Legislature(2003 - 2004)
02/03/2004 01:30 PM Senate L&C
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HB 305-UNEMPLOYMENT COMPENSATION BENEFITS
CHAIR CON BUNDE announced HB 305 to be up for consideration.
2:13 p.m.
REPRESENTATIVE TOM ANDERSON, sponsor of HB 305, said it provides
an 8.2 percent increase in the maximum weekly unemployment
benefit amount. The increase would be phased in a three-year
period and minimizes impact to employers and employees. Alaska
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currently ranks 47 in the nation with a maximum benefit of
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$248. Alaska would rank 28 if the benefit was fully increased
to $308 in 2006. He reminded the committee members that this
would not take effect for several years. In 2005, the maximum
benefit for base period wages exceeding $26,750 will increase
and in 2006, the maximum weekly benefit amount will increase for
Alaskan's whose base period wages exceed $29,750. In 2007, wages
will be $32,750.
REPRESENTATIVE ANDERSON concluded by saying that unemployment
insurance promotes economic stability and creates a balance for
those who are not working.
CHAIR BUNDE reminded the committee that the business community
was being impacted with increased workers' compensation
assessments, as well.
TAPE 04-3, SIDE B
CHAIR BUNDE asked where Alaska stands among other states in
terms of qualification for benefits.
REPRESENTATIVE ANDERSON deferred to the commissioner.
COMMISSIONER GREG O'CLARAY, Department of Labor and Workforce
Development, said Governor Murkowski recently launched his
Alaska hire program that pressures employers to meet and exceed
the 90 percent Alaskan hire rule and the importance of the
unemployment benefits are often overlooked. He further apprised
the committee that:
Over $150 million went on the street in unemployment
benefits that stayed within Alaska's boundaries. That
kept skilled workers here that could afford to remain
in Alaska at those rates. I think it's important to
remember we haven't had an increase in several years
and this particular bill does push out the negative
impact or the rate increases some two years from the
effective date of the new benefits....
CHAIR BUNDE asked if it was possible for someone to draw Alaska
unemployment benefits in another state.
COMMISSIONER O'CLARAY deferred to Bill Kramer, Chief,
Unemployment Insurance Program.
MR. BILL KRAMER, Chief, Unemployment Insurance Program, replied
that Alaska is part of the National Interstate Benefit
Agreement. He explained that a client who has an unemployment
claim based on wages he earned while working in Alaska may move
about the country and continue to draw benefits based on wages
he earned while he was in Alaska.
CHAIR BUNDE asked if he knew how many people do that.
MR. KRAMER replied that about 17 percent of the benefits
annually go to interstate clients.
CHAIR BUNDE asked where Alaska ranked among other states for
eligibility for the unemployment insurance program.
MR. KRAMER replied that the department tracks the recipient rate
and that Alaska ranks within the top 20 percent.
SENATOR SEEKINS asked if someone files for unemployment in a
state other than Alaska, are they paid at the Alaska rate.
MR. KRAMER replied that claims are based on Alaska's
unemployment insurance law and an individual would be paid based
on the wages earned while in Alaska.
CHAIR BUNDE commented: "So, it logically follows that if we're
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47, they might want to move to someplace that was a little
higher on the scale than that."
SENATOR SEEKINS asked the commissioner if the zero fiscal note
is still accurate.
COMMISSIONER O'CLARAY replied that the fiscal note is still
zero. He added that the State of Washington ranks second in the
United States for its maximum weekly benefit.
What usually occurs when an Alaskan worker in the
construction trades, as an example, moved or relocated
in the Washington area, they would choose to return to
work in order to get at this [Washington state's]
benefit rather than ours. That's the concern that I
have in terms of the construction workers - is that we
are losing valuable trained workforce - that end up
staying south when our construction season starts. And
so, it's going to lead to a shortage at some point
among our trained journeymen. We're already looking at
a 20 percent replacement factor in our journeymen
construction workers over the next five years....
SENATOR SEEKINS sought to clarify whether the change in rate
would have a fiscal effect on employees of the State of Alaska.
COMMISSIONER O'CLARAY replied that was correct, but the rate
increase would happen in 2006.
CHAIR BUNDE added that employers would feel the full impact in
2010 and that employees would be impacted with a 0.4 percent
increase.
COMMISSIONER O'CLARAY replied that was correct, but 0.4 percent
is not a major increase.
SENATOR SEEKINS said the state would be impacted fiscally in
2006. He explained that in the previous session this bill had a
significant fiscal note and now the fiscal note for the same
bill is zero. He pondered:
In my mind, I was just trying to figure out, if the
State of Alaska were anticipating no one from state
employment drawing unemployment, then I understand
that it could have a zero fiscal impact. I'm not
trying to be argumentative, but just trying to qualify
it. I see zeros across the board all the way through
2009, but yet I see an increase in the rate. Is the
State of Alaska exempt from that rate increase or does
the state participate in that rate increase and,
therefore, result in a fiscal note? That's the only
thing I am trying to determine.
MR. KRAMER replied that Senator Seekins' thinking is accurate.
The State of Alaska pays dollar for dollar for any
benefits that are paid out on their former employees'
behalf. So, starting in, depending on when this bill
is effective, if it's effective next January 2005, as
the department pays out unemployment benefits to
individuals whose claims are based on their wages from
the State of Alaska, the State of Alaska will receive
a bill - dollar for dollar - for any benefits that we
pay out. So, there will be some increase in the cost
of their benefits, because we will be paying out a
higher benefit amount for them.
SENATOR SEEKINS wondered if the fiscal note should be revised
for accuracy and clarity.
CHAIR BUNDE noted that the bill's sponsor was taking note of
that question. He asked the next person to testify, Don
Etheridge.
MR. DON ETHERIDGE, Alaska Federal of Labor - Congress of
Industrial Organizations (AFL-CIO), supported HB 305 saying:
This is our third year trying to get something moved
through to help the unemployed of our state to be able
to remain here.
He related how a laborer who just transferred to Alaska from
Washington State was getting ready to move back there because he
can survive much better on Washington unemployment payments when
he is out of work. "Half my list is talking about moving to
Washington and starting to go to work, now."
MR. ETHERIDGE urged the committee to move an immediate effective
date rather than January 2005, but said he could live with HB
305 the way it is if it is allowed to move out of committee now.
SENATOR SEEKINS asked Mr. Etheridge to comment on the huge
disparity in the construction trades' wages in the State of
Alaska versus the State of Washington, because:
At one time, the incentive was for people to remain in
the workforce because of the disproportionately higher
wage rate that they received up here. Is that still
there?
MR. ETHERIDGE replied that wages are not as disproportionate as
they used to be and some areas of the country have wages that
are higher than Alaska's. He reiterated that:
We are comparable with the state of Washington on most
of our construction trades.... There is not a big
incentive for them to stay here anymore when they can
go down there and make almost as much an hour on the
paycheck and benefits and then draw a lot more on
unemployment when they aren't working.
He pointed out that tax rates are the major difference.
MS. PAM LABOLLE, President, Alaska State Chamber of Commerce,
said qualifications and benefits of the unemployment insurance
program have historically been confusing. Few states provide a
benefit for dependents and Alaska does. Nearly half of the
claims in Alaska include a dependent benefit and the extra $72
per week puts Alaska in the middle of the pack; the increase
would put Alaska in the top 10 percent. Further, she said the
increase would cost employers $8 million.
MS. LABOLLE said in the past the Chamber of Commerce has
supported the first year increase and half of the second
increase in the past. She painted the employers' big picture by
pointing out that the minimum wage increased last year and a
significant workers' compensation increase started just this
month, an average increase of 21 percent.
MS. LABOLLE agreed that the Department of Labor would have a
zero fiscal note, because it just administers the program, but
felt strongly that the state [as an employer] should provide a
fiscal note. She informed the committee that Washington State is
overhauling its [unemployment] tax structure because companies,
like Boeing, are leaving in part or considering leaving totally.
Alaska, on the other hand, is trying to create a business
friendly climate.
MS. LABOLLE stated that the unemployment insurance program was
created for people who become unemployed through no fault of
their own. Forty-six states provide for a complete denial of
benefits for the duration of a claimant's unemployment until he
gets another job, earns a certain level of wages and applies
again. Of the other four states, Alaska's policy is the most
liberal.
SENATOR SEEKINS asked her to briefly comment on last year's task
force on this issue.
MS. LABOLLE responded that the Alaska State Chamber of Commerce
was asked to join a working group last year, but because of
various scheduling problems, didn't make any of the three
meetings. It was not because of unwillingness to attend.
SENATOR FRENCH asked if other states have a separate dependent
provision like Alaska's.
MS. LABOLLE replied that Alaska pays $24 per dependent child up
to three children and is one of twelve states that do that.
About 44 percent of claimants in 1999 or 2000 received dependent
benefits.
SENATOR FRENCH commented that he had just entertained his 15-
year old son over the weekend in Juneau and, "Twenty-four
dollars would barely get you through the first pizza party."
CHAIR BUNDE set HB 305 aside and encouraged the sponsor to
consider the enforcement issues and to try to find middle ground
between labor and the chamber.
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