Legislature(2007 - 2008)HOUSE FINANCE 519
05/08/2007 01:30 PM House FINANCE
| Audio | Topic |
|---|---|
| Start | |
| HB110 | |
| SB125 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | HB 110 | TELECONFERENCED | |
| += | SB 125 | TELECONFERENCED | |
| + | TELECONFERENCED |
HOUSE FINANCE COMMITTEE
May 8, 2007
1:48 P.M.
CALL TO ORDER
Co-Chair Meyer called the House Finance Committee meeting to
order at 1:48:10 PM.
MEMBERS PRESENT
Representative Mike Chenault, Co-Chair
Representative Kevin Meyer, Co-Chair
Representative Bill Stoltze, Vice-Chair
Representative Harry Crawford
Representative Richard Foster
Representative Les Gara
Representative Mike Hawker
Representative Reggie Joule
Representative Mike Kelly
Representative Mary Nelson
Representative Bill Thomas Jr.
MEMBERS ABSENT
None
ALSO PRESENT
Representative Kurt Olson; Sally Saddler, Legislative
Liaison, Department of Community and Economic Development;
Pat Shier, Director, Division of Retirement and Benefits,
Department of Administration; Kevin Brooks, Deputy
Commissioner, Department of Administration; Shawna Crondahl,
Alaska Municipal League (AML), Juneau
PRESENT VIA TELECONFERENCE
Paul Kendall, Self, Anchorage; Larry Semmens, City of Kenai,
Soldotna; Jerome Selby, Kodiak Island Borough, Kodiak; Linda
Freed, City of Kodiak, Kodiak; Roy Eckert, Borough Manager,
Ketchikan Gateway Borough, Ketchikan; John Stein, Municipal
Administrator, City & Borough of Sitka, Sitka; Pat Piney,
University of Alaska, Fairbanks; Dave Telerico, Denali
Borough; Tim Bourcy, President, Alaska Municipal League,
Mayor, Skagway; Shirley Marqardt, City of Unalaska; Jeff
Jabusch, Finance Director, City of Wrangell, Wrangell; Max
Malavansky, City Administrator, City of Saint George; Rhonda
Jensen, Assembly Member, City of Yakutat, Yakutat; Shelby
Boothe, Bristol Bay Borough; Cris Burch, Anchorage Assembly;
Tom Boedeker, Manager, City of Soldotna
SUMMARY
HB 110 An Act extending the termination date for the
Regulatory Commission of Alaska; and providing for
an effective date.
CS HB 110 (L&C) was reported out of Committee with
a "do pass" recommendation and with a new fiscal
note by the Department of Commerce, Community &
Economic Development.
SB 125 An Act relating to the accounting and payment of
contributions under the defined benefit plan of
the Public Employees' Retirement System of Alaska,
to calculations of contributions under that
defined benefit plan, and to participation in, and
termination of and amendments to participation in,
that defined benefit plan; making conforming
amendments; and providing for an effective date.
SB 125 was HEARD & HELD in Committee for further
consideration.
1:48:49 PM
HOUSE BILL NO. 110
An Act extending the termination date for the
Regulatory Commission of Alaska; and providing for an
effective date.
REPRESENTATIVE KURT OLSON, SPONSOR, noted that HB 110 would
th
extend the Regulatory Commission of Alaska until June 30,
2011. There would be an audit requirement in two years.
The four year extension was supported by the Governor; he
urged the support of the House Finance Committee (HFC).
1:49:59 PM
SALLY SADDLER, LEGISLATIVE LIAISON, DEPARTMENT OF COMMUNITY
AND ECONOMIC DEVELOPMENT, offered to answer questions of the
Committee.
PUBLIC TESTIMONY CLOSED
1:51:22 PM
Co-Chair Meyer asked how the four year extension had been
determined. Representative Olson replied he would have
preferred two years, however, working with the Senate, they
preferred four years. The Governor was comfortable with
either four to six years and four was chosen, a compromise.
Representative Gara supported either a 4 or 6 year
extension.
Co-Chair Meyer referenced the new note from the Regulatory
Commission of Alaska and asked if they employed 57 full time
employees. Representative Olson said yes.
1:53:46 PM
Representative Foster MOVED to REPORT CS HB 110 (L&C) out of
Committee with individual recommendations and with the
accompanying fiscal note. There being NO OBJECTION, it was
so ordered.
CS HB 110 (L&C) was reported out of Committee with "do pass"
recommendation and with the new fiscal note by the
Department of Community & Economic Development.
1:54:12 PM
CS FOR SENATE BILL NO. 125(FIN)
An Act relating to the accounting and payment of
contributions under the retirement plans of the Public
Employees' Retirement System of Alaska and the
Teachers' Retirement System, to calculations of
contributions under those retirement plans, and to
participation in, and termination of and amendments to
participation in, the defined benefit plans of those
systems; relating to employer contributions to the
health reimbursement arrangement plan; making
conforming amendments; and providing for an effective
date.
1:55:38 PM
Representative Gara asked if the gap issues for those people
not covered by either retirement plan had been addressed.
KEVIN BROOKS, DEPUTY COMMISSIONER, DEPARTMENT OF
ADMINISTRATION, explained that the Department is in the
process of drafting an amendment to the bill to address that
concern.
Representative Gara questioned if it would cost more if done
retroactively. Co-Chair Meyer understood it would need to
be made optional. Mr. Brooks noted, there are two members,
one in the House and one in the Senate and if opting in, the
individual would have to catch-up on their contribution
calculation.
1:57:35 PM
PAT SHIER, DIRECTOR, DIVISION OF RETIREMENT AND BENEFITS,
DEPARTMENT OF ADMINISTRATION, advised that the Attorney
General (AG) pointed out under Section 15, when an employee
rejoins the plan, they may only participate as a Defined
Contribution (DC) member. Previously, he said that if the
worker had been employed as a Defined Benefit (DB) employee,
they would be able to come back as that and that was not
correct information.
1:59:04 PM
SHAWNA CRONDAHL, ALASKA MUNICIPAL LEAGUE (AML), JUNEAU,
voiced appreciation for the work done on the bill. The AML
offers full support of CS SB 125 (FIN). She commented the
problem has been "huge" for some municipalities. The
current versions of SB 125 and SB 72, passed by the Senate
Finance Committee, combines to form an equitable Public
Employees Retirement (PERS) relief package for communities
statewide; no borough or municipality objects to those
pieces of legislation, including Anchorage & Fairbanks.
Ms. Crondahl added, many municipalities had concerns with
the original bill, which were relieved by changes made in
the Senate. CS SB 125 (FIN) now addresses original
concerns. Those concerns were:
· How the determinations were made & costs calculated
if a PERS employer pulled out of the system;
· Removing the 90-day provision for the opting-out
classes of employees;
· Adding a provision outlining how an employer can
appeal the seizure of funds;
· Establishing FY08 contribution rates below 22% for
PERS employers that made contributions in excess of
the their required contribution; and
· Holding employers harmless for FY08 - FY12, who
would have had rates under 22% during that time, in
order to allow time to adjust to higher rates.
2:02:33 PM
PAUL KENDALL, (TESTIFIED VIA TELECONFERENCE), SELF,
ANCHORAGE, commented that there are fundamental flaws with
the school infrastructure given through the Teacher's
Retirement System (TRS) and that the State should not be
offering insurance. He worried about the lack of leadership
and lack of vision throughout Alaska. He ascertained that
it is vision that determines ones priorities. He stressed
that public opinion is where the wealth of the State rests.
2:08:13 PM
LARRY SEMMENS, (TESTIFIED VIA TELECONFERENCE), FINANCE
DIRECTOR, CITY OF KENAI, MEMBER, ALASKA RETIREMENT
MANAGEMENT (ARM) BOARD, SOLDOTNA, testified regarding the
ARM Board. Last year, the ARM Board established the rates.
He pointed out that Governor Palin included $500.5 million
dollars for that budget. The ARM Board has endorsed the
concept of reducing the rate the employers pays with the
State paying the balance, up to the Board rate. Employers
support the 22% rate because it is stable and predictable.
The bill helps municipalities now experiencing large
increases; municipalities are not getting a "free ride" in
the process. He submitted that there are many "moving"
parts of the bill. He urged that CS SB 125 (FIN) be passed
on.
2:12:11 PM
JEROME SELBY, (TESTIFIED VIA TELECONFERENCE), KODIAK ISLAND
BOROUGH, KODIAK, commended the Committee on addressing the
three major issues facing Alaska:
· PERS/TRS
· Revenue sharing
· School funding
He applauded the hard work from the Legislature. He urged
that the Committee pass CS SB 125 (FIN) in its current form.
The municipalities will be stepping up at the 22% level.
The bill is carefully crafted and well balanced.
2:14:10 PM
LINDA FREED, (TESTIFIED VIA TELECONFERENCE), CITY MANAGER,
CITY OF KODIAK, KODIAK, stated that the PERS/TRS issue has
been significant for the City of Kodiak. She added that CS
SB 125 (FIN) addresses all concerns with the PERS/TRS. The
bill creates a stable and predictable, affordable system
into the future so that the communities can budget for
participating in future costs. The amount Kodiak will pay
when it increases to 22% will be over 10% of the City's
general fund budget, a large amount of money but an
important part of the communities work for public employees.
She urged that CS SB 125 (FIN) move from Committee.
2:16:46 PM
ROY ECKERT, (TESTIFIED VIA TELECONFERENCE), BOROUGH MANAGER,
KETCHIKAN GATEWAY BOROUGH, KETCHIKAN, thanked the Committee
for addressing the formula. He urged that the bill be kept
as it is. The boroughs are facing a fiscal crisis with
budgeting, pointing out the already serious increases to
property taxes. He urged that the bill pass from Committee
unamended.
2:19:13 PM
JOHN STEIN, (TESTIFIED VIA TELECONFERENCE), MUNICIPAL
ADMINISTRATOR, CITY & BOROUGH OF SITKA, SITKA, urged that
the bill move out of Committee in its current form. He
reiterated that the 22% was a reasonable number and
something that the municipalities can handle. He welcomed
the predictability and stability built into the plan & that
it be maintained. He added support for the hold harmless
provision, especially for the smaller communities.
2:20:56 PM
PAT PINEY, (TESTIFIED VIA TELECONFERENCE), UNIVERSITY OF
ALASKA, FAIRBANKS, indicated support for the stability of
the legislation. The University supports the solution;
however, she noted that funding had been stripped for the
University's TRS system, which leaves the University with a
$3.6 million dollar budget shortfall. The University
supports the solution budget implication. She pointed out
that the FY07 rate was 20.58%; currently, it is set at 22%.
All funding increases were stripped for the PERS increase.
She hoped that there would be a solution for the
University's budget situation. Representative Kelly
commented that a fix was being considered.
2:23:04 PM
MAX MALAVANSKY, (TESTIFIED VIA TELECONFERENCE), CITY
ADMINISTRATOR, CITY OF SAINT GEORGE, voiced support for CS
SB 125 (FIN). He urged continuation of the hold-harmless
provision and asked that the bill not be included in a
differentiation between it & revenue sharing.
2:24:14 PM
DAVE TELERICO, (TESTIFIED VIA TELECONFERENCE), DENALI
BOROUGH, testified in support of CS SB 125 (FIN) and urged
that it be passed out of Committee unamended.
2:24:57 PM
TIM BOURCY, (TESTIFIED VIA TELECONFERENCE), PRESIDENT,
ALASKA MUNICIPAL LEAGUE, MAYOR, CITY OF SKAGWAY, applauded
the work done on the bill to date and requested that it be
passed out of Committee as soon as possible.
2:25:52 PM
SHIRLEY MARQARDT, (TESTIFIED VIA TELECONFERENCE), MAYOR,
CITY OF UNALASKA, spoke on behalf of leaving CS SB 125 (FIN)
as it came into Committee. The hold harmless clause is very
important for the smaller communities. She appreciated that
the PERS/TRS issue was kept separate from the revenue
sharing. The need for revenue sharing is a stand alone
program and is fully supported by the AML membership. She
encouraged moving the bill from Committee.
2:27:53 PM
JEFF JABUSCH, (TESTIFIED VIA TELECONFERENCE), FINANCE
DIRECTOR, CITY OF WRANGELL, encouraged that the proposed
bill pass from Committee in its current form in order that
the small towns in Alaska can continue to survive the
economical obstacles before them.
2:30:27 PM
RHONDA JENSEN, (TESTIFIED VIA TELECONFERENCE), ASSEMBLY
MEMBER, CITY OF YAKUTAT, urged that the Committee leave CS
SB 125 (FIN) without changes, including the hold harmless
clause in tact and move it out of the House Finance
Committee.
2:31:24 PM
SHELBY BOOTHE, (TESTIFIED VIA TELECONFERENCE), BRISTOL BAY
BOROUGH, testified in support of CS SB 125 (FIN) and SB 72.
The bills provide needed stability to the personnel costs
and revenue streams. With escalating fuel, utility, freight
and health care costs, without the support provided by the
legislation, services will be reduced. He stressed that SB
125 should not be considered as a part of revenue sharing.
2:32:58 PM
CRIS BURCH, (TESTIFIED VIA TELECONFERENCE), CHAIR, ANCHORAGE
ASSEMBLY LEGISLATIVE COMMITTEE, ANCHORAGE, echoed concerns
and support voiced by previous testimony on CS SB 125 (FIN)
version of the bill. He noted that the City of Anchorage
strongly supports CS SB 125 (FIN), which would hold TRS
rates at 12.5% of total payroll & PERS rates at 22%, the
State covering the remainder.
2:34:20 PM
TOM BOEDEKER, (TESTIFIED VIA TELECONFERENCE), CITY MANAGER,
CITY OF SOLDOTNA, stressed the importance of the hold
harmless provisions as written into CS SB 125 (FIN). He
urged that the bill be moved out of Committee unchanged.
PUBLIC TESTIMONY CLOSED
2:36:04 PM
Co-Chair Meyer asked about the 22% current rate and increase
in five years, if it was possible to "bump" it up. Mr.
Brooks responded that the approach taken in the bill is to
wait for five years, to allow for the individual employers
to make arrangements. One consideration regarding PERS
moving to a blended rate is no-set rate. He noted that it
is a complicated & complex issue but could be done.
Co-Chair Meyer commented that at that rate, those that have
over paid at the higher rate should be stepped down. Mr.
Brooks explained that the determination has been a
collaborative work in progress.
2:39:03 PM
Representative Gara requested to make a conceptual
amendment. Representative Hawker wanted to see any
amendment in writing in order to avoid complications. Co-
Chair Meyer agreed.
2:39:51 PM
SB 125 was HELD in Committee for further consideration.
ADJOURNMENT
The meeting was adjourned at 2:40 P.M.
| Document Name | Date/Time | Subjects |
|---|