Legislature(1993 - 1994)

03/31/1993 01:00 PM JUD

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= 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                                                                   
  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                  
  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                 
  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                 
  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.                       
  CHAIRMAN PORTER adjourned the meeting at 2:21 p.m.                           

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