Legislature(1993 - 1994)
03/01/1994 01:45 PM Senate L&C
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* first hearing in first committee of referral
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= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
SENATE LABOR AND COMMERCE COMMITTEE
March 1, 1994
1:45 P.M.
MEMBERS PRESENT
Senator Tim Kelly, Chairman
Senator Steve Rieger, Vice-Chairman
Senator Bert Sharp
Senator Georgianna Lincoln
Senator Judith Salo
MEMBERS ABSENT
None
COMMITTEE CALENDAR
SENATE BILL NO. 289
"An Act making appropriations to satisfy the agreed-upon monetary
terms of certain collective bargaining agreements for certain
public employees; and providing for an effective date."
SENATE BILL NO. 338
"An Act relating to the issuance of revenue bonds for acquisition
and construction of the Alaska Discovery Center for the Ship Creek
Project in Anchorage; relating to a study of the feasibility and
financial viability of the Alaska Discovery Center; relating to
construction of the Alaska Discovery Center; and providing for an
effective date."
SB 300 (HOURS SPENT UNDERGROUND BY MINERS) WAS SCHEDULED, BUT NOT
HEARD THIS DATE.
PREVIOUS ACTION
SB 289 - See Labor & Commerce minutes dated 3/1/94.
SB 338 - See Judiciary minutes dated 3/1/94.
WITNESS REGISTER
Nancy Usera, Commissioner
Department of Administration
P.O. Box 110200
Juneau, Ak. 99811-0200
POSITION STATEMENT: Commented on SB 289.
Mila Doyle, Labor Relations Analyst
Department of Administration
Division of Personnel
P.O. Box 110220
Juneau, Ak. 99811-0220
POSITION STATEMENT: Commented on SB 289.
Josh Fink, Legislative Aide
Senator Tim Kelly
State Capitol
Juneau, Ak. 99801-1182
POSITION STATEMENT: Commented on SB 338.
Mark LoPatin
Ship Creek Landing
6960 Orchard Lake Rd., Ste 239
West Bloomfield, Michigan 48322
POSITION STATEMENT: Commented SB 338.
Ken Vasser
Wolforth, Argetsinger, Johnson, and Brecht
900 W. 5th, Ste 600
Anchorage, Ak. 99501
POSITION STATEMENT: Commented on SB 338.
Mark Hickey
Alaska Railroad Corporation
211 4th Street #108
Juneau, Ak. 99801
POSITION STATEMENT: Commented on SB 338.
Bob LeResche
John Nuveen & Co.
4270 Glacier Hwy.
Juneau, Ak. 99801
POSITION STATEMENT: Commented on SB 338.
ACTION NARRATIVE
TAPE 94-12, SIDE A
Number 001
CHAIRMAN KELLY called the Senate Labor and Commerce Committee
meeting to order at 1:45 p.m. and announced SB 289 (APPROP: COST OF OF
CERTAIN LABOR AGREEMENTS) to be up for consideration.
COMMISSIONER NANCY USERA, Department of Administration, said there
is one correction to the Funding Information section which should
say General Fund $92,000 and Other Funds, which are Marine Highway
Funds, should be $276,630.
She said there was a packet for each of them that contained
summaries of the two agreements.
In the Alaska Vocational Technical Center Teachers (AVTEC)
agreement, she said, they are changing to a new teacher based
salary schedule and are eliminating the automatic 3% salary
increases. Included in some of the changes was a management rights
clause which gives much more latitude to management in terms of
determining key things like overtime, work rules, and hours.
Layoff procedures were clarified and sabbaticals for teachers were
only at the employer's discretion and only after 7 years of
service.
In terms of their goal to provide greater flexibility and more
productivity and accountability, there was a conversion. The
annual leave provision was eliminated and replaced with 5 personal
leave days instead.
The dispute resolution procedure was clarified. This contract also
delineates that additional education credits have to be job
related.
On health insurance they were able to get all of the units to make
a choice either on the employer provided plan which will be
provided or they could convert to a trust of a comparable amount of
money and the union can provide its own insurance to its members.
SENATOR SALO asked if this was an entirely contribution defined
plan. COMMISSIONER USERA answered that it was before. SENATOR
SALO asked if the employee has any protection from the plan
becoming absolutely watered down? COMMISSIONER USERA said no and
explained that each unit was given their choice as she mentioned.
She said she believes that there is no benefit more important to an
employee than their health benefits. Her interest is in trying to
provide the best, most meaningful benefits within the funds
available to do that. She recognizes that benefits of a laborer
would be different from those of a worker behind a desk.
SENATOR RIEGER asked if it was the state's policy to target a cost
to the employer for his plan? COMMISSIONER USERA answered no and
said the state's contribution was currently at $423.50. One change
now is that everyone has to pay something to go to the doctor which
has made a big difference in cost containment.
SENATOR RIEGER asked if it was policy to not increase the $423.50?
COMMISSIONER USERA said she couldn't imagine a plan that would pay
more than that. She said there will be more and more effort
towards cost containment because of national concern with health
care.
As for the Licensed Alaska Marine Highway Engine Room Employees
(MEBA) agreement, she said, $38,800, an amalgamation of small
things, is a supplemental associated with the current fiscal year.
They have also eliminated management's obligation to negotiate
permissive subjects of bargaining.
MEBA has three shore-side port engineers that are represented by
MEBA who are actually shore-side personnel and there were a number
of changes to their contract which better represents their hybrid
situation. For instance they reduced paid holidays from 12 to 11,
they eliminated penalty pay for early call back from vacation, and
eliminated overtime except for preapproved hours only.
They firmed up the language on the drug testing policy.
Maintenance and care went from $40 to $45 per day. Personal leave
is tied to a reopener of wages in the fall of 1994.
The theme for these labor contracts has been to try to contain the
costs of each of these bargaining units, but to allow as much
flexibility as possible in trying to rearrange the wages and
benefits to increase productivity for the employers and still
provide meaningful benefits for the employee. Rather than lock in
a cost of living increase, they tied a reopener this year on wages
to the leave issue so if there would be an increase in wage there
would be a decrease in the leave associated with that. For health
insurance, they were able to get them onto the employer plan with
a reopener in the fall of 1994. The 2.9% cost of living increase
goes into effect the first of September.
COMMISSIONER USERA said she believed these agreements very
effectively represent a cost containment, increases in
productivity, and changes in some areas or incremental reductions.
Number 309
SENATOR SHARP asked what kind of work week the MEBA people were on?
MILA DOYLE, Labor Relations Analyst, said it depends on which
system they are assigned. Southeast employers work 84 hours pay
periods, week on, week off. The southwest system employees work
120 and 186 hours - essentially every day on and a comparable
amount of time off.
SENATOR SHARP asked how many hours annually they worked. MS. DOYLE
answered she couldn't give him an exact figure on that. SENATOR
SHARP said he would like to see what the average hours worked would
be for a fifteen year employee.
SENATOR LINCOLN asked if she could explain the discipline for drug
testing. COMMISSIONER USERA explained that a lot of the
controversy lies in not having the language clear.
SENATOR SHARP moved to adopt CSSB 289(L&C). There were no
objections and it was so ordered.
SENATOR KELLY moved to pass CSSB 289(L&C) from Committee. There
were no objections and it was so ordered.
Number 378
SENATOR KELLY announced SB 338 (ALASKA RR REVENUE BONDS:SHIP CREEK) K)
to be up for consideration.
JOSH FINK, Aide to Senator Kelly, reviewed the proposed CS to SB
338.
MR. FINK said he ran the finance section by the municipal bond bank
people and the people at AIDA and they indicated that the
provisions should insure the bonds negligibly, if at all, affect
the state's financial rating.
He said the differences between SB 338 and the CS are that it's not
the Alaska Discovery Center, but the Northern Crossroads Discovery
Center, so the title has been changed to reflect that.
The language referring to the Board of Directors was tightened up.
and the performance bond in section 3 was changed to read "payment
and performance bond."
Number 408
MARK LOPATIN, John Nuveen and Co., testified that one of the most
exciting things about this project is the opportunity to bring
international travelers, from London and Tokyo, to Anchorage. The
area they are developing is at Ship Creek. He said this bill is
for the Discovery Center and nothing else in that project.
He pointed out the features of the proposed center. He said there
was already ICT money identified for the walkway. SENATOR LINCOLN
asked if this was the money Alaska had already received this year.
MR. LOPATIN said the walkway was a request from the Municipality of
Anchorage to the state which, then, becomes a request to the
federal government.
SENATOR KELLY asked if he had permission from the Anchorage
Assembly for the project. MR. LOPATIN answered yes and they had
made all the corrections that were required in planning and zoning.
SENATOR KELLY asked him why he wanted to take the bonds into the
private sector? MR. LOPATIN said first of all it is a $54 million
project which is a very specialized use. Railroad property,
specifically, cannot be subordinated or pledged to a mortgage. The
facility generates $41.6 million to the area economy. It was clear
creative financing tools were needed and Railroad bonds are very
unique - being sold on a tax exempt basis for private purposes.
SENATOR KELLY asked about the state's credit risk if the project
didn't get completed or didn't perform to expectations.
KEN VASSER, testifying via teleconference, explained that the bonds
are payable from revenues from the project and are not obligations
of the State of Alaska. SB 338 goes further and requires that the
bonds state on their face that they're are not a legal or moral
debt of the state.
Number 561
SENATOR SHARP asked what would be the difference with AIDA bonds?
MR. VASSAR said that AIDA also has language saying the bonds are
not obligations of the state of Alaska.
SENATOR SHARP asked if the Railroad would be doing this and would
the bonds be insured?
MARK HICKEY, Alaska Railroad, said he didn't know if the Railroad
had any other outstanding bonds at the time.
TAPE 94-12, SIDE B
Number 580
SENATOR RIEGER asked if the Railroad would pledge any assets to
back the bonds. MR. LOPATIN explained that the only assets or
revenue of the Railroad's that will be pledged to repay the bonds
will be from this project.
SENATOR RIEGER asked who would own the Discovery Center. MR.
LOPATIN said the entity would own it.
SENATOR KELLY asked how confident he was that he could sell the
bonds. MR. HICKEY explained he was convinced it couldn't be
financed more traditionally. Therefore, the financing has to be
creative and this project makes sense. Economic Research
Associates was hired to come up with figures the market would bear
and The Northern Crossroad Discovery Center was developed from
those figures. He said he felt comfortable that this project would
be financed.
SENATOR LINCOLN asked why they are discussing the legislation now
instead of letting the Alaska Railroad Board first review it.
SENATOR KELLY said he thought the legislature would have to pass
authorizing legislation before the LoPatin group would commit the
kind of money it would take to do a serious feasibility study.
SENATOR LINCOLN also commented that she hoped it wasn't his intent
to just benefit the educated and well to do in Anchorage as it says
in the handout for the Northern Crossroads Discovery Center. She
also wondered what they meant by "person" to do the feasibility
study. MR. HICKEY apologized and explained that Anchorage and
Alaska have a very high per capita income for the tourists who come
here, compared to other tourist locations. That is what those
comments were in reference to. He said the facility is designed to
accommodate 60% of the tourists who arrive during a three month
period. The facility has to be large enough to move that many
people through in a short period of time.
During the other eight and a half months the facility would still
accommodate some tourists and more area residents, as well. Rates
would drop substantially. The area residents would pay less. The
project would be marketed differently for them.
SENATOR LINCOLN asked if there was another way to get funding for
the moving walkway if the ICT money doesn't come through. MR.
HICKEY said he didn't have final figures, but it will be dropped if
it can't be accommodated.
SENATOR LINCOLN said she was concerned that the people employed by
the Center would be Alaskans. MR. HICKEY said there would be
approximately 350 employees and there was no reason to bring people
in from out of state. They would hire native Alaskans to go along
with the mythology part of the package. This would also be a union
construction.
A representative of the Union said they supported the project.
SENATOR SALO asked about the time line with the construction. MR.
HICKEY said that construction would start in 1995 with an opening
in 1997.
Number 460
BOB LERESCHE, John Nuveen & Co., said the bonds this legislation
would authorize would be high yield bonds for a non-government
project. It's an extremely common type of bond in the market
today. The bonds will probably be required to have reserves to
cover things like a year's debt service, capitalized interest,
working capital reserves, and insurance. What the market will look
for in deciding how much to pay for these bonds are basically a
feasibility study, conducted by someone with whom the bond market
is familiar, predicting the revenues would be more than sufficient
to cover debt service at a certain coverage level. The bond market
also would look at who would manage the project and at the Alaska
tourism industry.
SENATOR LINCOLN said she needed clarification of page 2, line 30
stating the Railroad is not obligated to pay the bond or the
interest, except for the revenue stream or assets pledged for the
bond. MR. HICKEY answered that the revenue is admission tickets
and the assets are the Discovery Center itself - the brick and
mortar. MR. LERESCHE said the Railroad will pay these bonds by
passing the money through their system, but they're obliged to pay
no more than they get from the owner of the Discovery Center.
SENATOR KELLY moved to add the words "or firm" to "shall select the
person." There were no objections and it was so ordered.
SENATOR KELLY moved to add flexibility to go lower by inserting
"not more than" before "$55 million". There were no objections and
it was so ordered.
SENATOR RIEGER moved to adopt the CS with the two amendments to SB
338. There were no objections and it was so ordered.
SENATOR RIEGER moved to pass CSSB 338 (L&C) from Committee with
individual recommendations. SENATOR LINCOLN objected. SENATORS
KELLY, RIEGER, SHARP, and SALO voted yes; SENATOR LINCOLN voted no.
The motion to pass CSSB 338(L&C) out of committee carried.
SENATOR KELLY adjourned the meeting at 2:55 p.m.
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