03/31/2008 03:00 PM House LABOR & COMMERCE
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| SB120 | |
| Adjourn |
+ teleconferenced
= bill was previously heard/scheduled
| + | SB 120 | TELECONFERENCED | |
ALASKA STATE LEGISLATURE
HOUSE LABOR AND COMMERCE STANDING COMMITTEE
March 31, 2008
3:04 p.m.
MEMBERS PRESENT
Representative Kurt Olson, Chair
Representative Mark Neuman, Vice Chair
Representative Carl Gatto
Representative Gabrielle LeDoux
Representative Jay Ramras
Representative Robert L. "Bob" Buch
Representative Berta Gardner
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
CS FOR SENATE BILL NO. 120(FIN)
"An Act relating to disclosure of certain information from the
records of the Department of Labor and Workforce Development and
limiting the use of the disclosed information, and to the
calculation and payment of unemployment compensation benefits;
and providing for an effective date."
- MOVED CSSB 120(Fin) OUT OF COMMITTEE
PREVIOUS COMMITTEE ACTION
BILL: SB 120
SHORT TITLE: UNEMPLOYMENT COMP: BENEFITS/RECORDS
SPONSOR(s): LABOR & COMMERCE
03/14/07 (S) READ THE FIRST TIME - REFERRALS
03/14/07 (S) L&C, FIN
03/22/07 (S) L&C AT 1:30 PM BELTZ 211
03/22/07 (S) Heard & Held
03/22/07 (S) MINUTE(L&C)
04/24/07 (S) L&C AT 1:30 PM BELTZ 211
04/24/07 (S) Heard & Held
04/24/07 (S) MINUTE(L&C)
04/26/07 (S) L&C AT 4:30 PM FAHRENKAMP 203
05/02/07 (S) L&C AT 5:30 PM FAHRENKAMP 203
01/17/08 (S) L&C AT 1:30 PM BELTZ 211
01/17/08 (S) -- MEETING CANCELED --
01/22/08 (S) L&C AT 1:30 PM BELTZ 211
01/22/08 (S) Scheduled But Not Heard
02/05/08 (S) L&C AT 1:30 PM BELTZ 211
02/05/08 (S) <Bill Hearing Canceled>
02/09/08 (S) L&C AT 1:30 PM BELTZ 211
02/09/08 (S) Moved CSSB 120(L&C) Out of Committee
02/09/08 (S) MINUTE(L&C)
02/11/08 (S) L&C RPT CS 2DP 1AM NEW TITLE
02/11/08 (S) DP: ELLIS, DAVIS
02/11/08 (S) AM: STEVENS
03/12/08 (H) FIN AT 1:30 PM HOUSE FINANCE 519
03/12/08 (S) Heard & Held
03/12/08 (S) MINUTE(FIN)
03/15/08 (H) FIN AT 10:00 AM HOUSE FINANCE 519
03/15/08 (H) -- Continued from 03/14/08 --
03/17/08 (S) FIN RPT CS 2DP 4NR NEW TITLE
03/17/08 (S) DP: STEDMAN, ELTON
03/17/08 (S) NR: HOFFMAN, THOMAS, DYSON, OLSON
03/26/08 (S) TRANSMITTED TO (H)
03/26/08 (S) VERSION: CSSB 120(FIN)
03/27/08 (H) READ THE FIRST TIME - REFERRALS
03/27/08 (H) L&C, FIN
03/31/08 (H) L&C AT 3:00 PM CAPITOL 17
WITNESS REGISTER
DANA OWEN, Staff
to Senator Johnny Ellis
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Presented SB 120 on behalf of the sponsor,
the Senate Labor & Commerce Committee.
WAYNE STEVENS
President, CEO
Alaska State Chamber of Commerce
Anchorage, Alaska
POSITION STATEMENT: Testified in support of SB 120.
PAULA SCAVERA, Legislative Liaision; Special Assistant
Office of the Commissioner
Department of Labor & Workforce Development (DLWD)
Juneau, Alaska
POSITION STATEMENT: Answered questions on SB 120.
JIM WILSON
Actuary
Division of Employment Security
Central Office
Department of Labor & Workforce Development (DLWD)
Juneau, Alaska
POSITION STATEMENT: Testified on SB 120.
DON ETHERIDGE, Lobbyist
for the Alaska State AFL-CIO
Juneau, Alaska
POSITION STATEMENT: Testified in support of SB 120.
ACTION NARRATIVE
CHAIR KURT OLSON called the House Labor and Commerce Standing
Committee meeting to order at 3:04:15 PM. Representatives
Neuman, Gardner, Buch, Ramras, and Olson were present at the
call to order. Representative s LeDoux and Gatto arrived as the
meeting was in progress.
SB 120-UNEMPLOYMENT COMP: BENEFITS/RECORDS
3:04:27 PM
CHAIR OLSON announced that the only order of business would be
CS FOR SENATE BILL NO. 120(FIN), "An Act relating to disclosure
of certain information from the records of the Department of
Labor and Workforce Development and limiting the use of the
disclosed information, and to the calculation and payment of
unemployment compensation benefits; and providing for an
effective date."
3:04:37 PM
DANA OWEN, Staff to Senator Johnny Ellis, Alaska State
Legislature, on behalf of the sponsor, the Senate Labor and
Commerce Committee, stated that SB 120 would raise the maximum
weekly benefit amount for the unemployment insurance
compensation benefits, which has not been raised since 1977. He
said that SB 120 is a compromise bill such that each of the
parties who worked on SB 120 has some reservations about parts
of the bill. The parties support SB 120 since the bill attempts
to address the issues raised by management and labor. This bill
would raise the maximum weekly unemployment insurance (UI)
benefit amount from $248 per week to $370, which will place
Alaska at the median level nationwide. He outlined some issues,
pointing out that labor management supported raising the
unemployment benefit to help people remain in their community,
in Alaska, and because the "right thing to do." The business
community agreed that it was time to raise the amount of
unemployment insurance benefits. They argued that the system is
too costly and worked to make SB 120 "cost neutral."
3:08:14 PM
MR. OWEN explained that although the state lags behind in
recipient benefits, Alaska also ranks among the highest in
unemployment benefit costs in the nation, he noted. He surmised
that SB 120 does not meet the goal of being "cost neutral," but
that the bill comes as close to the goal as is practicable. The
Senate Labor & Commerce committee worked to lower the costs of
the overall system, he said. However, the system has some
structural issues due to a large number of seasonal employees
that drive unemployment insurance (UI) costs up.
3:09:37 PM
MR. OWEN stated that SB 120 shifts costs away from businesses to
employees in two ways: Currently, 80 percent of the cost of UI
is covered by employers and 20 percent is covered by employees.
He highlighted that Alaska is one of two states that assess the
UI, but that two additional states have the ability to assess UI
"on the books" but don't apply it.
MR. OWEN noted that SB 120 would change the proportional shift
of UI by reducing the amount to 73 percent for employers and
increasing the amount to 27 percent for employees. He noted
that the Senate Finance Committee added provisions to phase in
those amounts over a two year period, but the result is still
the same. He said that the second thing SB 120 does to reduce
cost to employers is to increase the amount of earnings
necessary during the qualifying period from $1,000 to $2,500.
He noted that the qualifying earnings have not been raised since
the 1970s. He surmised that people support the bill since
addressing UI benefits is something that needs to be done and
the bill represents a good faith effort.
3:11:06 PM
MR. OWEN referred to items in the packet: A letter from Wayne
Stevens, Alaska Chamber of Commerce, offers supports SB 149,
although not enthusiastically. An item labeled, "Key Vote" from
to the National Federation of Independent Business - ALASKA
(NFIB), also offers support for SB 120. He referred to a bar
chart labeled, "Unemployment Insurance Maximum Weekly Benefit
th
Amount by State", which notes that Alaska ranks 48 in the
nation. He referred to a chart labeled, "Alaska's Maximum
Weekly Benefit Unemployment insurance, 1966 to 2006" that
demonstrates that this is the longest period of time without an
increase to the maximum weekly benefit amount allowable. He
referred to a chart, labeled, "Average-Wage Replacement Rates"
that lists Alaska at 25.8 percent while the average nationwide
is at 34.6 percent. The UI system was intended to replace 50
percent of wages when a person loses his/her job, he offered.
While no state has reached the benchmark, Alaska is dead last at
25.8 percent, he highlighted. He referred to a chart, labeled
"Estimated Annual Unemployment Insurance Employee Tax Cost, if
the Maximum Weekly Benefit Amount (MWBA) increases to $370,
effective January 2009," which he said demonstrates the effect
of bill on employees. He noted the current employee
contribution is set at $157 annually. Under SB 120, that amount
would rise to $194 in 2013 when SB 149 would be fully
implemented, which represents a $37 increase overall. He
referred to a chart labeled, "Estimated Maximum Cost per Worker
for Average Employer" that shows the projected effect on
employers for estimated tax contributions per employee. He
explained that the amount employers paid was $584 in 2007,
dropped to $470 in 2008 and is expected to rise to $495 in 2014
under the provisions in proposed SB 120. He characterized the
UI Trust Fund as a well managed UI Trust Fund.
3:16:20 PM
REPRESENTATIVE BUCH asked for the total amount that is currently
in the UI Trust Fund.
MR. OWEN pointed out that Mr. Wilson would testify and could
answer any technical questions. In further response to
Representative Buch, Mr. Owen answered that four states have the
authority to assess employees a fee, but only two states
currently assess a fee. In further response to Representative
Buch, Mr. Owen advised that he did not know the UI percentages
assessed in the other states.
3:17:42 PM
REPRESENTATIVE GARDNER inquired as to whether the qualifying
amount that would be raised from $1,000 to $2,500 in SB 120 is
an adjusted dollar amount.
MR. OWEN answered that the qualifying amount is in nominal
dollars and not in adjusted dollars.
REPRESENTATIVE NEUMAN referred to the sponsor's statement which
mentions that SB 120 adds language that protects the privacy of
individuals claiming UI benefits. He asked for clarification of
any items not currently required by federal law.
MR. OWEN answered that the confidentiality provisions in SB 120
are based precisely on federal government requirements. In
further response to Representative Neuman, Mr. Owen noted that
Sections 1-8 of the bill provide for the confidentiality
provisions. He elaborated that Section 1 clarifies that the
Department of Labor & Workforce Development (DLWD) may not
release UI information to a person for a civil or administrative
matter for purposes not directly involving the presentation or
protest of a claim under state law. He noted that Section 2
would allow disclosure of UI information to the United States
Secretary of Health and Human Services for the purpose of child
support enforcement.
3:20:59 PM
MR. OWEN, in response to Representative Neuman, answered that
the pressure from the federal government is the impetus for SB
120. He offered his understanding that the state may face
severe penalties if it does not amend its UI statutes by October
2008, among those would be a loss of $19.1 million in federal
payments to the state and potentially costs of an additional $87
million to employers.
3:21:50 PM
DON ETHERIDGE, Lobbyist, Alaska State AFL-CIO, stated that the
AFL-CIO supports SB 120. While he opined that the AFL-CIO is
not totally happy with the final negotiations, that it supports
the bill and stands by the negotiations.
WAYNE STEVENS, President, CEO, Alaska State Chamber of Commerce,
stated that the State Chamber of Commerce supports SB 120. He
characterized SB 120 as a compromise bill that helps keep the UI
taxes down. He urged members to support SB 120.
3:23:50 PM
REPRESENTATIVE GARDNER noted that members heard earlier
testimony that rates are higher due to the seasonal work force.
She inquired as to whether other states with seasonal work
forces struggle with UI costs.
MR. STEVENS answered that seasonality is an issue in many
states. He pointed out that the taxable wage level, which is
the amount the employer's assessment is based on, was $19,200 in
the 1980, but is currently set at $31,300. However, during the
same period of time the amount the employer contributes has
risen while the benefit amount has not been increased.
3:24:47 PM
MR. STEVENS, in response to Representative Neuman, explained
that SB 120 was a thorough process undertaken during last year
and both sides raised issues. The process led to a compromise
that reaches the goal of increasing the benefit and ensuring
that the state is in compliance with federal law. He noted that
the state could lose $130 million in funding and expressed his
concern that those costs would be shifted to business. He
characterized the process as one with "good give and take from
all parties." He said that "everyone can walk out of the room
and say that we've done what we set out to do, keep costs down
and increase the weekly benefit amount." In further response to
Representative Neuman, Mr. Stevens stated that there were a
number of organizations that represented the perspectives of the
employee and the employer.
3:27:19 PM
PAULA SCAVERA, Legislative Liaision; Special Assistant, Office
of the Commissioner, Department of Labor & Workforce Development
(DLWD), in response to Representative Buch, replied that the
other state that assesses an employee unemployment insurance tax
is New Jersey and by statute that amount is set at $101.25
annually per employee.
3:28:43 PM
MS. SCAVERA, in response to Representative Buch, clarified that
the $101.25 is the entire unemployment tax amount that an
employee in New Jersey would pay for the unemployment insurance
tax program. In further response to Representative Buch, Ms.
Scavera stated that she thought the UI Trust fund contains
approximately $230 million, which she opined is a healthy
figure.
REPRESENTATIVE GARDNER inquired as to whether the seasonal work
force in other states results in a burdensome employer UI
assessment rate.
MS. SCAVERA answered that Arizona has a large seasonal
workforce, but only pay $240, which is lower than Alaska's rate,
but she noted its rules for qualifying varies from Alaska. She
related that she attends an annual meeting on UI and has
discovered that the rates and rules between states varies so it
is difficult to compare costs and rates for UI in other states.
3:31:15 PM
REPRESENTATIVE GARDNER related her understanding that Alaska
faces long standing issues with respect to unemployment
insurance such that employers feel burdened and that employees
receive a lower rate of compensation than in other states. She
inquired as to whether the reason is due to a large seasonal
workforce.
3:32:10 PM
JIM WILSON, Actuary, Division of Employment Security, Central
Office, Department of Labor & Workforce Development (DLWD),
stated that 20 years ago, Alaska had a larger construction and
transportation industry, which resulted in a greater percent of
the total economy. However, seasonality is less of an impact
now than it was 20 years ago, although it still represents a big
component, he said. Alaska's economy has grown considerably and
the trades have matured, he opined. Thus, the trade and service
industries offer more year round employment than ever before.
However, the seasonal component is still a factor in higher cost
of Alaska's system.
3:33:36 PM
REPRESENTATIVE RAMRAS affirmed the seasonal aspect of Alaska's
labor force. He related his own business experiences in
Fairbanks such that he employs 200 year round, but that his
labor force swells to 300 in the summer. He also highlighted
that due to new techniques such as "tenting" buildings in the
winter that some industries such as the construction industry
can operate all year.
CHAIR OLSON, after first determining no one else wished to
testify, closed public testimony on SB 120.
3:37:03 PM
REPRESENTATIVE LEDOUX moved to report the CSSB 120(FIN) out of
committee with individual recommendations and the accompanying
fiscal notes. There being no objection, CSSB 120(FIN) was
reported from the House Labor and Commerce Standing Committee.
3:37:23 PM
ADJOURNMENT
There being no further business before the committee, the House
Labor and Commerce Standing Committee meeting was adjourned at
3:37 p.m.
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