Legislature(1993 - 1994)
05/06/1994 08:00 AM House STA
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HCSCSSB 190(STA) - ENFORCEMENT OF SUPPORT ORDERS CHAIRMAN VEZEY opened HCSCSSB 190(STA) for discussion. REPRESENTATIVE BETTYE DAVIS clarified the committee was discussing version M, which was adopted at the last meeting. REPRESENTATIVE FRAN ULMER questioned the word "intentionally" which was added on page 14, lines 7 and 15. She felt the word "intentionally" raises the standard of proof. She believed the higher standard would make the ability to levy the penalty for failing to comply with a court order very difficult. She moved to remove the word "intentionally" from page 14, lines 7 and 15. CHAIRMAN VEZEY commented REPRESENTATIVE ULMER could make the motion, or HCSCSSB 190(STA) could just be tabled. REPRESENTATIVE B. DAVIS interjected she had the same concerns as REPRESENTATIVE ULMER. Testimony from the Child Support Enforcement Division (CSED) at the last meeting, however, agreed that the use of "intentionally" was acceptable language. She asked for CSED to speak on this issue again. CHAIRMAN VEZEY called Phil Petrie to the table. Number 084 PHIL PETRIE, OPERATIONS MANAGER, CHILD SUPPORT ENFORCEMENT DIVISION, answered questions on HCSCSSB 190(STA). He stated CSED did agree to the insertion of the word "intentionally" because it is an element of proof they normally have to prove with an employer anyway. He noted a court would not hold them responsible for their unintentional acts or if they did not receive the withholding order; therefore, "intentionally" will not cause CSED any difficulty. The noticing process is extensive before the case is sent to the Department of Law, therefore the attorney general would have no problem trying to prove an employer intentionally did not send the money to CSED. REPRESENTATIVE ULMER removed her motion. REPRESENTATIVE B. DAVIS submitted as an amendment, the addition of HB 458, sponsored by Representative John Davies, to HCSCSSB 190(STA). CHAIRMAN VEZEY asked Phil Petrie to comment on the amendment. MR. PETRIE commented the CSED and Department of Revenue supported HB 458. This action is pending in Congress in some form to be part of the Child Support Enforcement tools to be used. HB 458 would substantially improve collections and allow CSED to reach people who are normally self- employed, or otherwise employed, where CSED is not now adequately reaching them. HB 458 provides incentive for those people to come to CSED and establish a payment plan. A list of occupations and occupational licenses are included which would either be withheld or revoked for a period of time, until such time as the obligors come to CSED and set up a payment plan. Number 175 REPRESENTATIVE ULMER asked if this would apply for all obligors or only if they haven't made payments for some period of time -- what the triggering is. MR. PETRIE said, "It applies to all obligors with a threshold of arrearages - those who are not making payments and, I believe, the last copy of the bill that I saw had a threshold of $5,000 or more in arrears, but (indiscernible). If they were already under wage withholding, money was coming in and there was an approved payment plan with the division, then it's my interpretation that the bill would not apply. It would apply to that portion of the population that we're currently getting no payments from." MR. PETRIE clarified that it was $2,500, not $5,000. CHAIRMAN VEZEY called an at ease. CHAIRMAN VEZEY called the meeting back to order at 8:17 a.m. CHAIRMAN VEZEY inquired if the amendment was verbatim per HB 458. Number 210 REPRESENTATIVE JOHN DAVIES, Sponsor of HB 458, addressed the amendment. He said the intent of HB 458 is to give CSED a vehicle to get the attention of some independently employed people. It uses the vehicle of occupational licenses. CSED would prepare a list of those individuals who are significantly in default, or $2,500 in more than a year in arrears. To be out of default, it doesn't require that a person pay up their entire indebtedness, it only requires them to be on a regular payment plan. He explained the experience of other states, that have instituted this type of tool, was that about 80 percent of the people who owe back child support payments pay up within the provisionary period. The provisionary period in HB 458 is 180 days. He noted HB 458 only applies to situations where a license is being renewed or a license is being applied for for the first time. A person applying for a license would be issued a temporary license for the provisionary period. If they came into agreement with CSED within that period, the license would be made permanent. The process would be similar in the case of a renewal. He said 180 days before the license is to be renewed, they would be notified that it would not be renewed if they did not come into compliance. CHAIRMAN VEZEY questioned if $2,500 was a rather low threshold. He mentioned some child support payments run $1,100 a month. REPRESENTATIVE DAVIES responded the federal threshold is $5,000, therefore they felt a slightly lower amount would be appropriate. CHAIRMAN VEZEY asked if HB 458 impacted teaching certificates. REPRESENTATIVE DAVIES affirmed CHAIRMAN VEZEY. CHAIRMAN VEZEY noted there had been comments made earlier that HB 458 did not address the Alaska Bar Association. CHAIRMAN VEZEY called a brief at ease. REPRESENTATIVE DAVIES referred to page 6, subsection (ii), of the amendment, where it states "Authorization for Performing an Occupation Regulated under Alaska Statutes Title 08." He believed they would fall under that section. Number 289 REPRESENTATIVE SANDERS observed AS 08. included a larger list of occupations and commented he felt the amendment was more palatable because of this. He did not want to single out just a few occupations in the state. REPRESENTATIVE DAVIES observed HB 458 covers all occupational licenses. CHAIRMAN VEZEY asked the committee to comment on the threshold. He considered the amendment to be a "hammer" which he would not want to see used lightly or unnecessarily as a threat. REPRESENTATIVE OLBERG agreed $2,500 was too low. He suggested at least $5,000. REPRESENTATIVE GARY DAVIS agreed with "the big hammer." He has received calls about the complexities with CSED. CSED has subpoena power, however each case has its own individual problem. He felt criminals will always find another way to hide their income. HB 458 affects those that work, whereby taking their license so they cannot work influences them to arrange a payment schedule with CSED. REPRESENTATIVE G. DAVIS estimated the legislature has dealt with two or three bills this year to go after particular segments of people who are not in compliance. He felt the $5,000 threshold was better. REPRESENTATIVE DAVIES stated he had no problem amending the threshold. He believed the "hammer" would have to be used properly. HB 458 addresses a large class of people which CSED presently has a hard time with. The problem is a lot of people, who are in arrears, are fearful that the amount is so large they cannot handle it. HB 458 facilitates communication between the obligor and CSED. He emphasized it is in rare cases where the "hammer" actually gets used. REPRESENTATIVE KOTT referred to page 7, lines 8-11 of the amendment, under licenses that are excluded - it does not include a vessel license or licenses (indiscernible) 47.35 or a business license under 43.70. He asked Representative Davies if he had any recollection as to what licenses were being referred to. REPRESENTATIVE DAVIES answered that in reference to the vessel license, the issue there was that vessel licenses obtained by a number of different individuals and so it didn't seem to be a very well-defined tool, to go after a particular individual. It was thought that the other routes for identifying people would work in those cases, particularly the permits, themselves. It was felt that was a redundant requirement to go look at that and it wouldn't be very effective. Under (ii), AS 47.35 pertains to foster care, where the licenses are short term and situations not productive to pursue. Under (iii), business licenses issued under AS 43.70, many of the licenses are over the counter; therefore CSED has many other checks in place which would make rechecking these licenses redundant. Checking these licenses would not be cost effective or worth the effort. REPRESENTATIVE G. DAVIS commented on the issue of foster care, whereby they are able to take care of somebody elses child, but not their own. REPRESENTATIVE DAVIES pointed out that was not often the situation. There are other vehicles for dealing with those particular circumstances. Number 422 REPRESENTATIVE B. DAVIS observed foster care payments should be added because foster care payments are not considered to be salary. They are reimbursed for the care they provide. She believed it would be possible for a foster care provider to be in arrears, because they may have another family to tend to after. She pointed out not everyone in arrears on payments are not necessarily undesirable people. CHAIRMAN VEZEY responded he had believed foster care payments could not be attached according to existing law. REPRESENTATIVE B. DAVIS replied they would not be according to the amendment. CHAIRMAN VEZEY added a person with a foster care license, however, could have their license attached under the amendment. REPRESENTATIVE DAVIES stated the HB 458 is product of several deliberations with the departments and committee meetings. CSED felt including foster care would pit one child against another. CHAIRMAN VEZEY clarified the foster care license had been exempted. REPRESENTATIVE DAVIES noted it was done at the request of CSED. REPRESENTATIVE SANDERS commented excluding foster care licenses would provide for more foster homes. Number 460 REPRESENTATIVE KOTT asked if there was any fiscal application. REPRESENTATIVE DAVIES answered the net return back to CSED is in excess of $1 million a year. CSED estimates $6 million as the total collection. Two-thirds would go directly back to the children, half of one-third would go to CSED, and the other half of one-third would go to the federal government. CHAIRMAN VEZEY felt the question was if the fiscal note would have to be revised by the committee if the amendment passed. REPRESENTATIVE DAVIES replied CSED expects the costs will be covered through the increase of moneys they will receive from the federal government the costs. Therefore, there was no fiscal note. CHAIRMAN VEZEY repeated his previous question. REPRESENTATIVE KOTT inquired if there were costs involved. REPRESENTATIVE DAVIES answered yes, however, they will be more than offset by the additional recovery of back payments. REPRESENTATIVE ULMER inquired if SB 190 had a Finance referral. CHAIRMAN VEZEY responded he had heard yesterday that the Finance Committee was inclined to waive SB 190. REPRESENTATIVE KOTT interjected if the amendment was adopted, the committee would have to request another fiscal note from CSED. REPRESENTATIVE DAVIES offered CHAIRMAN VEZEY the original fiscal notes from HB 458. He felt updated fiscal notes would be preferable. DARREL REXWINKEL, COMMISSIONER, DEPARTMENT OF REVENUE, joined the table to answer questions for the committee. He stated he was just talking with Mr. Petrie and he did not recall having a specific cost for the implementation. However, he felt it did affect other agencies because they would have to be supplying CSED with information. He believed this was the reason other agencies provided fiscal notes with their costs. He suggested the money should perhaps go back to CSED, then they could RSA (Reimbursable Services Agreement) the money back to the other agencies. He questioned how the fiscal notes were put together. CHAIRMAN VEZEY, in observing the Department of Education fiscal note, stated he had the impression they expect the legislature will let them hire extra people. Fish and Game followed suit. He doubted the legislature would be inclined to hire new people to administer this amendment. REPRESENTATIVE DAVIES clarified CHAIRMAN VEZEY was examining the fiscal notes from early on in the process. Revised fiscal notes have not been attained since the meetings with the various departments. CHAIRMAN VEZEY stated the Department of Economic Development's fiscal note indicated the addition of nine positions. REPRESENTATIVE DAVIES responded that that fiscal note assumed they would have to deal with all over-the-counter business licenses. That requirement has been removed entirely. He felt the fiscal note was not valid. REPRESENTATIVE KOTT said he was concerned because if all the fiscal notes were not zero, Finance Committee would have to hear the bill. He recalled that the Finance Committee was contemplating waiving HCSCSSB 190(STA). CHAIRMAN VEZEY clarified the two fiscal notes on HCSCSSB 190(STA) are zero, and had been adopted at the last meeting. REPRESENTATIVE ULMER suggested the fiscal notes for the amendment be zeroed because the committee had heard testimony of a net benefit to the state of possibly $1+ million. CHAIRMAN VEZEY noted CSED was asking for additional personnel to administer the original program. The committee merely decided they would not get any. He compared the two positions the committee zeroed to the 15 positions REPRESENTATIVE ULMER suggested. He said he was not opposed to the change if the Department of Commerce & Economic Development (CED) was available to testify. Number 555 REPRESENTATIVE B. DAVIS explained the nine positions would actually now be negative because certain business licenses are not included. REPRESENTATIVE G. DAVIS commented there had been testimony that HCSCSSB 190(STA) includes allowances for a temporary license. The set up to operate this system, if not currently in place, would require some additional work from CED. REPRESENTATIVE KOTT asked if the amendment was not adopted, what would be the effect on HCSCSSB 190(STA) or on the whole system, based on Congress having pending legislation. CHAIRMAN VEZEY responded HCSCSSB 190(STA) would bring Alaska into compliance with federal laws and regulations. The amendment, he did not believe, had any basis in federal law. REPRESENTATIVE DAVIES pointed out the amendment would be a significant tool for CSED to help them come into compliance. The federal audit indicated one of the major shortfalls of CSED is that they were not collecting enough, or fast enough. REPRESENTATIVE DAVIES referred to the fiscal note and stated the impact needed to be worked out by Department of Revenue (DOR) and the agencies, therefore any additional program receipt authority ought to be given to DOR. Other impacted agencies should receive their funds through an RSA mechanism. He suggested zeroing the fiscal notes and having DOR report back to Legislative Budget & Audit Committee for the required program receipt authority. Number 606 REPRESENTATIVE SANDERS expressed that he had a problem with the people who are excluded. He noted a personal example, where people with business licenses who do pay their child support are competing in the same realm against people who do not. He did not think these people should be exempted. Why should some people be different from the others. REPRESENTATIVE DAVIES clarified the intent is to find an appropriate tool to go after every case, not to give people an exception. He noted there are other ways to go after those people which would be more cost effective. REPRESENTATIVE SANDERS explained he was thinking of people who have a business license, specifically printers. REPRESENTATIVE DAVIES reiterated it would not be cost effective to go after those with business licenses. There are too many. Number 647 KARL LUCK, DIRECTOR, DIVISION OF OCCUPATIONAL LICENSING, DEPARTMENT OF COMMERCE & ECONOMIC DEVELOPMENT, stated he was available to answer questions for the committee. REPRESENTATIVE B. DAVIS moved to adopt the amendment before the committee for purposes of discussion. CHAIRMAN VEZEY asked MR. LUCK what the impact on Division of Occupational Licensing (DOL) would be. The DOL fiscal note indicates the addition of nine positions. REPRESENTATIVE ULMER added the business license provision had been taken out, therefore the amendment was different from what the fiscal note pertained to. She noted DOR could go to LB&A with additional program receipts to handle the increased work generated through the other departments. MR. LUCK explained the reasons for the original fiscal note. DOL operates only on program receipts and they can only charge its operation to the licensees of all professions based on the cost of regulating that profession. He considered HB 458 outside of regulating a profession. Therefore, they premised the program was a "stand alone operation," which would not be covered by DOL's overhead or staff. Separate accounting would be required to keep track of the moneys going to DOR. TAPE 94-53, SIDE B Number 000 MR. LUCK continued. MR. LUCK stated DOL felt if they withheld professional licenses, there should be enforcement to make sure those people are not operating without their licenses. The major cost, he noted, was because DOL would be determining which of the 44,000 people were theirs to deal with. Personal identification would be important and time consuming, therefore DOL requested additional positions for these checks. DOL cannot mandate social security numbers in its system. DOL was also tasked with notification, requiring delivery in person or, as they believed, certified mail. REPRESENTATIVE G. DAVIS stated MR. LUCK indicated DOL was being tasked with things it does not do now. He asked if he was correct. MR. LUCK answered absolutely. DOL does not have the excess capacity of staff it their budget. He believed in the last six years, there has been 13 additional licensing programs added to DOL with zero staff increases in enforcement or administration. Only two programs have been eliminated in that time. REPRESENTATIVE SANDERS expressed concern regarding the amendment. He cited the example of a fisherman with a fishing permit, a 52-foot boat, employing four people who all have families, and catching $3 million worth of fish a year, paying taxes and supporting the economy. If his permit is taken because he owes $7,000 back child support, how does this serving the state of Alaska? How is the state gaining on a situation like this? REPRESENTATIVE ULMER felt the idea is just to suspend their licenses until they agree to a payment schedule, not to preclude their ability to make an income. REPRESENTATIVE G. DAVIS inquired what the procedures were for suspending or issuing a temporary license. Are they in place or would they require additional administrative procedures. MR. LUCK answered DOL would have to issue 150-day temporary licenses, however, this would be a unique procedure under this authority only. This would require coordination with all the professions or a particular board that it involves. Follow-up would be necessary because the boards have the authority. He noted there are provisions in the amendment which say the Administrative Procedures Act does not apply to the revocation of the license, therefore, there would not be a hearing. He emphasized the DOL licensing act states the Administrative Procedures Act will apply. Number 194 REPRESENTATIVE KOTT asked how many business licenses there were in the state. MR. LUCK answered at the end of the last fiscal year the state had 66,000 business licenses and 32,500 professional licenses. He estimated 100,000 possible matches. REPRESENTATIVE KOTT asked how many licenses there were relating to boxing or wrestling. MR. LUCK estimated less than 100. He noted many times those licenses are issued almost on the sight, or at the event, making it very difficult to ensure those people are not on the list of 44,000. CHAIRMAN VEZEY called for a recess at 9:05 a.m. The meeting resumed at 9:12 a.m. Number 232 JUANITA HENSLEY, CHIEF, DRIVER SERVICES, DIVISION OF MOTOR VEHICLES (DMV), DEPARTMENT OF PUBLIC SAFETY, commented on the amendment to HCSCSSB 190(STA). She referred to page 6, subsection (xiv) of the amendment, whereby DMV will withhold the issuance of a commercial drivers license (CDL). Alaska currently has approximately 25,000 commercial drivers and their licenses are renewed every five years. DMV just went through a process, in 1992, requiring every driver to be issued a CDL who operates a certain size of vehicle. She noted everyone in that category licensed within January of 1992 to March 31, 1992. This means 25,000 drivers will have to be renewed every five years. CHAIRMAN VEZEY clarified within a three month period all of them will be renewable. MS. HENSLEY replied correct. Every five years DMV will have a major impact because of these people. Unlike CED, DMV requires the social security number on a CDL per federal law. She noted the amendment mentions DOR will be sending DMV an electronic media to update their records. DMV will, however, be required to issue a temporary 150-day license to those individuals in arrears. She emphasized DMV agrees with the concept, however, it will impact DMV. Even if only five percent of those 25,000 were in arrears, it would still be a substantial increase on the DMV to handle the temporary licenses. Number 275 REPRESENTATIVE ULMER mentioned the commissioner of DOR is envisioning a system, whereby he would RSA money to the various impacted agencies to cope with the impacts. She asked if this would be a viable way to help the DMV workload. MS. HENSLEY replied if LB&A actually follows through and gives them the RSA, it would be viable. She said it depends on whether they would be able to receive the program receipt authority from LB&A. This is a major concern for DMV. REPRESENTATIVE SANDERS clarified she indicated the amendment would apply to commercial drivers licenses only. MS. HENSLEY answered yes, or school bus drivers. REPRESENTATIVE SANDERS asked if it was possible to apply the program to all drivers licenses. He felt it would be cost effective. MS. HENSLEY answered DMV issues over 200,000 drivers licenses and identification cards a year. REPRESENTATIVE SANDERS questioned the amount of people delinquent. MS. HENSLEY pointed out the issuance of the temporary license would be very burdensome for DMV, however, it could be done. Even with program receipts, it would still be costly to the state because of the additional employees necessary. REPRESENTATIVE SANDERS stated he favored the amendment, but he wanted to see it all inclusive. MS. HENSLEY observed a lot of people are going to be covered by their professional licenses they have as well. Number 312 REPRESENTATIVE B. DAVIS asked if she could add an amendment to the amendment. CHAIRMAN VEZEY answered REPRESENTATIVE B. DAVIS may. REPRESENTATIVE B. DAVIS referred to page 7, subparagraph (6), and moved to increase the threshold from $2,500 to $5,000, which is the federal mandate. CHAIRMAN VEZEY, hearing no objection, adopted the amendment. Number 333 REPRESENTATIVE KOTT, moved to delete on page 7, subsection (B), thereby allowing no exclusions, since HCSCSSB 190(STA) was going to be heard in the Finance Committee. REPRESENTATIVE B. DAVIS said HCSCSSB 190(STA) was waived out of Finance. CHAIRMAN VEZEY replied that was not technically correct. REPRESENTATIVE B. DAVIS noted she had heard that it was waived this morning. CHAIRMAN VEZEY clarified it would have to be waived in Session. REPRESENTATIVE OLBERG and B. DAVIS objected to the motion. REPRESENTATIVE KOTT felt the amendment should be all inclusive. REPRESENTATIVE OLBERG addressed his objection. He stated of the 66,000 business licenses, an estimated 30,000-40,000 probably do not have a business attached. He explained that in reality, most business licenses are for a purpose other than conducting business. It would not be practical to consider business licenses as drivers licenses. REPRESENTATIVE DAVIES commented HB 458 has been through three different hearings and (B) was the result of the consultations among the various departments about what they felt would be cost effective "in the large picture." The overall attempt is the ability to withhold wages and to have a zero tolerance, but doing it in the most cost effective way possible. Number 376 REPRESENTATIVE KOTT moved his amendment. CHAIRMAN VEZEY clarified REPRESENTATIVE KOTT's amendment was to delete, on page 7, subsection (2), subparagraph (B) including (i), (ii) and (iii). CHAIRMAN VEZEY asked the committee secretary to call the roll. IN FAVOR: REPRESENTATIVES SANDERS, KOTT. OPPOSED: REPRESENTATIVES OLBERG, G. DAVIS, B. DAVIS, ULMER, VEZEY. The MOTION FAILED. Number 390 REPRESENTATIVE OLBERG called for the question on the amendment to HCSCSSB 190(STA). CHAIRMAN VEZEY asked the committee secretary to call the roll. IN FAVOR: REPRESENTATIVES OLBERG, B. DAVIS, ULMER. OPPOSED: REPRESENTATIVES SANDERS, G. DAVIS, KOTT, VEZEY. The MOTION FAILED. Number 400 REPRESENTATIVE KOTT moved to pass HCSCSSB 190(STA) from House State Affairs with individual recommendations. CHAIRMAN VEZEY asked the committee secretary to call the roll. IN FAVOR: REPRESENTATIVES OLBERG, SANDERS, G. DAVIS, B. DAVIS, ULMER, KOTT, VEZEY. The MOTION PASSED. CHAIRMAN VEZEY clarified at last week's meeting the committee adopted two zero fiscal notes with HCSCSSB 190(STA) and they will move out with the bill.
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