Legislature(1997 - 1998)

03/11/1997 08:04 AM House STA

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
             HOUSE STATE AFFAIRS STANDING COMMITTEE                            
                         March 11, 1997                                        
                            8:04 a.m.                                          
 MEMBERS PRESENT                                                               
 Representative Jeannette James, Chair                                         
 Representative Ethan Berkowitz                                                
 Representative Fred Dyson                                                     
 Representative Kim Elton                                                      
 Representative Mark Hodgins                                                   
 Representative Ivan Ivan                                                      
 Representative Al Vezey                                                       
 MEMBERS ABSENT                                                                
 All members present.                                                          
 COMMITTEE CALENDAR                                                            
 *HOUSE BILL NO. 83                                                            
 "An Act relating to commercial motor vehicle inspections; and                 
 providing for an effective date."                                             
      - HEARD AND HELD                                                         
 *HOUSE BILL NO. 124                                                           
 "An Act relating to items not subject to collective bargaining and            
 to application of the Public Employment Relations Act to                      
 municipalities and other political subdivisions."                             
      - MOVED HB 124 OUT OF COMMITTEE                                          
 *HOUSE JOINT RESOLUTION NO. 25                                                
 Proposing amendments to the Constitution of the State of Alaska to            
 guarantee the permanent fund dividend, to provide for                         
 inflation-proofing, and to require a vote of the people before                
 spending undistributed income from the earnings reserve of the                
 permanent fund; and relating to the permanent fund.                           
      - HEARD AND HELD                                                         
 *HOUSE BILL NO. 84                                                            
 "An Act limiting the authority to conduct pull-tab charitable                 
 gaming to qualified organizations that are exempt from taxation               
 under 26 U.S.C. 501(c)(3) or (19); and providing for an effective             
      - SCHEDULED BUT NOT HEARD                                                
 *HOUSE BILL NO. 78                                                            
 "An Act relating to the definition of certain state receipts; and             
 providing for an effective date."                                             
      - SCHEDULED BUT NOT HEARD                                                
 *HOUSE BILL NO. 153                                                           
 "An Act relating to the eligibility of aliens for state public                
 assistance and medical assistance programs affected by federal                
 welfare reform legislation; and providing for an effective date."             
      - SCHEDULED BUT NOT HEARD                                                
 *HOUSE BILL NO. 155                                                           
 "An Act relating to hearings before and authorizing fees for the              
 State Commission for Human Rights; and providing for an effective             
      - SCHEDULED BUT NOT HEARD                                                
 (* First public hearing)                                                      
 PREVIOUS ACTION                                                               
 BILL:  HB  83                                                               
 SHORT TITLE: COMMERCIAL VEHICLE INSPECTIONS                                   
 SPONSOR(S): REPRESENTATIVE(S) MARTIN                                          
 JRN-DATE      JRN-PG             ACTION                                       
 01/22/97       122    (H)   READ THE FIRST TIME - REFERRAL(S)                 
 01/22/97       122    (H)   TRANSPORTATION, STATE AFFAIRS                     
 02/03/97              (H)   TRA AT  1:00 PM CAPITOL 17                        
 02/03/97              (H)   MINUTE(TRA)                                       
 02/10/97              (H)   MINUTE(TRA)                                       
 02/12/97       306    (H)   TRA RPT  CS(TRA)  NT 3DP 2NR                      
 02/12/97       307    (H)   DP: SANDERS, KOOKESH, MASEK                       
 02/12/97       307    (H)   NR: ELTON, COWDERY                                
 02/12/97       307    (H)   ZERO FISCAL NOTE (DPS)                            
 02/12/97       307    (H)   REFERRED TO STATE AFFAIRS                         
 03/11/97              (H)   STA AT  8:00 AM CAPITOL 102                       
 BILL:  HB 124                                                               
 SPONSOR(S): REPRESENTATIVE(S) VEZEY                                           
 JRN-DATE      JRN-PG             ACTION                                       
 02/12/97       314    (H)   READ THE FIRST TIME - REFERRAL(S)                 
 02/12/97       314    (H)   STATE AFFAIRS, JUDICIARY                          
 03/11/97              (H)   STA AT  8:00 AM CAPITOL 102                       
 BILL:  HJR 25                                                               
 SHORT TITLE: CONST. AM: PERM. FUND INCOME & DIVIDEND                          
 SPONSOR(S): REPRESENTATIVE(S) AUSTERMAN                                       
 JRN-DATE      JRN-PG             ACTION                                       
 02/26/97       483    (H)   READ THE FIRST TIME - REFERRAL(S)                 
 02/26/97       483    (H)   STATE AFFAIRS, JUDICIARY, FINANCE                 
 03/11/97              (H)   STA AT  8:00 AM CAPITOL 102                       
 WITNESS REGISTER                                                              
 REPRESENTATIVE TERRY MARTIN                                                   
 Alaska State Legislature                                                      
 State Capitol, Room 502                                                       
 Juneau, Alaska 99801-1182                                                     
 Telephone:  (907) 465-3783                                                    
 POSITION STATEMENT:  Sponsor of HB 83.                                        
 FRANK DILLON, Executive Director                                              
 Alaska Trucking Association                                                   
 3443 Minnesota Drive                                                          
 Anchorage, Alaska 99503                                                       
 Telephone:  (907) 276-1149                                                    
 POSITION STATEMENT:  Provided testimony on HB 83.                             
 JOHN MANLY, Legislative Assistant                                             
    to Representative Terry Martin                                             
 State Capitol, Room 502                                                       
 Juneau, Alaska 99801-1182                                                     
 Telephone:  (907) 465-3783                                                    
 POSITION STATEMENT:  Provided testimony on HB 83.                             
 SERGEANT BRAD BROWN                                                           
 Division of Alaska State Troopers                                             
 Department of Public Safety                                                   
 5700 East Tudor Road                                                          
 Anchorage, Alaska 99507-1225                                                  
 Telephone:  (907) 269-5086                                                    
 POSITION STATEMENT:  Provided testimony on HB 83.                             
 ED FLANAGAN, Deputy Commissioner                                              
 Office of the Commissioner                                                    
 Department of Labor                                                           
 P.O. Box 21149                                                                
 Juneau, Alaska 99802-1149                                                     
 Telephone:  (907) 465-2700                                                    
 POSITION STATEMENT:  Provided testimony in opposition to HB 124.              
 JOHN CYR, President                                                           
 National Education Association (NEA) - Alaska                                 
 114 Second Street                                                             
 Juneau, Alaska 99801                                                          
 Telephone:  (907) 586-3090                                                    
 POSITION STATEMENT:  Provided testimony in opposition to HB 124.              
 REPRESENTATIVE ALAN AUSTERMAN                                                 
 Alaska State Legislature                                                      
 State Capitol, Room 434                                                       
 Juneau, Alaska 99801-1182                                                     
 Telephone:  (907) 465-2487                                                    
 POSITION STATEMENT:  Sponsor of HJR 25.                                       
 JIM KELLY, Research and Liaison Officer                                       
 Alaska Permanent Fund Corporation                                             
 Department of Revenue                                                         
 P.O. Box 25500                                                                
 Juneau, Alaska 99802-5500                                                     
 Telephone:  (907) 465-2059                                                    
 POSITION STATEMENT:  Provided testimony on HJR 25.                            
 ACTION NARRATIVE                                                              
 TAPE 97-24, SIDE A                                                            
 Number 0001                                                                   
 The House State Affairs Standing Committee was called to order by             
 Chair Jeannette James at 8:04 a.m.  Members present at the call to            
 order were Representatives James, Dyson, Elton, Ivan and Vezey.               
 Members absent were Berkowitz and Hodgins.                                    
 HB 83 - COMMERCIAL VEHICLE INSPECTIONS                                      
 The first order of business to come before the House State Affairs            
 Standing Committee was HB 83, "An Act relating to commercial motor            
 vehicle inspections; and providing for an effective date."                    
 CHAIR JEANNETTE JAMES called on Representative Terry Martin,                  
 sponsor of HB 83, to present the bill.                                        
 Number 0044                                                                   
 REPRESENTATIVE TERRY MARTIN, Alaska State Legislature, stated HB 83           
 was an easy bill.  It was one that he decided to introduce because            
 it came through a legitimate organization - the Office of the                 
 Ombudsman.  The ombudsman recommended that the commercial vehicle             
 inspection law be repealed for two major reasons:  It appeared that           
 there was a law that was excessive as far as protecting the                   
 public's interest; and that the Alaska Trucking Association                   
 exceeded a double inspection every year.  In addition, if there was           
 a useless law on the book, the legislature could be stung by it.              
 He was pleased with the support of the bill by the industry and the           
 State Troopers in the hearings in the House Transportation Standing           
 Number 0166                                                                   
 CHAIR JAMES thanked Representative Martin for bringing forward this           
 issue.  She was aware of the inspection process that was put on the           
 books and never funded.  "It's a good idea.  It's not working and             
 hasn't been working; and, so let's move on and do something that              
 works better."                                                                
 Number 0185                                                                   
 REPRESENTATIVE FRED DYSON asked Representative Martin if there was            
 anybody against this thing?                                                   
 REPRESENTATIVE MARTIN replied that he had not heard anyone, yet.              
 Number 0219                                                                   
 REPRESENTATIVE ETHAN BERKOWITZ stated he recalled working on a case           
 where somebody had a recreational commercial vehicle and whether or           
 not it fell within the reach of these sorts of statutes.  He asked            
 Representative Martin if he thought these types of vehicles should            
 fall within the reach of these statutes?                                      
 Number 0253                                                                   
 REPRESENTATIVE MARTIN replied he did not want to pose as a lawyer             
 or as an expert.  There were specialist here to handle that                   
 question both from the trucking industry and the Department of                
 Public Safety.                                                                
 Number 0279                                                                   
 REPRESENTATIVE AL VEZEY commented that "commercial motor vehicle"             
 was defined in Sec. 6.  He asked Representative Martin who was                
 going to do these vehicle inspections?                                        
 Number 0319                                                                   
 REPRESENTATIVE MARTIN replied the in-house trucking industry was              
 doing a superb job right now, and Mr. Frank Dillon, Alaska Trucking           
 Association, was here today to talk about that.  The industry was             
 worried about their own safety and liability.  There was a good               
 daily procedure where the truck driver must list anything that was            
 found that could be a problem.  At the end of the driver's duty,              
 the list went to the mechanic to be fixed and checked off for the             
 next day.  "I think that's far superior than what the law has done            
 because these people are interested, they do not want to get out              
 there with vehicles that are going to fall apart."                            
 Number 0389                                                                   
 REPRESENTATIVE VEZEY asked Representative Martin who was going to             
 do the inspections?  What was the intent that qualified them under            
 the law?                                                                      
 Number 0407                                                                   
 REPRESENTATIVE MARTIN deferred the question to the industry.                  
 REPRESENTATIVE MARTIN further stated that the State Troopers could            
 show what they were doing and what the industry was doing in                  
 compliance with the federal law, plus their own in-house inspection           
 Number 0442                                                                   
 REPRESENTATIVE IVAN IVAN referred the committee members to Sec. 2             
 and said, he was curious which law or statute this bill covered and           
 what were the qualifications.                                                 
 Number 0485                                                                   
 FRANK DILLON, Executive Director, Alaska Trucking Association,                
 explained, in response to Representative Vezey's question, the                
 association had adopted the federal regulations through the                   
 administrative process - Section 396.25, "Qualification of                    
 inspectors."  The section defined by training and experience those            
 who would be qualified to do a federal motor safety inspection.  He           
 cited most qualified motor mechanics, mechanics who work on trucks,           
 owner-operators, or any vendor who does truck repair work would be            
 capable of doing such inspections.                                            
 Number 0570                                                                   
 REPRESENTATIVE VEZEY explained he had done a lot of work in the               
 area of privatization of the Division of Motor Vehicles (DMV).  The           
 model was obtained from the Federal Aviation Administration (FAA)             
 where there was an unprecedented amount of inspection and safety              
 programs.  "There are no government employees really that do any of           
 this.  When we say and qualify under law why don't we say,                    
 `qualified under federal regulations.'"  It was done in other                 
 cases.  The state law moved with the changes in the federal law.              
 "You have to comply with federal law and you have to comply with              
 state law."  So, why not bring the two together so that there was             
 not any conflict?                                                             
 Number 0633                                                                   
 MR. DILLON replied he was told that this bill was drafted                     
 specifically to do that and that was why the term "under federal              
 law" was used.                                                                
 REPRESENTATIVE VEZEY replied the bill said, "under law."                      
 MR. DILLON further stated the intent of the bill was to make it               
 inclusive so that the federal rules would apply.                              
 REPRESENTATIVE VEZEY said the only law that would apply would be              
 the state regulations adopted, according to his understanding.  The           
 bill did not refer to federal regulations.  That was done in other            
 statutes.  He cited Title 17, "controlled substances."  "We simply            
 adopt - automatically - we defer to federal regulation."  He                  
 suggested saying "in according with federal regulations."                     
 Number 0696                                                                   
 CHAIR JAMES asked Representative Vezey if he had looked at Sec. 4 -           
 REPRESENTATIVE VEZEY replied he was not talking about regulations,            
 he was talking about the qualifications for inspectors in Sec. 2.             
 The qualifications, which were also a regulation, could change.  "I           
 understand that we're talking about the regulations -- instructs us           
 to adopt federal regulations.  I'm curious why we just can't use              
 them and not worry about updating our own administrative code."               
 Number 0741                                                                   
 CHAIR JAMES replied she understood exactly what Representative                
 Vezey was saying now.  She cited Sec. 2, "Commercial vehicle                  
 inspectors," and read, "A person may not conduct commercial vehicle           
 inspections unless qualified under law."  Therefore, the only law             
 that would be administrative law as opposed to statutory law.  Was            
 that your concern, Representative Vezey?                                      
 Number 0771                                                                   
 REPRESENTATIVE VEZEY replied, "Correct."  The law that would be               
 applicable would either be a statute or a regulation that came down           
 the line.                                                                     
 CHAIR JAMES replied she understood.  According to her attitude                
 towards regulations, she preferred statutory law as opposed to                
 regulatory law.  Therefore, the language needed to be changed.  She           
 asked if the drafter of the bill was here today?                              
 Number 0794                                                                   
 JOHN MANLY, Legislative Assistant to Representative Terry Martin,             
 explained the drafter was Mike Ford.  The reason he drafted it that           
 way was so that it applied to either the state or the federal law.            
 Number 0820                                                                   
 MR. DILLON explained there was a bill passed in the mid-1980's, at            
 the time of the demise of the Alaska Transportation Commission that           
 handled the safety regulations and enforcement of the state.  When            
 the commission sunsetted it passed a law that would set up a system           
 with two inspections a year through a vendor or a qualified                   
 inspection station.  That never happened, however.  In 1990, when             
 he came to work in Alaska in the trucking industry, there was a               
 glaring hole in the structure.  There was no safety enforcement or            
 inspection program.  As a result, the trucking industry got                   
 together with the State Troops to find avenues to access federal              
 money and to set up a program through the troopers.  The trucking             
 industry was successful in adopting, administratively, the Federal            
 Motors Carrier Safety Regulations.  They had been in effect since             
 1993 and the industry had operated under their prescription since             
 that time.  The drivers and the companies had no better concern for           
 their safety compared to other industries.  The drivers were                  
 concerned for their own personal safety, and the companies were               
 concerned for their expenses.  In other words, the self-inspection            
 idea was not designed to let a company get by with running                    
 equipment that was not safe; that was not the purpose.  What we had           
 was a law that said we would have two inspections and that we would           
 set up a system of vendors to do the inspections across the state.            
 We felt that this would be redundant and would probably lessen the            
 impact of the regulations that were in place ending up with less              
 safe trucks than on the road now.  The goal in this effort was to             
 make this as strong as possible.  We would prefer to have it in               
 statute; that was our intent.  We sought the administrative                   
 adoption mode out of desperation at the time.  We would be happy to           
 have these regulations in statute in total and a way to adopt the             
 changes as they came up with the federal government.  The                     
 regulations had been drafted very carefully to address specific               
 problems in the area of safety.  They covered everything from                 
 driver qualification to equipment safety.  The industry had                   
 accepted the regulations both on the intra and inter-state basis.             
 They provided a good framework for folks to operate safe companies.           
 The oversight to this entire process was the State Troopers and the           
 Commercial Vehicle Unit.  The unit, right now, in cooperation and             
 guidance with the feds audited companies.  It audited both                    
 equipment on the road and the companies.  The only problem with the           
 system right now was that there was not enough inspectors to do an            
 adequate job.  He reiterated the intent was to simply put into                
 effect, statutorily, what was in effect in reality.                           
 Number 1062                                                                   
 REPRESENTATIVE BERKOWITZ reiterated he had worked on a case where             
 individuals were "recreationally" using commercial vehicles.  He              
 wondered if that would fall out of the scope defined in Sec. 6.               
 Number 1099                                                                   
 MR. DILLON replied, as defined in the adopted regulations,                    
 "commercial vehicle" was defined as one which was used for the                
 furtherance of a commercial enterprise.  In other words, if one               
 used it to make money or to further a business enterprise, it was             
 a commercial vehicle, regardless of what it was called.                       
 Number 1160                                                                   
 REPRESENTATIVE BERKOWITZ replied, so, there was a definition for              
 commercial purposes that would make this universal.                           
 MR. DILLON replied, "That's correct."  It was effective through               
 regulation now.                                                               
 Number 1172                                                                   
 REPRESENTATIVE BERKOWITZ asked Mr. Dillon if there was anything               
 that precluded the trucking industry from doing its own                       
 inspections?  He imagined it would be useful for insurance                    
 Number 1183                                                                   
 MR. DILLON replied the basic inspection was done by the company               
 itself on both a daily basis and an annual basis.  The option,                
 right now, was that if a company did not have a qualified mechanic            
 in its fleet, it could be taken to a vendor for the inspection.               
 Most of the trucking companies had mechanics that worked full-time            
 for them who were qualified and who were expected to keep the                 
 equipment safe and operable.  "We don't see any problem with those            
 folks doing the self-inspections and making sure that equipment is            
 safe."  Furthermore, one or two inspections a year did not make a             
 safe truck.  "If that's all you're doing and you're doing that just           
 to meet the intent of the regulation, you're not doing what should            
 be done as a responsible operator."  That was why the industry                
 advocated and enforced the daily inspection report forms, even for            
 a person who owned his own truck.  If there was a problem and it              
 was not repaired then the onus of that violation was on the driver            
 for taking it out and on the company for having sent it out.  The             
 intent behind all of the regulations was that they applied to both            
 the driver and the company.                                                   
 The record reflected the arrival of Representative Mark Hodgins at            
 8:22 a.m.                                                                     
 Number 1286                                                                   
 REPRESENTATIVE VEZEY asked Mr. Dillon if he had any ideas, in                 
 regards to his comments earlier, that there were not enough                   
 Number 1294                                                                   
 MR. DILLON replied, currently, there were two troopers who worked             
 in the Commercial Vehicle Unit.  They had four inspectors working             
 with them who were not commissioned by the Department of Public               
 Safety, but who functioned as truck inspectors.  The six of them              
 were undermanned.  They could not do the geographical work and the            
 number of inspection that were necessary.  The association was                
 hoping that it could find ways to work with the legislature to                
 increase the number of inspectors by two or three.  It was also               
 hoping that with the approval of Executive Order 98, the merging of           
 the functions that covered trucking in the Department of                      
 Transportation, and the cross training of the weigh and inspection            
 people, additional inspectors would be added without,                         
 fundamentally, having to spend any more money.  Right now, however,           
 there was not enough people to do the equipment inspections that              
 were needed.  There was not a major problem with accidents related            
 to commercial vehicle equipment, however.  The state ranked in the            
 top four in terms of safety per mile and per ton for commercial               
 Number 1386                                                                   
 REPRESENTATIVE VEZEY stated he thought that the inspectors were               
 going to be private sector employees.                                         
 Number 1393                                                                   
 MR. DILLON replied the inspection itself could be done by a person            
 who met the qualifications in the regulations.  There was also an             
 oversight program with the State Troopers where they could stop               
 equipment for cause and inspect it.  There was also a national                
 program called the Commercial Vehicle Safety Alliance (CVSA).  The            
 stickers that were seen in the windows of the trucks were                     
 inspections done by the troopers.  That was an entirely different             
 program from the daily and annual inspections, however.  The                  
 enforcement part would be done by the Alaska State Troopers, and              
 the inspection part would be done by an employee of a company or a            
 private vendor.                                                               
 Number 1450                                                                   
 REPRESENTATIVE VEZEY said that the bill called for an annual                  
 inspection.  "That's right up there with being worthless, in my               
 opinion.  I can't even think of how many things that would break in           
 one annual period."  A vehicle that was safe today was not safe               
 Number 1469                                                                   
 MR. DILLON replied, "I couldn't agree with you more."  That was why           
 the bill was perfunctory.  On the other hand, he knew of equipment            
 that was only getting inspected once a year and when it did get               
 inspected major repairs were necessary.  Nobody, in the state, who            
 operated a truck with a gross vehicle weight of more than 10,000              
 pounds, should not be inspecting it daily and completing a daily              
 inspection report.  The annual inspection, he reiterated, was a way           
 to insure that one time during the year the equipment was defect              
 free.  The trucking industry knew that one inspection per year was            
 not enough, which was why it worked with the troopers.                        
 Number 1517                                                                   
 CHAIR JAMES said the language in the law that was being deleted was           
 put in place about ten years ago which called for the privatization           
 of authorized inspectors rather than the troopers.  There were no             
 funds to certify the inspectors so it was never implemented.  Now,            
 it was being taken away and the current method was being put into             
 law.  She stated more intensive language was needed under the                 
 "inspectors" in the bill to incorporate the federal law.  She asked           
 Mr. Dillon, if that was done, would it call for more than an annual           
 Number 1581                                                                   
 MR. DILLON replied, "Certainly."  The federal regulations applied,            
 period, to anybody who handled or operated inter-state freight.               
 The federal government superseded the state in that regard.  That             
 was one of the compelling reasons for going into the inspection               
 program.  The federal government's mandate to have a state program            
 through the troopers was tied into about 10 percent or 20 percent             
 of the state's highway funding.  A substantial portion of the                 
 trooper's budget was paid for by the federal government through a             
 program called the Motor Carrier Safety Assistance Program.                   
 Therefore, we were putting into the state statute what we were                
 required to do federally.  If we could find a way to craft the                
 language so that we automatically updated the state's law as the              
 federal law changed, it would be ideal.  He was not sure if that              
 could be done, however.                                                       
 CHAIR JAMES noted for the record that Representatives Ethan                   
 Berkowitz and Mark Hodgins were present.                                      
 Number 1693                                                                   
 REPRESENTATIVE BERKOWITZ asked Mr. Dillon if there was a back-log             
 of the inspection requirements, and was it keeping trucks off of              
 the road?                                                                     
 Number 1700                                                                   
 MR. DILLON replied, "No."  The current annual inspection was being            
 done by companies and/or vendors now.  The enforcement was being              
 done by the troopers on a spot-check basis.                                   
 Number 1723                                                                   
 REPRESENTATIVE MARK HODGINS noted that he had owned and operated              
 trucks for the last 29 years.  Anytime one of his trucks went out             
 on the road they were always at risk to being inspected.                      
 Therefore, it behooved him as a business operator to make sure that           
 they were in the best condition possible.  Anytime there was a                
 light out, for example, the operator was subject to being pulled              
 over and detained.  Generally, that would cost six to eight times             
 more than the preventative maintenance.  As Representative Vezey              
 noted, there were times when mechanical things would happen so                
 inspections were good.                                                        
 Number 1796                                                                   
 CHAIR JAMES stated it would be interesting to see how the                     
 operations would fit under the statutory authority.  This was a               
 good example of where the legislature had the responsibility:  To             
 make law, to ensure that the law worked, and to require as few                
 regulations as possible so that the statute was the operating law.            
 Number 1834                                                                   
 REPRESENTATIVE KIM ELTON said he was comfortable with the bill, as            
 drafted.  Mr. Dillon noted that he was comfortable with the                   
 doubling in the size of the regulations.  He also commented that              
 the state needed more state employees which ran counter-intuitive             
 to what the legislature heard.  He noted for the record that there            
 were some people who were familiar with the way government worked             
 and the way the industry worked, and who were willing to be                   
 Number 1869                                                                   
 CHAIR JAMES replied she knew Representative Elton would get an                
 opportunity to say, "more government was better."                             
 Number 1892                                                                   
 SERGEANT BRAD BROWN, Division of Alaska State Troopers, Department            
 of Public Safety, was the first person to testify via                         
 teleconference in Anchorage.  He recommended in Sec. 2, that the              
 language read "the inspectors must be qualified pursuant to AS                
 28.32.080."  It would cover the qualifications of the inspectors              
 instead of using the language "qualified under law."                          
 Number 1925                                                                   
 CHAIR JAMES appreciated his suggestion.  It was a simple solution.            
 Did the committee members understand the suggestion?                          
 Number 1931                                                                   
 REPRESENTATIVE VEZEY asked Sergeant Brown what inspectors was he              
 talking about - the government employees or the private sector                
 Number 1938                                                                   
 SERGEANT BROWN replied inspectors, including himself, were trained            
 in accordance to North American standards which exceeded that of              
 the industry in some respects.  Thus, the suggestion addressed the            
 qualifications of the civilian inspector.                                     
 Number 1958                                                                   
 REPRESENTATIVE VEZEY said that was not distinguished in the law.              
 He asked Sergeant Brown, again, who were we talking about here?               
 Number 1963                                                                   
 SERGEANT BROWN replied it primarily addressed that the inspectors             
 meet the qualifications in accordance with the Motor Carrier Safety           
 Number 1975                                                                   
 REPRESENTATIVE VEZEY asked Sergeant Brown if the intent was to put            
 requirements onto the regulatory agencies that inspected the                  
 vehicles or the paper work?                                                   
 Number 1986                                                                   
 SERGEANT BROWN replied he was not sure that he understood the                 
 Number 1995                                                                   
 REPRESENTATIVE VEZEY stated that it primarily addressed the                   
 mechanics who worked for the private sector, but the law did not              
 distinguish between them.  Therefore, he wondered if the                      
 qualifications were for the regulatory agency employees; and, was             
 it a physical or an administrative inspection?                                
 Number 2020                                                                   
 SERGEANT BROWN replied we were looking at the qualifications of the           
 civilian inspectors and not so much the qualifications of the state           
 inspectors.  The state inspectors met their qualifications in                 
 accordance with the North American standards, an international                
 inspection criteria.  The CVSA basically said that when the decal             
 was placed on a vehicle it entitled a truck to travel through                 
 Canada, the U.S. and into Mexico, and the operator or the company             
 would be free of having to stop and submit to further inspections             
 so long as the sticker was current.  Therefore, the intent of the             
 law was to set out qualifications for the civilian inspectors in              
 accordance with the Motor Carrier Safety Regulations that had been            
 adopted.  It further clarified that there would be one annual                 
 inspection compared to two annual inspections because it was not              
 consistent with the motor carrier regulations.                                
 Number 2099                                                                   
 REPRESENTATIVE VEZEY commented that inter-state commerce was                  
 already preempted by federal law.  The federal law also affected              
 intra-state commerce.  It appeared, therefore, that a statute was             
 being written that only applied to intra-state commerce.                      
 Number 2126                                                                   
 SERGEANT BROWN stated that we were trying to ensure compatibility             
 and that nobody was treated differently.  The intent was to have              
 everybody play by the same rules and to sing from the same sheet of           
 Number 2165                                                                   
 CHAIR JAMES commented there were qualified commercial vehicle                 
 inspectors.  Therefore, she wondered if the trooper, who also                 
 performed inspections, was an enforcement officer as opposed to an            
 inspection officer.                                                           
 Number 2191                                                                   
 SERGEANT BROWN replied, "That's correct."                                     
 CHAIR JAMES replied in-order-to enforce inspection, therefore, one            
 had to be a qualified inspector.                                              
 Number 2198                                                                   
 SERGEANT BROWN replied in one sense, "Yes."  There were different             
 levels of inspection, however, that could be performed by field               
 personnel.  A person would have to be qualified in accordance to              
 the provisions listed in the Federal Motor Carrier Safety                     
 Regulations - Title 49.  However, to stop a commercial vehicle and            
 conduct an inspection did not require any special certification               
 because any trooper or enforcement officer should be able to write            
 up a head light discrepancy, for example.  Therefore, we were                 
 looking at inspection qualifications that were in accordance to               
 level one standards.                                                          
 Number 2242                                                                   
 REPRESENTATIVE VEZEY stated his understanding was that most vehicle           
 inspections took place at the weigh scales, at least that was where           
 the number one opportunity was.  Now, that was proposed to be taken           
 over by the Department of Transportation.  He wondered if it would            
 make more sense to use the Department of Transportation's personnel           
 to do an inspection at the scales.                                            
 Number 2271                                                                   
 SERGEANT BROWN replied the weigh station was a good place to                  
 contact the vehicles.  However, the majority of the serious                   
 violations were not detected at the weigh stations because there              
 was a considerable amount of commercial traffic that did cross the            
 scales.  The purpose of the program was to be a random road side              
 inspection.  Thus, the troopers would go to construction sites, for           
 example, to inspect vehicles.  In addition, when the troopers did             
 work the scales, they averaged one and one-half violations per                
 commercial vehicle.  Away from the weigh station, the violations              
 jumped to four to six depending on the area.  In the last three               
 years, the Alaska State Troopers had conducted nearly 6,000                   
 inspections statewide, of which, 26,000 violations had been                   
 written.  "Therefore, we do not detect the more serious equipment             
 at the weigh station.  It's more of a random sampling and                     
 CHAIR JAMES asked Sergeant Brown if he had anything more to add to            
 his testimony?                                                                
 Number 2332                                                                   
 SERGEANT BROWN referred the committee members to page 2, line 7,              
 and suggested eliminating the "(2)" in the statute referenced.  It            
 was too restrictive for the application of commercial vehicles.               
 The troopers wanted to adopt all of AS 28.05.011.  "My                        
 recommendation is that the (2) be deleted and just leave the Alaska           
 Statute as whole."                                                            
 Number 2379                                                                   
 CHAIR JAMES asked if the committee members were willing to accept             
 the recommendations of Sergeant Brown?  Was somebody willing to               
 make a conceptual amendment?                                                  
 Number 2390                                                                   
 REPRESENTATIVE VEZEY asked that the bill be held over until the               
 next committee hearing.                                                       
 CHAIR JAMES replied we would hold the bill until Thursday, March              
 13, 1997 to come up with a committee substitute.                              
 HB 124 - PERA: LOCAL EXEMPTION/NONNEGOTIABLE ITEMS                          
 The next order of business to come before the House State Affairs             
 Standing Committee was HB 124, "An Act relating to items not                  
 subject to collective bargaining and to application of the Public             
 Employment Relations Act to municipalities and other political                
 CHAIR JAMES called on Representative Al Vezey, sponsor of HB 124,             
 to present the bill.                                                          
 Number 2422                                                                   
 REPRESENTATIVE VEZEY explained HB 124 did two things.  First, it              
 added to existing state statute a list of the items that were not             
 subject to negotiations during the collective bargaining process              
 under the Public Employees Relations Act (PERA).  The items were              
 subject to state privatizing or contracting out for services.                 
 Second, it allowed for the political subdivision of the state to              
 get into PERA, but once in, it did not allow for it to get out.  "I           
 think that is an affront to the democratic process.  This bill                
 merely clarifies that through the democratic process, political               
 subdivisions can by vote decide to be in PERA or they can decide to           
 be out of PERA."  There were hundreds of methods of employee                  
 management and relations, and PERA was only one of those.  The bill           
 mandated to a few municipalities, a distinct minority in the state,           
 that they had to stay under PERA when other communities that were             
 not subject to PERA had more flexibility in regards to their                  
 management of their employee relations.                                       
 TAPE 97-24, SIDE B                                                            
 Number 0006                                                                   
 ED FLANAGAN, Deputy Commissioner, Office of the Commissioner                  
 Department of Labor, was the first person to testify in Juneau.               
 The Public Employees Relations Act was in Title 23, the Department            
 of Labor statute.  It was administered for the state by the Alaska            
 Labor Relations Agency.  The department was opposed to the bill               
 because it potentially denied the right of collective bargaining              
 currently covered under the act.  It had been portrayed as leveling           
 the playing field.  The department, however, believed that it "blew           
 up and obliterated the playing field," because employees that were            
 currently organized in unions would potentially loose that right.             
 The method of choice for municipalities that opted out of PERA or             
 that did not recognize bargaining was no labor relations                      
 MR. FLANAGAN further stated that the issue of local control was               
 adequately addressed in the statute which provided for legislative            
 approval for money.  The department also believed that the                    
 subcontracting provision would have a chilling effect on meaningful           
 negotiations of any public employer.  The law worked as it stood              
 now.  And, municipalities going in and out of PERA would create               
 mayhem and disturb a rather orderly system.                                   
 Number 0140                                                                   
 REPRESENTATIVE DYSON asked Mr. Flanagan if the contracting out was            
 negotiated under present law?                                                 
 Number 0156                                                                   
 MR. FLANAGAN replied it was provided for in the collective                    
 bargaining agreement.  There were agreements that were silent to              
 subcontracting.  Most, however, required a feasibility study and a            
 cost effectiveness study to show a savings before it could be done.           
 Furthermore, there was only a requirement to bargain at the table,            
 not a requirement to agree to any particular term or even to                  
 include that language.  It was part of the whole mix of issue that            
 were negotiated.                                                              
 Number 0194                                                                   
 REPRESENTATIVE DYSON stated that a political subdivision could find           
 itself in the position of balancing its best delivery of service              
 for the public and taking into account its responsibility of the              
 present employees under the contract.  From a public policy                   
 perspective, he asked Mr. Flanagan, what restrictions should be put           
 on a political subdivision when it was trying to find the best way            
 to deliver services to the public?                                            
 Number 0226                                                                   
 MR. FLANAGAN replied it honored what ever commitments that it had             
 made in the form of a contractual relationship with the employees             
 in a collective bargaining agreement.  If there was no language,              
 then it was whatever the public or the legislative body felt was              
 fair treatment.                                                               
 Number 0242                                                                   
 REPRESENTATIVE DYSON agreed that we needed to stick by our                    
 commitments.  He asked Mr. Flanagan if a political subdivision in             
 the state was absolutely free to contract out for the next cycle of           
 services that were formally done by public employees under a labor            
 Number 0264                                                                   
 MR. FLANAGAN replied that would depend on the outcome of the                  
 negotiations for the new contract.                                            
 Number 0284                                                                   
 REPRESENTATIVE DYSON wondered if, at the end of a contractual                 
 period, under present state law, there was an obligation to do any            
 negotiating.  If a political subdivision decided that it wanted to            
 eliminate doing this with public employees and wanted to contract             
 it out, could it not just announce that decision, and not have to             
 begin a new contract?                                                         
 Number 0309                                                                   
 MR. FLANAGAN replied not until a new contract was negotiated.  In             
 most contracts, there was a duty to bargain for a successor                   
 agreement, or a lack there of.  There was a transition period that            
 would have to be undertaken.  It would depend on the existing                 
 contractual language in regards to its own expiration.                        
 Number 0328                                                                   
 CHAIR JAMES stated that she generally supported people forming a              
 union to negotiate the way that they were treated in the work                 
 place.  In the private sector, she also supported the ability to              
 negotiate wages and benefits.  In the public sector, however, she             
 found union negotiations troubling; because, generally the                    
 negotiations were done with the Administration or the authorized              
 employees and the workers, followed with the approval by the                  
 elected council and then the public, who ultimately were the                  
 employers.  "This is a government where all the government is a               
 people's government.  And, we're all participants."  Public                   
 employee unions was that it was set up to be conflictive and to not           
 run smoothly.  The reason for bargaining was to make things run               
 better; or, in other words, an agreement between those who work and           
 those who tell the people what to do.  In addition, the public was            
 on the non-union side rather than on the union side, nationally.              
 Trade union membership had declined and most of the union members             
 were public employees, nationally.  She also believed that a deal             
 made was a deal made, and that the rules should not change in the             
 middle of a game.  However, economics changed and many times the              
 unions were unbending, especially in small communities.  If one               
 agreed that the public ran the system, then why should they not               
 have the ability to say, "we don't want to do this anymore?"                  
 Number 0453                                                                   
 MR. FLANAGAN responded he was aware that some differentiated                  
 between public and private employees.  The department believed that           
 when it came to the basic issue of the right to organize, it did              
 not differentiate because, "a worker is a worker is a worker."  A             
 worker should have the basic right to join collectively for a                 
 collective voice and for strength in numbers to negotiate with his            
 or her employer.  Chair James was correct, nationally, the growth             
 had been greater in the public sector rather than the private                 
 sector in unionization.  The large majority of union members were             
 still in the private sector; however, at least two-thirds.  The               
 local electorate had its voice in the municipal or state election             
 that elected the representatives who exercised the statutory                  
 authority under PERA to approve or to reject the monetary terms of            
 an agreement.  It also elected, in most cases, the principle                  
 executive officer charged with negotiating the agreement.  The                
 general climate or tenor of the public sector labor relations in              
 the state was open to question as to how much discord there was out           
 there.  It was a fact throughout history that a strike, a                     
 protracted impasse, a mediation, or an arbitration decision                   
 received headline news.  An agreement that was negotiated                     
 relatively quickly and quietly and passed without controversy                 
 received no ink.  In addition, there were numerous examples of when           
 public employees threw their bargaining agent a half-step forward.            
 He cited the city of Fairbanks when the employees froze their                 
 agreement and deferred a raise for three to four years in 1986.               
 They system worked pretty well.  The Alaska Labor Relations Agency            
 had done a lot to try to encourage mediation rather than strikes.             
 Number 0654                                                                   
 CHAIR JAMES agreed that there were some that worked good and some             
 that did not work good.  She had seen both and she was familiar               
 with the trials in the Fairbanks area.  When the economy was down             
 and wages were stuck at a certain place, that was when it got even            
 more controversial because the people who were paying the bills for           
 the public employees were not making nearly as much so they didn't            
 want to pay anymore.  The city of North Pole opted not to                     
 participate in PERA and they got along real well.  "In fact, I                
 think they're very, very effective and a very good operation in the           
 city of North Pole."  She felt it would be pretty binding for                 
 smaller communities, however.  They could opt for PERA when a plant           
 was in town, for example, and when the plant moved out, what did              
 the communities do then?                                                      
 Number 0740                                                                   
 MR. FLANAGAN said there had been organizing attempts in North Pole            
 when things probably were not going so well.  "Nobody's saying all            
 employees should be in a union.  What we're saying is they should             
 have that right, should they choose, to petition for and then get             
 an election."  And, because North Pole opted out at that time, the            
 employees did not have that recourse.  It was a difference of                 
 philosophy.  It was unfortunate when a plant moved out of town, for           
 example, but it did not give any employer the right to unilaterally           
 say it was a problem and do away with a collective bargaining                 
 Number 0786                                                                   
 CHAIR JAMES asked Mr. Flanagan who should make the decision that              
 they had a right?  Was it an inherent, state statute, or public               
 right to make that decision?                                                  
 Number 0805                                                                   
 MR. FLANAGAN replied the legislature in 1972 found that the                   
 employees should have the right to make that decision.  A floor               
 amendment allowed for the "opt-out" exemption.  That was the                  
 determining factor.  State law still said that employees should               
 have the right to bargain.  However, in this situation employers              
 had the chance to opt out, of which, some have exercised that                 
 right.  The department believed that employees should have the                
 right to organize, and once it was granted it was meaningless if it           
 could be taken away.                                                          
 Number 0847                                                                   
 REPRESENTATIVE DYSON stated that the public could, once and for               
 all, do away with a right that they once held.  The public, once              
 they have entered into a public employee union agreement, could               
 never go back to where they were.                                             
 Number 0888                                                                   
 MR. FLANAGAN replied, "Yes."                                                  
 Number 0893                                                                   
 REPRESENTATIVE BERKOWITZ asked Mr. Flanagan if there was anything             
 that would prevent a re-negotiation in the middle of a contract?              
 Number 0910                                                                   
 MR. FLANAGAN replied there was nothing to prevent that.  The act              
 would be silent.  Most contracts allowed for - by mutual agreement            
 - for a revisiting or a reopening.  The example he cited earlier              
 from the city of Fairbanks was exactly that.  The contract was in             
 effect for three years with two annual raises which were deferred             
 for a number of years extending the contract and saving the                   
 employer a great deal of money.  Letter-of-agreements were common             
 in both state and political subdivision agreements for mid-term               
 amendments to the contract.                                                   
 Number 0953                                                                   
 REPRESENTATIVE BERKOWITZ asked Mr. Flanagan if Sec. 2 in the bill             
 would allow political subdivisions to treat their unions                      
 differently than private organizations?                                       
 Number 0964                                                                   
 MR. FLANAGAN replied, "Yes."  A private sector employer was always            
 covered by the National Labor Relations Act; and, therefore,                  
 subject to organizing under the act by their employees.  Employers            
 became non-union because the employees at some point decided to de-           
 certify the union.  Private sector employers did not come in and              
 out of coverage under the National Labor Relations Act, unless                
 there was Congressional action to amend the statute.                          
 Number 1010                                                                   
 CHAIR JAMES explained her political philosophy was that the people            
 had the power while Mr. Flanagan said in this case that they did              
 not have the power.  Therefore, "If we say once you're in you can             
 never get out you're denying future people from making that                   
 decision or changing that decision."  She struggled with that                 
 because it did not fit the democratic process.  It seemed that the            
 members of a bargaining unit had more rights than those who were              
 not a member creating an uneven playing field.  Similarly, the                
 Twentieth Alaska State Legislature could not bind future                      
 Number 1116                                                                   
 MR. FLANAGAN replied the public that would potentially revoke this            
 right enjoyed the same rights in their work situation in most                 
 private work places.  Therefore, "We have the will of the majority            
 with the protection of the minority in this country.  And, if you             
 believe that collective bargaining is a basic right of workers, I             
 guess, where we depart is making a differentiation between public             
 and private workers."  The public had a voice or we would not be              
 here today.  "You folks may in fact exercise that and change it.              
 We hope you don't, but we'll see how it turns out."                           
 Number 1165                                                                   
 REPRESENTATIVE VEZEY explained the cities of Bethel, Kotzebue and             
 Haines were in court over the subject of their coverage under PERA.           
 He asked Mr. Flanagan if he knew the outcome of those court cases?            
 Number 1192                                                                   
 MR. FLANAGAN replied there was closure with the city of Kotzebue              
 with the superior court decision, therefore, its option to not be             
 covered under PERA was effective.  The city of Haines and their               
 option to not be covered under PERA was upheld by the Alaska Labor            
 Relations Agency.  There was a remand to the agency and it was                
 found that the city had effectively exercised its option.  He was             
 not sure of the status of the city of Bethel.                                 
 Number 1251                                                                   
 REPRESENTATIVE VEZEY explained his office had called the city of              
 Bethel and they were still trying to find somebody that knew                  
 something about it.                                                           
 MR. FLANAGAN stated it sounded like they did not have an agreement,           
 if it did not know if it was union or not.                                    
 Number 1263                                                                   
 REPRESENTATIVE IVAN wondered if once a community decided to                   
 unionize, if it was forever.                                                  
 CHAIR JAMES replied that currently was the way.  The bill would               
 allow for municipalities or areas to opt out again.                           
 Number 1318                                                                   
 JOHN CYR, President, National Education Association (NEA) - Alaska,           
 was the next person to testify in Juneau.  The NEA-Alaska was                 
 opposed to HB 124.  It found both sections onerous.  The first                
 section that allowed for subcontracting was a bad idea for                    
 educational purposes.  The law did not just deal with                         
 municipalities and state workers, it also dealt with school                   
 districts.  He explained for 20 years school districts were under             
 Title 14 which did not allow school districts finality in                     
 bargaining.  School employees did not have the right to binding               
 arbitration nor did they have the right to strike.  As a result,              
 the NEA-Alaska spent 20 years talking to members of the legislature           
 on how to resolve the problem.  It was the will of the members that           
 school districts have binding arbitration to settle labor disputes            
 with their employees.  It was obvious during the discussions that             
 school districts were not interested in binding arbitration because           
 they did not want to put the final decision in the hands of a third           
 party arbitrator, who could be from out of state or not in the                
 community.  Therefore, school districts were put under PERA.  The             
 NEA-Alaska did not want that, but through the negotiation process             
 it became obvious that it would be the only route to finality.  It            
 gave the districts access to the labor relations agency and a                 
 playing field that was understood.  Last year, the process was                
 tweaked in HB 465.  It made the initial proposal for the district             
 and the association open for public review forcing the school                 
 district to seek input on its proposals from the public.  The NEA-            
 Alaska believed that to be taken out of PERA removed the public and           
 its oversight in school district negotiations.  Right now, there              
 were 23 contracts being negotiated around the state.  "And, you               
 know they will be settled thoroughly without a whole lot of                   
 MR. CYR further stated that the NEA-Alaska believed subcontracting            
 was a bad idea, especially for schools, because it led to schools-            
 for-profit.  He cited the lunch program where the corporate dollar            
 meant more than nutrition.  He was concerned that health, safety              
 and the best teaching practices would be less important than                  
 whether or not a corporation made money.  In addition,                        
 subcontracting removed the parents from control.  The parents,                
 right now, were ultimately in control of school districts through             
 the school board and through the negotiation process.  "When you              
 subcontract then the corporate entity is in control of those --               
 that section of your work force, not the parents, not the                     
 community, but the corporation."                                              
 MR. CYR further said there were a lot of unintended consequences              
 that ran through the bill for school districts.  He explained                 
 wages, benefits, working conditions, for example, were bargained              
 for and a part of every contract; and rightfully so.  He cited the            
 inclusion of parents and teachers to hire, teacher mentoring to               
 ensure quality and professional growth, school committee to address           
 gang violence and drugs, student and parental input in evaluations,           
 student performance bench marks, exit criteria for seniors, and               
 language for the inclusion of special education children in regular           
 classrooms were the issue being discussed in Anchorage.  And, as a            
 result of the bill would be taken out of the public control.  In              
 addition, national research indicated that every state that was not           
 unionized, student performance was lower; it dropped by up to 10              
 points.  It came to the ability of districts and states to keep and           
 retain quality people; it was as simple as that.                              
 MR. CYR further said, historically, employees had the right to                
 bargain and to meet with their employers to talk about their work             
 conditions.  That was the very soul of what America was about.                
 "It's who we are.  It's what we do."  Therefore, to deny that right           
 to any group - public or private - was wrong.                                 
 Number 1894                                                                   
 REPRESENTATIVE DYSON asked Mr. Cyr if it would be a leap of logic             
 to infer that the administration was resisting the list of issues             
 he mentioned in the Anchorage contract?                                       
 Number 1927                                                                   
 MR. CYR replied he would not pretend to be a spokesperson for the             
 administration.  But,  "Yes."  The district was not interested in             
 those proposals.                                                              
 Number 1955                                                                   
 REPRESENTATIVE DYSON asked Mr. Cyr if he could infer that                     
 contracting out would have a negative impact, in general, on the              
 quality of education?                                                         
 Number 1984                                                                   
 MR. CYR replied there was research that pointed to the fact that              
 test scores had not gone up but had gone down, therefore, education           
 suffered over the long-range.                                                 
 Number 2012                                                                   
 REPRESENTATIVE DYSON asked Mr. Cyr if he would hold the same                  
 position on activities that were outside of the school building,              
 such as, maintenance?                                                         
 Number 2034                                                                   
 MR. CYR replied, if it was believed that one of the functions of              
 unionization was to make sure that the members of the union were              
 quality employees, then it gave the public and the consumer a                 
 legitimate measure of protection that was not built in the system,            
 Number 2132                                                                   
 REPRESENTATIVE DYSON asked Mr. Cyr if the association would resist            
 any contracting out even for school district activities that were             
 not in the school building?                                                   
 Number 2146                                                                   
 MR. CYR said he was not sure he understood the question.  Bus                 
 drivers, for example, were subcontracted and there had been some              
 problems.  There was very little quality control over who was                 
 Number 2170                                                                   
 REPRESENTATIVE DYSON asked Mr. Cyr, if the association would resist           
 any contracting out, even for school district services that did not           
 have direct contact with the students, such as, maintenance of the            
 Number 2198                                                                   
 MR. CYR replied buses were subcontracted in most districts.  But,             
 "Yes," the association believed that every employee in a school               
 district moved the agenda of the district and worked for the kids             
 whether they were in a warehouse or a teacher in front of the                 
 classroom.  They were all working for the children.                           
 Number 2236                                                                   
 CHAIR JAMES commented on the bargaining in Anchorage.  In addition,           
 the public was not happy with government, unlike Representative               
 Elton who thought it was wonderful.  Yet, they did not vote or                
 participate because they felt it would not do any good.  They were            
 just generally dissatisfied.  The NEA-Alaska was taking a different           
 approach now.  She was encouraged and happy because it was                    
 listening to the public.                                                      
 Number 2355                                                                   
 CHAIR JAMES further stated speech teachers were contracted out.               
 Contracting out did have its merits, especially when it was not a             
 full-time job for somebody.                                                   
 Number 2398                                                                   
 MR. CYR stated that in the past the association had not told the              
 public what it was bargaining.  It was trying now to be responsive            
 to the public comments.                                                       
 MR. CYR further stated that speech teachers were not subcontracted.           
 TAPE 97-25, SIDE A                                                            
 Number 0001                                                                   
 MR. CYR stated that mental health positions were contracted out               
 because school districts did not have the resources to provide the            
 in-depth psychological work that some kids needed.                            
 Number 0057                                                                   
 CHAIR JAMES explained that she had friends who went from school               
 district to school district testing students who were contracted              
 MR. CYR replied she was correct.                                              
 Number 0091                                                                   
 REPRESENTATIVE ELTON pointed out that in some cases he agreed with            
 Mr. Dillon who saw a role for government and who saw a role for               
 government employees.  "I would just like to say that that too                
 often I think we `demonize' government employees whether they're              
 operating under a collective bargaining agreement or not."                    
 REPRESENTATIVE ELTON further stated that the committee had not                
 heard from one school district, municipality, borough or anyone on            
 this issue today saying that there was a problem that needed to be            
 addressed by the adoption of this bill.  "I think that many people            
 out there probably think that we're trying to address a problem               
 that they don't have and if they have it they aren't telling us               
 about it."                                                                    
 Number 0184                                                                   
 CHAIR JAMES stated that the prime responsibility of government was            
 public safety.  And, the committee did talk about public safety a             
 little while ago with a different connotation.  She agreed with               
 Representative Elton, however, she thought that the room would be             
 full of people today since this was a controversial issue.                    
 Number 0223                                                                   
 MR. CYR stated that Anchorage was out of PERA so it did not have to           
 bargain with its employees; yet, it did bargain because it found it           
 to be the most expedient way.  He also cited the city of Palmer and           
 probably Fairbanks were out of PERA and they also bargained with              
 their employees.  "It is the most expedient way to negotiate                  
 working conditions with employees.  It is the standard of the                 
 industry for that very reason.  The state in its declaration of               
 policy stated that "the legislature finds that joint decision-                
 making is the modern way of administering government."                        
 Number 0318                                                                   
 REPRESENTATIVE VEZEY stated that most of the citizens of the state            
 of Alaska did not live in a community that was covered by PERA.               
 The municipality of Anchorage, the City and Borough of Juneau, the            
 Mat-Su Borough, and the city of Kodiak, for example, opted out of             
 PERA.  There were approximately 18 communities in the state and               
 some other political subdivisions that were covered by PERA.  The             
 bill was saying; therefore, to a distinct minority of Alaskans,               
 that the way they governed themselves was not equal to the way                
 others governed themselves.                                                   
 Number 0388                                                                   
 MR. CYR replied that all 54 school districts were covered by PERA.            
 Every school entity in the state fell under PERA.  Therefore, the             
 bill would certainly affect the school districts and thousands of             
 CHAIR JAMES asked the committee members if they were comfortable              
 moving the bill out of the committee today?                                   
 Number 0455                                                                   
 REPRESENTATIVE ELTON moved to table HB 124.                                   
 CHAIR JAMES called for a roll call vote.  Representatives James,              
 Dyson, Hodgins, Ivan and Vezey voted against the motion.                      
 Representatives Berkowitz and Elton voted in favor of the motion.             
 House Bill 124 was not tabled.                                                
 Number 0515                                                                   
 REPRESENTATIVE HODGINS moved that HB 124 move from the committee              
 with individual recommendations and the attached fiscal note(s).              
 Number 0524                                                                   
 REPRESENTATIVE ELTON objected.                                                
 Number 0538                                                                   
 REPRESENTATIVE BERKOWITZ stated that Representative Elton made a              
 compelling point.  The bill was trying to fix a problem that no one           
 had acknowledge existed.  He had not heard from a single school               
 district or political subdivision that said it wanted to opt out.             
 "We can go around fixing problems that don't exist all day long.              
 I just don't think that we ought to be sticking our nose, much less           
 the camel's nose, under that tent."                                           
 CHAIR JAMES called for a roll call vote.  Representative James,               
 Dyson, Hodgins, Ivan and Vezey voted in favor of the motion.                  
 Representatives Berkowitz and Elton voted against the motion.                 
 House Bill 124 was so moved from the House State Affairs Standing             
 HJR 25 - CONST. AM: PERM. FUND INCOME & DIVIDEND                            
 The next order of business to come before the House State Affairs             
 Standing Committee was HJR 25, Proposing amendments to the                    
 Constitution of the State of Alaska to guarantee the permanent fund           
 dividend, to provide for inflation-proofing, and to require a vote            
 of the people before spending undistributed income from the                   
 earnings reserve of the permanent fund; and relating to the                   
 permanent fund.                                                               
 CHAIR JAMES called for a brief at east at 9:46 a.m.                           
 CHAIR JAMES called the House State Affairs Standing Committee back            
 to order at 9:48 a.m.                                                         
 CHAIR JAMES called on Representative Alan Austerman, sponsor of HJR
 25, to present the resolution.                                                
 Number 0680                                                                   
 REPRESENTATIVE ALAN AUSTERMAN, Alaska State Legislature, explained            
 that over the last two and one-half years, since he had been a                
 legislator, the first thing out of people's mouth was to leave the            
 dividend alone when discussing a balanced budget.  When he tried to           
 explain the parameters of the permanent fund dividend program and             
 how it was set up, the people had a hard time understanding because           
 their dividend was part of the Permanent Fund.  "When you mention             
 dividend all they think about is Permanent Fund.  And, they don't             
 associate the difference in how the dividend program is set up                
 within the Permanent Fund."  Therefore, his frustration, as well as           
 discussions with Senator Lyda Green, author of a similar senate               
 bill, and her staff, he volunteered to introduce a similar bill in            
 the House.                                                                    
 REPRESENTATIVE AUSTERMAN explained that HJR 25 proposed amending              
 the state constitution to guarantee the dividend checks to the                
 people of the state.  The interest earnings were used three ways:             
 For the paying of the dividend, for inflation proofing and for the            
 undistributed interest earnings.  When he talked to people about              
 the original intend of the Permanent Fund, to help balance the                
 budget as oil revenues declined; they said, "Don't touch my                   
 dividend program."  It was hard to have a good conversation with              
 the people because they assumed one was attacking the dividend                
 REPRESENTATIVE AUSTERMAN explained that HJR 25 said inflation                 
 proofing and the dividend program could not be touched by the                 
 legislature without the vote of the people.  Under current statute,           
 the dividend program, inflation proofing and the spending of the              
 undistributed interest earnings were set so that legislators could            
 eliminate the program.  Most people thought that they were already            
 protected by a vote of the people.  In conclusion, he introduced              
 the resolution to give the people a comfort level and to give them            
 a say in whether the legislators could touch or spend their                   
 dividend, the inflation proofing or the undistributed interest                
 earnings.  He explained he would introduce a committee substitute             
 to leave the undistributed interest earnings in statute, if it was            
 needed to balance the budget at some point in time, for example.              
 Number 1047                                                                   
 CHAIR JAMES asked Representative Austerman if the permanent fund              
 dividend program was first and then inflation-proofing or did he              
 turn it around?                                                               
 Number 1058                                                                   
 REPRESENTATIVE AUSTERMAN replied it was left exactly the way it was           
 in statute now.  The dividend program and how the funds were used             
 were number one.                                                              
 Number 1065                                                                   
 REPRESENTATIVE HODGINS asked to be excused from the meeting.  He              
 was chairman of another committee that was starting soon.                     
 Number 1078                                                                   
 REPRESENTATIVE VEZEY said he did not hear more about a subject when           
 he was campaigning than the Permanent Fund.  Therefore, he moved              
 that HJR 25 move from the committee.                                          
 CHAIR JAMES agreed with Representative Vezey, but more discussion             
 was needed.  She assumed he was being factitious.                             
 Number 1105                                                                   
 REPRESENTATIVE DYSON said her assumption was unwarranted.                     
 CHAIR JAMES said the resolution did have two more committees of               
 referral.  It could be moved out of the committee, if that was the            
 will of the members.                                                          
 Number 1115                                                                   
 REPRESENTATIVE VEZEY moved that HJR 25 move from the committee with           
 individual recommendations and the attached fiscal note(s).                   
 Number 1118                                                                   
 REPRESENTATIVE BERKOWITZ objected.  He was concerned that the                 
 resolution would jeopardize the Permanent Fund, therefore, he would           
 like to hear more about it.  "If we vote on it now, we're basically           
 pushing $20 billion out the door without listening to it."                    
 CHAIR JAMES said she and Representative Berkowitz would hear it               
 again in the House Judiciary Standing Committee.                              
 REPRESENTATIVE BERKOWITZ replied he was just concerned about                  
 everyone's political self-interest.  "I wouldn't want them to have            
 to go back to their districts and have to hear how they missed the            
 opportunity on protecting the Permanent Fund."                                
 Number 1173                                                                   
 REPRESENTATIVE AUSTERMAN said he had anticipated more discussion in           
 this committee.  He would prefer that the committee members look at           
 the committee substitute before moving the resolution out of the              
 CHAIR JAMES stated there was not enough time today to move the bill           
 out.  It would be scheduled again for Thursday, March 13, 1997.               
 Number 1219                                                                   
 REPRESENTATIVE VEZEY noted, for the record, that Representative               
 Austerman held his own bill up.                                               
 Number 1231                                                                   
 JIM KELLY, Research and Liaison Officer, Alaska Permanent Fund                
 Corporation, Department of Revenue, was the first person to testify           
 in Juneau.  Any decisions on how to use the Permanent Fund income             
 were rightly placed with the legislature and the executive branch,            
 and not with the Board of Trustees.  However, there was a                     
 connection between distribution policy and investment policy which            
 had evolved over the years.  The Permanent Fund had been blessed              
 with some very favorable financial markets for the last decade or             
 so, and as it moved higher and higher into equities it had                    
 experienced good volatilities.  It had not experienced, however,              
 when equity markets fell dramatically.  Therefore, to put a                   
 distribution policy into the constitution and to expect it to work            
 for the next 20 years was not correct.  The world would be a                  
 different place in the next 20 years and the investment markets               
 would perform differently.  Therefore, the board would like the               
 opportunity to look at the options and the alternatives available,            
 and even some distribution policies that existed, so that a change            
 would not have any unintended negative consequences.  Many of these           
 issues were discussed in the letter from Michael J. O'Leary, Jr.,             
 Executive Vice President, Callan Associates, dated March 10, 1997.            
 There was also a letter addressing the concerns of the tax-exempt             
 status of the Permanent Fund and the possible consequences of the             
 resolution.  The corporation wanted to help the legislature                   
 calculated the income available for distribution and still protect            
 and grow the Permanent Fund principle.  "You all hear about the               
 dividend end of it.  We spend our time looking at the investment of           
 the principle part."                                                          
 Number 1403                                                                   
 CHAIR JAMES stated that she had the feeling that inflation-proofing           
 should be done first before the dividend.                                     
 Number 1410                                                                   
 MR. KELLY replied the Board of Trustees had supported that in the             
 past and would probably view it favorably in the future.                      
 Number 1416                                                                   
 CHAIR JAMES said that the earnings had been put back in a number of           
 times and that the legislature had made deposits over and above its           
 requirement creating the argument of pre-inflation-proofing.  She             
 asked Mr. Kelly if he agreed with the argument?                               
 Number 1434                                                                   
 MR. KELLY replied he would not agree with that according to the               
 reading of the statute.  The statute required inflation-proofing              
 every year and it spelled out how it would happen.                            
 Number 1447                                                                   
 CHAIR JAMES explained there were projections in 1993 that by the              
 time dividends and inflation-proofing were paid there would not be            
 enough for inflation-proofing in the long-haul.  She did not quite            
 buy that argument at the time, but there was the potential for that           
 under the current program.                                                    
 MR. KELLY replied that the board's consultant said over a rolling             
 five year period, 21 percent of time there was no real income, zero           
 income.  It was not only possible that there would not be money for           
 inflation-proofing, but there might not be money for dividends as             
 well because the distribution policy was based on realized income.            
 There were other ways to do it to minimize the impact, of which,              
 the Board of Trustees continued to look at.  He suggested that the            
 legislature look at it as well.                                               
 Number 1509                                                                   
 CHAIR JAMES explained she was scared of the stock market because              
 she was born one month after the crash in 1929.  Therefore, she was           
 very concerned about a crash, despite protections and improved                
 technology.  She was pleased with the Board of Trustees and its               
 decisions, however.                                                           
 Number 1587                                                                   
 CHAIR JAMES announced the resolution would be held over to                    
 Thursday, March 13, 1997.                                                     
 Number 1596                                                                   
 CHAIR JAMES adjourned the House State Affairs Standing Committee              
 meeting at 10:06 a.m.                                                         

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