Legislature(2023 - 2024)SENATE FINANCE 532

03/06/2024 09:00 AM Senate FINANCE

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ SB 197 RESIDENTIAL BUILDING CODE TELECONFERENCED
Heard & Held
-- Invited Testimony --
-- Public Testimony Rescheduled to a Later Date--
+ SB 183 WORKERS' COMP BENEFITS GUARANTY FUND TELECONFERENCED
Heard & Held
-- Invited & Public Testimony --
+ Bills Previously Heard/Scheduled TELECONFERENCED
                 SENATE FINANCE COMMITTEE                                                                                       
                       March 6, 2024                                                                                            
                         9:07 a.m.                                                                                              
                                                                                                                                
                                                                                                                                
9:07:15 AM                                                                                                                    
                                                                                                                                
CALL TO ORDER                                                                                                                 
                                                                                                                                
Co-Chair Olson  called the Senate Finance  Committee meeting                                                                    
to order at 9:07 a.m.                                                                                                           
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Senator Donny Olson, Co-Chair                                                                                                   
Senator Bert Stedman, Co-Chair                                                                                                  
Senator Click Bishop                                                                                                            
Senator Jesse Kiehl                                                                                                             
Senator Kelly Merrick                                                                                                           
Senator David Wilson                                                                                                            
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Senator Lyman Hoffman, Co-Chair                                                                                                 
                                                                                                                                
ALSO PRESENT                                                                                                                  
                                                                                                                                
Senator  Jesse   Bjorkman,  Sponsor;  Laura   Achee,  Staff,                                                                    
Senator Jesse  Bjorkman; Sylvan Robb, Director,  Division of                                                                    
Corporations,    Business   and    Professional   Licensing,                                                                    
Department of Commerce,  Community and Economic Development;                                                                    
Chuck Collins, Director,  Division of Workers' Compensation,                                                                    
Department of Labor and Workforce Development.                                                                                  
PRESENT VIA TELECONFERENCE                                                                                                    
                                                                                                                                
Jimmy  Ord,  Director  of Research  and  Rural  Development,                                                                    
Alaska Housing Finance  Corporation (AHFC), Anchorage; David                                                                    
Bunts,  President,  Alaska State  Homebuilders  Association;                                                                    
Eric  Visser, Former  President,  Alaska State  Homebuilders                                                                    
Association.                                                                                                                    
                                                                                                                                
SUMMARY                                                                                                                       
                                                                                                                                
SB 183    WORKERS' COMP BENEFITS GUARANTY FUND                                                                                  
                                                                                                                                
          SB 183 was HEARD and HELD in committee for                                                                            
          further consideration.                                                                                                
SB 197    RESIDENTIAL BUILDING CODE                                                                                             
                                                                                                                                
          SB 197 was HEARD and HELD in committee for                                                                            
          further consideration.                                                                                                
                                                                                                                                
SENATE BILL NO. 197                                                                                                           
                                                                                                                                
     "An  Act   relating  to  residential   building  codes;                                                                    
     relating  to construction  contractors and  residential                                                                    
     contractor endorsements; establishing  the Alaska State                                                                    
     Building Code  Council; and providing for  an effective                                                                    
     date."                                                                                                                     
                                                                                                                                
9:07:15 AM                                                                                                                    
                                                                                                                                
SENATOR    JESSE   BJORKMAN,    SPONSOR,   introduced    the                                                                    
legislation. He read from the Sponsor Statement (copy on                                                                        
file):                                                                                                                          
                                                                                                                                
     SB  197,  "An  Act  relating  to  residential  building                                                                    
     codes;   relating  to   construction  contractors   and                                                                    
     residential  contractor endorsements;  establishing the                                                                    
     Alaska State  Building Code Council; and  providing for                                                                    
     an effective  date," would  provide Alaskans  with more                                                                    
     confidence that their new home is safe and well-built.                                                                     
                                                                                                                                
     When  Alaskans  are  buying  a   home  or  selecting  a                                                                    
     contractor to build their home  it can be difficult for                                                                    
     those without  construction experience to know  what to                                                                    
     look  for.  In  areas  where there  isn't  a  municipal                                                                    
     residential  building  code,  shoddy  work  done  by  a                                                                    
     contractor can be hidden behind  walls for years before                                                                    
     creating  problems.  Having   a  statewide  residential                                                                    
     building code will ensure that  homes across Alaska are                                                                    
     built to  proven safety standards with  the appropriate                                                                    
     materials.                                                                                                                 
                                                                                                                                
     SB  197  would  require   the  Alaska  Housing  Finance                                                                    
     Corporation   to    adopt   the    2018   International                                                                    
     Residential  Code published  by the  International Code                                                                    
     Council  (or later  versions) through  regulation as  a                                                                    
     statewide  residential building  code.  The bill  would                                                                    
     allow AHFC  to amend  the code  as necessary  to adjust                                                                    
     for Alaska's  unique environment,  allow municipalities                                                                    
     to  adopt their  own  residential  building codes,  and                                                                    
     would exempt owner-built  homes and recreational cabins                                                                    
     from the state residential  building code. SB 197 would                                                                    
     also add  to the state  building code an  allowance for                                                                    
     the  use of  locally  graded lumber  produced under  AS                                                                    
     41.17.630 in  residences and  create an  advisory board                                                                    
     to make  recommendations to the Alaska  Housing Finance                                                                    
     Corporation  regarding the  adoption  of the  statewide                                                                    
     building code and necessary updates.                                                                                       
                                                                                                                                
9:10:54 AM                                                                                                                    
                                                                                                                                
Co-Chair  Olson wondered  whether  a building  that was  not                                                                    
built by a contractor would be unsafe.                                                                                          
                                                                                                                                
9:11:04 AM                                                                                                                    
                                                                                                                                
Senator Bjorkman replied that  the application and design of                                                                    
the bill  was a consumer  protection for people who  hired a                                                                    
licensed builder  to build  them a home.  He stated  that it                                                                    
did not  apply to  owner-builders who  built homes.  He said                                                                    
that  the  provision  would be  a  consumer  protection  for                                                                    
people who hired a licensed contractor to build a home.                                                                         
                                                                                                                                
9:11:51 AM                                                                                                                    
                                                                                                                                
Co-Chair Olson  relayed that his  question pertained  to the                                                                    
building of  homes in rural  areas that did not  have access                                                                    
to contractors.                                                                                                                 
                                                                                                                                
9:12:14 AM                                                                                                                    
                                                                                                                                
Senator  Bjorkman  replied  that there  was  no  enforcement                                                                    
measure in the  state that would prevent building  a home in                                                                    
rural areas.                                                                                                                    
                                                                                                                                
9:12:30 AM                                                                                                                    
                                                                                                                                
Senator Bishop surmised that, if  something failed, the onus                                                                    
for documentation  of the  build would  be on  the homeowner                                                                    
and the contractor.                                                                                                             
                                                                                                                                
9:12:48 AM                                                                                                                    
                                                                                                                                
Senator Bjorkman agreed.  He said that currently,  if a home                                                                    
was  found  to  not  reach  the  residential  building  code                                                                    
standard,  there was  no recourse  for  the homeowner  under                                                                    
statute to hold the contractor accountable.                                                                                     
                                                                                                                                
9:12:53 AM                                                                                                                    
                                                                                                                                
Senator Bishop wondered how homeowners  would be informed of                                                                    
their duty  to document  the process of  the build  and file                                                                    
evidence of the process in the event of future litigation.                                                                      
                                                                                                                                
9:13:22 AM                                                                                                                    
                                                                                                                                
Senator  Bjorkman responded  that  the  court would  require                                                                    
evidence presented that  a structure was not up  to code. He                                                                    
said that the  current issue was that if a  customer hired a                                                                    
contractor   to  build   a  home,   that  was   later  found                                                                    
uninhabitable because  it did  not meet  code, there  was no                                                                    
code  in statute  to hold  the contractor  accountable under                                                                    
the law.                                                                                                                        
                                                                                                                                
9:14:11 AM                                                                                                                    
                                                                                                                                
Senator  Bishop  reiterated   his  concern  that  homeowners                                                                    
should be informed  that every step of  the building process                                                                    
should  be   documented  and  available  in   the  event  of                                                                    
litigation.                                                                                                                     
                                                                                                                                
9:14:39 AM                                                                                                                    
                                                                                                                                
Senator  Bjorkman thought  that education  was available  to                                                                    
homeowners. He noted that home inspections were available.                                                                      
                                                                                                                                
9:15:07 AM                                                                                                                    
                                                                                                                                
Senator  Kiehl  spoke of  the  interaction  of buildings  in                                                                    
communities that were  built before the code.  He noted that                                                                    
the  code would  be  tied to  a  contractor's licensure.  He                                                                    
wondered  whether  contractors  would be  held  to  assuring                                                                    
buildings  that  were built  before  the  code existed,  but                                                                    
worked on after the code  was established, would be expected                                                                    
to bring those previously built buildings up to code.                                                                           
                                                                                                                                
9:15:59 AM                                                                                                                    
                                                                                                                                
Senator Bjorkman replied  that there was a  legal opinion on                                                                    
the matter.  He stated that if  the home was built  prior to                                                                    
the law  being enacted  the  law would only apply  to houses                                                                    
built after the bills effective date.                                                                                           
                                                                                                                                
9:16:29 AM                                                                                                                    
Senator Kiehl  asked about financing. He  wondered whether a                                                                    
situation would be  created where a homeowner  would have to                                                                    
bring a  home built before  the enactment  of the law  up to                                                                    
code before they could secure financing.                                                                                        
                                                                                                                                
9:16:56 AM                                                                                                                    
                                                                                                                                
Senator Bjorkman responded that deferred to AHFC.                                                                               
                                                                                                                                
9:17:26 AM                                                                                                                    
                                                                                                                                
JIMMY  ORD,  DIRECTOR  OF RESEARCH  AND  RURAL  DEVELOPMENT,                                                                    
ALASKA  HOUSING FINANCE  CORPORATION (AHFC),  ANCHORAGE (via                                                                    
teleconference),   responded   that    regardless   of   the                                                                    
legislation, AHFC  had lending requirements that  would need                                                                    
to be in place.                                                                                                                 
                                                                                                                                
9:18:16 AM                                                                                                                    
                                                                                                                                
Senator Kiehl  surmised that existing  or older  homes would                                                                    
need upgrades to get additional  financing and would need to                                                                    
bring  their  homes up  to  code  to  get financing  in  the                                                                    
future.                                                                                                                         
                                                                                                                                
9:18:46 AM                                                                                                                    
                                                                                                                                
Mr. Ord replied  in the negative. He said  that older houses                                                                    
only  had  to  be  brough   up  to  code  if  a  substantial                                                                    
percentage of the home was being retrofitted.                                                                                   
                                                                                                                                
9:19:17 AM                                                                                                                    
                                                                                                                                
Senator Kiehl  requested a follow  up of the  percentage and                                                                    
noted  that there  were communities  in the  state that  had                                                                    
building codes and some that did not.                                                                                           
                                                                                                                                
9:19:35 AM                                                                                                                    
                                                                                                                                
Mr. Ord agreed to provide that information.                                                                                     
                                                                                                                                
9:19:44 AM                                                                                                                    
                                                                                                                                
Senator Wilson  asked for the corporations   position on the                                                                    
bill.                                                                                                                           
                                                                                                                                
9:20:01 AM                                                                                                                    
                                                                                                                                
Mr. Ord responded that that AHFC did not have a position on                                                                     
the bill.                                                                                                                       
                                                                                                                                
9:20:27 AM                                                                                                                    
                                                                                                                                
LAURA ACHEE, STAFF, SENATOR JESSE BJORKMAN, spoke to the                                                                        
Sectional Analysis (copy on file):                                                                                              
                                                                                                                                
     Section 1: Amends  AS 08.18.025(a)   (c) to  add to the                                                                    
     requirements  for receiving  or renewing  a residential                                                                    
     contractor   endorsement   from   the   Department   of                                                                    
     Commerce, Community,  and Economic Development  to pass                                                                    
     a  test   of  the  person's  knowledge   of  the  state                                                                    
     residential building code. The  bill would also require                                                                    
     this endorsement  to build a residence  that is subject                                                                    
     to the state residential building code.                                                                                    
                                                                                                                                
     Section 2:  Would add a new  subsection AS 08.18.025(d)                                                                    
     that  requires compliance  with  the state  residential                                                                    
     building  code   to  maintain   residential  contractor                                                                    
     endorsement  unless the  area  where  the residence  is                                                                    
     being  built is  governed  by  a municipal  residential                                                                    
     building code.                                                                                                             
                                                                                                                                
     Section  3:  Amends  AS 08.18.171(16)  to  add  to  the                                                                    
     definition  of a  "residential contractor"  a reference                                                                    
     to dwellings covered by  the state residential building                                                                    
     code.                                                                                                                      
                                                                                                                                
     Section 4: Would add a  new subsection AS 08.18.171(20)                                                                    
     to  define "state  residential  building  code" as  the                                                                    
     code adopted under AS 18.60.860(a).                                                                                        
                                                                                                                                
     Section 5: Would amend AS  18.56.088(c) to add adoption                                                                    
     and  administration  of  a state  residential  building                                                                    
     code  to  the  duties  of the  Alaska  Housing  Finance                                                                    
     Corporation board.                                                                                                         
                                                                                                                                
     Section  6: Amends  AS  18.56.300(a)  to reference  the                                                                    
     state  residential building  code  in the  requirements                                                                    
     for  financing  the  construction   or  purchase  of  a                                                                    
     residence.                                                                                                                 
                                                                                                                                
     Section  7: Amends  AS  18.56.300(b)  to reference  the                                                                    
     state  residential building  code  in the  requirements                                                                    
     for  a residence  to pass  a home  inspection prior  to                                                                    
     purchase or loan approval.                                                                                                 
                                                                                                                                
     Section  8: Amends  AS  18.56.300(e)(3)  to change  the                                                                    
     definition of  "state building  code" from  the Uniform                                                                    
     Building  Code  adopted  by the  Department  of  Public                                                                    
     Safety to the residential  building code adopted by the                                                                    
     Alaska   Housing    Finance   Corporation    under   AS                                                                    
     18.60.860(a).                                                                                                              
                                                                                                                                
     Section  9:  Adds  a  new  section  AS  18.60.860  that                                                                    
     requires  the  Alaska  Housing Finance  Corporation  to                                                                    
     adopt by  regulation as the state  residential building                                                                    
     code the 2018  International Residential Code published                                                                    
     by the  International Code Council or  a later version.                                                                    
     The state  residential building code may  be amended as                                                                    
     necessary  to accommodate  Alaska's unique  environment                                                                    
     and must  allow for  the use  of locally  graded lumber                                                                    
     produced  and used  under  AS  41.17.630. The  language                                                                    
     allows municipalities  to adopt a  residential building                                                                    
     code and  provides that other codes  in Alaska statutes                                                                    
     supersede the state building  code where they conflict.                                                                    
     Exceptions to  the state residential building  code are                                                                    
     provided   for  owner-built   homes  and   recreational                                                                    
     cabins. Adds  a new  section AS 18.60.865  that creates                                                                    
     the  Alaska State  Building Code  Council appointed  by                                                                    
     the Board  of Directors  of the Alaska  Housing Finance                                                                    
     Corporation  to  provide  recommendations to  the  AHFC                                                                    
     Board  regarding the  adoption  of and  updates to  the                                                                    
     state residential building code.                                                                                           
                                                                                                                                
     Section 10:  Would add language  to the  uncodified law                                                                    
     that  the provisions  amended in  AS  08.18.025 and  AS                                                                    
     08.18.025(a)   in  the   bill  would   only  apply   to                                                                    
     contractors  receiving  endorsements  on or  after  the                                                                    
     effective  date. Also,  the state  residential building                                                                    
     code adopted  in AS 18.60.860  would only apply  to new                                                                    
     residences built on or after the effective date.                                                                           
                                                                                                                                
     Section 11:  Provides an effective  date of  January 1,                                                                    
     2025.                                                                                                                      
                                                                                                                                
9:24:50 AM                                                                                                                    
                                                                                                                                
DAVID   BUNTS,   PRESIDENT,   ALASKA   STATE   HOMEBUILDERS'                                                                    
ASSOCIATION (via  teleconference), spoke  in support  of the                                                                    
legislation. He offered  a brief history of  the building of                                                                    
homes during the 1970s and  1980. He offered some background                                                                    
on  the  licensing   of  builders  in  the   1990s  and  the                                                                    
relationship requirements  of the AHFC. He  relayed that the                                                                    
code was  a minimum  standard and  not a  high bar.  He said                                                                    
that municipalities  could add to  the code, which  could be                                                                    
considered burdensome  by builders. He stated  that the bill                                                                    
would not  change how a   truly professional   builder would                                                                    
operate.  He  supported  AHFC  administering  the  code.  He                                                                    
stressed that the  bill was a consumer  protection bill that                                                                    
protected all stakeholders.                                                                                                     
                                                                                                                                
9:29:22 AM                                                                                                                    
                                                                                                                                
Co-Chair  Olson  asked  about   building  a  house  on  Sait                                                                    
Lawrence Island.  He spoke of  delays in  getting inspectors                                                                    
to remote locations.                                                                                                            
                                                                                                                                
9:29:47 AM                                                                                                                    
                                                                                                                                
Mr. Bunts replied that if AHFC  money was not being used the                                                                    
house did not need inspection.                                                                                                  
                                                                                                                                
9:30:28 AM                                                                                                                    
                                                                                                                                
Co-Chair Olson thought that the bill mandated inspections.                                                                      
                                                                                                                                
9:30:31 AM                                                                                                                    
                                                                                                                                
Mr. Bunts disagreed.                                                                                                            
                                                                                                                                
9:30:45 AM                                                                                                                    
                                                                                                                                
Senator  Kiehl asked  about  energy efficiency  requirements                                                                    
versus the residential building code.                                                                                           
                                                                                                                                
9:31:20 AM                                                                                                                    
                                                                                                                                
Mr. Bunts said that AHFC  had essentially a building code if                                                                    
someone wanted to use AHFC money to build a house.                                                                              
                                                                                                                                
9:31:49 AM                                                                                                                    
                                                                                                                                
Co-Chair  Olson  asked  again  about  inspections  in  rural                                                                    
areas.                                                                                                                          
                                                                                                                                
9:32:09 AM                                                                                                                    
                                                                                                                                
Senator  Bjorkman said  that the  residential building  code                                                                    
would  not change  anything for  folks  that were  currently                                                                    
financing or would  finance any building in  the future. The                                                                    
building  code  provision  protected cash  buyers  who  were                                                                    
paying cash to contractors building  a home and did not have                                                                    
protections in place through a lending institution.                                                                             
                                                                                                                                
9:34:01 AM                                                                                                                    
                                                                                                                                
Co-Chair Stedman  asked about  getting a  physical inspector                                                                    
to  rural areas  and wondered  whether a  virtual inspection                                                                    
could be used.                                                                                                                  
                                                                                                                                
9:35:03 AM                                                                                                                    
                                                                                                                                
Senator  Bjorkman  reiterated  that  the  bill  required  no                                                                    
inspection or enforcement of code.                                                                                              
                                                                                                                                
9:36:06 AM                                                                                                                    
                                                                                                                                
Mr. Ord  discussed the requirements for  energy and building                                                                    
standards  for  residential  structures. He  furthered  that                                                                    
AHFC could do inspections virtually.                                                                                            
                                                                                                                                
9:37:28 AM                                                                                                                    
                                                                                                                                
Co-Chair  Stedman surmised  that  there could  be a  virtual                                                                    
inspection done in rural areas.                                                                                                 
                                                                                                                                
9:37:42 AM                                                                                                                    
                                                                                                                                
Mr. Ord agreed that AHFC  could do virtual inspections video                                                                    
phonically.                                                                                                                     
                                                                                                                                
9:37:53 AM                                                                                                                    
                                                                                                                                
Senator Bishop noted that on page 5, line 13:                                                                                   
                                                                                                                                
     When the  unit of residential  housing is located  in a                                                                    
     rural  area, the  person who  makes the  inspection may                                                                    
     use methods  other than a personal  physical inspection                                                                    
     to make  the inspection  if the  method is  approved by                                                                    
     the  corporation, and  variations  from the  applicable                                                                    
     code may  be accepted at the  corporations  discretion,                                                                    
     if  the person  authorized  to inspect  the unit  under                                                                    
     this  subsection  satisfies  the corporation  that  the                                                                    
     variation  does  not  adversely affect  the  structural                                                                    
     integrity of the  unit or the health and  safety of the                                                                    
     occupants.                                                                                                                 
9:38:34 AM                                                                                                                    
                                                                                                                                
ERIC  VISSER, FORMER  PRESIDENT,  ALASKA STATE  HOMEBUILDERS                                                                    
ASSOCIATION  (via teleconference),  testified in  support of                                                                    
the  bill.  He  believed   that  the  legislation  solved  a                                                                    
critical  problem of  protecting homeowners  from contactors                                                                    
who operated outside of the  building code. He supported the                                                                    
establishing  of the  Alaska  State  Building Code  Council,                                                                    
which would be comprised of 11 members.                                                                                         
                                                                                                                                
9:40:45 AM                                                                                                                    
                                                                                                                                
Senator Kiehl queried the  comparison of current residential                                                                    
standards  held by  AHFC to  the  residential building  code                                                                    
contained in the bill.                                                                                                          
                                                                                                                                
9:41:15 AM                                                                                                                    
                                                                                                                                
Mr.  Visser responded  that there  were ten  pages of  local                                                                    
amendments that  had been made to  the nationally recognized                                                                    
code.                                                                                                                           
                                                                                                                                
9:41:55 AM                                                                                                                    
                                                                                                                                
Senator  Bishop wondered  whether the  bill affected  tribal                                                                    
housing authorities.                                                                                                            
                                                                                                                                
9:42:20 AM                                                                                                                    
                                                                                                                                
Senator Bjorkman replied that he did not know.                                                                                  
                                                                                                                                
9:42:48 AM                                                                                                                    
                                                                                                                                
Co-Chair Olson asked about the fiscal note.                                                                                     
                                                                                                                                
9:42:58 AM                                                                                                                    
                                                                                                                                
Mr. Ord  replied that  the fiscal  note, OMB  component 110,                                                                    
provided that  AHFC anticipated an annual  operating cost of                                                                    
approximately  $250,000,  which included  personal  services                                                                    
incurred  and the  implementation of  the provisions  of the                                                                    
legislation,  including  necessary   travel,  services,  and                                                                    
commodities.                                                                                                                    
                                                                                                                                
9:43:24 AM                                                                                                                    
                                                                                                                                
Co-Chair  Olson  surmised  that the  funding  would  not  be                                                                    
undesignated general funds.                                                                                                     
                                                                                                                                
9:43:31 AM                                                                                                                    
                                                                                                                                
Mr.  Ord replied  in  the affirmative  and  stated that  the                                                                    
funding would be corporate funds.                                                                                               
                                                                                                                                
9:44:15 AM                                                                                                                    
                                                                                                                                
SYLVAN  ROBB, DIRECTOR,  DIVISION OF  CORPORATIONS, BUSINESS                                                                    
AND   PROFESSIONAL   LICENSING,  DEPARTMENT   OF   COMMERCE,                                                                    
COMMUNITY AND  ECONOMIC DEVELOPMENT, (DCCED)  explained that                                                                    
the fiscal note, OMB component  2360, was a zero fiscal note                                                                    
as the department would absorb  the minimal costs associated                                                                    
with the bill.                                                                                                                  
                                                                                                                                
9:44:54 AM                                                                                                                    
                                                                                                                                
Co-Chair Olson  understood that  the department  handled the                                                                    
licensing of building contractors.                                                                                              
                                                                                                                                
9:45:00 AM                                                                                                                    
                                                                                                                                
Ms. Robb agreed.                                                                                                                
                                                                                                                                
9:45:06 AM                                                                                                                    
                                                                                                                                
Co-Chair  Olson  wondered  whether claims  against  building                                                                    
contractors would be of cost to the department.                                                                                 
                                                                                                                                
9:45:13 AM                                                                                                                    
                                                                                                                                
Ms. Robb responded that the intent  of the bill was that the                                                                    
enforcement would  be a persons   ability to sue  a builder.                                                                    
She said that current costs were borne by the licensees.                                                                        
                                                                                                                                
9:46:00 AM                                                                                                                    
                                                                                                                                
Senator Bjorkman agreed with Ms. Robb's assessment.                                                                             
                                                                                                                                
9:46:13 AM                                                                                                                    
                                                                                                                                
Senator  Wilson thought  that general  funds  were used  for                                                                    
investigations against licensees.                                                                                               
                                                                                                                                
9:46:27 AM                                                                                                                    
Ms.  Robb  responded that  the  governor's  FY24 budget  had                                                                    
proposed a change of fund  source to the general fund, which                                                                    
had  not  ben  accepted  by the  legislature,  although  the                                                                    
governor had asked again in FY25.                                                                                               
                                                                                                                                
9:47:03 AM                                                                                                                    
                                                                                                                                
Senator Kiehl spoke  to AHFCs  fiscal note.  He wondered why                                                                    
the council  was necessary when  the work was  already being                                                                    
done.                                                                                                                           
                                                                                                                                
9:47:41 AM                                                                                                                    
                                                                                                                                
Senator Bjorkman responded that he  was not certain that the                                                                    
council  would  cost  what  was   currently  stated  in  the                                                                    
legislation.                                                                                                                    
                                                                                                                                
SB  197  was  HEARD  and   HELD  in  committee  for  further                                                                    
consideration.                                                                                                                  
                                                                                                                                
SENATE BILL NO. 183                                                                                                           
                                                                                                                                
     "An Act relating to  the workers' compensation benefits                                                                    
     guaranty fund; and providing for an effective date."                                                                       
                                                                                                                                
9:49:40 AM                                                                                                                    
                                                                                                                                
SENATOR    JESSE   BJORKMAN,    SPONSOR,   introduced    the                                                                    
legislation.  He spoke  to the  Sponsor  Statement (copy  on                                                                    
file):                                                                                                                          
                                                                                                                                
     Senate  Bill  183, "An  Act  relating  to the  workers'                                                                    
     compensation benefits guaranty  fund; and providing for                                                                    
     an effective date," would  better ensure timely payment                                                                    
     of workers' compensation claims  benefits by making the                                                                    
     Workers'  Compensation Benefits  Guarantee Fund  (Fund)                                                                    
     no  longer subject  to the  sweep provision  in Article                                                                    
     IX, Section  17 of  the Alaska Constitution.  In recent                                                                    
     years,  some of  the  injured  employees filing  claims                                                                    
     with the Fund  have been forced to wait as  long as six                                                                    
     months  to receive  benefits  as  the formerly  healthy                                                                    
     fund  has been  made periodically  insolvent by  annual                                                                    
     Constitutional sweeps.                                                                                                     
                                                                                                                                
     Under the  Alaska Workers' Compensation  Act, employers                                                                    
     of one or more employees  are required to have workers'                                                                    
     compensation  insurance to  cover  medical costs,  lost                                                                    
     wages, and  other benefits due to  employees with valid                                                                    
     on-the-job  injuries.  When  employers  choose  not  to                                                                    
     carry  this  insurance and  fail  to  pay for  employee                                                                    
     claims,  it  puts  an injured  employee  in  a  painful                                                                    
     financial position on  top of the impact  of the injury                                                                    
     itself.                                                                                                                    
                                                                                                                                
     In 2005,  the Legislature  created the  Alaska Workers'                                                                    
     Compensation   Benefits  Guaranty   Fund  to   pay  the                                                                    
     benefits  due  employees   under  the  Alaska  Workers'                                                                    
     Compensation Act  when their employer is  uninsured and                                                                    
     fails  to pay  their  claim. The  Fund  is seeded  with                                                                    
     civil  penalties assessed  against uninsured  employers                                                                    
     and  any reimbursements  the State  is able  to recover                                                                    
     from employers for claims paid from the Fund.                                                                              
                                                                                                                                
     The  timing   of  inflowing  revenues   and  outflowing                                                                    
     payments  may not  align,  sometimes  leaving the  Fund                                                                    
     empty  when  benefit   claims  are  submitted.  Through                                                                    
     careful  management,  the  Fund  had been  built  to  a                                                                    
     sufficient balance prior to FY21  such that it was able                                                                    
     to   make  timely   payments   to  injured   employees.                                                                    
     Unfortunately,  this  many-year  effort  was  nullified                                                                    
     when the FY21  sweep took $3.1 million  from the Fund's                                                                    
     balance. Supplemental Budget requests  in FY22 and FY23                                                                    
     have filled the  gap with General Funds, but  this is a                                                                    
     slow-moving  process leading  to  long  wait times  for                                                                    
     some claimants.                                                                                                            
                                                                                                                                
     While  the Constitutional  sweep provision  is intended                                                                    
     to help  maintain Alaska's long term  fiscal stability,                                                                    
     including the Workers'  Compensation Benefits Guarantee                                                                    
     Fund in the  sweep can have significant  impacts to the                                                                    
     intended  beneficiaries  of  the Fund  while  providing                                                                    
     minimal benefit for the State's savings account.                                                                           
                                                                                                                                
9:51:45 AM                                                                                                                    
                                                                                                                                
CHUCK COLLINS, DIRECTOR,  DIVISION OF WORKERS' COMPENSATION,                                                                    
DEPARTMENT  OF LABOR  AND  WORKFORCE DEVELOPMENT,  explained                                                                    
the reason for the bill,  and he highlighted the zero fiscal                                                                    
note, OMB Component 2820.                                                                                                       
                                                                                                                                
9:54:43 AM                                                                                                                    
                                                                                                                                
Co-Chair Stedman  spoke of the   sweep  issue  and described                                                                    
the process. He  asked how long it had  taken the department                                                                    
to pay the claims form 2022 and 2023.                                                                                           
                                                                                                                                
9:55:38 AM                                                                                                                    
                                                                                                                                
Mr. Collins responded  that the benefits had  been paid, but                                                                    
a  supplemental   was  being   requested  in  2024   due  to                                                                    
substantial injury settlements.                                                                                                 
                                                                                                                                
9:56:55 AM                                                                                                                    
                                                                                                                                
Co-Chair Stedman felt  that a cash flow  statements for FY22                                                                    
and FY23 would be helpful to the committee.                                                                                     
                                                                                                                                
9:58:15 AM                                                                                                                    
                                                                                                                                
Mr. Collins agreed to provide that information.                                                                                 
                                                                                                                                
9:58:25 AM                                                                                                                    
                                                                                                                                
Co-Chair  Olson   asked  when   the  information   could  be                                                                    
expected.                                                                                                                       
                                                                                                                                
9:58:27 AM                                                                                                                    
                                                                                                                                
Mr. Collins  replied that it  would probably be a  couple of                                                                    
days.                                                                                                                           
                                                                                                                                
9:58:45 AM                                                                                                                    
                                                                                                                                
Senator Wilson  thought that all the  accounts vulnerable to                                                                    
the sweep  should be  reviewed to  assure that  the programs                                                                    
they funded were safe.                                                                                                          
                                                                                                                                
9:59:27 AM                                                                                                                    
                                                                                                                                
Co-Chair  Olson understood  that Senator  Wilson was  hoping                                                                    
the Legislative Finance Division would research the matter.                                                                     
                                                                                                                                
9:59:32 AM                                                                                                                    
                                                                                                                                
Senator Wilson replied in the affirmative.                                                                                      
                                                                                                                                
9:59:51 AM                                                                                                                    
                                                                                                                                
Co-Chair Olson OPENED and CLOSED public testimony.                                                                              
SB 183 was HEARD and HELD in committee for further                                                                              
consideration.                                                                                                                  
                                                                                                                                
ADJOURNMENT                                                                                                                   
10:00:39 AM                                                                                                                   
                                                                                                                                
The meeting was adjourned at 10:00 a.m.                                                                                         
                                                                                                                                
                                                                                                                                

Document Name Date/Time Subjects
SB197 Sponsor Statement Ver S.pdf SFIN 3/6/2024 9:00:00 AM
SL&C 2/12/2024 1:30:00 PM
SB 197
SB197 Sectional Analysis Ver S.pdf SFIN 3/6/2024 9:00:00 AM
SL&C 2/12/2024 1:30:00 PM
SB 197
SB197 Supporting Documents-IRC Use in US.pdf SFIN 3/6/2024 9:00:00 AM
SL&C 2/21/2024 1:30:00 PM
SB 197
SB197 Supporting Documents-Legal Opinion on Professsional Certificates.pdf SFIN 3/6/2024 9:00:00 AM
SL&C 2/21/2024 1:30:00 PM
SB 197
SB 197 support letter.pdf SFIN 3/6/2024 9:00:00 AM
SB 197
SB183 Sponsor Statement verA.pdf SFIN 3/6/2024 9:00:00 AM
SL&C 2/12/2024 1:30:00 PM
SB 183
SB183 Sectional Analysis ver A.pdf SFIN 3/6/2024 9:00:00 AM
SL&C 2/12/2024 1:30:00 PM
SB 183
SB183 Supporting Documents-AWCB Letter to Claimant.pdf SFIN 3/6/2024 9:00:00 AM
SL&C 2/12/2024 1:30:00 PM
SB 183
SB183 Supporting Documents-AWCB_Resolution 23-01.pdf SFIN 3/6/2024 9:00:00 AM
SL&C 2/12/2024 1:30:00 PM
SB 183
SB183 Supporting Documents-Overview and History of WCBG Fund.pdf SFIN 3/6/2024 9:00:00 AM
SL&C 2/12/2024 1:30:00 PM
SB 183
SB 197 2024-01 Building Code Support (completed-Adobe Sign).pdf SFIN 3/6/2024 9:00:00 AM
SB 197
SB 197 2024_CCHRC Board of Directors.pdf SFIN 3/6/2024 9:00:00 AM
SB 197
SB 197 Support KPBA.pdf SFIN 3/6/2024 9:00:00 AM
SB 197
SB 197 AAHA SB197 Response Senate Finance Committee 3-11-24.pdf SFIN 3/6/2024 9:00:00 AM
SB 197