Legislature(1997 - 1998)

01/30/1997 01:37 PM House FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
  HOUSE BILL NO. 2                                                             
                                                                               
       "An Act allowing,  for the  purposes of permanent  fund                 
       dividend eligibility,  an individual  to accompany,  as                 
       the  spouse  or minor  or  disabled dependent,  another                 
       eligible  resident  who  is  absent   for  any  of  the                 
       following reasons:  vocational,  professional, or other                 
       specific  education for which  a comparable  program is                 
       not  reasonably available  in the  state; secondary  or                 
       postsecondary  education;  military   service;  medical                 
       treatment;  service  in the  Congress  or in  the peace                 
       corps;  to  care for  the  individual's terminally  ill                 
       parent, spouse, sibling, child, or stepchild; for up to                 
       220  days  to  settle the  estate  of  the individual's                 
       deceased parent, spouse,  sibling, child, or stepchild;                 
       to  care  for  a  parent,  spouse, sibling,  child,  or                 
                                                                               
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       stepchild  with  a  critical  life-threatening  illness                 
       whose  treatment plan, as  recommended by the attending                 
       physician,  requires travel  outside of  the state  for                 
       treatment  at a  medical  specialty complex;  or  other                 
       reasons that the commissioner  of revenue may establish                 
       by regulation; requiring, for the purposes of permanent                 
       fund dividend eligibility, a state resident to have the                 
       intent  to   remain  indefinitely;   relating  to   the                 
       eligibility for 1992, 1993, 1994,  1995, 1996, and 1997                 
       permanent  fund  dividends   of  certain  spouses   and                 
       dependents of eligible applicants; and providing for an                 
       effective date."                                                        
                                                                               
  Representative Davies MOVED  to adopt  Amendment 1 (copy  on                 
  file).    He  explained  that  the  amendment  would  change                 
  "indefinitely"   to   "permanently".     He   observed  that                 
  "permanently" is in  current statutes.   He maintained  that                 
  the  meaning  of  "indefinite"  as  defined by  Black's  Law                 
  Dictionary, has the  connotation of temporary.   He stressed                 
  that "permanent" has  the connotation of lasting  for a long                 
  time.  He pointed out  that the original legislative  intent                 
  was to provide dividends based  on an individual's longevity                 
  in the State of Alaska.                                                      
                                                                               
  Representative  Martin  spoke  against  the  amendment.   He                 
  maintained that  "permanent" is  too limiting.   He  alleged                 
  that it is almost unconstitutional  to require that, because                 
  the  State of  Alaska  is going  to give  a  person a  gift,                 
  residents   must  guarantee   that  they   want   to  remain                 
  permanently in Alaska.   He  pointed out that  circumstances                 
  change.  Job  opportunity, marriage or military  service can                 
  cause a change in residency.                                                 
                                                                               
  Representative  Mulder spoke in opposition to the amendment.                 
  He acknowledged the  emotional appeal of using  "permanent".                 
  He  stated that he  would like to  say that the  dividend is                 
  only going  to be paid to "real Alaskans," that are going to                 
  be here  forever.  He  emphasized that times  and conditions                 
  change and unforeseen things  can happen in the future.   He                 
  maintained that the  Division has been very  stringent about                 
  who should and should not receive the dividend.                              
                                                                               
  Representative Kott maintained  that "indefinitely" has  the                 
  connotation  of not  having  the intention  of leaving.   He                 
  pointed  out  that   the  Division  requested  the   use  of                 
  "indefinitely".                                                              
                                                                               
  NANCI  JONES,  DIRECTOR,  PERMANENT FUND  DIVIDEND  DIVISION                 
  stated that the change to  "indefinitely" is consistent with                 
  the Division's  philosophy that a  person cannot be  held in                 
  Alaska forever.  She noted  that at the time a person  signs                 
  their dividend they pledge their intent  to remain in Alaska                 
                                                                               
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  between January and March 31st of  the year.  She questioned                 
  if a person decides to change residency or seek  a change of                 
  residency  after  March  31st,   should  they  recall  their                 
  application.   She  maintained  that "permanently"  does not                 
  exist.  She pointed out that  guidelines still apply for the                 
  year and a day of required residency.                                        
                                                                               
  Co-Chair  Hanley   quoted  from   Black's  Law   Dictionary,                 
  "indefinite  contemplates  that  condition  will  end at  an                 
  unpredictable time, whereas  permanent does not  contemplate                 
  that condition  will cease  to exist."   He  asked how  many                 
  appeals the  Division  would deny  or  accept based  on  the                 
  change.                                                                      
                                                                               
  Ms. Jones stated  that the Division would  allow more people                 
  under the change to "indefinitely".  She stressed that there                 
  would be less appeals.  She maintained that "permanently" is                 
  more restrictive than  the actual  statute that governs  the                 
  definition of a state resident.                                              
                                                                               
  Representative   Grussendorf  spoke   in   support  of   the                 
  amendment.    He stressed  that  a seasonal  worker  is here                 
  indefinitely, based on the length of the season or job.                      
                                                                               
  Co-Chair Therriault asked  if there  is a compelling  reason                 
  for the use of "indefinitely".                                               
                                                                               
  Ms. Jones  stressed that  guidelines require  that a  person                 
  have  residency ties  such  as  checking  accounts,  voter's                 
  registration, or children in school.   She pointed out  that                 
  the  area  of dispute  comes  after the  individual  has met                 
  residency obligations for a period of time and things beyond                 
  their control result in a change in residency.  The Division                 
  then reassess  their application  based on  their intent  to                 
  stay at  the time the  application was filed.   She spoke in                 
  support of "indefinitely".   She maintained that there  is a                 
  difference in substance versus form.                                         
                                                                               
  Representative  Martin  observed  that  statutes  require  a                 
  person to   establish residency by being  physically present                 
  in the State with the intent to make a home.                                 
                                                                               
  In response to a question by  Co-Chair Therriault, Ms. Jones                 
  noted that the Division receives calls  regarding applicants                 
  that have moved or intend to move out of state.  If a person                 
  leaves  the  State  after their  application  is  filed, but                 
  before the distribution of the dividend, their dividend will                 
  be denied.  These  cases are appealed based on  the argument                 
  that at the  time of  the application the  applicant had  no                 
  intention  of  leaving  the  State  and  met  the  residency                 
  requirements.                                                                
                                                                               
                                                                               
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  Co-Chair Hanley summarized that the  individual that has met                 
  the residency  requirements  during the  previous  year  but                 
  moves after the application period would be denied under the                 
  definition of "permanently" but not under "indefinitely".                    
                                                                               
  Representative   Davies  noted  that  "intend"  is  used  in                 
  statutes referring to the Permanent  Fund Dividend and basic                 
  residency requirements.   He  argued that  the key  question                 
  hinges on, at  the time the  application was filed, did  the                 
  applicant intend  to  remain  a resident  of  the  State  of                 
  Alaska.    He  pointed out  that  the  applicant  must be  a                 
  resident at the  time of  the application and  that being  a                 
  resident includes the  intent to make  a home in the  State.                 
  He maintained  that it is appropriate for the Permanent Fund                 
  Dividend Statute to  have additional or different  tests for                 
  residency.  He maintained  that the question is  whether the                 
  applicant's actions were consistent with a genuine intent to                 
  remain in Alaska.                                                            
                                                                               
  Representative  Martin reiterated  that  "permanent" is  too                 
  restrictive.    He  stressed  that   citizens  are  free  to                 
  participate in the nation.                                                   
                                                                               
  Representative Davis spoke in support  of the amendment.  He                 
  pointed  out that  the  Permanent Fund  Dividend Application                 
  questions if applicants "intend to remain an Alaska resident                 
  permanently".                                                                
                                                                               
  Representative Martin questioned if long term residents that                 
  may want to return to their birth place in their later years                 
  should be required to refund dividends received during their                 
  residency.                                                                   
                                                                               
  Representative Kott stressed  that "permanently" is  used in                 
  the application  because it is  part of the  law.   He noted                 
  that "indefinitely"  was used  on applications  from 1992  -                 
  1995.  "Indefinitely" was changed in 1996 to "permanently".                  
                                                                               
  Representative   Davies   emphasized  that   an  applicant's                 
  activities during the  period they certify that  they intend                 
  to  remain  determine eligibility.    He maintained  that if                 
  their  actions,  at  that time,  are  inconsistent  with the                 
  certification they should be denied.                                         
                                                                               
  A roll call vote was taken on  the MOTION to adopt Amendment                 
  1.                                                                           
                                                                               
  IN FAVOR: Davies, Davis, Grussendorf, Hanley, Therriault                     
  OPPOSED:  Foster, Kelly, Kohring, Martin, Moses, Mulder                      
                                                                               
  The MOTION FAILED (5-6).                                                     
                                                                               
                                                                               
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  Co-Chair  Therriault  MOVED to  adopt  Amendment 2  (copy on                 
  file).  He noted that  the Committee discussed narrowing the                 
  scope  of  persons  that  can  make  applications  for  past                 
  dividends, to those that actually filled out applications on                 
  a yearly  basis.   Amendment 2  would  limit eligibility  to                 
  applicants that  applied for  the prior  year dividend.   He                 
  pointed  out  that   applicants,  who   were  absent   while                 
  accompanying an eligible Alaska resident, were notified that                 
  they should apply for a dividend.                                            
                                                                               
  In  response  to a  question  by Representative  Davies, Ms.                 
  Jones  noted that  applicants  were  allowed absences  while                 
  accompanying an eligible spouse from 1992  - 1995.  In 1995,                 
  applicants were denied for absences while accompanying their                 
  eligible  spouse.   A  separate  letter  was sent  to  these                 
  applicants which encouraged  them to  file.   The were  also                 
  directed to file  on the  1996 and 1997  applications.   She                 
  added that another letter  was sent after HB 4  was defeated                 
  encouraging  them to  keep applying.   The  court  case that                 
  disallowed the absence  was December  16, 1993.   Applicants                 
  whose applications  were under  review or  appeal for  other                 
  reasons were affected by the court case.  Only 25 applicants                 
  were not paid their 1992 dividend due to the court case.  In                 
  1993, while the actual court  case was pending, the majority                 
  of those that applied were paid.  The first year that all of                 
  these applicants were denied was 1994.  She noted that there                 
  has  always  been  an  indicator   on  the  application  for                 
  applicants that were  absent while accompanying an  eligible                 
  Alaska resident.                                                             
                                                                               
  Representative Kott  reiterated that 25 applicants  were not                 
  paid  their  1992  dividend  while  absent  accompanying  an                 
  eligible spouse.   Their applications were under  appeal for                 
  reasons other  than  their  absence  while  accompanying  an                 
  eligible Alaska resident.  The  Department of Law determined                 
  that they would not try to  collect from those that received                 
  dividends in  1992  while accompanying  an eligible  Alaskan                 
  resident.    He  added  that  there  were  1,052  applicants                 
  affected by the  court decision in  1993, 1,900 in 1994  and                 
  1,400 in 1995.                                                               
                                                                               
  Representative  Davies provided  members  with a  memorandum                 
  from Tamara Cook, Director, Legislative Legal Services (copy                 
  on  file).   She  concluded that  allowing eligibility  of a                 
  resident  for  a prior  year  dividend,  that  they did  not                 
  previously  apply  for, may  result  in an  equal protection                 
  challenge.    Representative  Davies pointed  out  that  the                 
  number of persons affected is relatively small.   He pointed                 
  out  that  the State  could be  open  to an  expensive court                 
  challenge on behalf of a small number of people.                             
                                                                               
  (Tape Change, HFC 97-15, Side 2)                                             
                                                                               
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  Co-Chair Therriault WITHDREW Amendment 1.                                    
                                                                               
  Co-Chair Hanley  referred to subsection (2) on  page 4, line                 
  29.    He  noted  that  applicants  that  are  retroactively                 
  eligible for  a 1992 -1997  dividend would be  disallowed if                 
  they are not eligible for the 1998 dividend.                                 
                                                                               
  Co-Chair Therriault noted  that Ms. Cook could not  recall a                 
  time when past eligibility was based on present eligibility.                 
                                                                               
                                                                               
  Representative Davies spoke  in support  of the deletion  of                 
  subsection (2) on page 4, line 29.                                           
                                                                               
  Co-Chair Hanley MOVED to  delete subsection (2) on  line 29,                 
  page  4,  and  renumber accordingly.    Co-Chair  Therriault                 
  pointed out that subsection (3) is  needed to provide a stop                 
  date.  There being NO OBJECTION, it was so ordered.                          
                                                                               
  Representative Davies noted  the intent that no  interest be                 
  paid on the accrual.                                                         
                                                                               
  NICOLE  POIRRIER,  STAFF,  REPRESENTATIVE  KOTT  noted  that                 
  according to Ms. Cook, the  Permanent Fund Dividend Division                 
  has no  statutory authority  to pay  interest on  dividends.                 
  She  noted  that   interest  was   not  paid  on   dividends                 
  retroactively  paid to  18 year  olds for  years  that their                 
  parents did  not file  on their  behalf.   In addition,  the                 
  State takes  the position that this is not  a valid debt.  A                 
  new right is being created for these individuals.                            
                                                                               
  Representative Mulder  MOVED to report  CSHB 2 (FIN)  out of                 
  Committee  with  individual  recommendations  and  with  the                 
  accompanying fiscal note.  There being NO OBJECTION,  it was                 
  so ordered.                                                                  
                                                                               
  CSHB 2 (FIN) was  reported out of Committee with a "do pass"                 
  recommendation  and  with  a  fiscal   impact  note  by  the                 
  Department of Revenue.                                                       

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