this framework."
MS. WILBER clarified that under Version J, the SOCC would not be
required to select the amount of per diem; it would be required
to set the policy. She offered that the SOCC could choose to
set a flexible scale, like the fluctuating federal per diem;
they could choose to stay with the federal per diem rate; they
could choose to use the short-term rate; or they could choose to
use the long-term rate - 75 per cent of the federal per diem
rate. She stated that the benefit of requiring the SOCC to set
the per diem rate, as opposed to Legislative Council, is that
doing so "takes the decision out of the political realm." She
added that even though it may be easy to have Legislative
Council set per diem policy, it inherently politicizes the
issue; having an apolitical body, such as the SOCC, set per diem
would remove the politicization.
REPRESENTATIVE WOOL expressed his understanding that the
proposed legislation would not remove politicization, because
the legislature must introduce a bill within a certain period to
adjust the recommendation. Once the bill is introduced, the
issue becomes political. He opined that removing the political
aspect of the process is impossible. He suggested that in more
than half of states, the legislature is involved in setting
compensation.
MS. WILBER clarified that currently and under the proposed
legislation, the legislature cannot adjust the SOCC's
recommendations; it can only reject them through legislation.
4:31:30 PM
REPRESENTATIVE KNOPP asked if setting a policy through a joint
resolution would de-politicize the issue.
CHAIR KREISS-TOMKINS commented that the House does "weigh in"
through an operating budget floor amendment. He opined that a
joint resolution has merit.
MS. WILBER responded that she does not know which process would
be less political, but she opined that passing legislation of
any type is inherently political. She offered that the
advantage of the SOCC is that it is not comprised of
legislators, but of civilians with no political futures.
4:33:07 PM
REPRESENTATIVE TUCK referred to [Section 5] of the proposed
legislation, which read as follows:
It is the policy of the legislature that the
commission recommend an equitable rate and form of
compensation, per diem allowances during legislative
sessions, benefits, and other allowances for
legislators.
REPRESENTATIVE TUCK asked if his understanding is correct: The
authority still lies with the legislature, as the recommendation
comes through the legislature. In 2009, the recommendation was
adopted because of the legislature not disapproving it. Under
the proposed legislation, the legislature still can disapprove;
it would not lose its authority; and the SOCC would make its
recommendations, which would become policy unless the
Legislature disapproves.
MS. WILBER said, "Yes, that is correct." She added that the
proposed legislation would not change the mechanism by which the
SOCC makes recommendations; it merely would add per diem to the
list of items that it must recommend. She said the legislators'
ability to reject the recommendations or allow them to be
adopted through no action would remain unchanged under Version
J.
REPRESENTATIVE TUCK commented that he supports the proposed
legislation. He stated that the SOCC has performed well in the
past in setting compensation. He expressed his belief that the
SOCC's recommendation puts the public at ease, especially in the
event of salary, per diem, or benefit increases; it provides
"cover" for the legislature; it is made up of public members;
and legislators are permitted to testify to the SOCC. He
reiterated that the proposed legislation represents a good
public process.
4:36:12 PM
CHAIR KREISS-TOMKINS opened public testimony on HB 181. After
ascertaining that there was no one who wished to testify, he
closed public testimony.
REPRESENTATIVE WOOL asked why the SOCC has not recommended a
salary increase for legislators since 2008.
4:37:19 PM
KATE SHEEHAN, Director, Division of Personnel and Labor
Relations (DPLR), Department of Administration (DOA), informed
the committee that she serves as secretary to the SOCC. She
answered that SOCC's discussion about compensation has varied
from meeting to meeting. She said that when the SOCC decided to
take no action, it was due to budget constraints. She stated
that in the last meeting, the SOCC's only recommendation was to
allow a deputy commissioner to keep his/her salary in the event
he/she became commissioner at a lower salary. She relayed that
in the meeting before the last, the SOCC recommended increases
to the governor's, lieutenant governor's, and commissioners'
salaries; it consulted the Consumer Price Index (CPI) and
geographic differentials for commissioners. She said that
former Governor Sean Parnell stated that he would decline a pay
increase for himself but supported the increase for
commissioners. Ms. Sheehan added that the legislature rejected
the SOCC recommendations that year.
REPRESENTATIVE WOOL asked if the recommendations Ms. Sheehan
related were the only recommendations the SOCC has made since
its inception.
MS. SHEEHAN replied that she would have to review prior meeting
[minutes], but she confirmed that there has been no
recommendation on legislator salaries after the 2009
recommendation.
REPRESENTATIVE WOOL commented that there may be some expectation
that a legislator's job is "not about the money" but is public
service. He said for a professional in the executive branch,
the position is considered a fulltime career. He suggested that
cost of living, inflation, and CPI should be considered
regarding legislator salaries.
MS. SHEEHAN relayed that in the last [SOCC] meeting, most of the
discussion was concerning the state budget situation. She
mentioned that she would have to review the minutes of prior
meetings to be able to report on the discussions that took
place.
4:40:21 PM
REPRESENTATIVE TUCK asked when the last wage increase for
legislators was prior to 2009. He suggested that it had been a
long time since any wage increase before that year.
MS. SHEEHAN replied that she did not recall.
MS. WILBER answered that she also did not have that information.
4:41:47 PM
REPRESENTATIVE LEDOUX moved to report CSHB 181, Version 30-
LS0717\J, Gardner, 3/28/17, out of committee with individual
recommendations and the accompanying zero fiscal note.
REPRESENTATIVE KNOPP objected.
4:42:10 PM
A roll call vote was taken. Representatives Tuck, LeDoux,
Johnson, and Kreiss-Tomkins voted in favor of moving CSHB 181,
Version 30-LS0717\J, Gardner, 3/28/17, out of committee with
individual recommendations and the accompanying zero fiscal
note. Representatives Knopp and Wool voted against it.
Therefore, CSHB 181(STA) was reported out of the House State
Affairs Standing Committee by a vote of 4-2.
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