Legislature(2005 - 2006)SENATE FINANCE 532
04/28/2006 09:00 AM FINANCE
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* first hearing in first committee of referral
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CS FOR SENATE BILL NO. 309(L&C) "An Act establishing a construction trades training grant program for award by the Department of Labor and Workforce Development, providing for special employee unemployment contributions to fund the program and an offsetting credit against the employees' general unemployment contribution, and providing for an expiration date for the program, contributions, and credit; and providing for an effective date." This was the first hearing for this bill in the Senate Finance Committee. GREG O'CLARAY, Commissioner, Department of Labor and Workforce Development, characterized the bill as "must pass legislation" necessary to meet the State's needs in the construction industry, and to prepare Alaska's workforce for the potential formation of a natural gas pipeline in the future. TOM MAHER, Staff to Senator Therriault, explained the bill and the sponsor statement [copy on file], which reads as follows. This legislation responds to the upcoming opportunity to train resident Alaskans to fill the thousands of high paying jobs that will be created in the construction of a gas pipeline by providing a stable stream of revenue, subject to legislative appropriation, to Alaska Work Partnership, Inc. or other qualified nonprofits for both training and increasing the capacity of training facilities. With a project as large as the gas pipeline and the thousands of jobs it will create, we must start now to make sure resident Alaskans are trained and employable. This bill provides the multi-year commitment necessary to do that. This funding will leverage industry investment in training facilities and equipment to build private sector training capacity and increase industry capability for sustaining training into the future. In 2005 there were more than 20,000 individuals employed in Alaska construction trades with annual incomes approaching $60,000. Unfortunately, one in every five jobs, or 20% belongs to individuals, who according to Permanent Fund Dividend Eligibility are recent arrivals to Alaska. These high paying jobs will continue to attract workers from other states and countries. Also, with our 45% of our resident construction workforce being over 45 years old, industry must renew it's workforce with thousands of appropriately training workers. Alaska Works Partnership, Inc. has developed successful programs that are proven effective in moving residents into construction jobs. In the past five years AWP has helped more than 1,000 residents become employed in construction. More than 85% of the residents AWP has served are employed in construction as a result of training. More than 90% of the workers Alaska Work Partnership, Inc. trains are not members of a union. The majority of workers placed in jobs work for non-union employers. SB 309 will divert 1/10th of a percent of current employee contributions to a new "holding account" for appropriation by the Legislature. Estimated income to the account is projected to be over five million a year. With increased payroll within the state, the Department of Labor has projected that it is highly unlikely that this small percentage diversion will cause any increase in unemployment insurance rates. The Senate Labor and Commerce Committee amended this legislation to allow grants to other nonprofit corporations, as determined by the Commissioner, to be qualified and capable of providing this training. SB 309 is slated to sunset in six years and requires an annual report on performance. Mr. Maher overviewed the fiscal notes, and noted the six-year termination date with annual reporting requirements. He located changes made by the Senate Labor & Commerce Committee on page 2 line 12, that allowed for grants to be made to nonprofit training entities other than AWP. 4:06:48 PM Mr. Maher referenced numerous letters of support for this bill. AT EASE 4:07:24 PM /4:08:00 PM 4:08:38 PM Senator Hoffman requested further information about the construction labor force's growth of "15 percent over the next five years" referred to in fiscal note #1. Commissioner O'Claray replied that the figure was a statewide projection. He informed that the Alaska Works Partnership (AWP) trains more rural residents than urban residents, and considered the program a "good balance". This funding stream would allow "concerted" training efforts in both rural and urban areas, as well as redirecting more than $3 million from the State Training and Employment Program (STEP) fund back to the State for use in other industries. Co-Chair Green inquired as to the relation between this bill and the funding for the proposed King Career Center. Commissioner O'Claray responded that the King Career Center would likely receive funding in the FY 07 Capital Budget for a pilot program and this funding stream would sustain those programs beyond the pilot period. Co-Chair Wilken had received comments regarding this bill as a "union/non-union" issue. He had directed those concerns to Senator Therriault's office, and hoped Senator Therriault had addressed those matters. 4:11:32 PM Senator Bunde reported that the amendment adopted in the Senate Labor & Commerce Committee offered the opportunity for any non- profit corporation to apply for funding for training programs under this bill. Co-Chair Green asked if that was the language specified on page 2, line 12. Senator Bunde affirmed. 4:12:24 PM Co-Chair Wilken was aware of concerns that this bill would divert monies away from the unemployment insurance (UI) fund. He asked if UI benefits would be fully funded. Commissioner O'Claray predicted 20 years of continual growth in the State's economy, with new employees' UI contributions being added to the fund along with existing employees'. The affect of this bill would be "minimal", and would not have an adverse affect on employers' rates, as the fund is supported by employee contributions. Senator Olson asked regarding training of rural residents. Commissioner O'Claray speculated that approximately 40 percent of the participants involved in pipeline training in Fairbanks in recent years were residents of Rural Alaska. He recounted that AWP trains primarily in rural areas. Senator Olson inquired where the training had occurred, other than King Career Center. Commissioner O'Claray would provide the requested information. Senator Olson asked if dormitory facilities were available at the training locations. Commissioner O'Claray informed that many of the facilities provide housing for the trainees. 4:15:06 PM Co-Chair Green asked online testifiers to abbreviate their testimony in light of the time constraints. 4:15:44 PM MIKE ANDREWS, Director, Alaska Works Partnership Inc., had provided a map [copy not provided] indicating the regions where AWP had conducted training. He urged support for the bill. He qualified that AWP was formed as another avenue for people to receive training outside of the traditional union membership. The two entities are symbiotic, not competitive, and for that reason, this bill should not be viewed as a "union/non-union" matter. 4:17:37 PM JOHN BITNEY, Lobbyist, Alaska State Homebuilders Association, testified in support of the bill. The Association is not a union group, but supportive of the bill as "a rising tide floats all boats". He hoped his Association would be included in the annual reporting requirements contained in the bill. 4:18:59 PM RICHARD CATTANACH, Executive Director, Associated General Contractors, testified via teleconference from an offnet location in support of the bill. 4:19:21 PM JAY QUAKENBUSH, President, Building and Construction Trades, testified via teleconference from Fairbanks and urged support of the bill. He recognized the potential future natural gas pipeline as a monumental construction project, and warned that "our borders are open" for out-of-state workers to fill jobs in Alaska. He exampled the thousands of workers who came from other states to work on the construction of the Trans Alaska Pipeline System (TAPS) and left the state upon completion. He understood this bill as providing a "proactive" way of addressing employment issues in Alaska. 4:20:54 PM JIM LAITI, Business Manager, Pipefitters Local 375, testified via teleconference from Fairbanks in support of the bill. He identified demand for construction workers for the proposed natural gas pipeline, TAPS maintenance, possible development of the NPR-A area, and Alpine development. These projects illustrate a need for more trained workers, and he urged support of the bill. 4:21:56 PM CLICK BISHOP, testified via teleconference from Fairbanks in support of the bill. 4:22:26 PM MIKE SAMSON, President, Samson Electric, testified via teleconference from Anchorage. He is a member of the Associated Building Contractors (ABC) and dedicated to the training process, but was concerned that ABC may not be included in the program. Neither Samson Electric nor ABC has received any funding under the STEP program for their training practices. He would support an amendment to specifically include ABC along with AWP. 4:24:33 PM BILL WATTERSON, President, Watterson Construction, testified via teleconference from Anchorage. His company employs approximately 200 people, and more than 98 percent of payroll checks are written to Alaska residents. He opined that trained Alaskan workers are better employees than "boomers" that come to the state to work for short periods. He informed that over 35 percent of people employed by his company as craft workers are members of ethnic minority groups. He would support the bill if the employer was allowed to designate which training program their contribution would fund. 4:26:40 PM JULIE AUNE, Vice President, AAA Fence, testified via teleconference from Anchorage. She represents a small, family owned company with no means to train employees as there are no specialty training programs. She would like to be able to chose the training provider if her company is contributing financially in any way. 4:28:38 PM MIKE SEXTON, Executive Director, Mechanical Contractors of Fairbanks, testified via teleconference from Fairbanks in support of the bill, and encouraged its passage. 4:29:12 PM WENDY REDMAN, University of Alaska, testified via teleconference from Fairbanks in support of the bill. The University does not have the capacity to provide this type of training, and has therefore partnered with Alaska Works and ABC to develop training programs. 4:30:10 PM REBECCA LOGAN, President, Associated Building and Contractors (ABC) of Alaska, testified via teleconference from Anchorage. She commented that ABC supports the concept of the bill, but does not support the "delivery". She considered the training contract that this legislation proposed to award solely to AWP a "procurement" issue that was not open to the competitive bidding process that other State grants are subject to. 4:31:00 PM Co-Chair Green asked if a restriction would be placed on awarding funds to a non-profit entity other than Alaska Works. Commissioner O'Claray replied that there was no such prohibition. The aforementioned amendment adopted in the Senate Labor & Commerce Committee substitute clarified that issue. Co-Chair Green furthered, asking if a group of companies would have to form a nonprofit training center to qualify for funding. 4:31:41 PM Senator Bunde responded that a consortium of building contractors would need a non-profit entity to receive funding monies, rather than the State awarding training funds to the construction company directly. Co-Chair Green informed that she would support the bill only if she could be assured that private companies would be able to organize to receive funding for their collective training practices. Commissioner O'Claray guaranteed this bill was developed to be non-partisan in regard to the union/non-union issue. He asserted that there are many people to train, and the bill endeavors to encompass as many employees as possible. Co-Chair Green appreciated Commissioner O'Claray's "positive attitude". Co-Chair Wilken moved to report the bill from Committee with individual recommendations and accompanying fiscal notes. There being no objection, CSSB 309(L&C) was REPORTED from Committee with two fiscal notes from the Department of Labor and Workforce Development: fiscal note #1 in the amount of $5,043,300, and fiscal note #2 for $247,700.