HOUSE FINANCE COMMITTEE March 27, 2000 1:55 P.M. TAPE HFC 00 - 83, Side 1 TAPE HFC 00 - 83, Side 2 RECONVENED Co-Chair Therriault called the House Finance Committee meeting to order at 1:55 p.m. PRESENT Co-Chair Mulder Co-Chair Therriault Representative J. Davies Representative Grussendorf Representative Moses Representative G. Davis Representative Williams Vice Chair Bunde and Representatives Foster, Austerman and Phillips were absent from the meeting. ALSO PRESENT Senator Drue Pearce; Representative Jeannette James; Don Etheridge, AFL-CIO; Wendy Redman, Vice President, Statewide Programs, University of Alaska; Robert Wells, Department of Natural Resources; Mike Tibbles, Staff, Representative Therriault. TESTIFIED VIA TELECONFERENCE Elizabeth Hickerson, Assistant Attorney General, Department of Law; Mike Hotina, Director, Labor Relations, University of Alaska; Scott Miller, President, Delta Farm Bureau, Delta Junction; Art Griswold, Delta Junction. SUMMARY HB 116 "An Act relating to the Board of Agriculture and Conservation, to the agricultural revolving loan fund, to the disposal of state agricultural land, and to the Alaska Natural Resource Conservation and Development Board; and providing for an effective date." CSHB 116 (FIN) was REPORTED out of Committee with a "do pass" recommendation and with a fiscal impact note by the Department of Natural Resources, published date 2/11/00. CSHB 304 (FIN) "An Act relating to issuance and sale of revenue bonds to fund drinking water projects, to creation of an Alaska clean water administrative fund and an Alaska drinking water administrative fund, to fees to be charged in connection with loans made from the Alaska clean water fund and the Alaska drinking water fund, and to clarification of the character and permissible uses of the Alaska drinking water fund; amending Rule 3, Alaska Rules of Civil Procedure; and providing for an effective date." CSHB 304 (FIN) was REPORTED out of Committee on March 17, 2000. Discussion occurred regarding proposed amendments to CSHB 304 (FIN). NO committee action was taken. CSSB 269(RLS) am "An Act relating to legislative powers and responsibility with respect to collective bargaining agreements between the state and a labor or employee organization representing state employees; and providing for an effective date." CSSB 269(RLS) am was heard and HELD in Committee for further consideration. CS FOR SENATE BILL NO. 269(RLS) am "An Act relating to legislative powers and responsibility with respect to collective bargaining agreements between the state and a labor or employee organization representing state employees; and providing for an effective date." SENATOR DRUE PEARCE, SPONSOR testified in support of HB 269. She observed that Senate Bill 269 began as a fairly short and easy bill that would require that the monetary terms of any collective bargaining agreements negotiated with state employee unions be submitted to the legislature by the 45th day of session. She observed that it is currently the 78th day of the legislative session. The Administration has negotiated at least 12 contracts with state employee unions and the university has negotiated one or two contracts. According to Senator Parnell, the final terms of each of the contracts has not been provided to the legislature. She stressed the difficulty of making an informed decision without access to the contract terms. Senator Pearce observed that a section was added to conform with the Alaska Supreme Court's decision in University of Supreme Court No. 5-8366 (Sept. 24,1999). The Supreme Court decision stated that the legislature has to specifically appropriate the monetary terms of a collective bargaining agreement or the monetary terms of the agreement would not take effect. An amendment was made on the Senate floor, which provides that if the legislature does not fund the monetary terms of a collective bargaining agreement then none of the agreement's provisions would take effect. The Court's ruling highlights a significant problem for the Legislature. Contract negotiations between the state and state employee unions are confidential. Often the Legislature does not receive the monetary terms of these negotiated collective bargaining agreements until the final days of session. As a result, the Legislature faces the challenge of making reasoned decisions involving complex contractual terms in a short period of time. Senate Bill 269 would alleviate this problem by requiring all monetary terms of collective bargaining agreements to be submitted by the 45th day of the Legislative session. The state could begin the negotiation process at an earlier date and still provide a significant amount of time within the calendar year for legislative review. Senate Bill 269 also gives the legislature the discretion to review changes to a timely filed but previously rejected collective bargaining agreement for consideration in the calendar year under which that agreement was negotiated. Senator Pearce observed that if a situation occurred similar to the PSEA contract of a few years ago: if by the 45th day the legislature had received the terms of the contract and the legislature chose not to appropriate the funds for the contract, then the union could go back to the table for renegotiations. Co-Chair Therriault questioned if the Administration came to terms after the 45th day if they could request that the legislature approve the contract. Senator Pearce anticipated that an authorization by the legislature could be a resolution passed by both bodies, approving the terms. She did not think that introduction of legislation would be sufficient without action. Senator Pearce pointed out that there has always been language in the statute directing the legislature to approve or disapprove the contracts by concurrent resolution. Last year the legislature passed a resolution disapproving the contracts, but specific language was not added to the budget concerning the contracts. The Court ruled that there has to be a specific appropriation or the contracts do not take affect. The primary thrust of the bill would comply with the court decision and take the concurrent resolution out of the picture. It becomes a straight appropriation issue. Representative J. Davies hypothesized that funding by the legislature would constitute authorization by the legislature. Co-Chair Therriault pointed out that his questioned is what it would take if the legislature did not authorize the appropriation. Senator Pearce noted that the question is what would happen if the contracts were turned down and renegotiations happens quickly and are brought back before the end of that session or in a special session. The legislation was amended on the Senate floor to allow renegotiated contracts to be brought back to the legislature. Senator Pearce recalled that some legislators were not aware that the contract that they approved contained a 37.5-hour workweek provision. She emphasized the need to have all of the terms of a contract for deliberation, not just the monetary terms. The point is to have all the information on the table so that an informed decision can be made. Representative J. Davies questioned if the entire agreement would be void if the legislature did not fund the monetary terms of the agreement. Senator Pearce agreed that if the legislature did not fund the monetary agreements that none of the terms would take effect. She reviewed terms proposed under contracts in negotiation. She referred to the GGU contract that is being negotiated. One of the provisions that the Administration considers to be a non-monetary provision is to allow the 7,000 employees in the GGU to convert their sick leave to personal leave and then cash in up to half of the leave converted. If all of the employees availed themselves of this option it could cost the state of Alaska $24 million dollars, which could happen in a short term. When other unions have had the same option, the number of employees that have availed themselves of the opportunity was been high: over half of those eligible availed themselves of the opportunity. The reserve fund has a $10 million dollar balance. The reserve fund could be depleted and extra money required "in one fell swoop". Even though this is considered a non-monetary term by the union and Administration the legislature would consider it to be one of the provisions that would not go into effect if monetary terms were not approved. Senator Pearce pointed out that there would be times when it would be to the employee's advantage not to allow non- monetary terms to take effect without approval of monetary terms. For example: If employees agreed to return to a 40- hour workweek in return for salary increases. Senator Pearce noted that in a multi-year agreement, that if the monetary terms were approved in the first year then the non-monetary terms would remain in effect, even if the money was not appropriated in the second year. Representative J. Davies expressed concern that it is possible that there would be provisions that are non- monetary that both the Administration and union would agree to, absent the monetary provisions. He questioned why the sponsor would want to sweep all of the provisions under the termination. Senator Pearce responded that it would be difficult to approve only specific portions of the contract. Representative J. Davies observed that contracts could have provisions contingent on monetary terms and others that were not. Senator Pearce maintained that non-monetary terms should not apply if the monetary terms are not approved. Representative J. Davies felt that any provision with a fiscal impact should be a monetary term. He reiterated that he would like to have non-monetary terms available for agreement. Co-Chair Therriault emphasized the difficulty of crafting language to address Representative J. Davies' concerns. Senator Pearce stated that there may be a way to do a consent agreement, but emphasized that the legislature would still want to know what the (non-monetary) terms are. Representative Grussendorf observed that there are 12 contracts and questioned if they could be approved individually. Senator Pearce clarified that they could be approved separately. Each one would have to be approved. Representative Grussendorf pointed out that the 37.5-hour workweek was negotiated in lieu of a salary increase. Representative Grussendorf questioned why a 45-day cut off was selected. Senator Pearce observed that the original legislation contained a 60-day cutoff. She reiterated that the legislature is currently on the 78th day and that the information has not been provided. Representative Grussendorf stated that he would be more comfortable with of a 60-day period. Senator Pearce noted that April 1 was the original date. In response to a question by Representative Grussendorf, Senator Pearce explained that if they chose not to go back to negotiation some unions have the right to strike, some have negotiated away their right to strike. In the new DGU contract the employees of DGU are given the right to strike if the legislature fails to fund the contract in any year. This is a major contract change. Troopers do not have the right to strike. DON ETHERIDGE, AFL-CIO testified in opposition to the legislation. He observed that the legislation was amended in the Senate Rules Committee. He maintained that under the amendment that that union members would not have the right to strike or any way to change a contract, if monetary terms are turned down on the second or third year of a multi year agreement. He maintained that the state of Alaska would have an unfair advantage under the legislation. He maintained that employees should have the right to go back to the table or strike if the monetary terms are not approved. He referred to previous negotiations and observed that local 71 attempted to go back to a 40-hour workweek, but that it was rejected by the legislature. He acknowledged that the legislature has the option to turn contracts down. He stated that it would not be fair to retain non-monetary terms if the monetary terms were rejected. Representative Grussendorf pointed out that there is an understanding that the university is not in the position to fund contracts if they are not approved by the legislature. In response to a question by Representative Williams, Mr. Etheridge stated that the union could live with the 45-day deadline, but that they support a longer period. He anticipated that contracts would be negotiated annually. Co-Chair Therriault observed that language was written into the contract preserving the employee's right to strike every year and concluded that the provision would create a virtual one-year contract. Mr. Etheridge responded that "that is the only portion of the contract that is open and it doesn't take a long period of time to go in and work on that point." Most contracts have a no strike/no lockout clause. He estimated that there would be court battles. Representative Grussendorf referred language added on page 2, by the Senate Rules Committee: Unless otherwise authorized by the legislature, the final agreement shall be submitted to the legislature no later than the 45th day of the legislative session to receive legislative consideration during that calendar year." He questioned if the Administration or the unions could petition the legislature to extend the time. Mr. Etheridge responded that if a contract was negotiated after the 45 day period that they could request that it be looked at, or that if a contract was going to be late that an extension could be requested. He added that if the legislature or the membership rejected a contract that there would be time to fix it before the legislature adjourned. Representative Grussendorf questioned if rejection would be through a concurrent resolution. Representative G. Davis questioned the definition of "monetary terms". Mr. Etheridge responded that the definition as provided to them by the Administration would be "something that requires appropriation". He stressed that a legal definition is needed. WENDY REDMAN, VICE PRESIDENT, STATEWIDE PROGRAMS, UNIVERSITY OF ALASKA expressed concern with section 1, which provides that none of the provisions of an agreement take effect if the monetary terms are not approved. She observed that the University has taken the position that if the legislature does not fund the monetary terms that they do not go into effect. She pointed out that the university proceeded with the balance of negotiated contracts that were not funded by the legislature. There are some elements of any contract that may be triggered off of monetary provisions. She stressed that there are a lot of things in collective bargaining process that are important to university employees such as: grievances, teaching loads, and committee work on tenure review. She emphasized that the contracts are presented to the legislature and that many legislators review them. She suggested that section 1 be deleted. She questioned if workload would be a monetary term and what would happen if the monetary terms are denied and all other terms were rejected. She questioned if they would be at impasse and if members would have a right to strike. She stressed that further direction is needed. Co-Chair Therriault asked if some of the non-monetary terms were linked directly to monetary terms. MIKE HOTINA, DIRECTOR, LABOR RELATIONS, UNIVERSITY OF ALASKA testified via teleconference. He stated that they did not have any non-monetary terms linked directly to monetary terms. He stressed that the legislation creates a disincentive. He stressed that they can address the problem of getting the contracts to the legislature. If the legislature does not appropriate the monetary terms under the current law they do not go into effect. Once a contract is disapproved it would go back to the table. The right of management to set standards and demand accountability becomes the only bone of contention and could lead to erosion of productivity and accountability. He maintained that both sides are aware that the legislature has the right to not approve the monetary terms. In response to a question by Representative Grussendorf, Mr. Hotina reiterated that there was no specific provision that indicated that if the monetary terms were not approved that a non-monetary term would not go into effect. Representative Grussendorf pointed out that there are many non-monetary terms of importance. He felt that the terms would be linked. Mr. Hotina stated that there is no legal barrier that would preclude a link between monetary and non-monetary terms. SB 269 was heard and HELD in Committee for further consideration. (TAPE CHANGE, HFC 00 - 83, SIDE 2) HOUSE BILL NO. 116 "An Act relating to the Board of Agriculture and Conservation, to the agricultural revolving loan fund, to the disposal of state agricultural land, and to the Alaska Natural Resource Conservation and Development Board; and providing for an effective date." Co-Chair Therriault provided members with a proposed committee substitute, work draft #1-LS0407\Q, Cook, 3/23/00 (copy on file). Co-Chair Mulder MOVED to ADOPT work draft #1-LS0407\Q, Cook, 3/23/00. There being NO OBJECTION, it was so ordered. JOE BALASH, STAFF, REPRESENTATIVE THERRIAULT explained that a number of areas needed technical changes, which were made in the committee substitute. Changes were made to address the concerns of the Department of Law and the Department of Natural Resources. In section 1, page 2, line 9 the following language was added: "An appointed member may be removed from office by the governor if the governor first provides a written statement of the reasons for removal to the member and makes the statement available to the public." In the previous version a member could only be removed for cause. Mr. Balash observed that the language in subsection (d) was tightened to address concerns regarding ethics. It prohibits a member from having an existing loan or contract restructured. On line 29 "immediate family member" and "official action" have the meanings given in AS 39.52.960. In subsection (e) the appointment of the board director is made by the commissioner from a list submitted by the board. The list must have at least two persons. Sections 2 - 4 were not changed. Section 5 removes existing language regarding when a loan is delinquent. It was reduced to receipt of payment by the board or the director. This was the recommendation of an audit report. The delinquency penalty is not needed in statute. Representative Williams referred to page 5, line 28. He asked for clarification. Mr. Balash observed that there was some question if the Board would have to meet in order to receive payment. The director of the board can receive the payment. Section 9 removes language exempting restructuring from the length of time that there was a limitation on existing loans. Section 11 applies to all loans under the statute. Co-Chair Therriault observed that Representative Harris sponsored a bill dealing with interest rates on loans. Some of the language in HB 116 duplicates and conforms to Representative Harris' bill. REPRESENTATIVE JEANNETTE JAMES spoke in support of the legislation. She maintained that the legislation accomplishes its goals. She stressed that changes of the director of the Division of Agriculture have been a problem. She observed that there is a problem keeping good directors. ELIZABETH HICKERSON, ASSISTANT ATTORNEY GENERAL, DEPARTMENT OF LAW testified via teleconference. She noted that the committee substitute addresses concerns by the Department of Law. There are no legal issues remaining. SCOTT MILLER, PRESIDENT, DELTA FARM BUREAU, DELTA JUNCTION testified via teleconference in support of the legislation. ROBERT WELLS, DEPARTMENT OF NATURAL RESOURCES stated that the concerns of the Department of Natural Resources were addressed. The Department of Natural Resources supports the legislation. He noted that the fiscal note would remain essentially the same. There would be a need for more meetings of the board due to additional responsibilities: $10 thousand dollars were added. He observed that the interest rate is similar to HB 203. The interest rate could be reduced, which could lead to increased loan activity. Representative James observed that the Board has been paying the cost of their application. Co-Chair Mulder observed that the fiscal note moves from a fixed to an adjustable rate. Mr. Wells stressed that it would be hard to quantify the fiscal impact. Short-term loan rates could be different. The Board is generally very fiscally conservative. ART GRISWOLD, DELTA JUNCTION testified via teleconference in support of the legislation. The Alaska Highway Grange also supports the bill. Co-Chair Mulder MOVED to report CSHB 166 (FIN) out of Committee with the accompanying fiscal note. There being NO OBJECTION, it was so ordered. CSHB 116 (FIN) was REPORTED out of Committee with a "do pass" recommendation and with a fiscal impact note by the Department of Natural Resources, published date 2/11/00. CS for HOUSE BILL NO. 304 "An Act relating to issuance and sale of revenue bonds to fund drinking water projects, to creation of an Alaska clean water administrative fund and an Alaska drinking water administrative fund, to fees to be charged in connection with loans made from the Alaska clean water fund and the Alaska drinking water fund, and to clarification of the character and permissible uses of the Alaska drinking water fund; amending Rule 3, Alaska Rules of Civil Procedure; and providing for an effective date." Co-Chair Therriault provided members with a technical amendment to CSHB 304 (FIN), 1-GH2031 \H.1 Cook 3/24/00, that he intended to offer on the House Floor. MIKE TIBBLES, STAFF, REPRESENTATIVE THERRIAULT explained that he consulted legal counsel regarding problems that arose in the House Finance Committee substitute. One of the problems was the result of a conceptual amendment the other was language that was inadvertently dropped. He reviewed the amendment. He observed that there were two restrictions under AS 37.15.560(b). The amount that can be bonded in a particular year is $15 million dollars. The limit on the total unpaid principal is $150 million dollars. The amount applies only to each particular program. Drinking Water and wastewater programs are included. The amendment clarifies that the amounts applies to each program. Page 2, line 18, following "$150,000,000": Insert "for each program". Mr. Tibbles noted that the conceptual amendment offered by Representative J. Davies resulted in the drinking water language being placed in the wastewater section. Wastewater was not specified. The amendment clarifies that it applies to wastewater. Page 7, line 26, following "provides": Insert "waste" Mr. Tibbles explained that subsections (a) and (b) were setup to allow municipalities and private entities that are economically regulated access to loans. The language was not tied to the private portion. The amendment includes the private sector. Page 9, line 8, following "assistance" Insert "for drinking water system projects, including projects to plan, design, build, construct, or rehabilitate a public drinking water collection, storage, treatment, or distribution system," Page 9, lines 9- 11: Delete all material and insert: "(A) municipalities;" Co-Chair Therriault explained that he planned to offer the amendment on the House floor, as a technical amendment. Representative J. Davies clarified that economic regulation was not limited to wastewater. CSHB 304 (FIN) was REPORTED out of Committee on March 17, 2000. Discussion occurred regarding proposed amendments to CSHB 304 (FIN). NO committee action was taken. ADJOURNMENT The meeting was adjourned at 3:10 p.m. House Finance Committee 11 3/27/00