ALASKA STATE LEGISLATURE
SENATE LABOR AND COMMERCE STANDING COMMITTEE
January 31, 2008
2:03 p.m.
MEMBERS PRESENT
Senator Johnny Ellis, Chair
Senator Gary Stevens, Vice Chair
Senator Bettye Davis
Senator Con Bunde
MEMBERS ABSENT
Senator Lyman Hoffman
COMMITTEE CALENDAR
Update on the Alaska Comprehensive Health Insurance Association
(ACHIA)
CS FOR HOUSE BILL NO. 226(FIN)
"An Act extending the termination of the state training and
employment program; requiring a review of the program; and
providing for an effective date."
HEARD AND HELD
SENATE BILL NO. 153
"An Act relating to the use of credited military service by
retired peace officers and fire fighters to meet certain
requirements for major medical insurance coverage benefits."
HEARD AND HELD
SENATE BILL NO. 187
"An Act increasing the minimum wage; creating an annual
adjustment to the minimum wage based on the rate of inflation;
and providing for an effective date."
HEARD AND HELD
SENATE BILL NO. 197
"An Act requiring credit card issuers to recognize certain dates
as dates of payment."
HEARD AND HELD
PREVIOUS COMMITTEE ACTION
BILL: HB 226
SHORT TITLE: REPEAL TERMINATION OF STEP PROGRAM
SPONSOR(s): REPRESENTATIVE(s) COGHILL
03/27/07 (H) READ THE FIRST TIME - REFERRALS
03/27/07 (H) L&C, FIN
04/18/07 (H) L&C AT 3:00 PM CAPITOL 17
04/18/07 (H) Moved CSHB 226(L&C) Out of Committee
04/18/07 (H) MINUTE(L&C)
04/20/07 (H) L&C RPT CS(L&C) NT 3DP 3NR
04/20/07 (H) DP: GARDNER, LEDOUX, BUCH
04/20/07 (H) NR: NEUMAN, RAMRAS, OLSON
05/03/07 (H) FIN AT 9:00 AM HOUSE FINANCE 519
05/03/07 (H) Heard & Held
05/03/07 (H) MINUTE(FIN)
05/04/07 (H) FIN AT 8:30 AM HOUSE FINANCE 519
05/04/07 (H) Moved CSHB 226(FIN) Out of Committee
05/04/07 (H) MINUTE(FIN)
05/05/07 (H) FIN RPT CS(FIN) NT 8DP 2NR 1AM
05/05/07 (H) DP: GARA, NELSON, FOSTER, STOLTZE,
JOULE, HAWKER, MEYER, CHENAULT
05/05/07 (H) NR: THOMAS, KELLY
05/05/07 (H) AM: CRAWFORD
05/08/07 (H) TRANSMITTED TO (S)
05/08/07 (H) VERSION: CSHB 226(FIN)
05/09/07 (S) READ THE FIRST TIME - REFERRALS
05/09/07 (S) L&C, FIN
01/31/08 (S) L&C AT 2:00 PM BELTZ 211
BILL: SB 153
SHORT TITLE: PEACE OFFICERS/FIRE FIGHTER RETIREMENT
SPONSOR(s): SENATOR(s) FRENCH
04/13/07 (S) READ THE FIRST TIME - REFERRALS
04/13/07 (S) L&C, STA, FIN
01/31/08 (S) L&C AT 2:00 PM BELTZ 211
BILL: SB 187
SHORT TITLE: ALASKA MINIMUM WAGE
SPONSOR(s): SENATOR(s) WIELECHOWSKI, THOMAS, ELTON
01/16/08 (S) PREFILE RELEASED 1/4/08
01/16/08 (S) READ THE FIRST TIME - REFERRALS
01/16/08 (S) L&C, FIN
01/31/08 (S) L&C AT 2:00 PM BELTZ 211
BILL: SB 197
SHORT TITLE: PAYMENT DATE FOR CREDIT CARD PAYMENTS
SPONSOR(s): SENATOR(s) WIELECHOWSKI
01/16/08 (S) PREFILE RELEASED 1/4/08
01/16/08 (S) READ THE FIRST TIME - REFERRALS
01/16/08 (S) L&C
01/31/08 (S) L&C AT 2:00 PM BELTZ 211
WITNESS REGISTER
LINDA HALL, Director
Division of Insurance
Department of Commerce, Community & Economic Development (DCCED)
Juneau, AK
POSITION STATEMENT: Commented on ACHIA update.
CECIL BYKERK, President
Bykerk Consulting, LLC
Juneau, AK
POSITION STATEMENT: Commented on ACHIA update.
REPRESENTATIVE COGHILL
Alaska State Capitol
Juneau, AK 99801-1182
POSITION STATEMENT: Sponsor of HB 226.
CLICK BISHOP, Commissioner
Department of Labor and Workforce Development (DOLWD)
Juneau, AK
POSITION STATEMENT: Supported HB 226.
JOE CRUM, President
Northern Industrial Training Trust
Anchorage, AK
POSITION STATEMENT: Supported HB 226.
DENNIS TRAYLOR
Southcentral Alaska Building and Construction Trades
Anchorage, AK
POSITION STATEMENT: Supported HB 226.
TOM BRICE
Alaska District Counsel of Laborers
Anchorage, AK
POSITION STATEMENT: Supported HB 226.
JOHN MACKINNON, Executive Director
Associated General Contractors
Juneau, AK
POSITION STATEMENT: Supported HB 226.
KEN PELTIER, Administrator
Alaska Operating Engineers and Employers Training Trust
Anchorage, AK
POSITION STATEMENT: Supported HB 226.
JONATHAN SMITH
Alaska Regional Council of Carpenters
Juneau, AK
POSITION STATEMENT: Supported HB 226.
SENATOR FRENCH
Alaska State Capitol
Juneau, AK 99801-1182
POSITION STATEMENT: Sponsor of SB 153.
COLONEL AUDIE HOLLOWAY, Director
Alaska State Troopers
Department of Public Safety (DPS)
Anchorage, AK
POSITION STATEMENT: Supported SB 153 with a more definite fiscal
note.
VINCE BELTRAMI, President
AFL-CIO
Anchorage, AK
POSITION STATEMENT: Supported SB 187.
SENATOR JOE THOMAS
Alaska State Capitol
Juneau, AK 99801-1182
POSITION STATEMENT: Co-sponsor of SB 187.
PAT LUBY, Advocacy Director
AARP
Anchorage, AK
POSITION STATEMENT: Supported SB 187.
PAUL WOLFSON
Tuck School of Business
Dartmouth College
Dartmouth, NH
POSITION STATEMENT: Supported SB 187.
SENATOR WIELECHOWSKI
Alaska State Capitol
Juneau, AK 99801-1182
POSITION STATEMENT: Sponsor of SB 197.
STEVE CLEARY, Executive Director
Alaska Public Interest Research Group (AKPIRG)
Anchorage, AK
POSITION STATEMENT: Enthusiastically supported SB 197.
DAVID LAWER, Senior Vice President and General Counsel
First National Bank of Alaska
Anchorage, AK
POSITION STATEMENT: Opposed SB 197.
BILL SCANELL, representing himself
No Address provided
POSITION STATEMENT: Supported SB 197.
JOHN FARLEIGH, representing himself
Anchorage, AK
POSITION STATEMENT: Supported SB 197.
ACTION NARRATIVE
CHAIR JOHNNY ELLIS called the Senate Labor and Commerce Standing
Committee meeting to order at 2:03:05 PM. Present at the call to
order were Senators Davis, Bunde, Stevens and Ellis.
2:05:09 PM
^ACHIA Update
CHAIR ELLIS announced that the first order of business was the
update presentation on the Alaska Comprehensive Health Insurance
Association (ACHIA) by the division director.
LINDA HALL, Director, Division of Insurance, Department of
Commerce, Community & Economic Development (DCCED) introduced
Mr. Bykerk, Executive Director, ACHIA (better known as the high
risk pool). She said this group provides critical functions and
with this year's interest in health insurance they are here from
out of state to try meet as many legislators as possible and to
talk about the program. She also introduced Shawn Pollock and
Brian Angel, members of the ACHIA board.
CECIL BYKERK, President, Bykerk Consulting, LLC said the purpose
of the Alaska Comprehensive Health Insurance Association (ACHIA)
was to create a mechanism for people who are unable to buy
medical insurance because they have major health problems to
have coverage. They know losses will come forward with these
people and he said the pool was never intended to be self-
sustaining.
He went to a pie chart of where money has come from to support
the claim payments of over $60 million. It indicated a third of
ACHIA's funding comes from the policy holders themselves - so
they are paying a part of their way without being a burden on
the community through unpaid hospital and doctors bills. Another
piece on the chart indicated a federal program that has been
available for a few years; it wasn't funded last year, but
Alaska will get about $1 million from the program this coming
federal fiscal year. The majority of the shortfall is made up
through assessments on the health insurance writers of the state
- prorated based on approximately 1 percent of gross premium
volume. Over $40 million has been assessed from them. While that
money comes from the companies, it trickles down one way or the
other from the policy holders. Some companies directly charge
for it and others bury it in their premium and expenses.
He explained that legislation was passed last year so that
beginning in 2008 companies writing in Alaska can offset $.50 on
every dollar they paid in assessment last year. A little over $6
million was assessed last year and so the companies will in
effect be reimbursed by the state for $3.1 million. So the state
is supporting the program in that way starting this year.
2:11:07 PM
MR. BYKERK said ACHIA is not a welfare program and it is not
meant to compete with the average health insurance companies
that are funding the program. ACHIA is limited by statute to a
50 percent mark up from the average premium in the market place;
most recently they have been at about 35 - 40 percent mark up so
that people can afford to come in. He said some states have low-
income subsidy programs, but Alaska doesn't and that could be
considered. But he said he was here to provide information and
the biggest piece of information is the knowledge that they
exist. Therefore, they are aggressively working on a new
marketing campaign so that more people will be aware of the
program's existence. He also mentioned that since 1997, they are
the federally required HIPAA mechanism for the State of Alaska.
2:15:42 PM
SENATOR BUNDE suggested making a flier for legislators to use as
a resource to give to constituents.
CSHB 226(FIN)-REPEAL TERMINATION OF STEP PROGRAM
2:18:43 PM
CHAIR ELLIS announced CSHB 226(FIN) to be up for consideration
and that he has instructed a CS to be written that would extend
the program to 2018 to comport with some of the gasline training
plans the state hopes to have. He, personally, along with a lot
of other people, wanted to see the State Training and Employment
Program (STEP) program made permanent in statute.
REPRESENTATIVE COGHILL, sponsor of HB 226, explained that when
he originally introduced this bill the STEP program was
permanent. Mainly he sees that some people who need retraining
or who are marginally employed need an avenue to get into the
workforce. In the foreseeable future, Alaska is going to have
workforce development struggles in every major professional
career field. The STEP program has proven to him that it can
fill that need.
He said the program is not without its problems and union issues
revolve around philosophies of different administrations. While
he favors non-union, he realized that unions do some good work.
They have the best training in the world, for one, and this
program has hit one of the sweet spots of Alaska where people
really have the need.
2:22:37 PM
The House gave it a 2009 sunset date because it wanted to see
how the STEP grants were handled. He agreed with that, but he
didn't want to sunset it every year. It's right to be
accountable, so he proposed putting it into the DOL and then
looking for places to fund it. In his view then, the funding
would be part of the annual question of what the legislature
looks at.
He said that part of the funding comes from unemployment
insurance, so the annual review would include the workforce
development reports and unemployment insurance accounting. This
was enough for him, but it wasn't for the majority members in
the House. That is why the reporting mechanism is in the bill,
and that is okay with him. He said there are other programs, but
the STEP program is one good tool that promotes a healthy
workforce.
2:27:33 PM
CLICK BISHOP, Commissioner, Department of Labor and Workforce
Development (DOLWD), said the STEP program has demonstrated
tremendous success in training Alaska's workers in Alaska
careers for over 19 years. Over 24,000 Alaskans have been served
by the program, and each year it is evaluated. It continually
demonstrates its overall success. Some of the performance
highlights are that more than 94 percent (1,643) of the trainees
had employment within 12 months after completing the program.
STEP participants earned over $71 million in Alaska wages in the
year following training, a 35 percent increase over total pre-
training earnings. STEP provides services that benefit the
participants in the long term; about 90 percent of participants
that completed STEP training in 2003 were still Alaskan
residents in 2006.
2:29:03 PM
He said intent was developed last year that requires the
department to work with all interested stakeholders in reviewing
the program's priorities and procedures in both the controlling
regulations and statute. A public forum was held in the interim
in which all but 4 of the 22 entities testified in favor of
STEP's continuance. One comment stands out from that period;
that was, "STEP demands deliverables and accountability." He
concurred with that.
He said that last year he pledged to Representative Coghill to
advance STEP one piece at a time. The first goal was the
reauthorization of STEP; and the second was to get the
recommendations from the public forum on STEP. The third goal
was to assemble a task force to work through the comments and
recommendations he had received in the course of last year in
order to develop any changes or procedures - in regulations or
statute - to bring forward in the next legislative session. He
had assigned Deputy Commissioner David Stone to that task. He
closed saying that everyone needs to keep the dialogue on a
professional tack as the program gets improved.
2:31:05 PM
SENATOR BUNDE said he would provide some questions in writing.
CHAIR ELLIS asked Commissioner Bishop if he was able to find
improvements in the procurement process.
COMMISSIONER BISHOP answered that one of the areas he was able
to work on last spring was to improve the STEP application
process.
CHAIR ELLIS asked if he was personally involved.
COMMISSIONER BISHOP replied yes; "I'm on deck."
2:33:23 PM
JOE CRUM, President, Northern Industrial Training Trust, started
by saying they had trained 875 Alaskans in 2007 and looked to
double that this year. He said the concept of STEP is excellent.
It is one of the only programs that has training for someone who
is already working. The STEP electronic submittal application
for grants is awesome as well as the fact that STEP pays for
room and board and other support services for participants.
Having STEP funds available for competitive grants ensures that
trainees from around the state, not from just population
centers, can attend the program. A person from Savoonga, for
instance, does not have equal access to a Job Center where he
can meet with a counselor in person and receive assistance
versus a person from Anchorage. STEP grants circumvent the
access problem by allowing the burden to be placed on the
grantee and not the state system - and he appreciated that. He
summarized that the STEP cuts across barriers; it is open to all
ages, abilities, all races and all regions within the state.
2:35:39 PM
On the improvement side, he said, grant announcements have a
deadline for submittal and a required training schedule, but
there is no deadline for when the grants are awarded. This
typically takes several months, which makes the original
training schedule that must accompany the application invalid.
This delay severely shortens the recruitment timeframe. STEP
reimbursements take a considerable time to be paid back, so when
a grantee is purchasing training equipment for the grant
training they have to pay in advance and wait two or three
months to be paid back. That causes undue financial hardship for
his organization as well as many others, and there is no
recourse for late payment from the State of Alaska.
MR. CRUM also suggested using a flat rate for tuition in the
grant, because going back for a breakdown of costs for facility
rental, telephone and fax use and insurance amounts is very
cumbersome. The last suggestion he had was to consider using the
new Denali Commission application process which is awesome.
CHAIR ELLIS commented those were the most specific comments he
had heard in a long time and he said the Deputy Commissioner of
the Department of Law (DOL), Guy Bell, was taking notes.
2:38:00 PM
DENNIS TRAYLOR, Southcentral Alaska Building and Construction
Trades, supported HB 226 and said one of Alaska's major
challenges over the coming decade is workforce development. STEP
grants benefit working Alaskans, because as a past instructor of
a training program he has seen firsthand the assistance the STEP
grant provided. Most of the trainees are men and women from
rural areas who are already supporting a household with family
members on a trainee's budget. Going to a training facility to
complete their training while supporting an additional household
crates a financial hardship, and these grants are a lifesaver
for these men and women. Otherwise, he said, these slots would
ultimately go to a trainee within a city where the training is
being offered. This is not a union/non union issue, because any
of the trainees, union or non union, can use the STEP grant.
When he was an instructor, the AVTEC program in Seward received
a $5 million grant and was able to purchase training equipment
he wasn't able to. When Dan Logan, one of the AVTEC directors
came to his facility looking for curriculum to put together a
concentric conduit bending program, he invited him in and opened
up the curriculum to him. While he was jealous of the grant, he
knew they were all working towards the same goal or training the
working men and women of Alaska to become skilled workers. He
urged that the unions, the universities, AVTEC and the ABC all
work together to meet the incredible challenge this state faces.
2:41:24 PM
TOM BRICE, Alaska District Counsel of Laborers, supported HB
226. His folks deal with private construction laborers of
Alaska, Locals 341 and 942. Specifically, they appreciate the
STEP program because it is competitive and that insures quality.
It ensures deliverable and accountability for state funds spent.
2:43:27 PM
JOHN MACKINNON, Executive Director, Associated General
Contractors, supported HB 226. The Association represents over
650 members statewide, and it is very heavily involved in
workforce development, training and continuing education.
2:44:14 PM
KEN PELTIER, Administrator, Alaska Operating Engineers and
Employers Training Trust, said the trust is a jointly
administered labor-management trust fund between the Operating
Engineers Local 302 and Associated General Contractors. They
train heavy equipment operators, mechanics and service oilers in
the construction field and have provided training services
independent in Alaska since 1989. The Training Trust has
successfully received STEP funding for the last 10 years.
He said that the Department of Labor and Workforce Development
(DOLWD) has identified the construction field as a high priority
occupational training area and Alaska is experiencing a critical
shortage of resident workers with construction skills.
Historically this industry relies on non-residents to fill jobs
where they cannot find qualified Alaskans. Without the necessary
training available, contractors are more likely to hire
experienced individuals from outside the state. The department
estimates construction job growth will exceed 15 percent over
the next decade; more than 40 percent of the workforce is over
the age of 45 and could retire within a decade. The job growth
and replacing the aging workforce will require about 1000 new
constructions workers each year; if a gas pipeline is built,
thousands more will be needed.
Opportunities for employment of rural Alaskans are limited
primarily due to a lack of appropriate skills. The STEP program
has expanded training opportunities to rural individuals and has
increased the number of available trainee slots for rural
participants to attend the apprenticeship program in Palmer.
He concluded by saying through STEP funding, the Training Trust
believes it will be able to increase employability for more of
its Alaskans by providing training resulting in credentials and
certifications. This training will make them ready to meet the
needs of labor shortages and expanding job opportunities and to
fill positions otherwise filled by non residents. He stated that
STEP training will meet the job needs of those in areas with a
high rate of unemployment.
MR. PELTIER added that this is a unique and viable program that
Alaskans can be proud of. No matter what the field of work, it
is a program that encourages workers to improve their skills,
allowing them to obtain better paying jobs and decrease their
dependence on unemployment funds. He encouraged the legislature
to take the STEP program from a pilot to a permanent state
program.
2:47:17 PM
JONATHAN SMITH, Alaska Regional Council of Carpenters, supported
HB 226. He said the STEP funds have helped the millwright,
machine erectors, pile drivers and carpenters across the state.
2:47:45 PM
CHAIR ELLIS summed up that it's highly likely that the
legislature would extend the STEP program. He didn't sense any
controversy, but the accountability piece could still be
discussed. He had proposed a longer extension period than came
to the committee and he wanted members to think about what
period of time they are comfortable with.
SENATOR BUNDE said he had no quarrel with 2018 if he could hear
the rationale.
SB 153-PEACE OFFICERS/FIRE FIGHTER RETIREMENT
2:49:25 PM
CHAIR ELLIS announced SB 153 to be up for consideration.
SENATOR FRENCH, sponsor of SB 153, read his sponsor statement:
Current law allows a police officer or firefighter who
has also served in the armed forces to count five
years of military service towards their Public
Employees Retirement System retirement, provided that
two conditions are met. First, the employee must not
be eligible for a federal retirement benefit and
second, the employee must "buy" those military service
years by paying for them.
The shortcoming with the current system is that the
military years purchased towards a state retirement do
not count towards qualifying for retiree medical
benefits. Moreover, many of those who are buying in
presume that they are getting just that coverage. Thus
the need for SB 153. This legislation corrects what
many with former military service assume when
purchasing military time: that the time purchased will
be credited to their medical benefits as well as their
retirement.
This bill simply allows for the same purchase of years
to count towards retirement and medical benefits.
The bill does not allow any double dipping because the
potential state retiree must not be eligible for
federal military benefits in order to qualify for the
purchase in the first place.
SB 153 recognizes the contribution made by police
officers and fire fighters who have both served our
country through the military and now pursue careers to
protect and defend our state and communities.
2:51:11 PM
SENATOR FRENCH asked the committee to remember there is no
double-dipping. If you have served 20 years in the military and
you are eligible for a military pension, you cannot buy into
this program. You have to be eligible for either one or the
other.
He explained that as the program stands now you can buy those
five years of retirement time, but you don't get medical
benefits. So the idea is to just complete the step that was made
when the program was first extended to the state's police
officers and firefighters and to let it be applied evenly across
the board.
2:51:57 PM
SENATOR BUNDE asked if this would apply to people who worked for
a fairly short time for the state, because if they had worked
for an extended period of 10 or 15 years, they would
automatically qualify for the health benefit through vesting.
SENATOR FRENCH replied you first have to get to 20 years of
service with the state. You can't buy your 25 years in essence
by having served only 10 years. You have to have the 20 years in
in order to buy the last 5 - and you can only buy 5.
SENATOR BUNDE asked how much it would cost the individual to buy
the health benefit.
SENATOR FRENCH replied that it would cost the same as was
indicated on the PERS chart.
SENATOR BUNDE clarified that his concern was on the fiscal
impact to the health care system.
SENATOR FRENCH replied that SB 153 has two department fiscal
notes; a zero fiscal note from the Department of Public Safety
(DPS) and two from the Department of Administration (DOA) -
first a small one and then a much bigger one arrived today. He
said communication is going on with the administration about
what the problem was with its assumptions.
CHAIR ELLIS said he wanted a well-reasoned fiscal note before
the committee before the bill would be considered again.
SENATOR FRENCH said the most recent fiscal note he received
walked into his office an hour ago.
2:55:27 PM
COLONEL AUDIE HOLLOWAY, Director, Alaska State Troopers,
Department of Public Safety (DPS), supported the concept of SB
153 because it would help with recruiting and keeping older
troopers. He had some concerns, however, and for one didn't want
to make the PERS liability worse. He could testify much more
confidently with a more definite fiscal note.
CHAIR ELLIS said that he would hold the bill until they could
pin the numbers down.
SB 187-ALASKA MINIMUM WAGE
2:57:50 PM
CHAIR ELLIS announced SB 187 to be up for consideration.
2:58:03 PM at ease 2:58:44 PM
SENATOR WIELECHOWSKI, sponsor of SB 187, said Alaska's cost of
living is one of the highest in the nation. The cost of food,
housing, utilities, transportation and health care are far
greater here than in most states. Despite this, Alaska has the
lowest minimum wage on the west coast. Oregon, Washington,
California and Hawaii all have higher minimum wages, as do seven
other states. In addition, in 2009 the federal minimum wage will
increase to $7.25, surpassing Alaska's rate of $7.15.
SB 187 will increase Alaska's minimum wage from $7.15/hour to
$8/hour in 2009 and adjust it annually for inflation. If
Alaska's minimum wage, last raised in 2003, were to have kept
pace with the rate of inflation, it would be more than $8/hour
today. At least 10 states adjust their minimum wage annually for
inflation, including Arizona, Colorado, Montana, Nevada, Ohio,
Oregon, Washington and Wisconsin.
In 2009, federal minimum wage will increase to $7.25/hour
surpassing Alaska's, the first time since statehood that Alaska
minimum wage will be below the federal minimum wage. Since 1962
until 2003, Alaska's minimum wage was required by statute to be
at least $.50 above the federal level in recognition of our
higher cost of living.
3:00:01 PM
About 14,000 Alaskans (or almost 5 percent of the workforce)
earn the minimum wage, most are in accommodation and retail
services as well as food service, education services and
manufacturing. A full time worker that makes the minimum wage
earns less than $14,000/year - barely above poverty level and
$3,000 below poverty level for a family of two. Twenty-five
percent of those who earn between $7.15 and $8/hour are parents.
Many are the sole wage earners in their household. About 58
percent of minimum wage earners are adults, the average age
being 38. So, statistics don't support the often-heard statement
that minimum wage is for teenagers.
3:02:14 PM
SENATOR WIELECHOWSKI explained that Alaska law currently exempts
employees under 18 years of age who are working 30 hours or less
per week from the state's minimum wage. New economic studies
show little to no impact on small businesses regarding minimum
wage. Recently, over 650 economists including 5 Nobel Prize
winners and 6 past presidents of the American Economic
Association signed a statement stating that the federal and
state minimum wage increases can significantly improve the lives
of low income workers and their families without the adverse
effects that critics have claimed.
He mentioned that Senator Joe Thomas is a co-sponsor.
3:03:22 PM
VINCE BELTRAMI, President, AFL-CIO, supported SB 187. He said it
seeks to restore the annual inflation-proofing and bring the
minimum wage up to $8/hour or $1 dollar over the federal minimum
wage, whichever is greater. He added that other states, Oregon
and Washington being the closest examples, have minimum wages
over $8/hour and have an inflation adjuster equal to the
consumer price index (CPI). Washington voters approved that by a
2:1 margin, but before that in 1998 when Washington had the
increase on the ballot, a lot of corporate lobbying groups
warned of catastrophic consequences if an indexed minimum wage
were passed. Greg Weeks, Director, Washington Employment
Security Department, said that the Washington State economy
right now is a job engine drawing people from the sidelines and
into the job market. Job growth reports showed Washington
outpacing the nation with a 3.5 percent gain over the previous
year. Since Washington began regularly increasing the minimum
wage in 1999 employment in sectors that traditionally pay at or
near minimum wage have posted sustained job growth. For example,
eating and drinking establishments, the ones that often times
are worried about these types of increases, have added jobs
every single year in the state even after the post 911 recession
began. The state increased 10.1 percent in the restaurant and
bar employment, and overall non farm employment increased by 7.9
percent.
He said another study in 1998 failed to find any systematic
significant job loss associated with the 1996/97 federal
increase of $.90/hour, which amounted to more than 21 percent. A
recent fiscal policy institute study of state minimum wages
found no evidence of negative employment effects on small
businesses as a result of increases in the minimum wage.
3:07:07 PM
In Anchorage, since 2003 when Alaska's minimum wage was
increased to $7.50/hour the cost of living has gone up more than
15 percent. So the lowest of the state's wage earners are
loosing ground. Had the legislature left the inflation-proofing
in in 2003, we would be at $8.50/hour and at that rate a full
time worker would have an annual income of about $16,600, about
$1,000 below the federal poverty level. He said inflation
adjustments would make labor costs predictable for employers,
help to get more Alaskans closer to being off of the poverty
rolls and would increase the amount of money circulating in our
economy, which should stimulate our consumer markets. "It's very
clear that increases to minimum wage won't hurt our economy, but
in fact will help it," he concluded.
3:07:35 PM
SENATOR JOE THOMAS, co-sponsor of SB 187, added the current
minimum wage creates a net income of $13,068/year or $1089/month
and the basics of living every month puts an average family of
three in the hole by about $740/month. This obviously
contributes to the situation where somebody else is somehow
supporting those folks, and that needs to be taken into
consideration in looking at the impact. Making people more self
sufficient takes less money from the welfare agencies, he
emphasized.
CHAIR ELLIS noted that Grey Mitchell, Director, Division of
Labor Standards and Safety, Department of Labor and Workforce
Development (DOLWD), was available to answer questions.
3:09:27 PM
PAT LUBY, Advocacy Director, AARP, supported SB 187 and said a
living wage should be their target, not just the minimum wage.
Each year Alaska has an increase in older workers. Many of them
want to work and draw salaries. A second significant group is
retirees who find that inflation increases in health and
utilities or the loss of a spouse force them back into the
workplace. This trend will likely increase in the future and
many of these retirees can only find jobs at the minimum wage.
He said the new federal government's poverty level for a single
person in Alaska is $13,000. None of these folks are getting
rich, he said; they are only going to get by and he supported
helping them.
3:10:52 PM
PAUL WOLFSON, Tuck School of Business, Dartmouth College, New
Hampshire, said he received a PhD in Economics from Yale in 1989
and he had been employed in many good positions. Michelle
Sydeman [staff to Senator Wielechowski] asked if he would
testify on the minimum wage. He said he had published three
papers on the minimum wage. While he hadn't had a chance to look
at specific data for Alaska, he wanted to talk about the
economic profession's view of the current minimum wage.
He said before 1990, almost all economists would have agreed
that the minimum wage would reduce employment, but in the last
20 years a great deal of research has indicated that might not
be correct. The most prominent research, by David Card and Allen
Kruger (professors at Berkeley and Princeton), examined fast
food restaurants on the Pennsylvania/New Jersey border and
compared employment before and after the minimum wage increased
in New Jersey. They found no evidence the employment in New
Jersey responded badly to the minimum wage increases there. More
recently similar work has been published by three economists at
Berkeley; one looked at restaurants in San Francisco in 2004
when it imposed a minimum wage of $8.50 and compared them to
restaurants elsewhere in the Bay area. Even though their
estimate was more precise, they weren't able to detect an effect
that was different than zero.
In another study, the same three authors, instead of looking at
restaurants in the same area, looked around the country and
noticed a number of counties that were adjacent to each other,
but in neighboring states. One of those states at one time
raised the minimum wage while the other one did not. So they
looked at what happened to employment in those neighboring
counties, but they, too, were not able to find any effect of the
minimum wage on employment. However, they were able to explain
how other people found raising the minimum wage defective and
their explanation was that they were able to control for trends
in the regional economy that other people weren't able to
because they didn't have the same data structure.
MR. WOLFSON concluded that it is fair to say that the economic
profession no longer has a consensus view; economists can be
found on both sides of the issue, which is quite surprising.
Opponents of the two increases in the federal minimum wage that
occurred in 1996 and 1997 predicted massive job losses, but
instead the employments rates of the least advantaged workers
soared to unprecedented levels.
3:16:09 PM
SENATOR BUNDE said he would like to know where Alaska ranks for
cost of living and how many people in Alaska are calculated to
work at minimum wage and if they are one or two-earner families.
He also wanted Mr. Wolfson to explain his suggestion that
raising the minimum wage expanded jobs and if that encouraged
people to stay at that level rather than to move on. Often
minimum wage jobs are considered a starter job and you move on.
SB 187 was held for further work.
SB 197-PAYMENT DATE FOR CREDIT CARD PAYMENTS
3:18:27 PM
CHAIR ELLIS announced SB 197 to be up for consideration.
SENATOR WIELECHOWSKI, sponsor of SB 197, said this bill stems
from an irate constituent who related that he had mailed his
payments to his credit card company at least a week ahead of
time, and for whatever reason, had not received them on time. So
he thought why not do it the way the IRS, the State of Alaska,
the Municipality of Anchorage do, which is "the bill is received
the day it is mailed."
SENATOR WIELECHOWSKI explained that people who have their credit
card payments received late often have their rates tripled. In
some cases, the late payments are tied to higher mortgage and
auto insurance rates. This can have devastating impacts on one's
job application because employers often look at credit reports.
He said the fees can amount to hundreds of dollars because you
are charged interest on the full amount; he was shown a credit
card statement where someone was charged a 399 percent interest
rate for being one day late along with a $39 late fee. It was
due on a holiday, which was a Monday, the day before was a
Sunday; so there was no mail on Sunday. The credit card company
got the payment on Tuesday. The particular problem people in
Alaska have is that it takes longer for mail to get here and
longer for it to get sent back. It's bad for people in
Anchorage, but it's even worse for people in the Bush.
He had done extensive research on this issue and hadn't found
any other state attempting to address this. He has gotten more
positive feedback on this bill than almost any other bill he has
filed. He hoped it had been narrowly crafted enough so that it
didn't have any preemption issues with federal law. He explained
that states cannot regulate rates, fees or price related items,
but this bill doesn't do that. A state cannot regulate if it's
something that's overly burdensome, but this bill doesn't do
that either. He reiterated that every state, the municipality of
Anchorage, and the federal government, when they accept payment
from you, it's the date you have it postmarked. Electronic
payments are that way as well. That's all this bill says.
CHAIR ELLIS said he is an enthusiastic co-sponsor because he
thought Alaskans were being scammed by some of the major credit
card companies. He thought the system was set against consumers
and Alaskans in particular. So if this can be documented, he
hoped to make some progress.
SENATOR BUNDE said he shared his goal and concerns, but maybe
considering the time value of money, they could be encouraging
Alaskans to mail their payments on the due date, when it's post
marked, but now it doesn't arrive at the company for a week and
the company is now losing money. That doesn't seem fair either
and would, of course, be added to the overhead which will come
back on us all. He asked if the sponsors had given any thought
to applying this only to payments mailed before the due date.
CHAIR ELLIS responded that was a good question and asked him to
hold it for the next hearing.
3:22:41 PM
STEVE CLEARY, Executive Director, Alaska Public Interest
Research Group (AKPIRG), enthusiastically supported SB 197. It's
a great help to consumers who are paying their bills on time to
receive credit for that. He agreed with what can happen to
consumers if they send their payments on time, but are still
considered late.
3:23:47 PM
DAVID LAWER, Senior Vice President and General Counsel, First
National Bank of Alaska, said this legislation will not achieve
Senator Wielechowski's objective. It would result in becoming
the law of the state where payment is received and First
National Bank of Alaska and Alaska USA would be the only banks
in Alaska it would affect. He explained that First National
could comply with it with respect to payments made from accounts
with the bank to credit cards with the bank. Otherwise they are
not able to identify the date and source of the computer
authorization for payment or the date of a telephone
authorization for payment. In most cases, he explained, an
electronic or a phone authorization is made to an intermediary.
So when that intermediary ultimately sends payment to him on
behalf of its customer, they simply send a name, an account
number and an amount. The bank is unable to ascertain the date
when the call was made.
As to the post mark payment, as matters are now when they
receive payment in the mail, that is processed by their lock box
system which mechanically opens the envelope and sorts the check
and the payment stub from the envelope. The payment stub and
check are then sent for processing. If the bank had to record
the date of post marking that would have to be done by people,
which would entail a cost they couldn't bear given their margins
in connection with their issuing business.
MR. LAWER explained that the law of payment can be varied by
contract and his bank only credits payments made across the
counter if received by 2:00 p.m. Any payment received later is
treated as being received the next day. If this bill was changed
to prohibit alteration of the law by contract, First National
would simply go out of the credit card issuing business. Then
Alaska constituents would be left with no one to do business
with except the credit card companies that are doing business
and receiving payments outside of the state of Alaska and who
would be unaffected by this law.
3:29:07 PM
BILL SCANELL, representing himself, supported SB 197. He said
while he understands most of this stuff is federally regulated,
something needs to be done in Alaska. When his wife, who is
fanatical about paying her bills, was a day late, it took them
both 5.5 months to pay off the credit card and their insurance
rates went up. The phone calls alone took up literally half a
day and that just isn't right. Getting a post mark is valid
proof of service, he said. If credit card companies are charging
working people 18, 20, 30 and 50 percent, they can afford to pay
for opening envelopes.
3:31:27 PM
JOHN FARLEIGH, representing himself, supported SB 197. He
testified how he cut up his Chase credit card and sent it back
when his interest rate reached 24.9 percent because of a series
of late payments. He explained that last November 27 he mailed
payments to both Chase and American Express. Three days later on
November 30 American Express posted his payment, but Chase
didn't post his payment until December 10. He called customer
service and they agreed to take away the $35 charge, but refused
to repost it to a more reasonable date.
He expounded that not only is this legislation needed, it needs
an amendment because of what happened to him after he complained
- Chase retaliated on him. His next month's bill was received in
his home on December 24 with a due date of January 5 and he
declared, "If they are claiming it takes two weeks for the mail
to get there, that makes if physically impossible to make that
payment."
He related that he started wiring payments through Western
Union, but now Chase doesn't accept wired payments, so they are
taking away his ability to pay on time. This is a calculated
strategy, he exclaimed, to allow them to raise his interest
rates. So the amendment he suggested was to require credit card
companies to give people a 30-day window to pay from the time
they issue the bill.
CHAIR ELLIS thanked him for his testimony and said they would
hold this bill for further work.
There being no further business to come before the committee, he
adjourned the meeting at 3:35:05 PM.