House Committee on Business Affairs and Labor (04/21/2010)

Final
STAFF SUMMARY OF MEETING

HOUSE COMMITTEE ON BUSINESS AFFAIRS AND LABOR

Date:	04/21/2010	ATTENDANCE

Time:	11:03 AM to 02:56 PM	Balmer	X
		Bradford	X
Place:	HCR 0112	Casso	X
		Kerr A.	*
This Meeting was called to order by		Liston	X
	Representative Rice	Middleton	*
		Priola	X
This Report was prepared by		Soper	X
	Christie Lee	Stephens	X
		Gagliardi	X
		Rice	X
		X = Present, E = Excused, A = Absent, * = Present after roll call

Bills Addressed:		Action Taken:
HB10-1410 SB10-133 Banking Commission Briefing Department of Personnel and Administration		Referred to Finance Witness Testimony and/or Committee Discussion Only - -

11:03 AM -- House Bill 10-1410

Representative Rice, prime sponsor, presented House Bill 10-1410 concerning a requirement that the state treasurer transmit moneys appropriated to state departments that are unexpended and unencumbered at the end of a fiscal year to the state employee payday shift fund so that the moneys may be used to pay salaries in June for work performed by state employees during the month of June. Currently, state employees whose salaries are funded by General Fund are paid on the first working day in July of each year for work performed during the month of June. Employees whose pay is funded by cash or federal funds are paid on the last working day of June.

This bill requires the state treasurer to transfer monies that would otherwise revert to the General Fund at the end of each fiscal year to a new cash fund. All monies and any income or interest earned are to remain in the cash fund. As of FY 2011-12, monies in the cash fund are to be appropriated to first pay the General Fund salaries of employees who are paid on a bi-weekly basis, with any remaining monies used to pay the General Fund salaries of employees who are paid monthly. Payroll obligations will be fulfilled in this manner until all employees whose salaries are paid with General Fund receive pay for June on the last working day of the month. The bill clarifies that until sufficient funding levels are achieved, remaining payroll obligations will continue to be paid on July 1. Unless a state department, office, or agency pays all of its payroll with a source other than General Fund, it is required to satisfy payroll obligations at the same time as payroll made with General Fund.

11:08 AM -- Jennifer Okes, Deputy Executive Director of the Department of Personnel and Administration, testified in support of the bill. She explained that the bill will alleviate the hardship on bi-weekly employees who can face up to a 17-day delay in their paycheck. Ms. Okes said the bill creates fiscal responsibility and transparency by conducting payroll the right way. Ms. Okes talked about the reversions that would go into the cash fund created in the bill. Representative Stephens talked about the unexpended appropriated funds that the Joint Budget Committee estimates to be about $5.2 million a year. Ms. Okes responded. Representative Stephens said she would like to see only the bi-weekly employees addressed in the bill and explained that the three-day hardship for monthly employees is not as dire. She also asked Ms. Okes to talk about the accounting side of the issue. Ms. Okes stated that expenses and revenues should be recorded in the period in which they occur, which is June, and explained that this is done for accounting purposes, but not for budgetary purposes. She said having two sets of books is not transparent and that it would more efficient to have one set of books. Representative Stephens mentioned that all of the agencies were not able to respond to the fiscal note. Ms. Okes explained.

11:19 AM

Representative Rice explained that the bill provides an annual appropriation so the decision can be made on an annual basis. Representative Stephens stated that the $1.4 million for bi-weekly employees is doable and should be addressed first. Representative Priola asked Ms. Okes to walk him through the time frame, he said he understands the three-day delay in pay for monthly employees, but not the 17 for bi-weekly.

11:22 AM -- David McDermott, State Controller, testified in support of the bill and responded to Representative Priola's question, stating that the employees paid bi-weekly work for a two-week period and wait for two weeks to receive their paycheck, so there is already a two-week delay in pay for work performed and talked about the 17-day delay. Representative Priola stated that the two-week lag would exist with or without the bill. Mr. McDermott explained that bi-weekly employees can actually have their pay delayed up to 31 days because the 17 days is in addition to the two-week delay. Mr. McDermott talked about the history of the issue and mentioned that it occurred in 2003 for the first time. He said the bill provides the flexibility to address this issue through the appropriations process and talked about other programs that push expenditures into the following year, including payroll, Medicaid, and CHP+. Mr. McDermott also talked about government efficiency. He explained that this was a benefit seven years ago, but now there is no benefit in doing this.

11:33 AM

Representative Balmer asked how big a problem this is to the state's credit rating. Mr. McDermott responded. Representative Liston asked whether this is an accrued liability over the years and needs to be addressed. Mr. McDermott listed the amounts that were reverted each year since this practice began in 2003. Representative Liston said the bill would provide a method to allow the state to ease back to where they were. Mr. McDermott responded. Representative Balmer returned to the credit rating issue and asked whether there is a curve on the rating and whether they look at other states since they are all in the same boat. Mr. McDermott responded. He said many states are doing worse than Colorado and that Colorado is a low debt state. Representative Liston asked what the three top agencies are. Mr. McDermott explained how the process would work under the bill.

11:44 AM -- Scott Wasserman, representing Colorado Wins, testified in support of the bill. He said they represent a number of employees that fall into this category and gave an example of a housekeeper who works out at Fitzsimmons.


BILL:	HB10-1410
TIME:	11:48:34 AM
MOVED:	Rice
MOTION:	Moved to refer House Bill 10-1410 to the Committee on Finance. The motion passed 11-0.
SECONDED:	Casso
		VOTE
	Balmer	Yes
	Bradford	Yes
	Casso	Yes
	Kerr A.	Yes
	Liston	Yes
	Middleton	Yes
	Priola	Yes
	Soper	Yes
	Stephens	Yes
	Gagliardi	Yes
	Rice	Yes
Final YES: 11 NO: 0 EXC: 0 ABS: 0 FINAL ACTION: PASS

11:54 AM -- Senate Bill 10-133

Representative Rice, prime sponsor, presented Senate Bill 10-133 concerning the creation of an income tax credit to incentivize Colorado businesses to rehire laid-off workers. The bill creates a state income tax credit available to Colorado businesses that rehire workers who were laid off during 2009. The tax credit is only available for tax year 2011 and only for businesses that rehire their laid-off workers sooner than they would have without the tax credit and keep the worker employed for at least a year after being rehired. The credit is equal to a percentage of the employer's costs for paying its portion of Federal Insurance Contributions Act (FICA) taxes during the initial 12-month period of employment for each worker rehired. An employer's share is 7.65 percent of each worker's salary. For workers rehired between the date the bill becomes law and May 31, 2010, the credit for each rehired worker is equal to 66 percent of the employer's FICA taxes. For workers rehired between June 1, 2010, and September 30, 2010, the credit is equal to 33 percent of the employer's FICA taxes.

11:59 PM

Representative Balmer expressed his concerns with the bill, as did Representative Liston and Representative Priola. Representative Rice addressed their concerns.

12:14 PM -- Virginia Love, representing the Colorado Competitive Council (C3), testified on the bill explaining that C3 was an opponent, but has not seen the final amendments to the bill. She spoke to amendment L.007 (Attachment A).

12:19 PM -- Ali Mickelson, representing the Colorado Fiscal Policy Institute, testified against the bill. She agreed with Representative Balmer's concerns regarding an additional credit that would take money out of the budget.

12:21 PM

The bill was laid over to a later date.

01:36 PM -- Banking Commission Briefing

Barbara Kelley, Executive Director of the Department of Regulatory Agencies, and the new banking commissioner, Steven Strunk, came to the table. Ms. Kelley talked about the department's search for a new commissioner that has taken about 17 months. She explained that Commissioner Strunk has 35 years experience in the banking industry and talked about his background.

01:40 PM

Commissioner Strunk addressed the committee and talked about his experience. Representative Rice talked about Mr. Joseph, who was the acting banking commissioner during the vacancy, and commended him for his work. Ms. Kelley agreed that he did a wonderful job in the position and would remain in his capacity as the head of securities. Representative Soper talked about the bank closures across the country and asked Commissioner Strunk to address where Colorado falls compared to other states. Commissioner Strunk responded. Representative Balmer asked what issues the commissioner would like to address in his new position. Commissioner Strunk talked about state- and federal-chartered banks and FDIC insurance. Representative Liston asked the commissioner to talk about the various types of banks and the recent bail outs. Commissioner Strunk talked about the recent crisis on Wall Street and about community banks and commercial banks. The commissioner talked about the types of banks that exist including investment banks, community banks, and commercial banks. Representative Liston asked how long the commissioner has been in Colorado, why he decided to come and work for the public sector, and how he ended up in Colorado. Commissioner Strunk responded.

02:05 PM

Representative Soper asked about banking fees and whether the commissioner feels they are too high or whether it will be addressed by the open market or needs to be addressed with legislation. Representative Rice mentioned that typically, there are not many investment banks in Colorado. Representative Balmer talked about the lack of national banks headquartered in Colorado and asked whether the state should attempt to become a regional banking center. Commissioner Strunk responded. Ms. Kelley also responded and talked about a time when Colorado had the opportunity to do so and deliberately decided not to go that route. Representative Rice commented on the fact that most bank exams are joint with state and federal and asked what is looked for at each level. Commissioner Strunk responded. Representative Rice asked the commissioner whether any states choose to not have state-chartered banks. Commissioner Strunk said no states choose this. Representative Rice asked the commissioner to report back to the committee after he has been in the position for a bit and talk about some lessons learned from the Frontier Bank failure.

02:19 PM -- Recess

The committee took a recess.

02:21 PM -- Department of Personnel and Administration

Representative Rice called the committee back to order.

02:25 PM -- Rich Gonzales, Director, and Jennifer Okes, Deputy Director, Department of Personnel and Administration, came to the table. Mr. Gonzales talked about the prior discussions and the issues that were raised regarding state part-time employees receiving full-time benefits. He explained that as of December 31, 2009, there were 2,888 part-time state employees. Mr. Gonzales explained that the part-time employees costs the state approximately $10 million dollars and that of the 2,888 part-time employees, 1,493 have medical benefits, 1,710 have dental, and everyone has life insurance benefits. The numbers are provided on page five of a Joint Budget Committee Memorandum (JBC) that was distributed to the committee (Attachment B).

02:33 PM

Representative Gagliardi commented on the audit of the state's total compensation survey process that is discussed on page seven of the handout. Mr. Gonzales responded. Ms. Okes also responded. Representative Soper asked whether the part-time employees pay into benefits at the same proportion as full-time employees. Mr. Gonzales and Ms. Okes responded. Representative Rice said he would like to see the issue come up next session and talked about the process the issue will go through this interim, including the JBC. Mr. Gonzales commented on the process. Representative Bradford commented on the memorandum and thanked the staff for their time and said she would like to attend the August JBC meeting to see where this goes.

02:43 PM

Caroline Smith, Joint Budget Committee Staff, was asked come to the table and discuss the JBC process. Representative Stephens said she would like to stay updated on the issue. Representative Rice thanked the department and Ms. Smith for their work on this issue.

02:47 PM

Representative Rice talked about the committee's calendar for the next week. He said the committee would be holding a discussion with the Attorney General's Office, Department of Regulatory Agencies, and the Department of Revenue regarding Chrysler's stated noncompliance with House Bill 10-1049.

02:49 PM

Representative Rice asked Melissa Kuipers, Colorado Automotive Retailers, to come up and talk about the issue. Ms. Kuipers said the manufacturers can currently only be handed a one-time fine of $2,500. Committee discussion about the issue ensued with Representatives Balmer, Bradford, and Gagliardi commenting. Representative Rice talked about an article stating Chrysler's noncompliance with the bill. Representative Balmer talked about potential legislation. Representative Liston and Representative Soper commented as well.

02:54 PM

The committee adjourned.