Legislature(2021 - 2022)ADAMS 519
02/02/2022 01:30 PM House FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| HB187 | |
| HB64 | |
| HB30 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | HB 30 | TELECONFERENCED | |
| + | HB 64 | TELECONFERENCED | |
| + | HB 187 | TELECONFERENCED | |
| + | TELECONFERENCED |
HOUSE FINANCE COMMITTEE
February 2, 2022
1:36 p.m.
1:36:19 PM
CALL TO ORDER
Co-Chair Foster called the House Finance Committee meeting
to order at 1:36 p.m.
MEMBERS PRESENT
Representative Neal Foster, Co-Chair
Representative Kelly Merrick, Co-Chair
Representative Dan Ortiz, Vice-Chair
Representative Ben Carpenter via teleconference
Representative Bryce Edgmon
Representative DeLena Johnson
Representative Andy Josephson
Representative Bart LeBon via teleconference
Representative Sara Rasmussen via teleconference
Representative Steve Thompson
Representative Adam Wool
MEMBERS ABSENT
None
ALSO PRESENT
Representative James Kaufman, Sponsor; Matthew Harvey,
Staff, Representative Kaufman; Neil Steininger, Director,
Office of Management and Budget, Office of the Governor;
Representative Louise Stutes, Sponsor; Fate Putman, Staff,
Representative Stutes; Jerry McCune, Representative, United
Fishermen's Association and President, Cordova District
Fishermen United; Makena O'Toole, Shellfish Division
Representative, Cordova District Fishermen United; Elise
Sorum-Burke, Staff, Representative Josephson; Charles
Collins, Director, Division of Workers Compensation,
Department of Labor and Workforce Development; Scott
Jordan, Director, Division of Risk Management, Department
of Administration.
PRESENT VIA TELECONFERENCE
Representative Louise Stutes, Sponsor; Forest Bowers,
Deputy Director, Commercial Fisheries, Department of Fish
and Game; Phil Doherty, Executive Director, Southeast
Alaska Regional Dive Association; Ronald Blake, Southeast
Alaska Regional Dive Association, Cordova; Mike Mickelson,
President, Cordova Fishermen's united; Nicole Reynolds,
Deputy Director Tax Division, Department of Revenue;
Caroline Schultz, Policy Analyst, Office of Management and
Budget, Office of the Governor.
SUMMARY
HB 30 WORKERS' COMP: DEATH; PERM PARTIAL IMPAIR
HB 64 FISHERY DEVELOPMENT ASSOC.; ASSESSMENTS
HB 187 STATE AGENCY PUBLICATIONS
Co-Chair Foster reviewed the agenda for the meeting.
HOUSE BILL NO. 187
"An Act relating to the elimination or modification of
state agency publications that are outdated,
duplicative, or excessive or that could be improved or
consolidated with other publications or exclusively
delivered electronically; and providing for an
effective date."
1:37:31 PM
REPRESENTATIVE JAMES KAUFMAN, SPONSOR, introduced himself.
He thanked the committee for hearing his bill. He
characterized HB 187 as a simplification bill that
created cost efficiencies. He read from the sponsor
statement:
HB 187 in its current form, is intended to conserve
resources expended in the production, processing,
transportation, distribution storage and disposal of
excess state agency publications.
Representative Kaufman explained that the bill required
state agencies to compile a list of publications produced
each year and look for opportunities to reduce or eliminate
them. His goal was to prevent the state from doing the same
things over and over if unnecessary.
1:39:50 PM
MATTHEW HARVEY, STAFF, REPRESENTATIVE KAUFMAN, reviewed the
sectional analysis. He referred to the sectional analysis
which he read:
Section 1:
Amends AS 37.07.020 to add a requirement for the
governor to submit legislation to remove or amend
statutory requirements for publications deemed to be
outdated, duplicative or excessive, or that could be
consolidated with other publications, and which of
those could be delivered in electronic form as
directed in Section 2.
Section 2:
Repeals and reenacts AS 44.99.220 requiring state
agencies to use a list of publications, which is
already statutorily required to be developed, to
identify and highlight publications deemed to be
outdated, duplicative or excessive, or that could be
consolidated with other publications, or which could
be delivered in electronic form.
This list of publications, including highlighted
publications, is required to be electronically
submitted to the governor and both bodies of the
legislature.
Section 3:
Provides for an immediate effective date.
Co-Chair Foster asked if members had any questions. He
commented that choosing which publications were worthy of
publication was subjective. He offered that some
publications were widely read, and some were read by a
limited number of readers. He wondered how the decisions
would be made.
Representative Kaufman answered that the bill created a
feedback loop; after the assessment was made and
legislation was introduced it was up to the legislative
process to determine whether the publications were viable
or not. There would be an opportunity to hear testimony
regarding the publications through the public process.
1:43:01 PM
Representative Edgmon thought similar legislation had
already been passed. He recalled discussions regarding
balancing the needs to save money and resources and
concluding that digital versions were just as useful as
hardcopy. He generally approved of the bill and thought it
was well intended. However, he noted that there had been
some complications in rural Alaska because of internet
connections. He believed that some publications were very
important and rural residents were accustomed to receiving
the information via mail.
Co-Chair Foster indicated that Representative Rasmussen was
online.
Representative Kaufman responded that he considered the
issue, which was why the bill did not authorize the
executive branch to eliminate the publications. He felt
that the bill included a "change management piece" that
acted as a check via the legislative process to determine
if eliminating a paper publication would unduly affect its
readers.
1:45:16 PM
Representative Wool recalled that Representative Edgmon was
referring to a bill introduced by Representative Kreiss-
Tomkins. He recollected the discussions concerning the
benefits and drawbacks of electronic versus hard copies.
Although he agreed with the idea of saving paper and
resources, he was inclined to read hard copies of reports
he received versus being informed that the information was
available online. He determined that if it required active
investigation to find a report, he might not seek the
information out. He deemed that there was a passive versus
active component to consider. He believed that printed
publications still had value. He agreed that there were
likely too many publications. He favored striking a balance
between publications in various forms.
1:47:07 PM
Representative Carpenter thought that the value of the bill
was not the paper that would be saved, it was the habit
changes within the various agencies that would challenge
established thinking on how to do things more efficiently.
He thought the bill helped to move people towards the
digital age of the younger generation and changed
organizational thinking regarding how to do things better
and more efficiently as a new habit.
1:48:34 PM
Co-Chair Foster commented that the local paper in Nome was
very popular and heavily relied on. He observed that the
state was putting less announcements in newspapers as a
cost saving measures. He asked if any provisions in HB 187
affected announcements placed in the classified sections.
Representative Kaufman responded in the negative. He
recounted that the intent of the bill focused on
publications within the executive branch and created an
opportunity to review whether a publication had value.
Representative LeBon asked if the sponsor had an opinion
about the potential savings resulting from the bill.
1:51:46 PM
Mr. Harvey answered that Representative Kreiss-Tompkins had
a similar bill requiring that all reports were digitally
delivered. He indicated that he obtained the savings
information from the work done for Representative Kreiss-
Tompkins' bill. He relayed that the state had 189 statutes
that required reports and the savings for printing was
estimated at over $585,000. He qualified that since HB 187
was not a blanket mandate to deliver all publications
electronically, he anticipated less cost savings.
Representative LeBon commented that in the banking business
financial statement delivery was evolving into all digital
formats.
1:52:59 PM
Representative Josephson relayed his understanding of the
bill and thought that it put the legislature on the
defensive. He asked whether the legislature would have to
step up to the plate and decide on publications for each
of the reports the executive branch identified for
elimination or modification.
Representative Kaufman replied that the governors bill had
to be moved through the legislative process by the
legislature. He did not perceive it as a defensive position
since it would be moved through the legislative process by
the will of the legislature. However, he thought that would
be the benefit of HB 187 - to determine what publications
were being valued through debate and discussions.
Representative Josephson cited a document in members files
[Research Brief State Agency Reports Required by Alaska
Statute LRS Report 15.248 (copy on file)]. He pointed to
the listed Annual Report on Mining Activity in the State
and deduced that it would warrant a tremendous amount of
interest and would likely be safeguarded. Representative
Kaufman answered in the affirmative. He reminded
Representative Josephson that the purpose was not to get
rid of things it was to access and avoid repetitive ways
of doing things. He hypothesized that the mining report may
be duplicative and all the costs of not only publication,
but of distribution and disposal had to be factored in. He
concluded that bill ensured that the publications were
delivering value.
1:56:25 PM
Representative Thompson thought the bill was a great idea.
He guessed that the 2015 research would currently include
many more mandated reports. He relayed his experience
attempting to determine the number of reports required by
school districts in a cost saving exercise. He discovered
that sometimes the reports went into a file and were not
used and wondered what the additional savings in personnel
costs could be achieved. Representative Kaufman emphasized
the lack of job satisfaction in producing something that
was not valued. He determined that loss of job satisfaction
had a cost as well as other value added work the employee
could perform instead. The savings could be much deeper
than the production costs.
Co-Chair Foster relayed that there was a fiscal note
associated with the bill.
1:58:57 PM
NEIL STEININGER, DIRECTOR, OFFICE OF MANAGEMENT AND BUDGET,
OFFICE OF THE GOVERNOR, relayed that the Office of the
Governor fiscal note (FN2 (GOV) was zero. He explained that
it was determined that the Office of Management and Budget
(OMB) would accommodate the additional workload of
compiling a list of publications with existing resources.
Representative Kaufman commented that the bill was better
than a zero fiscal note by actually creating savings.
Representative Wool asked if the bill was about not
printing reports or not writing the reports at all. He
presented a scenario where he was reminded the committee
requested a report in the previous year and they had
forgotten about it. He asked whether they were reducing
report requirements or only the printing of them.
Representative Kaufman responded that the bill encompassed
the total production of reports and may result in the
elimination of some reports. He believed that in a large
and complex organization it was usually easy to find
efficiencies if mechanisms were created to start the
discussion. He reviewed the total existence of a report;
from the conceptualization, compiling information, writing,
transmission, or delivery that included transportation
emissions to disposal with possible landfill issues, etc.
He noted the layers and layers of benefits from halting
doing something unnecessary. The discussions in the review
cycle would include all publishing options and all the
ramifications. Representative Wool wondered how simple it
would be to eliminate the statute requiring a report. He
noted the fiscal note was zero. He wondered if there was a
fiscal aspect or why the finance committee was referred the
bill. Representative Kaufman responded that the fiscal note
was zero but was likely a savings bill. He believed that
agencies knew the number of reports that were required and
their intrinsic value and therefore the list was not a
burden. He guessed that the referral was an artifact but
he viewed it as an opportunity to discuss ideas such as
this.
Co-Chair Foster indicated he would set the bill aside and
thanked the bill sponsor.
HOUSE BILL NO. 64
"An Act relating to regional fishery development
associations; and relating to developing fishery
management assessments."
2:05:41 PM
Co-Chair Foster indicated there were several people
available online for questions.
2:06:42 PM
FATE PUTMAN, STAFF, REPRESENTATIVE STUTES, provided the
committee with an overview of the bill. He explained that
HB 64 established regional fisheries development
associations to support commercial fishing management
assessments in order to facilitate new or developing
fisheries within a geographic region. The developing
fisheries were perspective fisheries that were not
currently regulated or controlled by the Alaska Commercial
Fisheries Entry Commission (CFEC). The definition of a
developing fishery was designated as an area where the
optimum yield of the resource had not been reached or the
sustained yield has not been estimated, and annual stock
assessments were not conducted. He furthered that declining
state funding hindered the Department of Fish and Games
(DFG) ability to manage and establish new and developing
fisheries. He delineated that DFG managed state fisheries
by performing annual surveys and assessments of fisheries
resources in order to identify the biomass and the
sustainable yield of seafood as required by the states
Constitution Article 8, Section 4 called the Sustained
Yield Principle. In the case of new and developing
fisheries the funding to perform assessment surveys and
studies was lacking and prohibited the fisheries from
opening. He shared that the Speaker's office had been
contacted by a constituent in Prince Willian Sound that
wanted to fish for Tanner Crab, which remained closed for
30 years due to lack of funding for current assessments. He
indicated that annual surveys were currently being
conducted and the stocks were adequate for a commercial
fishery. The fishery was recently opened and anyone that
wanted to fish could obtain an interim use permit from
CFEC. He elucidated that HB 64 was designed to let
developing fisheries open by providing a source of funding
for the annual biomass survey. Currently, the constituent
could fish for Tanner Crab in Prince William Sound,
however; legislation was necessary for other developing or
new fisheries. The bill created a fund that allowed for
management of new and developing fisheries and allowed the
creation of regional fisheries development associations,
which were non-profit organizations representing the
stakeholders. He conveyed that the associations may elect
to levy an assessment that would fund the DFG studies. The
fees called management assessments were collected at the
time of sale so that the buyer would submit the assessments
on a quarterly basis to the Department of Revenue (DOR) who
would remit the funds back to the Regional Fishery
Development Associations (RFDA). The RFDA would develop an
annual operating plan in tandem with DFG in order to
conduct the surveys. He noted a similar association with
the dive fisheries in the state; the Southeast Alaska
Regional Dive Fishery Association developed by statute had
used the model since 1998 to manage geoduck, sea urchin,
and sea cucumber fisheries. The bill was developed using
the dive fisheries statute that granted the developing
fisheries the mechanism to fund themselves in order to
become an established fishery. He listed the benefits of
commercial fisheries in the state and noted the job
creation and revenue potential.
Co-Chair Foster indicated there were no questions on the
sectional analysis.
Co-Chair Foster noted the committee had been joined by
Representative Johnson.
Representative Edgmon asked for an explanation of the
difference between a regional seafood association and a
regional fishery association. Mr. Putman deferred the
answer.
2:14:01 PM
FOREST BOWERS, DEPUTY DIRECTOR, COMMERCIAL FIAHERIES,
DEPARTMENT OF FISH AND GAME (via teleconference), asked
that the representative restate his question.
Representative Edgmon complied. Mr. Bowers answered that
the Regional Seafood Development Association (RSDA) was
developed via statute through the legislature. He explained
that the RSDA was developed to enhance the value of
fisheries via the marketing aspect of commercial fishing
and was housed in the Department of Commerce, Community and
Economic Development (DCCED). The current bill was focused
on stock assessment and biology and was more appropriately
related to DFG. Representative Edgmon appreciated Mr.
Bowers' response, but he was not convinced why two
different entities were necessary. He wondered why it was
not housed in the same shop.
Mr. Putman was not familiar with the marketing portion of
the industry.
2:16:23 PM
JERRY MCCUNE, REPRESENTATIVE, UNITED FISHERMEN'S
ASSOCIATION AND PRESIDENT, CORDOVA DISTRICT FISHERMEN
UNITED, explained that the marketing association required
members to be a permit holder of a specific gear type and
operate a boat and pay fees to the association. The
association had control over the assessments. He agreed
with the previous testifier that the marketing associations
operated differently than the regional associations would.
He restated that the proposed association was concerned
with stock assessment and biology. He furthered that the
marketing association bylaws were limited and did not
address the needs of the proposed RFDAs; they did not mesh.
Representative Edgmon wanted to learn the distinction
between the two associations. He guessed that they may have
similar duties and suggested the state was in an era of
consolidation and creating efficiencies.
Representative Josephson wondered whether new fisheries
alluded to a situation like Tanner Crab reopening after
many years or if they were creating fisheries for new
species that never had a commercial fishery. Mr. McCune
replied that there were two developing fisheries that had
never been open before in Prince William Sound: sea
cucumbers and octopus. They were looking for species to
keep the fisheries open in the winter. He noted that the
bill encompassed the entire state and was not exclusively
for Prince William Sound. Representative Josephson asked if
there was a point in time in the process where a non-
commercial user could speak against the development of a
new fishery.
Mr. Putman responded that the appropriate venue to address
the issue would be during a Board of Fish hearing.
Representative Carpenter cited the regional dive fishery
association. He inquired whether General Funds (GF) were
ever necessary to support the dive fisheries and if he
expected that the RDFAs would need state support at some
point. He expressed concerns regarding whether GF would be
necessary. He hoped the program was an economic stimulus
and created opportunity. Mr. Putnam responded that the
general idea of a RFDA was to use the funds associated with
the collection of fees from the fishermen to pay for
assessments to keep the fishery open in the future.
2:21:28 PM
PHIL DOHERTY, EXECUTIVE DIRECTOR, SOUTHEAST ALASKA REGIONAL
DIVE ASSOCIATION (SARDA)(via teleconference), he shared
that prior to his directorship he was an area management
biologist for commercial fisheries in the Ketchikan area.
He addressed Representative Carpenters question and
answered in the negative. He explained that the dive
association continued to tax themselves; three different
species were taxed at different rates: sea urchins, geoduck
clams, and sea cucumbers. The tax was paid at the time of
delivery and was added to the fishers fish ticket and sent
to DOR who remitted it back to the association. The
association met every year with DFG and submitted an
operating plan and transferred funding for stock
assessments and fishery management. He maintained that GF
was never used in the process.
2:23:30 PM
Representative Edgmon favored the bill and thought it was
necessary. He understood that developing fisheries had to
have commercial value and in order to be commercialized to
the point of paying an assessment fees other things had to
happen to form the association. He commented on the zero
fiscal impact note. He wondered whether he was missing
something. Mr. Putman replied that the concept was to
allow the fisheries to initially operate under a
commissioners permit, which allowed a new or developing
fishery to occur. At that point, it was not an open fishery
yet, it was a test fishery. The fish were brought to a
buyer and a fee was assessed, eventually the fees would
build up enough to develop into a full fishery. Once
developed into a full fishery the fishers operated under
an Interim Use Permit (IUP), the fees were collected, and
the stock assessments would happen on an annual basis to
keep the fishery open.
Vice-Chair Ortiz spoke in support of the bill. He noted the
benefits of the development associations such as creating
economic opportunity and more jobs. He remarked that the
resource was renewable, if managed correctly.
Co-Chair Foster thanked Mr. Putman and moved to invited
testimony.
2:26:47 PM
MAKENA O'TOOLE, SHELLFISH DIVISION REPRESENTATIVE, CORDOVA
DISTRICT FISHERMEN UNITED, spoke in favor of the bill. He
shared that he had spent many years trying to revive
defunct and underutilized fisheries. He used the
commissioners license process for sea cucumbers, squid,
green sea urchin, skates, etc. He elucidated that DFG was
unable to engage with the fishers due to budgetary
constraints and lack of a funding mechanism. A few years
ago, some local fishers formed a fisheries development
committee and ascertained that they could contribute funds
for the stock assessments for fisheries they believed were
viable. They discovered that a legal avenue was necessary,
and SARDA was a model. He elaborated that he had
participated in the Southeast Alaska dive fisheries for
over a decade. He characterized the relationship between
industry and management through SARDA as very functional.
He thanked Speaker Stutes for assisting with the bill. He
addressed questions from the hearing discussions. He
highlighted defunct versus new fisheries and elaborated
that there were many defunct fisheries that would benefit
from the passage of the bill because DFG simply did not
have the funding to perform assessments. Some of the
defunct species included herring ,Tanner crab, Dungeness
crab, Red, Blue, and Brown King crab, and razor clams. The
legislation also covered new fisheries such as Norton Sound
salmon fisheries, hooligan, California Market squid, green
sea urchins, octopus, skates, dog sharks, black rock fish,
etc. There were many underutilized resources in the state.
He opined that while the state was investing in
mariculture, the state also needed to discover what it
already had for development.
Representative Edgmon thanked the testifier and believed
that he outlined the distinction between RSDAs and RSFAs.
2:31:01 PM
RONALD BLAKE, SOUTHEAST ALASKA REGIONAL DIVE ASSOCIATION,
CORDOVA (via teleconference), related that he participated
in the Southeast dive fisheries since 1990. He echoed Mr.
O'Toole's testimony regarding the relationship between
SARDA and DFG. He offered that while working with the
department on developing a sea cucumber fishery [in Prince
William Sound] it asked the fishers to establish a dive
association and they discovered it could not legally be
done. House Bill 64 became the mechanism that allowed the
fishers to comply with the DFGs request.
2:32:33 PM
MIKE MICKELSON, PRESIDENT, CORDOVA FISHERMEN'S UNITED (via
teleconference), supported the legislation. He remarked
that he did not have anything to add to the prior
testimony. He had worked with the biologists and discovered
that there was enough biomass to support some of the
fisheries, which he felt was the key factor. The fish were
available, and the bill facilitated the start of new
fisheries.
Co-Chair Foster asked Mr. Bowers to review the fiscal notes
from DFG.
Mr. Bowers explained that the published fiscal note from
DFG for Commercial Fisheries (FN4 (DFG))had zero fiscal
impact involving very little staff time. He conveyed that
the department's overall role in the creation and
management of these associations would be minimal. The
associations would qualify under the provisions of the bill
and would engage with the Commercial Fisheries Division to
formulate a cooperative agreement which described how any
revenue generated from the tax would be used for stock
assessment. The revenue was indeterminate due to the
inability to predict the amount of revenue the bill would
generate.
Co-Chair Foster moved to the next fiscal note.
Mr. Haghayeghi spoke to the published DFG zero fiscal note
for the CFEC (FN3 (DFG)). The commission did not anticipate
any additional fiscal impact from passage of the
legislation.
2:36:41 PM
NICOLE REYNOLDS, DEPUTY DIRECTOR TAX DIVISION, DEPARTMENT
OF REVENUE (via teleconference), relayed that the published
DOR fiscal note (FN5 (REV)) was indeterminate in terms of
the revenue impact. The revenue impact of this bill was not
able to be determined at this time. The department would
absorb the costs of the small additional administrative
burden to implement the program with existing resources.
Representative Carpenter asked if any personal use
fisheries would be impacted if a new commercial fishery was
developed. He deduced that his question may be premature.
Mr. Putman responded that there was often little relation
between personal use and commercial fishing because the
Board of Fish allocated the resources. He noted that all
salmon fisheries were limited and that did impact personal
use. He did not know if he could directly answer without
knowing the specific fishery. He thought the decision would
be up to the department to decide if a new fishery would
impact personal use. Representative Carpenter remarked that
his question was premature but important. He felt assured
knowing that there was a process for making the
determination at a later stage.
2:39:52 PM
Vice-Chair Ortiz asked that with the establishment of an
association who decided on the membership. He wondered if
there would eventually be too much membership demand to
sustain the fishery. Mr. Putman indicate that Vice-Chair
Ortiz's question was a good one. He clarified the question
was how to sustain the fishery if there was too much
fishing pressure. He replied that one of the functions of
the limited entry commission was to determine where the
pressure was applied and whether there was enough resource
for both commercial and personal use. They were difficult
questions to answer. He deferred to DFG who might have a
better answer. Vice-Chair Ortiz clarified his question. He
inquired if all of the fishers who formed an association
would be able to participate in the fishery. Mr. Putman
replied that anyone was able to be part of the association
and they would vote on how to assess the fishery; not all
members were commercial fishers. He noted that formation of
the association was loosely defined in the bill. There were
outstanding issues with the workings of the committee that
needed to be addressed, but the sponsor wanted to keep it
flexible so that anyone who wanted to be a part of the
association could participate and vote on how to move
forward.
2:43:19 PM
Vice-Chair Ortiz asked how SARDFA worked. He asked if the
membership was open and how it was controlled.
Mr. Doherty answered that if someone was a permit holder
through CFEC, whether interim use or permanent, they were a
part of the association. The dive association membership
did not include any non-permit holders. The membership duty
was to pay the landing tax. He restated that as soon as
someone purchased the limited entry permit, they
automatically became part of the association and paid the
tax.
Representative Wool referenced the associations assessment
fee. He asked how the assessment rate was determined. Mr.
Putman replied that the bill specified the amounts of
assessments the associations members could vote for. He
pointed out that it began at 2.5 percent up to 30 percent
of the value of the fish. He reiterated that the money was
housed in DOR and given to DFG for stock biomass
assessments to determine if the fishery was viable.
Representative Wool wondered what happened if the amount
voted on was insufficient to perform the biomass studies.
He asked how the department handled the situation. Mr.
Putman responded that if funds were insufficient there
would be no fishery and it incentivized choosing a higher
tax rate. The commissioner had to approve the ballot and if
the commissioner decided the amount was not enough to
perform the assessment the vote could be rejected.
2:47:46 PM
Representative Wool provided a scenario and asked how the
commissioner ascertained how much was necessary to perform
the study or what happened if the funding proved to be
insufficient to complete the assessment. Mr. Putman
answered that DFG had a good handle on the cost of
assessments. He deemed that if the association was small
and the tax amount was too low, the commissioner would
likely reject the vote and ask for a higher fee. The
process would make certain the amount was functional and
could move forward with an assessment. Representative Wool
inquired whether an association could keep repeating the
experimental opening process if it lacked enough money for
an assessment. He deduced that it was not possible to
establish a new fishery without an adequate assessment. Mr.
Putman answered in the affirmative. He restated that
lacking a sustainable yield would violate the constitution.
He relayed that DFG was vigilant regarding not allowing
commercial fishing without a biomass study.
2:49:51 PM
Mr. Putman provided closing remarks. He referenced the
aging of the commercial fishing fleet and believed that the
bill presented an effort to open new fisheries and younger
fishers could start without purchasing a limited entry
permit.
HB 64 was HEARD and HELD in committee for further
consideration.
HOUSE BILL NO. 30
"An Act relating to notice of workers' compensation
death benefits; relating to the payment of workers'
compensation benefits in the case of permanent partial
impairment; relating to the payment of workers'
compensation death benefits; and providing for an
effective date."
2:51:15 PM
Co-Chair Foster moved to the last bill on the agenda and
indicated it was the bills first hearing.
REPRESENTATIVE ANDY JOSEPHSON, SPONSOR, thanked the
committee for hearing the bill. He relayed the history of
the legislation. He first took up the permanent partial
impairment bill in 2014. The bill had a hearing in 2015 and
passed out of the House in 2018. It languished in the
Senate Finance Committee. In 2019, a unique death benefit
that 12 other states had was removed. The clean bill
passed in 2020. He noted that at least four or five members
of the current committee voted in favor of the bill. He
explained that a partial impairment was an injury that was
determined by a medical doctor to be permanent and partial
related to the fact that the person was still living. The
rating the state operated under the whole body rating
while some states measured the loss by body part. The rate
was calculated by the doctor determining the percent of the
damage and the percentage was multiplied by the whole body
number. The legislation was attempting to modify the whole
body rating by increasing it from the current rate of $177
thousand, which placed the state in the bottom 5 states
nationally. He reported that the rate had not been
increased in 22 years and indicated that the bill proposed
raising it to $273 thousand. He added that factoring in for
inflation the rate should be $286 thousand. He offered that
the bill updated all matters related to permanent
impairment. Representative Josephson continued that the
bill addressed increasing the rate for the death of a
family member with dependents. The current rate was
established in 1968. He characterized the provision as
anti- elitist. He delineated that currently, financial
support was typically cut off when a dependent of a sole
surviving parent turned 19, unless the child was attending
a university until the age of 23. The bill extended the
benefits to all dependents between the ages of 19 and 23.
Representative Josephson discussed workers compensation
premiums. He observed that there was a perception that
premiums were rising. However, premiums were not increasing
but actually decreasing particularly in the category of
indemnity. He specified that indemnity meant death or
impairment and asserted that the cost of indemnity had
decreased. He pointed out that the cost of indemnity was
14.5 percent of the entire cost of premiums. Within the
portion of indemnity (14.5 percent) there were large
decreases of about 40 percent. He explained that it was due
to improved workplace safety. He emphasized that the cost
of the bill to cover all workers in the state was
approximately $4.8 million, which may seem like a lot but
was divided by hundreds of thousands of workers. He
acknowledged that the bill would increase premiums by 2
percent, but premiums had dropped 14 percent over the last
several years. He surmised that the trend line on premiums
was still decreasing. He highlighted how poorly the state
treated its injured workers. A person who lost an arm
received $106 thousand in a PPI award. In the highest state
of Pennsylvania, the person received $389 thousand. The
th
state ranked 45 in the loss of an arm and an eye. In
Maryland, if a person lost an eye at work, they were paid
over $250,000 versus in Alaska where a person would be
compensated only $44,000. He contended that the state could
and must do better.
2:59:43 PM
Co-Chair Merrick asked how many people in Alaska received a
partial impairment every year. Representative Josephson
could not recall and deferred the answer to the Department
of Labor and Workforce Development (DLWD).
3:00:13 PM
Representative Edgmon thanked the sponsor for bringing the
bill forward and felt it was highly commendable. He
mentioned the impending federal infrastructure funding and
workforce that will be necessary for building roads and
working on infrastructure projects in light of Alaska's
extreme weather events. He noted someone from his hometown
being injured on the job related to an extreme weather
event. He asked for a better sense of who the bill
pertained to. Representative Josephson responded that it
applied to every worker who was an employee; blue collar
workers, white collar workers, and those not self-employed.
He shared from personal experience that he had purchased
workers compensation for a prior campaign manager and
added that it encompassed a broad pool of workers.
3:02:29 PM
ELISE SORUM-BURKE, STAFF, REPRESENTATIVE JOSEPHSON, added
that there was a separate category for commercial fishers,
who were not covered either.
3:02:52 PM
Representative Carpenter asked that when comparing the
state to national averages or other states for
compensation, if the total compensation and other
associated costs were factored in. He noted that the state
offered retraining which added costs. He asked how Alaska
compared to other states that did not have retraining
programs or had their own retraining process instead of a
lump sum payment. Representative Josephson answered that it
would be less generous than expected. He deferred the
answer to DOL for comment. He recalled that a person only
had the option of the reward or the training but not both.
He reminded the committee that there was no way to sue
except for third party liability. He exemplified that if
the rung of a ladder was defective, the injured party could
sue the ladder company. Mostly, workers compensation was
designed to avoid litigation, but the worker likely
received less. He thought a person would be awarded much
more in personal injury court if it was not a workplace
injury. He characterized workers compensation as part of a
grand bargain that moved the process along
expeditiously and was part of a give and take. An
employer paid for the injury without explanation because it
was a no fault strict liability, however, the injured
employee would not recover as much as possible.
Co-Chair Foster invited Mr. Collins to the table.
3:06:18 PM
CHARLES COLLINS, DIRECTOR, DIVISION OF WORKERS
COMPENSATION, DEPARTMENT OF LABOR AND WORKFORCE
DEVELOPMENT, responded that he could not recall the exact
number of claims involving PPI, but remembered that in 2020
the state paid out $7.3 million for PPI. He expounded that
many claims had a number of different indemnity portions;
an injured worker could elect to also take reemployment and
rehabilitation benefits depending on each individual plan.
Some claimants might take a lump sum of PPI benefits, and
some retrain and receive their benefit as a replacement
wage until it ran out. He commented that the benefits were
very complex and varied per individual case. He requested
that the second question be repeated.
3:08:11 PM
Representative Carpenter restated his question about the
compensation and comparing the total benefit, including
retraining to national averages - he asked if they were
comparing apples-to-apples. He would argue that Alaska
would be in a top tier of compensation if retraining costs
were included with the payout. Mr. Collins replied that all
workers compensation benefits were paid by the workers
employers or their carriers, which were self-insured
entities like the state of Alaska who paid the benefits
directly rather than through an insurance company. He
delineated that reemployment payments in Alaska through AS
23.30.041 were limited in scope and amount. He explained
that the injured state worker was evaluated and if found
eligible for reemployment benefits an education plan was
developed and the most the state paid was $13.3 thousand in
reemployment benefits. The caveat was that wage replacement
called 041K derived from AS 23.30.041 (k) paid a weekly
stipend while retraining. As for other jurisdictions,
outside of Alaska, he expounded that each jurisdiction had
its own set of laws governing worker's compensation and no
two states were the same. He noted that in the state of
Washington everything was done through the state; the
insurance policy was purchased through the state and ran
the retraining programs. In Alaska, workers compensation
was run through the carriers organization and the state
was removed from the process. He recounted that in 2020,
there was more than $7 million in replacement wages paid
out on 111 active plans and the plans dated back several
years through to the present. At any given time, people
were working through the system and would accept some of
the 041K replacement wage, which was the most expensive
portion of workers compensation. He furthered that
according to AS 24.30.041 a person could take a job
dislocation settlement. Even if an injured employee took
either of the aforementioned benefits, PPI payments were
typically paid directly to the injured employee.
3:12:21 PM
Representative Carpenter understood that the injured worker
received PPI compensation and retraining. He asked if he
had made an accurate statement. Mr. Collins thought
Representative Carpenter's comments were accurate. He
qualified that if someone elected retraining before they
can collect 041K they had to utilize their PPI. If the
injured person was in a retraining program, their PPI was
paid weekly while in the retraining program. It was
possible that if a person ran out of PPI while still
retraining, they could collect more 041K wage replacements.
He noted that the individuals plans had to be approved by
the employer as well as the department and the employee.
Representative Carpenter deduced that the issue was more
complex that what he had originally thought. He thought
that the complexity made it difficult to compare merely the
PPI payments to other states. He determined that it was
necessary to compare the entire package. He was hoping
someone could provide more information regarding the cost
issue.
3:14:52 PM
Representative LeBon observed that the purpose of the bill
was to bring the benefit up to a hold harmless level for
inflation. Representative Josephson responded in the
affirmative. He referenced the statements that premiums had
decreased and wondered whether the reason was that claims
were decreasing. Representative Josephson concurred that
indemnity claims had decreased and deferred further answer
to Mr. Collins.
Mr. Collins reported that for the past 9 years the state of
Alaska actuary National Council on Compensation Insurance
(NCCI) had recommended lowering the workers compensation
rates in Alaska. The reason pertained to 2 factors; Alaska
was a safer place to work and with the adoption of a fee
schedule based on relative values versus based on the prior
usual and customary costs. The medical portion also
decreased. The lowest NCCI rates were lowered roughly 13
percent.
Representative LeBon thought it was good news. He relayed
from personal experience that early in his employment his
employer offered accidental death and disability insurance
and the premiums were shared 50 percent and 50 percent
(50/50). He noted that most of the workers took advantage
of the supplemental program over and above workers
compensation. He commented that workers compensation was
likely not as robust as it should have been.
3:18:09 PM
Representative Edgmon asked Mr. Collins about his comment
made that Alaska was one of the safest states to work in.
He deemed that Alaska was not the safest place due to
weather and other conditions. Mr. Collins answered that he
might have misspoken. He stated that he said it was
currently safer to work in Alaska than 10 to 20 years
ago. He added that the data proved the statement. There had
been less claims every year since 2015 and he attributed it
to an overall safer workplace environment. Representative
Edgmon thought he might not have heard Mr. Collins
correctly.
Representative Wool referenced the $7 million paid out in
claims. He asked whether the amount was paid expressly for
PPI. He asked about added costs. Mr. Collins replied that
the $7.3 million paid was only for PPI in 2020. The total
indemnity payments in 2020 was $57.1 million, which
included total disability payments, PPI, and other
associated benefits.
3:21:10 PM
Representative Wool deduced that if the bill were adopted
it would compensate for inflation. He asked where the PPI
payments came from. Mr. Collins answered that the portion
of PPI addressed in HB 30 was only one component but would
likely increase the payout amount substantially. However,
the premiums would rise only by about 2.9 percent.
Representative Wool remained curious about the number of
incidents the $7 million represented. He queried whether
there was a formula that established the PPI payouts and
whether the bill proposed to retain the same formula. Mr.
Collins responded that there was a formula contained in the
sixth edition of the AMA Guide, [The American Medical
Association's Guides to the Evaluation of Permanent
Impairment, 6th Edition, 2021]. He indicated he was not
qualified to confer a rating. The process was done by a
doctor that was certified to provide a PPI rating. He
warned that the process was complicated. He used the index
finger as an example. He elaborated that could equate to 11
percent of the whole body base rating of $177 thousand
established in the year 2000.
3:24:27 PM
Representative Thompson opined that the reduction in on-
site injuries was attributed to big programs in Alaska
geared towards job safety. He mentioned that apprenticeship
programs included job safety training and most companies
had yearly safety training. He thought that Alaska had
changed its way of doing business to prevent job injuries
and was pleased.
3:25:15 PM
Representative Carpenter agreed with Representative
Thompson that the work culture had changed in Alaska. He
asked about workers compensation compared to what an
employer might offer for life and disability through
private insurers and what premiums they would pay compared
to paying for workers compensation benefits.
Representative Josephson answered that he did not have any
idea. Representative Carpenter commented that it was
valuable to the conversation to know if the industry had a
comparable or less expensive way to provide it. He thought
maybe the state needed to consider handling workers
compensation differently. He wondered if there was a
comparable alternative to workers compensation that would
decrease the cost to employers without duplicating efforts.
3:27:31 PM
Representative Josephson relayed that every state had
workers compensation and either offered it or allowed
workers to sue their employers. He reiterated that it was
part of the grand bargain originally established in the
late 1800s in Germany. He informed the committee that
worker's compensation was relatively inexpensive per
individual. He surmised that it was costly for a business
with scores of workers engaged in dangerous work. He
referenced Mr. Collins statements that premiums had
decreased.
3:28:20 PM
Ms. Sorum-Burke reminded the committee that worker's
compensation was required by law for every employer, and it
was a no-fault system. She elucidated that the reason for
Worker's Compensation had to do with employer liability and
whether the employee could sue the employer. She turned to
a presentation titled HB 30 (copy on file). She addressed
Slide 8 titled The Elevator Paradigm. The slide depicted
a customer and an employee in an elevator that fell. The
paradigm asks the question regarding what damages do each
receive. The example was a single childless worker who
would only receive funeral expenses. The slide contained
the following:
What damages do they receive?
Customer:
Economic Damages
Non-Economic Damages
Pain and suffering
Loss of Consortium
Punitive damages
Up to $1.5 million
Ms. Sorum-Burke maintained that workers compensation
existed to protect employers and provided some compensation
for employees. She noted that one state allowed workers
compensation as an option, which was Texas. She stated that
the employer was opening itself up to liability if they
chose not to opt for the program in Texas.
Representative Carpenter understood the participation
requirement. He felt that the state could do something
different than workers compensation. He recalled that he
was never offered disability insurance when he began
working. If the employer was offering disability, he
wondered whether it was cheaper via a private insurer than
paying benefits through workers compensation. He was not
suggesting that liability insurance should not be provided
he questioned whether workers compensation was the least
costly way and wanted to look at the big picture and not
just throw a bunch of money and increase payments.
3:31:53 PM
Representative Thompson shared that he was on the Worker's
Compensation Board from 1984 to 1994. He recalled that the
board discovered that many employers were not carrying
workers compensation. He asked if the state was still
monitoring employers to ensure that they were not cheating
the system and driving up the costs for employers who
carried it. Mr. Collins replied that the state had 5 full-
time inspectors and less than .01 percent of employers
failed to insure. He furthered that all the fines levied
against employers that failed to insure were placed in the
Benefits Guarantee Fund, which paid for employees that
worked for an uninsured employer. The state had done an
excellent job of making sure that employers were following
the law and took care of employees that were injured who
worked for an uncovered employer. Representative Thompson
was pleased to hear of the states diligence.
Co-Chair Merrick invited Mr. Collins to review the
published fiscal note from the Department of Labor and
Workforce Development for Workers Compensation (FN 5 (LFW)
that reported changes in revenues.
Mr. Collins reported that the fiscal note showed no cost to
the state. He elaborated that Workers' Compensation
insurance premiums were paid by insurers or by self-insured
employers and were paid to the Division of Workers'
Compensation and assessed at a statutory rate of 2.9
percent. The state would gain revenue due to higher sales
of premiums, which was reflected in the fiscal note.
Co-Chair Merrick moved to the published fiscal impact
fiscal note from the Department of Administration (DOA) for
Risk Management (FN4 (ADM)
3:34:52 PM
SCOTT JORDAN, DIRECTOR, DIVISION OF RISK MANAGEMENT,
DEPARTMENT OF ADMINISTRATION, reviewed the fiscal note. He
explained that the amount proposed currently under the
Alaska Worker's Compensation Act, AS 23.30.190 (a), the
whole body rating was $177,000. The bill increased the
rating by 54.24 percent to $273,000 based on the ten year
average (FY 2012- FY 2021) of whole body Permanent Partial
Impairment (PPI). The 54.24 percent would increase the
average annual payout by $423,254 thousand. Based on the
$423,254 thousand the division anticipated an additional
payout in second injury fund fees of 6 percent or $25,395
thousand totaling $449 thousand as noted in the fiscal
note.
Co-Chair Merrick turned to the final published zero fiscal
note, Various for All Branches.
3:36:41 PM
CAROLINE SCHULTZ, POLICY ANALYST, OFFICE OF MANAGEMENT AND
BUDGET, OFFICE OF THE GOVERNOR (via teleconference),
reported there was a zero fiscal note for the designation
Various that represented all branches of government. She
indicated that Risk Management estimated the legislation
would increase costs by $449 thousand annually, amounting
to a roughly 2 percent average increase in risk management
costs borne by paying all agencies. The state would not be
increasing the associated budgets by the amount.
Co-Chair Merrick thanked the presenters. She reviewed the
agenda for the following day.
ADJOURNMENT
3:37:37 PM
The meeting was adjourned at 3:37 p.m.