COMMITTEE SUBSTITUTE FOR HOUSE BILL NO. 378(RLS) "An Act relating to the establishment of, assessment of, collection of, and accounting for service fees for state administration of workers' compensation and workers' safety programs; establishing civil penalties and sanctions for late payment or nonpayment of the service fee; and providing for an effective date." This was the second hearing for this bill in the Senate Finance Committee. AT EASE 6:25 PM / 6:33 PM Amendment #1: This amendment deletes "or interpret" from page 7, line 8 and line again on line 9. The amended language reads as follows. TRANSITION: REGULATIONS. The director of the division of insurance in the Department of Community and Economic Development, and the Department of Labor and Workforce Development, may proceed to adopt regulations necessary to implement this Act. Regulations to implement a provision of this Act take effect under AS 44.62 (Administrative procedure Act), but not before the effective date of secs. 1 - 6 of this Act. Senator Leman moved for adoption. Without objection the amendment was ADOPTED. Amendment #2: This amendment reads as follows. CSHB 378 (RLS) Workers Compensation Safety Fee Suggested Language Changes by Department of Community & Economic Development Change 1: Sec. 3. Sec. 23.05.067 (a) (2) (page 2, lines 26 through page 3, line 8) is replaced by the following: (2) For each insurer, the director of the division of insurance shall deposit under (e) of this section from funds received from the insurer under AS 21.09.210, the service fee of 1.82 percent of the direct premium income for workers compensation insurance received by the insurer during the year ending on the preceding December 31, subject to all the deductions specified in AS 21.09.210(b). Current language requires the Division of Insurance to deposits a portion of premium tax collected as opposed to premium reported. Otherwise, deposits may be required greater than the amounts collected. Change 2: Delete Section 2 and renumber Sections 3-11. Unlike previous versions, the rules CS does not, contain the "in lieu of all taxes..." sentence found on page 2, lines 25-28 of the previous (CSHB 378 (L&C)) version. The provision amending AS 21.09.270 should be removed. This change maintains the long-standing statutory status quo regarding retaliatory fees. This will keep Alaska's retaliatory calculation in line with other states and will promote a level playing field between companies from this state and other states. Senator Leman moved for adoption and explained these were two technical changes suggested by the Division of Insurance. He referred to an April 14, 2000 letter on the subject by Bob Lohr the division's director. [Copy on file.] The amendment was ADOPTED without objection. REMOND HENDERSON, Director, Division of Administrative Services, Department of Labor and Workforce Development listed the four updated fiscal notes that accompany the committee substitute. Mr. Henderson addressed the changes to the Occupational Health and Safety component fiscal note to reflect that in the second year of the program, it would still be reliant on some general funds. This, he explained is because the committee substitute increased the phase-in time of the program to three years. He noted that $1 million, of which $315,000 is from the Occupational Safety and Health Administration (OSHA) and the balance from the Workers Compensation component, would replace general funds in the second year. PAUL GROSSI, Director, Division of Worker's Compensation, Department of Labor and Workforce Development noted the amendment that lengthened the phase-in time by one year was done by the House Rules Committee so there would not be a "double charge" for those entities paying a tax then a service fee. Co-Chair Torgerson noted the current version of this fiscal note is $300,000 less than previous versions and asked if the program is losing money because of the phase-in change. Mr. Grossi replied that the program would not lose money, however funds would not be available for deposit into the program's account until the following year. This was because of the collection period, he said. Mr. Grossi confirmed that the increased phase-in period of the program is the reason for the changes in the Workers Compensation component fiscal note dated April 17, 2000. Mr. Henderson explained that the changes to the Department of Labor and Workforce Development, Office of Commissioner component April 17, 2000 fiscal note reflect the reduction of revenues received in the first year from $3.5 million to $2.5 million. BRAD THOMPSON, Director, Division of Risk Management, Department of Administration, explained the increased Risk Management component fiscal note. He stated that the State Of Alaska, as an authorized self-insured employer, would pay according to the fee assessment stipulated in the bill. He pointed out that the fiscal note reflects the increased costs estimated for all state agencies. The Division of Risk Management, Mr. Thompson noted allocates these costs based on experience and exposure of claims based on a historical five-year average. He continued that the accompanying Office of Management and Budget information shows the inter-agency funding source of the increased amounts. Senator Green mentioned the potential impact of this legislation on local governments. She said she was uncomfortable tying worker's compensation to OSHA for budgeting purposes saying that any revenue shortfalls would require reductions to worker's compensation due to OSHA minimum funding requirements. No motion to move the bill was offered by any member of the Committee. Co-Chair Torgerson ordered the bill HELD in Committee.