Legislature(2009 - 2010)HOUSE FINANCE 519
04/11/2010 12:30 PM House FINANCE
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HOUSE BILL NO. 421 "An Act relating to the compensation of certain public officials, officers, and employees not covered by collective bargaining agreements; and providing for an effective date." 2:05:16 PM KEVIN BROOKS, DEPUTY COMMISSIONER, DEPARTMENT OF ADMINISTRATION, reported that negotiations had concluded resulting in voluntary agreements between the state and the five unions that represent state employees. He noted that HB 421 provided a similar wage increase for non-covered employees in the executive, legislative, and judicial branches. He summarized the contents of the legislation by section. Section 1, of the bill represents a two percent increase to the FY 2010 salary schedule to begin in FY11. Sections 2 and 3, of the bill provide for similar increases in FY12 and 13. Section 4, addresses a similar wage increase for employees of the executive branch. Section 5, provides for a comparable two percent increase for employees of the court system. He pointed out that the executive and judicial branches do not use the legislature's wage range classification. Section 6, clarified that the University of Alaska employee's wage increases are determined by the Board of Regents. Section 7, provides for an effective date of July 1, 2010. Co-Chair Stoltze announced that the wage increase does not apply to elected officials. Mr. Brooks affirmed. Representative Austerman asked for clarification of the wage increase. Mr. Brooks restated that the wage increase was two percent for FY 2011, FY 2012, and FY 2013. 2:08:43 PM Co-Chair Hawker questioned the wage increase when the state economy is struggling and with record-high unemployment rates. Mr. Brooks replied that the department was aware of the economic climate and the issues were prevalent in discussions with the labor unions. The contracts reached with unions were relatively modest compared with contracts in past years. He argued for parity for similarly situated state employees not covered by unions. Co-Chair Hawker appreciated acknowledgement of the dilemma. He believed the court system employee's compensation was relatively low. He wondered if it was possible to approve the fiscal note for the court system but not for the executive and legislative branches. 2:12:03 PM Mr. Brooks expressed uncertainty regarding the procedure to make the change. Co-Chair Hawker wondered what would happen if the committee passed out the bill but zeroed out the fiscal notes for the executive and legislative branches. Mr. Brooks thought that the money would have to be taken from other sources of funding in the executive and legislative budgets. The bill would authorize the expenditure for all three branches of government. Representative Kelly asked what the rate of inflation was estimated to be in the next three years. Mr. Brooks reported that the department did not attempt to project the consumer price index (CPI) in relation to the wage increases. Representative Fairclough cited page 37, Article 12 of the Alaska Constitution that addresses the merit system. She asked if the wage increases in HB 421 were based on the merit system as described in the constitution. Mr. Brooks believed that it was consistent with Article 12. However, the wage increases were mostly associated with cost-of- living adjustments. Representative Fairclough opined that it was difficult to award merit pay to outstanding employees through the established system. Mr. Brooks thought that the state's pay system was consistent with the merit principals set forth in the constitution. 2:16:35 PM Representative Fairclough hypothesized the situation of a zero-based budget without increases and asked if an administrator had the flexibility to change an employee's pay within the existing structure by changing steps or ranges. Mr. Brooks stressed that it was important to distinguish between statutory employees and those covered under collective bargaining agreements [unionized]. He affirmed that the rate of pay can be changed administratively through individual job reclassifications. Representative Gara relayed that the average rate of inflation over the last three years was 2.7 percent. He believed that a "meager" two percent wage increase fails to keep up with the cost of living. He was supportive of the increase and wished it was higher. Representative Austerman asked when the last salary increase was. Mr. Brooks answered that the previous three fiscal years had increases of five and one half percent the first year and three percent the following two years. Representative Austerman asked if the inflation rate was 2.7 percent over the last three years. Mr. Brooks affirmed. 2:20:27 PM Co-Chair Hawker pointed to Section 6 of the bill and inquired about the absence of a fiscal note for the University of Alaska. Mr. Brooks answered that the University of Alaska was not included in HB 421. Co-Chair Hawker wondered why the Section exists. Mr. Brooks supposed it was a clarifying section. He implied that it could be removed. Co-Chair Hawker wondered if the rules that determine how the legislative branch sets the range increments are referenced in the legislation. Mr. Brooks related that the legislative staff pay rules are covered under the reference to Title 24 on page 1, line 9 of the bill. HB 421 was HEARD and HELD in Committee for further consideration.