SENATE BILL NO. 298 "An Act relating to the compensation of certain public employees and officials not covered by collective bargaining agreements; and providing for an effective date." ALISON ELGEE, Deputy Commissioner, Department of Administration, stated that SB 298 was introduced to provide non covered employees of the Executive Branch, the Legislature and the Judicial Branch similar increases to the collectively bargained contracts before the Committee. She noted that the legislation would provide employees in FY 2001, a benefit of $1200 dollars payable on a $50 dollar per pay period to employees employed in the year prior to 2000 for each pay period that they were employed. In FY 2002, the bill includes a wage increase of 2%; FY 2003, an increase of 3%. She referred to the sectional analysis included in member's packets. Senator Adams inquired if the work draft was supported by the Administration. [Copy on File]. Ms. Elgee commented that she had just received a copy of the committee substitute. It appears that there are substantive changes. The draft proposes a 2% increase in FY 2003 rather than the 3% recommended. The draft also proposes a benefit payment of $800 dollars instead of $1200. The draft version appears to limit the employee contribution to health insurance in FY 2003 from $630 proposal to $600 dollars. Co-Chair Parnell referenced Section 8, Page 4, which addresses the lump sum payment. He asked if the Governor, Lt. Governor, and legislators would be included in the increase for health benefits. Ms. Elgee explained that health benefits were set for all members of the select benefits plan by the Commissioner and included everyone that participates. It is necessary that there is a statutory change regarding pay increases. SB 298 does provide for pay increases for legislators in future years. Co-Chair Parnell questioned when pay increases would take affect. Ms. Elgee reiterated that the first pay raise would be July 1, 2001 at 2%; the next would be at 3% in July 2002. Co-Chair Parnell stated that the "lump sum distribution" was not considered a pay raise. PAUL LYLE, (Testified via Teleconference), Fairbanks, advised that the committee substitute was not available through the Legislative Information Office. He noted that he did not object to any of the changes proposed, however, requested information on changes made to the work draft. JOHN ATHENS, (Testified via Teleconference), Fairbanks, inquired if the work draft had been adopted by the Committee. He requested time to give testimony on that version. Co-Chair Torgerson indicated that the work draft had just been faxed to all Legislative Information Offices. DON ETHERIDGE, Lobbyist, AFL-CIO, Juneau, spoke in favor of the proposed legislation. He noted that the AFL-CIO believes that all public employees should receive the proposed increases. He acknowledged that Legislator's should also receive the proposed increase. SENATOR TIM KELLY spoke to the proposed committee substitute. He commented that the work draft was a counter proposal to that submitted by the Governor. Senator Kelly pointed out that the work draft proposes five changes. The first change would be to the salaries of department heads with an effective date of January 2003. In relationship to monetary terms, the work draft would lower the bonus from $1200 dollars to $800 dollars, and it would lower the rate in the third year from 2% to 3%. It would also cap health care benefits in the third year, from $630 to $600. He added that the proposed draft does not include the Legislature, Governor or Lt. Governor in the lump sum pay out. He proposed that the effective date occur during the next administration. Senator T. Kelly pointed out the cost analysis of the bid. [Copy on File]. The analysis indicates that there would be a savings from the Governor's bill of $1.8 million dollars, with a $2.8 million dollar savings over the three-year course of the bill. He voiced concern that the total cost would be $100.5 million dollars over a three-year period, and that would increase the fiscal gap. Senator Adams questioned how the work draft would affect the other contracts, asking if those twelve contracts would be separate. Senator Tim Kelly replied that the contracts all call for a $1200 dollar signing bonus. Additionally, they call for a $515 dollar health benefit in the first year, and a $575 health benefit in the second year. All twelve contracts max out with a $630 dollar health benefit in the third year. He continued that all contracts call for a 2% increase in the second year and a 3% increase in the third year. He outlined the differences. Senator Adams understood the only changes made would be to the Executive and Legislative Branches. Senator Tim Kelly acknowledged that was true and that the legislation would not address the twelve contracts now before the Legislature. Co-Chair Parnell asked the effect of Section 11. Senator T. Kelly stated that section indicates that the legislation, a pay raise for non-union State employees, would not go into effect until a majority of the Unions contract with them. Co-Chair Parnell MOVED that work draft 1-GS208\H, Lauterbach, 4/25/00, be the version of the bill before the Committee. Senator Adams OBJECTED. Following a brief at-ease, Senator Adams explained his objection. He pointed out that the work draft would treat State employees differently. Senator T. Kelly responded that if in fact the twelve negotiated contracts were approved by the Legislature, he believed that the bill would revert back to the Governor's position. At this time, he did not believe that there was sufficient support in the Legislature to pass the negotiated contracts. Senator T. Kelly suggested that the proposed legislation could be available to the Unions to help avert a public employees strike. He argued that such a strike would be counter productive. Senator Adams recommended that the contracts be placed on the floor so that the full Legislature could vote on them. At that time, there would be something substantial to negotiate. He noted that action would publicly indicate each legislator's position. A roll call vote was taken on the motion to adopt the work draft. IN FAVOR: Donley, Leman, Wilken, P. Kelly, Green, Phillips, Parnell, Torgerson OPPOSED: Adams The MOTION PASSED (8-1). Co-Chair Torgerson advised that the bill would be HELD in Committee for further discussion. SB 219 was HELD in Committee for further consideration.