Legislature(1995 - 1996)
06/06/1996 09:20 AM House FIN
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* first hearing in first committee of referral
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+ teleconferenced
= bill was previously heard/scheduled
HOUSE FINANCE COMMITTEE
June 6, 1996
9:20 A.M.
TAPE 1st SSHFC 96-4, Side 1, #000 - end.
TAPE 1st SSHFC 96-4, Side 2, #000 - #053.
CALL TO ORDER
Co-Chair Mark Hanley called the House Finance Committee
meeting to order at 9:20 a.m.
PRESENT
Co-Chair Hanley Representative Martin
Co-Chair Foster Representative Mulder
Representative Brown Representative Navarre
Representative Grussendorf Representative Parnell
Representative Kelly Representative Therriault
Representative Kohring
ALSO PRESENT
Annalee McConnell, Director, Office of Management and
Budget, Office of the Governor; Chuck O'Connell, Alaska
State Employees Association; Bob Stalnaker, Director,
Division of Retirement and Benefits, Department of
Administration; Sandy Perry Provost, Special Assistant,
Department of Public Safety.
SUMMARY
SB 1003 An Act relating to public employees.
CSSB 1003 (FIN) am was reported out of Committee
with "no recommendation" and with two fiscal
impact notes by the Department of Administration.
SB 1005 An Act making, amending, and repealing
appropriations; making appropriations under art.
IX, sec. 17(c), Constitution of the State of
Alaska, from the constitutional budget reserve
fund; and providing for an effective date.
CSSB 1005 (FIN) am was reported out of Committee
with a "do pass" recommendation.
SB 1010 An Act relating to motor vehicle records and
hearings of the Department of Public Safety;
increasing the period under which a person may
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drive a motor vehicle under a temporary permit;
relating to ownership of certain abandoned motor
vehicles; relating to suspension or revocation of
a motor vehicle registration or special permit;
relating to renewal of a driver's license by mail;
relating to procedures applicable to
administrative revocation of a driver's license;
relating to commercial driver training schools;
increasing the property damage amounts for proof
of financial responsibility and proof of motor
vehicle eligibility in order to lawfully operate a
motor vehicle in the state; amending the
definition of `commercial motor vehicle'; relating
to prohibited operation of a commercial motor
vehicle and to disqualification from driving a
commercial motor vehicle; relating to certain
notifications in accidents involving property
damage; relating to motor vehicle registration
procedures; and providing for an effective date.
CSSB 1010 (L&C) am was reported out of Committee
with a "do pass" recommendation and with two zero
fiscal notes one by the Department of Public
Safety, dated 6/3/96, and one by the Department of
Transportation and Public Facilities, dated
6/3/96.
SENATE BILL NO. 1003
An Act relating to public employees.
CHUCK O'CONNEL, BUSINESS MANAGER, ALASKA STATE EMPLOYEES
ASSOCIATION (ASEA) spoke in support of SB 1003. He stated
that ASEA can accept the compromise represented by the
legislation. He observed that the legislation makes changes
to the retirement system that ASEA has resisted. He noted
that there is no diminishment of benefits for any of the
present bargaining units. He observed that contracts would
have to be voted on again if there were reductions in
benefits for existing bargaining units.
MARK BOYER, COMMISSIONER, DEPARTMENT OF ADMINISTRATION
reviewed changes to SB 1003 made by the Senate. He observed
that references to geographic differentials have been
deleted. Reference to the geographic differential as it
relates to municipal assistance and revenue sharing were not
included in the legislation. He explained that it was
unnecessary to restate in Title 29 the differentials in
these programs. The legislation maintains the status quo.
The legislation would provide that leave be accrued at the
rate of pay in which it is earned. Presently, leave paid at
cash out is at the current wage rate, not the rate at which
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it was earned. Retirement will be based on the average
salary of the highest five years times the years of service
with a multiplier, instead of the highest three years. The
legislation also changes the qualification for retirement
health benefits. New employees will have to work for the
State for a minimum of ten years, instead of five, before
qualifying for retirement health benefits. New employees
would still be eligible for other aspects of the retirement
system after five years. The legislation also contains an
early retirement incentive program and clarifies the
qualifying criteria for cost of living differentials in the
marine units. A person must otherwise qualify as if they
were receiving a permanent fund dividend in order to prove
residency for the purposes of receiving a cost of living
differential. Legislators' salaries will not be increased
by the provisions that approve the monetary terms of the
contracts. Non-covered employees would also receive a 1.4
percent increase for three years.
In response to a question by Representative Brown,
Commissioner Boyer noted that section 10 was deleted from
the legislation because it duplicated language existing in
statute. He noted that it was not the intent of the
Governor to change differentials of the municipal assistance
and revenue sharing programs. Changes to the retirement
system of new police and fire department employees were
eliminated. He observed that the benefit calculation was
eliminated from sections 20 and 21. He added that sections
22 and 23 were eliminated. He explained that clarifying
language was added to provisions regarding salary
adjustments for judicial employees. A new section was added
to clarify that appropriations made for the University are
made for contracts during the current legislation session.
A reference to the limitation of employee salaries relating
to the geographical differential was eliminated. A
traditional period for conversion from an hourly bank to a
cash bank was included.
In response to a question by Representative Brown,
Commissioner Boyer noted that leave conversions only effect
non-covered employees. He added that retirement changes are
not subject to bargaining. Retirement changes would effect
new employees only. He explained that the Constitution
prevents modification or impairment of benefits for current
employees. The cost of living differential language will
effect new contracts in the marine highway system. He
observed that a recent Superior Court decision validates the
State's position that the State has the authority to change
the format of the differential. A new qualifying form has
been sent to marine highway employees that conforms to the
definition change included in the legislation.
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Representative Martin asked for more details on the proposed
retirement incentive program (RIP).
Commissioner Boyer noted that the contracts have a four year
span. There would be no increase the first year of the
contract. The total four year cost for the contract
increase is approximately $32 - $34 million dollars. He
observed that the changes included in the legislation would
save approximately $17.0 million dollars over the first five
years. This amount would grow exponentially over time. The
total savings over 25 years would be approximately 51
million dollars.
BOB STALNAKER, DIRECTOR, DIVISION OF RETIREMENT AND
BENEFITS, DEPARTMENT OF ADMINISTRATION reiterated that the
only remaining cost reduction provisions in the legislation
are the five year average salary and ten year requirement
for retirement health insurance. These will result in an
employer savings of approximately 1.8 percent. Employer
cost would be approximately 8 percent upon transition into
the Tier III environment. He noted that the RIP provision
has not been altered.
In response to a question by Representative Martin, Mr.
Stalnaker stressed that employees determine their ability to
RIP based on the level of salary they would receive at
retirement. He pointed out that some of the highest paid
employees are excluded from the RIP provisions. He
estimated that the majority of employees exercising early
retirements are at the mid range level.
Representative Therriault noted that the University saved
the most money in the previous RIP. Commissioner Boyer
noted that the University is eligible to implement the RIP
provisions.
Representative Mulder MOVED to report CSSB 1003 (FIN) am out
of Committee with individual recommendations and with the
accompanying fiscal notes. There being NO OBJECTION, it was
so ordered.
Commissioner Boyer noted that the two accompanying fiscal
notes were not adopted by the Senate. He stressed that the
Department of Administration will ask the Legislative Budget
and Audit Committee for authority to expend retirement funds
if the fiscal notes are not appropriated.
CSSB 1003 (FIN) am was reported out of Committee with "no
recommendation" and with two fiscal impact notes by the
Department of Administration.
CSSB 1005 (FIN) am was reported out of Committee with a "do
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pass" recommendation.
SENATE BILL NO. 1005
An Act making, amending, and repealing appropriations;
making appropriations under art. IX, sec. 17(c),
Constitution of the State of Alaska, from the
constitutional budget reserve fund; and providing for
an effective date.
Co-Chair Hanley reviewed amendments adopted by the Senate.
He noted that the Senate Finance Committee version included
a higher savings amount. Funding was increased in CSSB 1005
(FIN) am to correspond to the reduction in savings. He
observed that CSSB 1005 (FIN) am funds CSSB 1003 (FIN) am.
He observed that CSSB 1005 (FIN) am includes additional
funding; $25.0 thousand dollars for Victims for Justice,
$200.0 thousand dollars for work programs and childcare in
the Welfare Program, $200.0 thousand dollars to the
Department of Fish and Game, $140.0 thousand dollars for the
Juneau health lab, $1.6 million dollars for the Bethel
seawall, and $250.0 thousand dollars for the Harborview
facility.
Representative Martin expressed concern with sections 17 and
18. He questioned the use of Alaska Housing Finance
Corporation (AHFC) funds for the Bethel seawall.
Representative Navarre observed that the majority has placed
a cap on the budget, reducing the budget by $70.0 million
dollars. He stressed that this requires that sections 17
and 18 allow funding from AHFC to not be counted in this
cap.
ANNALEE MCCONNELL, DIRECTOR, OFFICE OF MANAGEMENT AND
BUDGET, OFFICE OF THE GOVERNOR stated that the
Administration's preference would be to use other projects
for AHFC funding. She stressed that the primary concern of
the bonding agency is the total dollar amount. She
emphasized that the Bethel seawall fits well within the
total dollar amount that is authorized under the plan
approved by AHFC. She observed that all projects require
legislative authorization.
Representative Martin noted that $36.0 million dollars have
been spent on the Bethel seawall. He referred to section 18
which appropriates $250.0 thousand dollars to the city of
Valdez for reviewing and implementing a study of alternative
uses of the Harborview facility.
Ms. McConnell noted that the study is to look at
alternatives for the current facility serving people with
developmental disabilities.
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Representative Navarre noted that the closure of the Valdez
facility would result in the loss of 110 jobs in Valdez.
The building will require additional funding for moth
balling. He maintained that the expenditure of $250.0
thousand dollars is well spent if an alternative use is
determined.
Representative Brown referred to section 11. Section 11
reappropriates funding that would otherwise lapse to the
Department of Community and Regional Affairs, Division of
Energy for hydroelectric and intertie projects. Ms.
McConnell explained that section 11 was introduced by
Senator Sharp. She noted that no specific projects were
identified. Co-Chair Hanley summarized that the Division of
Energy would identify projects. Ms. McConnell added that it
would also depend on which projects were ready for
development.
Representative Mulder MOVED to report CSSB 1005 (FIN) am out
of Committee with individual recommendations. There being
NO OBJECTION, it was so ordered.
SENATE BILL NO. 1010
"An Act relating to motor vehicle records and hearings
of the Department of Public Safety; increasing the
period under which a person may drive a motor vehicle
under a temporary permit; relating to ownership of
certain abandoned motor vehicles; relating to
suspension or revocation of a motor vehicle
registration or special permit; relating to renewal of
a driver's license by mail; relating to procedures
applicable to administrative revocation of a driver's
license; relating to commercial driver training
schools; increasing the property damage amounts for
proof of financial responsibility and proof of motor
vehicle eligibility in order to lawfully operate a
motor vehicle in the state; amending the definition of
`commercial motor vehicle'; relating to prohibited
operation of a commercial motor vehicle and to
disqualification from driving a commercial motor
vehicle; relating to certain notifications in accidents
involving property damage; relating to motor vehicle
registration procedures; and providing for an effective
date."
Co-Chair Hanley noted that CSSB 1010 (L&C) am is similar to
CSHB 517 (TRA) am S. He observed that CSHB 517 (TRA) am S
required a title change due to House action that was not
caught by Legislative Legal Services. He concluded that the
title of CSHB 517 (TRA) am S as before the House is not
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correct.
SANDY PERRY PROVOST, SPECIAL ASSISTANT, DEPARTMENT OF PUBLIC
SAFETY explained that CSSB 1010 (L&C) am as introduced
duplicated CSHB 517 (TRA) am S as passed by the Senate. She
noted that CSSB 1010 (L&C) am matches CSHB 517 (TRA) am S
except for an amendment introduced by Senator Halford
defining "motor vehicles". Co-Chair Hanley explained that
"motor vehicle" was defined to include cars and trucks.
(Tape Change, SSHFC 96-4, Side 2)
Representative Mulder MOVED to report CSSB 1010 (L&C) am out
of Committee with individual recommendations and with the
accompanying fiscal notes.
Representative Navarre noted that the fiscal notes are zero.
CSSB 1010 (L&C) am was reported out of Committee with a "do
pass" recommendation and with two zero fiscal notes one by
the Department of Public Safety, dated 6/3/96, and one by
the Department of Transportation and Public Facilities,
dated 6/3/96.
ADJOURNMENT
The meeting adjourned at 9:50 a.m.
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