Legislature(2005 - 2006)SENATE FINANCE 532

04/28/2006 09:00 AM FINANCE

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
-- Recessed to 3:00 pm --
Moved CSSJR 20(FIN) Out of Committee
Moved CSSB 272(L&C) Out of Committee
Moved SB 309 Out of Committee
Moved SB 317 Out of Committee
+ Bills Previously Heard/Scheduled TELECONFERENCED
     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                                                               
This was  the first hearing for  this bill in the  Senate Finance                                                               
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                                                               
     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                                                               
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"                                                               
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                                                               
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                                                               
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.                                                                                    

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