03/24/2009 09:00 AM Senate STATE AFFAIRS
| Audio | Topic |
|---|---|
| Start | |
| SB23 | |
| SB129 | |
| HJR19 | |
| SB126 | |
| Adjourn |
+ teleconferenced
= bill was previously heard/scheduled
| *+ | SB 126 | TELECONFERENCED | |
| + | SB 129 | TELECONFERENCED | |
| HJR 19 | |||
| = | SB 23 | ||
ALASKA STATE LEGISLATURE
SENATE STATE AFFAIRS STANDING COMMITTEE
March 24, 2009
9:05 a.m.
MEMBERS PRESENT
Senator Linda Menard, Chair
Senator Kevin Meyer, Vice Chair
Senator Hollis French
Senator Albert Kookesh
Senator Joe Paskvan
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
SENATE BILL NO. 23
"An Act relating to the public employees' retirement system and
the teachers' retirement system; and providing for an effective
date."
MOVED CSSB 23(L&C) OUT OF COMMITTEE
SENATE BILL NO. 129
"An Act relating to state and municipal building code
requirements for fire sprinkler systems in certain residential
buildings."
MOVED SB 129 OUT OF COMMITTEE
HOUSE JOINT RESOLUTION NO. 19
Recognizing the 20th anniversary of the Exxon Valdez oil spill
and supporting the continued practice of accompanying each oil
tanker through Prince William Sound with at least a two vessel
escort.
MOVED HJR 19 OUT OF COMMITTEE
SENATE BILL NO. 126
"An Act amending the State Personnel Act to place in the exempt
service the chief economist and state comptroller in the
Department of Revenue and certain professional positions
concerning oil and gas within the Department of Natural
Resources; relating to reemployment of and benefits for or on
behalf of reemployed retired teachers and public employees by
providing for an effective date by amending the delayed
effective date for secs. 3, 5, 9, and 12, ch. 57, SLA 2001 and
sec. 19, ch. 50, SLA 2005; and providing for an effective date."
HEARD AND HELD
PREVIOUS COMMITTEE ACTION
BILL: SB 23
SHORT TITLE: REPEAL DEFINED CONTRIB RETIREMENT PLANS
SPONSOR(S): SENATOR(S) ELTON
01/21/09 (S) PREFILE RELEASED 1/9/09
01/21/09 (S) READ THE FIRST TIME - REFERRALS
01/21/09 (S) L&C, STA, FIN
02/12/09 (S) L&C AT 1:30 PM BELTZ 211
02/12/09 (S) Heard & Held
02/12/09 (S) MINUTE(L&C)
02/19/09 (S) L&C AT 1:30 PM BELTZ 211
02/19/09 (S) Heard & Held
02/19/09 (S) MINUTE(L&C)
02/26/09 (S) L&C AT 1:30 PM BELTZ 211
02/26/09 (S) Moved CSSB 23(L&C) Out of Committee
02/26/09 (S) MINUTE(L&C)
02/27/09 (S) L&C RPT CS 4DP 1NR NEW TITLE
02/27/09 (S) DP: PASKVAN, MEYER, THOMAS, DAVIS
02/27/09 (S) NR: BUNDE
03/17/09 (S) STA AT 9:00 AM BELTZ 211
03/17/09 (S) Heard & Held
03/17/09 (S) MINUTE(STA)
03/24/09 (S) STA AT 9:00 AM BELTZ 211
BILL: SB 129
SHORT TITLE: RESIDENTIAL SPRINKLER SYSTEMS
SPONSOR(S): SENATOR(S) MENARD
02/27/09 (S) READ THE FIRST TIME - REFERRALS
02/27/09 (S) CRA, STA, L&C
03/17/09 (S) CRA AT 3:30 PM BELTZ 211
03/17/09 (S) Heard & Held
03/17/09 (S) MINUTE(CRA)
03/19/09 (S) CRA AT 3:30 PM BELTZ 211
03/19/09 (S) Moved SB 129 Out of Committee
03/19/09 (S) MINUTE(CRA)
03/20/09 (S) CRA RPT 1DP 2NR
03/20/09 (S) DP: MENARD
03/20/09 (S) NR: OLSON, THOMAS
03/24/09 (S) STA AT 9:00 AM BELTZ 211
BILL: HJR 19
SHORT TITLE: OIL TANKER ESCORT VESSELS/OIL SPILL ANNIV
SPONSOR(S): REPRESENTATIVE(S) AUSTERMAN
02/23/09 (H) READ THE FIRST TIME - REFERRALS
02/23/09 (H) RES
03/11/09 (H) RES AT 1:00 PM BARNES 124
03/11/09 (H) Moved Out of Committee
03/11/09 (H) MINUTE(RES)
03/13/09 (H) RES RPT 5DP 2NR
03/13/09 (H) DP: GUTTENBERG, EDGMON, OLSON, SEATON,
TUCK
03/13/09 (H) NR: KAWASAKI, JOHNSON
03/18/09 (H) TRANSMITTED TO (S)
03/18/09 (H) VERSION: HJR 19
03/20/09 (S) READ THE FIRST TIME - REFERRALS
03/20/09 (S) STA
03/20/09 (S) RES REFERRAL ADDED
03/23/09 (S) RES REFERRAL REMOVED
03/24/09 (S) STA AT 9:00 AM BELTZ 211
BILL: SB 126
SHORT TITLE: REEMPLOYMENT OF RETIREES; EXEMPT SERVICE
SPONSOR(S): RULES BY REQUEST OF THE GOVERNOR
02/27/09 (S) READ THE FIRST TIME - REFERRALS
02/27/09 (S) STA, L&C, FIN
03/24/09 (S) STA AT 9:00 AM BELTZ 211
WITNESS REGISTER
BETH ALMEIDA, Executive Director
National Institute of Retirement Security (NIRS)
Washington D.C.
POSITION STATEMENT: Presented research on the relative benefits
of a defined benefit plan for state employees.
JILL SHOWMAN, President
Mat-Su Education Association
Wasilla AK
POSITION STATEMENT: Spoke in support of SB 23.
JIM LEPLEY, President
Anchorage Education Association
Anchorage AK
POSITION STATEMENT: Spoke in support of SB 23.
PAT LUBY, Advocacy Director
AARP Alaska
Anchorage AK
POSITION STATEMENT: Spoke in support of SB 23.
LAWRENCE WEISS, Executive Director
Alaska Center for Public Policy
Anchorage AK
POSITION STATEMENT: Spoke in support of SB 23.
DONALD CALLAHAN, Retiree
Fairbanks AK
POSITION STATEMENT: Spoke in support of SB 23.
LADAWN DRUCE, President
Kenai Peninsula Education Association
Soldotna AK
POSITION STATEMENT: Spoke in support of SB 23.
MELODY DOUGLAS, Chief Financial Officer
Kenai School District
Soldotna AK
POSITION STATEMENT: Spoke in opposition to SB 23.
MICHAEL ROVITO, Staff
to Senator Linda Menard
Alaska State legislature
POSITION STATEMENT: Presented SB 129.
WARREN CUMMINGS, State Vice President
Western Fire Chiefs Association
Fairbanks AK
POSITION STATEMENT: Spoke in opposition to SB 129.
JIM HILL, Fire Chief
Ketchikan Fire Department
Ketchikan AK
POSITION STATEMENT: Spoke in opposition to SB 129.
DAVID MILLER
Alaska State Fire Fighters Association
Sitka AK
POSITION STATEMENT: Spoke in opposition to SB 129.
JEFF TUCKER
Alaska and Interior Fire Chiefs Associations
POSITION STATEMENT: Spoke in opposition to SB 129.
JEFF WILCHEK
Chinook Fire Inc
Anchorage AK
POSITION STATEMENT: Spoke in opposition to SB 129.
MIKE CHMIELEWSKI, Council Member
City of Palmer
Palmer AK
POSITION STATEMENT: Spoke in opposition to SB 129.
PAT THOMPSON
Anchorage AK
POSITION STATEMENT: Spoke in opposition to SB 129.
DAVID TYLER, State Fire Marshal
Anchorage AK
POSITION STATEMENT: Spoke in opposition to SB 129.
DAVID R. OWENS, Owner
Owens Inspector Service
Palmer AK
POSITION STATEMENT: Spoke in support of SB 129.
NICK BAKIC, Service Manager
ACCEL Fire Systems
Anchorage AK
POSITION STATEMENT: Spoke in opposition to SB 129.
BOB WEINSTEIN, Mayor
Ketchikan AK
POSITION STATEMENT: Spoke in opposition to SB 129.
PAUL MICHELSOHN, Director
Alaska State Homebuilders Board
Anchorage AK
POSITION STATEMENT: Spoke in support of SB 129.
ANNIE CARPENETI, Attorney
Criminal Division
Department of Law
Juneau AK
POSITION STATEMENT: Answered questions regarding SB 129.
ERIN HARRINGTON, Staff
to Representative Alan Austerman
Alaska State Legislature
POSITION STATEMENT: Presented HJR 19.
DOROTHY MOORE, City Council Member
Valdez AK
POSITION STATEMENT: Spoke in support of HJR 19.
TOM KUCKERTZ, Project Manager
Prince William Sound Regional Citizen's Advisory Council
Valdez AK
POSITION STATEMENT: Spoke in support of HJR 19.
JOHN VALSCO, Homer Representative
Prince William Sound Regional Citizen's Advisory Council
Homer AK
POSITION STATEMENT: Spoke in support of HJR 19.
JERRY MCCUNE
United Fisherman of Alaska
Juneau AK
POSITION STATEMENT: Spoke in support of HJR 19.
GINGER BLAISDELL, Director
Administrative Services
Department of Revenue (DOR)
Juneau AK
POSITION STATEMENT: Presented SB 126.
ACTION NARRATIVE
9:05:10 AM
CHAIR LINDA MENARD called the Senate State Affairs Standing
Committee meeting to order at 9:05 a.m. Senators Kookesh,
Meyer, French, and Menard were present at the call to order.
Senator Paskvan arrived shortly thereafter.
SB 23-REPEAL DEFINED CONTRIB RETIREMENT PLANS
CHAIR MENARD announced the consideration of SB 23.
9:08:04 AM
BETH ALMEIDA, Executive Director, National Institute of
Retirement Security (NIRS), Washington D.C., said NIRS is a
nonprofit, nonpartisan organization. Its mission is to foster a
deep understanding of the importance of retirement security to
retirees and the economy as a whole using research, education,
and outreach. She will summarize recent research found in their
report entitled "Pensionomics." The intent was to measure the
economic footprint of state and local pension plans. Defined
benefit (DB) plans can act as an automatic stabilizer for the
economy by providing predictable benefits.
9:10:35 AM
MS. ALMEIDA said NIRS used data from 2006 and found that
expenditures made out of state and local retirement benefits
supported about 2.5 million jobs nationally and paid $92 billion
in income. The total economic impact was about $358 billion
nationwide and about $57 billion in state, local, and federal
tax revenues. Alaska retirement benefits supported 6,270 jobs
that paid $385 million in income to other Alaskans, not
including the value of the pension payments themselves. The
total statewide impact was about $1 billion, with about $155
million in tax revenues within Alaska. For every $1.00 paid out
in benefits, $1.25 in total economic activity was supported in
the state. Every dollar contributed by taxpayers supported about
$6.35 in economic activity in Alaska. That really speaks to the
fact that taxpayer contributions are only one source, and
employee contributions and investment earnings on contributions
make up the remainder.
9:12:17 AM
SENATOR FRENCH asked about slide 9 and what she means by
taxpayer -- the people who contribute to their own pension?
MS. ALMEIDA said, no. Taxpayer contributions are the employer
contributions. State employees are also taxpayers, but the study
calls them employee contributions.
9:13:25 AM
MS. ALMEIDA said the baseline data from the U.S. Census Bureau
show that 35,000 Alaskans received pension benefits from state
and local plans in 2006. The total received by retired Alaskans
was about $819 million, and the average pension was a little
under $2,000 per month. Over the 13 years of available data,
employee contributions comprised about 12.5 percent of total
system revenue. Employer contributions comprised just under 18
percent. The remainder, 70 percent, was made up of investment
earnings. The economic impact refers to the multiplier affect.
One person's spending is another person's income. That gives the
other person more spending power. The initial event is the
spending of pension payments by retirees and it has a much
bigger impact by the multiplier effect. NIRS used publicly
available data and software called IMPLAN -- input-output
modeling software originally developed for the U.S. Forest
Service. It allows the measurement of the relationship among
various sectors in the economy as a matrix.
MS. ALMEIDA repeated that the total economic impact of pension
payments in Alaska is about $1 billion. There was about $155
million in tax revenue impact as shown on slide 15. NIRS looked
at the impacts sector by sector and found a deep impact in
virtually every industry in the state. The industries with the
most impacts were health care, retail trade, and accommodation
and food service.
9:18:01 AM
MS. ALMEIDA said slide 18 provides a detailed breakdown by
industry of the total economic impact of each dollar paid out in
pension benefits. NIRS calculated the ultimate ripple effect of
each dollar, and it translates to about $1.25 in total economic
activity. NIRS calculated the return on contributions made by
public employers to state and local pension plans. Because there
are employee contributions and investment earnings, this
multiplier is large. It is $6.25.
MS. ALMEIDA concluded that pension plans have a large economic
footprint in the U.S. and each state. The ripple effect is
significant. Pension plans are important to those who receive
them, but it may not be well recognized that other folks in the
communities benefit when retirees can make regular expenditures
to pharmacies, hardware stores, and doctors. Defined benefit
plans are automatic stabilizers because retirees continue to
spend on basic needs, providing important economic stimulus
during these tough times.
9:21:04 AM
MS. ALMEIDA spoke next about a NIRS report called "A Better Bang
for the Buck; the Economic Efficiencies of Defined Benefit
Pensions." This study evaluated claims that defined contribution
(DC) plans save money compared to DB plans. NIRS compared the
costs of delivering a given amount of retirement income. In many
states and in the private sector, employers are examining this.
NIRS did a fair apples-to-apples comparison. The study modeled
the population of 1,000 female teachers who worked for 30 years
with a final salary of $50,000. NIRS defined a target retirement
lifetime benefit of about $2,200 per month at the age of 62
adjusted for inflation. The study looked at what it would cost
to fund this benefit through a DB plan and a DC plan.
9:23:58 AM
MS. ALMEIDA found that the DB approach saved a lot of money
compared to the DC approach. The DB plan does a much better job
of pooling longevity risks. Actuaries are good at predicting
life spans of a large population. The DB plan can efficiently
manage those risks. Individuals have to over-save because each
person doesn't know how long he or she will live, so the DC plan
must save money to insure they won't outlive their savings. A DB
plan only needs to set aside enough money for the average life
expectancy of a large group. That saves a lot of money. Another
reason why DB plans save money is that it can maintain better
portfolio diversity over time. As people age, their investments
need to be more conservative to insure against the downside risk
of a market decline. The DB plan always has a mixture of people
of different ages, so unlike individuals, the group does not
age, so the portfolio can generate an enhanced return, which
makes providing the benefits much cheaper.
9:26:33 AM
MS. ALMEIDA said the third reason that a DB plan saves money is
that the investment returns are better because it has
professional asset management and lower fees. Not surprisingly,
the managers do a better job. There are consistently higher
returns, which makes a big difference in the cost of delivering
retirement benefits. The cost of providing $2,200 per month
beginning at the age of 62 in the model DB plan is $12.5 percent
of payroll. That same benefit under a DC approach would cost 16
percent by taking into account that individuals would have to
save as if they were to live to 100.
9:28:43 AM
MS. ALMEIDA said the DC plan increases the cost to 17 percent of
payroll since the DB plan has more diversified portfolios. The
final effect was the largest one. NIRS was very conservative and
only assumed a one percent per year difference in investment
earnings -- 8 percent for DB and 7 percent for DC. It doesn't
seem like much but it compounds over time and drives the cost of
the DC plan to 23 percent of payroll. The DB plan in this model
population was 46 percent less than the DC plan to deliver a
given benefit. There is "something missing" in the assumption
that a DC approach reduces retirement plan costs. Such claims
are based on evaluations that aren't apples-to-apples. The
assets needed on the eve of retirement is $350,000 for the DB
plan, and $550,000 for the DC plan. "This is real money."
9:31:31 AM
MS. ALMEIDA summed up her conclusions. A DB approach is more
efficient and provides a better bang for the buck. These
efficiencies drive significant cost savings for taxpayers and
employers. Decision makers should continue to carefully evaluate
claims that DC plans will save money.
9:32:48 AM
JILL SHOWMAN, President, Mat-Su Education Association, said she
represents about 1,200 educators, and the administration,
teachers, and community are all quite concerned with recruiting
and retaining qualified educators. In the past three years
finding new teachers and retaining teachers has been a problem.
This is primarily due to the DC plan and lack of social
security. The district has to go outside the state to find
teachers. Each time the district hires a new teacher, it must
provide $100,000 of training and materials. That is a cost that
the district would not be burdened with if it retained staff.
9:35:46 AM
MS. SHOWMAN said she is Tier II and has taught for over 12
years. She may have to change her profession because of the
retirement. She teaches an undergraduate education class at the
University of Alaska, Southeast. When high school and college
students ask her about becoming teachers, "I've got to be honest
with them and tell them that it's not as great of a profession
as it once was, and that's primarily due to the retirement." She
tells them to look outside Alaska or at other professions. That
saddens her. She urged passage of SB 23.
9:37:39 AM
JIM LEPLEY, President, Anchorage Education Association, said he
represents over 3,500 teachers in Anchorage. He encouraged the
committee to promote this legislation.
PAT LUBY, Advocacy Director, AARP Alaska, Anchorage, said
financial security is the cornerstone of the American dream -
you work hard and follow the rules and you'll be able to retire
without financial worries. However, one quarter of [Alaska]
retirees don't participate in social security. A person doesn't
outlive social security. In the past it didn't matter so much
that Alaska's public employees did not participate, because they
had a DB plan that would last as long as they lived. Now, they
have no DB or social security. The American dream no longer
exists for Alaska's newly hired public employees. It is possible
to make the DC plan work "as long as you don't live too long."
But most people live into their mid 80s and many into their 90s.
If the DC plan is to work, people need to predict their and
their spouses' life expectancy.
MR. LUBY said retirees need to know if they will be healthy up
until death or if they will need long-term care. Medicare
doesn't pay for nursing homes or home care. A person will need
to know if there will be inflation in health care and utility
costs. Defined benefits and social security provide annual COLAs
[cost of living allowances], but the DC doesn't. The price of
fuel oil and gasoline may go up. "You better have a crystal ball
to make a defined contribution plan work." Many companies have
switched to DCs, but all who work in the private sector have
social security that will last as long as they live. No matter
how much is saved in a 401k or I.R.A., they will always have the
defined benefits of social security. Alaska's public employees
used to have the same financial security before SB 141 [of
2005], and no matter how long they lived or what bad luck was
dealt them, they would not starve or end up on public
assistance. AARP members rely on Alaska's public servants for
police assistance, to teach their grandchildren, and to put out
fires, and they don't want these honorable public servants to
end up worrying about their health coverage and outliving their
savings. They deserve better than that. He asked for support for
SB 23. Give people the security they deserve.
9:41:52 AM
LAWRENCE WEISS, Executive Director, Alaska Center for Public
Policy, Anchorage, said he is a Tier I TRS retiree. He has heard
different large figures on Alaska's unfunded liability, and this
way of looking at the pension plan obscures the facts and
creates a panic about the actual status. A person buying a house
with a 30-year mortgage would develop heart palpitations by
looking at the total owed. The other way to look at it is that
there will be reasonable monthly payments over 30 years. The
unfunded liability on pensions is very similar. The liability is
defined at a given date. It is not useful harping on it at any
one point in time, especially now.
9:44:26 AM
DONALD CALLAHAN, Retiree, Fairbanks, said he is in Tier I of
PERS. He is 68 and worked as a city engineer. He went to the
University of Alaska and graduated as a civil engineer. At the
age of 41 he became a paramedic and retired after 30 years in
the city system with what he thought was a great retirement. He
has lost about 30 percent of his retirement due to inflation. If
he had to live on his mutual funds as if he were in a DC plan,
he would run out in about 3 years and would have to sell his
house and move south. Every union retiree gets a better
retirement than he does. He son has become a teacher in Alaska
and worked for a year for free as a student teacher. His pay is
over $40,000. He got his Masters Degree last summer. He had a
difficult time finding a house he could qualify for. Retired
teachers in Fairbanks do a lot of community work.
9:46:43 AM
LADAWN DRUCE, President, Kenai Peninsula Education Association,
Soldotna, said she represents over 600 certified teachers and
specialists in the Kenai Peninsula Borough school district. She
noted NEA's fight on the national level to right the injustice
of the windfall elimination provision. She wants to tell new
teachers that the legislature will return to the DB program. "We
need a cost analysis for all parties involved, including the
retirees." But she said to not get lost in the numbers -- there
are some things that are priceless. Public employees provide
priceless services to Alaska communities. Young people coming
out of college are educated about their retirement and are being
cautioned to plan for a secure future. "Let's not wait until
it's too late." She asked the committee to move SB 23.
9:48:28 AM
MELODY DOUGLAS, Chief Financial Officer, Kenai School District,
Soldotna, said the district has expressed concern about PERS and
TRS since 2003. "This is an ability-to-pay issue." She thanked
the legislature for the funding in fiscal year 2008, and $17.2
million was for TRS retirement. The funding is 41.4 percent for
TRS. There were 596 full-time equivalent teaching staff in 2008.
Salaries and benefits are 80 percent of the budget. Class sizes
would have doubled in the district. None of the new hires or
exiting teachers has expressed concern over the DC plan. The
district hired 76 teachers in 2008, 107 in 2009, and she expects
75 in 2010. The next time the numbers are released, the unfunded
liability will be about $10 billion. The public sector can no
longer fund a DB plan. The DC plan has only been in place for
three years and should be evaluated later.
9:50:38 AM
CHAIR MENARD said there is a second fiscal note. It went from
$17 million to $782 million.
SENATOR PASKVAN said the fiscal note of March 16 is $14 million
for fiscal year 20ll, and the revised note was $752,000 for
2010. He believes that for 2011 "it is an extra $84,000, and I
believe that those are just additional transition costs." Those
are thousands not millions.
SENATOR MEYER said this is an important subject and it seems
like the committee is moving rapidly, but many have heard this
in a previous committee, and numerous changes were made to meet
his concerns. He moved to report CSSB 23(L&C) from committee
with individual recommendations and attached fiscal note(s).
There being no objection, CSSB 23(L&C) moved out of committee.
9:53:10 AM
The committee took a brief at ease.
SB 129-RESIDENTIAL SPRINKLER SYSTEMS
9:56:21 AM
CHAIR MENARD announced the consideration of SB 129.
MICHAEL ROVITO, Staff to Senator Menard, Alaska State
Legislature, said SB 129 is in response to a national movement
to mandate fire sprinkler systems in single or double-family
residences. These systems will cost from $3.00 to $5.00 per
square foot if they are built into a new home. It is excessive
and will put a financial burden on a homebuyer. Changes in
residential construction, like emergency escapes, circuit
breakers, fire blocking, and draft stopping, have dramatically
dropped the number of fatal fires in the United States. About 33
percent of Alaska residents are on private wells, and sprinklers
will require larger wells and other costly changes. A sprinkler
can be set off erroneously and can cause mold -- a serious
health risk. Smoke alarms have a proven track record, and if
they malfunction they won't douse the home with water.
Homebuilders and real estate agents support the bill. "Many
citizens have contacted us concerned about the added cost to a
home because of any mandating of sprinkler systems."
9:59:45 AM
SENATOR KOOKESH asked if there is a looming mandate. Why are we
doing this?
MR. ROVITO said this is a proactive response to a national
movement. The International Residential Code (IRC) "is often
adopted widely throughout the United States. The individuals
involved in determining these codes have pushed the mandate." So
the bill is an attempt to stop anyone mandating sprinklers.
CHAIR MENARD said those who oppose this bill do so because they
want to keep the decision at the local level.
10:01:20 AM
SENATOR PASKVAN said his concern is that "a municipality may not
require a fire protection system." And subsection (b) says it
"applies to home rule and general law municipalities." He spoke
with a building official in Fairbanks and he understands why the
legislature could tell state fire marshals they can't mandate
sprinklers for Alaska's districts, but he asked why it shouldn't
be left at the local level. He appreciates being proactive, but
even if there were valid reasons for requiring sprinklers in the
future, this would prohibit it.
MR. ROVITO said the original intent was to prevent general
mandates. He understands what Senator Paskvan is saying about
making decisions on a case-by-case basis.
SENATOR PASKVAN said if technology is at a point that it can be
done, a municipality would be barred from saying it is
reasonable to include sprinklers in a residence. "Why is the
state telling us we can't make a decision at the local level?"
10:04:06 AM
CHAIR MENARD said there are firefighters that will testify. The
bill doesn't prohibit anyone from installing a sprinkler system.
"It's just one of those mandates that we're trying to avoid."
WARREN CUMMINGS, State Vice President, Western Fire Chiefs
Association, Fairbanks, said he is submitting written testimony.
Sprinklers are not as expensive as was mentioned. He put an
addition on his house and the sprinkler system cost $2,786, and
he has had no accidental discharges in the 30 years he's had it.
CHAIR MENARD asked the square footage of his house.
MR. CUMMINGS said his house totals 2,800 square feet, and it all
has the sprinkle system. The original system was installed in
1979 and the addition was in 1994. It was done by a contractor.
MR. CUMMINGS said he is sending a newspaper article of a family
of five perishing in a trailer fire. It is a good example of
what can be prevented by sprinkler systems.
JIM HILL, Fire Chief, Ketchikan Fire Department, Ketchikan, said
sprinkler systems save lives. "We've been fighting this battle
for years and years." He would like to keep the discretion at
the local level. Rural communities and places without water
systems may have issues. Working with builders and residents is
good. "Don't take our local powers away from us."
10:07:52 AM
CHAIR MENARD asked if he has a sprinkler system in his home.
MR. HILL said, no, but he would love to install one.
DAVID MILLER, Alaska State Fire Fighters Association, Sitka,
said the association is opposed to SB 129. That decision ought
to be left at the local level. Houses are being built closer
together again. As a fire starts, it is harder to keep it away
from neighboring houses. The faster those fires can be attacked,
the better. Sprinklers can save other structures and lives. A
fire in Washington started in one structure and four others
burned down. New lightweight construction materials burn
quicker. When he started fighting fires 25 years ago, there was
about 17 minutes to get to the fire and stop it. It is now only
4 or 5 minutes.
10:09:38 AM
JEFF TUCKER, Interior Fire Chiefs Association, said he opposes
this bill. There is no national mandate to require residential
sprinkler systems. The state has no power to adopt it. This bill
prohibits local options from adopting this proven technology.
JEFF WILCHEK, Chinook Fire Inc, Anchorage, spoke in opposition
to SB 129. The cost of a sprinkler system is comparable to
carpeting a home. It gives a home immediate fire protection. It
saves lives, including firefighter lives. He has a sprinkler
system and has never had an accidental discharge. It gives peace
of mind for him and his family.
10:11:48 AM
MIKE CHMIELEWSKI, Council Member, City of Palmer, spoke in
opposition. Because of home rule status, Palmer adopts the
building code with exceptions. This is the first time that a
local option is being taken away. The bill said it applies to
home rule. He can't speak to the merits of sprinklers, but
clearly there is enough merit to warrant discussion. He doesn't
have a sprinkler system in his home, but this discussion has
generated thoughts of putting one in.
PAT THOMPSON, Anchorage, said this is an unnecessary step by the
legislature. The codes are developed nationally and adopted
locally, and there is always the option to amend, adjust, and
delete whatever suits the local codes. "And I don't think that
the legislature or this committee should ... get mired in this
discussion, nor should it get mired in discussions with things
like R-values of insulation or snow loads for roofs." Smoke
alarms have been touted as great things, and they have cut fire
deaths in half. They started out being expensive, and the same
people who are saying that smoke alarms are great today are the
same ones who were fighting them back then. In the 1970s smoke
alarms cost $200 each, and that is $1,000 in today's money.
Eventually they became standard, and he can't imagine anyone in
a house without a smoke alarm.
10:15:01 AM
DAVID TYLER, State Fire Marshal, Anchorage, said previous
testimony stated that he had the authority to bring the IBC in
place. That is not true; he gets his authority from statute,
which specifically limits him on what code he can adopt. One
concern with SB 129 is the effect on assisted living and daycare
facilities that provide care between 10 p.m. and 6 a.m. He would
not be allowed to require sprinkler systems for those. "That's
the heart of what we try to do is protect citizens and, in this
case, citizens that don't necessarily have the ability to
protect themselves."
DAVID R. OWENS, Owner, Owens Inspector Service, Palmer, said he
is also representing the Mat-Su Homebuilders. He has been a
building inspector for 25 years, and 10 of those years were with
the municipality of Anchorage. He supports SB 129. With the
upgrades in building standards in the last 10 years, including
smoke and CO detectors, fire separation between the house and
garage, and "the [indecipherable] protection that we do build
very safe one and two-family dwellings." It is unreasonable to
ask the general public to install sprinklers.
NICK BAKIC, Service Manager, ACCEL Fire Systems, Anchorage, said
he is opposed to the bill. Three months ago the governor's
operating budget stated that Alaska has a history of tragic fire
loss, and the state is experiencing an increase in civilian
fatalities due to fire. Fire deaths increased from 12 in fiscal
year 2004, to 20 in 2006, and to 24 in 2007. All but three
occurred in residential structures. Residential fires continue
to be Alaska's largest number of structure fires, accounting for
75 percent of the state's total. Of 14 deaths, 13 occurred in
residential dwellings. The Division of Fire and Life Safety has
no authority to enforce single family code requirements. This
bill would keep them from being able to, and there will continue
to be a rise in deaths. Smoke detectors are easy to disable by
pulling out the battery. The sprinkler system doesn't require a
battery and is always there. There was a 10-year study in
Scottsdale, Arizona, and requiring sprinklers saved lives and
money. It is proved beyond doubt that sprinklers save money for
the municipality. The International Association of Fire Chiefs
has definitions for reactive and proactive fire protection.
Reactive is traditional fire protection where a problem occurs
because of building codes, and there is hope that the fire
department can beat the clock and arrive soon enough to have a
positive impact. Proactive fire protection is embracing new
technology, like automatic sprinklers and early detection
systems, combined with aggressive code enforcement and strong
public education.
10:20:52 AM
BOB WEINSTEIN, Mayor, City of Ketchikan, said Ketchikan is not a
bastion of over-regulation by the government. The city recently
went through an extended public process for updating the fire
and building codes. One of the largest issues was whether
sprinklers should be required in residential buildings. After
extensive dialogue with the local builders association, the city
developed mutually-agreeable language so that sprinklers would
be required in homes that have no access to fire fighting
equipment and no reasonable alternative. It is a very important
issue in Ketchikan where many homes are on wooden staircases or
steep terrain. "We have lost such homes to fire because of lack
of access." The fires threaten neighboring homes as well. SB 129
would veto the actions of the Ketchikan city council and have an
adverse impact on the safety of the citizens. Please let
communities make their own decisions.
10:22:46 AM
PAUL MICHELSOHN, Builder and Director, Alaska State Homebuilders
Board, Anchorage, said he is a member of the ICC and the NAHB
code board. "Fire sprinklers do go to sleep." What is to prevent
a homeowner from shutting it off like shutting off a toilet?
Deaths have been reduced nationally by over 70 percent in the
past 20 years due to the better quality of homes being built in
America. The fire in Washington that was mentioned above would
not have been helped by a sprinkler system "because a sprinkler
supposedly protects the inside of the residence not the
outside." If a house burns from the outside, a sprinkler is not
going to do a thing for it. There are a lot of older homes in
Alaska. "If the statistics were brought forth accurately, you
will see that the fire deaths occurring in Alaska are in houses
that are older than 20 or 25 years old. They don't even have
proper water systems, no less the ability to put a sprinkler
system in." The sprinkler system code is targeted at new
construction and not at trailers. Trailers can't have sprinklers
because there isn't enough insulation in the walls to keep the
water from freezing. Smoke alarms and education save lives. "If
the fire coalition put some of their efforts into education of
the public; telling them about smoke detectors; telling them
about exit routes; telling them about safety of fires, I think
it would be a much more reasonable request than to request
sprinkler systems." Today's testifiers said that sprinklers are
not law now, and that is correct. The law was passed last
September to be put into the main body of the 2009 IRC. From
2000 to 2006 it was in the appendix. The appendix is just a
guideline. Now the fire coalition was successful in getting it
into the body of the code. Once the state adopts the IRC - there
is talk in the legislature now about adopting a state code - and
the state fire marshal adopts the code, then the local
jurisdictions will not have the authority to amend it out. A
local jurisdiction can amend or adjust the code to be more
stringent, not less. He is in favor of the bill. "We don't want
to take the risk of having to come down here in a year from now
and then talk about throwing the entire code out, which is
happening in various states." This same bill has passed in North
Dakota and is awaiting a signature from the governor.
10:27:04 AM
SENATOR MEYER said he agrees that most homes in Anchorage that
catch fire are old homes and mobile homes. Smoke detectors give
false alarms. Can the same thing happen with the sprinklers?
MR. MICHELSOHN said the heat has to melt the metal to release
the spring. They can be broken very easily with Frisbees, tennis
racquets, and clothes hangers. "That is the fear, and by law a
homeowner is not allowed to shut the water system off if a
sprinkler system activates." A person of authority has to come
and shut it down. It flows from six to nine gallons per minute,
so mold and heavy condensation will be a problem.
10:29:02 AM
CHAIR MENARD said she built a professional building with a
firewall. She asked him to describe firewalls.
MR. MICHELSOHN said they are called fire separation walls for
commercial buildings. "That is happening on residential where
someone said the houses are getting closer and closer together."
The code has been reduced from five feet to three feet between
properties. At three feet, eaves have to be protected by
sheetrock and fire-rated plywood. In some instances fire glass
is required. These are options. A person can install fire-rated
sidings. The exterior can have stucco. There are many options
besides fire sprinklers. Sprinklers create a false sense of
security to the occupant. Assisted living and day care centers
aren't regulated under this bill because they are commercial.
10:31:00 AM
SENATOR PASKVAN said the Ketchikan mayor said they dealt with
the issue on a local level.
MR. MICHELSOHN said he flew to Ketchikan four times to testify.
The local authority tried to require sprinkler systems for all
residential houses. "The building official has told the people,
well you got your way last year, but it's in the code now, so
we'll have it again." That is the wrong attitude because it was
a good discussion. Ketchikan has steep wooden steps and
walkways. It was agreed that those areas would have sprinklers
because of access problems. But a block and a half away it
wasn't necessary. A subdivision in Anchorage has been mentioned.
A block below it and the one above it do not require a sprinkler
system; just one block does because that is the agreement that
the developer made with the municipality to get the subdivision.
"They could've put hydrants in; they could have put assist
pumps; they could put better quality construction; so there's
pros and cons that this does not take away from the
municipality. The option is always there."
10:33:26 AM
SENATOR PASKVAN asked if Mr. Michelsohn believes that a local
jurisdiction should have a say in adopting any building code.
MR. MICHELSOHN said he is in favor of any municipality adopting
the code and being able to amend it as it sees fit. But if the
state adopts the IRC in its entirety, then no jurisdiction in
the state will be able to amend out fire sprinklers.
CHAIR MENARD asked if he sees this as a proactive bill.
MR. MICHELSOHN said he sees the bill as preventative
maintenance. "I foresee some other issues coming down the road."
SENATOR KOOKESH asked if "we would be preempted from doing
anything" if the state adopts that code. In order to adopt
something, a decision would be made. "It doesn't just get forced
on us; we'd have the same discussion."
10:35:08 AM
MR. MICHELSOHN said the codes that are currently adopted in the
state are the IBC, UPC, UMC, IFC, NEC, and the IEECC.
SENATOR KOOKESH said he is not talking about those; he is
talking about the one--
MR. MICHELSOHN interrupted and said the IRC. "I don't know your
process. We're trying to figure that out right now. What is the
process to get a code adopted statewide?"
SENATOR KOOKESH said if the legislature had to adopt a code
statewide, "we, the legislature, would have that determination
in front of us." Nobody else would, so the legislature would
have an option--
MR. MICHELSOHN interjected, "I don't know if that's a true
statement, sir."
SENATOR KOOKESH asked who makes a decision that would override
the state legislature.
MR. MICHELSOHN said he asked someone in the Department of Labor
because the codes are split with it and the state fire marshal.
He doesn't know if it goes in front of the legislature or not.
SENATOR KOOKESH said, "OK, then for you to come here and say
that it's going to be adopted is a misnomer because you don't
even know that."
MR. MICHELSOHN said, "I said we're trying to prevent this in the
event that it gets adopted, because a lot of the areas are going
to try to get this code adopted. It's in right now, being
proposed."
10:36:31 AM
ANNIE CARPENETI, Attorney, Criminal Division, Department of Law,
said she works with the fire marshal to adopt these codes. The
process begins with the fire marshal sending her the codes that
are adopted by reference, "and you have to go through the codes
because they except from the adoption by reference various
sections of the code that the fire marshal does not want to
adopt by reference." She believes that the fire marshal would
not be able to adopt any provision that deals with one and two-
resident buildings, because that is not part of the statutory
authority given to the fire marshal. "They are not allowed to
regulate residences under four units." These are adopted by
regulation, which first go through the regulatory process of
public notice, hearings, and comments. She goes through the
codes, section by section. She showed a book of the regulations
adopted by the fire code and it has the IBC with exceptions. The
exceptions go on for pages and pages. The legislature has the
authority to change them.
10:39:09 AM
SENATOR KOOKESH said he saw a lot of letters of support. There
was a lot of testimony in opposition, so he asked if Chair
Menard got any letters in opposition.
CHAIR MENARD said, "We did not."
MR. ROVITO said he was contacted by the AML [Alaska Municipal
League], "and just had a brief conversation, and that was the
end of that. None of these people had ever contacted me."
SENATOR KOOKESH said he never expected that much opposition
because it wasn't in the record.
SENATOR PASKVAN asked for clarification. If the state fire
marshal cannot regulate a building under four units, is there
any need for this?
CHAIR MENARD said that is a good question.
SENATOR PASKVAN asked why the local jurisdictions shouldn't
fight the battles based upon their own issues. Since the fire
marshal cannot regulate these buildings, he wondered if this is
even necessary.
10:41:17 AM
SENATOR KOOKESH said he likes local options, and he hasn't yet
seen a problem here that needs to be corrected.
CHAIR MENARD said the next committee of referral is the Senate
Labor and Commerce committee.
SENATOR MEYER asked the chair if she wanted to move the bill and
do the clean-up work in the next committee. He moved SB 129 with
attached fiscal notes from committee with individual
recommendations.
SENATOR KOOKESH objected. This bill has problems and he hopes to
see it worked on in the Labor and Commerce committee. He is
concerned about local options, the definitions, and whether this
is really needed. This is not a lurking problem. He said he has
always been opposed to legislation that just adds to the
bureaucracy. He removed his objection and SB 129 moved out of
committee.
10:43:21 AM
The committee took a brief at-ease.
HJR 19-OIL TANKER ESCORT VESSELS/OIL SPILL ANNIV
10:45:30 AM
CHAIR MENARD announced the consideration of HJR 19.
ERIN HARRINGTON, Staff, to Representative Alan Austerman, Alaska
State Legislature, sponsor, said today is the anniversary of the
Exxon Valdez oil spill. There are many people around the state
who are keenly interested in HJR 19, which recognizes the spill
and supports the continued practice of accompanying each laden
oil tanker in Prince William Sound with a two-vessel escort. The
Exxon Valdez ran aground on Bligh Reef 20 years ago today and
spilled nearly 11 million gallons of crude oil. It oiled 1,300
miles of coastline, reaching as far away as Chignik which is 700
miles away. The death toll included 250,000 sea birds, 2,800 sea
otters, 300 harbor seals, 250 bald eagles, up to 22 killer
whales, billions of salmon and herring eggs, and many intertidal
plants and animals. Many species are still recovering today. In
1990 Congress passed the Oil Spill Prevention Act (OPA-90). It
addresses preventing, responding to, and paying for oil
pollution. One outcome was that laden tankers with a single hull
had to be escorted by two vessels.
10:48:38 AM
MS. HARRINGTON said that is not a panacea, and the Coast Guard
studied what would have happened if the Exxon Valdez had been
double-hulled. It concluded that there would have still been at
least a 4-million-gallon spill, which would have been
catastrophic as well. Alaska also passed legislation following
the spill, so shippers now must have oil spill prevention and
contingency plans -- an exhaustive process for preventing and
responding to an oil spill. These plans are not set in statute,
but the current plan requires a two-vessel escort for all laden
tankers in Prince William Sound, single or double hulled. The
plans are reviewed every five years, and they can be amended by
the Department of Environmental Conservation but are not
outlined in law. She provided a photo of a two-tug escort. One
tug is tethered to the ship. Without it the tanker can take up
to two miles to stop in an emergency.
10:51:16 AM
SENATOR KOOKESH asked if OPA-90 will be amended to eliminate the
escorts.
MS. HARRINGTON said OPA-90 only requires single-hulled tankers
to have escorts. The last of the single-hulled tankers will be
gone from Prince William Sound by 2012 or earlier. So there will
no longer be any federal requirement for the two-tug escorts.
She noted editorials in Alaska papers, and there is interest in
pursuing legislation that would require the escort regardless of
the hulls.
SENATOR KOOKESH asked if this resolution will just send a
message to Congress to continue the two-tug escorts.
MS. HARRINGTON said yes.
10:53:22 AM
DOROTHY MOORE, Council Member, City of Valdez, said she is a
former history teacher and a life-long resident of Valdez. She
is on the city council and is its representative to the Prince
William Sound Regional Citizen's Advisory Council. She urged
passage of HJR 19. "We have 20 years of experience that worked.
I don't think we need to fix something that isn't broken. We
need to learn from the past to protect Prince William Sound for
all of Alaska."
TOM KUCKERTZ, Project Manager, Prince William Sound Regional
Citizen's Advisory Council, Valdez, said there are 18 member
entities on the council. Its mission is to promote
environmentally safe transportation of oil from the Alyeska
terminal. The system in place has done very well over the past
20 years. "We think that two tugs are very important," and on
behalf of the council, he urged passage of HJR 19.
CHAIR MENARD asked if anyone is opposing the bill.
MR. KUCKERTZ said he knows of no opposition, but the Coast Guard
would like to do a risk assessment. His group believes that that
is not needed because risk assessments tend to be biased toward
those who are paying for them, "but it can be worse than that."
The risk is determined by multiplying the probability of
something happening by the consequences -- a very small number
by a large number. The small number is the one big accident out
of the 15,000 tanker trips. So the probability of an accident is
determined to be 1 in 15,000. "The folks that want to do a risk
assessment will tell you that we don't want to use that number
because it is too large - we want to use one in a million. Well,
we know it's not one in a million."
10:57:16 AM
SENATOR KOOKESH said a lot of money has been spent since the
spill to build double-hulled tankers. What was that purpose of
that if we will continue to use two tugs? Who pays for the tugs?
"I'm all for safety but I'm really thinking that we've maybe
crossed that threshold a little bit of a ways back by saying
everybody's required now to build double-hulled tankers. I'm
sure that's a huge expense to somebody."
MR. KUCKERTZ said both tugs are paid by industry. There has
always been a single-tug escort. There can be a long discussion
regarding the merits and deficiencies of double hulls. The
double hulls lessen the release of oil with a low-energy
grounding, such as the side-swiping of a bridge by the Cosco
Busan [in San Francisco Bay in 2007], and chances are that it
would not have leaked if it were double hulled. In a high energy
grounding, such as the Exxon Valdez, double hulls could reduce
the leak by 60 to 40 percent. "But we haven't really done the
experiment." Half of the bottom ripped out of the Exxon Valdez,
and a double hull might not have done that much better. Double
hulls ride higher in the water, so the oil is under
gravitational force to leak more.
10:59:39 AM
SENATOR PASKVAN surmised that this is just a resolution because
of a federal preemption under the commerce clause.
MR. KUCKERTZ said he is an engineer not a lawyer, but he thinks
that is the case. He hopes the resolution will help make sure
Alaska's resources are protected.
JOHN VALSCO, Homer Representative, Prince William Sound Regional
Citizen's Advisory Council, said HJR 19 is not against the oil
industry. He has seen how oil tax dollars have built Homer's
infrastructures. He worked on the construction of the pipeline,
and now he and his son both fish commercially. The oil industry
has to share Alaska waters with other users. HJR 19 is a first
step in codifying using two tugs in Prince William Sound.
11:02:13 AM
JERRY MCCUNE, United Fisherman of Alaska, said he is also the
president of Cordova District Fishermen United. The groups
support this resolution. Prevention is the key. Two escorts make
everybody happy and give them the peace of mind that the tanker
can be moved or towed.
SENATOR KOOKESH asked the additional cost of the tug and what
the industry's position is.
MR. MCCUNE said he can't speak for the oil industry, but the
resolution says they are neutral.
11:03:39 AM
SENATOR PASKVAN moved to report HJR 19 from committee with
individual recommendations and attached fiscal note(s). There
being no objection, HJR 19 moved out of committee.
The committee took a brief at-ease.
SB 126-REEMPLOYMENT OF RETIREES; EXEMPT SERVICE
11:06:09 AM
CHAIR MENARD announced the consideration of SB 126.
GINGER BLAISDELL, Director, Administrative Services, Department
of Revenue (DOR), said SB 126 has three parts: two positions in
DOR; 23 positions in the Department of Natural Resources (DNR);
and an extension of a sunset for the retiree/rehire program. The
positions for DOR include the state comptroller and the chief
economist. The economist is in a classified position in the
supervisory bargaining unit, and after multiple recruitments the
position has been unfilled for a year and a half. The bill will
exempt the position so the state can increase the pay. The state
comptroller has turned over four times in four years because the
employee has left for a higher paying job. The bill will move it
into exempt status instead of partially exempt "so that we could
use a different pay scale." The positions in DNR are
professional level, which are out-marketed. Market-based pay in
the private sector is significantly higher than what the state
can offer. "So we're looking at taking them from temporary-
project service into full-time exempt status for a long-term
project." The retiree/rehire program has had two different
terms. This one will sunset on June 30, so on July 1 the few
employees that are retirees would have to make a choice of
retaining their positions and stop receiving their retirement
benefits, or they would have to retire, making those positions
vacant.
11:09:24 AM
CHAIR MENARD said the first retiree/rehire program started in
2001 and was continued in 2005. What was the original intent?
MS. BLAISDELL said it was to fill positions that were difficult
to fill.
CHAIR MENARD asked if retirees, prior to 2001, were prohibited
from returning to state work in any capacity.
MS. BLAISDELL said once state workers retire, they receive
retirement benefits. If they return to work with the same plan,
they forfeit retirement pay and receive regular position pay.
11:10:24 AM
CHAIR MENARD surmised that there would be 23 employees affected.
MS. BLAISDELL said those are at DNR and are not rehired
retirees. The 23 employees in that program are listed in a
report that the committee has. There are 77 TRS active retirees
and 47 PERS active retires employed by state and local
governments.
CHAIR MENARD asked how this affects young employees who want to
climb up the ladder.
MS. BLAISDELL said there have been questions on upward mobility,
but the retiree/rehire program is only allowed if there are
fewer than five candidates for any given position. It is not a
shoe-in for the retiree to get that job. There are only 36
positions using the program, and the state has 15,000 to 17,000
employees.
CHAIR MENARD said she has always had a problem with retirees
taking the slots of new hires who have potential. It shuts out
opportunities.
SENATOR PASKVAN asked if there are 124 in TRS and PERS, and the
bill is to expand it with 23 positions in DNR.
MS. BLAISDELL said no. There are two separate actions in SB 126.
The DNR and DOR positions are just being changed to exempt
service to use a different pay scale. The retiree/rehire program
is separate.
11:14:14 AM
SENATOR PASKVAN asked the average age of retirement for the 124
people.
MS. BLAISDELL said she doesn't know.
CHAIR MENARD asked about making it two separate bills.
MS. BLAISDELL said the bill has two topics, but both are
personnel related. She is not sure why the governor chose to put
them in one bill.
11:14:58 AM
SENATOR FRENCH asked if this is "must-have legislation."
MS. BLAISDELL said if the portion that allows the positions to
become exempt were deleted, the DNR positions would remain in
temporary status, and the DOR positions would likely remain
vacant or become vacant. Those positions are critical to the
needs of the state. The retiree/rehire program will sunset on
July 1 if the bill doesn't pass. So, 124 people will need to
make the choice of staying in their positions without drawing
retirement benefits or leaving.
SENATOR FRENCH asked if those 124 would stop getting retirement
if they stayed in their jobs.
MS. BLAISDELL said that is correct; they would just be receiving
their regular pay.
11:16:22 AM
SENATOR FRENCH asked if it is a must-have bill for the governor.
MS. BLAISDELL said she doesn't know.
SENATOR FRENCH said he has many questions and would like to
address it later.
CHAIR MENARD agreed. In the interest of time, the committee will
take it up on Thursday.
SB 126 was held over.
11:17:23 AM
CHAIR MENARD adjourned the Senate State Affairs committee
meeting at 11:17 a.m.
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