03/06/2024 03:15 PM House LABOR & COMMERCE
| Audio | Topic |
|---|---|
| Start | |
| HB254 | |
| HB204 | |
| HB233 | |
| HB333 | |
| Adjourn |
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HB 189 | TELECONFERENCED | |
| += | HB 204 | TELECONFERENCED | |
| *+ | HB 333 | TELECONFERENCED | |
| *+ | HB 233 | TELECONFERENCED | |
| + | HB 226 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | HB 254 | TELECONFERENCED | |
ALASKA STATE LEGISLATURE
HOUSE LABOR AND COMMERCE STANDING COMMITTEE
March 6, 2024
3:17 p.m.
MEMBERS PRESENT
Representative Jesse Sumner, Chair
Representative Justin Ruffridge, Vice Chair
Representative Mike Prax
Representative Dan Saddler
Representative Stanley Wright
Representative Zack Fields
MEMBERS ABSENT
Representative Ashley Carrick
COMMITTEE CALENDAR
HOUSE BILL NO. 254
"An Act relating to liability for publishing or distributing
pornography to minors on the Internet."
- HEARD & HELD
HOUSE BILL NO. 204
"An Act exempting certain employees from overtime pay
requirements; and providing for an effective date."
- HEARD & HELD
HOUSE BILL NO. 233
"An Act relating to rates and time allowances for motor vehicle
warranty work."
- HEARD & HELD
HOUSE BILL NO. 333
"An Act establishing a corporate income tax credit for certain
expenditures on child care services, utility rates, residential
housing, and food security and availability; and providing for
an effective date."
- HEARD & HELD
HOUSE BILL NO. 189
"An Act relating to the sale of alcohol; and providing for an
effective date."
- BILL HEARING RESCHEDULED TO 3/8/24
HOUSE BILL NO. 226
"An Act relating to the Board of Pharmacy; relating to
insurance; relating to pharmacies; relating to pharmacists;
relating to pharmacy benefits managers; relating to patient
choice of pharmacy; and providing for an effective date."
- SCHEDULED BUT NOT HEARD
PREVIOUS COMMITTEE ACTION
BILL: HB 254
SHORT TITLE: PROHIBIT PORNOGRAPHY TO MINORS
SPONSOR(s): REPRESENTATIVE(s) VANCE
01/16/24 (H) PREFILE RELEASED 1/12/24
01/16/24 (H) READ THE FIRST TIME - REFERRALS
01/16/24 (H) L&C, JUD
01/31/24 (H) L&C AT 3:15 PM BARNES 124
01/31/24 (H) Heard & Held
01/31/24 (H) MINUTE(L&C)
03/06/24 (H) L&C AT 3:15 PM BARNES 124
BILL: HB 204
SHORT TITLE: OVERTIME PAY EXEMPTION
SPONSOR(s): RULES BY REQUEST OF THE GOVERNOR
05/16/23 (H) READ THE FIRST TIME - REFERRALS
05/16/23 (H) L&C, FIN
01/24/24 (H) L&C AT 3:15 PM BARNES 124
01/24/24 (H) Heard & Held
01/24/24 (H) MINUTE(L&C)
03/06/24 (H) L&C AT 3:15 PM BARNES 124
BILL: HB 233
SHORT TITLE: RATES: MOTOR VEHICLE WARRANTY WORK
SPONSOR(s): TOMASZEWSKI
01/16/24 (H) PREFILE RELEASED 1/8/24
01/16/24 (H) READ THE FIRST TIME - REFERRALS
01/16/24 (H) L&C, JUD
03/06/24 (H) L&C AT 3:15 PM BARNES 124
BILL: HB 333
SHORT TITLE: TAX CREDIT CHILD CARE/UTILITY/HOUSE/FOOD
SPONSOR(s): RULES BY REQUEST OF THE GOVERNOR
02/20/24 (H) READ THE FIRST TIME - REFERRALS
02/20/24 (H) L&C, FIN
02/28/24 (H) L&C AT 3:15 PM BARNES 124
02/28/24 (H) -- MEETING CANCELED --
03/06/24 (H) L&C AT 3:15 PM BARNES 124
WITNESS REGISTER
ERIC FALER, representing self
Cleveland, Ohio
POSITION STATEMENT: Testified during in support of HB 254.
DELAYNA WEST, representing self
Homer, Alaska
POSITION STATEMENT: Testified in support of HB 254.
NICKI KUMFER, representing self
Homer, Alaska
POSITION STATEMENT: Testified in support of HB 254.
BRENDA EDENS, representing self
Homer, Alaska
POSITION STATEMENT: testified in support of HB 254.
MAXINE DOOGAN, President
Community United for Safety & Protection
Fairbanks, Alaska
POSITION STATEMENT: Testified in opposition to HB 254.
STACI YATES, Director
Human Trafficking Recovery Services
My House
Wasilla, Alaska
POSITION STATEMENT: Testified in support of HB 254.
KAREN LEWIS, representing self
Wasilla, Alaska
POSITION STATEMENT: Testified in support of HB 254.
THERESA O'CONNEL, representing self
Anchorage, Alaska
POSITION STATEMENT: Testified in support of HB 254.
WINDY PERKINS, representing self
Anchorage, Alaska
POSITION STATEMENT: Testified in support of HB 254.
ASHLEY GREEN, representing self
Anchorage, Alaska
POSITION STATEMENT: Testified in support of HB 254.
RAYMOND WALKER, representing self
Homer, Alaska
POSITION STATEMENT: Testified in support of HB 254.
TERRA BURNS, Advocate
Community United for Safety & Protection
Fairbanks, Alaska
POSITION STATEMENT: Testified in opposition to HB 254.
TREVOR MCGEE, representing self
Colorado Springs, Colorado
POSITION STATEMENT: Testified in support of HB 254.
NICOLE THOMAS, representing self
Anchorage, Alaska
POSITION STATEMENT: Testified in support of HB 254.
BELLA ROBINSON, executive Director
Coyote RI
Rhode Island
POSITION STATEMENT: Testified in opposition to HB 254.
RHODA MYERS, Executive Director
Alaska Faith & Family Services
Chickaloon, Alaska
POSITION STATEMENT: Testified in support of HB 254.
SYLIVA FRANCINE TRYGSTAD, representing self
Homer, Alaska
POSITION STATEMENT: Testified in support of HB 254.
BRIAN BERG, Vice President of Operations
HCA Healthcare
Salt Lake City, Utah
POSITION STATEMENT: Testified during the hearing on HB 204.
SHANNON DAVENPORT, President
Alaska Nursing Association
Anchorage, Alaska
POSITION STATEMENT: Testified in opposition to HB 204.
FRANK TOMASZEWSKI
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: As prime sponsor, presented HB 233.
DAVID GOFF, Staff
Representative Frank Tomaszewski
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Presented the sectional analysis for HB
233, om behalf of Representative Tomaszewski, prime sponsor.
LES NICHOLS, General Manager
Fairbanks Nissan
Fairbanks, Alaska
POSITION STATEMENT: Gave a PowerPoint presentation, entitled
"House Bill 233 Relating to Time Allowances for Warranty Work."
MARTEN MARTENSEN, Owner & General Manager
Continental Auto Group;
Alaska Auto Dealers Association
Anchorage, Alaska
POSITION STATEMENT: Gave invited testimony during the hearing
on HB 233.
SUSAN HICKS, Service Director
Gene's Chrysler Dodge Jeep Ram
Fairbanks, Alaska
POSITION STATEMENT: Gave invited testimony during the hearing
on HB 233.
LUKE KINCAIDE, Master Technician
Gene's Chrysler Dodge Jeep Ram
Fairbanks, Alaska
POSITION STATEMENT: Gave invited testimony during the hearing
on HB 233.
RICH SWENSON, Fixed Operations Director
Continental Auto Group
Fairbanks, Alaska
POSITION STATEMENT: Gave invited testimony during the hearing
on HB 233.
JERRY HEADSTROM, Master Technician
Honda & Acura
Fairbanks, Alaska
POSITION STATEMENT: Gave invited testimony during the hearing
on HB 233.
JEFF PERRY, Director of State & Local Public Policy
General Motors Company
Seattle, Washington
POSITION STATEMENT: Gave invited testimony during the hearing
on HB 233.
FADIL LIMANI, Deputy Commissioner
Department of Revenue
Office of the Commissioner
Juneau, Alaska
POSITION STATEMENT: Presented HB 333, on behalf of the House
Rules Standing Committee, sponsor by request of the governor.
MICHAEL WILLIAMS, Director
Division of Tax
Department of Revenue
Juneau, Alaska
POSITION STATEMENT: Answered questions during the hearing on HB
333.
ACTION NARRATIVE
3:17:41 PM
CHAIR JESSE SUMNER called the House Labor and Commerce Standing
Committee meeting to order at 3:17 p.m. Representatives Saddler,
Wright, Prax, Ruffridge, and Sumner were present at the call to
order. Representative Fields arrived as the meeting was in
progress.
HB 254-PROHIBIT PORNOGRAPHY TO MINORS
3:18:05 PM
CHAIR SUMNER announced that the first order of business would be
HOUSE BILL NO. 254 "An Act relating to liability for publishing
or distributing pornography to minors on the Internet."
3:18:16 PM
CHAIR SUMNER opened public testimony on HB 254.
3:18:49 PM
ERIC FALER, representing self, testified in support of HB 254.
He invited the committee to consider whether access to
pornography on the Internet has affected children today. He
shared an anecdote about how exposure to porn affected him as a
young adult. He said he supports any effort at the state level
to protect citizens from pornography.
3:21:07 PM
DELAYNA WEST, representing self, Testified in support of HB 254.
She said abusers and traffickers use porn to groom kids and
encouraged the committee to pass the bill.
3:22:00 PM
NICKI KUMFER, representing self, testified in support of HB 254.
She cited studies on how porn exposure affects adolescents and
their development. She opined that prevention, intervention,
and protection programs are necessary to address pornography
addiction. She reiterated her support for the bill to protect
minors.
3:24:03 PM
BRENDA EDENS, representing self, testified in support of HB 254,
explaining that she is totally against the publishing and online
distribution of pornography to minors.
3:24:43 PM
MAXINE DOOGAN, President, Community United for Safety &
Protection, testified in opposition to HB 254 because it would
create civil liability for adult content creators if a child
were to access their content. She opined that the legislature
should "deal with" people who steal and resell their content.
3:27:03 PM
STACI YATES, Director, Human Trafficking Recovery Services, My
House, testified in support of HB 254 and shared an anecdote
about how exposure to porn at a young age negatively affected
her. She cited research on the impact of porn consumption and
said there needs to be mandatory age verification for online
porn distributors. She noted that there's no way to guarantee
that porn content is consensual, adding that exploitation and
trafficking are common experiences in the industry.
3:29:17 PM
KAREN LEWIS, representing self, testified in support of HB 254.
She opined that additional legislation is needed to add
liability to teachers, libraries, publishers, vendors, and other
adults who allow this content to be put in the hands of
children.
3:30:08 PM
THERESA O'CONNEL, representing self, testified in support of HB
254. She shared an anecdote about how exposure to pornography
corrupted the innocence of the kids she grew up with. She
advocated for age verification and reiterated her support for
the bill.
3:31:17 PM
WINDY PERKINS, representing self, testified in support of HB
254. She said pornography negatively impacts children because
their prefrontal cortex is not fully developed. She said the
bill is a "no brainer" and shared a personal anecdote about how
exposure to pornography has negatively impacted her family.
3:32:57 PM
ASHLEY GREEN, representing self, testified in support of HB 254.
She shared her understanding that porn negatively impacts child
development, encourages children to experiment with sexually
explicit behavior, and affects mental health. She opined that
the consequences need to be severe and urged support for the
bill.
3:33:48 PM
RAYMOND WALKER, representing self, testified in support of HB
254. He said the bill is a "no brainer," adding "any legislator
that votes against bills like this should be tarred and
feathered."
3:34:14 PM
TERRA BURNS, Advocate, Community United for Safety & Protection,
testified in opposition to HB 254 and reminded the committee
that is already a serious state and federal crime to distribute
pornography to a minor. She said the bill would make adult
content creators civilly liable for children consuming their
content, which they can't control as people steal, resell, and
repost their content on other websites. She asked why the
legislature is attacking sex workers and urged a "no" vote on
the bill.
3:36:32 PM
TREVOR MCGEE, representing self, testified in support of HB 254.
He noted the traumatic affect that pornography has on the young
mind and likened it to drug use. He said allowing pornographic
content to be readily accessible to minors should be a crime.
3:37:23 PM
NICOLE THOMAS, representing self, testified in support of HB
254. She opined that citizens and parents have a moral
obligation to protect youth from the harmful effects of
unrestricted access to explicit content online. She said HB 254
presents a corrective and necessary step that would mitigate the
adverse effects and promote a healthier online experience. She
said she put together a petition in support of HB 254 that
garnered over 200 signatures.
3:39:25 PM
BELLA ROBINSON, executive Director, Coyote RI, testified in
opposition to HB 254, reiterating that it is already a serious
state and federal offense to share pornography with minors. She
opined that the bill is discriminatory against an entire sector
of workers, adding that age verification has already been ruled
unconstitutional in other states. She opined that parents
should be responsible for their kids' online activity.
3:41:53 PM
RHODA MYERS, Executive Director, Alaska Faith & Family Services,
testified in support of HB 254, saying that [the legislature]
should do everything it can to protect children. She opined
that minors should not have access to pornography and urged the
committee to pass the bill.
3:43:29 PM
SYLIVA FRANCINE TRYGSTAD, representing self, testified in
support of HB 254. She said children need to be protected from
access to pornography and urged the committee to vote "yes."
3:44:16 PM
CHAIR SUMNER closed public testimony on HB 254 and announced
that the bill would be held over.
HB 204-OVERTIME PAY EXEMPTION
3:44:30 PM
CHAIR SUMNER announced that the next order of business would be
HOUSE BILL NO. 204 "An Act exempting certain employees from
overtime pay requirements; and providing for an effective date."
3:44:42 PM
CHAIR SUMNER opened public testimony on HB 204.
3:44:56 PM
BRIAN BERG, Vice President of Operations, HCA Healthcare,
testified during the hearing on HB 204. He said the bill seeks
to expand the voluntary flexible work hours plan to allow nurses
to work a 12-hour shift by choice. He noted that 10-hour shifts
are already available to nurses in many other healthcare
settings, and the goal is to expand it to 12.
3:46:12 PM
SHANNON DAVENPORT, President, Alaska Nursing Association,
testified in opposition to HB 204. She said she currently works
a 40-hour workweek at 8 hours per day, which allows her more
flexibility and a better work/life balance to spend time with
family. She said the problem arises when surgeries are
scheduled, which only covers 8 hours, and the nurses are
assigned to a 12-hour shift. In these instances, nurses must
use their own paid time off (PTO) to get paid for the extra 4
hours. Another aspect is that unless a 12-hour contract is
signed, nurses lose their job, she said. She added that hospice
nurses often work much longer than 12-hour shifts. She
maintained her strong opposition to HB 204.
3:48:32 PM
CHAIR SUMNER closed public testimony and announced that HB 204
would be held over.
HB 233-RATES: MOTOR VEHICLE WARRANTY WORK
3:48:41 PM
CHAIR SUMNER announced that the next order of business would be
HOUSE BILL NO. 233, "An Act relating to rates and time
allowances for motor vehicle warranty work."
3:48:54 PM
The committee took a brief-ease at 3:48 p.m.
3:49:02 PM
FRANK TOMASZEWSKI, Alaska State Legislature, as prime sponsor,
presented HB 233. He shared the sponsor statement [included in
the committee packet], which read as follows [original
punctuation provided]:
House Bill 233 makes a key change to the auto warranty
statute by adding time allowances to the schedule of
compensation for warranty work. Thousands of Alaskans
benefit from warranty work every year as part of their
agreement with auto manufacturers from whom they've
purchased their car. By agreeing to sell cars on
behalf of certain manufacturers, auto dealers assume
the responsibility of coordinating the time and labor
spent performing warranty repair work on their cars.
Warranty work differs from regular auto work in that
the manufacturer compensates the dealer directly.
Additionally, qualified dealers do not have the
ability to refuse the work. Auto manufacturers
compensate dealers for warranty work using rates and
time allowances that dictate the maximum amount of
time that the dealer may bill for different repairs.
The rates and time allowances that manufacturers use
to reimburse dealers for warranty work are often much
lower than the rates and time allowances that dealers
and independent mechanics bill customers for non-
warranty work. As a result, dealers are often forced
to pay their mechanics more than they are compensated
by the manufacturer or risk losing their mechanics to
independent auto shops. Across the nation, states have
taken varied approaches to addressing how to ensure
fair payment for dealers by manufacturers. Senate Bill
144 takes an approach used by states like Colorado,
Montana, and Illinois by requiring that manufacturers
compensate dealers for warranty work at the same rates
and time allowances that the dealer charges retail
customers for similar, non-warranty work.
3:52:40 PM
DAVID GOFF, Staff, Representative Frank Tomaszewski, Alaska
State Legislature, on behalf of Representative Tomaszewski,
prime sponsor, shared the sectional analysis for HB 233
[included in the committee packet], which read as follows
[original punctuation provided]:
Section 1
AS 45.25.210. Rates for warranty and other work Amends
subsection (b) Page 1 Lines 6-8 to state. "The
compensation for labor must include the rates and time
allowances for warranty work."
Section 2
AS 45.25.210. Rates for warranty and other work Amends
subsection (c) Page 1 Lines 11-12 to include "and time
allowances" in the schedule of compensation.
Section 3
AS 45.25.210. Rates for warranty and other work Adds
new section (j) Page 2 Lines1-4 which defines "rates"
and "time allowance" for the purposes of warranty and
other work.
Section 4
AS 45.25.990. Definitions Page 2 Lines 6-8 Amends the
definition of "schedule of compensation" to include
parts, rates for labor, and time allowances for labor.
3:54:35 PM
CHAIR SUMNER opened invited testimony on HB 233.
3:55:02 PM
LES NICHOLS, General Manager, Fairbanks Nissan, gave a
PowerPoint presentation, entitled "House Bill 233 Relating to
Time Allowances for Warranty Work" [hard copy included in the
committee packet]. He began on slide 2, "Alaska Auto Dealers
Association," which read as follows [original punctuation
provided]:
• The AADA is a statewide association of auto dealers,
both franchise new car dealers and independent used
car dealers. We represent our State's auto dealers by
promoting best practices, providing communication on
the state of the automotive industry in Alaska, and
representing dealers' concerns to our elected
officials.
MR. NICOLS moved to slide 3, "The Problem," which read as
follows [original punctuation provided]:
• Manufacturers help themselves to a massive self-
decided discount on the time they will pay dealers and
our employees for their warranty repairs.
• Automotive News February 27, 2023
• 'Mr. White previously worked as a field
service manager for Ford and stated that
manufacturers aggressively discount labor time
estimates.'
• Technicians are avoiding working for dealerships
because they are paid for more hours for the same work
when they work for an independent repair facility.
• Their discounts shift the expense of warranty
repairs from the manufacturer, directly to Alaskan
consumers, employees, and businesses.
MR. NICOLS offered a comparison of J.D. Power Initial Quality
Studies (IQS) from 2019 and 2023 on slide 4.
4:04:16 PM
MR. NICHOLS advanced to slide 5, "Who is Affected," which read
as follows [original punctuation provided]:
Automobile Manufacturers take these discounts out of
the hands of Alaskan employees, Alaskan businesses,
and the Alaskan economy to unfairly pad their bottom
line.
• Alaskan Employees technicians are unable to bill
full hours for their work, resulting in lower pay for
them and their support staff, including service
writers and service managers.
• Alaskan Businesses Fairbanks lost Buick, Cadillac,
Daewoo, Hyundai, Kia (twice), Mazda, Mercedes, and VW.
Juneau lost Chevy(once) Ford, Mazda, VW. Ketchikan
lost Subaru, Ford, and Chevrolet. Kenai lost
Chevrolet, Kodiak lost Ford. Anchorage lost Mitsubishi
and Volvo.
• Alaskan Consumers The burden of manufactures'
discounts directly raise prices on the Alaskan
consumer.
MR. NICHOLS proceeded to slide 6, "The Solution," which read as
follows [original punctuation provided]:
• This bill would require manufacturers to pay the
same number of hours for a repair that a customer
would be charged for nonwarranty [sic] work by using
an industry-wide time guide rather than their
discounted time guide.
• This bill would provide protection to Alaskans by
requiring manufacturers to pay equal compensation to
technicians for doing warranty work versus non-
warranty customer work.
• This bill would create a level playing field for the
Alaskan consumer by preventing the manufacturer from
inflating the cost of repairs on consumers by
discounting time from dealers and our service
employees.
MR. NICHOLS concluded on slide 7, "Important Points," which read
as follows [original punctuation provided]:
• Manufacturers believe they deserve a discount for
volume work.
• They have very sophisticated methods to extract
discounts
• They are not our biggest customers, the Alaskan
consumers are.
• They claim this is a "money grab" by Dealers when we
try and level the playing field, but not so when they
are taking money from Alaskan workers, businesses, and
consumers.
• Manufacturers know that the contracts they offer are
contracts of adhesion where the parties are of such
disproportionate bargaining power that the party of
weaker bargaining power could not have negotiated for
variation in the terms of the contract.
• Manufacturers know their contracts have to be
addressed by State Legislatures in order to be
compliant with federal anti-trust laws.
They know these protections can only be provided by
state law.
4:10:17 PM
REPRESENTATIVE PRAX inquired about a previously mentioned
"industry standard" for time allowances.
MR. NICHOLS said the four guides that are commonly used are all
within 10-12 percent of each other.
REPRESENTATIVE PRAX asked about comparable warranty work on new
versus old vehicles and questioned whether companies are setting
time standards on new cars.
MR. NICHOLS said not necessarily; however, he acknowledged that
the age of the vehicle may be a factor in some instances. He
said he had observed discrepancies in the labor time for two
different model year vehicles with the same parts and repair,
which is not logical. He explained that certain things may be
easier with a new car while other things may be more difficult.
4:12:50 PM
REPRESENTATIVE WRIGHT asked Mr. Nichols to review the pay
structure for technicians.
MR. NICHOLS explained that technicians receive an hourly rate
multiplied by the book time for each job. He shared an anecdote
to illustrate the need for fairness.
4:15:13 PM
MARTEN MARTENSEN, Owner & General Manager, Continental Auto
Group; Alaska Auto Dealers Association, gave invited testimony
in support of HB 233, explaining that this bill is meant to
address the lack of technicians in Alaska, which results in a
struggle to fix customers' cars in a timely manner. He
discussed the shortage of technicians all throughout the U.S.
and the inability to pay them a decent wage because they're
doing warranty work for which they're underpaid.
4:16:56 PM
REPRESENTATIVE PRAX sought to confirm that the agreement between
dealers and manufacturers sets the rates as well as the time
limits.
MR. MARTENSEN said the dollar amount is an average among repair
workers and the time allowance is determined by the manufacturer
with zero input from the dealers.
REPRESENTATIVE PRAX asked whether dealers in different states
charge the same rate.
MR. MARTENSEN answered no. He said rates may vary between
states and even cities that are reflective, in part, by
different markets and labor costs.
REPRESENTATIVE PRAX asked whether those rates are determined by
the legislature.
MR. MARTENSEN said repair orders are analyzed to calculate the
average charge to customers, which sets the rate for warranty
reimbursement.
4:19:42 PM
SUSAN HICKS, Service Director, Gene's Chrysler Dodge Jeep Ram,
gave invited testimony in support of HB 233 and explained how
warranty repair costs and pay rates are calculated. She said
warranty repairs times are not based on real world scenarios and
do not include time for diagnostics. She said the passage of HB
233 would bridge the gap between what manufacturer-allowed times
pay technicians and how long it actually takes to diagnose and
repair a vehicle. The discrepancy between warranty and retail
labor times negatively impact the dealer's ability to attract
and maintain skilled technicians, she said. She reported that
the annual turnover rate for technicians is 30 percent
nationwide. Passage of the bill would allow Alaska dealers to
be more competitive when it comes to hiring and maintaining
skilled technicians.
4:23:45 PM
REPRESENTATIVE WRIGHT asked about the turnover rate for the
service writers.
MS. HICKS cited national statistics that ranked service writers
in the top 10 most stressful jobs with the highest rates of
turnover in the dealership.
REPRESENTATIVE WRIGHT asked whether the bill would help retain
service writers.
MS. HICKS answered yes, it would help with retention.
4:25:25 PM
REPRESENTATIVE PRAX shared his understanding that dealers are
not paid for diagnostic time per vehicle.
MS. HICKS confirmed. She explained that Gene's Chrysler Dodge
Jeep Ram's manufacturers award dealers a bucket of time per
quarter; however, some manufacturers grant zero diagnostic time
at all.
REPRESENTATIVE PRAX surmised that the dealer does not pass the
diagnostic time onto the customer for warranty work.
MS HICKS said they do not.
REPRESENTATIVE PRAX asked whether non-warranty work is passed
onto customers.
MS. HICKS answered explained that service advisors authorize a
certain amount of diagnostic time for technicians for non-
warranty work which can be extended if authorized by the
customer.
REPRESENTATIVE PRAX inquired about extended warranties.
MS. HICKS said they are available through both the manufacturer
and independent entities.
REPRESENTATIVE PRAX asked whether the customer pays a flat rate
for diagnostic and repair time.
MS. HICKS confirmed that the third party pays a flat rate
similar to the manufacturers for the approved diagnostic rate.
4:28:40 PM
LUKE KINCAIDE, Master Technician, Gene's Chrysler Dodge Jeep
Ram, gave invited testimony in support of HB 233. He reported
that out of 25 warranty repaid orders, master technicians failed
to meet the manufacturer's allotted time 50 percent of the time.
At Gene's Chrysler Dodge Jeep Ram dealership, only 2 out of 25
warranty repair orders were completed in the time set forth by
the manufacturer. He continued to share anecdotes that
exemplified his experience working under current warranty time
allotments.
4:32:52 PM
REPRESENTATIVE PRAX asked where Mr. Kincade received his master
certification.
MR. KINKAIDE said he attended the manufacturer's training, which
was paid for by his dealership.
REPRESENTATIVE PRAX asked how long it takes to become reasonably
proficient.
MR. KINKAIDE said testing can be completed within one year, but
it doesn't provide the hands-on experience that comes with time.
He added that he had worked at his dealership for 13 years, and
even with that amount of experience, he only completed the
warranty repair orders twice within the manufacturer's time
limit.
REPRESENTATIVE WRIGHT asked whether these timing exercises
factor in time for snow.
MR. KINKAIDE answered no.
4:34:43 PM
RICH SWENSON, Fixed Operations Director, Continental Auto Group,
gave invited testimony in support of HB 233. He said auto
manufacturers do not value technicians, which is proven by the
low rates of pay for warranty labor. He addressed the high
rates of turnover, which the dealership has tried to combat with
seniority bonuses and retirement bonuses. He said passing the
bill would level the playing field and improve the pay for
warranty work.
4:37:14 PM
JERRY HEADSTROM, Master Technician, Honda & Acura, gave invited
testimony in support of HB 233. He emphasized that the labor
times are not attainable for warranty repairs. He shared
specific examples. Further, he said manufacturers continue to
add requirements, such as the multi-point inspection, which
technicians are not compensated for. He concluded that
technicians are trying to get the manufacturer's warranty time
to match the "normal" labor rate.
4:41:52 PM
REPRESENTATIVE SADDLER asked who sets the manual rates.
MR. HEADSTROM said he did not know the answer.
4:42:36 PM
JEFF PERRY, Director of State & Local Public Policy, General
Motors Company (GM), gave invited testimony in opposition to HB
233, opining that it would strip one party of its rights to a
fair contract while enriching the other's. He said the bill is
based on the false premise that franchise dealers in Alaska need
protection from manufacturers' oppressive contracts of adhesion
that are forced upon them. He said manufacturers are obligated
by state law to treat all dealers equally. He emphasized that
dealers set compensation programs, not the manufacturers. He
reported that dealers across the country support their
technicians with salary pay, instead of flat rate or hourly pay,
which leads to significantly lower turnover rates. He stressed
that GM values their technicians as evidenced by their
technician excellence program and encouraged Alaska dealerships
to follow suit. He discussed the sample of 25 repair orders,
which showed that 50 percent of technicians were meeting the
original equipment manufacturers (OEM) time guides. He asserted
that GM's time studies are, in practice, much different than
previous testimony had alleged. He said times are studied by a
technician in every circumstance with hand tools. He stated
that HB 233 would have a severe and significant impact on
consumers in Alaska. If the bill is enacted and manufacturers
are forced to use the aftermarket time guides, the increase in
warranty would ultimately be borne by consumers in higher
vehicle prices and increased repair costs. He estimated that
the cost to consumers would increase by $600 to $1,000 per
vehicle. He urged the legislature not to pass the bill, adding
that GM had proposed two alternative approaches to HB 233 that
would fairly compensate technicians.
4:53:09 PM
REPRESENTATIVE PRAX sought to confirm that time allowances are
the same in every state.
MR. PERRY answered yes, "the book is the book." However, he
said manufacturers can submit a request for more time through
the warranty system.
REPRESENTATIVE PRAX imagined that it would be more difficult for
dealers to take a car in Alaska versus Florida. He sought to
verify that Mr. Perry had stated that GM would make regional
allowances for that.
MR. PERRY said yes, if a technician needed more repair time and
the request was properly documented, GM would approve the
request.
4:54:53 PM
REPRESENTATIVE SADDLER asked whether Mr. Perry is asserting that
the manufacturers' warranty time is sufficient to do the work,
despite all the testimony in contradiction to that.
MR. PERRY said the times that were studied by GM can be
completed by a technician because they've seen it be done.
REPRESENTATIVE SADDLER asked whether the manufacturer's warranty
time should be a reasonable standard that's consistently met by
the dealership.
MR. PERRY answered yes, he believed the times are reasonable and
should be met on a consistent basis.
REPRESENTATIVE SADDLER asked how Mr. Perry would respond to the
contradictory testimony.
MR. PERRY said he recognized that things happen and that every
circumstance cannot be accounted for. He encouraged technicians
to request additional time when they need it.
REPRESENTATIVE SADDLER asked how often the appeal process is
executed.
MR. PERRY recalled that in 2023, GM received 190 requests [for
additional time] out of 10,000 annual repairs at GM dealerships
in Alaska.
REPRESENTATIVE SADDLER asked how often dealers can request
additional payment.
MR. PERRY estimated under 1 percent of the time.
4:58:32 PM
REPRESENTATIVE RUFFRIDGE asked whether the rate and time
allowances for warranty work are published by GM.
MR. PERRY answered yes.
REPRESENTATIVE RUFFRIDGE asked why GM is opposed to the bill, if
the company already publishes time allowances and rates.
MR. PERRY clarified that he opposes the bill because it states
that rates, times, and parts are all based on what the dealer
has charged retail customers. He explained that current law
"puts a period" after rates, whereas HB 233 would add the
element of time charged to retail customers. In addition, he
shared his belief that charging customers based on a flat book
rate that does not actually reflect the time spent working on
their car would potentially violate the existing truth and
repair law under the Alaska Automobile Repair Act.
REPRESENTATIVE RUFFRIDGE sought to confirm that GM is in
opposition to Section 2.
Mr. PERRY answered yes. More specifically, GM is opposed to the
addition of the word "time."
REPRESENTATIVE RUFFRIDGE asked whether a middle ground could be
reached between technicians and manufacturers to ensure that
workers are being compensated for their time.
MR. PERRY answered yes, there is a form of middle ground, but
it's not on the third-party time. He reiterated that GM had
offered two alternatives to the language in HB 233. The first
would require all manufacturers to implement a process that
allows technicians to request additional time, which cannot be
unreasonably denied. The second would require manufacturers to
pay for actual time worked, as supported by the documentation of
the technicians' time stamps.
REPRESENTATIVE SADDLLER asked Mr. Perry to share his
interpretation of the dealers' motivation for coming forward
with these concerns.
MR. PERRY opined that the dealers are making a lucrative profit
from the times billed for repairs, which do not accurately
reflect the times spent working on the car. He shared his
belief that the dealers would like to extend that profitability
to the manufacturers and for the state to endorse it.
REPRESENTATIVE SADDLER shared his understanding that it's Mr.
Perry's contention that dealers want the same rate of return for
the warranty work that they receive for non-warranty work. He
asked whether that is accurate.
MR. PERRY answered yes.
5:05:43 PM
CHAIR SUMNER announced that HB 233 would be held over.
5:06:11 PM
The committee took an at-ease from 5:06 p.m. to 5:15 p.m.
HB 333-TAX CREDIT CHILD CARE/UTILITY/HOUSE/FOOD
5:15:45 PM
CHAIR SUMNER announced that the final order of business would be
HOUSE BILL NO. 333 "An Act establishing a corporate income tax
credit for certain expenditures on child care services, utility
rates, residential housing, and food security and availability;
and providing for an effective date."
5:16:16 PM
FADIL LIMANI, Deputy Commissioner, Department of Revenue, Office
of the Commissioner, presented HB 333, on behalf of the House
Rules Standing Committee, sponsor by request of the governor.
He directed attention to a PowerPoint presentation, entitled
"House Bill 333" [hard copy included in the committee packet and
began on slide 2, "HB 333 Overview," which read as follows
[original punctuation provided]:
This proposed legislation focuses on four key areas:
• Childcare
• Housing
• Energy
• Food Security
The idea behind this legislation is that it creates a
tax incentive for Corporations and businesses to
offset their corporate income tax liability for
qualified expenditures in those key areas.
The Department of Revenue will define the qualified
expenditures through regulations.
Further, the tax credits are limited to 50% of
qualified expenditures and may not exceed 50% of the
Corporation's tax liability for any year.
MR. LIMANI continued to slide 3, which featured data
demonstrating the annual general fund (GF) revenue from
corporate income tax, totaling $436 million. He turned to slide
4, "HB 333 Estimated Revenue Impact," which read as follows
[original punctuation provided]:
At this time, we don't have clear visibility on the
revenue impact as we can't predict taxpayer behavior
and how much they may contribute to each of these
areas; however, we have run an analysis and determined
the maximum revenue impact to the State on Corporate
Income Tax Revenue would range from ($238) million in
FY25 to ($267) million in FY30.
MR. LIMANI estimated that the maximum impact on tax revenue
ranges from -$237.6 million in FY 25 to -$266.8 million in FY
30.
CHAIR SUMNER asked how Mr. Limani would envision a credit of
$239 million.
MR. LIMANI said the modeling looks at the maximum amount based
on the 50 percent threshold, which would include both petroleum
and non-petroleum revenue. Returning to slide 4, he reported
that the maximum impact on non-petroleum corporate income tax
revenue would range from -$87.5 million in FY 25 to -$126.3
million in FY 30. Maximum impact on petroleum corporate income
tax revenue ranges from -$150.1 million to $140.5 million.
5:20:16 PM
MR. LIMANI proceeded to slide 5, "HB 333 Implementation Cost,"
which read as follows [original punctuation provided]:
The department will need to make minor changes to its
Tax Revenue Management System (TRMS) and tax forms to
implement this bill. The Tax Division will use
existing resources to absorb the costs to update tax
forms, TRMS, and other miscellaneous implementation
costs.
5:21:31 PM
REPRESENTATIVE RUFFRIDGE referred to paragraph (3) on page 1,
line 12, and asked whether there would be an application process
for this tax credit.
MICHAEL WILLIAMS, Director, Division of Tax, Department of
Revenue (DOR), said a number of things could be developed
through the regulatory process. He referenced a rebate program
that was offered through [the Alaska Housing Finance Corporation
(AHFC)] that was partially funded through state dollars and said
he envisioned similar contributions qualifying for the credit in
HB 333. Another qualifying expenditure could be on-site
childcare provided by employers.
MR. LIMANI said the obligations of corporate expenses would not
change on the administrative front. From the regulation
standpoint, he highlighted the need to define the qualified
expenditures and who the recipients would be.
5:23:56 PM
REPRESENTATIVE RUFFRIDGE asked whether organizations attempting
to driving down the state's energy costs would be eligible for
the tax credit.
MR. WILLIAMS said that that is an example of what the regulatory
process would contemplate.
5:24:59 PM
REPRESENTATIVE SADDLER observed that the bill language is vague
in terms of implementation. He asked how an organization would
demonstrate its contribution to decreasing heating or mortgage
rates or improving food security.
MR. LIMANI said that the idea behind the legislation is to keep
it vague for the intended purpose of meeting with stakeholders
and refining regulation.
REPRESENTATIVE SADDLER suggested doing that work first.
5:26:41 PM
REPRESENTATIVE WRIGHT asked how many broad-based taxes exist in
Alaska.
MR. LIMANI said currently, there are none.
REPRESENTATIVE WRIGHT asked whether corporate income tax in the
only lever available to incentivize investments and whether
that's the primary intent of the proposed legislation.
MR. LIMANI answered yes, corporate income tax is the only way to
incentivize investment and development within the state.
5:27:44 PM
CHAIR SUMNER announced that HB 333 would be held over.
5:28:00 PM
ADJOURNMENT
There being no further business before the committee, the House
Labor and Commerce Standing Committee meeting was adjourned at
5:28 p.m.