Legislature(1999 - 2000)

02/11/1999 08:08 AM STA

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
HB 74 SALARIES FOR CERTAIN STATE OFFICIALS                                                                                      
                                                                                                                                
Number 0433                                                                                                                     
                                                                                                                                
CHAIR JAMES announced HB 74, "An Act relating to salary caps and to                                                             
the power to transfer certain positions to the classified service                                                               
and entitlement to longevity increments for certain state                                                                       
officials," is before the committee and that she didn't plan on                                                                 
moving it out of committee today.                                                                                               
                                                                                                                                
REPRESENTATIVE KERTTULA stated that she had a conflict with this                                                                
piece of legislation, because her husband, her sister, and her                                                                  
cousin all work for the State of Alaska and could be affected.                                                                  
                                                                                                                                
REPRESENTATIVE SMALLEY objected.                                                                                                
                                                                                                                                
REPRESENTATIVE OGAN said, "Please consider this bill, not as an                                                                 
end, but as a beginning in making the necessary reductions to our                                                               
new fiscal reality.  You have in your packets a comparison of the                                                               
governor's budget and the legislature's from 1996 through 1999.                                                                 
Also provided is a summary by Pam Varni from Legislative Affairs                                                                
outlining the very responsible consistent reforms the legislative                                                               
branch of the government has taken to respond to public demands for                                                             
a leaner more efficient government.  Please take time to review it.                                                             
It is an excellent model for the Administration to use as an                                                                    
example of how to do more with less."                                                                                           
                                                                                                                                
REPRESENTATIVE OGAN continued, "Also in your packet is a fiscal                                                                 
note that shows a savings of at least $3 million in salaries in                                                                 
certain partially-exempt, and exempt persons within the                                                                         
Administration were capped at a range 21, step F.  I fully expect                                                               
the Administration to raise arguments of the people who supervise,                                                              
now being paid less than those they direct.  This bill is not                                                                   
unique in that regard.  In fact there are many employees who not                                                                
only make more than directors, or commissioners; they make more                                                                 
than the Governor does.  Perhaps someone in the Administration                                                                  
could tell the committee how many employees in our state have a                                                                 
high salary higher than the Governor's.  I expect the                                                                           
Administration to show us the list of some 32 legislative employees                                                             
who are not capped at 21-F."                                                                                                    
                                                                                                                                
Number 0468                                                                                                                     
                                                                                                                                
REPRESENTATIVE OGAN said, "I recognize that these employees, with                                                               
a high degree of education credentials or responsibility, should be                                                             
offered more in wages.  In HB 74 I have intentionally provided a                                                                
section for similar exemptions for the Administration.  And we're                                                               
open to expanding that list and I think a good example of that is                                                               
something I read in the newspaper about a gentleman who has to be                                                               
a doctor, whose a director of a division, and certainly that would                                                              
be a rational exemption.  I also expect to hear the argument that                                                               
qualified people will not work for salaries that are too low."                                                                  
                                                                                                                                
REPRESENTATIVE OGAN continued, "The expertise argument fails on at                                                              
least two counts.  First, many of these political positions are                                                                 
political.  If expertise and institutional knowledge were important                                                             
there would not be a huge turnover in these positions. ... With                                                                 
each administration that comes in a lot of people that had these                                                                
positions were removed, not because they were doing a poor job, but                                                             
simply they were in the wrong party.  And that is, of course, the                                                               
prerogative of the Governor, because they serve in his pleasure.                                                                
If these positions were advertised at a 21-F, as the legislature                                                                
currently offers, the Administration would undoubtedly find many                                                                
applicants, especially during this downturn period.  I think there                                                              
are at least 600 people that were laid off a week or two ago from                                                               
one of the major oil companies and I imagine a lot of those guys                                                                
would be good managers.  They might have the wrong letter behind                                                                
their name, but they would be good managers."                                                                                   
                                                                                                                                
Number 0493                                                                                                                     
                                                                                                                                
REPRESENTATIVE OGAN continued, "For example, our new Commissioner,                                                              
Ed Flanagan, has taken, as have other administrator's in the past,                                                              
pay cuts when he was promoted.  In Mr. Flanagan's case it has been                                                              
reported the cut would be about $3,000 a year as he goes from                                                                   
deputy commissioner to commissioner.  Perhaps the Administration                                                                
could give other examples of cuts for promotions."                                                                              
                                                                                                                                
REPRESENTATIVE OGAN said, "I have also heard comments about the                                                                 
recent wage and benefit study showing top-level ranges being within                                                             
the standards of the private sector.  Madam Chair, could this be                                                                
the same study, which was criticized just few short weeks ago by                                                                
the same Administration as being politically motivated and not                                                                  
accurate?  Let's take a look at the executive summary of the study.                                                             
On page 2, if you have it in your packet, the executive summary                                                                 
shows":                                                                                                                         
                                                                                                                                
     The costs of benefits for state employees are substantially                                                                
     higher than the survey participants.  Now I think the study                                                                
     shows that the high level of exempt employees, their salary                                                                
     compensation is fairly consistent.  But it also says the state                                                             
     contributions toward medical is 31 percent higher than the                                                                 
     private sector.  The state contributions toward SBS                                                                        
     (Supplemental Benefits System) and PERS (Public Employees'                                                                 
     Retirement System) is 25 percent higher and paid time off                                                                  
     benefits for state employees is 48 percent higher than the                                                                 
     average surveyed participant.                                                                                              
                                                                                                                                
REPRESENTATIVE OGAN further stated, "The question of whether or not                                                             
a person takes a professional position needs to be asked, not on                                                                
salary alone, but on the entire package available.  And we haven't                                                              
even addressed in those figures the travel, and we've got some                                                                  
information in there on what the travel of a lot these people are                                                               
and the airline miles.  Now I know, I'm consistently taken to task,                                                             
as a legislator, for my high salary, and my opponents always point                                                              
out what the total package for the cost of me being a legislator,                                                               
which includes my office account, any travel that I do, my moving                                                               
expenses, and those.  And they all say well you max x-amount of                                                                 
dollars per year.  And if we look at it critically with that point                                                              
of view, some of these folks are pushing $200 thousand."                                                                        
                                                                                                                                
Number 0528                                                                                                                     
                                                                                                                                
REPRESENTATIVE OGAN said, "The committee needs to know what the                                                                 
total typical benefit package is worth for a range 28, step F                                                                   
position.  I respectfully ask the chair to request that                                                                         
information.  This is a political business, not a corporate                                                                     
performance driven entity.  Many of the positions in this bill are                                                              
political appointees, first and foremost.  I do not mean to suggest                                                             
that credentials are not necessary, but experts of the wrong                                                                    
political persuasion are simply not hired for these positions.  In                                                              
other words, expertise is not always the primary hiring criteria."                                                              
                                                                                                                                
Number 0535                                                                                                                     
                                                                                                                                
REPRESENTATIVE OGAN continued, "This Administration contains at                                                                 
least 30 persons who once worked for the legislature.  Just like                                                                
our staff, they once traveled to Juneau twice yearly without                                                                    
reimbursement, they managed two residences, worked long hours and                                                               
received no travel budget or area pay differential.  And I would                                                                
suggest Madam Chair that we have some pretty fine employees around                                                              
here who are pretty highly qualified.  And actually I know some                                                                 
employees who are pretty highly educated. .... With a few                                                                       
exceptions these employees are all capped at range 21-F.  Why were                                                              
these professionals originally attracted to the legislative jobs?                                                               
Were they any less talented or ambitious when they held positions                                                               
here?  The point is, we have similarly qualified professionals                                                                  
working with vastly different compensation packages."                                                                           
                                                                                                                                
REPRESENTATIVE OGAN added, "As members look at these financial                                                                  
notes, please also consider all the benefits and additional perks.                                                              
The Legislative Budget and Audit Committee examined the travel of                                                               
deputy commissioners and directors and we have that handout.                                                                    
Please note the costs to the state with airline miles being                                                                     
accumulated as additional personal benefits to all who travel.  We                                                              
don't address that in the bill, but I would just like to state for                                                              
the record that if everyone in the state was willing to give up                                                                 
their airline miles as a perk, I would certainly be willing to go                                                               
along with that and as we build up our accounts - be able to credit                                                             
those for our state travel.  What's good for the goose is good for                                                              
the gander."                                                                                                                    
                                                                                                                                
REPRESENTATIVE OGAN asked, "Can we afford to make further                                                                       
legislative cuts and leave the Administration whole?  Should we                                                                 
eliminate positions rather than reduce salaries?  Should we reduce                                                              
benefits and leave salaries and positions alone?"                                                                               
                                                                                                                                
Number 0564                                                                                                                     
                                                                                                                                
REPRESENTATIVE OGAN followed, "I do not have the final answer.  I                                                               
do know the governor has asked the private sector; our constituents                                                             
to sacrifice and cut their budget.  As the Governor himself has                                                                 
emphasized we are all going to have to make some adjustments.  I                                                                
have asked the persons affected by this bill, many I know very                                                                  
well, to please suggest their ideas for responding to our revenue                                                               
shortfalls.  I am asking them to step up, as they support their                                                                 
governor who is asking the public to pay taxes."                                                                                
                                                                                                                                
REPRESENTATIVE OGAN closed, urging the committee to use this bill                                                               
as a place to find facts, to ask hard questions, to encourage                                                                   
solutions and not controversy.  Let it be a beginning point for                                                                 
those, who the public looks to for leadership, to do so by example.                                                             
He said, "As we discover positions, which should be exempt, we may                                                              
add them into the section in the bill established for that purpose.                                                             
After all that has been examined, and if we find adjustments to the                                                             
caps in this bill are fair and necessary, I am prepared to discuss                                                              
those changes."                                                                                                                 
                                                                                                                                
REPRESENTATIVE HUDSON asked Representative Ogan if his concept                                                                  
takes into consideration the level of responsibility in the pay                                                                 
structure.                                                                                                                      
                                                                                                                                
REPRESENTATIVE OGAN replied, "Yes sir, I think (indisc.--a                                                                      
teleconference network glitch) as far as the responsibility with                                                                
the governor, and many directors, and many deputy commissioners,                                                                
and even commissioners are paid more than the governor.  And many                                                               
directors are paid more than commissioners."                                                                                    
                                                                                                                                
Number 0579                                                                                                                     
                                                                                                                                
REPRESENTATIVE HUDSON said he believes that is a wrong comparison.                                                              
For example, director of the Alaska Marine Highway, is responsible                                                              
for one of the largest passenger liners in America, which entails                                                               
managing 700 personnel, a fleet of ships, and all of the politics                                                               
and rigors of the schedule.                                                                                                     
                                                                                                                                
REPRESENTATIVE OGAN mentioned that he has taken into consideration,                                                             
there being certain exemptions, as stated in a section of the bill                                                              
on page 2, line 4.  Some people have a certain level of                                                                         
responsibility that the committee may wish to give deference to.                                                                
There is something wrong with the system when people that have the                                                              
ultimate responsibility are paid less than the people under them.                                                               
                                                                                                                                
Number 0627                                                                                                                     
                                                                                                                                
REPRESENTATIVE KERTTULA asked whether or not there was going to be                                                              
a geographic differential, for example are people in Nome going to                                                              
get paid the same as people in Juneau.                                                                                          
                                                                                                                                
REPRESENTATIVE OGAN said that's correct and urged the                                                                           
Administration to use the legislature as an example.                                                                            
                                                                                                                                
REPRESENTATIVE KERTTULA mentioned some of the legislative staff                                                                 
don't work year-round.                                                                                                          
                                                                                                                                
REPRESENTATIVE OGAN stated the legislative staff does work                                                                      
year-round.                                                                                                                     
                                                                                                                                
CHAIR JAMES clarified that some employees work year-round and some                                                              
don't.                                                                                                                          
                                                                                                                                
REPRESENTATIVE KERTTULA referred to Section 4.  She said it                                                                     
wouldn't allow for any pay increments for the deputies.  They could                                                             
never get a pay increase once they came in that would be as it is                                                               
drafted.                                                                                                                        
                                                                                                                                
REPRESENTATIVE OGAN replied that's correct.  If they're at their                                                                
maximum pay range, that's the maximum they could get.                                                                           
                                                                                                                                
REPRESENTATIVE KERTTULA asked, "Was it your intention to never                                                                  
allow a pay raise, though, because that appears to be how it's                                                                  
written right now?"                                                                                                             
                                                                                                                                
REPRESENTATIVE OGAN replied that would be correct.                                                                              
                                                                                                                                
Number 0647                                                                                                                     
                                                                                                                                
CHAIR JAMES asked, "We're talking about political appointees, not                                                               
people that are hired for long periods of time.  We're talking                                                                  
about political appointees in this case aren't we? ... Political                                                                
appointees not people that are hired through the hiring process ...                                                             
in collective bargaining and those kinds of things?"                                                                            
                                                                                                                                
REPRESENTATIVE OGAN replied, "That's correct Madam Chair.  It's                                                                 
simply political appointees and it's pretty well defined I believe                                                              
and they'd be held at the same standard as our legislative                                                                      
employees because they are essentially political employees.  I mean                                                             
we hire them at our will and they serve at our pleasure."                                                                       
                                                                                                                                
REPRESENTATIVE HUDSON said, "We are talking about deputy                                                                        
commissioners, assistant commissioners, and directors.  I guess the                                                             
problem that I have is that we have many people down beneath the                                                                
directors and the commissioners who are already up in range 22 to                                                               
24 -- and the high salary grades because they've been around for                                                                
many years.  My concern is that, and while I accept the prime                                                                   
sponsor of the bill as a point to start from and to really start                                                                
thinking seriously about how we can reduce are cost of government,                                                              
we have collective bargaining, we have responsibilities and they're                                                             
almost contractual responsibilities.  I think we'd have to really                                                               
look seriously at whether or not we don't have to go back; if we're                                                             
going to take care of the division director are we going to then be                                                             
forced to go back in and take care of everybody else that would                                                                 
earn a higher salary, because they've been there longer or because                                                              
they have earned it and they're collectively bargained for a                                                                    
particular position."                                                                                                           
                                                                                                                                
CHAIR JAMES stated, "This is my seventh year here.  And I've been                                                               
concerned about the parameters in which we hire legislative staff.                                                              
...  They are more restrictive I believe than the Administration.                                                               
But for legislative staff there is the number movement.  If you                                                                 
started at a 21 and ... the next year you get a merit increase.                                                                 
But if you get to 21-F you're at the top and you can't go any                                                                   
further.  Some of these folks that have been hired at 21 already                                                                
are at 21-F because they have been working elsewhere in the State                                                               
... and are qualified for a higher appointed amount.  It's very                                                                 
difficult to compare ... with other employees, where legislative                                                                
employees are hired for seven days a week, 24-hours a day ... with                                                              
no overtime."  People that are not from Juneau have to pay their                                                                
own way and we're not having a shortage of finding people who want                                                              
to work.  It is like comparing "apples and oranges" when people are                                                             
hired to work for the Administration, and when people are hired to                                                              
work for the legislature."                                                                                                      
                                                                                                                                
TAPE 99-2, SIDE A                                                                                                               
                                                                                                                                
[Approximately three minutes of testimony was lost due to recorder                                                              
malfunction].                                                                                                                   
                                                                                                                                
Number 0001                                                                                                                     
                                                                                                                                
REPRESENTATIVE OGAN said that what spurred this legislation was a                                                               
discussion with some high-level executives of the oil companies                                                                 
attending the Alliance Conference.  One of the oil companies said                                                               
that their executive budget has been cut by 50 percent.  They have                                                              
profit-driven programs as opposed to constitutionally mandated                                                                  
programs, which is different, but the reality is that they are on                                                               
the same fiscal stream.  He said that he has yet to see any cuts on                                                             
the upper echelon of the bureaucracy.  The legislature has made a                                                               
lot of cut backs, but the upper levels need to be made to                                                                       
reorganize.                                                                                                                     
                                                                                                                                
Number 0056                                                                                                                     
                                                                                                                                
TOM BOUTIN mentioned he has lived in Alaska since 1973 and has                                                                  
lived in Juneau since 1983.  He said supports HB 74 and that he                                                                 
believes the government needs to move toward solving its fiscal                                                                 
problems, before asking the private sector to help.  He said,                                                                   
"State government took its oil money and bulked up and now it has                                                               
to adjust to reduce circumstances, that happens in the private                                                                  
sector very often.  Alaskans have a government that was built by                                                                
oil.  Now a process needs to take place to determine how much                                                                   
government we can have without oil.  This bill brings an important                                                              
stakeholder, the executive branch management and professionals into                                                             
that process and certainly gets everyone's attention.  I think the                                                              
legislature needs to do that and it needs to be done very soon.                                                                 
Before coming here today I talked with people who currently have                                                                
state government positions that could be directly impacted if HB 74                                                             
became law.  I think if you polled state employees the majority                                                                 
might favor this bill over alternatives.  I would not be surprised                                                              
if those who would have their salaries reduced by this bill would                                                               
favor this level of pay roll reduction over a state income tax."                                                                
                                                                                                                                
MR. BOUTIN continued, "One person pointed out that salary cuts that                                                             
might result from HB 74 would be before tax and therefore the real                                                              
impact on take home pay would be better.  I hope everyone could                                                                 
agree that state payroll reductions would certainly would be more                                                               
efficient than new taxes and have a much smaller impact on the                                                                  
Alaska economy.  It will be interesting to what the fiscal notes                                                                
say; none were available when I checked yesterday."                                                                             
                                                                                                                                
MR. BOUTIN said, "Like many people in Alaska that I know - I've                                                                 
worked for both the private sector and government.  In working for                                                              
the government, I worked first for the Alaska Department of Revenue                                                             
and then for the Department of Natural Resources.  The positions                                                                
were in the professional service and therefore exempt or partially                                                              
exempt.  The Department of Revenue job was paying about $73                                                                     
thousand a year; when I took the job at the Department of Natural                                                               
Resources that job paid $83 thousand a year.  Public service should                                                             
not pay as much as the private sector.  I have never worked for a                                                               
private sector firm which gave any where near as much paid                                                                      
vacation, any where near the 13 paid holidays, nor the other                                                                    
benefits, such as not having to pay social security and having the                                                              
Supplemental Benefits System, the additional Public Employee                                                                    
Retirement System and a Deferred Compensation Plan."                                                                            
                                                                                                                                
MR. BOUTIN continued, "I have to tell you it was an eye-opener for                                                              
me to see people not only take sick leave when they were ill -                                                                  
something I never encountered in the private sector, and also take                                                              
sick leave when family members were ill.  Most importantly of all,                                                              
all of my private sector jobs had a normal work week of six,                                                                    
ten-hour days including my first job in Alaska, which was a logging                                                             
engineer position at 'Ketchikan Pulp'.  So, as far as I know,                                                                   
professional positions, and that is what HB 74 impacts, continue to                                                             
be six tens in the private sector.  The private sector manager has                                                              
to turn a dollar into jobs, costumer satisfaction, and at least a                                                               
dollar ten or a dollar and a quarter.  Productivity is measured and                                                             
managers either earn their keep or they show them the door."                                                                    
                                                                                                                                
Number 0127                                                                                                                     
                                                                                                                                
MR. BOUTIN said, "The type of budget cut proposed by HB 74 is not                                                               
unreasonable given the budget cuts that need to come.  Hardly a                                                                 
week goes by that some large lower 48 private sector firm doesn't                                                               
announce major payroll cut backs.  Now Alaska government has to cut                                                             
back; it's unfortunate, but it's not unhealthy.  It would be                                                                    
unhealthy to not first reduce the costs of government.  I think                                                                 
that cutting the Alaska government payroll must take place, and                                                                 
beginning at the higher echelons is good process and good                                                                       
management."                                                                                                                    
                                                                                                                                
MR. BOUTIN continued, "The rank and file should be much more                                                                    
willing to understand the other changes that need to come if a                                                                  
professional staff has first had to tighten its belt.  If General                                                               
Motors had just lost all sales of the Cadillac, Oldsmobile, Buick                                                               
and Pontiac divisions, cutting the pay of top executives and                                                                    
grounding the corporate jet fleet would be a meaningful symbol and                                                              
an important preliminary step to solving the problem.  I think                                                                  
symbolism is important in managing; I think that bringing every                                                                 
part of an organization into the solution is good process.                                                                      
Sometimes government people like to talk about the public as their                                                              
customers; I think that before you go to your customers to try to                                                               
raise prices, you need to reduce your own costs.  HB 74 is a small,                                                             
but an important step."                                                                                                         
                                                                                                                                
MR. BOUTIN further stated, "State government is spending at least                                                               
$3 million more than it is taking in each day, about $7 thousand                                                                
per minute based on a 7.5-hour day, therefore, I'm expecting many                                                               
measures like HB 74 to be enacted.  I think that the private sector                                                             
is expecting measures like this to be implemented before any                                                                    
discussion of new taxes, I know I am.  I keep reading in the                                                                    
newspapers that this budget situation needs to be explained to the                                                              
public; the thinking seems to be that a person who works 30-hours                                                               
a week at K-Mart and 30-hours a week at Costco, with no benefits,                                                               
would say fine to an income tax if only she understood how much                                                                 
state revenues have diminished.  I think it's curious that no one                                                               
is first trying to bring the 21 thousand state employees into the                                                               
process."                                                                                                                       
                                                                                                                                
MR. BOUTIN said, "HB 74 goes a long way toward doing that, a good                                                               
beginning.  I also think the public would take notice if it were                                                                
quickly enacted.  For several years now the Alaska legislature has                                                              
shown leadership, taken the heat.  HB 74 demonstrates the sort-of                                                               
leadership that is needed right now."                                                                                           
                                                                                                                                
Number 0174                                                                                                                     
                                                                                                                                
MR. BOUTIN concluded, "The final point I want to make is that in my                                                             
experience, legislative staffers work very hard compared to                                                                     
Administration personnel.  Of course there are hard working people                                                              
in every administration, but I'd be quite surprised if anyone does                                                              
not believe that legislative staffers work harder.  The key point                                                               
is that every legislative staffer works hard, by hard worker I'm                                                                
talking about people who come in early and work late, always                                                                    
working against deadlines, always producing.  The Administration's                                                              
managers can spend a lot of time traveling, going to meetings,                                                                  
churning, going to the Anchorage Board Room any Friday night, yet                                                               
you call their offices on Saturdays and most of those people aren't                                                             
at work; they don't work Sundays either.  After a while you come to                                                             
realize they do not intend to make up the work they missed when                                                                 
they were traveling and sitting in meetings.  If the top pay of a                                                               
legislative staffer is going to be used as a benchmark for                                                                      
government workers, then I don't think that any government pay                                                                  
level should exceed what the legislature pays even if oil goes back                                                             
to $25.  Please move this bill on behalf of the legislative staff                                                               
that will be on this floor working this Saturday, and for the woman                                                             
who works 30-hours a week at Costco and 30-hours a week at K-Mart                                                               
just to make ends meet."                                                                                                        
                                                                                                                                
Number 0203                                                                                                                     
                                                                                                                                
ALISON ELGEE, Deputy Commissioner, Department of Administration,                                                                
said that she is here on behalf of the Administration to oppose HB
74.  The concern is one that Representative Hudson has already                                                                  
expressed.  That is qualifications are very important for these                                                                 
positions, but the underlying responsibility is really the                                                                      
benchmark against which we determine our compensation policy.  When                                                             
you look at the responsibilities of the director level people, and                                                              
the Alaska Marine Highway example is a good one, where the                                                                      
management responsibility includes management of several millions                                                               
of dollars and several hundred employees on a year-round basis.  It                                                             
is difficult to compare that job with that of a staff assistant to                                                              
the legislature.  We need to be competitive not only internally to                                                              
state government, but also externally to attract good qualified                                                                 
people to take these positions.  She mentioned the Department of                                                                
Administration prepared the attached fiscal note.                                                                               
                                                                                                                                
MS. ELGEE explained, "There are a couple of points that I would                                                                 
like to make on the benefit analysis that was raised by                                                                         
Representative Ogan.  He picked three specific areas of benefits                                                                
that the study showed were higher than their comparables that they                                                              
used in conducting that study.  The overall benefit package, they                                                               
said, was only 7 percent higher than the comparables.  When you                                                                 
take apart the pieces, the retirement and benefits are identical to                                                             
every public sector employee in the state of Alaska - be it a state                                                             
employee or a municipal employee.  And, that is also recorded by                                                                
their 'KPMG' study, the retirement and benefits are identical.  The                                                             
health benefits are I think overstated in their comparisons,                                                                    
because they have compared a number of employees from outside of                                                                
the state of Alaska that participate in managed care plan                                                                       
environments which we do not have available to use in this state."                                                              
                                                                                                                                
MS. ELGEE further stated, "When you look at a comparison that is a                                                              
direct conventional plan comparison to the state of Alaska's costs,                                                             
on the employer side our costs are running from zero to 8 percent                                                               
higher.  On the employee contribution side, our employees                                                                       
contribute as much as 50 percent higher than the comparables that                                                               
are used in that study.  And when you look at the paid time off                                                                 
benefits, you end up with a distorted comparison because what                                                                   
'KPMG' did was take the number of days off, convert it to dollars,                                                              
and then run it against a base level comparison where the dollars                                                               
that you're starting with are substantially different.  If it is                                                                
look at it on a day-by-day basis, the people that we have working                                                               
for state government in an annual and sick leave environment do                                                                 
have more paid days off than their comparables in the study.  But                                                               
the majority of our employees are in a personal leave environment                                                               
and those employees actually receive less paid time off than the                                                                
comparables that were cited."                                                                                                   
                                                                                                                                
REPRESENTATIVE OGAN asked if Ms. Elgee would be affected by the                                                                 
passage of HB 74.                                                                                                               
                                                                                                                                
MS. ELGEE replied yes.                                                                                                          
                                                                                                                                
REPRESENTATIVE OGAN asked why didn't the Administration send a                                                                  
commissioner that does not have a conflict to testify on this.                                                                  
                                                                                                                                
MS. ELGEE replied that the time demands on the staff varied and she                                                             
agreed to do it.                                                                                                                
                                                                                                                                
REPRESENTATIVE OGAN asked, "Is it the position of the                                                                           
Administration that they take no cuts in salary or benefits?"                                                                   
                                                                                                                                
MS. ELGEE said she felt it's inappropriate to say that the                                                                      
Administration is unwilling to consider any kind of reduction, but                                                              
they feel this approach is a wrong approach in terms of just taking                                                             
across the board action that ignores the level of responsibility of                                                             
the people that we're asking to perform these duties.                                                                           
                                                                                                                                
REPRESENTATIVE OGAN asked Ms. Elgee if the Administration is                                                                    
willing to come up with some alternatives, with some changes.                                                                   
                                                                                                                                
MS. ELGEE replied that she was not in a position to make that                                                                   
commitment, but would discuss that with the Administration.                                                                     
                                                                                                                                
Number 0287                                                                                                                     
                                                                                                                                
REPRESENTATIVE KERTTULA asked Ms. Elgee is she was the person who                                                               
normally would come before a committee to discuss salaries and                                                                  
employment.                                                                                                                     
                                                                                                                                
MS. ELGEE responded yes, as Deputy Commissioner of Administration,                                                              
this is one of her responsibilities.                                                                                            
                                                                                                                                
Number 0293                                                                                                                     
                                                                                                                                
REPRESENTATIVE KERTTULA stated for the records, "For exempt                                                                     
employees, such as this bill would affect, they don't receive any                                                               
overtime pay for any of the extra hours that they work.  Is that                                                                
right?"                                                                                                                         
                                                                                                                                
MS. ELGEE replied, "The employees that would be impacted by this                                                                
bill, that is correct.  There is no overtime compensation."                                                                     
                                                                                                                                
REPRESENTATIVE HUDSON asked what percentage of our reduction would                                                              
this represent - approximately.                                                                                                 
                                                                                                                                
MS. ELGEE replied there is no one percentage reduction, because                                                                 
you're impacting people in the commissioner's offices that are                                                                  
anywhere from a range 23 to a 28.  You're impacting directors that                                                              
are at a range 26 but in a variety of incremental steps.  So, the                                                               
percentage reduction would be different for each employee.                                                                      
                                                                                                                                
REPRESENTATIVE HUDSON asked if it would be 15 percent, 20 percent,                                                              
25 percent.                                                                                                                     
                                                                                                                                
MS. ELGEE said she would provide that information.                                                                              
                                                                                                                                
Number 0310                                                                                                                     
                                                                                                                                
REPRESENTATIVE HUDSON referred to the fiscal note saying that it                                                                
provides for a cost savings of about $3.1 million.  He said he                                                                  
presumed that was made according to the specific position and step                                                              
that these affected members have at the present time.  He said that                                                             
he believes the actual fiscal note would be many, many, many,                                                                   
millions of dollars for this reason that you do not reduce the                                                                  
salary of the boss without going down through the scales and                                                                    
reducing the salaries of everybody that works for the boss.                                                                     
                                                                                                                                
CHAIR JAMES stated legislative staff is paid more than the                                                                      
legislator at a range 10.                                                                                                       
                                                                                                                                
REPRESENTATIVE OGAN gave the governor's and his chief of staff's                                                                
salary.                                                                                                                         
                                                                                                                                
CHAIR JAMES explained there's a lot of unfairness out there.  She                                                               
said in her first job that she took was with the Department of                                                                  
Motor Vehicles and she made $166 a month, which included vacation                                                               
time and holidays.  By the time she paid the babysitter, she                                                                    
couldn't work for $166 a month so she went to work in the private                                                               
sector and made $1.26 per hour or approximately $2600 a year.  The                                                              
private sector provided her with all the same benefits as the state                                                             
and more pay.  She said the reason she says this is, at that time,                                                              
in 1950s, is people said that - especially women going back to work                                                             
after their families are gone, they could go to work for the state,                                                             
because you didn't have to have any special skills.  So people                                                                  
would go to work for the state for the benefits and assumed that                                                                
they would be making less money in their paycheck than what they                                                                
earned in the private section, that's the choice they made.  Over                                                               
the years that has turned around, where working for the state, or                                                               
any kind of government, provides more pay plus great benefits.                                                                  
Now, state jobs are much more sought after than private sector                                                                  
jobs.                                                                                                                           
                                                                                                                                
Number 0392                                                                                                                     
                                                                                                                                
DON ETHERIDGE District, Local 71, appeared before the committee.                                                                
He stated, "None of our folks are effected by this bill directly,                                                               
but indirectly they all will be.  And, I too, when I started with                                                               
state government was making a whole lot less than the private                                                                   
sector, but we've worked to get it up, comparable.  During pipeline                                                             
days, the state jobs weren't that well paid and the industry went                                                               
skyrocketing and ours held pretty much level.  Now it's going the                                                               
other way, they took a big cut, our private sector folks, but our                                                               
state folks have been able to hold the line.  One of our major                                                                  
concerns if we start cutting state salaries then everybody else is                                                              
going to start losing also.  And that's a major concern out there                                                               
because we don't need another 86 (1986) here, because there's too                                                               
many houses that were walked away from - and giving the keys back                                                               
to the banks and so forth."                                                                                                     
                                                                                                                                
MR. ETHERIDGE further stated, "First of all, I believe that all of                                                              
you deserve higher pay, I would do what you guys go through for the                                                             
pay you get and I don't know why you do. ... In response also to                                                                
the comment made that every time the Administration changes,                                                                    
directors change, I know that's not true, I worked under a director                                                             
of the 'Highways Department' [Department of Highways] that was                                                                  
there for over 20 years.  He stayed on and on, through not only                                                                 
different administrations but a different party - taking over the                                                               
Administration and he just kept right on going.  And, if you get                                                                
some of these directors that get entrenched in there and they can't                                                             
afford to get rid of them because they know too much to do that.                                                                
I think that we need to protect these folks that are making the                                                                 
decisions.  When we're talking to people that are out spending our                                                              
state dollars, I want somebody that's qualified out there to spend                                                              
our state dollars. ... I want somebody that's got the                                                                           
responsibility and will stay there and has an incentive to stay                                                                 
there and do the job."                                                                                                          
                                                                                                                                
MR. ETHERIDGE continued, "When I worked for 'Marine Highways', I                                                                
made more money than the director.  I made more money than the                                                                  
governor did at certain times, but I also worked an excess of 1,000                                                             
hours a year of overtime in those years in order to do it because                                                               
we were so shorthanded we couldn't afford to hire help to give me                                                               
the break - which I would loved to have had.  When you look out                                                                 
there, there's many instances where the people are going to make                                                                
more money because of the hours they have to put in."                                                                           
                                                                                                                                
MR. ETHERIDGE further stated, "The comment of one of the gentlemen                                                              
testifying earlier, that you don't find directors and commissioners                                                             
in the offices on weekends, I've got news for him.  I find lots of                                                              
them in here.  I spend a lot of time in my office over the                                                                      
weekends, especially when you guys are in session, and I have no                                                                
problem getting a hold of those people.  I know that when you dial                                                              
the phone numbers for their switchboards, there is nobody at the                                                                
switchboards to answer them, but if you have the direct number to                                                               
their offices, you can get those folks, because they are there.  I                                                              
spend a lot of time on the phone with them over the weekends.  I                                                                
even call them at home at night, or whatever I have to do, if I've                                                              
got an issue that I need to work on - they are available.  I've                                                                 
never had one yet tell me, no matter what time of day or night I                                                                
call him, that he isn't going to talk to me."                                                                                   
                                                                                                                                
Number 0456                                                                                                                     
                                                                                                                                
MR. ETHERIDGE said, "I believe that you're going backwards in the                                                               
idea of equality here.  Instead of trying downgrade the folks that                                                              
are doing these jobs, I believe the staff for the legislators -                                                                 
they're underpaid, they're overworked, they put in so many more                                                                 
hours than should be called for, but they deserve more and I'll be                                                              
the first one to stand here and argue it.  If we could organize                                                                 
them and bring them up - I'd love for the chance to do that.  But                                                               
you guys don't let us do that for some reason.  I also see a lot of                                                             
staffers here that are using this as a stepping-stone. ... And, I                                                               
would hate to see anything taken away from them - just to bring                                                                 
them down to somebody else's level.  I don't believe that's the                                                                 
fair way to do this."                                                                                                           
                                                                                                                                
Number 0476                                                                                                                     
                                                                                                                                
REPRESENTATIVE OGAN asked Mr. Etheridge, "Is it your position that                                                              
there shouldn't be any salary reductions at all -- of the pain of                                                               
this budget shortfall should be more on the backs of the                                                                        
taxpayers?"                                                                                                                     
                                                                                                                                
MR. ETHERIDGE replied, "Yes, I believe that everybody in the state                                                              
should have to foot the bill of running the government.  I see that                                                             
right now were talking of cutting public employees, commissioners,                                                              
and all these folks, wages on the facts that - well, we got less                                                                
oil dollars.  People are getting laid off in the industry.  The pay                                                             
cuts in the industry, and so forth.  The state does not go up when                                                              
the product price goes up.  State salaries don't do that.   We have                                                             
to negotiate the prices to get them up and we have to work at them                                                              
to get them up.  The oil industry, when the prices go up, their                                                                 
executive get raises. ... But, our public employees - they've got                                                               
the same job every day and they're doing more with less out there                                                               
every day."                                                                                                                     
                                                                                                                                
[HJR 7 and HB 74 were heard and held].                                                                                          
                                                                                                                                

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