04/07/2009 09:00 AM Senate FINANCE

SENATE BILL NO. 170                                                                                                           
                                                                                                                                
     "An  Act  modifying   the  Alaska  unemployment  insurance                                                                 
     statutes to  comply with the  requirements of  the federal                                                                 
     economic stimulus  bill by redefining the  base period for                                                                 
     determining  eligibility  for unemployment  benefits;  and                                                                 
     providing for an effective date."                                                                                          
                                                                                                                                
9:13:00 AM                                                                                                                    
                                                                                                                                
Senator Ellis  addressed the legislation and  the importance of                                                                 
quick action. He opined that  the millions of dollars available                                                                 
to the  state would  strengthen the state's  unemployment trust                                                                 
fund protecting business  and providing money for  one time job                                                                 
training  for Alaskans  who  are  unemployed. This  legislation                                                                 
creates a  minor change updating  the unemployment  law. Alaska                                                                 
has modernized the unemployment system for the state.                                                                           
                                                                                                                                
MAX HENSLEY, STAFF, SENATOR ELLIS, spoke to the legislation.                                                                    
                                                                                                                                
          Senate Bill 170 updates Alaska's unemployment                                                                         
     insurance statutes to conform  to the federal unemployment                                                                 
     insurance   modernization  provisions   included  in   the                                                                 
     American Recovery  and Reinvestment Act of  2009, commonly                                                                 
     known as  the federal stimulus  bill.  ARRA  provides over                                                                 
     $16  million in  funding to  support these  changes, which                                                                 
     includes   just   over   $1  million   in   administrative                                                                 
     assistance.   This  funding is  conditional on  making the                                                                 
     changes  included in  SB  170.   Of  the three  provisions                                                                 
     necessary to  receive this funding,  Alaska is  already in                                                                 
     compliance with the two more  difficult requirements.  The                                                                 
     bill   meets  the   final  requirement   by  creating   an                                                                 
     alternative  base   period  to  determine   an  unemployed                                                                 
     person's eligibility for unemployment insurance.                                                                           
                                                                                                                                
          Thirteen Governors (including seven Republicans)                                                                      
     from across the country  have expressed their intention to                                                                 
     make these changes, and four  states already comply.  Iowa                                                                 
     and  South  Dakota  have  already  passed  legislation  to                                                                 
     modernize their UI  systems and accept their  share of the                                                                 
     federal money,  and Georgia  is in  the process,  with the                                                                 
     support of each of their  Governors.   Any funding sources                                                                 
     Alaska  chooses  not to  take  advantage  of will  be  re-                                                                 
     allocated to  the federal UI  program that will put  it to                                                                 
     use  rather  than being  used  to  reduce federal  deficit                                                                 
     spending.                                                                                                                  
                                                                                                                                
           The Alaska Department of Labor estimated that the                                                                    
     alternative  base period  would  make approximately  1,300                                                                 
     more   Alaskans   eligible  for   unemployment   insurance                                                                 
     compensation each year.  This  change will help low-income                                                                 
     Alaskans  weather the  national economic  downturn without                                                                 
     placing  an   undue  hardship   on  employers   and  small                                                                 
     businesses that support the UI  trust fund.  The estimated                                                                 
     impact  on the  UI trust  fund in  calendar year  2008 had                                                                 
     this change  been in place  would have  been approximately                                                                 
     $1.9 million  in additional payments  (on top of  the $121                                                                 
     million paid  out already).   This amount is  small enough                                                                 
     in comparison to  the overall size of the  fund's corpus -                                                                 
     $351 million  at the end  of 2008 - the  annual investment                                                                 
     returns,  and the  additional  federal  funds which  would                                                                 
     become available, that the impact  on business taxes would                                                                 
     be negligible.                                                                                                             
                                                                                                                                
9:18:07 AM                                                                                                                    
                                                                                                                                
Co-Chair Hoffman  MOVED to ADOPT  CSSB 170 (FIN)  LS0762/S. Co-                                                                 
Chair Stedman OBJECTED for discussion purposes.                                                                                 
                                                                                                                                
Mr. Peterson  addressed the  CS and  the Amendment.  Alaska law                                                                 
must  comply  with  the  Federal  Unemployment  Tax  Act  as  a                                                                 
condition   of    certification   for    federal   unemployment                                                                 
compensation administrative  grants totaling  approximately $20                                                                 
million. If Alaska  were decertified due to a  failure to enact                                                                 
this  legislation, the  state risks  loosing  the full  federal                                                                 
unemployment tax  act credit  of 5.4  percent translating  to a                                                                 
loss  of  $111  million  in  annual  tax  credits  for  Alaskan                                                                 
employers.  The  Alaska  unemployment security  act  stipulates                                                                 
that   the   state   complies  with   federal   law   for   the                                                                 
administration  of the  unemployment insurance  program. Tribal                                                                 
entities'  services require  coverage and  federally recognized                                                                 
tribes  require  the  choice  to  become  federally  recognized                                                                 
employers for  the payment of unemployment  insurance taxes. He                                                                 
discussed the  letters available (Copy on  File) describing the                                                                 
need  for this  legislation and  citing the  prevailing federal                                                                 
law.  He  addressed  one  letter in  particular  by  the  Clark                                                                 
(Click)   Bishop,  Commissioner,   Department   of  Labor   and                                                                 
Workforce Development                                                                                                           
                                                                                                                                
Co-Chair  Stedman  WITHDREW  his   OBJECTION.  There  being  NO                                                                 
OBJECTION, it was so ordered.                                                                                                   
                                                                                                                                
Senator Huggins  stated that he  assumed that  a representative                                                                 
from  the administration  would  come forward  before the  bill                                                                 
moves.                                                                                                                          
                                                                                                                                
9:22:57 AM                                                                                                                    
                                                                                                                                
Senator  Ellis MOVED  to ADOPT  Amendment  1. Co-Chair  Stedman                                                                 
OBJECTED for  discussion. Senator  Ellis explained  the change,                                                                 
which clarifies the title.                                                                                                      
                                                                                                                                
Page 1, lines 1 - 2:                                                                                                            
     Delete  "to comply  with the  requirements of  the federal                                                                 
     economic stimulus bill"                                                                                                    
                                                                                                                                
Co-Chair  Stedman  WITHDREW  his   OBJECTION.  There  being  NO                                                                 
OBJECTION, it was so ordered.                                                                                                   
                                                                                                                                
9:24:30 AM                                                                                                                    
                                                                                                                                
Senator    Huggins   informed    about   concerns    from   the                                                                 
administration regarding the federal  stimulus funds. He opined                                                                 
that  most  Alaskans   appreciate  information  concerning  the                                                                 
administration's  position  on  the  stimulus  money.  Co-Chair                                                                 
Stedman  proposed that  representation from  the administration                                                                 
is encouraged when the bill returns to the finance committee.                                                                   
                                                                                                                                
Senator Ellis stated his thorough  understanding that the money                                                                 
is  available one  time only.  He concluded  that money  placed                                                                 
into the  unemployment trust fund  to aid employers  is helpful                                                                 
because  it  remains in  the  trust  fund contributing  to  the                                                                 
fund's  health. The  job training  money is  allocated for  job                                                                 
training centers.                                                                                                               
                                                                                                                                
SB  170   WAS  HEARD   AND  HELD   IN  COMMITTEE   FOR  FURTHER                                                                 
CONSIDERATION.                                                                                                                  
                                                                                                                                
9:25:51 AM  AT EASE                                                                                                           
9:28:22 AM  RECONVENED