House approves paying increases with leftover money

Posted: Friday, May 05, 2000

JUNEAU (AP) -- Leftover money from previous years would help pay newly negotiated wage and benefit increases for state employees under a plan approved by the House late Friday night after tense negotiations with Knowles administration officials.

If the Senate approves bills to authorize and pay for the increases on Saturday, lawmakers could adjourn their special session on state employee contracts after the minimum three days required by law.

The Legislature reconvened Thursday after the Republican-dominated Senate balked in the regular session at paying for increases spelled out in newly negotiated contracts with 12 state employee unions.

GOP lawmakers don't want the contracts to erase their $30 million reduction in general fund spending. So they demanded that Knowles administration find other money to replace $19 million in general funds.

The bill the committee passed doesn't exactly follow that directive. Instead, it takes about $5.1 million in general funds from the current year's budget, along with other money, and shifts it to the fiscal year that begins July 1.

''The first hurdle for the administration was 'Help us find the money,''' said House Finance Committee Co-Chairman Eldon Mulder, R-Anchorage. ''And to their credit, they did.''

The biggest share of the money -- about $8.1 million -- comes from a complex shuffle called Medicaid ProShare. The program allows the state to more than double the federal match rate for Medicaid by legally laundering federal money through local hospitals, and then using it to match even more federal money.

The maneuver is fully used in next year's budget. But lawmakers, the Office of Management and Budget and the Department of Health and Social Services worked over the past few days to maximize the shuffle in the current year's budget to help pay the contracts.

''When all was said and done, there was another $8 million,'' said Annalee McConnell, director of OMB.

However, lawmakers questioned how much money the shuffle could generate, and the dispute produced a flurry of late-night negotiations.

''The real question came down to do we believe their funding sources and one of them came into question,'' Mulder said.

To guard against the possibility of a shortfall, Mulder amended the bill to appropriate an extra $4 million from the investment loss trust fund. However, it's unclear the fund will contain that much money.

The bill then passed 32-4 a few minutes before midnight.

The bill also taps unspent money from other programs and projects, including $4 million from the school debt repayment fund, $900,000 from the Commercial Fisheries Entry Commission's receipts and $818,000 that won't be needed to make longevity bonus payments to Alaska seniors.

One lawmaker questioned whether the longevity bonus windfall was actually that large.

''Phony, phony, phony,'' said Rep. Ramona Barnes, R-Anchorage.

The final $4.7 for the contracts would come from the general fund next year. That won't break the $30 million plan, Mulder said, because lawmakers actually reduced general fund spending by about $38 million.

''We still achieve approximately $34 million of savings,'' Mulder said.

All 12 unions were offered similar deals: a $1,200 lump-sum payment this year, a 2 percent increase next year, and a 3 percent increase the following year, and increases in the state's health insurance contribution.

Nonunion employees would get similar increases, while University of Alaska employees stand to get raises under separately negotiated contracts.

The focus of the special session shifted on Friday, with lawmakers focused mostly on how to pay for the contracts instead of whether to pay for them.

At a joint House-Senate hearing on Thursday, lawmakers grilled Knowles administration officials about merits of the agreements, questioning provisions allowing members of the largest union to cash out half of their accrued sick leave.

They also questioned Administration Commissioner Bob Poe's argument that the state needs to pay better to attract and retain good workers.

But by Friday afternoon's House Finance Committee meeting, money was the primary concern.

''What people began to realize was that in fact, the terms were reasonable,'' McConnell said.

Some lawmakers even complained that the increases didn't apply to the Legislature. The 60 members of the Legislature are the only state employees not covered by the increases.

Their $24,012 annual salary is set by law. However, lawmakers also receive $161 per day for living expenses during the session.

''Legislators as a whole, compared to other states, are way underpaid,'' said Rep. Ben Grussendorf, D-Sitka.

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