Legislature(2007 - 2008)CAPITOL 17
03/10/2008 03:00 PM House LABOR & COMMERCE
| Audio | Topic |
|---|---|
| Start | |
| HB391 | |
| HB350 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 350 | TELECONFERENCED | |
| += | HB 391 | TELECONFERENCED | |
ALASKA STATE LEGISLATURE
HOUSE LABOR AND COMMERCE STANDING COMMITTEE
March 10, 2008
3:07 p.m.
MEMBERS PRESENT
Representative Kurt Olson, Chair
Representative Mark Neuman, Vice Chair
Representative Carl Gatto
Representative Gabrielle LeDoux
Representative Robert L. "Bob" Buch
Representative Berta Gardner
MEMBERS ABSENT
Representative Jay Ramras
COMMITTEE CALENDAR
HOUSE BILL NO. 391
"An Act relating to project labor agreements."
- HEARD AND HELD
HOUSE BILL NO. 350
"An Act providing for an amount to be deducted and retained for
collecting and submitting the vehicle rental tax."
- MOVED CSHB 350 (L&C) OUT OF COMMITTEE
PREVIOUS COMMITTEE ACTION
BILL: HB 391
SHORT TITLE: STATE CONSTRUCT'N PROJECT LABOR AGREEMENT
SPONSOR(s): REPRESENTATIVE(s) KELLY
02/19/08 (H) READ THE FIRST TIME - REFERRALS
02/19/08 (H) L&C, FIN
03/05/08 (H) L&C AT 8:00 AM CAPITOL 17
03/05/08 (H) Heard & Held
03/05/08 (H) MINUTE(L&C)
03/10/08 (H) L&C AT 3:00 PM CAPITOL 17
BILL: HB 350
SHORT TITLE: VEHICLE RENTAL TAX COLLECTION
SPONSOR(s): REPRESENTATIVE(s) HARRIS
02/04/08 (H) READ THE FIRST TIME - REFERRALS
02/04/08 (H) L&C, FIN
02/25/08 (H) L&C AT 3:00 PM CAPITOL 17
02/25/08 (H) Heard & Held
02/25/08 (H) MINUTE(L&C)
03/05/08 (H) L&C AT 8:00 AM CAPITOL 17
03/05/08 (H) Heard & Held
03/05/08 (H) MINUTE(L&C)
03/10/08 (H) L&C AT 3:00 PM CAPITOL 17
WITNESS REGISTER
DEREK MILLER, Staff
to Representative Mike Kelly
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Presented Amendment 1 on HB 391 on behalf
of the prime sponsor, Representative Mike Kelly.
PETE FELLMAN, Staff
to Representative John Harris
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Presented two proposed committee
substitutes for HB 350 on behalf of the prime sponsor,
Representative John Harris and answered questions.
JOHANNA BALES, Deputy Director
Anchorage Office
Tax Division
Department of Revenue (DOR)
Anchorage, Alaska
POSITION STATEMENT: Answered questions on HB 350
ACTION NARRATIVE
CHAIR KURT OLSON called the House Labor and Commerce Standing
Committee meeting to order at 3:07:13 PM. Representatives Buch,
Gardner, Neuman, and Olson were present at the call to order.
Representatives Gatto and LeDoux arrived as the meeting was in
progress.
[Before the committee was the proposed committee substitute (CS)
for HB 391, labeled 25-LS1493\C, Wayne, 2/26/08, adopted at the
March 5, 2008 House Labor and Commerce Standing Committee
meeting.]
HB 391-STATE CONSTRUCT'N PROJECT LABOR AGREEMENT
3:07:22 PM
CHAIR OLSON announced that the first order of business would be
HOUSE BILL NO. 391, "An Act relating to project labor
agreements."
3:07:44 PM
DEREK MILLER, Staff, to Representative Mike Kelly, Alaska State
Legislature, summarized Version C of HB 391 for members. He
stated that proposed Section 1 would require construction
contracts initiated by the state would also require contractors
that commit to a project labor agreement (PLA) must include an
option for employees to sign a declaration of benefits. This
declaration would allow employees the choice of depositing their
employer's contribution to the fringe benefit package to the
union plan or to the non union plan. Proposed Section 2 of HB
391 would apply the declaration of benefit language as part of
the application requirements set out in obtaining an Alaska Gas
Inducement Act (AGIA) license. Proposed Section 3 would provide
applicability standards for PLAs after the effective date of HB
391.
3:09:13 PM
REPRESENTATIVE NEUMAN made a motion to adopt Amendment 1,
labeled 25-LS1493\C.1, Wayne, 3/10/08, which read:
Page 2, following line 9:
Insert a new subsection to read:
"(c) An employer or labor representative who
participates in or administers a fringe benefits
program that is available for selection by an employee
under (b) of this section shall provide to the
employee a written description of the fringe benefits
program within seven days after a request by the
employee."
Reletter the following subsection accordingly.
Page 2, line 28, following "agreement;":
Insert "an employer or labor representative who
administers a fringe benefits program that is
available for selection by an employee under this
paragraph shall provide the employee with a written
description of the fringe benefits program within
seven days after a request by the employee;"
3:09:56 PM
REPRESENTATIVE GATTO objected for the purposes to read Amendment
1.
3:10:17 PM
MR. MILLER offered that Amendment 1 would add a new subsection,
proposed AS 36.30.405 that would address concerns raised in the
companion bill in the other body about employees making an
informed decision prior to submitting their declaration of
benefits to the employer. Amendment 1 would require an employer
to provide a written description of the fringe benefit package
at the request of the employee to ensure full disclosure and
allow the employee to make an informed decision.
3:11:00 PM
REPRESENTATIVE NEUMAN inquired as to whether the employee would
be able to compare both fringe benefit plans.
MR. MILLER answered that is the effect of Amendment 1, which
would include requirements for vesting and enable the employee
to review the benefits package side by side within 7 days of the
request for information.
3:11:41 PM
REPRESENTATIVE GARDNER, inquired as to when the employee is
required to select the fringe benefit plan.
MR. MILLER responded that the employee would receive copies of
the fringe benefit plans prior to any contribution. In further
response to Representative Gardner, Mr. Miller acknowledged that
the employee would have an opportunity to view both fringe
benefit plans prior to selecting a plan.
3:12:45 PM
REPRESENTATIVE BUCH noted that he would like to put on record
his gratitude for the opportunity to weigh in on HB 391. He
asked for clarification of the fringe benefit process. He
related his understanding that the employer offers the fringe
benefit plan that generally consists of a health plan and a
defined contribution plan. Since the employer holds the plan,
the employer has the option to develop the plan, not the
employee especially if the employee is not part of a collective
bargaining agreement. In those instances, the employee would be
considered an "at will" employee and would not have an option to
develop his/her own plan.
MR. MILLER related his understanding that when a contractor
enters into a PLA that the declaration of benefits would allow
the employee to select either the benefit package under the PLA
or their current employer.
3:15:34 PM
REPRESENTATIVE BUCH offered that in a project labor agreement
the parties would be the State of Alaska and the contractors
such as TransCanada PipeLine, LTD. He suggested that the
employees would be working for subcontractors who would not
"even be sitting at the table". The negotiation takes place at
the onset of any construction so none of the subcontractors
would be working for contractors at that point, he opined.
MR. MILLER professed that he is not an expert and could not
answer questions about the project labor agreement process. He
related that many subcontractors who bid on projects that
require a PLA are non-competitive bids due to the requirement to
contribute to the PLA plan, as well as their own retirement
fringe benefit plan. He offered to respond at a later time with
more information.
REPRESENTATIVE GATTO pointed out that proposed AS 36.30.405
states, "to the extent permitted by law" whereas Amendment 1
refers to "an employer or labor representative who administers a
fringe benefits program..." He opined that Amendment 1 refers
to the person who administers the fringe benefit. He inquired
whether in a PLA do all employees fall under the PLA or can
employees be treated differently.
REPRESENTATIVE BUCH opined that all workers who work under a
[PLA] agreement are subject to that agreement.
REPRESENTATIVE GATTO inquired as to whether a welder working for
a subcontractor under a PLA would be entitled to the same
benefit package as all other employees who work under the PLA.
REPRESENTATIVE LEDOUX related her understanding that the purpose
of HB 391 is to assist the non union contractors who cannot
competitively bid due to the benefits they are required to give
under the project labor agreement. She opined that the only
time the employee would make a decision would be after the
employer was awarded the contract such that the subcontractor
would have prevailed.
MR. MILLER clarified that some non union companies must not only
contribute to their own plans, but must also contribute to the
union trust. Thus, the company contributes to two plans. He
surmised that there are two separate issues and he offered to
garner more information for the committee.
3:22:44 PM
REPRESENTATIVE NEUMAN offered that Amendment 1 states that an
employee of a subcontractor has the choice to select fringe
benefit plans on previously negotiated agreements. Contractors
would already have determined their fringe benefit plans, he
noted. Amendment 1 would allow employees to compare benefits
between union and non union fringe benefit packages.
MR. MILLER agreed with Representative Neuman's analysis of
Amendment 1.
3:24:16 PM
REPRESENTATIVE GARDNER inquired as to whether HB 391 is
supported by unions since she was absent at the initial hearing
on HB 391.
CHAIR OLSON answered that the lobbyist for the AFL-CIO testified
that that it did not oppose HB 391.
MR. MILLER, in response to Representative Gardner, answered that
written benefits would include not only the benefits but also
timelines and cost to the employee.
3:25:18 PM
CHAIR OLSON, after first determining no one else wished to
testify, closed public testimony on HB 391.
[HB 391 was held over. Amendment 1 was left pending]
The committee took an at-ease from 3:25 p.m. to 3:27 p.m.
3:25:49 PM
HB 350-VEHICLE RENTAL TAX COLLECTION
3:27:05 PM
CHAIR OLSON announced that the final order of business would be
HOUSE BILL NO. 350, "An Act providing for an amount to be
deducted and retained for collecting and submitting the vehicle
rental tax."
3:27:24 PM
PETE FELLMAN, Staff to Representative John Harris, Alaska State
Legislature, explained on behalf of the prime sponsor of HB 350,
the proposed committee substitutes (CS) for HB 350, labeled 25-
LS1362\L, Bullock, 3/5/08, referred to as Version L; and 25-
LS1362\M, Bullock, 3/5/08, referred to as Version M. He
explained that Version L of HB 350 would allow businesses to
retain 2 percent [of the vehicle rental tax collected] with a
$4,000 cap, and Version M of HB 350 would allow businesses to
retain 2 percent [of the vehicle rental tax collected] without a
cap. He offered that the prime sponsor prefers to limit the
bill to timely filing credits to only the vehicle rental tax due
to time constraints.
3:28:28 PM
CHAIR OLSON, after first determining no one else wished to
testify, closed public testimony on HB 350.
3:29:21 PM
MR. FELLMAN, in response to Representative Gardner, confirmed
that the rebate on the vehicle rental tax is only available to
those businesses who submit timely filings to the state.
3:30:19 PM
CHAIR OLSON, in response to Representative Gardner, surmised
that the reason that companies are given a rebate that is not
limited to the specific amount charged by a credit card company
is because credit card agreements vary.
MR. FELLMAN opined that the reason for the timely filing credit
has more to do with the labor intensive process that the
Department of Revenue (DOR) would need in order to maintain
separate rates for all businesses. The two percent timely
filing credit represents a figure somewhere in the median range.
3:31:30 PM
REPRESENTATIVE GARDNER inquired as to the specific credit card
rates.
CHAIR OLSON answered that testimony at a prior hearing on HB 350
highlighted that the rates varied widely.
3:31:58 PM
REPRESENTATIVE GATTO posed a scenario in which a credit card
company charges a business a rate of 4 percent, but may also
offer the business a discount for heavy usage. In those
instances, the state would not be privy to any rebates the
vehicle rental business received from the credit card company,
he surmised.
3:33:14 PM
CHAIR OLSON, in response to Representative Gatto, noted that the
committee packet contains two versions of proposed committee
substitutes for the committee to review that include different
timely filing credit percentages. The purpose of HB 350 is to
compensate the business for the administrative functions for
collecting the vehicle rental tax on behalf of the state.
3:33:35 PM
REPRESENTATIVE LEDOUX pointed out that companies have the
benefit of interest accrual on the vehicle rental tax collected
for the period from the collection of the tax to the quarterly
submittal date.
3:34:45 PM
JOHANNA BALES, Deputy Director , Anchorage Office, Tax Division,
Department of Revenue (DOR), said that Representative LeDoux is
absolutely right in that businesses who collect the vehicle
rental tax submit the tax collected quarterly and companies can
retain the state's money for up to 3 months. She opined that
the lag time represents one of the downsides to third party
collections. While the fractional interest and timely filing
credit may offset credit card charges assessed to businesses
offering credit cards, the purpose of the timely filing is
simply to assist companies to recover a portion of their costs
for the administrative functions of collecting the tax.
Additionally, if businesses fail to timely file, the company
would incur interest assessed by the state which is currently
set at 11 percent, compounded quarterly, she noted.
3:36:42 PM
REPRESENTATIVE NEUMAN opined that Version L seems to incorporate
the comments and testimony on HB 350. Version L offers a 2
percent timely filing credit capped at $4,000, he noted He
related his understanding that the timely filing credit is
similar to a fee charged for the service provided to the state.
He surmised that if a business collects $20,000 to $30,000 in
vehicle rental tax and is able to earn interest on the taxes
collected, that those companies are entitled to the interest
earned, since it probably takes more effort to account for the
tax. He offered his support for Version L of HB 350.
3:38:40 PM
REPRESENTATIVE NEUMAN made a motion to adopt the proposed
committee substitute (CS) for HB 350, Version 25-LS1362\L,
Bullock, 3/5/08, as the working document.
There being no objection, Version L was before the committee.
3:39:12 PM
MS. BALES, in response to Representative Gatto, offered that in
addition to the 11 percent interest, the state charges a penalty
of 5 percent per month up to a 25 percent maximum for businesses
that fails to file on time.
3:39:29 PM
REPRESENTATIVE GATTO opined that the amount being paid for the
vehicle rental tax is probably already calculated into the
amount received in revenue. He inquired as to whether the state
would then increase the tax to attempt to recoup the shortfall
in revenue.
CHAIR OLSON surmised he did not think that would be the case and
is the reason for the cap on the timely filing credit.
REPRESENTATIVE BUCH related his understanding that HB 350 would
allow businesses that collect vehicle rental tax on behalf of
the state to retain a portion of the tax to offset the
administrative costs to the business.
MR. FELLMAN, in response to Representative Gatto, answered that
HB 350 has a further referral to the House Finance Committee. In
further response to Representative Buch, Mr. Fellman assured him
that the chart provided to the committee that correctly assesses
the amounts of the timely filing credits.
3:41:34 PM
REPRESENTATIVE NEUMAN referred to the chart provided to the
committee and related that the total cost to the state would be
approximately $65,000. He expressed his preference for
expanding HB 350 to incorporate other taxes collected on behalf
of the state, but he also acknowledged the time constraints due
to the 90 day legislative session. He maintained his support
for Version L of HB 350.
MR. FELLMAN, in response to Representative Gardner, explained
that the fiscal note of $8.5 million refers to the HB 350 prior
before the cap.
MS. BALES further explained that the fiscal note reflects that
the DOR collects $8.5 million in vehicle rental tax. Thus, 3
percent timely filing credit with no cap would equate to
$255,000 in lost revenue. She maintained that the total tax
collected remains projected at $8.5 million. Therefore, a 2
percent timely filing credit with no cap would equate to $65,000
lost revenue to the state versus the $255,000 loss when the
timely filing credit is set at 3 percent with no cap.
REPRESENTATIVE GATTO related that HB 350 would simply return
$65,000 to companies.
3:44:17 PM
REPRESENTATIVE NEUMAN moved to report proposed CS for HB 350,
labeled 25-LS1362\L, Bullock, 3/5/08, out of committee with
individual recommendations and the accompanying fiscal notes.
There being no objection, CSHB 350(L&C) was reported from the
House Labor and Commerce Standing Committee.
3:44:46 PM
ADJOURNMENT
There being no further business before the committee, the House
Labor and Commerce Standing Committee meeting was adjourned at
3:44 p.m.
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