SB 195-PAY INCREASES FOR EXEMPT EMPLOYEES  3:54:16 PM CHAIR SHOWER announced the consideration of SENATE BILL NO. 195 "An Act relating to the compensation of certain public officials, officers, and employees not covered by collective bargaining agreements; and providing for an effective date." CHAIR SHOWER asked the sponsor to give the committee a high level summary of the bill. 3:54:37 PM SENATOR JESSEE KIEHL, Alaska State Legislature, Juneau, Alaska, sponsor of SB 195, stated that this is a catchup bill for state workers who are not represented by a union. It provides a five percent pay increase spread equally over two years. This brings the pay for these state workers up to the last round of general government employee pay increases. This will be the first adjustment these employees have received since 2015. He noted that during a previous hearing he incorrectly stated that the bill affects all Department of Law (DOL) employees. The bill would cover all the attorneys at the Department of Law; the non- attorneys in that department are mostly represented by a union. SENATOR REINBOLD recalled a similar bill in 2014 and the average cost was $10 million. She relayed her concern was that the private sector was struggling and their voice wasn't being heard. She said she was reserving judgment pending a review of the fiscal note. 3:57:23 PM SENATOR KIEHL responded that there are just over 2,800 exempt and partially exempt employees statewide. The fiscal note shows an $8.6 million cost the first year, $5.78 million of which is unrestricted general fund (UGF). The total cost the second year is $8.8 million. These costs reflect a modest, total five percent, increase for workers who have not had a pay adjustment since 2015. SENATOR KIEHL said he was pleased to see that wages in the private sector were increasing because it was past due. He was also pleased to see that the economy was beginning to recover. He agreed that private sector business have been struggling and they deserve empathy. He said it's noteworthy that even as they struggle, many are raising wages for their employees, and for more than what is proposed in SB 195. He reiterated that the bill is a catch up, but not on par with the increases in the private sector. SENATOR REINBOLD spoke about the disparity between a 37.5 hour week job with benefits and the relentless hours and huge responsibilities for the owner of a private sector business. She recalled hearing that about 75,000 jobs were lost over the last two years due to COVID-19, and noted that she wasn't aware of even one "bureaucratic job" that was lost. She questioned the timing of the proposal. 4:01:36 PM SENATOR KIEHL said he didn't disagree that the private sector had struggled, but he did not agree with the point that these exempt and partially exempt state employees work just 37.5 hours a week. These employees are not represented by a union, a large majority are not overtime eligible, many of them work significantly more than the 37.5 hour state contract work week, and that additional time is not compensated. SENATOR KIEHL clarified that he was not trying to draw an equivalence. SB 195 is about how the legislature, as the board of directors for the State of Alaska, addresses an inequity in the pay of legislative and some executive and judicial branch employees. SENATOR REINBOLD responded that her point was that union and non-union workers were getting raises while small businesses in the state were getting wiped out. She agreed that many state employees work more than 37.5 hours per week, but that wasn't her point. The point was that private sector businesses don't have anybody looking out for them and it's not wise to ignore their needs. SENATOR KIEHL restated that Senator Reinbold was not wrong about the suffering in the private sector. He expressed appreciation for the legislative efforts to reopen tourism and opined that everyone in the room was focused on and committed to work together on economic recovery. 4:04:13 PM SENATOR HOLLAND noted that the fiscal note reflected the $8.6 million cost for the first 2.5 percent increase in FY2023 and $8.8 million for the second 2.5 percent increase in FY2024. He asked whether the reason that FY2024 didn't show the cumulative cost of $17.4 million was that the first year cost would be in the base budget in the second year. SENATOR KIEHL replied that his analysis was correct. When fully implemented, the total cost of the five percent increase was about $17 million. 4:05:47 PM CHAIR SHOWER stated he would hold SB 195 in committee to ensure all the committee member's questions were answered. SENATOR KIEHL said he would be happy to answer any questions the members may have either in the office or during the next hearing.