Legislature(1999 - 2000)
03/04/1999 08:04 AM Senate FIN
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* first hearing in first committee of referral
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+ teleconferenced
= bill was previously heard/scheduled
SENATE BILL NO. 33
"An Act relating to the Task Force on Privatization;
and providing for an effective date."
SENATOR JERRY WARD testified to the bill, saying this was a
follow up of a bill from two years ago and vetoed by the
governor, then reintroduced last year but died in
committee. He referred to a drafted committee substitution
and handed out suggested changes to that CS. The changes
replaced the words "delivery" with "privatization" wherever
they appeared in the bill. He felt there were some problems
with the proposed CS but thought they could be overcome.
He felt the consideration of privatization public services
was long overdue.
Senator Pete Kelly asked what was the difference between a
task force and a commission. Senator Jerry Ward answered
that according to legal, there was no difference.
Co-Chair John Torgerson didn't think the change to
"privatization" in the title would allow the other
functions he intended. Senator Jerry Ward responded that
he checked with the Legal Services Division and it did. The
heart of the matter was that if the Legislature was going
to consider the privatization of government services it
needed to be clearly stated, he said. Co-Chair John
Torgerson countered that he made the other changes in the
CS because he did not want the committee to just look at
privatization. "There were more things to be looked at," he
said.
Senator Al Adams had a concern with the drafting in how it
dealt with separation of powers. To avoid the problem, he
suggested deleting (1), the two members appointed by the
Governor telling him who he should appoint. Co-Chair John
Torgerson asked that the matter be held until the CS was
before the committee.
DARWIN PETERSON, staff to Senator John Torgerson, explained
the committee substitute. Senate Finance Committee
Substitute for SB 33 would establish a commission on the
delivery of government services, he told the committee.
The motive behind the title change was to give the
commission the flexibility to broaden its research on the
most efficient way to deliver state government services to
the public.
Section 1 found that annual state government expenses were
exceeding revenues and therefore, the Legislature's intent
was to determine which functions of state government could
be delivered more efficiently and cost effectively by
considering four options. Option 1, transferring services
to the private sector, Option 2, transferring services to
local governments, Option 3 consolidating services
internally and Option 4, discontinuing some services for
the federal government.
Section 2 would establish an 11-member commission appointed
by the Governor, the Senate President, the Speaker of the
House, the Alaskan Municipal League, the Local Boundary
Commission and the Alaska State Chamber of Commerce.
Section 3 stated that the four public members of the
commission appointed by the Senate President and the
Speaker of the House, were not eligible for compensation
but were entitled to travel and per diem.
Section 4 instructed the commission to meet as often as
necessary to finish their work.
Section 5 outlined the duties of the commission. It would
review similar studies performed in other states, review
state contract and policy and procedure, and identify state
government services that were capable of being delivered to
the public in a more efficient manner. The commission
would then determine whether the identified functions
should be transferred to the private sector or local
governments, consolidated and if appropriate, discontinued.
This section also instructed the commission to include in
its written report, the government services that should
remain the responsibility of the state. The commission was
required to submit its report by January 1, 2000. This
would allow the Legislature to take advantage of the
commission's recommendations during the second session of
the Twenty-first Legislature in order to realize any
feasible actions as soon as possible.
Section 6 established a sunset date of January 1, 2000.
Section 7 provided an immediate effective date.
Senator Randy Phillips wanted to know why a member would be
appointed from the local boundary commission. Darwin
Peterson replied they would bring a wealth of information
to the table as far as municipalities around the state in
general. Co-Chair John Torgerson added that it was to
address the consolidation of school districts under REAA
where there was a boundary problem. Senator Randy Phillips
suggested the municipal league would cover that. Co-Chair
John Torgerson responded that they didn't have the power.
Senator Al Adams returned to his point of separation of
powers. He again suggested the committee delete Section 2
(1) and also lines 24 and 25, telling the Governor whom to
appoint. He then said he had a fiscal note on the original
version of the bill and asked if there was a fiscal note
for the CS to address travel and per diem expenses?
Co-Chair John Torgerson said the CS was new and there
hadn't been time yet for fiscal notes to be drafted. It
was not his intention to pass the bill out of committee
today.
Senator Randy Phillips moved to adopt the CS for SB 33.
Without objection, it was adopted.
Senator Gary Wilken questioned why the state chamber of
commerce called out as a particular group to work on this
project. He was unsure what they would bring to the table.
Perhaps there were other that would want to be included and
could bring more than the chamber of commerce could, he
suggested. Co-Chair John Torgerson said that was a good
comment and said that the reason they were included was
because it was a priority of the organization and they were
more focused on the issue than others.
Senator Loren Leman compared this to the blue ribbon
commission appointed by Governor Jay Hammond in 1978.
Senator Loren Leman said he had proposed a similar
commission in 1989 or 1990. He wanted to see if the duties
were broad enough to get at what he felt needed to be
addressed, which was to look at all functions of government
and see how they might be preformed better. He asked if it
was Senator John Torgerson's intent to have this be a
similar operation. Co-Chair John Torgerson said it was and
that a report such as described would be an excellent tool
for the Legislature. He wanted the task force to have more
responsibilities than just the privatization of
governmental services and he spoke of the five options.
JUANITA HENSLEY, Department of Administration, testified in
person in Juneau. The Department of Administration had no
real concerns over the CS. She did point out that even
though the bill did not speak to it directly, any time a
government function was outsourced that would displace a
state employee feasibility studies had to be done. The
studies cost approximately $20,000 to $50,000. Co-Chair
John Torgerson asked if that requirement was in statute.
Juanita Hensley answered no it was in the current contract
language with the labor bargaining unit. Co-Chair John
Torgerson wanted to know if that couldn't be changed with a
statute change. Juanita Hensley said she would get an
answer back on that.
Senator Loren Leman suggested the bill could give direction
to the Administration on how it should negotiate employee
contracts to avoid restrictions like this.
PAM LABOLLE, President Alaska State Chamber of Commerce,
testified in person from Juneau. She spoke of the history
of the privatization efforts saying that this bill had been
a priority of the state chamber for the past several years.
They wanted state leadership to make a commitment to take a
look at privatization of appropriate functions and
services. She spoke to the chamber's resolution that urged
the Legislature and the Administration to forge a plan by
the end of 1999 and implement a program to privatize all
applicable services currently provided by government. She
referred to a 1996 study focusing on the Department of
Transportation and Public Utilities. She talked about the
Council of State Government Survey done in 1997 showing
that half of the states had increased privatization over
the past five years and planned expansion. In most states,
privatization was widespread, according to Pam LaBolle.
She pointed out written testimony she had provided to the
committee.
MARJORIE VANDOR, Assistant Attorney General, Governmental
Affairs Section, Civil Division, Department of Law,
testified that the department believed this bill had
problems. Legal concerns arose because the taskforce was
being created by law rather than by resolution. With that
came heightened concerns about the constitutionality of the
separation of powers. Her second concern was that the bill
placed restrictions on whom the Governor could appoint to
the commission. Her final concern was with Section 3 line
29 on page 2 of the CS. It changed from the earlier version
as to compensation for public members. It only allowed
compensation for those public members appointed by the
Legislature whereas the earlier version allowed for
compensation of all public members. A member of the Local
Boundary Commission was entitled to compensation, she said,
and whether they would be paid out of their budget or the
Legislative task force budget was unclear. Co-Chair John
Torgerson said the committee would get fiscal notes on
this. He guessed Senator Al Adams would make a
recommendation that the Governor appointments be removed
from the bill. He supported that, but had hoped the two
branches could work together.
Senator Randy Phillips lamented that the Department of Law
could find any excuse to not support a bill. "Does the
administration support the privatization of services?" he
asked. Marjorie Vander believed so. Senator Randy
Phillips then asked why no committee substitute had been
offered to address the concerns. Senator Al Adams
countered that he did offer a solution.
Co-Chair John Torgerson assumed the local boundary
commission would pay costs incurred by their member. He
noted that the CS just came out yesterday so there would be
more fiscal notes forthcoming.
JOYCE HARRIS, Court Visitor, Office of Public Advocacy,
testified via teleconference from Fairbanks. She explained
that she was a private contractor who provided services to
the OPA for eight years. The unique aspect was that she did
not have a contract, but was required to respond to a RSP
every two years. In her position, she reviewed the work of
a state agency that awarded her contract. "I send my bill
in to the agency whose work I review as a private
contract," she stated. In her opinion, in her area of work,
the private sector was able to provide a much higher level
of service at no cost to the state. However, the state
continued to provide services that could be provided and
funded by the private sector. This was more to protect the
jobs in the state agencies rather than to provide the best
level of service to the public, she stressed. She then
urged that the task force look at how the contracts would
be regulated, monitored and that there would actually be
signed contracts with the state. She wanted to ensure that
there was adequate oversight to take action if individuals
holding those contracts failed to provide those services.
She suggested that the private sector could also do the
required feasibility studies.
B. JARVI, Vice President Professional Guardian Services
Corp., testified via teleconference from Fairbanks. She
believed that the state must provide for the common good to
insure consistency and continuity in areas such as police
protection, educational systems, highway systems and the
function of regulation. She told how Alaska used to need to
provide many services because there was no one else
available to provide them. However, before the state
started funding more public services, it should look at
eliminating the cost of the state being a service provider
where it was not necessary. Privatization of services
offered by entities whose services were funded by the state
should be looked at also, in her opinion. She suggested
that many University of Alaska services, such as the
student loan program, bookstores and food stores, medical
services and maintenance services could be privately
handled. She spoke about her for-profit company and the
services it provided. Their main competitor was the state
itself. She talked about the Office of Public Advocacy,
which regulated her company and also competed, for her
business. She also thought non-profit entities needed to be
reviewed.
MONITA LANE, president, Alaska Caregivers Association,
testified via teleconference from Fairbanks. She supported
SB 33 and thought the public should be involved in the task
force. The Office of Public Advocacy should be privatized,
in her opinion. The Pioneer Homes should also be privatized
and receive no state funding. She talked about her
organization's assisted living facilities that were not
funded by the state. She felt the insurance reimbursement
program should also be privatized and would pay for itself
with the savings of assisted living rather than nursing
home care services. Longevity program fund savings should
be channeled back to senior services and consolidated into
one office, she said.
Co-Chair John Torgerson ordered the bill held in committee.
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