CS 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."                                                                          
                                                                                                                                
PAUL  GROSSI, Director,  Division of  Workers' Compensation,                                                                    
Department  of Labor  and  Workforce Development,  clarified                                                                    
that the  bill was  designed to  replace general  funds that                                                                    
the  Division of  Workers'  Compensation  and worker  safety                                                                    
programs  within the  Department have  lost. The  bill would                                                                    
create  a dependable  funding source  paid equitably  by all                                                                    
employers using the system.   He reiterated that the purpose                                                                    
would  be  to  provide  a  stable  funding  source  to  that                                                                    
Division.                                                                                                                       
                                                                                                                                
Mr.  Grossi  continued,  the current  system  provides  that                                                                    
employers that purchase  workers' compensation insurance pay                                                                    
a tax or can become  self-insured.  The proposed legislation                                                                    
addresses  that  inequity.   The  new  fee system  would  be                                                                    
designed to  raise the same  amount of money as  the current                                                                    
tax.  Because  the new system would spread  costs among more                                                                    
employers, those employers currently  paying the premium tax                                                                    
would realize  a decrease in  their payments.   He concluded                                                                    
that the bill would offer  a fair, effective way of ensuring                                                                    
continued funding for vital worker protection programs.                                                                         
                                                                                                                                
Co-Chair Torgerson  noted that the  bill would not  be moved                                                                    
from Committee  at this time,  however, all  testimony would                                                                    
be taken.                                                                                                                       
                                                                                                                                
ROBERT LOHR, Director, Division  of Insurance, Department of                                                                    
Community & Economic Development,  advised that the Division                                                                    
of  Insurance  recommends  two technical  amendments.    The                                                                    
first change would revise the  language so that the Division                                                                    
of  Insurance would  deposit a  portion of  the premium  tax                                                                    
collected  as  opposed  to   the  premium  income  reported.                                                                    
Otherwise, deposits  may be required  that would  be greater                                                                    
than the amounts collected.                                                                                                     
                                                                                                                                
Mr. Lohr  continued, the  bill does  not contain  the phrase                                                                    
"in lieu of all taxes…" as  found on Page 2, Lines 25-28, of                                                                    
the  previous version.   He  recommended that  the provision                                                                    
amending  AS  21.09.270  be  removed.     The  change  would                                                                    
maintain  the long-standing  statutory status  quo regarding                                                                    
retaliatory  fees.   That  would  keep Alaska's  retaliatory                                                                    
calculation in  line with other  states and would  promote a                                                                    
level playing  field between companies  from this  state and                                                                    
other states.                                                                                                                   
                                                                                                                                
Senator  Phillips  asked  how it  would  differ  from  other                                                                    
states.                                                                                                                         
                                                                                                                                
Mr.  Grossi replied  that Alaska  is one  of the  six states                                                                    
that actually  funds the program  through the  general fund.                                                                    
The  remaining  states have  some  sort  of "special"  fund.                                                                    
Sixteen states have a fee-funding source.                                                                                       
                                                                                                                                
Senator Green asked if the  excess money would be paying for                                                                    
the Occupational Safety and Health Administration (OSHA).                                                                       
                                                                                                                                
Mr. Grossi replied that it would  be used to fund the safety                                                                    
programs and OSHA.                                                                                                              
                                                                                                                                
Senator  Green  pointed out  that  the  legislation was  not                                                                    
necessarily  intended   to  be  used  to   improve  workers'                                                                    
compensation but rather for funding OSHA.                                                                                       
                                                                                                                                
Senator  Leman  commented  that the  money  would  still  be                                                                    
available for appropriation.                                                                                                    
                                                                                                                                
Co-Chair Torgerson  agreed that  the Legislature  would have                                                                    
the  authority  to decide  on  how  those funds  were  being                                                                    
spent.  He  reiterated that those funds would  be subject to                                                                    
appropriation.                                                                                                                  
                                                                                                                                
Co-Chair  Torgerson  noted that  HB  378  would be  HELD  in                                                                    
Committee for further consideration.