Number 087 HB 46 - STATE-PAID TRAVEL MILEAGE CREDITS CHAIR FOSTER stated that he was neutral on CSHB 46 and it would be a committee decision as to whether or not to move the bill. Number 098 REPRESENTATIVE TERRY MARTIN, Prime Sponsor of HB 46, introduced CSHB 46 by stating, "CSHB 46 represents a simple and efficient effort to reduce the budget and potential waste in departmental operations. It targets the abuse and under-regulated tabulation of frequent flier credit miles by state employees during state paid flights. The purpose of the bill is to apply all mileage earned through state travel to the specific department authorizing the ticket. State employees conducting business, at state expense, should relinquish awarded miles as property of the state. As frequent flier award certificates are issued, they should in turn be applied to future travel expenses incurred by the department. "The bill should also enhance efficiency by deterring and limiting the number of employees attending the same meeting. In the same instance, it will promote information sharing and increase a team effort to reduce excessive travel in certain divisions. In terms of the national perspective, as of last year 14 states had frequent flier policies. All 14 describe the mileage as `property of the state' and require a central collection location in a division to maintain enforcement and consolidate travel data. In some cases, states whose employees travel extensively have two frequent flier mileage numbers: one for personal travel and one for state business. "In an effort to curb travel expenses, all state agencies should maintain a permanent, cumulative file of their personnel's travel records. The file should include, at a minimum, the total current airline frequent flier mileage accrued by state employees at state expense. Coupled with the passage of CSHB 46, tracking and recording funds spent on travel will help reduce waste in each departmental budget and should assist administrators in reaching a more fiscally conservative approach to state operations." Number 174 REPRESENTATIVE HUDSON commented that this subject is not a new one, and asked Representative Martin what the current position of the airlines was, in contrast to Alaska Airline's past position that frequent flier points were a bonus to the flier and nothing else. Number 186 REPRESENTATIVE MARTIN responded that this was something that would have to be worked out with the airlines, but 14 other states already have such programs. He added that he is amazed that the airlines are able to do this with IBM, ARCO, and other private enterprises as well and that Alaska Airlines has a monopoly going on and no incentive to cooperate. He added that a Juneau outfit, U.S. Travel, would be able to set up such a program for every department of state government. Number 210 REPRESENTATIVE HUDSON stated that he has always felt frequent flier miles are not state assets, but rather employee entitlements, since often employees traveling on state business must fly at night and on weekends. He expressed concern that, through CSHB 46, the organized employees of the state, rather than legislators and the governor and other such employees, are being asked to give up something that the state doesn't own. Number 231 REPRESENTATIVE MARTIN responded that, if this is the case, it should be an explicitly stated component of the employee benefits package. Number 243 REPRESENTATIVE HUDSON commented that the dialogue taking place was very important and emphasized his belief that the state has no call on the mileage points at issue. The state has a responsibility to pay the fare, and if they don't think the fare is appropriate, they should negotiate for a lower fare. He cited an earlier attempt to negotiate for a lower fare when Mark Air first flew into Juneau and offered blocks of seats at lower fares for state travelers, adding that in his mind such an approach was the proper way to do it -- not via the proposals contained in CSHB 46. He further added that he thought CSHB 46 would have a demoralizing effect. Number 261 REPRESENTATIVE MARTIN responded that a decision clearly should be made by the legislature on how to treat the mileage. He also commented that Mark Air's past efforts had been honest ones to save millions of dollars, but employees went over to Alaska Air and flew with them in order to get the free mileage. Number 270 REPRESENTATIVE FOSTER restated his position that he would either move or not move CSHB 46 at the end of discussion and ask for a vote thereon. Number 276 REPRESENTATIVE MACKIE stated that he understood CSHB 46 only deals with employees who are part of an organized bargaining unit and under contract and does not effect legislators, the governor, the governor's people, or other political people who are, nonetheless, state employees. He asked Representative Martin why that was the case. Number 281 REPRESENTATIVE MARTIN replied that under absolutely no circumstances was it his intent that legislators, the governor, the governor's people, or other political people be exempted from the requirements of CSHB 46. He added that any state of Alaska employee should be responsible for turning in the frequent flier miles to the state and the airline should be responsible for the points being credited to the state or state agency. Number 296 REPRESENTATIVE MACKIE expressed concern that only organized bargaining units would be losing frequent flier benefits. Number 302 REPRESENTATIVE MARTIN responded that they then needed to add words to the effect of "no one" to the bill. Number 312 REPRESENTATIVE MACKIE continued to express concern regarding the seeming exemption of legislators and other political employees from the terms of the CSHB 46, according to his interpretation of AS 39. Number 317 REPRESENTATIVE MARTIN expressed willingness to amend CSHB 46, though he stated that he did not construe AS 39 to say what Representative Mackie interpreted it as saying. Number 318 REPRESENTATIVE MACKIE stated to Chair Foster that he was not trying to be dilatory, but according to his reading, it was obvious CSHB 46 only dealt with employees in organized groups. Number 320 REPRESENTATIVE MARTIN said that this was the first he had ever heard of Representative Mackie's interpretation of CSHB 46. Number 330 REPRESENTATIVE VEZEY made the point that he recognized the demoralizing effect of losing benefits, but it certainly wouldn't be as demoralizing as the loss of a job or having a cohort lose a job. He added that he, personally, places jobs at a higher priority than travel benefits. Number 340 REPRESENTATIVE DAVIS stated that he had been under the impression that there is no mechanism for the airlines to credit the state, but Representative Martin's testimony contradicted that impression. He asked Representative Martin to confirm that if the state paid for the tickets, the state could, under law, receive the frequent flier benefits. Number 351 REPRESENTATIVE MARTIN responded that there is currently no mechanism in the state to implement a program such as he is suggesting. He added that he is frustrated with the entire situation, although U.S. Travel has told him that they could do it through a very simple process. Number 373 REPRESENTATIVE DAVIS asked Representative Martin to clarify what U.S. Travel is and if it is a travel agency. Number 376 REPRESENTATIVE MARTIN replied affirmatively, indicating that U.S. Travel is a travel agency. He mentioned receiving a program from U.S. Travel, but said he hadn't had the time to go down and see U.S. Travel. He added that U.S. Travel has told him that if the bill goes through, they can set up the system for the state. Number 380 CHAIR FOSTER reminded the committee that CSHB 46 had been in a subcommittee consisting of Representative Mulder and Representative Mackie and asked if there were any comments the subcommittee wished to make. Number 382 REPRESENTATIVE MULDER responded that he had asked the representative of Alaska Airlines if they had done anything like this, and they had not, and they were not excited about having the opportunity to do it. He added that many state employees don't look at travel as a benefit; rather, they view it as part of the job. He concluded that he does not feel that CSHB 46 is all that necessary at this point in time, although the issue it addresses is certainly fair game when looking for ways to cut overall spending. Number 395 REPRESENTATIVE MULDER stated that in deference to Chair Foster's request, he and Representative Mackie had moved CSHB 46 out of subcommittee so that it could be discussed by the entire committee. Number 399 REPRESENTATIVE MACKIE asked Representative Martin to confirm that what he was proposing was adding a new section which would result in all state employees being addressed in CSHB 46. Number 404 REPRESENTATIVE MARTIN confirmed that CSHB 46 addresses all state employees. Number 406 REPRESENTATIVE MACKIE commented that he felt he had a better understanding, but he would like to see if the bill could work before implementing it as legislation and, ultimately, he agrees with Representative Hudson that negotiating lower fares with the airlines is really the answer, not CSHB 46. Number 420 REPRESENTATIVE MARTIN stated that the legislature has a responsibility, one way or the other, to do something about this. He added that many state employees call and tell him how they and their families travel together, sometimes for 30 days, on state frequent flier miles. Number 440 REPRESENTATIVE HUDSON made the point that CSHB 46 is making a major public statement by, in effect, saying that nobody gets the mileage, and if you take the mileage, you get fired. And not only that, these terms aren't even negotiable through collective bargaining or other negotiation. Along with that, injured state employees and organized militia combine to make this very questionable public policy. He stressed the need to know the costs of implementing, and the importance of such a program to the state -- that the rationale would have to be great. Number 463 REPRESENTATIVE MARTIN replied that the rationale is to save the state money. Number 474 REPRESENTATIVE HUDSON remarked that he had done a good deal of collective bargaining, and just because something is silent doesn't mean it's acted on one way or another. In this case, according to all he's seen, Representative Hudson didn't consider frequent flier mileage ownership to be an issue to be acted upon, and considered the state to have no contractual right to the mileage. Number 489 CHAIR FOSTER asked if there were any other questions. Number 494 REPRESENTATIVE MACKIE asked if the Department of Administration (DOA) had a position on CSHB 46. Number 495 JIMMY PETTY, from the audience, identified himself as the Director of the Division of General Services, and stated that the DOA has a zero fiscal note for CSHB 46 and has not prepared a position paper at this point. He added that DOA has gone to Alaska Airlines with the idea that, if it were possible, pooling the miles could be of substantial benefit. Alaska Airlines' policy is to not allow pooling of miles, so there is no way the state can get the collective benefits of pooling mileage from Alaska Airlines. Alaska Airlines also told DOA that they view the miles as belonging to the employees -- the traveler. Number 520 REPRESENTATIVE DAVIS asked Mr. Petty to clarify that it wasn't an illegal thing, it was just Alaska Airlines' policy. Number 523 MR. PETTY confirmed Representative Davis' statement and said the question of illegality had to do with the prior bill, before the committee substitute was adopted, so that state statutes would not be violated. Number 527 REPRESENTATIVE DAVIS asked Mr. Petty how much the state spends per year on travel. Number 528 MR. PETTY said the DOA does not have good indicators on how much individual travel was taking place. Number 535 REPRESENTATIVE DAVIS expressed concern that the amount of money spent yearly by the state on travel is a valid question with regard to this entire issue. Number 539 MR. PETTY responded that from the governor's budget, provided by Representative Martin, it was very difficult to ascertain how much money went to airlines specifically, since travel was all lumped together. Number 540 REPRESENTATIVE HUDSON wondered if the travel budget indicates which airlines are flown and if mileage is claimed in every case. MR. PETTY acknowledged that Representative Hudson's comment was a possibility, and discussed state contracts for the best possible fare, period, without mileage incentives. Number 555 REPRESENTATIVE MARTIN stated there is a $46 million travel allocation, most of it for air travel. Number 558 REPRESENTATIVE MACKIE said that Representative Martin's numbers are neither achievable or realistic. Number 560 REPRESENTATIVE MARTIN expressed concern. Number 568 REPRESENTATIVE MACKIE made a motion to move the bill from committee, in deference to the wishes of Chair Foster. Number 569 CHAIR FOSTER asked for a voice vote as to whether CSHB 46 should be moved out of committee. Representative Davis and Representative Vezey said "yes," all other committee members said "no," and Chair Foster declared the bill to be held in committee.