MINUTES SENATE FINANCE COMMITTEE March 6, 2000 9:04 AM TAPES SFC-00 # 47, Side A CALL TO ORDER Co-Chair John Torgerson convened the meeting at approximately 9:04 AM PRESENT Co-Chair John Torgerson, Co-Chair Sean Parnell, Senator Al Adams, Senator Lyda Green, Senator Pete Kelly, Senator Loren Leman, Senator Randy Phillips, Senator Gary Wilken Also Attending: Senator Pearce, Senate President; Sue Mossgrove, Staff, Senator Robin Taylor. Attending via Teleconference: From Anchorage: Jay Seymour, Attorney, Perkins Coie; Janis Adair, Director, Division of Environmental Health, Department of Environmental Conservation; From Tok: Betty Revis. SUMMARY INFORMATION SB 193-COLLECTION OF UNPAID WAGES The sponsor testified. The amended bill was passed out of committee. SB 269-LEGISLATURE & STATE EMPLOYEE CONTRACTS The sponsor testified. The amended bill was passed out of committee. SB 271-FEES FOR FOOD ESTABLISHMENT INSPECTIONS The sponsor's staff and the Division of Environmental Conservation testified. The bill was held in committee. CS FOR SENATE BILL NO. 193(L&C) "An Act relating to the payment of wages and claims for the payment of wages." Senator Wilken made a motion to adopt the Committee Substitute for SB 193, Version 1-LS1263\H. Co-Chair Parnell objected for explanation purposes. Senator Pearce explained that on page 1, line 10, the word "penalties" was deleted and a new Section 3 (f) was added, which reads: "In an action brought for unpaid overtime under AS 23.10.060 that results in an award of liquidated damages under AS 23.10.110, the provisions of (d) of this section do not apply unless the action was brought by the department under (e) of this section." JAY SEYMOUR, Attorney, Perkins Coie, testified via teleconference from Anchorage. He stated that "Version H" as outlined was a first good step in bringing some reasonableness to wage and hour law. He added that this version takes out the harsh double penalties that can be assessed under current law AS 23.05.40. Co-Chair Torgerson hearing no objection ADOPTED SB 193, Version 1-LS1263\H. Amendment #1: This amendment inserts a new bill section to read as follows: Sec.3. AS 23.05.140(b) is amended to read: (b) If the employment is terminated, [REGARDLESS OF THE CAUSE OF TERMINATION,] all wages, salaries, or other compensation for labor or services become due immediately and shall be paid within the time required by this subsection [THREE WORKING DAYS AFTER THE TERMINATION] at the place where the employee is usually paid or at a location agreed upon by the employer and employee. If the employment is terminated by the employer, regardless of the cause for the termination, payment is due within three working days after the termination. If the employment is terminated by the employee, payment is due at the next regular pay day that is at least three days after the employer received notice of the employee's termination of services. Sec. 4. AS 23.05.140(d) is amended to read: (f) If an employer violates (b) of this section by failing to pay within the time required by that subsection [THREE WORKING DAYS OF TERMINATION], the employer may be required to pay the employee a penalty in the amount of the employee's regular wage, salary, or other compensation from the time of demand to the time of payment, or for 90 working days, whichever is the lesser amount." Page 2, line 26: Delete "within three working days of termination" Insert "within the time required by (b) of this section" Senator Wilken made a motion to adopt Amendment #1. He explained that it sets forth that if someone quits a job voluntarily, the payroll is not due until the next scheduled payroll run. Senator Adams asked if under current law, an individual would be paid within three working days of termination. He wondered if this amendment would put an undue hardship on individuals that might be relocating to the lower 48, or to another area statewide. Senator Wilken responded that he did not think so and added that these funds would essentially be considered money in the bank, regardless of whether someone terminated his or her employment. Senator Adams OBJECTED to Amendment #1. A roll call vote was taken. IN FAVOR: Senator Phillips, Senator Leman, Senator Wilken, Senator P. Kelly, Senator Green, Co-Chair Parnell, Co-Chair Torgerson. OPPOSED: Senator Adams. The MOTION PASSED: (7-1) Chair Parnell made a motion to move the Finance version of SB 193, Version 1-LS1263\H as amended from the Committee with individual recommendations and attached zero fiscal note from Labor and Workforce Development. Co-Chair Torgerson hearing no objection passed SB 193 FROM THE COMMITTEE. SENATE BILL NO. 269 "An Act relating to the deadline for the submission of monetary terms of collective bargaining contracts between the state and a labor or employee organization representing state employees to the legislature." SENATOR PEARCE stated that SB 269 would modify current law and set an April 1st deadline for the submission of monetary terms included in collective bargaining agreements negotiated by the State Employee Union. She continued that often the Alaska Legislature finds itself receiving monetary terms of contracts in the final days of session often before they are able to look at the intricacies of the different contracts. She noted that under the current law, the legislature must make reasoned decisions involving these contracts in an extremely short period of time. She added that SB 269 allows the state to begin the negotiation process whenever necessary, while still providing a significant amount of time within a calendar year for legislative review of the terms. She cited the case University of Alaska vs. The Alaska Supreme Court, where it was decided that monetary terms in collective bargaining agreements do not become effective until the legislature specifically funds them. She then gave the history of this litigation. Senator Leman asked how this legislation would affect the legislature trying to limit session to a 90-day period. He wondered if it would not accomplish the same thing by stating that, "terms shall be submitted no later than 40 days before the constitutional deadline for regular session," rather than specifying a date. Co-Chair Parnell suggested that language could state that the final contract terms must be in place so many days following the commencement of the legislative session. A general discussion about how this language should be drafted took place. Co-Chair Torgerson asked if the Committee should consider an immediate effective date. Senator Pearce responded affirmatively. She added that the legislature usually responds to the monetary aspects of these contracts, while there are changes to language should be considered at the same. Co-Chair Torgerson referred to page one, line ten, which makes note of a calendar year, rather than a fiscal year. Senator Pearce responded that if for some reason the legislature did not deal with contractual terms, she assumed that most governors would bring the body back for special session. She noted that Alaska's session did work on a calendar year and then weighed the pros and cons of each calendar year versus a fiscal year. Amendment #1: This amendment makes the following changes to this legislation. Page 1, line 1: Delete "monetary terms of" Page 1, line 9: Delete "terms" Insert "final contract" Co-Chair Parnell made a motion to adopt Amendment #1. He explained that this amendment would make clear the contract language presented to the union members for ratification, the same language that the administration will submit to the legislature for appropriation purposes. Senator Adams asked if all final contracts in this situation would be arrived at by April 1, as noted in this legislation and pointed out that the previous "terms" language was a bit more general. Co-Chair Parnell responded to this query with his previous statement regarding language consistency. Senator Adams pointed out that this legislation affected numerous contracts and he wondered if negotiations could be completed by April 1. Co-Chair Torgerson responded that the unions are only required to submit the monetary terms of an agreement to the legislature within 10 days of final negotiations. He added that the parties can adjust negotiations to arrive at a new deadline regardless of what final date is chosen. Co-Chair Torgerson hearing no objection ADOPTED Amendment Senator Leman proposed a conceptual amendment, which would read "40 days before the end of the constitutional deadline," rather than a set date of April 1. Senator Pearce felt as though so many days from the beginning of session for a deadline might be a better approach. She outlined her reasoning for this assessment. There was additional discussion about the rational behind an up-front session deadline or at the end of session deadline for these employee contracts and how either of these options would affect future constitutional language changes to terms of session. Amendment #2: This was a conceptual amendment which would conceptually strike "April 1," on page one, line ten and insert "45 days after the start of the legislative session." Senator Wilken made a motion to adopt Amendment #2. Co-Chair Parnell responded that this language would square with the language in existing law. There was additional discussion about deadlines for contract negotiations. Co-Chair Torgerson hearing no objection ADOPTED Amendment Co-Chair Parnell made a motion to move SB 269, Version LS1386\A as amended from the committee with individual recommendations and attached zero fiscal note from the Department of Administration. Co-Chair Torgerson hearing no objection moved SB 269 FROM THE COMMITTEE. SENATE BILL NO. 271 "An Act relating to fees charged for inspections by the Department of Environmental Conservation; and providing for an effective date." SUE MOSSGROVE, Staff, Senator Robin Taylor stated that SB 271 had been introduced as a matter of fairness for all businesses providing food services from restaurants to day care centers. She noted that currently food inspection fees are included as a part of the permit process within Department of Environmental Conservation Food Safety and Sanitation Program. Ms. Mossgrove continued that during the interim, the Administrative Regulation and Review Committee held a hearing to review the increased fees proposed by the Department of Environmental Conservation. She added that while they continue to raise fees, they have not proved the services for which they have charged. She noted that several business owners have complained that this practice is unfair; for example, the fees for one establishment showed an increase from $75 in 1995 to $525 in 1999. She commented that another showed their fees increasing from $50 to $985. She disclosed that in the last two years they were inspected only one time. Ms. Mossgrove asserted that the Department of Environmental Conservation changed rate setting from one permit for the entire establishment, to individual permits and fees based on type of facility and risk. She noted that by separating food inspection fees from the permit process and not allowing Department of Environmental Conservation to charge for a service until they provide it, the sponsor hoped to bring equity to the businesses around the state. Senator Phillips asked for an example of the Department of Environmental Conservation charging for an inspection without following through on this service. Ms. Mossgrove presented an example of a business out at Dot Lake, a restaurant and convenience store that was charged $75 for an initial permit. She noted that this same business a few years later is paying for two separate permits, one for $150.00 and the other for $575.00 and added that this business was only inspected once over the last two years. Senator Adams asked if the sponsor would consider established rates for these inspections. He noted that the present statutes do not allow for this. Ms. Mossgrove responded that she did not think Senator Taylor would oppose such a measure. She noted that in previous legislation, the Department of Environmental Conservation was given the authority to charge fees without set guidelines on what is reasonably allowed. Senator Green clarified that if a business cannot get their license to operate they do not pay fees for an inspection. She referred to the attached fiscal note and pointed out that schools are exempted as well as charitable organizations. She asked what any of these charities were. Ms. Mossgrove stated that she could give no specific examples of these entities. Senator Green asked if Head Start could be one of them? Ms. Mossgrove stated that she believed so and noted that there was some discussion about other daycare facilities being overburdened with fees, which Head Start was exempt from. Senator Green referred to discussions with the Finance Subcommittee Chair for Department of Environmental Conservation and the potential of a refund for overcharges and increases. She asked if these considerations were taken into account while drafting this legislation. Ms. Mossgrove responded that no, this had not been considered. BETTY REVIS testified via teleconference from Tok. She stated that she runs a coffee cart, which only serves coffee and tea. She pointed out that even though this is the only service she provides, she is nonetheless charged the same inspection fees as a grocery store down the street. She continued that when she opened her business in 1993, she was required to pay $50.00 for inspections and noted the fees were presently increased to $210.00. She stated that she did not understand the reasoning for this or the fairness of it. She concluded that her business had not been inspected, this year or last. JANIS ADAIR, Director, Division of Environmental Health, Department of Environmental Conservation testified via teleconference from Anchorage that the fees charged to businesses have been equally problematic for them. She noted that the fees for inspection were raised due to a funding switch from general funds to general fund program receipts. She continued that the remaining general funds were reduced by the conference committee last year. She stated that these two things have exacerbated the situation. She added that it has been years since the department has been able to inspect every permitted facility. She pointed out that these inspections are conducted from a "risk based" perspective, to help understand why some facilities and businesses are not charged. She then explained how fees are broken into schedules and how they are allocated. She also explained why this proposed legislation would mean multiple billings to customers and additional increased costs. Tape: SFC - 00 #47, Side B 9:51 AM Ms. Adair noted that Head Start and public schools are exempted from these inspection fees, but because they are considered high-risk facilities, the department conducts inspections anyhow. She noted that children are more susceptible to food-borne illnesses than others. She responded to Ms. Revis' concerns by noting that the department intends to amend food service regulations, which will exempt espresso and coffee carts from the permitting and fee process. Co-Chair Torgerson wondered how many facilities are inspected as versus those being billed. Ms. Adair responded that this depends on the year, since any given year, inspectors quit and she noted that some of these same employees periodically go on family leave. She added that taking these factors into account, about fifty percent of the deemed facilities were inspected overall. She noted that most of these were seafood related, about 80 percent, since the department is mandated by the federal government to do so. Senator Wilken asked if the department bills 100 percent of these facility, but that only 40 percent of these are inspected. Ms. Adair responded that there are a host of facilities, which the department inspects and a subset of these are charged a fee. She noted that Senator Wilken was correct, that the department does charge a fee, which includes the total cost of the program, including inspections, but not all of these are inspected. Senator Wilken asked if some of the establishments receive a bill for inspection, but are not inspected. Ms. Adair responded that if a facility receives a bill, this reflects an allocation of the cost of the program, including the amount of inspection. She added that the food service aspect of the program was changed from a mix of general funding programming fees to 93 percent of programming fees, therefore, the cost of the program at seven percent would consist roughly of travel. She continued that the "costed-out" amount must be allocated across all users that are permitted and not exempted from a fee. Ms. Adair and Senator Leman discussed how the billing process worked for this inspection program. Co-Chair Torgerson asked if Alaska has laws requiring that a facility be inspected every year. Ms. Adair responded that there was not, much less a law requiring an inspection. She noted that an inspection is a way to determine compliance with food safety laws. She added that the Food and Drug Administration recommends that full service restaurants be inspected at least twice a year, but the department does not have the staff to do this. She explained in detail how inspections are presently conducted and noted that she would be happy to work with the Committee on this legislation. Co-Chair Torgerson noted that he would contact Ms. Adair for a list of inspections, those businesses inspected and how much money is charged. Senator Leman asked if the department would support the divestiture of some of these duties to some of the larger municipalities to conduct their own food service inspections such as which, Anchorage is currently involved. Ms. Adair responded that the department has considered this, but found that in the smaller communities the economy of scale does not exist. Co-Chair Torgerson ordered the bill HELD in Committee. ADJOURNED Senator Torgerson adjourned the meeting at 10:07 AM. SFC-00 (11) 03/06/00