Legislature(2005 - 2006)HOUSE FINANCE 519
02/08/2006 01:30 PM House FINANCE
| Audio | Topic |
|---|---|
| Start | |
| HB273 | |
| HB245 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 12 | TELECONFERENCED | |
| + | HB 273 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | HB 245 | TELECONFERENCED | |
HOUSE BILL NO. 273
"An Act relating to the dividends of individuals
claiming allowable absences; and providing for an
effective date."
Representative Weyhrauch, sponsor, explained that currently
every Alaskan who is a resident of the state is qualified to
receive a Permanent Fund Dividend (PFD). Under certain
circumstances, physical presence in the state can be waived
and a resident can still receive a PFD. HB 273 would make
sure that a person who qualifies for a dividend is an
Alaskan resident, and upon return to the state after an
allowed absence, would receive a PFD. The impetus behind
the bill is the $150 million sent out of the state under
absentee exceptions. Certain categories of exemptions never
return to the state. HB 273 would give a PFD to everyone
who qualifies, upon return to the state from an allowed
absence, and would benefit the economy of the state.
1:51:45 PM
Representative Joule asked if a person whose dividend has
been held for several years would receive any interest.
Representative Weyhrauch said that no interest would be
added.
Representative Holm inquired if there were any limits to the
amount of time a person could be gone and still be eligible
for a dividend. Representative Weyhrauch deferred to Mr.
Harvey.
1:53:08 PM
TERRY HARVEY, STAFF, REPRESENTATIVE WEYHRAUCH, reported that
there is a 10-year moratorium on absences allowed, which
will go into effect in 2008.
Mr. Harvey related that the permanent fund dividend is a
very touchy subject. Many arguments are demanding in tone
when expressing a need for the dividend. The original
public purpose of the PFD was about physical residency in
Alaska, not about need. He shared other arguments put forth
by people as to Alaskan residency. The legislature has
established residency as being physically present in Alaska
for 185 days and the Supreme Court has backed that up. He
emphasized that a person with an allowable absence is not
committing fraud by collecting a dividend from outside of
the state. He discussed the fairness issue regarding those
who collect a dividend, but do not return to the state.
1:56:27 PM
Representative Stoltze asked for the Administration's
position on the bill.
SHARON BARTON, DIRECTOR, ALASKA PERMANENT FUND DIVISION,
DEPARTMENT OF REVENUE, stated the Administration's support
for HB 273.
Representative Weyhrauch requested that Ms. Barton explain
the Permanent Fund Dividend Division's report. Ms. Barton
referred to a report entitled "HB 273, Delayed Payments
Analysis, February 6, 2006" (copy on file.) A considerable
number of categories were added to the samples and the data
was fine-tuned at the request of the House State Affairs
Committee. The rates of those absent groups not returning
grew larger. The four largest groups, those accompanying
someone on an allowable absence such as military or student
dependants, do not return at a rate of 82 percent. College
students do not return at a rate of 67 percent. Active
military do not return at a rate of 72 percent. Those out
receiving medical care do not return at a rate of 63
percent. The report is broken down into various categories
of time spent outside of Alaska, from 1 to 10 years.
Students who only go out to school for one or two years
return at a higher rate. The weighted average for all
absent types is 72 percent not returning after 10 years.
2:00:50 PM
Ms. Barton shared financial data on the projected costs of
those who do not return to the state.
Representative Kerttula asked how the survey was organized.
Ms. Barton explained how the individuals were tracked. No
persons included in the group only applied one year.
Representative Kerttula asked if people in previous years
were included. Ms. Barton explained that they were not and
that the data was done by hand. Representative Kerttula
asked how many people are claiming exceptions. Ms. Barton
referred to attachment one, which lists exceptions by year
and by category.
2:03:58 PM
Representative Joule asked for clarification about the
secondary school category on page 2. He asked if graduate
students were included in the college category. Ms. Barton
replied that graduate students are included in the college
category.
Representative Stoltze asked if HB 2 had not passed, if
there would be no need for spouses and children to be
included in this bill. Ms. Barton said there would have
been less of an impact if HB 2 had not passed.
2:06:59 PM
Representative Kelly asked if five years was ever considered
as the limit to be absent from the state. Representative
Weyhrauch said it was not considered. Representative Kelly
asked if the clock could be reset if the person comes back
and re-qualifies. Representative Weyhrauch said that is
possible.
2:08:36 PM
Representative Kerttula asked for a definition of secondary
school. Ms. Barton replied that it is high school. In
response to a question from Representative Kerttula, Ms.
Barton replied that the last pages of the handout are the
delayed payment analysis figures requested by the House
State Affairs Committee. Representative Kerttula noted a
higher return rate for those gone only two years. Ms.
Barton said that is true for college students and small
groups. An amendment was made to allow for students to be
out for two years without losing their dividends.
Representative Kerttula asked if it were possible to know if
students were remaining out of state longer for medical or
law school. Ms. Barton replied no.
Representative Weyhrauch noted that those returning students
would get a large check upon return. He clarified that many
students who leave for school apply for in-state residency
to get a better tuition rate, which has a far greater
economic benefit to them than a PFD.
2:11:49 PM
Mr. Harvey spoke to the original purpose of this
legislation. The argument heard was that there should be
reasons why a resident can leave temporarily, with intent to
return. That language is in the PFD application. The
sponsor feels that making eligibility conditional is a
return to the original intent of the bill. Over a ten-year
period, 97,000 individuals applied from out of state,
received $136 million as a PFD, and never returned to
Alaska.
Ms. Barton added that as the bill is currently written,
college students would receive a dividend for the first 3
years, not just two. The first year students leave for
school in the fall and are not "out of state" that year.
2:14:07 PM
RALPH TAYLOR, NOME, voiced appreciation for the hard work
done on the bill. He related that there are a lot of checks
and balances in place at this time. He shared a story of
his daughter's experience in the army when she did not
receive a PFD at one point. He maintained that there are
checks and balances already in place, which should be used
to deny those not returning to the state.
Representative Weyhrauch related that the bill does not
interfere with the rights of PFD applicants. The full range
of checks and balances is still intact and available to
everyone.
Representative Foster thanked Mr. Taylor.
2:19:06 PM
RON HOYT, HOMER, shared that he is a WW II veteran. He
spoke in support of the bill and in favor of a two-year
absence limit. He suggested the time be capped at 5 years
and that interest need not be paid.
VI GERRELL, PhD, spoke in opposition to HB 273. She
maintained that the most recent sampling is inadequate. She
suggested that the bill is unconstitutional because it
targets groups, gives no proper notice, and denies the right
to due process and protection under the laws. She opined
that military people and students are Alaskans who intend to
return to the state.
2:27:08 PM
Representative Weyhrauch asked Mr. Poag to review the legal
aspects of HB 273. He maintained that the bill does not
target a specific group, nor does it comment on fraud. He
requested Mr. Poag address the problems associated with
identifying a class as "needing a dividend" and the issue of
equal treatment.
CHRISTOPHER C. POAG, ASSISTANT ATTORNEY GENERAL, CIVIL
DIVISION, related that the persons who qualify for the PFD
are Alaska residents. The bill provides that Alaska
residents who are not physically present in the state must
have a subjective intent to return to the state. The
legislature has given the PFD Division broad discretion to
decide the criteria regarding reasonable subjective intent.
He related a case of Church vs. State where Mr. Church did
not qualify for an allowable absence. The Supreme Court
expressed that the PFD is an economic interest. The
objective is to encourage Alaskans to remain or to return so
that only permanent Alaskan residents receive the PFD. As
long as the enactment by this legislative body has this
legitimate government objective, it would survive an equal
protection challenge. This legislation does not target a
specific group and has no "notice" issue because it applies
to the future. He spoke to the due process issue regarding
the bill and stated that the interest issue does not come
into play.
2:34:40 PM
HB 273 was heard and HELD in committee for further
consideration.
2:35:39 PM
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