HB 76-UNEMPLOYMENT; ELEC. FILING OF LABOR INFO  3:22:17 PM CHAIR OLSON announced that the first order of business would be HOUSE BILL NO. 76 "An Act relating to electronic filing of certain information with the Department of Labor and Workforce Development; relating to surcharges, rate increase reduction, prohibition on the relief of certain charges, the unemployment trust fund account, and the offset of certain unemployment compensation debt under the Alaska Employment Security Act; relating to the definition of 'covered unemployment compensation debt' in the Alaska Employment Security Act; and providing for an effective date." 3:22:52 PM REPRESENTATIVE JOSEPHSON made a motion to adopt Amendment 1, labeled 28-GH 1494\A.1, Wayne, 3/11/13, which read: Page 1, line 2: Delete "rate increase reduction," Page 3, lines 11 - 29: Delete all material. Renumber the following bill sections accordingly. Page 5, line 5: Delete "Section 10" Insert "Section 9" Page 5, line 6: Delete "sec. 11" Insert "sec. 10" CHAIR OLSON objected for the purpose of discussion. 3:23:44 PM REPRESENTATIVE JOSEPHSON explained Amendment 1 would delete Section 5, which is the only controversial section of HB 76. He stated that the state's Unemployment Insurance (UI) Trust Fund has never been insolvent. He asked Ms. Huff to re-read a definition of the weighted average, which includes the use of the word solvency. Thus this UI Trust Fund is clearly about solvency. He said Section 5 is irrelevant, in terms of who pulls the trigger, since it could be anyone. However, this provision would add unnecessary risk to this program and it shifts the timing of the UI taxes, but not the total amount of taxes. He expressed concern that the result may be that businesses are paying lower taxes in good times and higher taxes as they struggle to come out of a recession. This bill would also require a new consultation with actuaries. He reminded members that recently the state had difficulties with its actuaries for the Public Employees' Retirement System (PERS) unfunded liability. He acknowledged that the aforementioned isn't a universal problem and concluded that the system is working. Additionally, he said he has never recalled anyone in his district raising this issue. Lastly, he informed the committee that the state, in terms of the nation, ranks 34 out of 50. The state pays $370 per week maximum, and there is a correlation between what the state pays in benefits and this formula. Given Alaska's high cost of living, he said one issue is whether the state is adequately paying UI benefits if the state is only paying $1,200 to $1,300 in UI benefits. 3:25:33 PM CHAIR OLSON maintained his objection. A roll call vote was taken. Representative Josephson voted in favor of Amendment 1. Representatives Millett, Reinbold, Saddler, Chenault, Herron, and Olson voted against it. Therefore, Amendment 1 failed by a vote of 1-6. 3:26:12 PM REPRESENTATIVE HERRON [did not offer] amendments in members' packets Amendment 2 [labeled 28-GH1494\A.2, Wayne, 3/11/13], and Amendment 3 [labeled 28-GH1494\A.3, Wayne, 3/14/13]. 3:26:33 PM REPRESENTATIVE HERRON moved to adopt Amendment 4, labeled 28- GH1494\A.4, Wayne, 3/15/13, which read: Page 3, line 20, following "may": Delete "suspend, in whole or in part, any unemployment rate of contribution increases" Insert ", in increments of 16.5 percent, suspend up to 66 percent of an unemployment rate of contribution increase" Page 3, line 23: Delete "suspended, in whole or in part" Insert "partially suspended under this subsection" Page 3, line 26: Delete "suspended, in whole or in part" Insert "partially suspended" Page 3, following line 27: Insert a new subsection to read: "(b) The commissioner may not suspend more than one 16.5 percent increment of an unemployment rate of contribution increase under (a) of this section in a six-month period." Reletter the following subsection accordingly. CHAIR OLSON objected for the purpose of discussion. 3:27:04 PM REPRESENTATIVE HERRON explained Amendment 4. He related that he circulated Amendment 2 [A.2] and Amendment 3 [A.3] and discovered that both sides of the issue didn't like those amendments. Therefore, Amendment 4, which allows UI tax contributions to be suspended in parts up to 66 percent and limits the commissioner's ability such that he/she may not suspend it for more than one 16.5 percent increment without a six-month period, was developed. CHAIR OLSON maintained his objection. 3:27:47 PM REPRESENTATIVE JOSEPHSON asked him to summarize Amendment 4 again. REPRESENTATIVE HERRON explained that he [did not move forward] with the earlier two amendments since he circulated them and found committee members did not support the potential amendments so he worked to improve the change. Under Amendment 4, the UI insurance rates could incrementally be suspended up to 16.5 percent and allow a six-month trial prior to suspending another 16.5 percent UI tax contribution. 3:28:26 PM CHAIR OLSON maintained his objection. A roll call vote was begun. Representative Herron voted yea. REPRESENTATIVE MILLETT requested an at-ease. The committee took an at-ease from 3:28 p.m. to 3:30 p.m. CHAIR OLSON asked for further clarification of Amendment 4. REPRESENTATIVE HERRON related that in considering the testimony the focus has been on Section 5 of the bill and the administration and others are opposed to [Section 5.] Thus, he said he tried to allow the department to adjust the unemployment rate of contribution up or down on increments every 6 months up to a maximum of 66 percent, which is the language in Amendment 4. 3:32:05 PM BRYNN KEITH, Acting Deputy Commissioner, Office of the Commissioner, Department of Labor & Workforce Development (DLWD), introduced herself. PAUL DICK, Director, Central Office, Division of Employment Security (DES), Department of Labor & Workforce Development (DLWD), introduced himself. 3:32:25 PM CHAIR OLSON inquired as to the impact of proposed Amendment 4 on the bill. 3:32:39 PM MS. KEITH explained that the bill, as written, would allow the commissioner of the DLWD limited discretion, under controlled circumstances to suspend in part or in whole tax increases on unemployment insurance. The department, she related, holds the opinion that further restricting that flexibility is unnecessary. Furthermore, adjusting tax rates twice a year as opposed to the annual adjustment would potentially add an additional burden to employers. Additionally, the semi-annual adjustment would add additional administrative costs associated with it within the DLWD. 3:33:21 PM REPRESENTATIVE MILLETT surmised then that Amendment 4 would require the department to review the UI rates every six months and by discretion the DLWD could adjust the [UI] rates, which is "a look back." MS. KEITH answered yes; that is how she interprets Amendment 4. REPRESENTATIVE MILLETT related her understanding that the current "look back" is for one year and if the bill passed it would remain a one-year "look back." MS. KEITH answered yes. CHAIR OLSON maintained his objection. 3:34:11 PM A roll call vote was taken. Representatives Herron and Josephson voted in favor of Amendment 4. Representatives Millett, Reinbold, Saddler, Chenault, and Olson voted against it. Therefore, Amendment 4 failed by a vote of 2-5. The committee took an at-ease from 3:34 p.m. to 3:36 p.m. CHAIR OLSON related that a conceptual amendment was previously distributed to members, but since then had been incorporated into the proposed committee substitute. 3:36:19 PM REPRESENTATIVE REINBOLD moved to adopt the committee substitute (CS) for HB 76, labeled 28-GH1494\N, Wayne, 3/18/13 as the working document. CHAIR OLSON objected for the purpose of discussion. 3:36:36 PM KONRAD JACKSON, Staff, Representative Olson, Alaska State Legislature, stated that Version N makes some minor corrections to the bill. He pointed out that the most significant change embodied in Version N is the repeal of Section 5 on page 6, line 4. The intent of the change is to give the department some time to consider unemployment insurance rate adjustments. If there is [a major economic crisis] or if a "terrible" commissioner makes decisions, the language would disappear in five years. 3:38:30 PM MR. JACKSON explained that a new page 3 is in Version N. He offered that when the Department of Law drafts a bill the legislative team of lawyers also review and format the language. He pointed out that on page 2, line 13, the citation that refers to the UI Trust Fund account, AS 23.20.135(a), which was in the incorrectly referred to AS 23.20.130(b)(2). [The correction was made to a proposed committee substitute (CS) for HB 76, previously circulated to members but not discussed or adopted by the committee.] He suggested that the committee consider adoption of Conceptual Amendment 2, which corrects the aforementioned typo on page 5, line 14, and page 6, line 1 of Version N. 3:39:33 PM REPRESENTATIVE REINBOLD moved Conceptual Amendment 2, [which corrects the UI Trust Fund account citation]. There being no objection, Conceptual Amendment 2 was adopted. REPRESENTATIVE SADDLER asked for clarification on whether Conceptual Amendment 2 would amend Version N. CHAIR OLSON answered yes. The committee took an at-ease from 3:40 p.m. to 3:42 p.m. 3:42:47 PM CHAIR OLSON stated that the proposed CS for HB 76, Version N, as amended, is before the committee. 3:42:57 PM REPRESENTATIVE CHENAULT asked whether Conceptual Amendment 1 had been approved. MR. JACKSON explained that a draft amendment, entitled, "Conceptual Amendment 1" was circulated to members, but was not presented or adopted by the committee. Instead, the draft language was incorporated into the proposed committee substitute (CS) for HB 76, Version N. The committee formally adopted [the proposed CS for HB 76, Version N], and adopted Conceptual Amendment 2, which corrects the reference to the UI Trust Fund account in the proposed CS for HB 76, Version N. CHAIR OLSON remarked that the committee has been experiencing some of the effects of a 90-day legislative session as opposed to a 120-day legislative session. 3:44:11 PM REPRESENTATIVE REINBOLD moved to report the proposed committee substitute (CS) for HB 76, labeled 28-GH1494\N, Wayne, 3/18/13, as amended, out of committee with individual recommendations and the accompanying fiscal notes. REPRESENTATIVE JOSEPHSON objected. 3:44:27 PM A roll call vote was taken. Representatives Chenault, Herron, Millett, Reinbold, Saddler, and Olson voted in favor of reporting the proposed committee substitute (CS) for HB 76, labeled 28-GH1494\N, Wayne, 3/18/13, as amended, from the House Labor and Commerce Standing Committee. Representative Josephson voted against it. Therefore, the CSHB 76(L&C) was reported out of the House Labor and Commerce Standing Committee by a vote of 6-1.