Legislature(2007 - 2008)
03/12/2008 02:57 PM Senate FIN
| Audio | Topic |
|---|---|
| Start | |
| SB289 | |
| SB260 | |
| SB120 | |
| SB246 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
SENATE FINANCE COMMITTEE
March 12, 2008
2:57 p.m.
CALL TO ORDER
Co-Chair Stedman called the Senate Finance Committee meeting
to order at 2:57:17 PM.
MEMBERS PRESENT
Senator Lyman Hoffman, Co-Chair
Senator Bert Stedman, Co-Chair
Senator Charlie Huggins, Vice-Chair
Senator Kim Elton
Senator Donny Olson
Senator Joe Thomas
Senator Fred Dyson
MEMBERS ABSENT
None
ALSO PRESENT
John Weise, Staff, Senator Lyman Hoffman; Dan Fauske,
CEO/Executive Director, Alaska Housing Finance Corporation,
Department of Revenue; Kate Troll, Executive Director,
Alaska Conservation Alliance; Megan Waggoner, Juneau;
Madelin Siedler, Juneau; Representative Mike Doogan; Senator
Johnny Ellis; Dana Owen, Staff, Senator Johnny Ellis; Tom
Brice, Agent, Alaska District Council of Labors; Don
Etheridge, Alaska AFL-CIO
PRESENT VIA TELECONFERENCE
Scott Waterman, Valdez; David Ruiz, Member, Laborers Union
341; Larry Brink, Anchorage; Elsa Billingham, Anchorage;
Wayne Stevens, President, Alaska State Chamber of Commerce;
Steve Haagenson, Executive Director, Alaska Energy
Authority; Jerry McCutcheon, Anchorage; Phil Steyer,
Director, Chugach Electric Association
SUMMARY
SB 289 "An Act relating to home energy conservation and
weatherization for purposes of certain programs of
the Alaska Housing and Finance Corporation."
SB 289 was heard and HELD in Committee for further
consideration.
CSHB 260(STA)
"An Act relating to a State Officers Compensation
Commission and establishing how legislators, the
governor, the lieutenant governor, and executive
department heads shall be compensated; providing
for an effective date by repealing the effective
dates of certain sections of ch. 124, SLA 1986;
and providing for an effective date."
CSHB 260(STA) was heard and HELD in Committee for
further consideration.
SB 120 "An Act relating to the calculation and payment of
unemployment compensation benefits; and providing
for an effective date."
SB 120 was heard and HELD in Committee for further
consideration.
SB 246 "An Act establishing a working group to analyze
the potential of a hydroelectric power project on
the Susitna River; and providing for an effective
date."
SB 246 was heard and HELD in Committee for further
consideration.
2:57:27 PM
SENATE BILL NO. 289
"An Act relating to home energy conservation and
weatherization for purposes of certain programs of the
Alaska Housing and Finance Corporation."
Co-Chair Hoffman, sponsor, announced that SB 289 was
introduced to address energy needs throughout the state.
JOHN WEISE, STAFF, CO-CHAIR HOFFMAN, referred to a handout
entitled "SB 289 Home Energy" (copy on file.) He explained
page 1, the Housing Assessment Survey 2005. It was
estimated that in 2005 there were about 277,000 housing
units in Alaska. The percentage of older housing was
increasing and the percentage of newer housing was
decreasing. Households eligible for weatherization - 60
percent of median income - numbered about 45,000. The
number of households that reported being drafty was about 45
percent or about half of all houses in Alaska.
Mr. Weise explained on page 2 that SB 289 would work with
the Alaska Housing Finance Corporation (AHFC) to be more
responsive to Alaskan's being impacted by high energy costs.
The bill updates and expands the home energy efficiency and
weatherization programs within AHFC.
Mr. Weise turned to page 3, weatherization. The focus is on
energy efficient improvements and directs available funding
to items that will save the most energy. Typical
improvements include air sealing, insulating, and improving
heating efficiencies.
Mr. Weise commented on page 4, Energy Efficiency and
Weatherization Program. He related that after meeting with
AHFC, a two-pronged approach was decided. The first was to
focus on the weatherization program already in effect. It
is a grant program available to Alaskans at the 60 percent
median income level. This bill would raise the level to 100
percent median income. Low income Alaskans would continue
to receive priority.
Mr. Weise reviewed a graph on page 5, Median Income
Guidelines.
3:02:33 PM
Mr. Weise pointed out the impact of SB 289 as shown on page
6. In past years roughly $4.8 million was spent a year and
600 households were helped. Funding at the 60 percent level
would not meet Alaska's needs. The expanded program, which
would request $200 million, adjusts the median to 100
percent and would serve 17,400 households.
Mr. Weise turned to the second program as describe on page
7, Home Energy Rating Rebate Program. Homeowners would need
to self finance or get a loan and an energy audit would be
required. The rebate would be based on improved energy star
ratings.
Mr. Weise detailed the Energy Star Ratings on page 8. Each
step would equal an increase in the rebate. He shared
expectations based on past research listed on page 9. There
is an expected 30 percent reduction in home energy costs.
Mr. Weise summarized SB 289 by saying it would be an
improved and more flexible process for AHFC to respond to
rising fuel costs. Existing AHFC programs will be more
responsive and more Alaskans will be helped.
3:06:33 PM
Mr. Weise summarized that the bill removes two programs no
longer in existence. It adds energy efficiency, as shown on
page 3, line 6 of the bill, and moves to 100 percent median
income.
Co-Chair Stedman requested a synopsis of the program's
beginnings and successes.
3:07:47 PM
DAN FAUSKE, CEO/EXECUTIVE DIRECTOR, ALASKA HOUSING FINANCE
CORPORATION, DEPARTMENT OF REVENUE, thought that the
weatherization program has been around for about 20 years.
SCOTT WATERMAN, VALDEZ, reported that the weatherization
program has been around since 1978. The home energy rebate
program was in existence from 1992 to about 1995 when the
funding ran out. It has not been reauthorized for refunding
since then.
Co-Chair Stedman asked how many years it has been
underfunded. Mr. Fauske replied that there is a line item
in the capital budget for weatherization. It was generally
funded between $3.5 million and $6 million. He reported
that the weatherization is especially effective now with
high oil prices. He detailed how weatherization results in
savings to a homeowner.
Co-Chair Hoffman pointed out that housing construction is
down at this time. Mr. Fauske explained that prior to the
bill there was interest by home builders in home
weatherization under the existing program. There is a great
deal of excitement by home builders to implement an expanded
program.
3:13:26 PM
KATE TROLL, EXECUTIVE DIRECTOR, ALASKA CONSERVATION ALLIANCE
(ACA), testified in support of SB 289. She related that
energy issues are a priority in ACA's goals, especially in
light of the energy crisis in rural Alaska. Many states
have implemented such energy programs and have provided
savings to home owners. She shared statistics about savings
from such programs and about the possible reduction of
carbon emissions. She emphasized that the bill provides
short-term assistance and she encouraged support, also, for
HB 252, which deals with investing in renewable energy. She
added that SB 289 would create more jobs.
3:18:19 PM
MEGAN WAGGONER, JUNEAU, testified in support of SB 289. She
thought it was increasingly important for homes to be more
energy efficient. She termed the subsidy an excellent
incentive for people to start looking at their energy
habits. She noted that rural communities would benefit the
most from this legislation, but that all communities would
be grateful.
MADELIN SIEDLER, JUNEAU, spoke in support of SB 289. She
related that she belongs to a generation that is beginning
to value responsible resource consumption, and home energy
efficiency is a keystone issue in this movement. She
maintained that we have a duty to ourselves and to the
future to conserve resources. She mentioned the financial
benefits from this legislation. She called SB 289 a
tremendous step in the right direction to a more sustainable
energy future.
SB 289 was heard and HELD in Committee for further
consideration.
AT-EASE: 3:21:06 PM
RECONVENE: 4:01:20 PM
CS FOR HOUSE BILL NO. 260(STA)
"An Act relating to a State Officers Compensation
Commission and establishing how legislators, the
governor, the lieutenant governor, and executive
department heads shall be compensated; providing for an
effective date by repealing the effective dates of
certain sections of ch. 124, SLA 1986; and providing
for an effective date."
REPRESENTATIVE MIKE DOOGAN, sponsor, reported that the bill
is an attempt to restore a compensation commission modeled
after a compensation commission in Alaska in the late
1970's, the last compensation system that worked. There are
several repealers in the bill that would take out some
aspects of current law. The bill would establish a
commission of five citizen members all appointed by the
Governor. One would be appointed from a list prepared by
the Speaker of the House, one from a list provided by the
President of the Senate, and the other three would be at
large members. None of the members can have served in a
position over which the commission has authority, for the
previous four years.
Representative Doogan explained that the bill covers the
Governor, the lieutenant governor, executive department
heads, and legislators. It is staffed by the Department of
Administration. There is a fiscal note for $7,500. The law
requires the commission to report at least every two years.
It does not require that the report change compensation.
The recommendations of the commission take affect unless
they are specifically rejected by the legislature. The
legislature retains authority over what happens to
compensation because it does require a specific
appropriation to fund it. This is not an arrangement
peculiar to Alaska. He referred to a report in members'
packets from the National Council of State Legislators.
4:05:31 PM
Senator Thomas asked about the legal services memorandum.
Representative Doogan recalled that in the House State
Affairs Committee, a question was raised whether or not this
legislation should be a resolution. The letter is a legal
opinion that it should be a bill.
Co-Chair Stedman asked if a sunset provision is needed.
Representative Doogan hoped it would continue into infinity,
if it works. If there are problems, it can be removed from
statute.
Co-Chair Hoffman noted that the commissioner's
recommendations would take effect unless rejected by the
legislature. He wondered if that would include the first
recommendation. Representative Doogan said it would.
Senator Elton asked if "executive department head" refers to
commissioners. Representative Doogan thought that was the
language needed to refer to commissioners.
Co-Chair Stedman noted the small fiscal note. He said he
would refer the bill to a finance subcommittee made up of
Senator Elton - Chair, Senator Olson, and Senator Dyson.
He felt there was a relationship between the salary
structure and some of the recent improprieties.
CSHB 260(STA) was heard and HELD in Committee for further
consideration.
4:10:22 PM
SENATE BILL NO. 120
"An Act relating to the calculation and payment of
unemployment compensation benefits; and providing for
an effective date."
SENATOR JOHNNY ELLIS, sponsor, explained the intent of the
bill. He reported that the bill is a result of a year-long
stakeholders process conducted in the Senate Labor &
Commerce Committee. There were numerous work sessions with
business groups, labor advocates, Department of Labor
experts, staff, and committee members.
Senator Ellis pointed out that a healthy unemployment
insurance system benefits all Alaskans. It provides a shock
absorber for businesses, individuals and families hit by
economic change. It helps both businesses and workers.
Alaskan workers stay in Alaska, ready for jobs when business
picks up. Employers maintain a stable, ready pool of
experienced workers.
Senator Ellis reported that Alaska's unemployment insurance
system has been soundly managed. It has never depleted its
trust fund. Other states have depleted their trust funds
during time of economic stress. Alaska's system has always
been able to maintain payments, even during the severe 1986
oil price crisis.
Senator Ellis emphasized another important consideration -
wage replacement. The unemployment insurance system seeks
to replace roughly 50 percent of lost wages, a goal
repeatedly confirmed by presidents and commissions over many
decades in the United States. Alaska's wage replacement
rate is dead last among all states. It was 25.8 percent in
2005 and is likely to be even lower today.
Senator Ellis pointed out that Alaska's benefit amount has
fallen far behind wages. The maximum weekly benefit amount
of $248 is the fourth lowest in the nation. Alaska's
maximum weekly benefit amount has not been adjusted since
1997. Eligible wages are capped at $26,500. One third of
Alaskan wage earners earn that much or more, but are limited
to $248 in weekly benefits.
Senator Ellis reported that tax rates are low. Now is the
time to raise the benefit amount. Alaska's 2008
unemployment insurance tax rates for employers are the
lowest in 28 years. There is room to raise the benefit -
the $370, which represents a restrained, compromised weekly
benefit amount. CSSB 120 (L&C) would raise the average
employer cost $25 per employee from the 2008 level. The
total out-of-pocket cost to employers would remain $89 below
2007 level. The employee cost will rise $37 per year over
the 2008 amount.
4:16:09 PM
Senator Ellis said the Senate Labor & Commerce version
represents a compromise. Benefits need to be raised.
Employers view the system as too costly. The bill shifts
costs from the employers to employees. Currently employers
pay 80 percent, employees 27 percent. Under the bill,
employers would pay 73 percent and employees would pay 27
percent. Alaska is one of only two states that actively
mandate employee contributions. New Jersey is the other
one. New Jersey's maximum weekly benefit is $536; Alaska's
is $248. The bill would raise it to $370.
Senator Ellis explained that the bill includes an automatic
inflation proofing mechanism. It will help to avoid having
to address the issue every year.
4:19:17 PM
Senator Ellis stressed that Alaska must enact the
confidentiality statutes. The first eight sections of the
bill are confidentiality related. Federal law requires all
states to protect unemployment insurance data by October
2008. Failure would mean the loss of $19.1 million in
federal funds to the state. Alaska businesses would pay an
additional $87 million in taxes if the statutes are not
updated in regards to confidentiality.
4:20:55 PM
DANA OWEN, STAFF, SENATOR JOHNNY ELLIS, explained a handout
entitled "The Case for Raising Alaska's Unemployment Benefit
Amount" (copy on file.) He highlighted page 1,
"Unemployment Insurance Maximum Weekly Benefit Amount by
State," which illustrates where Alaska's weekly benefit
th
falls in relation to other states. Alaska is 48. New
Jersey, a state that has an employee contribution to the
unemployment insurance tax system, is third from the top.
Mr. Owen discussed page 2, "Alaska's Maximum Weekly Benefit
- Unemployment Insurance 1966 - 2006." This stair step
chart illustrates the history of raises in the unemployment
insurance benefit amount. The rate of $248 was achieved in
1997. This is the longest stretch, since 1966, of not
raising rates.
Mr. Owen interpreted the table on page 3, "Alaska's
Unemployment Insurance - Weekly Benefit Amount Schedule."
This chart shows the effect of the 1997 amendment and the
range of amounts earned under the unemployment insurance
system.
Mr. Owen reported that page 4, "Alaska Unemployment
Insurance - Recipients by Weekly Benefit Amount, 2000." It
illustrates that the largest portion of unemployment
insurance recipients are maxed out at $248 weekly benefit.
Mr. Owen explained the graph on page 5, "Average Wage
Replacement Rates - By State, 2005". Alaska is at the
bottom of the list.
4:23:05 PM
Mr. Owen depicted "Replacement Rates - Western States, 2005"
on page 6. He pointed out that Alaska is the lowest at 25.8
percent.
Mr. Owen showed on page 7 how "The Target Gets Farther Away
- Alaska, 1987 to 2007." The amount of benefit diminishes
in relation to the amount of wage it replaces.
Mr. Owen discussed the "Average Weekly Benefits Amount
(AWBA) as a Percentage of Average Weekly Earnings - 2006."
Mr. Owen noted that the chart on page 9, the "Estimated
Annual Unemployment Insurance Employee Tax Cost with Maximum
Weekly Benefit Amount Increased, Tax Share Ratio Changed,
and Minimum Qualifying Wage Raised, Effective January 2009,"
is what is presented in the Labor and Commerce version of
the bill. The employee rate would increase from $157 to
$194 by the time the rate phases in, in 2013. This is a $37
increase in the employee payment. The graph on page 10
depicts "Estimated Annual Cost per Worker for Average
Employer with Unemployment Insurance Maximum Qualifying Wage
Raised, effective January 2009. In 2007 the estimated
annual cost per worker for the average employer was $584.
In 2008 that number drops dramatically to $470. It
continues to decline until 2010 when the effect of SB 120
comes into play. When it is fully in effect in 2013, the
cost of $495 is still below what employers were paying last
year.
4:25:49 PM
Senator Ellis pointed out that business groups requested
that this bill be phased in. He summarized that the bill is
long overdue, is a reasonable well-crafted compromise, and
is nearly cost neutral. This is the right time; the rates
are the lowest in 28 years. It is a reasonable compromise.
4:27:22 PM
DAVID RUIZ, MEMBER, LABORERS UNION 341, Anchorage, testified
in support of SB 120.
LARRY BRINK, ANCHORAGE, testified in support of SB 120.
ELSA BILLINGHAM, ANCHORAGE, testified in support of SB 120.
She shared a personal story regarding unemployment benefits.
WAYNE STEVENS, PRESIDENT, ALASKA STATE CHAMBER OF COMMERCE,
testified in support of SB 120. He included a letter of
support in the members' packets (copy on file.)
4:36:18 PM
Senator Elton referred to the chart that looks at past costs
of the employee to the employer. The bill reflects a
savings to the employer. He wondered if the figures were
inflation adjusted. Mr. Stevens said he did not know.
Mr. Owen thought they were nominal dollars and did not
include adjustment for inflation. Senator Elton concluded
that the savings to the employer are even greater.
4:38:34 PM
TOM BRICE, AGENT, ALASKA DISTRICT COUNCIL OF LABORS,
testified in support of SB 120. He mentioned a concern
about the perception that the employee will have to buy the
increase, going from 20 percent to 27 percent.
DON ETHERIDGE, ALASKA AFL-CIO, testified in support of SB
120.
4:40:38 PM
Co-Chair Stedman asked if anyone opposed the bill.
Senator Ellis reported that the National Federation of
Independent Businesses included a letter in the members'
packets which stated opposition to the bill. There are
others that don't believe in unemployment insurance or that
it should be paid 100 percent by the employer. He shared
discussions regarding the phase-in aspect of the bill.
Co-Chair Stedman asked how long the groups worked on the
bill. Mr. Owen said about a year. Senator Ellis added that
he has received a letter from AGC stating some support for
the bill.
SB 120 was heard and HELD in Committee for further
consideration.
AT-EASE: 4:44:40 PM
RECONVENE: 4:47:56 PM
SENATE BILL NO. 246
"An Act establishing a working group to analyze the
potential of a hydroelectric power project on the
Susitna River; and providing for an effective date."
Co-Chair Stedman reported that the bill deals with an issue
the committee has been struggling with for several years.
Senator Joe Thomas, sponsor, explained the purpose of the
bill. SB 246 will direct the Governor to have the Alaska
Energy Authority (AEA) analyze the hydroelectric potential
of the Susitna River. The AEA will review and update
studies done in the past, evaluate cost analysis, financing
options, current and future demand, and other critical
issues to determine the feasibility of the project. The
Governor will submit a final report to the legislature not
later than July 1, 2010.
In recent years, Alaskans have seen their energy costs
skyrocket. These ever-rising costs and uncertain supplies
not only make it difficult for Alaskans across the state to
make ends meet, but also have an adverse impact on economic
growth.
The energy produced by a hydroelectric facility is
predictable, stable, clean and low cost. Currently, the
Bradley Lake hydroelectric dam produces energy for the
Railbelt at just $.05 per kWh, far below the $.176 per kWh
that the Interior is currently paying.
In addition to these factors, the majority of our combustion
turbine power plants along the Railbelt are over 30 years
old and all will need retrofitting and replacement that will
cost between $1 billion and $2.5 billion over the next ten
years. Once these replacements begin, we will continue with
the same rising energy costs, fluctuating operating
expenses, and high polluting facilities that the citizens of
the state have experienced in the past.
Twenty-five years ago, when a dam along the Susitna River
was last looked at, Cook Inlet Gas cost $.21 per million
cubic feet, the population and energy demand along the
Railbelt was substantially less than today, and energy costs
were nowhere near what they are today. He said he believes
all these factors, along with environmental and long-term
energy considerations, merit a reopening of the Susitna
discussion.
Nothing is as comprehensive of an approach to reducing
costs, emissions and dependence on finite, non-renewable
energy production for the Railbelt and adjacent areas as a
Susitna Dam project.
Senator Thomas referenced the high price of oil and gas. He
noted that the fiscal note is broken down according to tasks
with the objectives clearly laid out. He encouraged the
committee to support the passage of SB 246.
4:52:25 PM
Co-Chair Stedman asked if this is a broader reaching energy
analysis scope, farther reaching than just the Susitna
project. Senator Thomas agreed that it was not limited to a
Susitna study. Co-Chair Stedman asked what the comparative
energy supplies are: a bullet line, imported LNG, gas line
strikes in Cook Inlet, coal, etc. Senator Thomas added
other potential hydro in the Railbelt.
4:53:44 PM
Senator Elton wondered if the Railbelt Energy Fund was more
appropriate as the funding source. Senator Thomas agreed
that the fund would be appropriate. Co-Chair Stedman noted
that it also includes a look at the transmission lines.
Senator Thomas agreed that it did look at updating
bottlenecks. Co-Chair Stedman thought the committee should
look further into the Railbelt Energy Fund.
Co-Chair Stedman noted the fiscal note contains $2.7 million
in FY 09 followed up by $1.5 million in FY 2010.
4:55:17 PM
STEVE HAAGENSON, EXECUTIVE DIRECTOR, ALASKA ENERGY
AUTHORITY, spoke of the benefits of hydroelectric energy
projects. He suggested identifying the potential savings
and benefits from using hydroelectric energy. He testified
in favor of SB 246.
Co-Chair Stedman offered the numbers of $10 billion to $15
billion for cost of the Susitna hydroelectric project.
JERRY MCCUTCHEON, ANCHORAGE, testified against SB 120.
5:03:52 PM
PHIL STEYER, DIRECTOR, CHUGACH ELECTRIC ASSOCIATION,
testified in support of SB 246. The Railbelt is heavily
dependent on natural gas from the Cook Inlet Basin to
generate electricity. Electricity from the three current
hydro projects is the least expensive, but it is at its
limit. As the price of natural gas has risen, so has the
cost to the public. Chugach is looking for a Susitna
hydroelectric project for the Railbelt.
Senator Thomas concluded by saying that this was a much-
needed project. He thought that future gas should not be
used to solve energy needs, but rather should be sold and
exported. He suggested that there is a strong need to go
forward with this bill.
SB 246 was heard and HELD in Committee for further
consideration.
ADJOURNMENT
The meeting was adjourned at 5:07 PM.
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