Legislature(1999 - 2000)
01/28/1999 03:29 PM Senate STA
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* first hearing in first committee of referral
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= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
SB 33-TASK FORCE ON PRIVATIZATION
MARK HODGINS, aide to the Senate State Affairs Committee, presented
SB 33 for the sponsor, Senator Ward. SB 33 was introduced to
establish a task force to review functions of state government that
could be easily transferred to the private sector. The task force
will be comprised of members from the public and the legislative
and executive branches. The task force will take the first all-
encompassing look at privatization of governmental services in
Alaska. Some form of privatization of governmental services has
taken place in 48 other states. When enacted, SB 33 will evaluate
which services can be provided more efficiently by the private
sector, as well as highlight those services that are better
provided by the government. The report should provide a road map
for reducing the size and cost of state government without reducing
services, while providing options for the future. SB 33 will also
look into the state's contracting procedures to ensure that
Alaskans are getting the most out of their contracting dollars.
Number 048
SENATOR PHILLIPS asked which two states have not privatized any
government services.
SENATOR WARD answered the States of Massachusetts and New Jersey.
SENATOR ELTON pointed out the fiscal note refers to last year's
bill. He questioned whether costs will be higher since SB 33
requires more task force members.
MR. HODGINS explained he provided the fiscal note from last year's
bill to use as a reference. The narrative on that fiscal note
suggests that the costs are indeterminate because the Department of
Administration (DOA) did not know which departments will be
affected.
Number 073
SENATOR ELTON questioned why SB 33 restricts, to some extent, the
ability of the Senate President and Speaker of the House to select
the co-chairs of the task force.
SENATOR WARD replied this legislation was copied from a document
that created a similar task force in the State of Wyoming.
Number 111
KATHLEEN STRASBAUGH, assistant attorney general, Department of Law
(DOL), gave the following testimony. The Administration opposes SB
33 for the same reason it vetoed similar legislation recently
passed by the Legislature. The Administration supports the concept
of investigating this matter, would provide information,
participate, and help the committee in any way it could; however,
it feels there is a separation of powers issue associated with
bringing together the two branches. It prefers that the
Legislature accomplish the same objective by setting up its own
committee with a resolution.
SENATOR MACKIE asked if the Governor would support SB 33 if he did
not have to appoint any task force members.
MS. STRASBAUGH was unable to describe what type of structure the
Governor would like to see. The Administration's position on the
last bill was that it is more appropriate to accomplish this task
by committee rather than by statute.
Number 136
SENATOR MACKIE asked what the Administration has done in this area
under its own powers.
MS. STRASBAUGH replied all contracts are currently up for
negotiation, but the state previously negotiated with the union the
ability to contract out certain kinds of functions if found to be
appropriate in a feasibility study. Some litigation has taken
place related to that agreement.
SENATOR MACKIE asked Ms. Strasbaugh if the Administration is
opposed to the bill because it does not want to participate with
the Legislature in this type of a task force because it believes
there are two separate branches of government, regardless of what
the issue is.
MS. STRASBAUGH said that is correct, and repeated that the
Legislature can accomplish its objective by passing a resolution to
form a committee.
Number 159
DON ETHERIDGE, representing Local 71, testified in opposition to SB
33 and expressed concern that certain functions of state government
have been pre-targeted for contracting. Local 71 has been trying
to protect certain jobs within the Department of Transportation and
Public Facilities (DOTPF). Local 71 workers have been able to do
the jobs at a lower cost, but DOTPF has been under political
pressure to contract the work out: Local 71 fears SB 33 will add
additional pressure. Local 71 has provisions in its contract that
require the Administration to do feasibility studies. If the
Administration can prove the work can be done cheaper through
contracts, Local 71 will not litigate. During this time of budget
reductions, Local 71 sees no point in funding a task force when a
process already exists to serve the same purpose.
Number 190
SENATOR PHILLIPS asked Mr. Etheridge who Local 71 believes is
targeting its workers.
MR. ETHERIDGE replied Local 71's major fear is that it is not sure
where the threat is coming from. Contractors have been putting
pressure on the Administration and legislators to contract out
Local 71's positions, specifically pipeline drillers. When
pipeline construction began, the state did not have any drillers on
its payroll. DOTPF eventually put together its own drilling crew,
and now that the pipeline work has slowed down, those drillers may
be laid off but expected to hang around in case a gas line is
built.
SENATOR PHILLIPS asked who will execute the task force's
recommendations.
SENATOR WARD replied the recommendations are reported to the
Legislature and the Administration, and the power of appropriations
remains with the Legislature. He stated he has discussed with Mr.
Etheridge his concern for two years. SENATOR WARD stated his
intent is to review all departments to determine what services can
be performed at a reduced cost by contracting, and that it is not
his intention to remove one state employee. He does support a
hiring freeze, however.
Number 250
SENATOR PHILLIPS maintained members of Local 71 are some of the
most important state employees. He asked Mr. Etheridge why he
thought Local 71 employees would be the easiest to target.
MR. ETHERIDGE responded all of the highway maintenance was
contracted out in British Columbia, without success.
SENATOR WARD said he wanted to establish a task force two years ago
so that it could make thoughtful decisions without the added
pressure of a financial crisis.
Number 265
SENATOR MACKIE said last year's discussions revolved around labor
group representation on the task force. He noted downsizing could
occur at anytime. He stated his intent to support SB 33 because
the task force report will not list positions that should be cut;
it will recommend ways to make government more efficient and less
costly. The Legislature is now forced to ask the Governor for
suggested reductions and to downsize, and many of those decisions
are made off the cuff. He asked Mr. Etheridge if he was more
comfortable with the new bill, in terms of the composition of the
task force.
MR. ETHERIDGE said yes, and that his concern about the short time
frame has also been resolved. He explained Local 71 came out in
support of the bill when it was first introduced two years ago, but
in conversations with staff last year, he became nervous. Local 71
and the Administration did a job study this past year and
reclassified positions in an attempt to reduce costs: 200 positions
will be downgraded and 16 will be upgraded.
Number 325
SENATOR MACKIE assured Mr. Etheridge he has no preconceived notions
about which jobs should be contracted out. He thanked Mr.
Etheridge for his testimony.
Number 335
DAVID KOIVUNIEMI, Assistant Commissioner of the Department of
Administration (DOA), testified that the collective bargaining
agreements require that feasibility studies be done if work is to
be contracted out. According to the past fiscal note, feasibility
studies cost $50,000. DOA is willing to cooperate and provide any
information it has available to the task force.
SENATOR MACKIE moved SB 33 out with individual recommendations.
SENATOR ELTON objected. The motion carried with Senators Mackie,
Phillips and Ward voting "Yea," and Senator Elton voting "Nay."
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