SENATE STATE AFFAIRS COMMITTEE February 13, 1997 3:34 p.m. MEMBERS PRESENT Senator Lyda Green, Chairman Senator Jerry Ward, Vice-Chairman Senator Jerry Mackie Senator Mike Miller Senator Jim Duncan MEMBERS ABSENT All members present COMMITTEE CALENDAR SENATE JOINT RESOLUTION NO. 14 Relating to support for federal legislation permitting state concealed handgun permittees to carry concealed handguns in other states. - MOVED SJR 14 OUT OF COMMITTEE SENATE BILL NO. 46 "An Act naming a new maritime vessel for the Alaska Marine Highway System; and providing for an effective date." - HEARD AND HELD SENATE BILL NO. 68 "An Act relating to the Task Force on Privatization; and providing for an effective date." - CSSB 68(STA) ADOPTED AND MOVED OUT OF COMMITTEE PREVIOUS SENATE COMMITTEE ACTION SJR 14 - No previous action to record. SB 46 - See Senate Transportation Committee minutes dated 2/4/97. SB 68 - No previous action to record. WITNESS REGISTER Bill Stoltze, Staff to Senator Rick Halford State Capitol Juneau, AK 99801-1182 POSITION STATEMENT: Offered information on behalf of sponsor of SJR 14 Senator Jerry Ward State Capitol Juneau, AK 99801-1182 POSITION STATEMENT: Prime Sponsor of SB 68 Craig Johnson, Staff to Senator Ward State Capitol Juneau, AK 99801-1182 POSITION STATEMENT: Offered information on SB 68 Don Etheridge Local 71 710 W. 9th St. Juneau, AK 99801 POSITION STATEMENT: Requested eqaul representation of public employee representatives on task force Mike McMullen, Personnel Manager Division of Personnel Department of Administration P.O. Box 110201 Juneau, AK 99811-0201 POSITION STATEMENT: Presented Administration's concerns with SB 68 Jim Baldwin, Assistant Attorney General Civil Division Department of Law P.O. Box 110300 Juneau, AK 99811-0300 POSITION STATEMENT: Outlined department's concerns with SB 68 Ms. Pam LaBolle, President Alaska State Chamber of Commerce 217 2nd St. Juneau, AK 99801 POSITION STATEMENT: Testified in support of SB 68 Paul Sweet P.O. Box 1562 Palmer, AK 99645 POSITION STATEMENT: Had questions on SB 68 ACTION NARRATIVE TAPE 97-4, SIDE A Number 001 SJR 14 SUPPORT FEDERAL CONCEALED GUN LEGISLATION  CHAIRMAN GREEN called the Senate State Affairs Committee to order at 3:34 p.m., and brought up SJR 14 as the first order of business before the committee. Number 005 BILL STOLTZE , staff to Senator Rick Halford, who is prime sponsor of SJR 14, explained the resolution is straightforward with one resolve supporting a national standard in accordance with which nonresidents of a state may carry certain concealed firearms. Because of confusing regulations that vary in the 50 states, it is problematic for an individual who has a concealed handgun permit in Alaska to carry that handgun into another state. SJR 14 endorses H.R. 339, which will allow the carry of a concealed handgun in another state. The permittee would have to comply with the laws of the other state, but if that state doesn't have an existing law, then there are federal regulations providing where the handgun can or cannot be carried. Number 064 There being no further testimony or questions on SJR 14, CHAIRMAN GREEN asked for the pleasure of the committee. SENATOR MILLER moved SJR 14 and the accompanying fiscal note be passed out of committee with individual recommendations. Hearing no objection, it was so ordered. Number 075  SB 46 NEW FERRY NAMED M.V. KENNICOTT  CHAIRMAN GREEN brought SB 46 before the committee as the next order of business. Because HB 64, which is the same as SB 46, was passed by the House, transmitted to the Senate and referred to the State Affairs Committee, it was agreed the House bill would be scheduled for a hearing the following week and action would be taken on that piece of legislation at that time. SENATOR MACKIE commented he believes it was a very good process entered into by the leadership of the Legislature and the Administration to involve children in the school districts around the state in selecting a name for the new ferry. Number 125 SB 68 TASK FORCE ON PRIVATIZATION  CHAIRMAN GREEN brought SB 68 before the committee as the final order of business. SENATOR WARD , prime sponsor of SB 68, said privatization would save money for the state of Alaska, but that component is a secondary component. He said we have a responsibility to the citizens of Alaska to perform certain tasks, and this has to be weighed into the privatization question. Because privatization is such a large task to undertake, it has been broken down into two separate components. The first component for the task force to look at this year is the Department of Health, Education and Social Services, the Department of Corrections, the Department of Transportation and Public Facilities, and the second component is state contracting policy and procedures. He noted the budgets of those departments total $1.5 billion, so it is a tremendous dollar volume to go through. Senator Ward related that other states have similar task forces and they have found areas where they could not only protect the public interest as the number one goal, but to protect in a reduced manner through contracting, etc. Senator Ward said the intent of SB 68 is to look at the entire privatization question and to approach it from a methodical means in order to resolve it in an orderly fashion if, in fact, it does need to have legislation proposed. Number 185 CRAIG JOHNSON , staff to Senator Ward, discussed other states that have implemented similar programs. In 1990, the state of Montana issued a report on the Department of Administration, Department of Commerce, etc., and the bottom line of that report was that through privatization and without the reduction of services, they showed a savings of $1.5 million over a three-year period. In New Jersey, a task force examined privatization in competitive contracting and that report showed a $30 million savings in the first year. Mr. Johnson said SB 68 has been embraced by several broad and far reaching groups. He said he thinks the thought is that if a working document can be developed that will allow the evaluation of privatization in a fair, open and constructive manner, that everyone will be the beneficiary of that. The task force, which will consist of ten members, would be required to submit its first report by November 15, 1997. A second report on privatization of government functions not addressed in the first report would be due November 15, 1998. The task force would then sunset on December 1, 1998. Number 230 CHAIRMAN GREEN commented that in examining the different departments, the task force could have very different conclusions for each department and recommend one course of action for one group and then a different course of action for anther group. MR. JOHNSON agreed, and said that would be the goal, as well as to examine it in the premise of saving the state money and closing the fiscal gap. Number 245 DON ETHERIDGE , representing Local 71 and also speaking on behalf of the APEA Supervisors Unit, stated they do support the task force idea, but they want it to be done on a fair and equal footing for the employees of the unions that are doing the jobs now. That is why they are requesting that they receive seats on this task force with the organized labor folks that are already involved with it. Mr. Etheridge said a lot of their concern comes from some of the contracting out that has been done in the past where a job is contracted out, but the people working under that contract have to do a lot less than is required for public employees doing the same job for the same dollar figure. He cited an incident where some people proposed taking over the grading of a road for the same dollar figure that the state is now doing the entire maintenance of the road. In conclusion, Mr. Etheridge said the employees he represents are confident that the job can't be done for less than what they can do it for, and they would like to part of this task force process. Number 280 SENATOR DUNCAN asked if he was correct in his understanding that Mr. Etheridge testified in support of the task force with the idea that there be assurance that the public employees' unions are involved and represented on the task force. MR. ETHERIDGE acknowledged that was correct, and added they would like one of the public seats on the Senate side, one of the public seats on the House side, as well as one of the seats appointed by the governor, and that this be specified in the bill. Number 301 MIKE MCMULLEN , Division of Personnel, Department of Administration, said he was present to explain the current restrictions in the state collective bargaining agreements that have to do with studies that would lead to privatization. Mr. McMullen said several of the state's collective bargaining agreements identify procedural steps that must be followed if work of the bargaining unit is going to be contracted out, and, in all cases, it requires a rather formal study to show the cost benefits and conclude that there is a savings to the state before that happens. A concern of the departments is in terms of the timing. The legislation requires that the task force produce recommendations, in November 1997 so that the Legislature can consider them in the next session. If the task force identifies areas to be studied, there is a cost to those to studies, and if they wait until next year to get the money to do the studies, that pushes the implementation later. This has the potential of the task force recommendation and the actual study coming up with different conclusions. Mr. McMullen said the department is leaning towards the task force actually going to the level of detail of doing the feasibility studies so that it is done once and the conclusions are final and from there the state would proceed with the implementation. Mr. McMullen advised that it has been the department's experience that the kind of study required to stand up in arbitration cases can cost from $20,000 to $50,000. If the task forces recommends 15 areas, then $300,000 or more would be needed to do the formal studies. Whether the task force does those or the Administration does those, the money will need to be there and the studies will need to be done in order to make this succeed. Mr. McMullen said there is a slight hesitancy in full support of this process on the part of the Administration in that in looking at all the options for government to be run correctly, efficiently, and to provide the services required from our residents, studying privatization as a single solution is sort of the cart before the horse type of question. Mr. McMullen related that when it comes to the Administration making the appointments, it will be looking at an issue that has been raised in arbitrations in the past, and that is participating in a task force type review before a formal feasibility study is conducted. The decision to contract out was made before the feasibility study, and therefore, the feasibility study is questionable and the contracting out in conflict with collective bargaining agreements. Mr. McMullen said the Administration's biggest concern, recognizing that a formal study will be required, is it will need to be funded and it will need to occur before the contracting occurs, as well as being sure that it doesn't get in the wrong sequence with legislation or expectations based on the task force recommendations, which may end up being different than the detailed analysis. SENATOR WARD said a lot of the concerns raised by Mr. McMullen are the very concerns that the other 41 states have faced, and they have not all been resolved. He stressed it is not the intent of this legislation to privatize all of government as a first priority. The first priority is service to the people and then to look at privatization to see if it can be done better, and if not, he would fully expect this task force to leave it alone. Number 400 SENATOR DUNCAN asked Mr. McMullen if the concern about the sequence of task force recommendations, possible legislation to accomplish the recommendations and feasibility studies, could cause difficulty in arbitration with unions and in resolving some issues. MR. MCMULLEN acknowledged that it could be a problem. Number 420 CHAIRMAN GREEN asked if there is a legal description of a "feasibility study." MR. MCMULLEN advised that there is not, and he pointed out that contracts aren't even consistent in their references to feasibility studies. Number 441 JIM BALDWIN , Assistant Attorney General, Department of Law, said he had two points he wanted to make about SB 68. The first one is that the department believes there is a legal issue with placing administration people on what would be a legislative organization. The separation of powers doctrine requires that the branches in their functions be kept basically separate unless there are places in the constitution where there is some overlapping, and he said he didn't see a particular provision for that here. He said the Administration is willing and able to assist in any way it can short of membership on the task force in order to keep faith with the separation of powers doctrine. Mr. Baldwin's second point was the provision relating to subpoenas and arrests. He said it is very broad grant of power to a legislative committee beyond that which is currently provided in statute. He suggested that in the way it is written in the bill, it may come in conflict with a court rule. Number 475 CHAIRMAN GREEN related that she discussed the subpoena provision with the sponsor and that she had an amendment do delete that provision, but that it might be appropriate to keep in the ability to swear in a witness. Number 500 SENATOR MILLER asked if it was the Administration's position that they don't want a seat on this task force, but that they would assist the task force in any way they can. MR. BALDWIN responded that was correct. Number 540 SENATOR WARD asked if was it his testimony that if this legislation passes, the Governor, the Administration, who have supported privatization studies in the past, will not appoint those positions. MR. BALDWIN replied that he did not know the answer to that question. Number 550 PAM LABOLLE , President, Alaska State Chamber of Commerce, testifying in support of SB 68, stated privatization is one of the state chamber's priorities and has been for the past two years. She read from a resolution passed by the chamber which encourages the privatization of those state services which could be competitively provided in the private sector. It also asks that the Legislature forge a plan by the end of 1997 and implement a program to privatize all applicable services currently provided by the government. SENATOR WARD expressed his appreciation to Ms. LaBolle and the state chamber for all the information they have provided to him on the issue of privatization. Number 580 CHAIRMAN GREEN stated there was one individual waiting to testify via teleconference from the Mat-Su Legislative Information Office. PAUL SWEET of Palmer questioned if there was a cost analysis as to what the cost will be for each prisoner by privatizing and how much money will be saved there. TAPE 97-4, SIDE B Number 001 Continuing, Mr. Sweet also questioned what kind of insurance coverage would be necessary under privatization since the tort reform bill will eliminate deep pockets. He said the bottom line is that if there isn't the proper insurance coverage, who pays for a possible riot or killing in the prison system when there is no more deep pockets to go to. SENATOR WARD expressed his appreciation to Mr. Sweet for his questions and concernss, and assured him that these were the types of issues that would be looked at by the task force. Number 040 CHAIRMAN GREEN offered the following amendment to SB 68, which would delete the subpoena provision: Amendment No. 1  Beginning at page 2, line 20, through page 3, line 19: Delete subsections (b), (c) and (d). Renumber remaining subsection accordingly. SENATOR MACKIE moved the adoption of Amendment No. 1. Hearing no objection, the Chairman stated the amendment was adopted. Number 052 SENATOR MACKIE said he thought it was a good idea to involve a representative of the public employees on the task force and that member could be one of the governor's appointees. He then moved the following amendment: Amendment No 2  Page 2, line 3: Following "governor" insert ", one of which will be a member of a public employee's organization." SENATOR DUNCAN suggested amending the language so that it would provide that labor organizations that represent state employees would provide a list of nominees. He also noted that Mr. Etheridge indicated in his testimony that they are supportive of this issue on the condition that there be labor representation on the task force and that they would like to have one of the seats appointed by each of the presiding officers, as well as one of the governors, which would give them a total of three seats on the task force. SENATOR MILLER said he thinks organized labor does have a place at the table, but he is not sure that the speaker of the house and the president of the senate should be required to make one of their selections from organized labor, although they may do so. SENATOR DUNCAN moved the following amended language to Amendment No. 2: Amendment to Amendment No. 2 Page 2, line 3, following "governor": Insert ", one of which shall be a public member selected from a list of nominees submitted by labor organizations that represent state employees" Hearing no objection to the amendment to the amendment or to the amendment itself, CHAIRMAN GREEN stated Amendment No. 2 as amended was adopted. Number 125 There was further discussion by committee members on the makeup of the task force and whether organized labor should be given more seats. SENATOR DUNCAN said he had prepared an amendment that would give organized labor additional seats, but that he would not offer the amendment in committee. CHAIRMAN GREEN commented that she doesn't think the major group impacted by this is the public employees' union; she thinks it is the other 500,000 plus state citizens who are impacted and who are very concerned. She added that she does not want this to become a public employees versus the citizens issue. Number 240 SENATOR DUNCAN directed attention to the first finding in Section 1 on page 1, which he thinks is misleading, and he said he wants to be sure that it is not implying that the bureaucracy of state government is exceeding the annual revenue of the state, because it is not. A big portion of the state's budget is education, municipal assistance, revenue sharing, etc. There being no further testimony or discussion on SB 68, CHAIRMAN GREEN asked for the pleasure of the committee. SENATOR WARD moved that CSSB 68(STA) and the accompanying fiscal note be passed out of committee with individual recommendations. Hearing no objection, it was so ordered. There being no further business to come before the committee, CHAIRMAN GREEN adjourned the meeting at 4:45 p.m.