2003 Commerce & Human Resources

Wages/hours, unions, retirement

January 9, 2003
January 13, 2003
January 15, 2003
January 21, 2003
January 23, 2003

February 5, 2003
February 11, 2003
February 17, 2003
February 25, 2003

March 3, 2003
March 13, 2003

DATE: January 9, 2003
TIME: 2:15
PLACE: Room 416
MEMBERS: Vice Chairman McKague, Representatives Lake, Trail, Crow, Bradford,
Bauer, Garrett, Martinez, Ringo, Naccarato

Chairman Schaefer
GUESTS: Dwight Johnson, Anne Pasley-Stuart, Dawn Justice, Dave Whaley, Kent
Day, Jerry Peterson, Chuck Oxley, Betsy Russell, Jim Kerns, Diana
Members introduced themselves, and Vice-Chairman McKague called the
meeting to order at 2:15
RS 12431 Dwight Johnson, of the Department of Labor, presented RS 12431. He
said that even with the current hard times, the Unemployment Insurance
Fund is doing OK. With the hard times, it is felt the increases which are to
be put in effect this year and next are too burdensome to business. In the
Fall of 2003, there is to be a review of the Unemployment Insurance Fund
and rules by both labor and management. They intend to propose
legislation for the session in 2004.
MOTION: Representative Crow moved to send RS 12431 to print with the
change that the Fiscal Impact be changed to only the first sentence,
eliminating the rest. She explained that the “powers that be” have said
that the Fiscal Impact should only reflect the impact on the general fund.
By voice vote, the motion carried.
ADJOURN: The meting was adjourned at 2:25

DATE: January 13, 2003
TIME: 1:35
PLACE: Room 416
MEMBERS: Chairman Schaefer, Vice Chairman McKague, Representatives Lake,
Trail, Crow, Bradford, Bauer, Garrett, Martinez, Ringo, Naccarato
GUESTS: Cindy Hedge and David Whaley, AFL-CIO; Roger Madsen, Dwight
Johnson, Tom Andreason, Jean Hull, Tom Valasek, &, Carol Brassey
Dept. of Labor; Jerry Peterson, Building Trades; Anne Pasley-Stuart, Ray
Stark, Boise CC; Dawn Justice, IACI; Alan Winkle, PERSI; Betsy Russell;
Pete Skamser, NFIB; Jason Kreizenbeck, Micron; Susan Kennedy,
Intermountain Gas; Graham Garner, Joan Eaton, Building Contractors,
Tim S. Olson, RBSI; and Pam Eaton, Idaho Retail Assn.
MINUTES 1/9/03 Rep. Ringo moved to approve the minutes of January 9. By voice
vote the motion passed.
HB 70 Dwight Johnson, Public Affairs Director of the Department of Labor
presented a packet of information to members in support of HB 70. He
gave a brief overview of the Unemployment Insurance Fund since1983
when the fund nearly ran out of money. Now Idaho taxes are still above
the national average, and our benefits rank 10th in the nation. In
December of each year, the Department makes a projection for the next
year. Under the current law, there is to be a 50% increase for employer-paid unemployment insurance this year. This bill from the Governor
freezes the taxes and benefits for two years. There will be a study in the
fall of 2003 with all parties concerned and legislation will be introduced in
the 2004 session. Employment went down in Idaho in 2002 for the first
time in 12 years. Even with modest improvement, the Department feels
there is enough money in the fund for the next two years

In response to questions, Mr. Johnson said that in a worst case
scenario, the State can borrow from the Federal Government at the
current rate of interest which is just below 6% right now.

Rep. Martinez said he would like the study committee to meet earlier,
and have the new legislation take effect next year in 2004.

Mr. Johnson said a fall date for the committee gives more time to see
how the economy is going to move. No legislation can be passed until
2004, so two years is really needed in order for businesses to plan ahead.
If it was next year’s legislation, it would have to be retroactive. In
response to his second question, Mr. Johnson said all the money in the UI
fund is for benefits, none is for administration.

In response to Rep. Ringo’s question, Roger Madsen, Head of the
Department of Labor said by the time the internal study reached his desk
it was October 31. Economic times were uncertain, and it was felt waiting
another year would produce more informed results. In fact, things were
better the 4th quarter. He promised the Interim Committee will meet this

In response to Rep. Naccarato’s question, Mr. Johnson said the rates
were frozen in 2002 also.

In response to Rep. Trail’s question, Mr. Johnson said borrowing was
not necessary in 1983 as the Legislature was in session and passed a bill
that corrected the situation.

Dave Whaley, of the AFL-CIO spoke in opposition to the bill in its
current state. He said the current rates under law were the result of an
Interim Study Committee in 1996 in which he participated. He expressed
concern that if the rates don’t go up for 3 years, the increase in rates will
really spike, and businesses will be hurt. He said he had heard
“rumblings” for more than a year of big companies in our state folding.
The fund level is going down and workers should not have their benefits

In response to Rep. Martinez’s question, Mr. Whaley said he would
not oppose a freeze of only one year.

Anne Pasley-Stuart, a small business owner spoke in favor of HB 70.
She said there are over 40,000 small businesses owned by women in the
state, and 14,000 in Ada County. She said businesses owned by women
is the fastest growing segment in the state. She said that two years
allows for a better analysis.
Jerry Peterson, of the building trades, spoke in opposition to HB 70.
He is afraid of the fund being depleted, and it taking years to build the
fund back up. He asked that the formula be changed rather than a freeze
be imposed. He suggested going to Schedule 3.
Ray Stark, of the Boise Chamber of Commerce, spoke in favor of HB
His directors feel the fund is working. It builds up in good times, and
drops in poor times. He is comfortable with this bill.

Rep. Naccarato said that the Lewiston Chamber of Commerce
supports a one year freeze.

Mr. Stark said it will take two years to work through the process.

Pete Skamser, of the National Federation for Independent
Businesses, spoke in favor of HB 70. He presented a letter to the
representatives. He said the proposed current rate increases are huge.
External costs are extremely difficult for business owners to manage. He
commented that unemployment benefits are much higher than national
average. He knows that taxes will go up, but he asked that when they do,
they be phased in incrementally.
Dawn Justice, of ICAI, spoke in support of HB 70. She complimented
the Department of Labor on their hard work which protects both
employees and employers.
MOTION: Rep. Lake moved to send HB 70 to the floor with a DO Pass.
Rep. Trail spoke in support of the bill and said the Moscow Chamber
of Commerce supports this bill. He said it is a freeze for both business
and labor. He said the money paid in benefits is an economic stimulus to
the local economy. Rep. Lake said he supported the bill because there
is a hefty balance in the trust fund.
Rep. Naccarato, said he was a union member and a small business
owner. He offered a substitute motion to make the freeze for only one
year. In line 18 “…for calendar year 2003 the taxable…”
Rep. Lake spoke in opposition of the motion. He said it would be 2004
before the legislature could pass a bill and the tax would then have to be
retroactive, which would be hard on businesses.
ACTION By voice vote the Substitute Motion was defeated.
ACTION By voice vote the motion to send HB 70 to the floor with a do pass
was approved, with Rep. Naccarato being recorded as voting Nay.

Vice Chairman McKague and Rep. Trail will co-sponsor the bill on the
ADJOURN: The meeting was adjourned at 2:50

DATE: January 15, 2003
TIME: 1:45
PLACE: Room 416
MEMBERS: Vice Chairman McKague, Representatives Lake, Trail, Crow, Bradford,
Bauer, Garrett, Ringo, Naccarato
. Representative Carol Schumacher sat
in for Chairman Schaefer,
GUESTS: Vicki Patterson, Dona Van Trease, Samantha Ransom, Kay Youngerman,
IPEA; Alan H. Winkle, PERSI; Gabe Weske, DHR; Kim Day, Adam
Alan H. Winkle, Executive Director of PERSI, presented a briefing on
the PERSI Contribution Rates. As with the rest of the country, PERSI has
experienced two years of bad markets. By law the Board of PERSI is
required to be able to pay off all their excess liabilities in 25 years. At
present it will take 39 years to do this. The Board is required by law to
raise the rates for contributions from both employees and employers.
However the law also allows a 12 month grace period to be used, but no
more than twice in four years. In times of low returns, the discretionary
COLA (Cost of Living Allowance) for Retirees receives additional scrutiny.
One percent of COLA is tied to the Consumer Price Index.

Mr. Winkle said “the good times are over.” In 2000, the Legislature
amended the law to provide for the gain sharing program, and recom-mended a fund reserve sufficient to absorb a one standard deviation

(-5%) market devaluation. There was a 6% asset loss in 2001 and
another 7% loss in 2002. To reduce the amortization period to less than
25 years, the Fund needs at least an .81% of pay increase in
contributions. The actuaries say the fund lost one billion in funds because
they expect a 8% increase. The actual asset loss was half that amount.

In the years of good markets the contribution rates went down, in
effect. Now we need to return to the 1997 rates. However, since these
rates will go back in effect gradually, starting July 1 of 2004 with a 1%
increase each year, a six month grace period clause is being invoked. By
policy, the Board doesn’t raise contribution rates to pay for Cost of Living
Allowance (COLA) therefore no discretionary COLA was approved.
These new rates assume a 1% investment return the next two years. The
Board feels this is a prudent assumption.

Rep. Trail inquired if changing the allocation of 70% in stock and 30%
in bonds has been considered. Mr. Winkle said there has been no
change to the asset allocation. With the proposed plan, the general
teacher will take home $7.84 less a month, and police officers and
firemen will take home $12 less. (Policemen and firemen retire earlier, so
contribute more.)

Pending PERSI
From Service




Mr. Winkle presented two pending rules from PERSI. The rule
changes are due to Federal requirements. Each year there are significant
changes to the PERSI plan and IRS Letter of Determination. The IRS
examiner requested some changes be made. Also changes have been
made due to IRS rules regarding Economic Growth and Tax Relief
Reconciliation Act of 2001 (EGTRRA). The new changes allows more
flexibility for members. Members are now allowed to transfer monies into
the fund when they are rehired, and are allowed more flexibility in rolling
over their funds to other types of retirement accounts. There are also two
minor word changes which are required. These changes will benefit
ACTION Representative Lake suggested that we “sit” on the rules for awhile to
see if any objections are raised, and the Committee agreed.
Idaho Public
Vicki Patterson, a lobbyist for the Idaho Public Employees
Association, presented the goals of her association. The IPEA was
organized in 1959 and has 1600 members. They have twenty chapters
around the state who meet as often as each chapter wishes.

Their goal is to improve the life of state employees. Their goals
include, supporting changes in the Gain Sharing allocations, reinstating a
three panel hearing under the State Problem Solving Procedure,
supporting a study to have the state provide self-supporting day care
facilities, and supporting salary increases for state employees.

The charts show that in 2001 state employees received a 3.5%
increase in pay. Some employees received a much larger increase, and
some received only 1%, if that. Health care rates are going up, but with
the salary staying the same, take-home pay is going down.

In response to Rep. Trail’s question, Ms. Patterson said it is state
policy that state employees are not to use the phone, e-mail or fax for
personal issues during working hours.

In discussing Gain Sharing, Rep. Lake asked why, in good times,
employers should not get a break as they pay 2/3 of the funds into PERSI,
and the employees only pay 1/3. Ms. Patterson said the money in
PERSI belongs to the state employees. Rep. Naccarato pointed out that
money from the fund can only go to employees. Mr. Winkle said that was
true. No funds were drawn out, but employers got a “holiday” from paying
into the fund.

Rep. Trail asked how the employees felt when CEC (Change in State
Employee Compensation) Hearings were not held this year. Ms.
said there were mixed emotions. There was a report that
hearings would be held later when more information about the budget was
available. Their attitude is “wait and see.”

At the request of several Committee members for a detailed report on
employee salaries and who got the few raises that were allowed last year,
Gabe Weske, of the Department of Human Resources, promised to have
that information to the Committee by the end of the week.


DATE: January 21, 2003
TIME: 1:31
PLACE: Room 416
MEMBERS: Vice Chairman McKague, Representatives Lake, Trail, Bradford, Bauer,
Garrett, Martinez, Ringo, Naccarato

Representatives Schaefer and Crow.
GUESTS: Karl Tueller, Renea Nelson, Diana Zacharias, Dennis Stevenson

& 1-13

Rep. Ringo moved that we accept the minutes of January 15. The
motion passed by voice vote. Rep. Lake moved that we accept the
minutes of January 13. The motion passed by voice vote.
Rep. Naccarato inquired as to when the list of salaries and raises
promised by the end of last week from the Department of Administration
would be received. Rep. Lake said he had been in touch with the
Department and they were working on it. It turned out to be a more
complex issue than thought.
Pending Rules

of the Idaho


Travel and


Grant Program

Karl Tueller, Deputy Director of the Department of Commerce spoke.
He said they had hoped to be able to introduce their new director at this
meeting. He showed an Idaho Vacation Guide which had been delivered
to all legislators this week. In 1985 the Idaho Travel Council was
established. Their funding comes from a 2% hotel, motel, and
campground tax. This tax raised over 5 million dollars last year, of which
45% or 2.3 million goes back as grants to promote tourism in the local
area. He said for the most part, this program has been very successful.
There is an eight member Idaho Travel Council composed of members
from around the State. He introduced Renea Nelson.

Renea Nelson, Grant Administrator for the Idaho Department of
Commerce, presented the rules. Rule 48-0103-0101 deals with the
rules concerning their logo. The rule change now allows the logo to be
printed in color, providing the color is pre-approval by the ITC staff.

Pending Rule
Ms. Nelson continued with Rule 48-0103-0101. The Department is
switching to electronic applications, however for this next year, they will
still allow hard copies, as not every one has the technology available.


Ms. Nelson presented Rule 48-0103-0301. Among other things, this
rule increases the amount of money that can be shifted from one line item
to another during the grant cycle. It will now be 25% of the grant, but not
more than $10,000. Amendments and withdrawal of applications can now
be done electronically.

An informal bid is required when the amount is between $1500 and
$5000. (The maximum amount is being raised from $2500.)

A formal bid is required for amounts over $5000. (This is being raised
from $2500)

Rep. Garrett inquired as to why the listing of the exact amount of
money for per diem has been eliminated. Ms. Nelson explained that it is
being changed to follow the state guidelines, so they don’t have to change
the rule every time the State changes the amount.

Chairman McKague asked what the hotel, motel and campground 2%
tax is used for. Ms. Nelson said it is used only for tourism promotion.
Karl Tueller pointed out that in Boise there is an additional 2% auditorium
district tax which is not handled by them. The 2% tax throughout the
State is not used for construction or maintenance.

MOTION: Rep. Lake moved that we approve Pending Rules 48-0103-0101 and
48-0103-0201 and Temporary Rule 48-0103-0301
. By voice vote
the motion passed.

DATE: January 23, 2003
TIME: 1:30
PLACE: Room 416
MEMBERS: Vice Chairman McKague, Representatives Lake, Bradford, Bauer, Garrett,
Martinez, Ringo, Naccarato


Chairman Schaefer, Representatives Trail and Crow
GUESTS: Pat Page, Diana Jansen, Rick Thompson, Jan Cox, Cynthia Ness, Dwight
Johnson, Roger Holmes, Gabe Weske, Lyn Darrington, Andrew Hanhardt,
Evelyn Thomas, Kathlene Allen, Jerry Peterson, Steve Kenyon, Alan
Winkle and Pam Ahrens.

January 21

Rep Bauer moved to accept the minutes as written. By voice vote the
motion passed.
Pam Ahrens, Director of the Department of Administration, presented a
report on the health benefits for state employees. Her department is
responsible for all insurance acquired by the state. She presented three
colleagues, Jan Cox, Cynthia Ness, and Rich Thompson who were there to
help answer any questions.

The Fact sheet gave the monthly insurance premiums the state has paid
since 1989 for employees. Once a year, the opportunity to change
insurance coverage is offered to the employees. Employees receive health
and medical insurance. The state pays for life and disability insurance.
There is a flexible account of up to $2500 for employees to put aside pre-tax money for medical expenses or day care.

A report on the group insurance plan as of July 1, 2002 was given. The
total number of people covered was 48,177. The U of I is not included in
the plan, but there are 17,041 active and 3,008 retired employees in the
plan. The State of Idaho pays 90% of the premium costs and the employee
pays 10%. For most employees, there are two modules with differing
premiums and deductibles. Retirees are only offered Module 2. About 200
employees in a few small counties are part of a third plan.

The Department’s administrative costs are considered to be fairly low.

Ms. Ahrens discussed the Claims Distribution. The average age for
employees is 45. Four major health conditions cost 40% of the expenses.
Heart disease was first and cancer was second.

Rep. Bradford asked if employees are encouraged to buy the generic
drugs. Ms. Ahrens said that the co-pay is three-tiered. It is $12 for generic
drugs, $18 if no generic drugs are available, and $40 if generic is available,
but the patient chooses the non-generic. They are encouraging patients to
buy 30 days of the drug to see how it works, rather than 90 at first shot.
They have actually seen a slight decrease in their drug costs.

Retirees expenses are 53.5% for drugs since Medicare does not provide
drug benefits.

Thirty per cent of employees never file a claim in a given year. Only 7% of
retired employees do not submit a claim in any one year. Seventy-five per
cent of retirees submit claims of over $500 in a given year.

Rep Lake asked if there is tracking to see which employees or retirees file
large claims each year. Ms. Ahrens said they are not allowed to track
individuals by State law. Rep. Lake inquired how many have filed claims in
multiple years. Ms. Ahrens said she would have to look that information up
by groups.

Ms. Ahrens said for the year 2003, the insurance plan will not cover the
expenses. The Department was charged with not raising the premiums, so
some changes had to be made. After conferring with employees, the
decision was made to put in a 90-day wait period for eligibility, increase the
deductibles and maximum out-of-pocket expenses, increase the
emergency room co-pay, increase the prescription co-pays, and require two
co-pays for a 90-day supply of maintenance medication.

For FY 2004 in order to maintain a similar coverage, they expect a 15%
increase in premiums. The Governor recommends funding in the agency
budgets to cover the increase. The national trend is not looking good. In
Colorado they have had three straight years of up to double-digit increases
in the cost of health care premiums and are concerned about even finding a
carrier in the future.

The Department has been in contact with their two major carriers. They are
reviewing prescription drug management, analyzing a multi-state
prescription drug purchasing Coalition (RxIS), and reviewing prescription
formulary plan alternatives.

Rep. Bradford asked about a proposed Coalition on drug purchases. Ms.
said they have looked at a couple of states that have that type of
program, but the savings do not seem to be that much.

Cynthia Ness, of the Department, spoke on prescriptions. The
Department’s dispensing fee is about $2.50 per prescription. Pharmacies
also charge a transaction fee, which the department doesn’t pay.

Rep. Naccarato asked about the return of unused prescriptions. Many
agencies have to throw away expensive medications. Ms. Ahrens said they
deal with individuals, so are not a part of that discussion.

Rep. Ringo asked if the State Police being a part of the plan raises the
rates. Mrs. Ahrens said State Police are covered by Worker’s
Comprehension for injuries on the job. Rep. Ringo said local police
departments are having a terrible time getting health insurance. She asked
if local agencies could also be covered under the state plan. Ms. Ahrens
said over the past few years the concept has been discussed. It could
raise the rates for the State. The local government would have to pay
whatever costs are decided by the state whether they have the funds or
not. There would be people going in and out of the plan, so this would
make it difficult for the State. She suggested that the Association of
Counties put together a plan.

Rep. Garrett asked about the feeling that state active employees are
picking up the cost of retirees insurance. Mrs. Ahrens said each active
employees contributes $8 a month and the state also contributes $8 each
month. The retirees pay a substantial amount per month for their coverage.
A retiree with no Medicare pays well over $300. If there are two members
in the family the cost is over $500. If both are on Medicare, an individual
person would pay $304.

Rep. Garrett pointed out the number of retired employees is increasing.
Ms. Ahrens said the average active employee age of 45 is about 10 years
higher than most large groups. The law states that retirees get the same
plan as the active state employees, but they do have to pay for it.

In response to Rep. Naccarato’s question, Ms. Ahrens said the state
contributes the same amount for each employee per month, regardless of
how many family members the employees has or what coverage is chosen.
In response to a question on the graph on page 5–how to distinguish
between dental and medical portions, Ms. Ahrens said the dental contract
is separate and was not shown in the charts she presented. Also not
included is employee mental health or employee assistance.

Rep. Lake asked how the 10%-90% contribution rates compare with
private plans. Ms. Ahrens said the plan compares favorably. She said
State will most likely be picking up a larger percentage of insurance costs
in the future.

Rep. Lake asked why there is a 50/50 split on the active employees’ and
the State’s contributions to retirees expenses. Ms. Ness said it is in law.

Department of Labor Rules
Pending Rules
of the Appeals
Bureau 09-0106-0201
Dwight Johnson, of the Department of Labor, presented the rules
regarding unemployment insurance benefits. The first rules deals with the
timeliness of a person’s appeal for unemployment insurance benefits. If the
appeal does not arrive due to the U. S. Post Office mail being slow, this is
not the fault of the person making the appeal. This rule change is due to a
State supreme court ruling earlier this year.
Pending Rules
of the Benefits
Bureau 09-0130-0201
Under current law, in order to receive benefits a person must be available,
among other things. If a person refuses a job for which they are qualified,
they lose benefits and must re-qualify by working 12 more weeks.
However, if a person was ill when called back to work by an on-going
employer, it is treated differently from a refusal to accept a job. The
benefits for that week only are lost. They know of no opposition to the rule
as published.
Rep. Garrett moved that we approve Rules 09-0106-0201 and 09-0106-0201 . By voice vote the motion passed.

DATE: February 5, 2003
TIME: 1:33
PLACE: Room 416
MEMBERS: Vice Chairman McKague, Representatives Lake, Trail, Crow, Bradford,
Bauer, Garrett, Martinez, Ringo, Naccarato. Standing in for Chairman
Schaefer was Betty Schaefer
GUESTS: Jim Szatkowski, Dave Whaley, Cindy Hedge, Jerry Peterson, Dwight
Johnson, Craig Bledsoe, Lyn Darrington, Kathy Pollard, Ned Nuerge, Karl
Malott, David Kerrick, Dennis Doan
MINUTES Rep. Lake moved to approve the minutes of January 27. By voice vote
the minutes were approved.
HB 27 Dwight Johnson, Director of Public Affairs for the Department of Labor
presented HB 27. This bill was drafted by Department of Labor at the
request of organized labor. However, neither organized labor nor
business likes this bill. He asked that HB 27 be held in committee.
MOTION Rep. Ringo moved to hold HB 27 in committee. By voice vote the
motion passed.
RS 12851C1 David Kerrick, representing Employers Resource, a professional
employer presented RS 12851C1. A professional employer provides
administrative help to small business. The common law employer enters
into an agreement with the professional employer company to do payroll,
tax returns, workers’ comp., etc. This company reports under one tax ID
number to the federal government. At present, this service is not
available to political subdivisions. However, smaller cities have same
needs as small businesses–they can’t afford specialists in all the human
resource areas. His company is trying to expand the use of this service in
Idaho but needs a law to permit political subdivisions to use this service.

Big companies who do business in many states are allowed to report to
the Department of Labor under an ERISA qualification. Like big
companies, a professional employer can offer benefit plans for its
workers. However, if it is considered a multiple employer welfare
arrangement, the company does not qualify for ERISA (Employee
Retirement Income Security Act.) This bills states that the professional
employer is not considered to be a multiple employer welfare
arrangement within the meaning of the applicable law. Currently the
Idaho Department of Labor claims that a professional employer is a
MEWA (multiple employer welfare arrangement) and that they have the
right to regulate them. Professional employers are a new concept, so the
old models do not work. The first act dealing with this subject was passed
in 1994. Since it is a new “creature,” there needs to be more refinements
as time goes by. This bill would make professional employers qualify
under the federal rules only under ERISA, and not at the state level as a

A third part of the bill concerns tort claims against governmental agencies.
This does not diminish the protection for government agencies in regards
to torts.

MOTION Rep. Martinez moved to introduce RS12851C1 for printing. Rep.
Bauer seconded. By voice vote the motion passed.
RS12797 Rep. Naccarato presented RS 12797, a House Concurrent Resolution.
A couple of weeks ago, there was a “Buy Idaho Day” at the Capitol.
From talking to people that day, he got the idea to show support and build
up Idaho workers in an effort to see Idaho Workers a “living wage.”

Rep. Lake inquired as to the term “living wage?” He asked if this term
has a dollar sign attached, or is that the next step? Rep. Naccarato said
it wouldn’t come from him, and he doesn’t see this coming. Rep. Garrett
pointed out that resolutions are only for “feel good” purposes. They have
“no teeth”. She asked if this is worth $700 or more for printing. Rep.
said he feels it is good for us to stand up as legislators and
say we support Idaho workers. He said the term “living wage” would be
defined at a later date.

MOTION Rep. Ringo moved to introduce R12797 for printing. She expressed
the opinion that beyond “feeling good,” this resolution might affect the
economy in a positive-enough way to off-set the costs. Rep. Lake asked
where “Build Idaho” comes from. Rep. Naccarato said the term is from
him. It is an attempt to promote Idaho. The term isn’t currently being
used elsewhere.

Rep. Martinez said that he has seen other resolutions passed that have a
symbolic meaning. At this time of economic crisis, he feels that this is an
important piece of legislation. People are working so hard at low salaries
without health insurance, and are having to fall back on state help. He
feels this is a “good concept.”

ACTION By voice vote the motion passed.
RS 12861 Rep. Bieter presented RS 12861. He said this RS doesn’t change the
concept in statute, but enhances what is already in Idaho law. This
proposed legislation is to help with better enforcement of a statute already
in existence. This uses the civil, rather than criminal, penalties to aid in
the enforcement of the statute. Rep. Bieter asked for a “print” so the
subject can be discussed. Rep. Lake expressed a strong concern with
the bill’s term “shall require a fine of $5,000.” “Shall” is not in many places
in code, usually the word “may” is used. When Rep. Lake inquired, Rep.
Bieter couldn’t address the number of places in code where “shall” is used
rather than “may.” He said the problem is that there isn’t much
enforcement of the statute this bill is addressing. Rather than jail time,
they want to use economic means. The practice has been to give just a
“slap on the wrist” to violators

Vice Chairman McKague asked what event brought about this RS?
Rep. Bieter, said that jobs which are intended to stay in Idaho are not
being given to those not living in Idaho. Rep. Ringo asked about the
fiscal impact statement. Rep. Bieter said there was a typo. It should
have been “no fiscal impact.” He said there would be no added cost of
enforcement. Additional fines would benefit law enforcement indirectly.
Rep. Ringo asked how this is enforced now. Rep. Bieter said there are
others who are better able to answer, but he would assume it would be an
investigation as a result of a complaint to the Sheriff.

Rep. Lake asked what we are enforcing? Rep. Bieter said we are
enforcing a penalty for not giving preference to Idaho employees on Idaho
public works contracts. With contractors personally, the preference is
given reciprocity depending upon what the contractor’s home state does
in granting preferences to its own citizens.

Rep. Bradford said he lives in a border town with Utah. He expressed
concern that this bill would limit where people can get help. Rep. Bieter
said the law is already in place. This is only for public works, not for
private jobs. This is to help our Idaho workers

MOTION: Rep. Lake moved to return RS12861 to sponsor. He checked the code
on this matter which was first passed in 1939, but no enforcement was
added until 1985. Code allows for special privileges for Idaho workers,
but the law also says you can’t discriminate against servicemen, and with
current federal laws, one couldn’t discriminate on the basis of race or
religion either. He expressed a concern that this would put employers “in
a box.”

Rep. Martinez said he looks at this bill as not a quota issue, but an
attempt to support people living in our state. He understands the
problems of small boarder communities, however, he feels this would help
the majority of the workers in Idaho. He said he thought this RS should
be brought to print.

Rep. Ringo debated against the motion as well. She said she doesn’t
like it that companies may agree to comply with certain guide lines to get
a contract, and then not keep their word.

ACTION By roll call vote the motion passed to return RS 12861 to the
Voting “aye” were Reps. Schaefer, McKague, Lake, Crow,
Bradford, Bauer, and Garrett. Voting “nay” were Reps. Trail, Martinez,
Ringo and Naccarato.

DATE: February 11, 2003
TIME: 1:30
PLACE: Room 416
MEMBERS: Chairman Schaefer, Vice Chairman McKague, Representatives Lake,
Trail, Crow, Bradford, Bauer, Garrett, Martinez, Ringo, Naccarato
GUESTS Jerry Kurz, Kevin Satterlee, Connie Charlton, Pam Carson, Dixie
Hayenga, Troy Kase, Paul Blas, Vicki Patterson, Judi Gregory, Anne
Pasley Stuart, Andrew Hanhardt, Dave Wiedemann, Mary M. Hill, Ann
Dusseau, Kipp Sherry, Judy Shock, Matthew O’Connell, Jarrett A Porter,
Jon Sowers, Doug Roberts, Jon Sandoval, Kathy Osborn, Cynthia Ness,
Rebecca Fry, Rick Thompson, Ann Heilman, Gabe Weske, Tammy
Townsend, Donna Hillard, Bob Oberholzer, Ron Stricklin, Robert McCarl,
Alan Winkle, Diana Jansen, Pat Page, Betsy Johnson, Lynn Steele, R.
Rogers, Tim Tater, Nancy Grimsby, Nick Brizzi, Ken Miracle, Rich G. Karl
Malott, Jeremy Elliott, Kim Stevens, Lynn Darrington, Kim Day, Jeff Olson,
Dedra Williams, Ed Lonsdale, Daisy I., Alicia Tauscher, Benjamin
Earwicker, Dawn Ramirez, Bob Brewer, S. Krejci, Nancy Handzel, and
Anthony Nettles.

The Joint CEC Committees of the Senate and the House met in the Gold Room. Vice
Chair McKague opened the meeting at 1:30.

Keith Johnson, State Controller, presented. His said his job is to manage the State’s
payroll. The payroll process is very technical in nature. They must put monies in the proper
accounts and prepare W2 forms. They want to use technology to improve their work. They
have eliminated the paper processing, forms are now filled out on line. The data is actually
more secure using this system. They are involved in many payroll issues. He is the SS
administrator for the State. Filling out and filing forms electronically is a much better solution.
They feel they can improve benefits, i.e.allow employees to establish health savings accounts, if
the move toward technology is continued. They have also considered retirement options for
employees. The state would pick up a portion of retirees health costs until Medicare kicked in.
He asked for the Committee’s input in establishing these new options. They are saving money
by using on-line time sheets. They have reduced payroll overtime from 300 hours to 50 hours a
year. Employees can access their information on the internet 24 hours a day. With direct
deposits (83% are using this), they do not have to print stubs, and replace lost pay checks. He
asked the Committee’s support on continuing to make his department more efficient.

Ann Heilman, Administrator, Division of Human Resources in the Office of the
Governor, presented. Our nation is in a severe recession. Salaries were frozen in the State in
2002. However, other employees in the private sector received some increase in salary across
the nation. Health care costs have risen, too. The State is facing a 15 million dollar increase in
health care–that amount of money would have given a 3% increase in pay to each State
employee. The State needs to restore a balance and make State jobs market equal. The State
needs to attract the brightest and best.

She mentioned her CEC Report which was given in October. It is also on the web.

The October report called for 1% increase in pay and another 1% contingent on the economy, a
4% increasing for nurses and 2% increase for corrections officers. We have a pure “pay for
performance” system and there are no across-the-board increases. The fiscal outlook is not
good. She supports the Governor’s request to fund the extra health insurance costs. In nursing
care, the turn over is 30%, and nurses are scarce. There is a 19% turn over in correctional
officers, too. Training for both of these areas is expensive. These jobs are 12% behind market
equal. She said we continue to lose highly trained employees to the private sector and other
government agencies. In 1994, the State designed a new pay system–“Pay for Performance.”
It was supposed to match market rates. This system needs consistent funding for revisions in
order to work. The foundation for the State pay rate is the Hay Method, which is in code.
However the Hay Point Factor System has its short-comings. An IT specialists and a financial
analyst rate the same on the scale. However the IT specialist market rate is over 40% higher.

Benefit costs continue to grow faster than salaries. Now employees must wait 90 days
before they are covered. This is not common in high tech jobs. Our benefits package is only
average in the nation.

She is required by code to conduct salary surveys. They used four surveys to compare
the rate. They covered medium to large employers in Idaho, a ten-state area, the Hay group
national system, and 132 major hospitals in the North West. State employee’ pay lags by 11%
in the general sector. Seventeen per cent are paid at, or above the market rates, but IT,
nursing, management, public safety, and engineering are considerably behind the market rate.
It would take 5 to 10 years with a 6 to 7% raise each year to catch up in these areas.

The World at Work predicts that US salary increases will average 4.2% annually in the
next year. Around 85% will receive a base salary increase. Around 36% of the organizations
report difficulty with recruitment and retention, which is down from over 70% last year. The best
companies view employee raises as necessary capital investment, even in difficult times. We
need to decide where we want to be in pay and benefits for our employees. She asked for the
Committee’s support to form an interim committee to study the whole salary system in the State.
There are many issues that need to be considered.

Ms. Heilman said we are in uncertain times; the fear of war looms ahead, and State
employees feel grateful to have jobs. She asked to Committee to provide a sense of hope for
State employees.

Sen. Andreason thanked her for her report. He asked how long would it take to catch
up with the pay scale. Ms. Heilman said 5 to 10 years with 6% raise overall.

Senator Davis asked about the Governor’s letter of January. He read the last
paragraph. He asked if that last paragraph is the entire substance of the Governor’s
recommendation. Ms. Heilman said yes. Sen. Davis then pointed out that the Governor did not
accept Ann’s report. He asked if her report mainly is concerned with salaries and not benefits.
Ms. Heilman said the Governor has said he expects her to approach the compensation
package as a whole. Pam Ahrens covers insurance, and Alan Winkle covers PERSI. She is to
look at the general picture. This request is new and differs from previous years.

Sen. Malepeai asked for an interim committee. He said the state is not meeting its
obligations under the statute for market equity. He asked if she was looking for another system.
Ms. Heilman said she is asking for an interim committee because she feels the whole system
needs to be looked at as a package. A good employee should be able to expect a small
increase every year to catch up with the market rate. We haven’t been able to have raises that
determine between cost of living increases and salary increases. Do we want to set policy at
market rate? (Some companies aim for 90% of market rate.) There is a lot of confusion with
the Hay System. It only addresses internal equity, not equity with the outside.

In response to Senator Noble’s question, Ms. Heilman explained how the State
matches up to the private sectors. She said it depends upon the job. For low-skilled jobs, it
depends upon the low market rate. National data isn’t used much in Idaho as large
metropolitan areas are so much more expensive places to live

Sen. Cameron said the Governor’s letter says he is forwarding his own report. Is this
letter his report, or is there more? Ms. Heilman said the Governor’s letter is his report, along
with his budget. Sen. Cameron commented that the language seemed odd to him. He asked
for the names of the legislators who worked on the adoption of the Hay’s report. Ms. Heilman
said in 1994 there was a vision that she believes was good–to only base raises on
performance. The results of this vision have not been seen. Sen Cameron replied that the
vision not being fulfilled was her opinion, not fact. Some positions have become far out of line
with their point factors. Ms. Heilman said the Legislature had good intentions. Said it is difficult
to carry the vision of Legislature’s intent. She may have overstated the situation. We need an
interim committee to “back up the truck” a little bit. What were those decisions, and what do we
need to do to make things right? She said we need to define the parameters.

Sen. Cameron asked for a comparison of benefits. Ms. Heilman said she did work on
comparing benefits. It is very hard to do as it is a complex area. The age of work force enters
into the mix. She feels the State is about average in benefits. Sen. Cameron asked if the
studies she looked at included benefits. Ms. Heilman said yes.

Sen. Stegner referred to the 8 listed bullet points in her October recommendation. He
asked if all these items were still her recommendation? Ms. Heilman She reviewed her list.
She said the percentages for increase in pay in her recommendation to the Governor held only
if there were the resources to support them. She does not ask for an increase in pay now. The
development of multiple pay schedules would be premature to implement today as there is not
the money. Sen. Stegner asked her to summarize. Of the 8, she is only recommending 5 and
8, “Correct” Ms. Heilman said she is doing her very best to respect that Idaho code requires
this report in October when it is very difficult to predict the economic future. She said she only
wants full funding of the increase in insurance costs for employees now.

Sen. Andreason commented that she said the “refactoring is out of whack.” There was
to be a continuous study. Are there still small groups making studies with the idea of
refactoring? Ms. Heilman said they are using the Hay system to refactor and reclassify all
along. They have also been doing studies with agencies and small groups. They are doing a
fairly decent job of keeping internal equity.

Rep. Martinez commented that Ms. Heilman said State employees lag 11%. If one
looks at Idaho employers only, or western states only, what is the percentage? Ms. Heilman
said that is not the way they conduct the study. She turned the question over to Gabe Weske.
He said they used a blended number, but he could get the data the Representative requests.

Officer Jerry Kurz, representing the Idaho State Troopers and the Idaho State Troopers
Association, spoke. He has worked for ISP for 12 years. He said he realizes there will be no
salary increases or rise in benefits. His group hopes that once the hard economic hard times
are over, the State will make up for what they have lost. He said that ISP staffing levels are the
same as in 1976–260 sworn officers in Idaho. On any one given day there are only 40 officers
on the road at any one time. They are stretched as thin as possible right now. Some state
highways have thin or no troopers covering their area. Additional initiatives, especially meth,
have been added to their work load. ISP the lead agency, and so are required to assist all of
the smaller counties who need help. They help with clean-up expenses for meth labs which
have to be cleaned up as they a danger to the public.

Rep. Trail asked if any federal funding for homeland security would be coming their way.
Officer Kurz said possibility, but he believed most of it is going to the counties who needed it
more than ISP does.

Senator Goedde inquire as to how much it costs to put a trooper on street and what the
turn-over rate is. Officer Kurz said it takes 12 weeks of POST Academy training, advanced
training of 12 to 16 weeks, then 3 month of field training. He said turn-over is a problem and
they are losing troopers on a daily basis. He said Nevada is aggressively recruiting. In the next
3 to 5 years ISP will lose 35 due to retirement. He declined to give a number on the cost of
training. Senator Goedde asked Ms. Heilman if she could give any figures. Ed Strickfaden
said it costs $100,000 to make a state trooper independent. Ms. Heilman said she doesn’t
have the current turn-over rate for troopers. She said they are trying to get some of the troopers
Oregon is letting go because of budget cuts there.

Rep. Lake said in past year ISP has lost 9 troopers. He felt that “losing them daily”
wasn’t accurate. Some left because of career change. Correct? Officer Kurz said yes. The
year before last, they lost some to Spokane.

Sen. Werk asked if there has been cutbacks in training? Officer Kurz said yes, there
have. They are trying to have training in outlying areas as it is less expensive­only one person
has to travel. However, it takes time to change procedures.

Sen. Werk asked if the budget cuts have affected forensic lab work? Officer Kurz said
yes. There have been cutbacks there, too, as well as other areas. There is a slow down on
getting stuff processed at the lab as the lab is shorthanded. It is hard to get stuff back in time
for court, so some people are not being prosecuted.

Senator Davis inquired about the statement that they have the same number of officers
as in 1976? He asked what this number included. Officer Kurz said he was speaking only for
Idaho Police, obviously there have been large increases at the local levels. There is now one
trooper for every 100,000 in population, rather than one trooper for 10,000 which it used to be.

Kevin Satterlee, of Boise State University professional staff, spoke. Enrollment is way
up and they have 1000 more students than at this time last year. The Legislators’ constituents
are attending BSU. The current proposals to save money will impact morale, and employees
will be looking to bail out as soon as the economy turns around. Public service is more than a
profession, it is a calling, and those who chose it do so because they want to impact their world
for good. He could get a job as an attorney elsewhere. However, the cuts make it difficult for
State employees to “love their jobs.”

Connie Charlton, of the Boise State University Association of Classified Employees,
spoke. She works at BSU where jobs have been lost because of budget cuts. She asked that
benefits be maintained at the current level with no increased costs to the employees. They
know they won’t get a raise

Troy Kase, of the Idaho State University Council of Professional Employees
Association, spoke. He wants to see continued support for his school by the Legislature. He
said we need educated people for a strong economy in the State. He read a list of jobs and
wages. The more education, the higher the wage. He wants to see the Governor’s
recommendation implemented so that health costs will not rise. He wants to be involved in
further compensation discussions. There is a suggestion that pay only be delayed two weeks
from the end of the time period, rather than the current four. That might help to increase

Vicki Patterson, Idaho State Employees Association Lobbyist, spoke. She had made a
presentation to each committee several weeks ago, and reviewed her requests and
recommendations from those presentations. She said she supported Senator Andreason’s RS.

Kip Sherry, a Department of Corrections employee, spoke. He is an IT systems
specialists and a native of Idaho. He said he could make 50% more in private industry within
the state. However, he chose to stay in State government. He used a “fractured fairy tale to
show his feelings on the matter.

Andrew Hanhardt a Deputy Trustee of Local SEIU (Service Employees International
Union), spoke. He said he represents many public employees, many of whom work for the
State. It has been hard for public employees to survive in the current economy situation. He
asked for input from the Committee. He said, “We can’t do more with less.” The employees
need help. He asked the State to pay for the employees’ health insurance increase and any
other benefit increases.

Judy Shock, who works for PERSI, spoke representing herself. She said both she and
her husband work for the State. He is a corrections officer. Both have taken part-time jobs in
order to pay for her husband’s medical bills as he is a diabetic. They came to Idaho 5 years
ago to pastor a church. They left the church due to health problems, and have worked in the
public sector. She has retirement concerns.

Matthew O’Connell, who works for Idaho Fish and Game in Cascade, spoke for
himself. His health insurance deductible has doubled in the 8 years he has worked for Fish and
Game. In this time there has not been a true Cost of Living increase. The Federal government
does give COLAs. The 3% raise only goes to outstanding employees, while others get 2% or
2.5%. He got superior ratings only when there was no money for raises. He asked that the
state pay outstanding employees more, but the other the 3% advertised. The salary scale is
slipping compared to the Idaho cost of living. Time and service should count for something. He
suggested staggering the pay raises every other year to reduce costs on the General Fund.

Jarrett A. Porter with the Idaho Transportation Department, spoke. He has worked 17
years and has had only one longevity raise. Their work force is diminishing. The starting wages
for a road worker is a little over $9 an hours, and people can’t live on that. Sometimes they pay
$10 for a new employee with extra skills. However the employees that have been there much
longer and are making only $11 an hours are training the new employees making $10 an hour.
They don’t see the salary and merit increases. He would like to see certified employees benefit
from the salary savings in the Idaho Department of Transportation. He would like to see “Pay
for Performance” broken down into lump sums for ratings, rather than a percentage of pay.

Sen. Goedde asked if the salary savings account of $5 or 6 million go back to
employees. Mr. Porter said it goes back into other Transportation Funds such as asphalt.

Jon Sandoval, Chief of Staff at the Department of Environmental Quality, spoke. He
represents 400 employees. He provided written information and asked that it be review by
Committee Members.

Ron Stricklin, an IT Systems analyst for the Department of Corrections, spoke. Idaho is
doing more with less­the new State Motto. Employees are concerned with benefits and salary.
He said he was not speaking for corrections, but personally. His department lost 37 people,
some of whom have been rehired. They have lost 80 positions overall. The Director says there
is nothing left to cut from the budget. Other agencies are in the same position. He agrees with
Ann Heilman’s recommendations. He wants the agency managers to move savings in other
areas into the salary “bucket.” He hopes the state employees will be rewarded when the
economy does improve.

Robert McCarl, a state employee since 1986, spoke. He is an Associate Professor in
Anthropology. He submitted suggestions through the Service Employees International Union.
To those who teach, these cut-backs mean additional teaching loads and additional hours of
preparation for each hour of class. He is now teaching 12 hours of class a week, which takes
18 hours of preparations, and 6 hours in his office available to students. Also required is 10
hours of research a week which is necessary to advance in his position, and 6 hours of
meetings. Grading papers is extra. This has affected students. There is standing room only in
his classes, and he has less time to help individual students. Teachers have to loan books to
poor students. More faculty are leaving jobs for other places.

Tim Tater, an analyst with DEQ, spoke. He has worked for DEQ for 13 years. He is a
member of SEIU, and supports Andrew’s comments 100%. On the subject of pay, it is
extremely difficult to do their work and in effect be getting less and less every year. What he
does is important­protecting the environment, fighting fires, and protecting people. He works in
DEQ because he wants to serve. He wants to feel the Legislature and the State care about his
service. He says that when the economy improves, people will bail from State work, as they
didn’t get the increases when the economy was good.

Ken Miracle, an HR officer for the Department of Agriculture, spoke. Many state
employees are happy to have jobs, but the erosion on health benefits and wages is taking its
toll. He read resignation letters from employees who have left for better paying jobs. They are
having difficulty replacing these people as they cannot pay enough. (Some left for the Federal
Government where they have received more money.) He asked that the current compensation
system be revised. He needs help to recruit his work force.

Kim Day, of the Idaho Industrial Commission, spoke for himself. He has worked for the
state for 11 years. His wife is a 5th generation Idahoan. Last year she lost her State job. They
lost over half of the family income. She has done whatever work she could find. Finally she got
a State job, but at 80% of her former salary. They have medical expenses. He has started two
internet businesses to try and make ends meet. This creates family tension. They consider
themselves lucky, they had savings, and their children are grown. They weren’t as close to the
edge as some. These are the human problems. In answer to questions, he said his wife,
Susan Day worked at the Department of Health and Welfare in quality control and her section
was closed down.

Jeff Olson, an organizer for the Service Employees International Union, spoke. Most of
their members are State employees. He traveled many miles and spoke with many workers.
State employees haven’t asked for more money, but they are concerned about the costs of their
benefits. He said he has been asked to remind the Committee that Idaho State is the largest
employer in the State and in each county. Many assume there is plenty room to cut. He
disagrees. Idaho’s economy is comprised of many small business, with only a few large
companies. We have a responsibility to remember what the impact of cuts in personnel will be
on the small communities. Taking all this money out of the local economy will have a disastrous

Dedra Williams, representing the 615 Classified Employees at ISU, spoke. She asked
the Committee to support the State’s payment of the insurance increase. She said she loves her
job at the University. Those at ISU support a tax increase, over a reduction in services at ISU.
She asked for support of higher education. She wants the proposed interim committee to
include classified employees, also.

Ed Lonsdale, a teacher at the BSU College of Technology, spoke. He trains the
employees that go to work at Powerball and Micron. When the economy turns down and people
lose their jobs, they go to school to upgrade their skills. This results in a large percentage of
increase in their students. Several teaching positions have gone unfilled. Those teaching full
time find the administration load on their shoulders increasing due to job lay-offs. He has been
teaching at BSU for 13 years. He said the decisions made 2 to 3 years ago are affecting us
now. The decisions made now will affect us in 2 to 5 years. In response to questions, he said
he does have connections with high school students. Working with Tech Prep agreements and
AP classes is part of their charge. It is increasingly difficult to fit this in their crowded work
schedule. In response to how the tuition fee system works, he said tuition fees go into the
General Fund, and then the General Fund distributes the money. However, there is a lag in
their increase in funding by several years.

Dawn Ramirez, of the Idaho Department of Transportation, spoke. She said her
husband has worked for the State of Idaho for 10 years. They had the standard health
insurance for their family of four. Five years ago, she became a State employee. Their monthly
payment went down, but now the State is paying Blue Shield of Idaho an extra $4800 per year
to insure the same four people. She said she appreciated the reduction in premium, but this is
a waste of taxpayer’s money.

Nancy Handzel, an employee of Water Resources, spoke. Her husband also works for
the state, but now he is Kuwait. State employees want and need to feel appreciated. Their
benefits are being systematically eroded. They are allowed two paid hours for doctor’s
appointments. This MDA time can be used for a dental check-up, but not for dental work that
needs to be done. If an employee takes sick leave, they will probably take the rest of the day
off, or they will not seek medical attention. She asked that the MDA be kept as it has been.
She asked for a return to the old standard of MDA.

Anthony Nettles spoke, representing himself. He has worked 15 years for the State
Tax Commission. The Bureau Chief is responsible for collecting delinquent taxes, and has 100
employees. He has a BA degree in accounting and is going for higher certification. He took a
pay cut to come to Idaho, but the benefit package entered into his decision. He needs to
provide for his family and his future. He is looking for employment outside of the State because
of the way employees are treated. The money set aside for CEC has been used for flood
damage and other emergencies in years past. When the economy was good, they did not get a
raise. He cannot put his job ahead of his family’s welfare. He closed with “You get what you
pay for” in regards to the quality of State employees.

Rep. Trail asked about the 21 unfilled positions in the State Tax Commission. Their job
is to find delinquent tax payers. Mr. Nettles said his Division of Audit and Collection, Field
Services Department currently has a 10% vacancy rate. For every $1 spent, they bring in $7.
He and his employees can’t get to the work. His employees are overworked and under
rewarded. It bothers his employees when tax payers get away without paying.

Sen. Andreason asked how many cases he can’t get to. Mr. Nettles said that morning
he had 3000 income tax cases he couldn’t get to. The work is there, but they are not able to get
to it.

Sen. Andreason asked for the value of these cases. Mr. Nettles said the average
dollar value of a case is $2,400. Before the cuts, they would get through their case load in 26

The meeting was adjourned at 4:00 by Vice-Chairman McKague.

DATE: February 17, 2003
TIME: 1:38
PLACE: Room 416
MEMBERS: Vice Chairman McKague, Representatives Lake, Bradford, Bauer,
Martinez, Ringo, Naccarato, Representative Schaefer substituted for
Chairman Schaefer


Representatives Crow, Trail, and Garrett,
GUESTS: Karl Tueller, Eddie Yen, Armando M. Orellana, General Woo-Joo Chang,
Dr. Cao Guoli, Ms. Park
MINUTES Rep. Bradford moved to approve the minutes of February 5 as
printed. By voice vote the motion passed.

Rep. Martinez moved we approve the minutes of February 11 as
printed. By voice vote the motion passed

Karl Tueller, Deputy Director of the Idaho Department of Commerce,
opened the meeting by introducing the four representatives of the
international offices. He said that one-third of Idaho’s agricultural
products are exported, so these offices are important to our economy.
Eddie Yen, Director and Official Representative of the Idaho-Asia
Trade Office, spoke. He represents Taiwan and the Greater China area.
He commented that people all over the world complement him on his
potato tie–from the Idaho Potato Commission. He said it is great for
pubic relations.

Last year there was a large trade mission delegation to Asia led by
Governor Kempthorn. Both large and small companies were represented.
After this mission left, they received a lot of comments and questions. He
mentioned Value Partner World–a project to encourage participation in
Idaho’s agriculture products abroad. The Governor goes to their country
and gives certificates of appreciation to the importers. He is the only
governor who does this.

Idaho tortillas and chips have become a popular item in coffee
shops in Taiwan. Now the trend is spreading to China. He mentioned
two other companies from Idaho who are now selling their products in
Asia. Peaches from Idaho are being shipped to Taiwan. Among other
companies shipping products to Taiwan is Precision Panel. Cabins and
summer homes are becoming popular in Taiwan. Simplot has an offices
in Beijing. He showed brochures printed in Chinese and simplified
Chinese which are used as sales tools. He received a large response on
the mouse pads with Idaho’s outline with pictures from the state and a
Chinese calendar with information. Each committee member was given a
mouse pad.

He closed with the comment that the international market place
belongs to those with the right products who will take the effort to sell their
products abroad.

Armando M. Orellana, Director and Official Representative of the
Idaho-Mexico Trade Office, spoke. Their goal is to promote Idaho’s
products to Mexico, Central, and Latin American. He tries to help Idaho
citizens do businesses in his area. Mexico is the third-largest trading
partner of the U.S. Idaho took a trade mission to Central America, and
he has seen good results from that mission. Central America is one of the
few areas that can receive fresh potatoes from the U.S., and he is working
to expand that market.

He is working on a large order that would double the number of
employees of a company in Idaho that works in the area of software for
power generation.

Idaho bean seed is a profitable business, and he has hopes for
expansion. There is a market for machinery for bean growers that is built
here in Idaho. Also there is a market for Idaho-made potato processing
equipment in Mexico.

The largest bakery in Mexico now makes a bread with Idaho Potatoes.
He is working on developing even better relations. They help recruit
buyers from key Mexican regions to buy Idaho products.

In 2001, the Governor led a trade mission to his part of the world. Our
Idaho Universities have exchange programs with other Universities in his
region. They work with the Farm Bureau to sell bean seed in North
Mexico. They also help collect monies owed by companies in Mexico to
Idaho farmers. There was a special shipment of wheat to a miller in west
Mexico. The miller was so pleased, he has reordered this special, more
expensive wheat.

He is working with a big retailer in Mexico­they compete with
WalMart­to encourage them to buy food and finished products from

General Woo-Joo Chang, Official Representative of the Idaho-Korea
Representative Office, spoke. He helped with the visit of Idaho Kiwanis to
Korea last year. It worked out well. There is a housing boom in Korea,
They are building large apartments–55 story buildings are going up.
They are using some Idaho products. Idaho Potatoes are gaining a larger
market. However there was a problem with patents. They finally worked
it out. The Patent office approved the term “Idaho Grown Potato.” They
have a special program to help students study in Idaho. Since there are
few Korean students in Idaho, they have to learn to speak English. They
like this arrangement. A friend of his imported race horses from Idaho.
He has worked for Idaho for 15 years. He has enjoyed the scenery and
the people of Idaho. Ms. Park will start to work full time for Idaho.

He closed with a mention of the anti-American demonstrations in
South Korea. He said it is not against Americans personally. There is a
long, good relation between the U.S. and South Korea. The
demonstrators wanted more equality with the U.S. He said that South
Korea is grateful for all the U.S. has done for it.

In response to Vice-Chairman McKague question General Chang said he
represents Korea. He initiated talks between South and North Korea in
1971. Now they can go by highway or sea to North Korea. Soon the
railway will connect on the west coast into China they hope. He expects
trade with North Korea and he hopes he will be able to represent us.
Rep. Lake asked Karl Tueller asked about marketing products by the
Department of Agriculture. How do the two agencies work together? Mr.
said they have a close working relationships. The Dept. of
Commerce has the main charge. However the trade office in Mexico is
under the Department of Ag. The two departments meet weekly. Almost
every mission is a dual partnership. The only difference is that the Dept.
of Ag. has access to Federal funds for agricultural areas that Idaho does
not have, so they are able to do things he can’t. The market budget for
the Department of Commerce is very limited.

Mr. Tueller said Mr. Yen and Mr. Orellana are full-time contract
offices to the state. The others are part-time. For very little money, they
do a lot. The two departments have joint staff meetings at least on a
weekly basis. The Agricultural Department has money for international
travel that they do not have.

Rep. Lake commented that with our trading partners, Japan is
first, and Canada is second. He asked about our presence in Japan. Mr.
stated that for a long time we did have representation in Japan.
However, our representative there died two years ago. He did a lot for us
because of his relationship with the U of I. For a small fee they could
maintain a business contact in Japan. Doing business in Japan is very
expensive. With cutbacks, they now occasionally use JETRO (Japanese
External Trade Organization) from Oregon.

Rep. Bradford commented that last year the market for Idaho
table grapes looked hopeful. He asked what happened? Mr. Yen said
there was a shipment last year to Taiwan. However this last year the
yield was down. They got some federal money and are trying to get wine
importers to buy Idaho grapes. They are doing some special programs to
bring importers to Idaho.

Mr. Tueller thanked the Committee for their time. He mentioned this is
one of a series of meetings. These gentlemen do an excellent job for the
State of Idaho.

At the Vice Chairman’s request, the secretary read a proposed letter
to the Speaker regarding the CEC meeting last Tuesday.

Rep. Lake asked if the letter was required. Rep. McKague said she
was told by leadership that a letter was required.

MOTION Rep. Lake moved to send the letter that was read stating that the
Committee took no action on the Governor’s budget request in
regards to CEC, to the Speaker of the House. By voice vote the
motion passed.

DATE: February 25, 2003
TIME: 1:45
PLACE: Room 416
MEMBERS: Chairman Schaefer, Vice Chairman McKague, Representatives Lake,
Trail, Crow, Bradford, Bauer, Garrett, Martinez, Ringo, Naccarato
GUESTS: Dale Peterson, Barbara Dorsey, Leonard Williams, Sue Kerrick, Dawn
Justice, Senator Goedde
MINUTES Rep. Martinez moved to approve the minutes of February 17 as
printed. By voice vote the motion passed.
SB 1026 Senator Goedde presented SB 1026. In 2000, the Legislature
passed a bill changing the multiplier dealing with garnishments from 40 to
30. However, one section of code was missed in the change.
MOTION Rep. Ringo moved to send SB 1026 to the Floor with a Do Pass.
By voice vote the motion passed. Rep. Ringo will carry the bill.
HCR 14 Rep. Naccarato presented HCR 14. The purpose of this bill is to
show support and encourage the hiring of Idaho workers. This bill
endorses the concept of “Buy Idaho” and goes on to “Build Idaho”.
Rep. Crow raised the issue of what the term “living wage” means.
She asked Rep. Naccarato to define this term. Rep Naccarato said there
was no definition in the bill and deferred to later speakers.
Dale Peterson, Executive Director of Buy Idaho, spoke in support of
HCR 14. He was there to speak on behalf of 1000 Idaho businesses.
Buy Idaho is a non profit, not tax-supported group, that with a staff of two,
works to help Idaho’s economy. He thanked the Legislators for their visits
to the various “Buy Idaho” booths in January. He said “Perception is
Reality.” Additional recognition will help increase sales, which will add
jobs, and encourage the Idaho economy. He stated the term “living wage”
referred to the positive natural forces of the American enterprise system.
More sales means more jobs and more tax revenue.

In response to questions, he said his superior was the Buy Idaho
Board comprised of 19 people from across the state. Members pay dues.
It also cost $50 to have a business display at the Capitol in January. The
term “Build Idaho” is also on their poster down stairs in the display case.
They feel this bill would be an encouragement to Buy Idaho.

Leonard Williams, a journeyman wireman, spoke in favor of the bill.
He said he felt this bill is in the best interest of Idaho. It will help working
families. It will help smaller businesses get started. This bill will
generate more money for education and other services.

In response to questions, Mr. Williams said a Boise “living wage” is
$11 to $12 an hour, but many places are only paying $6 an hour. This
requires people to work a second or part-time job which cuts into family
time. He feels this bill will help this situation.

In response to questions, Mr. Williams said jobs were lost in Eastern
Idaho with the malt plant. He did not think this would hurt the hiring of
specialists from out-of-state. He said he hoped his daughter would be
able to afford to live in Idaho when she graduated from college. He said
employers have a responsibility to pay “living wages” to their employees.

In response to a question if this is the promotion of a union, or just an
effort to keep people in Idaho, Mr. Peterson said he saw the bill as a
move on behalf of the Committee to give recognition and to encourage
the support of our Idaho businesses. This is not legislation dealing with
wages. When asked, he said that he did not have anything to do with the
writing of the bill and would be comfortable with the removal of the term
“living wage.”
Dawn Justice, of IACI (Idaho Association of Commerce and Industry)
spoke in opposition to the bill because of the term “living wage.” She said
this term has a conceptual meaning across the country. In fact cities and
counties have passed “living wage” laws. The formula to determine what
amount this is has varied. “Living wage” has a common, understandable
meaning. When questioned, she asked that the phrase be deleted. “Buy
Idaho” has no such language.
Rep. Naccarato spoke in support of his bill as written. He said there
is no definition of “living wage”. It would be determined by those trying to
sell their products in Idaho.
MOTION: Representative Crow moved to send HCR 14 to the floor with
amendments attached deleting the terms “living wage.” The SOP is
to be changed to reflect this change in the bill.
Rep. Naccarato said he opposed the amendments.

Rep. Martinez also opposed the amendments. He said this bill just
supports Idaho workers. He said he thought the term means $10 to
$10.50 an hour. But this bill doesn’t set any dollar amount. He said he
didn’t understand the fright in those words.

Rep. Crow said if this is a wage setting issue, it should say so. It
looks as if we are dealing with two different issues. She called for a vote.

Rep. Lake offered a substitute motion to hold HCR 14 in Committee.
In a roll call vote, Reps. McKague, Lake, Crow, Bradford, Bauer, and
Garrett voted Aye, and Reps. Schaefer, Trail, Martinez, Ringo and
Naccarato voted Nay. HCR 14 will be held in Committee.

DATE: March 3, 2003
TIME: 2:15
PLACE: Room 416
MEMBERS: Chairman Schaefer, Vice Chairman McKague, Representatives Lake,
Trail, Crow, Bradford, Bauer, Garrett, Martinez, Ringo, Naccarato
GUESTS: See attached list
MINUTES Rep. Crow moved to approve the minutes as written. The motion
passed by voice vote.
HB 316 Rep. Lake presented HB 316. He said this legislation requires
contributors to make donations to political funds directly, not by payroll
deduction. This law is modeled on legislation in Utah and Michigan. The
purpose of this law is to bring uniformity to labor unions in the way they
collect money for political purposes. He went through the definitions in
the bill. This bill does not change the collection of union dues by payroll

This bill does specify that a separate, segregated fund must be
established which is only used for political purposes. Contributions are
voluntary. Employees must be informed about the purposes in general
terms. Employees must also be informed that they have the right not to
participate. (This is already in code.) Labor organizations may use dues
to communicate directly with their membership.

On Page 3, it states that it is unlawful to provide any form of
compensation to those who do participate in giving to a political action
committee or fund. There is nothing to prevent the employee from making

Senator Davis spoke in favor of the bill. He said this bill is a joint
leadership project of both the House and Senate. They believe it is
worthy of consideration. This legislation has been tested judicially and
legislatively in different parts of the country. This bill has the parts of the
Utah Legislation that were upheld by the Utah Supreme Court. This bill
allows deductions for union dues, but it protects the free-speech rights for
those in the union who might not agree with the stand of the union.
Kristy Reed Johnson, of Post Falls, spoke against HB 316. She was
a member of the flight attendant’s union for 33 years. It was convenient
for her dues to be deducted automatically. She said that it is now
possible to not have deducted the political part of your dues if you
disagree with the union’s stand. She said she did do that, and it got the
union’s attention very quickly. She felt this bill might have a negative
effect on how United Way receives contributions from deductions,
because some of the groups who receive United Way funds have political
overtones. She mentioned the Boy Scouts of America.
Jerry Helgeson, President of the Meridian Education Association,
spoke against HB 316. He said he was Idaho’s teacher of the year a few
years ago. He said he has spoken on the local, state, and national levels.
He said Legislators ask for input, and he was giving his. He claimed this
bill is an affront to the teachers of Idaho.
Dennis Doan, President of the Professional Fire Fighters of Idaho,
and a Boise fire fighter, spoke against HB 316. He asked where the
problem was. He said the Secretary of State has received no complaints
concerning this issue. This is a Right-to-work state, and membership is
voluntary. A 1996 law says a person must check off if they want to
contribute to the political action committee. He said segregated accounts
already exist. He asked why the Legislature is stopping at teachers and
fire fighters. He complained that this bill says they cannot reimburse
lobbyist for their expenses. He claimed that this bill makes fire fighters
criminals if they are involved in the political process. He also complained
about the Idaho Associations of Cities, and Counties, which use tax
money to lobby in the Legislature. He also mentioned the Farm
Bureau­you must be a member to buy their insurance. He predicted the
bill will be appealed and will cost the State a lot of money. He closed with
the claim that there is no problem, and we don’t need this.

When questioned by a Representative, he said he couldn’t explain
exactly if fire fighters are paying for political activities through their dues,
but said he was testifying against the bill. He claimed that this bill
wouldn’t allow teachers or fire fighters to testify about political issues.

In answer to questioning, he claimed that the PFF of ID endorses
candidates almost half and half of each major party.

Andrew Hanhardt, Deputy Trustee of the Service Employees
International Union, spoke against HB 316. He said the bill has the goal
to silence the voice of the workers. Workers of Idaho have the freedom to
decide who will work for them. There is no compulsion. As it is now,
members can drop their membership, or work to change the union.
Jeff Olson, Organizer for the Service Employees International Union,
spoke against HB 316. He said this bill comes to us from Utah at great
public cost. The American way allows people to join any organizations
they want, and spend their money in any way they want. He claimed this
bill tells people they cannot speak. He claimed this bill assures that
retaliation at the work site will continue. State workers will not be allowed
to offer suggestions to the Legislature to improve State efficiency.
Tim Teater, a member of SEIU representing himself, spoke against
HB 316. He said this legislation has no purpose except to attack
Idahoans and their right to express themselves. He can express himself
in meetings. He got carried away after that and had to apologize for those
remarks. He then said stockholders in corporations should be able to opt
out of the money spent by the corporations on lobbying. He said it is
“very very nasty anti-worker, anti-labor legislation”, and he will remember
who supported this, as will his friends.
Fred Riggers, a former volunteer firemen for 30 years, spoke on HB 316.
He said he helped organize the Nez Perce Rural Fire District. The County
Commissioners put a $.25 an acre tax to support the District. The taxes
were more than off-set by the savings in insurance. He also helped
organize an ambulance district under similar circumstances. He
suggested if this bill passed, “they couldn’t have fire districts and
ambulance districts.” He said he was poorly informed, but would like to
see this bill defeated.
Dave Whaley, representing the Idaho AFL-CIO, spoke against HB
316. He said it has far-reaching effects on what labor organizations, as
defined in the law, are allowed to do. This restricts the voice of workers in
Idaho. The issue is voluntary contributions. There is no AFL/CIO union
that doesn’t require signatures for political activities. He claimed it would
restrict donations to United Way. He said dues are voluntary in this state
and employees are allowed to restrict funds from political activities. He
said the AFL/CIO has never had a problem in this area.

During questions, Mr. Whaley said Voluntary contributions must be
signed for on a separate card. This bill would restricts their members.
Any attempt to restrict any voice is a restriction on them. Where does this
stop? Who is next? Their constitution says they only support those who
support workers, they have no other political cause.

Kathy Phelan, President of the Idaho Education Association, spoke in
opposition to the bill. She said it is their perception that this bill is aimed
at public employees with political action sections. It targets fire fighters
and teachers. She said this bill is to silence dissent. They don’t use
trickery. Membership is voluntary, and so is the money contributed to
their political action committee. Members pay $16 a year. She said they
are allowed to deduct money for charitable causes and savings, why not
for political purposes. This bill would prohibit the money they spent to
bring teachers to the Legislature to speak. She asked why the
Legislature wanted to make criminals out of teachers who want to speak.
She closed with “HB 316 is an act of tyranny…”

During questioning, she said that they pay for a teacher’s substitute
and give them travel money when they come to Boise to speak. She said
those expenses are paid from dues as is her salary and she was there as
a lobbyist. She asked what was the problem with that.

Karl Malott, representing the Professional Fire Fighters of Idaho, and
a Legislative Advisor for the Idaho Fire Fighters, spoke against HB 316.
He said it would be difficult for the fire fighters if this bill was passed as
they are spread out all over the State. Talking to each one, and collecting
money for a political action committee would be almost impossible.

He referred to the book of comments each member received. He said
there are still problems with the Utah law and currently their legislature is
trying to fix them. He said we don’t live in Utah. He said violations for
non-compliance are stricter than under the “sunshine laws.” Those have
civil penalties, this bill makes it a misdemeanor with possible jail
penalties. He pointed out a discrepancy in the bill’s wording. He said he
disagreed with what this bill does. He thinks it is bad policy. He is sure it
will be tested in court and sections will be declared unconstitutional.

Under questioning he said there have been no complaints and he has
no idea why this bill is being brought at this time.

Darrel Deide, from the Governor’s Office spoke in support of HB 316.
He said the SOP (Statement of Purpose) explains this bill. The
Governor’s office has worked as this bill was developed and finalized and
supports it in its present form. This is a leadership bill and has the
approval of the House and the Senate. He said labor organizations serve
a meaningful and important purpose common to all employees in the area
of wages, benefits, and working conditions. The dues that support that
common agenda of the employees is not being affected or changed.
However, in the political agenda, the wishes of the members are not all
the same. HB 316 gives all employees the right to make their political
contributions as they wish in the amount they wish.

When asked what the problem was, Mr. Deide said the problem is that
the current situation is reactive, rather than proactive. It is one of
omission rather than commission. He said he had not received any
correspondence on this issue. He said this is a matter of local control
being carried one step further to individual control. He said he couldn’t
cite a particular catalyst for this bill. There is a general consensus that all
people should make political contributions as a separate act on their part,
or refrain from making any at all.

In response to further questions he said this bill does not limit lobbying,
or door-to-door campaigning, but the money for this can’t come from

The question was raised as to how many union members feel too
intimidated to come here and represent themselves to the Committee.
MOTION Rep. Naccarato moved to hold HB 316 in Committee. He asked for
a roll call vote.
Rep. Crow moved to sent HB 316 to the floor with amendments.
Add “orally, or” Page 3, lines 3 & 5 before “in writing.”
commented the full House should hear this bill.
Both Reps. Naccarato and Martinez spoke in opposition to the
substitute motion. Rep. Martinez said workers in Idaho already have the
option to support political action committees if they wish. Only leadership
sees there is a problem. Ultimately he feels this bill will silence debate. It
will make people more cynical about being part of the process.

Rep. Lake said he sees the bill as an empowering people to contribute
how they want to and when they want do.

Rep. Ringo said the bill is perplexing to her. It is supported by
leadership, but no one has been able to identify a problem to her
satisfaction. She said it will make it more difficult for labor unions to
collect money for political action committees and will affect how well those
committees will be able to carry out their programs.

ACTION By roll call vote, the substitute motion to send HB 316 to the General
Orders to correct the omissions passed 7 to 4.

DATE: March 13, 2003
TIME: 3:37
PLACE: Room 416
MEMBERS: Chairman Schaefer, Vice Chairman McKague, Representatives Lake,
Trail, Bradford, Bauer, Garrett, Martinez, Ringo, Naccarato


Representative Crow
GUESTS: Rick Schultz, Vicki Patterson, Ann Heilman, Rayloa Jacobsen
MINUTES Rep. Bradford moved to accept the minutes for March 3 as
By voice vote the motion passed with Reps. Ringo,
Martinez, and Naccarato voting nay.
SB 1130 Senator Sorenson presented SB 1120. This bill would provide for
bonuses for state employees of up to $1000 for suggestions or ideas that
actually cause savings for the state. This would apply to classified and
non classified employees. She said this has been tried in other states
and has proven to be very effective.

Ann Heilman, of the Department of Administration, spoke. She
believes this is a great idea and will serve as a spark for state
employees. Her agency will be given the task of rule making, which the
Committee will then approve next session. Some states allow
employees to gain a percentage of the savings and have saved a quarter
of a million in the process. There will have to be a process of fairness
and a mathematical analysis of the actual savings.

In questioning, she said there is a problem in that a program like this
can become too cumbersome. They are doing research on the internet.
The State did have a program a few years ago, but it took a formalized
board, and suggestions stopped coming in. She believes this program
will be administered by both the agency and the Department of
Administration. The only place the money could come from now is the
agency personnel budget, but they will be doing research to see if it
could come from operations.

MOTION Rep. Garrett moved to send SB 1130 to the floor with a do pass. By
voice vote the motion passed.
Rep. Garrett will carry the bill.
SB 1120 Richard Schultz, Director of Health & Welfare, presented SB 1120.
This bill repeals a section of code established in 1913 and revised in
1974 when Health & Welfare was created. This statute hasn’t been
enforced since 1978 when the Board of Occupational Licenses was
established. They have taken over much of the responsibilities. Only
public bathrooms are not inspected, but since we now have running
water, the chance for the spread of disease is much less.
MOTION: Rep. Martinez moved to send SB 1120 to the floor with a do
In answer to questions, Mr. Schultz said there have been no
bathroom inspections since 1978. There may have been inspections by
counties and cities, but not by the state.
By voice vote the motion passed. Rep. Martinez will carry the bill.
Rayola Jacobsen, Bureau Chief of the Department of Occupational
Licenses, spoke. She said her department inspects barber shops, bath
houses, and hair dressing establishments. She always wanted to repeal
legislation, and this was the golden opportunity to do that.