Legislature(1993 - 1994)
03/31/1993 01:00 PM JUD
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
HB 81: PHASE OUT LONGEVITY BONUS Number 691 RUPE ANDREWS, representing the AMERICAN ASSOCIATION OF RETIRED PEOPLE (AARP), testified in opposition to HB 81. He said that the bill would reverse a 20-year-old state policy which provided economic stability to Alaska's senior citizens. He said that the longevity bonus allowed senior citizens to remain in Alaska and also to remain in their own homes as long as possible. He said that HB 81 represented a bad investment policy. He asserted that Alaska's senior citizens contributed $1.2 billion per year to the state's economy, not counting the longevity bonus and the permanent fund dividend. MR. ANDREWS mentioned that many states tried to attract senior citizens because, as he said, "there is nothing more portable than a retirement fund or a pension." He questioned what the state's policy toward future Alaskan senior citizens would be, if HB 81 was enacted. He stated that years ago, retirees left the state, as they could not afford to live in Alaska. He said that the longevity bonus had been created, in order to give Alaska seniors more economic stability and to enable them to continue to live in Alaska. He commented that the governor recognized the problems of senior citizens in Alaska. MR. ANDREWS said that the governor had called a conference of senior citizens, scheduled to meet in Juneau on April 8. He suggested that the committee wait to act on HB 81 until after the conference had taken place. He mentioned a statement made by the Department of Administration Commissioner, Nancy Usera, which he said was misleading. He said that she had said that all current longevity bonus recipients would continue to receive the bonus for life, under the governor's proposal. He stated that, as what one legislature could do another legislature could undo, Ms. Usera's comments were somewhat misleading. MR. ANDREWS also said that the longevity bonus should not be tied to a person's income level. Number 772 NANCY USERA, COMMISSIONER, DEPARTMENT OF ADMINISTRATION, recalled appearing before the House Finance Committee approximately one year earlier. At that time, she said, the price of oil had dropped, and there was talk of changing the nature of the longevity bonus. That talk was of great concern to the governor, she said. She stated that the Hickel administration believed that it was extremely important to deal with financial management issues of government in the context of sound public policy. She expressed the Hickel administration's belief that fiscal responsibility and social responsibility went hand in hand. MS. USERA stated that HB 81 had been developed to "grandfather in" all current longevity bonus recipients, and provided a three-year phase-out period for new recipients. She supported the original HB 81, and opposed the State Affairs committee substitute for the bill. She stated that the Hickel administration's first priority was to protect current recipients of the longevity bonus, who had become dependent on the monthly income. She called the State Affairs committee substitute irresponsible. MS. USERA said that the state could afford a reasonable financial transition for the longevity bonus program. She encouraged the committee to support the governor's original bill. TAPE 93-46, SIDE B Number 000 REPRESENTATIVE PETE KOTT asked Commissioner Usera if the governor would veto the State Affairs Committee's version of HB 81. Number 020 MS. USERA replied that the governor was very committed to his own proposal. Number 025 REPRESENTATIVE JAMES said that due to her husband's age and her own age, the longevity bonus was of personal concern to her. She had been told that 40% of longevity bonus recipients had not been in Alaska for more than three years. Number 044 MS. USERA responded that the state's records for the past several years indicated that approximately 20% of new longevity bonus recipients were new Alaska residents. She noted that when the longevity bonus program was created in 1973, its sole purpose was to provide an incentive for Alaska residents to remain in the state. It was not designed as a magnet, to bring new residents to Alaska, she said. Nor was it designed as a needs-based program. However, the original program was found to be unconstitutional in 1983, and had changed dramatically since then. Number 063 MS. USERA mentioned that in 1973, there were 4,000 longevity bonus recipients. Each one met the original requirements that they be at least 65 years old, had lived in Alaska for at least 25 years, and had been in Alaska since statehood. Today, she said, there were 23,000 people on the program, a good portion of whom were recent immigrants to Alaska. Number 093 REPRESENTATIVE KOTT asked Commissioner Usera approximately how many of the original longevity bonus recipients were still on the program. Number 105 MS. USERA replied that approximately 400 of the original recipients were still receiving the longevity bonus. She noted that the governor would entertain proposals for other cost-effective incentives for senior citizens to remain in Alaska. She stated that if someone could come up with a cost-effective annuity program, the governor's office would be happy to look at it. She noted that current annuity proposals before the legislature were not cost-effective. MS. USERA stated that longevity bonus bills had been before the legislature for seven years, and a solution to the continuing financial drain on the state had yet to be forged. For each year that went by, she said, an additional $150 million in liability to the state was incurred. She believed that the original HB 81 was a good first step toward solving the problem of the longevity bonus. Number 181 REPRESENTATIVE PHILLIPS commented that there were seven very active senior centers on the Kenai Peninsula. When the governor's bill was first released, she said, she did not receive very much input from those seniors. But what was most important to them, she said, was that existing recipients be grandfathered into the program. Number 199 REPRESENTATIVE CLIFF DAVIDSON questioned what HB 81 would do to those Alaskans aged 60-65, who were not yet receiving the longevity bonus, but who were counting on receiving it in the future. It was those Alaskans that the state would probably lose as a result of the phase-out, he added. Number 214 MS. USERA stated that Representative Davidson's comment had pointed out one reason why the governor was very committed to implementing a phase-out of the longevity bonus program. Number 232 REPRESENTATIVE DAVIDSON said that the state lost a great deal when it lost the experience of its senior citizens. He noted that the state could be more creative in its efforts to assist those people who would need something like the longevity bonus in the future. He commented that the longevity bonus program clearly costs the state a great deal of money, but said that at some point it pushed people out of their homes and created an even bigger expense for state government, and even forced people out of Alaska. Number 269 CHAIRMAN PORTER suggested that the committee not make amendments to HB 81. He said that the House Finance Committee would be a more appropriate place in which to amend the bill. He said that as a resident of Alaska for more than 40 years, he had looked forward to receiving the longevity bonus. However, he said, reality was reality. He noted that it was irresponsible to add costs to the longevity bonus program, as the governor's version of HB 81 would do. CHAIRMAN PORTER observed that, due to discussions that had been going on over the last few years, people were aware that the longevity bonus might disappear some day. He mentioned the original intent of the program, which was to give something back to those pioneers who had helped to settle Alaska. He was supportive a motion to move the bill out of committee. Number 324 REPRESENTATIVE JAMES made a MOTION to ADOPT CSHB 81 (STA). Number 339 REPRESENTATIVE DAVIDSON asked if it was correct that the bill currently before the committee was the State Affairs committee substitute for HB 81. MS. HORETSKI said that it was her understanding that the committee had both the State Affairs committee substitute and the original bill before it, and could report out either one. Number 347 CHAIRMAN PORTER, hearing no objection to the adoption of the State Affairs committee substitute for HB 81, said that that version of the bill was now before the committee. Number 352 REPRESENTATIVE KOTT mentioned that he had an amendment to offer, but would hold it for the time being and bring it to the attention of the House Finance Committee instead. Number 361 CHAIRMAN PORTER noted that the House Finance Committee would scrutinize HB 81. Number 367 REPRESENTATIVE JAMES made a MOTION to MOVE CSHB 81 (STA) out of committee, with individual recommendations and attached fiscal note. Number 371 REPRESENTATIVE DAVIDSON OBJECTED. He said that, due to the impact of other changes the legislature was making affecting senior citizens on fixed-incomes, he could not allow the bill to go forward without objection. In his opinion, the longevity bonus was not a subsidy, but a benefit provided in appreciation of the contributions of senior citizens. A roll call vote was taken on the motion to move the bill out of committee. Representatives Green, Kott, James, and Porter voted "YEA." Representatives Davidson and Nordlund voted "NAY." And so, the bill MOVED OUT of committee. ADJOURNMENT CHAIRMAN PORTER adjourned the meeting at 2:21 p.m.