Legislature(2013 - 2014)Anch LIO Rm 105
11/21/2013 10:00 AM Senate LEGISLATIVE COUNCIL
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| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
NOVEMBER 21, 2013
10:05 a.m.
MEMBERS PRESENT
Representative Mike Hawker, Chair
Representative Craig Johnson
Representative Lance Pruitt
Representative Bill Stoltze
Representative Peggy Wilson
Senator John Coghill
Senator Kevin Meyer
MEMBERS ON TELECONFERENCE
Senator Peter Micciche, Vice Chair
Representative Max Gruenberg
Senator Dennis Egan
Representative Austerman, Alternate
MEMBERS ABSENT
Representative Mike Chenault
Senator Charlie Huggins
Senator Mike Dunleavy
Senator Gary Stevens
OTHER MEMBERS PRESENT
Senator Donald Olson
Representative Gara
Representative Guttenberg (via teleconference)
AGENDA
SANCTIONING OF CHARITY EVENT
CONTRACT APPROVALS
OTHER COMMITTEE BUSINESS
SPEAKER REGISTER
Bob O'Neill, Pfeffer Development
Pam Varni, Executive Director, Legislative Affairs Agency
Jessica Geary, Finance Manager, Legislative Affairs Agency
Doug Gardner, Legal Services Director, Legislative Affairs
Agency
Juli Lucky, Staff to Representative Mike Hawker and Committee Aide
to Legislative Council
10:05:15 AM
I. CHAIR MIKE HAWKER called the Legislative Council meeting to order
at 10:05 a.m. in room 105 of the Anchorage Legislative Office
th
Building located at 733 W 4 Avenue. He noted that since some
members are on teleconference, all voting will be by roll call to
demonstrate for the record that there is a quorum for all votes.
Present at the call were Representatives Hawker, Gruenberg (via
teleconference), Pruitt, Stoltze, and P. Wilson; Senators
Coghill, Egan (via teleconference), Meyer, and Micciche.
Representative Austerman (alternate member) joined the meeting
later via teleconference.
Chair Hawker said there was a quorum to conduct business, and
also welcomed Senator Olson to the meeting.
II. RATIFICATION OF CHARITABLE EVENTS
a. Alaska Governors Awards for the Arts & Humanities
CHAIR HAWKER said that his staff has reviewed the organization
and confirmed that they are a recognized 501(c)(3) in good
standing.
10:08:23 AM
REPRESENTATIVE JOHNSON moved that Legislative Council ratify the
following charity event, which was previously sanctioned by the
Legislative Council Chair in accordance with AS 24.60.080(2)(b):
Alaska Governors Awards for the Arts & Humanities benefitting the
Alaska Arts & Culture Foundation.
CHAIR HAWKER, in response to a question by Representative P.
Wilson, noted that this vote ratifies an event that the Chair had
previously sanctioned in accordance with statute. It allows a
Legislator to accept a ticket to attend the event as a gift from
a lobbyist. Legislative Council is not in any way endorsing the
organization.
A roll call vote was taken.
YEAS: Gruenberg, Johnson, Pruitt, Stoltze, P. Wilson, Coghill,
Egan, Meyer, Micciche, Hawker
NAYS: None
The motion passed 10-0.
III. CONTRACT APPROVALS
a. Anchorage LIO - Furniture Integration Proposal
CHAIR HAWKER introduced Bob O'Neill, project manager for the
current Anchorage LIO renovation and an employee of Pfeffer
Development. He personally thanked Bob and his staff for doing an
incredible job preparing the temporary space for the Anchorage
office in a very short time span. He also thanked Juli Lucky of
his staff for the extraordinary amount of work she has done on
this project.
BOB O'NEILL made a presentation to Legislative Council that
included a small number of slides providing examples of office
and conference room configurations possible with their proposal.
In summary, he said office furniture needs should be considered
early in any new office space planning. The Legislature has a
strong requirement for furniture that provides flexibility and
standardization, given the number of office moves and varying
staff needs. Technology needs specific to the Legislature should
also be incorporated into furniture considerations. Pfeffer
Development proposes a two-step process that includes providing a
variety of furniture options that would be put out for a
competitive bid, and then coming back before Legislative Council
with a proposal and total cost for a final decision.
CHAIR HAWKER interjected during the presentation to remind
members that in a previous meeting when Council moved forward
with this project, furnishings were mentioned in an executive
session as the last item that Council would need to address in an
open session since it was a contract matter. He said that anybody
that watched the furniture move out of the building might agree
that much of the furniture is in the same condition as the
building about to be renovated. He further commented during the
presentation that the furniture and technology requirements would
be determined working in coordination with LAA staff.
MR. O'NEILL agreed, noting that they would go office-by-office
with the appropriate Agency staff to identify needs, standards,
and appearance. They will then put together a large bid package
outlining in detail every piece and part required, in other words
a specific set of standards in both graphic and written form with
piece counts. Once that part of the process is complete, Pfeffer
Development would come back to Council with what they have
determined are the best proposals for approval or denial in a
transparent process open to the public. Legislative Council is
not making a commitment beyond the time put in for the design
package.
CHAIR HAWKER said that at the end of the day, the Anchorage
office will need to be furnished, one way or another. It became
apparent during the move-out that much of the furniture was a
hodge-podge assembled by various individuals; much of it fell
apart when trying to move it; and about half of the furniture was
really not suitable for putting back in place once the building
is done. Council is being asked to authorize the Chair, on behalf
of the committee and working with LAA, to negotiate with the
appropriate entity under the procurement options to engage them
to come back with a bid package for furnishings. The procurement
of these services is estimated to be between $75,000 and
$100,000, which is the approximate cost for the same services for
the recently completed NANA building. He then opened up the item
for discussion.
REPRESENTATIVE STOLTZE commented that he was satisfied with the
surplus furniture available. He expressed trepidation about
jumping into a furniture contract and stated he would be casting
a protest vote.
PAM VARNI, Executive Director of the Legislative Affairs Agency,
in response to a question by Senator Coghill about what would
happen to the leftover furniture, said her staff have identified
quite a bit of furniture for surplus, while some furniture will
be stored. There has not been a large purchase of furniture made
for probably 20 years. Should the Legislature get new furniture
under this proposal, anything worth saving will be sent out to
other legislative offices around the state as necessary. Those
items not claimed by the Legislature and that might be of
interest to other state agencies will be sent to surplus.
SENATOR COGHILL followed up to say that it is an Anchorage
decision in his view, but there are a lot of Legislators that
have used their office account to purchase furniture pieces.
MS. VARNI confirmed that any furniture purchased with office
account funds is the property of the individual Legislator.
CHAIR HAWKER noted that, should the decision be made to go with
this proposal, if an individual Legislator chooses to furnish
their own office with their own furnishings, they will have the
ability to do so. There would still be a kit of furnishings that
can replace the personal items should that Legislator leave
office.
SENATOR COGHILL said from his experience it is quite a shuffle
when new Legislators come in. He added he will be watching how we
navigate the used furniture removal and listening to the
Anchorage Legislators on this issue.
CHAIR HAWKER said furniture is an essential part of the real
estate development process and, in his experience, the biggest
challenge. It's a complex process that really does require
professionals to work through.
SENATOR COGHILL agreed and added that, with regard to the media,
it would be in the public interest to ensure they have plenty of
space to do their job.
MR. O'NEILL said that was taken into account and is reflected in
the floor plans.
REPRESENTATIVE P. WILSON said that, for the benefit of those
listening to the meeting, the furniture in storage is in poor
condition.
REPRESENTATIVE GRUENBERG wanted clarification that the money
being requested is to hire someone to advise the Legislature on
obtaining furniture.
MR. O'NEILL confirmed that was the case and added that the
advisory role includes putting together a procurement package so
at the end of the process there would be a 30-70 page document
used to go out for a competitive bid. Responding to a question by
Representative Pruitt regarding a total cost estimate, he said
the question was difficult to answer but based on his experience
for all the furniture for this size building and all the
technology components for the conference rooms and the public
spaces, the cost would be in the $1.4-1.8 million range.
Responding to a question by Chair Hawker, Mr. O'Neill said the
estimate is $200,000-400,000 in technology alone.
REPRESENTATIVE JOHNSON asked if the Agency had the ability to do
this work rather than outsource it.
MS. VARNI responded that a lot of the work being proposed is
accomplished by architects and the Agency does not have an
architect on staff. Outside architects have been brought in to do
work on many previous projects. In terms of procurement, she
agreed the Agency is capable of that work. She said Pfeffer
Development could use the Agency's procurement officer once they
have the design package if that is Council's preference.
CHAIR HAWKER, in response to a follow-up question by
Representative Johnson, said that the authority being sought at
this time is to negotiate and determine what would be the process
forward.
REPRESENTATIVE JOHNSON said he would encourage the use of in-
house people as much as possible when it comes to the evaluation
portion of this process.
CHAIR HAWKER said that in speaking with Legal Services Director
Doug Gardner, there is a myriad of procurement routes available
and it's a matter of picking the course that allows for the best
execution. He was seeking the authority to keep working with LAA
to determine that route.
MR. O'NEILL said that in his experience having the same
architects that are working on the building do the furniture work
is an added advantage because of the coordination of the building
systems, wiring, etc. The entire design team working on the
building also engages in the process of the ultimate furnishing
design so that it is an integrated system as well as a single
point of contact and a single responsibility for that.
REPRESENTATIVE JOHNSON said that was exactly his point. He wants
someone who is accountable to the Legislature for the next 20 or
30 years, not someone that walks away when the building's done,
the contract is signed and the final check is cut. He wants
people that are accountable and work for the Legislature to be as
involved as possible.
CHAIR HAWKER agreed. He said while the Legislature has no
financial exposure on the project itself, the building has to
work for us.
VICE CHAIR MICCICHE agreed that we use our internal resources
whenever possible. It may be that we identify the needs for the
furniture required and perhaps order some internally. He said it
is worth commenting that he is sitting in his remote office with
hand-me-downs, his office in Juneau is filled with hand-me-downs
and he thinks it's sort of a badge of honor for folks. He said he
doesn't think there should be an expectation. He's not
necessarily referring to this current project, he just thinks we
should get full usage out of our state resources. The idea that
we have brand new shiny furniture in each office is something we
need to guard against.
CHAIR HAWKER said putting this package together allows us,
working with LAA, to inventory what we have and where we want to
look at new furnishing and where we don't need to look at new
furnishings. He reminded members that there was a recent purchase
of brand new furniture for the Eagle River LIO and as soon as the
furniture was installed, Information Services had to drill holes
in the furniture in order to wire the computer technology. It's a
no-win situation.
10:46:44 AM
REPRESENTATIVE JOHNSON moved that Legislative Council authorize
the chairman to negotiate for professional design services for an
integrated furnishings package for the Anchorage Legislative
Information Office, not to exceed $100,000.
A roll call vote was taken.
YEAS: Gruenberg, Johnson, Pruitt, P. Wilson, Coghill, Egan,
Meyer, Micciche, Hawker
NAYS: Stoltze
The motion passed 9-1.
CHAIR HAWKER stated that any Legislator that has questions or
concerns about this project is certainly more than welcome to
discuss with Pfeffer Development any level of detail that is
involved in this project.
REPRESENTATIVE JOHNSON said that what he likes about this is that
we are integrating the furniture and the technology but he would
also like to take a forward-looking approach with utility
corridors, etc., so as new technology grows we're not redesigning
everything, that we build into the future as much as possible.
MR. O'NEILL agreed and said that was taken into account even in
the basic building design. They try to provide the most
flexibility to anticipate future improvements in technology,
particularly in meeting room spaces.
CHAIR HAWKER noted that while the process is just beginning to
get underway, there was discussion at the last meeting concerning
a lease-purchase option for some time down the line; discussions
are ongoing.
IV. OTHER COMMITTEE BUSINESS
a. Legislator Allowance Accounts
CHAIR HAWKER moved down the agenda to Legislator Allowance
Accounts so interested parties present in the room could address
the item. He said he had spent a great deal of time on this issue
after a previous Legislative Council had created a compensatory
allowance system. He summarized a technical memo prepared by
Deloitte Tax LLP, one of the world's leading tax and accounting
firms to say that there are three options for consideration. This
committee does not have authority to change Legislators' base
salaries - that's a statutory matter. At this time, the Chair
noted the presence of Representatives Gara and Guttenberg (via
teleconference).
He said statute authorizes the existence of expense allowance
accounts. He cited from Sec. 24.10.110 Additional allowances, "In
addition [to salary of a Legislator], each member of the
legislature is entitled to an annual allowance prescribed in
accordance with AS 39.23 for postage, stationery, stenographic
services, and other expenses." He said it's pretty clear by that
statute that the allowance was intended to be for office
expenses. It was not intended to be compensation to the
legislature no matter how that might be structured.
10:53:45 AM
At this time, staff informed the Chair there was a technical
problem and he took a brief at ease to allow for resolution.
10:54:23 AM
CHAIR HAWKER brought the meeting back to order and noted that
this meeting was the first committee meeting to be held in this
temporary space. He congratulated the technical staff who made
this whole thing work in the two weeks they had to do so.
Chair Hawker, continuing the discussion of options available,
said again there are only three options that are legal in
accordance with the Internal Revenue Service. Very clearly, there
can be an allowance account that is fully accountable. There is a
set amount for each office, receipts are submitted to Legislative
Affairs Agency Accounting, and Accounting pays for those receipts
as long as they are deemed a legitimate legislative business
expense. Everyone is treated the same.
There is also an option that is a non-accountable account, which
is what the Legislature was given in 2013 by the previous
Legislative Council. A set amount of money is dispensed at the
beginning of the year, it's treated as taxable income, it has
withholding against it, it's compensation. He went on to say that
whatever is done with the net amount received requires no
reporting back to the state or otherwise, it may be used as the
Legislator wills. Again, non-accountable account resulting in
taxable income is the second option and is very clear.
In working with Deloitte Tax, it took some time to determine if
there were any other viable options. He wanted to see how much
latitude there was to give individual Legislators the ability to
choose between a fully accountable and non-accountable plan,
which was a little bit more like what existed before the
universal rule took effect for 2013. The concept is called a
'cafeteria' benefits plan. In this case, after much professional
research by some of the best people in the nation, they've
concluded that the IRS hasn't ruled if a cafeteria plan could be
used. The IRS has not issued the regulations that they proposed
to deal with the cafeteria concept. Those regulations, if
finalized, would probably be construed to preclude the ability of
individual Legislators to choose between accountable and non-
accountable. At best, it would be an uphill battle and probably
unworkable in the long range, particularly when cast in the light
of Alaska's statutory authority to have allowance accounts. He
doesn't personally see anywhere in that statute that really
allows any form of compensatory allowance account. The fully
accountable plan is, in fact, the only viable route forward for
proper implementation of that statute. It provides
accountability, transparency, and reportability for state funds.
Chair Hawker said he intended today to put a motion on the floor
that would direct LAA to re-write the Allowance Policy as a fully
accountable policy. He then opened the issue to discussion. He
invited Representative Gara to testify.
REPRESENTATIVE GARA said he hoped that the Legislature changes
the Allowance Account Policy to one that our accountants and
attorneys have said is legal. The problem with the current policy
is that roughly $1,000 goes into the Legislator's retirement
account out of the office account. There is an office account
statute that money should be spent on office expenses. Part of
the current policy says one-third of the money goes to the
federal government; that's $300,000 that gets sent to the federal
government because it's taxable. That doesn't seem smart. The
public should have a right to know what office account monies are
spent on. That's not the policy under the current system. At the
end of the year, if there is money left over, it should lapse to
the general fund. He thinks that's something the Legislature has
made a mistake on over the years. He hopes the committee will
adopt a policy that says Legislators will report their expenses
to the Legislative Affairs Agency so the public can see what they
are; that whatever money is not spent goes back to the general
fund; and that none of the money goes into retirement accounts.
CHAIR HAWKER interrupted to ask if Representative Gara agreed
with the motion about to be put forward. Representative Gara
confirmed that was so. Chair Hawker repeated that the current
policy was established by a previous Legislative Council, not the
people seated here today. That policy, as it was put in place,
necessarily lasted one year and Council is taking action today as
soon as it's practicable in time to make sure the new policy is
implemented as soon as it's possible to implement a new policy.
REPRESENTATIVE JOHNSON thanked the Chair for getting some
assistance from some professional tax people. He said he thought
the decision that was made in the previous Council was made
somewhat without appropriate information. He said he didn't think
Council had everything they needed to make the right decision.
The decision then was to offer flexibility to a Legislator and
let them do it on their own. With this newfound information, he
has no doubt that the direction Council is going is appropriate.
He asked if new staff would be necessary to administer 60
accounts.
JESSICA GEARY, Finance Manager for the Legislative Affairs
Agency, responded that extra staff would not be needed. She said
there were four people working in the Accounting office. They
have handled accountable plans in the past and they can do it
again.
SENATOR MEYER said he didn't care either way because he's always
exceeded the allotment that he's been given. He asked whether the
Senate shouldn't be given twice as much as the House since the
Senate districts are twice as large. He said he has found that
doing a mailing as a Senator means there are twice as many
constituents to reach and it's going to cost twice as much. He
said that's how he usually exceeds his allotment. Doing a mailing
in a Senate district is $7,000-8,000; two mailings generally uses
up the whole allotment. He said he sees some savings by having
the House be $10,000 and the Senate be $20,000 and is curious how
it ended up being $16,000 for the House and $20,000 for the
Senate. He acknowledged there would be some disagreement on that
issue. He said if you do take the lump sum, you keep track of
your own expenses and can claim it on income tax to get the money
back anyway. In a way, one is still tax-protected. An accountable
plan requires an extra step, so it isn't quite as efficient
although he has no problem doing that.
CHAIR HAWKER, speaking to both points, responded that he wasn't
part of this Council when the rates were established and that the
issue can be revisited at any time. It's not something he was
prepared to bring up today, but could be an item in the future.
The point on the financial efficiency, however, is that even when
taken as a non-accountable plan as personal income then spent and
arguably getting a tax deduction on your form 2106 (Employee
Business Expenses), there's an adjusted gross income hurdle
before one can get any claim of those Employee Business Expenses;
a built-in inefficiency there that you completely lose a portion
of that allowance account depending upon one's personal adjusted
gross income.
SENATOR MEYER said he agreed the cafeteria option should be off
the table. He then asked why Legislators couldn't be given a
choice to go accountable or non-accountable.
CHAIR HAWKER said he was responding as an individual Legislator
who doesn't see how Council has the authority to create allowance
accounts that are, in fact, compensatory. There is no clear
authority in statute; the statute discusses an expense allowance
account for specific things. It's silent on that being
administrated through additional compensation when there is no
accountability requirement. There is also a separate legal
statute that defines legislator compensation that does not speak
to the fact that your compensation is your salary plus an
allowance account. He noted that Legal Services has said that
it's "squishy" at best. He said he personally does not want to go
that way. He wants to be crystal clear, absolutely accountable
and within the letter of the law. If Legislator salaries need to
be adjusted, we have a salary commission; we have handed off that
responsibility to an outside party.
REPRESENTATIVE P. WILSON supported the fully accountable plan as
the money goes further and she is already in the practice of
keeping all her receipts.
REPRESENTATIVE JOHNSON said he has opted for a split between
accountable and non-accountable as that provided the most
flexibility, as well as he was initially concerned about the
responsiveness of the Accounting system for reimbursing vendors.
He found the response of the Accounting office to be very quick;
vendors receive payment in a very timely manner with no
complaints about late payments. He complimented Ms. Geary and her
department for their efficient performance. He is really
comfortable now with the way it is.
CHAIR HAWKER agreed that he was also a big fan of Accounting. He
said that in implementing this policy, to please keep in mind
that Legislators will occasionally have to pay for something out
of pocket and submit the receipt for reimbursement; not every
transaction can be billed to a vendor.
Chair Hawker, in response to Ms. Geary's assurance that
Accounting tries to get reimbursement checks out as soon as
possible, said they did an extraordinary job considering the
number of folks they are working with.
REPRESENTATIVE JOHNSON followed up to say that most vendors will
direct bill the state, so one doesn't necessarily have to pay out
of pocket. Further, if a vendor does not currently have an
account with the state, Accounting can assist in remedying that.
CHAIR HAWKER noted Representative Austerman had joined the
meeting via teleconference.
MS. VARNI, responding to a question about the history of
legislative allowance accounts and any legal opinions on the
subject, said she did have a legal opinion from Doug Gardner,
Legal Services Director, and Emily Nauman, Legal Services Staff
Attorney. The allowance has gone through many different changes
over the years. Accounting used to just cut the check without any
deductions; then it went to an accountable/non-accountable plan
and she'd be glad to share the legal opinion with Council
members. She said maybe Doug or Emily would like to comment.
REPRESENTATIVE GRUENBERG, responding to a request by Doug Gardner
to repeat his question with regard to the legal opinion, said
that he was specifically interested in whether the statutes,
under the current wording and Agency interpretation, would allow
the balance of the unexpended account to be paid directly to the
Legislator as taxable income.
CHAIR HAWKER said he could answer that question and the answer
was absolutely not. That would cause every payment made to every
Legislator to be re-characterized by the IRS as taxable income.
It exposes the Legislature having all that income over many years
past re-characterized for the fact that we have not been doing
this right. It's a bit of a gray area, but as soon as Legislative
Council became aware of the circumstance, they changed it to
something fully allowable under the IRS statutes and in full
compliance with the Internal Revenue Service code, regulations
and procedures. We cannot go back to that residuary concept.
REPRESENTATIVE PRUITT said, in going back to the comment made by
Senator Meyer, that if anyone needs more money it's the newer
Legislators. The expenses of just getting an office up and
running were rather high. He said he spent way more than his
allotment that first year to try and communicate with items such
as letterhead and appropriate TVs to watch Gavel-to-Gavel for
instance.
MS. GEARY, in response to further questioning by Representative
Pruitt, said food was reimbursed at 50% because that is what is
deductible for business expenses on one's income tax return.
CHAIR HAWKER, in response to follow-up questioning by
Representative Pruitt regarding allowable business expenses, said
that he had established a working relationship with Deloitte Tax
on an ongoing basis to be able to take these sorts of detailed
questions to one of the leading tax accounting firms in the
world.
MS. GEARY, in response to a question by Representative Pruitt,
said donations are not allowable business expenses with the
exception of advertising. If an organization was going to
advertise on behalf of a Legislator, that was not considered a
donation.
CHAIR HAWKER said these issues could be further clarified by an
amendment of statute if we chose to. Referring back to the
existing statute, he doesn't know of anyone who spends funds on
stenographic services. During the discussion, Ms. Varni indicated
the statute came into existence in 1959. He said perhaps it is
time to review the overall substantive elements of the statute
which is separate from the compliance elements being discussed
today. In further discussion, he said that his intent is to
establish a policy that is durable. There are so many areas
within state statute that become arcane and this may be one of
those areas that need to be revisited.
MS. VARNI, in response to a request by Representative Johnson for
a formalized approach to ensuring clear communication of this new
policy, said she and Ms. Geary would work with Representative
Hawker's office and the tax accountants to ensure the necessary
information was imparted to all 60 members.
SENATOR MEYER added his support to ensuring detailed
communication on how an accountable plan would work, especially
for those that aren't familiar with tracking business expenses.
SENATOR OLSON opined that Legislators should be able to choose
between accountable or non-accountable as only having an
accountable plan causes undue hardships to certain Legislators;
those Legislators with a district that includes several Alaska
Bush communities in a remote location have trouble getting
legitimate receipts and/or submitting and receiving
reimbursements in a timely manner. Many of these communities deal
on a cash basis only and he feels he is being put at a
disadvantage by having to operate under an accountable plan. The
allowance account does not cover the costs of mailings or
traveling around such a large and remote district. His tax
accountant does taxes for both rural and urban Legislators and
has trouble figuring out what can or can't be claimed. He
respectfully recommended there be an option to choose between an
accountable and non-accountable plan, and said that was in place
for several years, approved by a previous Legislative Council
likely for the reasons he cited above.
CHAIR HAWKER responded that the decision is constrained by the
statute. If the statute, which is obviously arcane, was modified
to recognize contemporary legislative life, including the
realities of Alaska, and it was modified in a manner to recognize
that it could be a compensatory expense allowance structure, then
allowing individual Legislators their own choice would be a very
good option. He does not see that there's a sufficiently clear
legal authority for Legislators to have any level of compensatory
allowance at this time. It is a policy call, however.
SENATOR OLSON followed up to say that it is his understanding
that there has not been a legal opinion that has given the same
weight to the Chair's interpretation of the statute. It certainly
has not been challenged as far as he knows. He believes Council
is premature in trying to make a decision at this point.
REPRESENTATIVE P. WILSON said given the discussion it would be
wise to look at the statute and see how it can be tweaked so that
it will reach everybody. It would have to be taken care of right
away at the beginning of session.
CHAIR HAWKER interrupted to say that for tax purposes, a decision
needs to be made before the end of the calendar year. He then
addressed Ms. Varni to say it was his understanding that there
was some level of legal involvement on this issue under a
previous Legislative Council that concluded it is legally
unclear.
MS. VARNI said that the problem in previous years with the
accountable plan was that the excess of one's allowance was not
returned to the general fund and Council is fixing that today.
CHAIR HAWKER, noting that participants had other meetings they
needed to get to, asked for a motion.
11:36:16 AM
REPRESENTATIVE JOHNSON moved that the Allowance Policy adopted by
Legislative Council on December 13, 2012 be amended to be
administered as a fully accountable plan for all legislators,
with any balance remaining at the end of the calendar year
lapsing.
A roll call vote was taken.
YEAS: Gruenberg, Johnson, Pruitt, Stoltze, P. Wilson, Coghill,
Egan, Meyer, Micciche, Hawker
NAYS: None
The motion passed 10-0.
VICE CHAIR MICCICHE noted for the record that some Legislators
kept an accountable plan individually because of constituent
questions about the previous system. For those Legislators with
challenging districts - for instance two of his communities
require a boat ride - coupled with being a new Legislator, he
wanted to assure the public that $20,000 is not an adequate sum
of money to cover those expenses. It's expensive to do
legislative business in the state of Alaska and it's not a large
sum of money even though it may sound that way to some.
CHAIR HAWKER, responding to a question by Representative
Gruenberg, said the policy just passed will be effective for the
coming calendar year (2014) and subsequent years, which is how
the account is administered.
III. CONTRACT APPROVALS (CONTINUED)
b. Barrow Lease
CHAIR HAWKER, noting the absence of Representative Johnson, asked
Representative Pruitt to please read the motions.
MS. VARNI said that before members is Barrow sublease extension
renewal #3 in the amount of $33,124.68 excluding CPI-U
adjustments. Senator Olson and Representative Nageak use the
Barrow LIO although it is her understanding that Representative
Nageak has office space at a different location, but does use the
services at the Barrow LIO.
SENATOR OLSON said his office is part of the LIO conference room
due to limited office space in Barrow and he is in favor of
continuing the lease at this location.
11:42:05 AM
REPRESENTATIVE PRUITT moved that Legislative Council authorize
the chairman to approve a one-year renewal of the existing
sublease agreement with Arctic Slope Telephone Association
Cooperative, Inc. for the Barrow Legislative Information Office
for a cost of $33,124.68.
A roll call vote was taken.
YEAS: Gruenberg, Pruitt, Stoltze, P. Wilson, Coghill, Egan,
Meyer, Micciche, Hawker
NAYS: None
The motion passed 9-0.
c. Discovery Preschool
MS. VARNI said the Discovery Preschool LLC contract is in its
third and final one year renewal. They have 39 spaces for
childcare and it serves year-round legislative, state and city
employees, as well as nine childcare slots for Legislators and
legislative staff who relocate to Juneau for session. The
Director has received six applications so far for those nine
spaces. In response to a question by Chair Hawker, Ms. Varni
confirmed there was no money associated with this renewal. She
said the legislature provides the office space but the financial
arrangements are between Discovery Preschool and the parents who
use those services and not the Legislative Affairs Agency.
Ms. Varni, responding to a question by Senator Meyer, said that
Discovery Preschool does not pay the Legislature rent for that
space; they have the same arrangement at the Federal Building in
that the space is provided to the contracted childcare services.
In follow-up, she confirmed that Discovery Preschool is not a
non-profit at this time. In the years that they have been in that
space, there have been no problems; they have provided a great
service not only to the parents coming to Juneau for session that
need childcare but for the community that has gone through a
childcare provider shortage.
SENATOR MEYER questioned whether that space would be better used
in another way. He noted that he was sympathetic as he had to go
all the way to the valley to find childcare when his children
were young. Having onsite childcare is convenient but said he was
bothered that we are out of space and we're buying up additional
buildings when that area is available. He further noted that
there have been questions about compatibility in locating a
childcare center close to a place that sees demonstrations which
may not be appropriate for children to see. He said he wants to
be sure that everyone's rights are protected while also providing
this important daycare service and, as the Legislature runs out
of space, all the alternatives are considered.
CHAIR HAWKER, noting that the issues raised by Senator Meyer may
warrant further debate, asked what the consequences would be if
this item was pulled from the agenda for additional
consideration.
MS. VARNI said the contract would expire at the end of December,
which would mean that 40 parents would need to find a place for
their children to have childcare provided.
MS. LUCKY, staff to Representative Mike Hawker, said she was
aware and sensitive to the issues that Senator Meyer has brought
up, and pointed out to members that this is the last year of the
contract. Regardless of any action taken by the Council today, in
the upcoming year, we will either be going out for RFP or the
contract will be expiring. As a parent who has counted on this
service before, and knowing many parents who have already put
their names in and are looking for that childcare now, she urged
Council to approve this renewal today. The contract will
naturally expire next year if no further action is taken.
SENATOR COGHILL, agreeing with Senator Meyer, said that in the
upcoming year, it might be a good idea to look at the
appropriateness of the use of that space. It created an untenable
situation where people's freedom of speech was blocked in a
significant way. He said he did not come to this meeting with the
intent to stop it but the point was well brought up.
REPRESENTATIVE PRUITT said it wasn't a good idea to stop it this
coming year, that there was an implied commitment that there
would be space available for children. He suggested that
Discovery Preschool make sure it is very clear to the parents
that are there that they recognize that because of the location,
there could be certain protests or things they don't agree with,
but by having their children at the daycare, they are expecting
whatever possible adverse conditions may come up. He agreed it
warrants a conversation in the upcoming year.
MS. LUCKY pointed out that Legislative Council did not get any
comments or complaints from the Director of the preschool or
parents of the children there. She said she is fairly sure that
they are aware of the fact that there will be protests in front
of the Capitol. They all are Juneau residents. She said approving
the contract to go through this year and allowing the parents who
already are counting on that childcare to be there is a good
route forward. Since this is the last renewal, this will be a
topic of discussion regardless of what is done today.
CHAIR HAWKER, presuming that the one year renewal is approved,
directed Ms. Varni to have LAA take the initiative and
responsibility of coming back early in the next year to put this
before Council as a discussion item.
SENATOR MEYER agreed it should come before Council in a timely
manner and added that traffic is also a concern. There are a lot
of cars coming and going during the three months of session and
he doesn't know what the State's liability is if a child gets
hurt. Such items warrant more discussion if it's going to be done
on a long-term basis.
SENATOR COGHILL said, logistically, the traffic on Seward Street
is really difficult and wanted to know if there had been any
accidents given parking and the slippery hill.
MS. VARNI said the Agency, in an attempt to alleviate the risks
of children crossing the street, asked the City to switch the
current loading zone to the other side of the street, but it was
not allowed.
11:56:36 AM
REPRESENTATIVE PRUITT moved that Legislative Council authorize
the chairman to approve a one-year renewal of the existing
professional service contract with Discovery Preschool LLC.
A roll call vote was taken.
YEAS: Gruenberg, Pruitt, Stoltze, P. Wilson, Coghill, Egan,
Meyer, Micciche, Hawker
NAYS: None
The motion passed 9-0.
IV. OTHER COMMITTEE BUSINESS (CONTINUED)
a. Legislative Procurement Procedure Amendments
CHAIR HAWKER said that at the last Legislative Council meeting,
members approved a suite of amendments to the Legislature's
Procurement Policy, which had been brought forward by Legal
Services and procurement folks. Two of those amendments, numbers
7 and 10, were withheld at the request of Representative
Gruenberg for additional consideration. He asked Mr. Gardner to
briefly explain the two amendments.
MR. GARDNER said the two remaining amendments that were held over
from the last meeting were part of a package of amendments that
Legal Services has collected over a period of time, noticing
issues such as changes in the law or areas where the procurement
procedures are working less well than they could be. With regard
to amendment number 7, after comments at the last committee
meeting, he narrowed the amendment language. In those instances
where there is a change in ownership for the lease of a
legislative space that does not include a subordination
agreement, this amendment allows the approval by the Chair of a
simple assignment without a committee meeting. Where there is a
subordination agreement, full Legislative Council approval is
still required; the Chair alone cannot approve.
With regard to amendment number 10, Mr. Gardner directed members
to the footnote included on the proposed amendment language,
saying much of it had been added as an explanation since the last
meeting. Right now, the Legislative Procurement Procedures don't
limit a potentially successful bid protestor to their bid
preparation costs. AS 36.30, which addresses procurement for the
Executive Branch, does have that limitation. Like AS 36.30, this
amendment is designed to protect the Legislature from a large
damage claim that goes beyond bid preparation. This is one area
where it seems reasonable for the Legislature to treat its
procurement procedure the same as the Executive Branch and limit
the compensation for someone who does present a successful bid
protest to the costs of applying for a particular contract.
CHAIR HAWKER summarized that this is conforming the Legislative
Procurement Policy to that established by statute for the
Administrative Branch; the Legislative Procurement Policy is
established under a separate statute but that statute really
directs the Legislature to be consistent with the statutory
policy established for the Executive Branch. Mr. Gardner agreed.
REPRESENTATIVE GRUENBERG said he appreciated the additional time
to review the two amendments and was satisfied that they were
good amendments for the reasons Mr. Gardner has stated.
Representative Gruenberg also detailed some history about what
constitutes damages and why Title 36 was limited.
12:06:32 PM
REPRESENTATIVE PRUITT moved that Legislative Council adopt
proposed amendments 7 and 10 to the Legislative Procurement
Procedure as presented.
A roll call vote was taken.
YEAS: Gruenberg, Pruitt, Stoltze, P. Wilson, Coghill, Egan,
Micciche, Hawker
NAYS: None
The motion passed 8-0.
c. Change Order Analysis
CHAIR HAWKER noted this item did not require a quorum. Senator
Micciche had requested a history of change orders on Legislative
Council remodel projects due to concerns he heard expressed in
previous meetings. Senator Micciche had completed his analysis,
provided a written report to the committee and was given the
floor.
VICE CHAIR MICCICHE summarized his written report for members,
saying that his analysis showed that the three large scale
remodel projects administered by the Legislative Affairs Agency
(Terry Miller LOB, Thomas Stewart LOB and Legislative Finance
LOB) were completed strictly following the Legislative
Procurement Policies and the direction of Legislative Council.
The first two projects (Terry Miller and Thomas Stewart LOBs)
were completed using an up-front approval of the solicitation,
award and expenditure designating a sum of money intended to
cover the entire project with the exception of required change
orders; on the third project (Legislative Finance LOB),
expenditures went before Council each time an individual
expenditure or change order exceeded $25,000.
He further noted that Legislative Council is charged with the
responsible fiscal management of legislative projects. Unless
Council chose to look at approving project costs up-front or
putting additional contingency funds into the contract structure
in strict accordance with procurement procedures, Legislative
Council responsibilities will continue to include approving each
change order item that exceeds $25,000 or 10% of the original
amount of the construction contract, whichever is more. He said
he personally feels that a second set of watchful eyes is
imperative to a robust and transparent public process, but that
he doesn't feel Council should rake LAA over the coals every time
there is a change order. He said he enjoyed the process of
completing his report and has background information of the
change orders attached to the packet. He said he investigated
other states and of those that responded, found that most states
generally have a higher amount of change order that needs
approval by a Legislative Council; for example, Idaho's limit is
$100,000.
CHAIR HAWKER thanked Vice Chair Micciche for the substantial time
and effort he put into the report and Senator Coghill added that
it was very well done and he appreciated Senator Micciche digging
into it.
There being no further business before the committee, the
Legislative Council meeting was adjourned at 12:13 p.m.
12:13:58 PM
| Document Name | Date/Time | Subjects |
|---|---|---|
| Agenda 11.21.2013.pdf |
JLEC 11/21/2013 10:00:00 AM |
Agenda |
| II. Charitable Events.pdf |
JLEC 11/21/2013 10:00:00 AM |
|
| IIIb. Barrow Lease.pdf |
JLEC 11/21/2013 10:00:00 AM |
|
| IIIc. Discovery Preschool.pdf |
JLEC 11/21/2013 10:00:00 AM |
|
| IVa. Legislative Procurement Procedure Amendments.pdf |
JLEC 11/21/2013 10:00:00 AM |
|
| IVb. Legislator Allowance Accounts.pdf |
JLEC 11/21/2013 10:00:00 AM |
|
| IVc. Change Order Analysis.pdf |
JLEC 11/21/2013 10:00:00 AM |