Legislature(1997 - 1998)
04/10/1997 03:23 PM House L&C
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* first hearing in first committee of referral
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= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HB 67 - LONGEVITY BONUS SABB'TCL:PFD ELIGIBILITY Number 0133 CHAIRMAN ROKEBERG announced the committee would address HB 67, "An Act relating, for purposes of eligibility for a permanent fund dividend (PFD), to an absence from the state while on an unpaid sabbatical under the longevity bonus program; and providing for an effective date." He asked Representative Ryan to explain the legislation. Number 0154 REPRESENTATIVE JOE RYAN, sponsor of HB 67, explained he introduced the bill to correct an oversight. He said last year, people who were eligible for the longevity bonus were allowed the opportunity to take a sabbatical, once every five years, for purposes of service in the Peace Corps, Congress, medical treatment, et cetera, and for up to 220 days to settle the estate or the individual's deceased parent, spouse's sibling, stepchild, et cetera, without losing the eligibility for the longevity bonus. Representative Ryan explained, "Previous to that time, if you lost your eligibility once, that was it. You were forever off the program. This way they could take this sabbatical and retain it." He noted that while the person is outside of the state, they do not receive their longevity bonus. At the same time, inadvertently, they could be disqualified for their PFD check. He said he feels that since a person would be giving up their longevity bonus for the period they were outside the state, they shouldn't also be denied the eligibility for the permanent fund check. Representative Ryan said, "So what this bill basically does is just allowing an exception for these folks - unpaid sabbatical leave under Alaska 47.45.035 or sabbatical under 43.23.005, subparagraph (H). And it basically says you can take this once every five years - sabbatical and you will give up your longevity bonus payments for the period of time you're absent, but you won't also lose you eligibility for the permanent fund. You retain your eligibility for your permanent fund dividend check." He asked for the support of the committee. Number 0355 CHAIRMAN ROKEBERG noted there are two versions of the legislation, HB 67, LS0331\A, which is the original version. There is also CSHB 67(STA), LS0331\E. He asked Representative Ryan to explain the differences between the bills and what his wishes are. REPRESENTATIVE RYAN explained there was an amendment made in the House State Affairs Committee to allow people over the age of 65 to be able to utilize this mechanism. He said his intention is in the original bill which allowed the people who were on a sabbatical to participate. He stated he didn't want to make it all inclusive for large groups of other people, but there were some members of the State Affairs Committee who liked it. Representative Ryan pointed out that the sabbatical, under AS 43.23.005(h), is what was added in the State Affairs Committee. He said his preference is to adopt the original version of the bill and disregard the committee substitute from the State Affairs Committee. Number 0474 REPRESENTATIVE JOHN COWDERY asked if there is an intention of prorating for time a person wasn't in the state. REPRESENTATIVE RYAN explained in testimony given by Ms. Jones, Director, Permanent Fund Dividend Division, people could lose up to as much as two years' eligibility and then would have to go through the re-eligibility program to get their eligibility back. It depends on what periods of time they took and the different years. If a person was gone six months in two different years, they would exceed the number of days they are allowed to be absent from the state and they could lose eligibility for one year and the next thinks that is unfair. What he is trying to do by introducing the legislation is to provide an extra benefit for the people who have been living in Alaska for a long time and have qualified for the longevity bonus. Number 0606 CHAIRMAN ROKEBERG explained he would discuss what he perceives as the differences between the original and the State Affairs version. The State Affairs version allows anybody over the age of 65 to be absent from the state, even though they're not eligible for the longevity bonus. The bonus program eligibility has run out, therefore, anybody that is over 65 could be absent for the state for 12 months and still would qualify for their permanent fund. REPRESENTATIVE RYAN noted that wasn't his intention. CHAIRMAN ROKEBERG said the original version is specifically directed at people who are qualified the longevity bonus program. REPRESENTATIVE RYAN agreed. Number 0707 NANCY JONES, Director, Permanent Fund Dividend Division, Department of Revenue, came before the committee. She explained HB 67 would make the unpaid sabbatical an allowable absence for the purposes of the Permanent Fund Dividend Division. Currently, a person can take a longevity bonus sabbatical, that is enacted under new laws, and come back and still be eligible to receive a longevity bonus payment. Ms. Jones said the bill is proposing that even though they are gone more than 180 days the state still pays them a dividend even though they have been out for a whole year. She stated, "The longevity program is maintaining only their eligibility - it's not paying them, but this bill is proposing that the permanent fund dividend program then pay them for that same period of absence." Ms. Jones informed the committee that it is currently possible for a person to take a sabbatical and still be eligible for the PFD. The current rule about the absence is that a person cannot exceed 180 days which is six months. So if a person was planning and straddled two calendar years, they would still be eligible to receive a PFD. She said, "We are concerned right now that we are, again, opening up an allowable absence for a very select few people because there is no more requirements. The longevity program is not allowing more people to become eligible. It's only maintaining the eligibility of the people currently on." She noted that last year 29,733 people received at least one longevity bonus payment. Ms. Jones informed the committee that the State Affairs Committee substitute said that anyone who was qualified for the longevity bonus program on January 1, 1997, would be eligible to take a sabbatical and still be eligible for the dividend. MS. JONES said, "We at PFD have an alternative. We think that we can work out eligibility requirements for people who are out on a sabbatical, either by regulation or a statute, which would allow the disqualification of a double year that Representative Ryan alluded to. If a person does stay out from January through December 31, of a dividend qualifying year, they will not only get the next year dividend, but since they weren't back before the new qualifying year then they would miss another year. So we think that we can work out, in regulation, where a person wouldn't lose two dividends. But we feel that the program should, right now, be on equal footing. Neither program pays an individual for being outside of Alaska for traveling in excess of 180 days and right now they're equal. This bill is proposing to then -- not be eligible to get a longevity payment, but then receive a dividend." Number 0935 REPRESENTATIVE COWDERY asked if his understanding is correct in saying that Ms. Jones' statement about changing regulation would accomplish the same thing. MS. JONES indicated that isn't correct. They could accomplish a regulation that would not allow a person to be in jeopardy of losing two dividends. They still wouldn't get paid for the year they were gone, but when they come back they still would be eligible to receive the next dividend. Number 1000 CHAIRMAN ROKEBERG asked if the bill doesn't accomplish that. MS. JONES said it doesn't. It would pay them in a qualifying year while they were gone. CHAIRMAN ROKEBERG clarified they would lose it the year they were gone, but not lose it the next year. MS. JONES answered in the affirmative. CHAIRMAN ROKEBERG asked Ms. Jones if she could come up with an amendment to the bill that would do that rather than spending time writing regulations. MS. JONES indicated she could. Number 1021 REPRESENTATIVE HUDSON referred to his interpretation of the State Affairs Committee version of the bill and said, "It sounds to me like under the age that individual who was qualified on January 1, 1997, received longevity bonus payments - no longer qualified, is eligible for this sabbatical purposes. But I'm 65 in December, so I would not be. Is that correct?" MS. JONES indicated Representative Hudson is correct. She said if he was not on the roles for the longevity program as of January 1, 1997, then this wouldn't apply. REPRESENTATIVE HUDSON said he is trying to figure out what kind of equity that provides. He said, "It clearly states that if they turn 65 on January 1, 1997, but they don't get the longevity bonus because that program went out of style, so for me at any rate - any bill that I sign onto I want to make certain that all people are treated equal. And for that reason, I certainly wouldn't support this." Number 1119 REPRESENTATIVE RYAN asked how many people have taken the sabbatical. MS. JONES indicated she didn't have those figures with her. REPRESENTATIVE RYAN asked Ms. Jones if she knows how many people had to forfeit their PFDs because they did make long trips out of the state. MS. JONES said didn't have the figures with her. CHAIRMAN ROKEBERG asked her if she knows how many people may have lost their longevity bonus because they made trips out of Alaska. MS. JONES responded she didn't know. She stated that there are strict requirements that a person would start to lose their eligibility if they were gone more than 30 days. If a person was gone 30 days, they wouldn't get a check for that time. They could come back and still be eligible. She noted since they have been ratcheting down the program, any infraction that a person commits totally makes it void that you cannot become eligible again. She said she believes the maximum is 90 days in that if a person is absent in excess of 90 days, they would be totally out of the program. Number 1259 CHAIRMAN ROKEBERG said Ms. Jones mentioned that the department could develop regulations. He asked if the department has started drafting any regulations. MS. JONES said they are waiting to see what transpires with the legislation. Number 1271 REPRESENTATIVE HUDSON asked if the state has provided for the spouses of our congressional delegation to receive their dividend. He said he knows there was some court action that essentially denied them over a number of years. He asked if the legislation would be a vehicle to do that. MS. JONES explained it is addressed in HB 2, which is currently in the Senate. CHAIRMAN ROKEBERG asked Ms. Jones how long it would take her to draft an amendment that would allow the loss of one year's PFD while on sabbatical, but not the other year which is the real loss. In other words, a double penalty. MS. JONES indicated it wouldn't take her very long to draft an amendment. Number 1349 REPRESENTATIVE RYAN said it is quid pro quo. You give up the longevity bonus way of life, but you retain your eligibility for the permanent fund. You only do it once every five years. He said he doesn't believe this will incur a great financial hardship for the state for this particular class of people. He said if we want to get into the political philosophy of giving particular groups of people special privileges, then we can run rampant with that. Representative Ryan stated the purpose of the bill is to save the longevity bonus, but at the same time make (indisc.). Number 1400 CHAIRMAN ROKEBERG asked if there was anyone else to testify on the bill. There being no further witnesses, he closed the public hearing on HB 67. CHAIRMAN ROKEBERG said HB 67 would exempt any loss of any PFDs to any longevity bonus member's eligibility who took a sabbatical. He said after this problem was discovered, he sent a letter to his constituents currently receiving the longevity bonus to warn them of the potentiality of the possible losses up to two years of permanent fund eligibility. Chairman Rokeberg said, "I think the point of the State Affairs issue, and the point that we were trying to avoid is not to have a double hit. If somebody wants to leave the state for a year, then they're not here. So perhaps you (indisc.) then they should give up the permanent fund dividend, but they shouldn't be penalized twice when they come back off their sabbatical. That's one argument and that's what Ms. Jones was talking about - that fix. So then you have this other one from State Affairs which is completely out of hand, I think, I don't care for it at all, which is putting people who are not even in the longevity bonus program on some different special footing. I totally reject that, but I'm concerned that your bill exempts any loss of the permanent fund vis-a-vis, the fact that they wouldn't get it for one year. But I mean that's a judgement call." Number 1493 REPRESENTATIVE RYAN noted $250 a month for 12 months is $3,000 of general fund money. He said, "$1,100 or $1,200 out of permanent fund money, if it weren't paid to the recipient, would remain in the earnings reserve. It's a pretty good trade, three to one and we're getting three times as much general fund money back to giving out one-third to the permanent fund. It seems to me that's pretty good business." CHAIRMAN ROKEBERG indicated he will fully support the original version of HB 67. He noted it has a Finance Committee referral Number 1607 REPRESENTATIVE COWDERY made a motion to adopt HB 67. Hearing no objection, HB 67 was adopted. REPRESENTATIVE COWDERY made a motion to move HB 67 out of committee with individual recommendations and with the accompanying zero fiscal notes. CHAIRMAN ROKEBERG asked if there was an objection to moving HB 67. Hearing none, HB 67 moved out of the House Labor and Commerce Standing Committee.
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