02/19/2002 08:05 AM House STA
| Audio | Topic |
|---|
+ teleconferenced
= bill was previously heard/scheduled
ALASKA STATE LEGISLATURE
HOUSE STATE AFFAIRS STANDING COMMITTEE
February 19, 2002
8:05 a.m.
MEMBERS PRESENT
Representative John Coghill, Chair
Representative Jeannette James
Representative Hugh Fate
Representative Gary Stevens
Representative Peggy Wilson
Representative Harry Crawford
Representative Joe Hayes
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
HOUSE BILL NO. 413
"An Act relating to the imposition of an income tax on
individuals, estates, and trusts; relating to the administration
of revenue laws; relating to the Alaska Net Income Tax Act; and
providing for an effective date."
- HEARD AND HELD
HOUSE JOINT RESOLUTION NO. 31
Relating to requesting the United States Congress to propose an
amendment to the Constitution of the United States that would
address emergency appointments to and powers of the United
States Senate.
- MOVED CSHJR 31(MLV) OUT OF COMMITTEE
HOUSE BILL NO. 248
"An Act relating to retirement contributions and benefits under
the public employees' retirement system of certain juvenile
detention employees and juvenile correctional institution
employees."
- HEARD AND HELD
HOUSE BILL NO. 331
"An Act relating to appointment of persons to positions that
require confirmation by the legislature; and providing for an
effective date."
- BILL HEARING POSTPONED TO 2/28/02
PREVIOUS ACTION
BILL: HB 413
SHORT TITLE:INCOME TAX: INDIVIDUAL/TRUST/ESTATE/CORP
SPONSOR(S): RLS BY REQUEST OF THE GOVERNOR
Jrn-Date Jrn-Page Action
02/13/02 2236 (H) READ THE FIRST TIME -
REFERRALS
02/13/02 2236 (H) STA, FIN
02/13/02 2236 (H) FN1: (REV)
02/13/02 2236 (H) GOVERNOR'S TRANSMITTAL LETTER
02/13/02 2236 (H) REFERRED TO STATE AFFAIRS
02/19/02 (H) STA AT 8:00 AM CAPITOL 102
BILL: HJR 31
SHORT TITLE:POWERS OF US SEN/EMERGENCY APPOINTMENTS
SPONSOR(S): REPRESENTATIVE(S)OGAN
Jrn-Date Jrn-Page Action
01/16/02 1968 (H) READ THE FIRST TIME -
REFERRALS
01/16/02 1968 (H) MLV, STA
01/29/02 (H) MLV AT 3:00 PM CAPITOL 124
01/29/02 (H) Moved CSHJR 31(MLV) Out of
Committee
MINUTE(MLV)
02/01/02 2112 (H) MLV RPT CS(MLV) NT 4DP 1NR
1AM
02/01/02 2113 (H) DP: KOTT, CISSNA, MURKOWSKI,
CHENAULT;
02/01/02 2113 (H) NR: HAYES; AM: GREEN
02/01/02 2113 (H) FN1: ZERO(H.MLV)
02/12/02 (H) STA AT 8:00 AM BUTROVICH 205
02/12/02 (H) <Bill Postponed to 2/19/02> -
- Location Change --
02/19/02 2303 (H) STA RPT CS(MLV) NT 6DP 1NR
02/19/02 2304 (H) DP: WILSON, STEVENS, JAMES,
FATE,
02/19/02 2304 (H) HAYES, COGHILL; NR: CRAWFORD
02/19/02 2304 (H) FN1: ZERO(H.MLV)
02/19/02 2304 (H) REFERRED TO RULES
02/19/02 (H) STA AT 8:00 AM CAPITOL 102
BILL: HB 248
SHORT TITLE:PERS BENEFITS FOR JUV INSTIT EMPLOYEES
SPONSOR(S): REPRESENTATIVE(S)WILLIAMS
Jrn-Date Jrn-Page Action
04/20/01 1096 (H) READ THE FIRST TIME -
REFERRALS
04/20/01 1096 (H) STA, FIN
04/20/01 1096 (H) REFERRED TO STATE AFFAIRS
02/12/02 (H) STA AT 8:00 AM BUTROVICH 205
02/12/02 (H) <Bill Postponed to 2/19/02> -
- Location Change --
02/19/02 (H) STA AT 8:00 AM CAPITOL 102
WITNESS REGISTER
LARRY PERSILY, Deputy Commissioner
Office of the Commissioner
Department of Revenue
PO Box 110400
Juneau, Alaska 99811-0400
POSITION STATEMENT: Presented HB 413.
CHUCK HARLAMERT, Juneau Section Chief
Tax Division
Department of Revenue
PO Box 110420
Juneau, Alaska 99811-0420
POSITION STATEMENT: Answered questions on HB 413.
SCOTT GOLDSMITH, Professor of Economics
University of Alaska Anchorage
3211 Providence Drive
Anchorage, Alaska 99508
POSITION STATEMENT: Testified on HB 413.
BOB STILES, President
DRven Corporation
711 H Street, Number 600
Anchorage, Alaska 99501
POSITION STATEMENT: Testified in favor of reenacting a personal
income tax as outlined in HB 413.
ERIC BRITTEN
Anchorage Chamber of Commerce
1717 Tidewater Road
Anchorage, Alaska 99501
POSITION STATEMENT: Testified on HB 413, noting that the
Anchorage Chamber of Commerce has passed a resolution suggesting
that an appropriate level of state services be established prior
to instituting new revenue sources.
REPRESENTATIVE SCOTT OGAN
Alaska State Legislature
Capitol Building, Room 108
Juneau, Alaska 99801
POSITION STATEMENT: Testified as the sponsor of HJR 31.
MIKE TIBBLES, Staff
to Representative William K. "Bill" Williams
Alaska State Legislature
Capitol Building, Room 515
Juneau, Alaska 99801
POSITION STATEMENT: Presented HB 248 on behalf of the sponsor.
VALERIE MILLER, Juvenile Probation Officer
204 Mission Road, Room 118
Kodiak, Alaska 99615
POSITION STATEMENT: During her testimony in support of HB 248,
compared work as a youth counselor to that of a juvenile
probation officer.
ARTHUR KONEFAL, Youth Counselor
Fairbanks Youth Facility (FYF)
975 Willow Grouse Road
Fairbanks, Alaska 99712
POSITION STATEMENT: During his testimony in support of HB 248,
described his experience as a youth counselor.
ANDY LEE
125 South Franklin Street
Juneau, Alaska 99801
POSITION STATEMENT: During the hearing on HB 248, discussed
retention of youth counselors and answered questions.
JANET PARKER, Retirement & Benefits Manager
Division of Retirement and Benefits
Department of Administration
PO Box 110203
Juneau, Alaska 99811-0203
POSITION STATEMENT: During the hearing on HB 248, answered
questions on behalf of the division.
ROBERT BUTTCANE, Administrative Juvenile Probation Officer
Division of Juvenile Justice
Department of Health & Social Services
PO Box 110635
Juneau, Alaska 99811-0635
POSITION STATEMENT: Answered questions during the hearing on HB
248.
ACTION NARRATIVE
TAPE 02-12, SIDE A
Number 0001
CHAIR JOHN COGHILL called the House State Affairs Standing
Committee meeting to order at 8:05 a.m. Representatives Hayes,
Crawford, Wilson, Fate, and Coghill were present at the call to
order. Representatives Stevens and James arrived as the meeting
was in progress.
HB 413-INCOME TAX: INDIVIDUAL/TRUST/ESTATE/CORP
[Contains discussion of SSHB 199 and HB 10]
CHAIR COGHILL announced that the first order of business would
be HOUSE BILL NO. 413, "An Act relating to the imposition of an
income tax on individuals, estates, and trusts; relating to the
administration of revenue laws; relating to the Alaska Net
Income Tax Act; and providing for an effective date."
Number 0220
LARRY PERSILY, Deputy Commissioner, Office of the Commissioner,
Department of Revenue, explained that HB 413 uses as a tax base
[an individual's] federal tax liability, rather than gross or
taxable income. It assigns a flat tax of 20 percent. This
legislation allows Alaskans to take all credits allowed under
federal law - such as child care credits, business credits, and
so forth - before calculating their Alaska income tax. This is
a flat tax. Because it's a percentage of an individual's
federal tax liability, however, "it picks up the graduated
federal tax rates." The more one makes, therefore, the higher
percentage that individual pays to the state.
MR. PERSILY pointed out that HB 413 has a trigger designed to
prevent the [state] government from accumulating more cash than
it needs in the Constitutional Budget Reserve (CBR). If there
is new development in Alaska, increased tax revenues, or
spending reductions, and if the CBR grows to $2 billion, then
the effective tax rate would drop from 20 percent to 10 percent
for the next calendar year only. Then the CBR balance would be
reviewed again. If the CBR balance reaches $2.5 billion, the
tax rate would be 5 percent for the next calendar year.
MR. PERSILY pointed out that HB 413 also provides a $25 rebate
for electronic filing. He noted that there is a comparative
analysis with hypothetical tax returns under each proposal.
Number 0614
REPRESENTATIVE JAMES inquired as to the total amount [the state]
owes the CBR now.
MR. PERSILY answered that approximately $4.3 billion has been
borrowed from the CBR, although he noted that he may be off a
hundred million dollars one way or the other. He specified that
[HB 413] doesn't address that issue.
REPRESENTATIVE JAMES related her belief that either the CBR
should be eliminated and a new method of saving money should be
developed, or the CBR should be filled before "we stop."
CHAIR COGHILL highlighted that this is the only bill that
addresses [returning money to the CBR]. Therefore, a mechanism
of doing so may be worthy of consideration.
MR. PERSILY acknowledged that a trigger could be incorporated
into any of the income tax bills. That way, if the state is
more economically healthy, the tax rate could be lowered.
CHAIR COGHILL asked how [HB 413] taxes earned income on
residents versus nonresidents. He specified that he was
interested in what "part-time residents" have to [report] to the
state.
Number 0827
CHUCK HARLAMERT, Juneau Section Chief, Tax Division, Department
of Revenue, answered that in that regard, all three bills [HB
413, SSHB 199, and HB 10] are essentially the same. In almost
every individual income tax bill he was aware of, residents of
the state are taxed on their worldwide income, which is the same
as the federal tax liability. If a resident has a business
operation or income from another state and the income is taxable
in that state, then a credit is allowed based upon the taxes
paid to the other state. That provision is found in all the
[individual income tax] bills.
MR. HARLAMERT reported that nonresidents [in Alaska], by
contrast, report all their worldwide income to their state of
residency and claim a credit for taxes paid to Alaska. Under HB
413, a nonresident calculates his/her tax in Alaska by taking
the entire taxable income and then apportioning it to Alaska
based on the individual's business activity in Alaska.
Basically, HB 413 takes the income on lines 7-20 of the tax
return - total income - and applies the ratio of income
generated in Alaska to income generated everywhere, and then
multiples it times the tax base in order to determine Alaska's
tax. Essentially, a nonresident's tax would be calculated as if
he/she were a resident; the person would then apply a numerator
- the income earned in Alaska - over the denominator - the
income earned everywhere. Thus the amount of the tax paid to
Alaska is determined.
MR. HARLAMERT pointed out that HB 413 avoids including
modifications from total income. Items excluded from
determining that ratio are alimony, living expenses, and other
nonbusiness items that don't really reflect where individuals
made their money.
Number 1084
REPRESENTATIVE JAMES asked whether part-time residents' [income
for tax purposes] would be based on the time spent in Alaska.
MR. HARLAMERT answered that part-time residents would be treated
as nonresidents under [HB 413].
REPRESENTATIVE JAMES asked how [part-time residents] allocate
their personal exemptions and/or itemized deductions if part-
time residents and nonresidents are treated the same. The
nonresident's [tax] is based on the amount of money earned, she
said, while the part-time resident's [tax] is usually based on
the amount of time in the state.
MR. HARLAMERT clarified that the difference is only in the ratio
applied. He pointed out that this [discussion] is in regard to
the calculation of the fraction of the taxpayer's total income
assigned to Alaska. The modifications to income and itemized
deductions are all in the background. Although those are
allocated, those items aren't included in the allocation
formula. Therefore, whether someone pays mortgage interest in
his/her former residence state or Alaska doesn't matter because
it's allocated in the same way.
REPRESENTATIVE JAMES posed an example of an individual who moved
to Alaska in July and established residency after working
elsewhere for the first half of the year. This individual
didn't work until November or December, and therefore his/her
small amount of income wouldn't be representative of the time
they spent in Alaska in relation to the services being received.
MR. HARLAMERT agreed, but pointed out that [HB 413] is an income
tax bill. Income earned is taxed; it isn't a tax based on time
spent in the state. The purpose of the formula is to determine
how much of the person's income was earned in the state. Mr.
Harlamert also pointed out that the factor takes into account
differences in income. He cited as an example someone who moves
to Alaska and receives a raise; that increase in wages would be
in the numerator and denominator, and thus would increase the
factor. If someone moves to Alaska and doesn't take a job
immediately, however, that individual isn't earning income
subject to tax, and the factor would appropriately reflect that.
CHAIR COGHILL said that is the policy call the legislature will
make.
Number 1391
REPRESENTATIVE FATE inquired as to the rationale for using the
computations in HB 413 versus others that are available.
MR. PERSILY explained that the process is to tax only the income
earned in Alaska. Therefore, if half of an individual's income
is earned in Alaska, then that individual will pay the Alaska
tax on 50 percent of that individual's federal tax liability.
REPRESENTATIVE FATE related his understanding from Mr.
Harlamert's testimony that [HB 413] is based upon not just what
the individual is paying on the tax, but upon a ratio measuring
it against the income "of the average tax in the Lower 48."
MR. PERSILY said that isn't correct.
Number 1520
MR. HARLAMERT explained that the purpose of the ratio is to
determine how much of a taxpayer's total income for the year is
properly taxable by the state. "We cannot tax nonresidents or
part-year residents on a 100 percent of their worldwide income
because they didn't earn it here," he said. "We just don't have
the right to do that under the constitution." There has to be a
method of attributing to Alaska the appropriate portion of
whatever tax base is used. Therefore, the method used by all
the proposals before the committee is to take a ratio of the
income earned in Alaska over income earned everywhere. That
ratio is then applied to the tax base.
CHAIR COGHILL identified the difference, saying [HB 413]
utilizes a place on the federal tax form that provides for some
exemptions. He related his understanding that the formula [HB
413] uses is "to give the federal tax liability the best
flexibility in the state."
REPRESENTATIVE FATE asked if [the administration] believes this
is a fair tax for everyone and believes this tax provides a
little more favoritism to those who can't pay taxes. He again
asked for the rationale.
MR. PERSILY related his understanding that Representative Fate
wasn't questioning the computation of how much a nonresident
pays, but rather the proposal to tax on federal tax liability,
which is a graduated tax.
REPRESENTATIVE FATE restated his question, "Why this type of
computation? What's the advantage of this to you? Why has the
administration done this kind of computation rather than other
kind of computations?"
Number 1719
MR. PERSILY related the administration's belief that the federal
tax system is good in that the graduated rate of the federal tax
system has been accepted by most - that is, the more income one
has, the better position the individual is to pay a greater
portion in taxes because, in theory, that individual can enjoy
the benefits of society more and pay more than others who earn
less.
MR. PERSILY recognized that an individual with a high income
would view a graduated tax as unfair, but countered that in
fixing the state's fiscal problems, a tax is necessary.
Furthermore, Mr. Persily said it would be safe to assume some
form of permanent fund earnings would be used to help with the
state's fiscal problem, which would likely result in an across-
the-board reduction in dividends that some would argue is unfair
to those with low income or fixed income. Therefore, two
[arguments] of unfairness cancel each other.
Number 1865
REPRESENTATIVE JAMES remarked that she still wasn't clear on the
intent with a resident versus a nonresident. She related her
understanding of the public's general belief that those who come
to Alaska to work and take their money home ought to pay
something to help the state balance the budget. Representative
James posed a situation in which a resident would be expected to
pay tax on his/her worldwide income - or will the residents be
prorated if they're making money outside the state? She
recalled testimony regarding a credit for money earned in
another state on which there is a tax, which she said makes
sense. She related her understanding that there would only be
two types of individuals: a resident and a nonresident. There
would be no part-time resident.
MR. HARLAMERT replied yes.
REPRESENTATIVE JAMES expressed concern with that because of the
existence of the permanent fund dividend (PFD). She asked, if
someone moves to Alaska in January and files for residency,
whether that individual would pay a [state income] tax just like
all other residents.
MR. HARLAMERT replied yes. He specified that the income tax
doesn't follow the residency definition under the PFD. One can
become an Alaska resident by declaration, simply by moving here
and obtaining a driver's license. In the first full year of
residency, the individual will pay tax as a resident taxpayer.
In the first year, the individual will pay as a part-year
resident.
MR. PERSILY posed an example in which someone lives out of
state, works in Alaska's oil fields as a nonresident, and earns
no income in the other state. Such individuals would pay income
tax on 100 percent of their earnings because 100 percent of
their earnings were taken in Alaska. However, an individual who
fished in Alaska and earned $50,000 [in the summertime], and who
worked in Oregon in the off-season and earned $25,000, would pay
tax on half, because of the proportion [of wages earned in
Alaska].
Number 2139
REPRESENTATIVE WILSON asked on which line of the [IRS] Form 1040
this would begin.
MR. HARLAMERT answered that with HB 413, it starts with line 52.
If the taxpayer qualifies, federal credits would be deducted as
shown on lines 61A and 63 [of Form 1040].
REPRESENTATIVE HAYES asked whether the administration has
reviewed an education credit for areas that pay property taxes
for K-12 [education]. If not, Representative Hayes asked why
that wasn't reviewed as a state credit. He indicated he was
referring to something similar to HB 10.
MR. PERSILY responded, "I guess we looked at it and felt that as
a policy call, it would be better not to give a property tax
credit." He said one could argue that such a credit
discriminates against those who don't own a home because they
will end up paying the bulk of the taxes. Mr. Persily pointed
out that property taxes are deductible on the federal tax
return; thus a portion would be returned through a lower state
tax return, as opposed to a direct credit.
REPRESENTATIVE HAYES restated that he was curious whether any
consideration has been given to an education credit for those
who pay into the community for K-12 education. He acknowledged
that it is mostly property tax.
CHAIR COGHILL remarked that perhaps there should be an education
tax first, for which there is credit on the [state] income tax.
REPRESENTATIVE WILSON noted that in some municipalities, renters
pay a sales tax on what is paid in rent. She related her
understanding that such a provision wouldn't fit under HB 413
because it doesn't have anything to do with the individual's
earnings.
Number 2379
SCOTT GOLDSMITH, Professor of Economics, University of Alaska
Anchorage, testified via teleconference. Mr. Goldsmith began by
stating that if [the legislature] doesn't do something this
legislative session to deal with the fiscal gap, in all
likelihood the economy will fall into a recession. A $1-billion
bite out of an economy Alaska's size is too large to digest in
one year. Furthermore, the size of the fiscal gap is large
enough that a combination of tools will be required to address
it, including some sort of income tax, a broad-based sales tax,
and a reduction in the PFD. Consequently, the question becomes
when the [state] income tax would be instituted and what it
would look like. In comparing an income tax with a sales tax
and a dividend, there is much interest in the split between the
proportions that residents and nonresidents pay. In terms of
that criteria, an income tax looks more attractive than the
other two options.
MR. GOLDSMITH said based on some basic calculations, he'd
calculated that for every $1 collected from an income tax,
Alaska residents would pay about $.75 and someone else, a
nonresident or the federal government, would pay about $.25.
However, a reduction in the size of the PFD would result in
Alaskans' [paying] about $.84 per $1; the remainder would be
shifted to the federal government and nonresidents. With a
broad-based sales tax, about $.93 per $1 would be paid by
Alaskan residents, with the remainder paid by nonresidents.
Therefore, an income tax seems to be most attractive on those
grounds. Although an income tax would create disincentives just
as any tax would, he argued that those disincentives would be
relatively modest. Under HB 413, the 20 percent on top of an
individual's federal rate sounds horrendous. However, it only
amounts to approximately a 3 percent increase in tax liability
for an individual paying 15 percent in federal taxes.
MR. GOLDSMITH remarked that an income tax is a progressive tax,
which means that people with higher incomes pay a larger percent
of their income in taxes than those with lower incomes. The
decision regarding how progressive to make the tax system is a
philosophical decision for which an economist can't provide an
answer. However, Mr. Goldsmith pointed out that Alaska, with
the PFD, has the most progressive tax structure in the nation.
MR. GOLDSMITH reported that in regard to overall state and local
taxes, low-income Alaskans receive money from the government, in
net terms, while high-income Alaskans pay primarily via property
taxes. Imposing an income tax such as proposed in HB 413 would
add some progressiveness to the system because it would impact
higher-income Alaskans more than it would lower-income Alaskans.
MR. GOLDSMITH echoed Mr. Persily's earlier testimony that in the
long run it's likely the PFD would be reduced, which would have
the opposite effect. Therefore, considering the overall tax
structure of the state in terms of a progressive income tax,
with a reduction in the PFD, could result in the same relative
position in terms of the current progressiveness.
Number 2666
MR. GOLDSMITH pointed out that when thinking of the tax
structure, one has to be careful about comparing Alaskans across
all strategies - that is, in regard to the full-time versus
part-time resident, the rich versus the poor, the urban versus
rural individual, and the young versus the old individual.
MR. GOLDSMITH identified one attractive feature of a personal
income tax: it solves the problem of the "Alaska disconnect."
He explained that the "Alaska disconnect" is the problem that
economic growth and development - which would help solve any
financial problems in most states - doesn't work in Alaska
because Alaska doesn't have a broad-based tax to capture some of
the profits generated by new economic activity in order to pay
for the public costs that arise. Therefore, a personal income
tax would be a method by which to capture some of those profits,
which would be positive both fiscally for the state [government]
and for Alaska economically.
Number 2746
REPRESENTATIVE FATE recalled Mr. Goldsmith's mention of the 15
percent average of federal tax in the state.
MR. GOLDSMITH clarified that an individual's lower tax rate on
the federal income is 15 percent, the rate at which he believes
the majority of Alaskan households pay. However, that isn't the
average for all Alaskans because a significant portion of
Alaskans pay at a higher rate, 28-30 percent on their "marginal
income."
REPRESENTATIVE FATE inquired as to the average in the state.
MR. GOLDSMITH estimated that the average federal tax on an
individual's taxable income is about 20 percent.
CHAIR COGHILL mentioned that one of the points of discussion is
regarding whether to use the adjusted gross income or the
federal tax liability. He requested that Mr. Goldsmith provide
his opinion of those options.
MR. GOLDSMITH opined that starting with the adjusted gross
income provides a bit more flexibility in regard to [allowing]
credits or exemptions. On the other hand, by making Alaska's
tax a percentage of the federal tax, [the state] is beholden to
the federal tax law. However, [tying to the federal tax
liability] is a bit more progressive due to the netted-out
exemptions, which tend to favor those at the lower end of the
income distribution.
Number 2857
REPRESENTATIVE JAMES related her conclusion that a three-way
fix, including some earnings from the permanent fund, a sales
tax, and a moderate income tax, is necessary. However, the
dilemma is that an income tax has about double the impact of a
[sales] tax, while use of the permanent fund earnings has no
cost at all. Therefore, Representative James expressed concern
as to the components. She asked Mr. Goldsmith to speak to what
he saw as the best advantage.
MR. GOLDSMITH responded that the [state] has about three years
to phase in a set of policies to address the fiscal gap. Each
year there should be about a $350-million bite, the first of
which should be through the income tax. Although it will have a
negative impact on the economy, it won't be as great as from a
sales tax generating the same amount of money because the
federal government would "pick up part of the tab."
TAPE 02-12, SIDE B
Number 2987
MR. GOLDSMITH related his belief that the economy could absorb
[the negative impact created by an income tax] without crashing.
For the next year, Mr. Goldsmith suggested that perhaps the
earnings over and above the PFD and inflation-proofing of the
permanent fund should be used. If necessary, Mr. Goldsmith
suggested that the third year would look at a sales tax. He
reiterated the need to take a phased-in approach in order to
avoid hitting the economy all at once.
Number 2909
REPRESENTATIVE JAMES agreed with a phased-in approach. However,
if $350 million were taken from the earnings reserve of the
permanent fund, it wouldn't impact the economy at all because
that is excess. She suggested that the income tax would follow.
She noted that the effective date [of the implementation of the
income tax] could be extended in order to provide more time to
prepare. She agreed with looking at a sales tax last. She
inquired as to why such a scenario would be wrong.
MR. GOLDSMITH answered that largely it's a political choice. If
the excess earnings of the permanent fund are used first, the
annual amount that could be drawn in subsequent years is
[decreased]. "Because we know the economy is going to be doing
okay this year, we can afford to take a little bit of a hit," he
pointed out. "The future is uncertain." He explained that if
the economy softens, the [state] wouldn't want to be forced to
impose an income tax on an economy that's already in a weakened
condition.
Number 2802
REPRESENTATIVE FATE asked Mr. Goldsmith why he felt that a sales
tax would have more of a negative effect on the state than would
an income tax.
MR. GOLDSMITH clarified that he was primarily referring to the
proportion of each tax that would be paid by nonresidents. The
larger the share being paid by nonresidents, the less negative
the impact on Alaska's economy because purchasing power would be
drawn out of the Alaskan economy [otherwise]. Mr. Goldsmith
informed the committee that about 7 percent of sales in Alaska
are made to nonresidents, and therefore 93 percent of sales
would fall on the shoulders of Alaskan residents if the sales
tax were used. With an income tax, however, the tax would be
shared by nonresident workers and the income they generate,
approximately 10 percent of total wages paid in the state, as
well as the federal government, because for many Alaskans the
state income taxes would be deductible from their federal income
tax. Therefore, the federal liability for some Alaskans would
decrease. In that sense, an income tax would have a less
detrimental effect on the overall economy.
REPRESENTATIVE FATE noted his intention to pursue this further.
Number 2670
BOB STILES, President, DRven Corporation, testified via
teleconference in favor of reenacting a personal income tax as
outlined in HB 413. He emphasized that he is in favor of doing
it now. Mr. Stiles remarked that there is a "counter-incentive"
to job creation in the state. If jobs are created that result
in people moving into the state, the burden on the state has
been increased and everyone's prorated share of the PFD has been
decreased. The imposition of a personal income tax has the
possibility to enhance the development of job creation.
MR. STILES related his [support] of tying it to the federal tax
because that is the simplest and easiest way to do so.
Tailoring a tax to an adjusted gross income versus the federal
tax liability creates additional bureaucracy and laws, all
requiring additional [employees]. In the end, less overall
income from the tax is seen than may have otherwise occurred
with a simple [strategy]. Furthermore, the income tax should be
done first because it has the longest lead time in regard to the
state's seeing any revenues from the tax. For instance, if a
tax were instituted during this session, the future liability
wouldn't begin to accrue until 2003 and the state wouldn't see
any income until 2004. The other mechanisms, a sales tax or use
of the permanent fund earnings reserve, can be implemented and
produce revenue more quickly than the income tax. Therefore,
Mr. Goldsmith said he believes that the approach in HB 413 is
preferable.
Number 2501
ERIC BRITTEN, Anchorage Chamber of Commerce, testified via
teleconference. Mr. Britten informed the committee that the
Anchorage Chamber of Commerce has passed a resolution suggesting
that an appropriate level of state services be established prior
to the institution of any new revenue sources. Additionally,
the chamber hasn't supported any spending caps. Once the
appropriate level of state services has been established, the
first recommendation is to use a portion of the current
permanent fund earnings. The next step would be to maintain an
appropriate balance in the CBR, using it as a shock absorber
against oil-price fluctuations. The third step would be to use
debt, as appropriate, to finance the state's infrastructure
needs on a long-term, systematic basis.
MR. BRITTEN pointed out that the Anchorage Chamber of Commerce
has passed resolutions in support of general obligation (GO) and
GARVEE [Grant Anticipation Revenue Vehicles] bonding. The final
step would be the implementation of broad-based taxes and/or an
increase of consumption taxes that are fair and equitable and
encourage economic development.
MR. BRITTEN remarked that any type of tax discourages economic
development to some extent. Obviously, a gross receipts tax is
more discouraging to economic development than any of the taxes
being discussed now. Targeted business taxes and corporate
taxes also discourage economic development. In supporting
broad-based taxes, he said, the chamber agrees that [HB 413] or
the income tax proposition, as well as a sales tax, fit within
that purview.
MR. BITTEN noted his personal observation, from discussions with
those in the Anchorage Chamber of Commerce, that there does
appear to be more support for an income tax than a sales tax.
The reasons for that support relate to the ability for [a state
income tax] to be deducted from the federal income tax.
Furthermore, [a state income tax] fits within a "broad-based"
classification. Moreover, there is sort of a property tax
deduction in that [HB 413 is linked to] the adjusted gross
income on the federal income tax, which allows the property tax
to be deducted on the federal income tax. Mr. Bitten
highlighted the support and passion for the development of a
complete plan. He mentioned that a phased-in approach does make
sense, as does having triggers.
Number 2266
CHAIR COGHILL asked if a sales tax would be deductible on
Schedule A [of the federal tax forms].
MR. PERSILY specified that a sales tax is not deductible on
federal income tax returns.
CHAIR COGHILL announced that this discussion would continue on
Saturday. He also announced that all three of the proposals
will be before the committee. Chair Coghill announced that the
hearing on HB 413 would be suspended.
The committee took a brief at-ease from 9:09 a.m. to 9:10 a.m.
HJR 31-POWERS OF US SEN/EMERGENCY APPOINTMENTS
Number 2152
CHAIR COGHILL announced the next order of business, HOUSE JOINT
RESOLUTION NO. 31, Relating to requesting the United States
Congress to propose an amendment to the Constitution of the
United States that would address emergency appointments to and
powers of the United States Senate. [Before the committee was
CSHJR 31(MLV).]
Number 2137
REPRESENTATIVE SCOTT OGAN, Alaska State Legislature, as sponsor
of HJR 31, referred to terrorist attacks of September 11, 2001,
and [the sending of anthrax through the mails by unspecified
terrorists]; the latter could have killed a majority of U.S.
congressional members. He said those events raised his level of
concern regarding the issue. Representative Ogan said,
essentially, if the nation were to lose a majority of the House
or the Senate, it would be left with martial law and the power
held be the executive [branch], until another Congress could be
elected.
REPRESENTATIVE OGAN noted that the Seventeenth Amendment of the
U.S. Constitution "provides a modality for making appointments
to the Senate," but sets no limit of time. That amendment gives
some latitude to the governors and laws of individual states
regarding how [those Senators] are appointed, but is silent
regarding [how the House would be reappointed]. He explained
that the Seventeenth Amendment was envisioned to prepare for
events such as the assassination or death of a Senator, not to
prepare for "the unthinkable."
REPRESENTATIVE OGAN surmised that most of those in the committee
room grew up during the Cold War and the Cuban Missile Crisis,
when the general philosophy was that there would be nothing left
to govern after a nuclear war; therefore, the issue had not been
addressed in the [U.S.] Constitution. He stated that he
believes now that terrorists have access to "weapons of mass
destruction." It is imperative that [the nation] makes certain
that all three branches of its government continue to function
and sends a message to terrorists that what they do to the
nation will not bring the Republic down.
Number 1959
REPRESENTATIVE OGAN referred to an earlier version [of the
resolution] in which the [U.S.] Senate would temporarily assume
the power of a unicameral body until a House could be elected.
He explained that the House Special Committee on Military and
Veterans' Affairs had deleted that language after lengthy
debate. Representative Ogan told the committee that there is a
bill in the U.S. House that says if two-thirds of the House
members are incapacitated, the states would be allowed to
appoint House members; he said that is a large number to appoint
and suggested it would be better to allow the [U.S.] Senate to
become a temporary unicameral body until a special election
could be held.
REPRESENTATIVE OGAN [suggested he was amenable to changes in the
language of his resolution]; his main concern was to see that
the issue was brought before Congress.
Number 1839
CHAIR COGHILL referred to [page one of a December 25, 2001
article in The New York Times, provided by Representative Ogan
and included in the committee packet], which says President Bush
signed executive orders to establish a line of succession. He
asked if that was parallel to Representative Ogan's thinking or
conformed to the bill before Congress.
REPRESENTATIVE OGAN said he believed President Bush recognized
the threat to the nation; Vice President Cheney is only now
coming out from a sequestered state. Representative Ogan
clarified that [HJR 31] deals with the legislative branch,
rather than the executive branch.
CHAIR COGHILL asked Representative Ogan why he'd singled out
Congress, when there are three branches of government. He
indicated Congress would [be the one with the power to] declare
war. He added that there are "several major heads" that could
be in the executive branch.
REPRESENTATIVE OGAN responded that even though he is comfortable
with the motives of [President Bush], "power corrupts and
absolute power corrupts absolutely." He said he would like to
see a plan in place so that the legislative branch would be
reappointed quickly. The power to declare war is with the
Senate. If [the nation loses a majority of its Senate members],
he said, the country would be run by martial law at that point.
REPRESENTATIVE OGAN posited that the President has the best
interests of the country in mind, but said he would prefer to
make certain that the third branch of government would be around
to appropriate the money to do whatever is necessary to defend
the country and to provide the checks and balances provided for
in the [U.S.] Constitution - having the power come from the
people.
Number 1674
CHAIR COGHILL said Representative Ogan's last remark brought the
discussion closer to a point he was attempting to make: This
[system of appointment] would perhaps be the most representative
of the people; furthermore, the executive branch could become
very powerful, with police powers, and would need the check.
Number 1654
REPRESENTATIVE STEVENS said he appreciated the chance to think
about how the succession works in government. He said he
believes the succession of the presidency was as follows: First
the Vice President, followed by the Speaker of the House, then
the cabinet members in the order they were appointed, but not
including all cabinet members. He added that the benefit is
knowing in advance what the succession would be. He asked
Representative Ogan if it is possible to know in advance the
succession [of Congress]. He noted that [the process of
reappointment] would be lengthy.
Number 1602
REPRESENTATIVE OGAN replied that he had attempted to address
that in an earlier version of the [resolution]; he mentioned a
rhetorical debate [in the House Special Committee on Military
and Veterans' Affairs]. He said the Seventeenth Amendment is
silent in regard to the House of Representatives. He surmised
that it had been assumed in the past that someone might get
sick, die of natural causes, or be assassinated, but since there
were over 400 members, the risk of losing more than 200 -
thereby losing the quorum - by those means was minimal.
REPRESENTATIVE OGAN, regarding the 100 [U.S.] Senate members,
told the committee he'd suggested in an earlier version of the
[resolution] that within ten days, new Senators would be
appointed by the [state] legislatures. He noted that prior to
the Seventeenth Amendment, the legislatures appointed the [U.S.]
Senators; therefore, he surmised, the Senators were perhaps more
accountable to the legislatures than they are now.
REPRESENTATIVE OGAN expressed his belief that it is more
efficient to give temporary unicameral power to the [U.S.]
Senate to declare war, to appropriate money, and to look over
the executive branch during a national emergency, than to hold
an election, or try to appoint an entire [U.S.] House of
Representatives. He reiterated that a bill in Congress would
allow the states to appoint "representative members." He said
the House Special Committee on Military and Veterans' Affairs
had debated the issue and, in its wisdom, decided it was best to
raise the issue before Congress and let Congress decide the best
course of action.
Number 1453
REPRESENTATIVE WILSON said September 11, 2001, made the country
aware that "something like this" could happen. She offered her
belief that this issue needs to be brought to the forefront and
that a plan needs to be made; consequently, it is wise to urge
Congress to make decisions regarding the issue.
Number 1399
REPRESENTATIVE HAYES moved to report CSHJR 31(MLV) out of
committee with individual recommendations and the accompanying
fiscal notes. There being no objection, CSHJR 31(MLV) was moved
out of the House State Affairs Standing Committee.
HB 248-PERS BENEFITS FOR JUV INSTIT EMPLOYEES
Number 1365
CHAIR COGHILL announced the next order of business, HOUSE BILL
NO. 248, "An Act relating to retirement contributions and
benefits under the public employees' retirement system of
certain juvenile detention employees and juvenile correctional
institution employees."
Number 1331
MIKE TIBBLES, Staff to Representative William K "Bill" Williams,
Alaska State Legislature, presented HB 248 on behalf of
Representative Williams, sponsor. He explained that HB 248
would give juvenile officers the same 20-year retirement system
currently enjoyed by peace officers and firefighters. Under
current law, peace officers include correction and probation
officers who are trained to deal with dangerous individuals and
who have powers of restraint and arrest.
MR. TIBBLES said juvenile officers have the same or very similar
training and, like correctional officers, are asked to place
themselves in a dangerous work environment. He asked the
committee to keep in mind that juvenile officers are asked to
deal with what the court believes are individuals who pose such
a threat to society that they need to be placed in an
institutional setting; furthermore, they are charged with the
difficult task of trying to rehabilitate those individuals.
MR. TIBBLES concluded by saying the sponsor believes this
legislation takes an important step to correct an inequity in
the law and "will go a long way to help the State of Alaska
retain its quality employees and attract new employees in the
juvenile officer field."
Number 1180
CHAIR COGHILL noted that [HB 248] is "standing in line" with
other bills regarding the 20-year retirement - many have
compelling cases as well. He explained that he'd agreed to hear
this bill because equity [has been an issue].
VALERIE MILLER, Juvenile Probation Officer, Kodiak, Alaska,
testifying via teleconference, told the committee she began
working for the state in 1978 as a youth counselor at McLaughlin
Youth Center. She worked in detention and on both boys' and
girls' treatment units, until leaving there in 1988. She noted
that she'd worked as Youth Counselor I, II, and III, "through to
unit leader." During that time, she was assaulted physically,
including being spit upon and often verbally assaulted.
MS. MILLER said safety for the youth, staff, and public was of
utmost importance and was a constant consideration. The level
of stress increased with the level of supervisory
responsibilities, and the "alertness to duty was intense, making
this work exhausting." She noted that the incarcerated youths
felt they had nothing to lose and were often impulsive,
unpredictable, disturbed, angry, and dangerous.
MS. MILLER stated that unlike in the adult system, there are no
armored or electronic barriers for protection. She said she
knew, as a youth counselor, that she was a "frontline worker
between the youth and the public." She added, "It was a
skillful, interpersonal balance to win the trust, respect, and
cooperation of these youths, which comes with experience,
maturity, and inner confidence."
Number 0898
MS. MILLER continued as follows:
At the time I transferred to the probation officer
[job class] series in 1988, I remember feeling a sense
of relief at the difference I perceived in the level
of anxiety I experienced with respect to the duties
and responsibilities when I became a probation
officer, as compared to a youth counselor in the
institution.
[As a youth counselor] I had no break, and I ate
institutional food with the youth. I worked with the
most severe clients ... with the highest risk factor -
who were either a danger to themselves or others, and
could not be placed in a lesser restrictive placement.
As a juvenile probation officer, I have variety and
flexibility in my job. As a youth counselor, I worked
within the same walls day after day, with little
opportunity to leave. As a juvenile probation
officer, I can call for backup from law enforcement
for any occasion. As a youth counselor, I needed to
remain calm and work through the situation, no matter
how hostile [or] out of control the youth were.
As a juvenile probation officer, in most emergency
instances, I am concerned for my safety [and the
safety of] possibly one or two youths and those
immediately around me in the community. As a youth
counselor, I was concerned for the safety of up to 20
(indisc.), the staff, and the community. As a
juvenile probation officer, I can hire a guard to sit
with and transport or escort youth. As a youth
counselor, I was the guard and escort and often had to
sit with youth for long periods of time, until the
youth would gain control.
There is, indeed, a disparity within the juvenile
justice job classes, and youth counselors have earned
more recognition. Youth counselors should have an
equitable incentive to remain at their posts in the
institutions and not be attracted to better benefits
offered in the probation officer series, thus
promoting and ensuring the quality of workers that are
needed in this field of work. This inequity needs to
be rectified.
MS. MILLER concluded by asking the committee to support HB 248.
Number 0739
ARTHUR KONEFAL, Youth Counselor, Fairbanks Youth Facility (FYF),
testifying via teleconference, told the committee that he has
worked at FYF for 21 years and was speaking on behalf of youth
counselors across [Alaska].
MR. KONEFAL described the environment in which a youth counselor
works as "a watched dormitory, [with] anywhere from 15 to 60
kids on one single unit." He said youth counselors work face-
to-face with residents for eight hours a day, without 15-minute
breaks, and they eat their lunch with the residents, needing to
be always on the alert." He said those committee members who
have had the benefit of visiting their district's facility would
know the environment he'd described.
MR. KONEFAL noted that the residents with whom the youth
counselors work are primarily 16- to 19-year-old males; these
aren't little boys, but often are 175- to 250-pound, six-foot-
tall men. Developmentally, however, they are immature and
exhibit the same impulsive and reckless behavior of young boys,
and "here is where they become dangerous."
MR. KONEFAL said there are stories from each youth facility. He
recalled being attacked during an AWOL [absent without leave]
attempt, choked from behind to the point of blacking out, and
being "the bearer of two black eyes to take back home and show
my own children." He said, "The visceral, verbal assault
expressed at me and my family are regular, and so accepted, that
when I file charges with the troopers I am told it is just a
part of my job. And in fact, it is."
MR. KONEFAL reported that some coworkers haven't been as lucky
in this career. He told the committee of a friend who was lured
into a room and beaten so severely that he missed two weeks of
work; when he returned, he was too traumatized to continue
working, knowing such an incident could happen again. He
continued:
With drug and alcohol abuse being such a pandemic
issue, every facility is taking in kids who go through
the pain and unpredictable behavior of withdrawal. If
[you] then combine these problems with our increasing
population of mental health issues, it gives you some
insight to the multifaceted problems that youth
counselors face each and every day.
As for residents with mental health issues, in
Fairbanks alone we've had a number of residents so
removed from their faculties of reasoning that they
would repeatedly bash their heads against cement walls
or floors, if upset. What did we do? Staff sat there
with this unfortunate kid's head in their hand,
cradling it for hours, until this chaotic episode
subsided. The resident turns out well under such
care, but the staff are left emotionally and
physically drained.
On a lighter side, youth counselors do routine escorts
to offsite locations such as the courts and medical
facilities and, when necessary, [fly with] the
residents throughout Alaska to the Lower 48. We do
this all without the benefit of uniform or sidearm, as
a judicial services officer would have.
If [a resident is at] court and does not like the
decision of the court, we must [act when he tries to
flee] or [lash out at someone]. Youth counselors are
the protective shield between the juvenile and the
public safety.
These situations can be harrowing. Physical
confrontations are the worst and were easier to handle
when I was 28 and just starting out as a youth
counselor. I'll be 50 next year, and I believe that
most of us know how that age stacks up [against the
brash], no-limits [assertiveness] of youth.
Luckily, I have picked up some other skills along the
way. I now have the insight to quell argument and
quash some violent behaviors, but this has come over a
period of 21 years. Most staff, by far, do not stick
around and develop this wisdom, nor are there staff
there to pass on these insights and set the example
for new staff. As a result, we get the new teaching
the new.
It is my belief that if we can recruit and, more
importantly, retain the best and brightest available,
we'll be more effective in preventing future societal
damage and save significant resources. One of the
ways to do this is through 20-year retirement. We are
shouldering similar responsibilities of other peace
officers in the 20-year retirement program, and I'm
here to ask your support to bring the youth counselor
series under the same retirement program.
MR. KONEFAL thanked members for their attention to this issue
and asked that they pass [HB 248].
Number 0342
ANDY LEE came before the committee to testify that he had spent
ten years, from 1991-2001, as a youth counselor at the Johnson
Youth Center [in Juneau]. During that time, he noted, he was
spat upon, urinated upon, and cried upon; however, he said,
because he held what he considered to be "the best job in state
service," he also considered that to be a part of the job.
MR. LEE noted that over that ten-year period, people in only 3
of the 32 positions have stayed ten years. It is not often that
people stay in the youth counselor service for 20 years, he
said, because of the risk, "the daily exposure to violent,
unpredictable, ever-growing numbers of young people who the
courts and the community have said, 'These people are in your
charge.'" For that reason, [youth counselors] approach their
jobs with great vigilance. He said some of the best individuals
in the community are attracted to this position, but "we're
unable to keep them" because there are other, equally
attractive jobs that have 20-year retirement.
MR. LEE told the committee about several people whom he had
supervised who became juvenile probation officers or "went to
corrections." He related a story of having recruited one
individual who had worked at the Lemon Creek adult facility for
ten years and returned after only one year, because he was 47;
he could retire as a correctional officer (CO) at 57, whereas he
would have had to work until age 67 at the youth center.
MR. LEE noted that over the years [the legislature] has "seen
fit to improve the youth facilities [and] build facilities, in
response to the growing needs of the juvenile community." He
offered his belief that the "missing link" is in addressing the
needs of the people who work in those facilities. He indicated
support for restorative justice as a model for treatment and
support for DJJ [Division of Juvenile Justice, Department of
Health and Social Services] in terms of the way it delivers
service. This [bill] is an opportunity to support the people
who work in those facilities, he said.
MR. LEE brought up one of the arguments against 20-year
retirement in areas such as the university and the state
troopers: "There's a brain drain." He countered that it
doesn't happen, however, because the brightest people are
recruited as youth counselors but aren't retained long enough to
become the best; they become the best as JPOs [juvenile parole
officers], as adult POs [parole officers], and as COs.
MR. LEE stated his belief that [HB 248] would close "that loop
in services." He said, "As we've met the needs from a facility,
we've met the needs from a restorative justice - choosing that
as our model for treatment - and I think the last piece in that
puzzle would be 20-year retirement."
Number 0005
REPRESENTATIVE JAMES said she appreciated [Mr. Lee's] testimony
and that it wasn't a job she could do. She indicated her first
reaction was to figure [out how to make job less difficult].
[The last portion wasn't on the tape, but was recorded in the
committee secretary's log notes.]
TAPE 02-13, SIDE A
Number 0001
REPRESENTATIVE JAMES asked, "When people move from this job to
one of the other jobs, do they also get more money, or is the
money the same?"
MR. LEE answered that the money is not the same. Youth
counselors are recruited at a range-11 salary, "YC1" [Youth
Counselor I] in the job series, and stay in that class until
promoted to a "YC2" [Youth Counselor II], a range 13, which
pays, to his belief, approximately $14 per hour. Correctional
officers [in adult facilities] work "26-50 a year" and receive
20-year retirement in addition to a higher range of pay; he
mentioned "their ability during those other 26 weeks to also go
into overtime and other benefits." He also offered his belief
that JPO pay is range 15-19, whereas youth counselor pay is
[range] 11-15.
REPRESENTATIVE JAMES indicated that was only part of the
solution. She asked how long a person would have to be "one of
these counselors" before being able to move to higher levels.
MR. LEE replied that it is expected that youth counselors will
move from a YC-1 to a YC-2 within 12 to 18 months; then they
move up the stepladder from a range 13A, on an annual basis,
similar to other state employees. In the ten years Mr. Lee has
worked in the field, he said, he has seldom heard the argument,
"We don't get paid enough." Rather, often the argument is,
"There are other jobs that are more attractive."
MR. LEE cited the following: JPOs work an eight-to-five
[shift], whereas [youth counselors] work three shifts.
Correctional officers work 26 weeks a year, whereas [youth
counselors] work overtime, work 52 weeks a year, and are in
Class I [a strike class that precludes striking]. Mr. Lee
relayed that one of his most difficult jobs as a supervisor was
attempting to figure out which employee had not worked the last
five Christmases. He remarked, "While it is a part of the
problem, I think what you find is a very sincere class of
individuals, who come into this with service in mind ... and
youth as a priority." He continued:
While I think there is pay inequity, while I think
there are some other inequities in terms of work
schedule and ability to transfer, I think this is the
critical one, because it has come up the most often.
And when youth counselors reach that three- to five-
year mark, it's when the debate comes: "Where am I
going to be ten years from now; where am I going to be
15 years from now." And if you're a youth counselor,
its "where am I going to be 20 years from now, 25
years from now."
MR. LEE mentioned [the decision of whether to] stay in that
Youth Counselor class. He indicated some coworkers sitting
behind him, noting that some were in their mid-40s. He noted
that he and Kate Sullivan, who was present in the room, had been
doing restraints for ten years, spending as many as four hours
at a time lying on top of an out-of-control individual - because
plastic cuffs and their bodies are all they can use, rather than
mechanical restraints, lethal weapons, or chemicals. He
explained, "If someone's out of control, all we have is the
ability to rotate bodies onto that individual until they regain
control of themselves." Mr. Lee said that could happen in a
cafeteria, gymnasium, courtroom, or community, for example.
Number 0435
REPRESENTATIVE JAMES asked Mr. Lee what the educational
requirement is to [start at the entry level] as a youth
counselor.
MR. LEE responded that the requirement is a high school degree
and one year of experience in a related field, ranging in
diversity from childcare to law enforcement. He pointed out
that the entry pay of a Range 11 is usually reserved for
administrative clerks and is an entry-level range with low
requirements. He added:
I agree that there should be an entry-level range,
because we do get, you know, very good people. And
it's been very tough to recruit over the past ten
years, because ... we have not kept up with the
private sector [pay], we have not kept up with adult
corrections, so I think it's very difficult to recruit
at the entry level. And also, when we do get someone
who has a degree, we also must recruit them at a range
11 or range 13.
Number 0514
REPRESENTATIVE JAMES mentioned "these other steps up" and a
higher-paid job. She asked if there were more educational
requirements in that regard.
MR. LEE answered that the job speculations read, "Education, or
experience." Youth counselors garner experience on the job and
may combine that with an [associate] degree, he suggested, or
[on-the-job] training, which would qualify them for the entry
level as a JPO, Adult PO, and Correctional Officer I.
CHAIR COGHILL clarified that juvenile justice is under the
Department of Health and Social Services, while the adult
corrections is under the Department of Corrections.
Number 0630
REPRESENTATIVE WILSON noted that she had read that youth
counselors are required to complete a minimum of 160 hours of
training in their first year of employment. She opined that
that is a considerable amount.
MR. LEE concurred. He explained that that training ranges from
first aid and cardiopulmonary resuscitation (CPR) to garnering
basic counseling skills. He said, "The one area that I think
that we're very strong in - or have been very strong in
recently, since the move to Division of Juvenile Justice - is
training." He continued:
When you consider that there's 160 hours of training,
you're working shifts, you're caught in a shift bid
where maybe your schedule is determined by your
seniority, so you have to work 26 weeks of graveyard,
yet you're still required to meet [the] training
requirement.
MR. LEE noted that some training requirements are through a
national affiliation for correctional officers and are done by
correspondence. He said people see youth counselor [positions]
as a good jumping-off point, not necessarily as a place to stay
for ten or fifteen years. He told the committee that he himself
left after ten years, and asks himself whether he'd have stayed
if the 20-year retirement were in place. He said it would have
been a tremendous for him to stay, and that he believes he would
still be there.
Number 0770
CHAIR COGHILL asked if there was any typical scenario Mr. Lee
could draw for the committee [regarding other dimensions of the
youth counselor's job].
MR. LEE cited the following primary areas of work for a youth
counselor: prevention, detention, adjudication, treatment, and
aftercare. It is the only job class within the Department of
Health and Social Services that has direct contact with the
juvenile in every phase through his/her journey through the
system. In comparison, he noted, a juvenile probation officer
only interacts through adjudication and placement, or perhaps
during the detention phase. He depicted the following scenario:
As a youth counselor, if you report to work at eight
o'clock in the morning, you're waking up 25
individuals who might not want to be awakened. You're
then charged with having ... their first meal of the
day, seeing that their beds are made, inspecting their
rooms. ... We're making sure that there are no
"shanks," that ... there's no paraphernalia, or a list
of communications, [and] that there's no attempts at
self-harm.
There are ... typically 2 or 3 youth counselors and
20-25 youth. They have to be transported from one
part of the building to the other, in direct contact
with the youth counselor. They may not like each
other. They may be from different gangs. They may be
[of] different ethnic backgrounds. They may simply be
[affected by] fetal alcohol [syndrome] and a sex
offender who can't understand basic directions. Yet
you're charged with meeting the needs of each of those
25 individuals.
You're charged with case management. Correctional
officers don't have case management. So we have the
duty of vigilance, we have the duty of security, we
have the duty of case management, [and] aftercare -
determining when this young person goes back to the
community. Youth counselors, during a typical day,
will meet with parents, will meet with juvenile
probation officer[s], will meet with officers of the
court to determine the progress of the youth through
the system, what phase of treatment [they are] in,
[and whether they are] ready to be reintegrated into
the community.
Those decisions, by and large, are made by youth
counselors - those decisions as to whether a sex
offender or a burglar returns to the community. When
that happens, that recommendation is typically made
with the information garnered by a youth counselor,
given to a probation officer, and ... then provided to
the court system. But the person that guides that
person through that journey, from prevention to
adjudication to release back into the community - and
then through the aftercare phase, while they're in the
community - is done, in most cases, by a youth
counselor.
MR. LEE said during a typical day, a youth counselor may eat
breakfast with a young person in the morning, restrain that
person in the afternoon, and administer [medications] to 25
people. He said he is certain [the youth counselor class] is
one of the few in the state to administer medication. He
explained:
Just that one task alone is very daunting: to make
sure that someone gets their meds. Yet, while you're
giving someone their meds and making sure their not
"cheeking" them or passing them to someone else,
you're also in charge of [the] person in cell B who's
banging his head against the wall. You're in charge
of the conversation that's going on across the room
about who we may assault, or should we steal cookies.
And you still have a caseload to manage.
MR. LEE concluded that a typical day for a youth counselor
involves multitasking "to the nth degree." He told the
committee that [for a youth counselor] there is no such thing as
an eight-hour day. He stated that Youth Counselor III unit
leaders - the mid-management position in the series - are on
call for as many as 25 weeks a year and respond to requests for
backup immediately and without question. Mr. Lee recalled that
after he'd been doing that ten years, his wife told him what she
missed the least about his job was his leaving in the middle of
the night, not knowing what he would face, and [her finding
out], when he returned home, that he had been spat or vomited
upon [that day at work]. He described work conditions:
A graveyard shift, many times, is one person per unit,
with the entire unit locked, and you can only call for
backup. If the person in the cell is getting ready to
hang themselves, or screaming and yelling or
challenging the person in the next cell, there's one
youth counselor on duty until backup arrives.
Number 1175
CHAIR COGHILL said one reason he'd agreed to hear this bill was
because he thinks [the realm of the youth counselor] is "a whole
different world." He said [Mr. Lee's testimony] was compelling.
He mentioned the lockdown and control system of the corrections
officers and "doctors doing [medications]." He indicated he
believed the equity issue to be significant. However, he noted
that [HB 248] presents a problem. He mentioned retroactivity,
240 employees, and a $7-million change in "the way we're doing
business here." He said he was willing to move the bill out of
committee and allow [the House Finance Standing Committee to
debate] "the $7-million question."
Number 1249
REPRESENTATIVE WILSON paraphrased a portion of the fiscal note
analysis, which read as follows:
Our actuarial consultant has estimated the total cost
(the net present value of fully projected benefits) of
this legislation to be $7.2 million, producing an
increase in the state's contribution rate of 0.14
percent and an annual cost to the State of $896,000.
REPRESENTATIVE COGHILL said he didn't think it was intended to
be. He added, "They just axed it."
Number 1364
JANET PARKER, Retirement & Benefits Manager, Division of
Retirement and Benefits, Department of Administration, told the
committee that she had just recently viewed the bill for the
first time and had not participated in the development of the
fiscal note. She said, however, that [the division] does take
every retirement bill "put into the legislature," sends it to
its actuaries - currently Mercer - and asks for a projection of
what the cost will be at the time.
MS. PARKER pointed out that the fiscal note in question shows
asterisks, which means there will be a cost; however, the true
cost is not currently apparent and won't be known until
"everyone files." Depending upon whether the bill is
retroactive, she added, there may be people with prior service
that [the division] was not told about. She said [the division]
was given a list of current employees in the department [and
used that list] to project the potential cost.
MS. PARKER said the actuary believes eventually this will
produce an increase of .14 percent of payroll. Although there
will be a cost to the system, it won't show up today. Instead,
it will probably show up in the year 2004, "and it may actually
be a little bit more or a little bit less." She noted that
actuarial science is not exact.
REPRESENTATIVE WILSON asked if the estimated $896,000 was a
total, rather than per year.
MS. PARKER answered that it is per year. She explained that
[the division] is saying it will increase the state's
contribution rate by .14 percent. The $896,000 is against the
current state salaries, she added.
Number 1500
REPRESENTATIVE CRAWFORD noted that he was in complete agreement
with [the proposed legislation]. He said he had spoken with
youth counselors over the years. He stated his belief that it
is a job that needs to be done, and said, "I think this is a way
to keep people in that employment for 20 years." He said he
would like to see [the bill] moved out.
Number 1533
REPRESENTATIVE JAMES mentioned her concern about the actuarial
and said, "I assume that that is presuming that everything else
is the same." She asked if there weren't some investments of
retirement money that "can kind of change that over a period of
time." She indicated the state is making a lot of money in the
retirement system.
MR. PARKER indicated an affirmative response. She added, "And
for the last 18 months, we're in a deficit position." She said
this is a long-range term, and [the division] assumes there will
be earnings over a 20-year period.
CHAIR COGHILL commented that this would create a significant
draw, as well.
MS. PARKER concurred. She suggested that people like Mr. Miller
who have moved from one job to another will try to "gap those
ten years of service." She said she didn't think that was
considered when "they produced this," but that consideration was
given to what happens if this group is allowed to retire at 20
years - ten years earlier than they could today, potentially.
She added that [the division] would pay benefits and health
insurance for those ten years, which is why it carries a cost.
Ms. Parker noted that the actuary comes in every year, looks at
his prior guess, and attempts to "match it up and see how it's
tracking."
Number 1661
REPRESENTATIVE STEVENS commented, "It's very confusing, once you
get into actuarial or consultants." He noted that current
employees could take the opportunity to retire after 20 years or
could stay for 30 years, which he said he believed would result
in "more in terms of retirement." Representative Stevens said
he did not understand why the state would have to pay more if
these people were to retire at 20 years, because the employee
continues to put in the same amount. He asked Ms. Parker if she
was saying the state would then have to put in an additional
amount.
Number 1700
MS. PARKER explained with the following example:
If I'm allowed to retire after 20 years, ... under the
peace officers system, it is a 50-percent benefit, of
my high three average years. However, instead of
waiting until I'm 55 or 60 to get that benefit, I'm
now going to be able to get it anywhere between [the
age of] 40 and 50. And I wasn't eligible to retire
for that time, so I'm going to get benefits for at
least for ten years more than I would have received,
even though ... if I sit and wait 30 years, I'm going
to get a higher benefit under the "all-other" system.
It would be about two-thirds of your salary at 30
years. But I have to wait 30. ...
I'm saying ... that if you let me go at 20, that
sounds pretty nice. ... We draw retirement for ten
extra years. And it's that amount money that needs to
be paid: ten years of health insurance and ten years
of retirement benefits that the system hasn't been
thinking about in the past. And that's why this costs
money.
CHAIR COGHILL indicated his [former] reluctance in hearing [HB
248] was because of the "retroactive part" and "the prospective
part." He surmised that it could be "a significant hit in a
year when we really can't take a significant hit." He
reiterated that this is a compelling issue, but noted that "if
one [bill] goes out, you have to give reasons why you're not
going to allow the other four or five [bills] to go out in that
same thing."
CHAIR COGHILL referred to previous testimony regarding
retention, and noted that recruitment is a real issue. [The
youth counselor field] isn't the only career field where this
issue exists, he remarked. Regarding the fiscal note, he said,
"We could stumble over it, or we could let it go."
Number 1847
REPRESENTATIVE HAYES asked what the average time is that
juvenile officers are staying in their jobs.
[MR. LEE shook his head.]
REPRESENTATIVE HAYES asked if there wouldn't be a cost-savings
from hiring a new employee at a lower [rate of pay], while
letting the higher-paid employee retire after 20 years.
MS. PARKER answered that it is a cost savings to the department,
but not to the retirement system, because as soon as that person
comes to the door, "we're starting to collect contributions to
pay for their retirement, whenever that may be."
REPRESENTATIVE HAYES commented that it "could be a wash for
state dollars in general." He clarified, "You might pay
$896,000, but then on this other hand, the department might be
paying, or having less ... going out."
MS. PARKER responded that she didn't think it worked that way.
What is being looked at is total, overall salaries; furthermore,
some people at a lower range will not make much difference,
because there is always turnover within the state, and the
salaries remain approximately the same on a larger basis. She
added that what she looks at is the large basis, for retirement
purposes.
CHAIR COGHILL stated that "we're going to be paying out ten
years earlier for 'x' amount of people." That money will just
be going out of the retirement system. He suggested there would
still [within the system] be the same number of employees
"paying in," so the payout would be greater than the income.
Number 1992
REPRESENTATIVE JAMES commented that it has always been her
belief that people who have been on the job longer and are
getting paid more are a benefit to the job because of their
experience and knowledge; therefore, she has never considered
that getting people with no experience at all at a lesser pay is
a better deal. When just measuring dollars, that may be the
case, but not when considering effectiveness on the job, she
added.
Number 2030
REPRESENTATIVE FATE asked how effectiveness is measured in terms
of youths that are released.
Number 2073
ROBERT BUTTCANE, Administrative Juvenile Probation Officer,
Division of Juvenile Justice, Department of Health & Social
Services, told the committee that "effectiveness is measured,
really, through mandates from the legislature in our missions
and measures." He listed the following three [missions and
measures]: reoffense rates, restitution payments, and
community-work-service hours completed. Subjectively, he said,
success is measured in reunification of families and
reengagement in school - completion of high school and entry
into college, for example.
REPRESENTATIVE FATE asked Mr. Buttcane if there was a method by
which to measure success regarding the longevity and stability
of personnel.
MR. BUTTCANE replied that although it may be possible to do so,
that correlation has not been made in the existing comparisons.
CHAIR COGHILL referred to Mr. Lee's previous testimony regarding
the number of [youth counselors] who don't stay that long
anyway. He asked, "If you don't have those people that have
been there for more than 20 years, how are you going to measure
their effectiveness after 20 years?" That, he said, is the
problem as he understands it.
Number 2137
REPRESENTATIVE FATE indicated that the question was as
Representative James had pointed out, that an individual becomes
more valuable the longer he/she has worked. He clarified that
he had been attempting to draw a correlation between the
parameters of success in the youth and the longevity of [youth
counselors] - "the experience ratio between that success."
MR. BUTTCANE responded that subjectively he would say that was
"quite on point": the more experienced and educated a juvenile
justice professional is in working with youths and their
families, he noted, the better the results. He added that he
could not document that statistically, but thinks there is a
correlation.
MR. BUTTCANE noted that there comes a point of diminishing
returns if, for example, a 57-year-old [youth counselor] were to
attempt to wrestle with a "15-year-old, hormone raging, out-of-
control, six-foot-ten, 280-pound sophomore." He said [HB 248]
would address some of the inequities "in dealing with some of
things that we're faced with in our youth counselor series." He
noted that [HB 248] is the fifth bill that has come before the
legislature in the last ten years in an attempt to correct that
inequity.
CHAIR COGHILL asked Mr. Buttcane to explain the 20-year and 30-
year difference in the percent paid by both the employee and the
state.
MR. BUTTCANE answered as follows:
The bill does speak to that and does lay out a formula
where both the employee, as well as the state, would
pay a higher percentage contribution into PERS [public
employees' retirement], in order to make the 20-year
retirement.
MR. BUTTCANE indicated page 1 [Section 1] of [HB 248] and
paraphrased [lines 8-12, which read]:
Beginning January 1, 2002, each juvenile officer shall
contribute to the system an amount equal to seven and
one-half percent of the juvenile officer's
compensation. Except as provided in (d) of this
section, beginning January 1, 1987, each other
employee shall contribute to the system an amount
equal to six and three-quarters percent of the
employee's compensation.
MR. BUTTCANE added that he believed it was the same for the
state; however, he deferred to the Division of Retirement and
Benefits for further comment.
CHAIR COGHILL announced his intention to hold the bill over,
saying there were significant issues for the committee to
consider. He reiterated that this issue is compelling. Chair
Coghill indicated the "look-back" provision is a big policy
decision; he said he wanted to stand before the House Finance
Standing Committee and be able to say, "This is why I did that,
guys." He encouraged testifiers to also speak at the House
Finance Standing Committee hearings. He added that he wanted to
spend more time on some of the issues "of the technical side of
the bill."
Number 2361
REPRESENTATIVE STEVENS said he would like to hear more from "the
retirement people." He said it seems the system is a healthy
one - many people retire at 20 years. [The employees] as well
as the state pay into [retirement]. He said, "It seems to me in
this analysis, they're mixing up apples and oranges, saying
that, 'If we go to a 20-year system for these people, they will
have to pay back what they would have paid if they'd been in a
20-year system.'"
REPRESENTATIVE STEVENS mentioned the actuarial consultant
information that, in fact, "raises it higher." He said it
didn't make sense: if the system is a healthy one for people
"at 20 years" - giving the contributions that they have always
made - then why isn't it a healthy system for those who are "at
30 years" but are putting in the money that they would have paid
if they had been "at 20 years."
CHAIR COGHILL said that was an excellent question and suggested
that both Ms. Parker and Guy [Bell, Director, Health Benefits
Section, Division of Retirement of Benefits, Department of
Administration] could perhaps [return for the next hearing
regarding HB 248] to answer that question.
Number 2414
REPRESENTATIVE JAMES responded that if [an employee] contributes
an amount during 20 years [of employment] that would allow that
employee to retire in 20 years, but if "the period has gone by
and the state hasn't matched it," then that would change the
actuarial amounts "down the line," and the state would have to
"catch up on that." She clarified that "the match" is what [the
employee] pays and the state matches. She added, "That's the
issue, and it's not involved in that."
CHAIR COGHILL thanked all the members of the juvenile justice
system for their work and their patience. Although there were
several who may have wanted to speak before the committee, he
said those who did had done a good job of representing the case.
He noted that he would not yet close public testimony. [HB 248
was held over.]
ADJOURNMENT
There being no further business before the committee, the House
State Affairs Standing Committee meeting was adjourned at 10:23
a.m.
| Document Name | Date/Time | Subjects |
|---|