1999-01-21                     Senate Journal                      Page 0054
SB 40                                                                        
SENATE BILL NO. 40 BY THE SENATE RULES COMMITTEE                               
BY REQUEST OF THE GOVERNOR, entitled:                                          
                                                                               
An Act relating to eligibility for the longevity                              
bonus; and providing for an effective date.                                    
                                                                               
was read the first time and referred to the State Affairs, Health,             
Education and Social Services, Judiciary and Finance Committees.               
                                                                               
Fiscal notes published today from Department of Administration,                
Department of Health and Social Services. Zero fiscal note published           
today from Department of Health and Social Services.                           
                                                                               
Governors transmittal letter dated January 20:                                 
                                                                               
Dear President Pearce:                                                         
                                                                               
As part of my Administration's effort to reduce state spending and             
address our budget gap, I am reintroducing a bill that would set               
income limits on eligibility for the longevity bonus.  These limits            
would be set so that only those senior citizens in upper income                
brackets who least rely on the bonus would no longer be eligible for           
the program.  I asked the Twentieth Alaska Legislature to consider             
this proposal, and still believe it is a responsible approach to our           
need to cut state spending.                                                    

1999-01-21                     Senate Journal                      Page 0055
SB 40                                                                        
This bill would limit the longevity bonus to those senior citizens             
with gross incomes of less than $60,000 a year or, for married                 
seniors, a combined annual gross income of $80,000.                            
                                                                               
Although the 1993 amendments to the bonus statutes closed the                  
program to any new applicants as of January 1, 1997, the savings               
over the next few years produced by this change are relatively small.          
By contrast, the plan presented in this bill would reduce program              
costs by about eight percent annually, equating to some $4.6 million           
in FY00.  Another $1.6 million would be saved annually in                      
accompanying "hold harmless" provisions of the Adult Public                    
Assistance budget because the federal government will not count the            
longevity bonus against public assistance payments if the bonus                
carries an income restriction -- such as that contained in this bill.          
                                                                               
This proposal does not "needs base" the bonus program, which some              
seniors oppose believing that equates to welfare.  Approximately               
ninety-two percent of seniors currently on the program, or more than           
20,000 people, would see no change in their bonuses.  The relatively           
high income level of $60,000 means the bonus would not be limited              
to just those seniors with lower incomes, but would continue to                
recognize the contributions of our Alaska seniors.                             
                                                                               
This bill considers only income, not assets, so recipients with                
moderate incomes would continue to receive the bonus even if they              
own valuable but non-liquid assets, such as homestead property or              
a residence that has greatly increased in value over the years.  Also,         
a senior made ineligible for the bonus by this law would be                    
reinstated to the program if his or her income later dropped below             
the cutoff levels.                                                             
                                                                               
This proposal is a logical approach to trimming our budget gap                 
without terminating essential programs and services to our residents.          
I urge your consideration of this measure.                                     
                                                                               
					Sincerely,                                                                
					/s/                                                                       
					Tony Knowles                                                              
					Governor