The Alaska House Finance Committee has approved a bill that would eliminate most state employees’ merit raises until oil prices rise, but Juneau legislators say they don’t expect the measure to advance much further.
“It does seem that it would have a hard time passing the House,” said Juneau Democratic Rep. Sam Kito III, who predicted a “big floor fight” if House Bill 379 advances to a vote of the full House.
“I agree with that,” said Rep. Cathy Muñoz, R-Juneau, when asked about Kito’s prediction.
Kito, Muñoz and Sen. Dennis Egan, D-Juneau, all said they oppose the House Rules Committee’s proposal, which advanced from the finance committee in a 6-5 vote Saturday. Muñoz was among the ‘no’ votes.
As passed by the committee, the bill calls for basing state employees’ annual 3.25 percent raises on the price of oil. Those raises are called merit increases, but according to figures presented to the House Finance Committee, only 5 percent of state employees fail to receive them.
The bill does not address the annual cost-of-living increase typically negotiated in union contracts, and it does not address step increases due to promotions or transitions. (Several union contracts awaiting ratification contain no cost-of living increases to aid the state as it grapples with a $4 billion annual deficit.)
According to the text of the legislation, the state would provide no merit increases until oil prices average at least $60 per barrel for a full year.
Workers would receive a fraction of the annual 3.25 percent increase if oil prices are between $60 per barrel and $90 per barrel. Only if oil averages more than $90 per barrel would employees see a full 3.25 percent increase.
According to analyses presented to the House Finance Committee, HB 379 could save the state $30 million per year.
The measure does not apply to already-signed union contracts, and it will not apply to contracts in negotiation, but all future contracts will be required to abide by the revised merit scale.
“This bill offers more stability for those folks that are working,” said Rep. Charisse Millett, R-Anchorage and the House Majority leader. “It means less layoffs. It means less cuts to departments. It means more money in the budget to keep people employed.”
Muñoz wasn’t swayed by the argument that paying people less means the state can keep more employees.
“One of the problems with that bill is that it takes away the ability to recognize merit,” she said.
It means taking from the deserving and undeserving alike, she explained.
The bill also lacks equity, she said. Some state workers will be immediately affected; others will lose their merit increases in a few years.
“To me, that just seems inherently unfair,” she said.
She added that re-examining the merit pay system would be worthwhile as part of longer-term study.
“I agree that everybody has to take some kind of hit,” Egan said, “but you don’t screw with something that’s been negotiated without tackling oil tax credits … or something that will bring some kind of new revenue to the state.”
