HB 260-STATE OFFICERS COMPENSATION COMMISSION    CHAIR MCGUIRE announced the consideration of HB 260. [Before the committee was CSHB 260(STA).] 9:07:09 AM KARL KURTZ, Researcher, National Conference of State Legislatures (NCSL), Washington D.C., said he does not take a position on HB 260 but will give perspective on legislator salaries and compensation commissions throughout the country. It is not easy to estimate salaries for state legislators because there are per diem payments and other payments to get around constitutional limits in salaries. There is also the political issue of legislators raising their own salaries. He tries to figure out what the IRS requires taxes on, so in his estimates he includes salary, unvouchered expense payments, and per diem. He excludes leadership and committee chair compensation. 9:10:12 AM SENATOR FRENCH asked what an unvouchered expense is. MR. KURTZ said some states offer office expenses that don't require submission of a voucher so the money can be used as income. He then referred to a map of the states showing the estimates of what legislators are paid. There are seven states that pay legislators over $60,000 per year. Another seven pays $45,000 to $60,000. Alaska falls into the middle with between $30,000 and $45,000. Eleven states pay between $15,000 and $30,000. There are nine states that pay less than $15,000. New Hampshire legislators get $100 per year. The ranges are broad. SENATOR BUNDE asked if he included the regular salary of Alaska legislators plus the long-term per diem. MR. KURTZ said Alaska's director of Legislative Affairs estimates an average of $33,000 for Alaska legislators. 9:13:29 AM SENATOR BUNDE said that number probably includes legislators who claim no long-term per diem and others who claim it nearly every day. He asked if that per diem is considered as salary. MR. KURTZ said yes, and that emphasizes the fact that all the numbers are estimated averages. The next map divides states into three levels of "professionalization." Some states have full- time legislators with compensation to allow them not to work outside the office. They also have a large staff, and there are ten states in that category. There are 16 classic citizen legislatures including New Hampshire and most of the Rocky Mountain States, and they are very part time, have low pay, and have very few staff. Almost half of the states are a hybrid between the two. Alaska is in that category. 9:16:51 AM MR. KURTZ referred to a list of compensation. The average is close to $40,000 in the hybrid category, and Alaska is close to that. The highest paid category averages $75,000. There have been substantial pay increases in each category, but by correcting for inflation, Congress has had cuts and the states have stayed about the same. Alaska has had pay cuts since 1972 based on inflation. In most states the legislature is responsible for setting their own salaries. Most states do not have a salary commission. His map is color-coded, and the darker the color the more the legislature has the responsibility for its salary. The salmon-colored states have commissions that make salary recommendations, and then the legislature votes on them. The third category (pink) shows states that have a commission that can act, but the legislature, governor, or voters have the right to reject the decisions of the commission. He understands that HB 260 is similar. 9:21:26 AM MR. KURTZ said the fourth category of states ties legislator salaries to some type of index, like an economic index. The salaries are thus automatic. Washington State has a commission that sets salaries every two years, and the only way to change it is with a voter initiative of the people. SENATOR STEVENS said there have been enormous ethical issues, lawsuits, and prison terms in Alaska. He asked if a lack of ethics is tied to unfair compensation. MR. KURTZ said that would be difficult to prove. Congress is the only body that bans all outside income. That is the principle that allows them to pay enough, and Congress has ethical problems. He doesn't think a correlation can be drawn between corruption and pay. 9:24:58 AM CHAIR MCGUIRE asked if California bans outside income. MR. KURTZ said no, but it may have a ban on honoraria. A farmer or attorney, for example, can still earn their incomes. 9:25:46 AM SENATOR BUNDE moved Amendment 1, labeled 25-LS0659\K.3, Bullard, 2/25/08, as follows: Page 2, line 1, following "place of": Insert "permanent" Page 2, line 4, following "allowance": Insert ", except that those whose place of permanent  residence is within 50 miles of a location in which the  legislature is convened in regular or special session are  not entitled to a per diem allowance for that session" Page 2, lines 6 - 7: Delete "applicable to all legislators" Insert "[APPLICABLE TO ALL LEGISLATORS]" Page 2, line 10, following "council.": Insert "The policy may not provide for the  reimbursement of moving expenses or per diem for  legislators whose place of residence is within 50 miles of  a location in which the legislature is convened in regular  or special session for that session." Page 5, following line 10: Insert a new subsection to read: "(c) A recommendation of the commission may not have the effect of allowing a legislator whose place of permanent residence is within 50 miles of a location in which the legislature is convened in regular or special session to receive compensation in the form of a per diem allowance or reimbursement for moving expenses for that session." CHAIR MCGUIRE objected for discussion purposes. SENATOR BUNDE said he believes in truth-in-labeling, and compensation that is taxed should not be called per diem. Amendment 1 asks the commission to look at that. The staff at Legislative Legal Services told him that "we actually cannot do that, even though leg council is a creature of the legislature, we can't tell them, apparently, what to do when it comes to deciding what is salary and what is per diem." He said he narrowed the amendment to focus on the intent of per diem, which is when someone must move to a temporary residence. Currently, people who live in Juneau are paid per diem. It is likely an attempt to equalize salaries, but it is not accurately described. The amendment is an attempt to "suggest that if you live within 50 miles of where the legislature is convened, and I'm will to discuss the distance … [you] ought not to be subject to a per diem allowance." A 50-mile commute can be done daily. CHAIR MCGUIRE said the amendment is before the committee and the letter [of intent] will be discussed separately. 9:29:18 AM SENATOR FRENCH said this battle has come up before, and the topic is exactly what the commission should do. There may be some places near Juneau cut off from the road system. He appreciates treating everyone fairly, but this is a topic for the commission, "not us here on the fly." SENATOR GREEN said she agrees. SENATOR BUNDE said he appreciates that view, and "I think it makes my point: we ought to be telling the commission they ought to study this and that amendment would do that." A roll call vote was taken. Senators McGuire and Bunde voted in favor of Amendment 1, and Senators Green, French, and Stevens voted against it. Amendment 1 failed on a vote of 2 to 3. 9:31:13 AM CHAIR MCGUIRE said the letter of intent is before the committee and she asked Senator Bunde if he wants to offer it. SENATOR BUNDE offered Conceptual Amendment 2. The commission should have a broad scope, but because of the problem of the legislative council not being, apparently, under the direction of the legislature, he wants the commission to review long-term per diem to see if it is more accurately defined as salary. CHAIR MCGUIRE asked why Senator Bunde thinks the commission won't have that authority. 9:32:05 AM SENATOR BUNDE said without this letter the commission may choose to ignore the issue. SENATOR GREEN asked if Senator Bunde said legislative legal told him that long-term per diem is salary. SENATOR BUNDE said no. They said long-term per diem versus salary is a creature of the legislative council, "and we can't tell them to change that." The council has chosen the term, and he thinks it is a subterfuge to say that legislators don't have a big salary, but he was told that IRS sees it as salary. He said he is just suggesting the commission review the accuracy of those terms. CHAIR MCGUIRE said it is a directive, and she feels that the committee has made it clear on the record that the commission will look at all compensation. There may be legitimate per diem expenses like gas or other things to do legislative work. Her concern is telling the commission it must redefine it. 9:34:30 AM SENATOR BUNDE said the word "encourage" can replace "shall". CHAIR MCGUIRE asked why this would be highlighted above any other subject. SENATOR BUNDE noted that any accountant will say what we call long-term per diem is salary. It is accuracy in labeling. When the term was put in, it was a subterfuge to hide salaries. The committee took an at-ease from 9:35:59 AM to 9:37:46 AM. SENATOR BUNDE said he can count, and he withdrew Conceptual Amendment 2. SENATOR MCGUIRE asked the record to reflect that good statements have been made. SENATOR FRENCH moved to report HB 260 from committee with individual recommendations and attached fiscal note(s). There being no objection, CSHB 260(STA) passed out of committee.