Legislature(1999 - 2000)
04/15/1999 08:05 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
HB 132-PERMANENT FUND ALLOWABLE ABSENCES Number 585 CHAIR JAMES announced HB 132, "An Act relating to allowable absences from the state for purposes of eligibility for permanent fund dividends; and providing for an effective date," is the next item up. Number 592 REPRESENTATIVE COGHILL moved to adopt CSHB 132, version H, Cook, 4/8/99, as the working document before the committee. There being no objection, it was so ordered. REPRESENTATIVE OGAN noted that the deputy commissioner of the Department of Administration, an assistant attorney general, and the sponsor met with the subcommittee. He stated, "After lengthy discussion decided that, add the language there of domicile in the state and then let the case law - that's pretty clear in the courts - define what domicile is, which is a tighter description of residency. If that would satisfy possible loopholes of people making false claims, 'Well, my employer make me work out-of-state for awhile, it was beyond my control.' ... The thing that wasn't resolved was, what do we do when somebody is self-employed, and so if you're self-employed, or you're a principal in a corporation ... there might be a loophole there where people could say, 'Well, gee my boss made me work outside for awhile ... the person is on the payroll but he's his own boss. That's probably the only down-side to this. Then we ... removed the retroactivity clause in 1997 and we also added, at Representative Smalley's request, to include Peace Corps." REPRESENTATIVE HUDSON asked why the retroactivity provision was removed. REPRESENTATIVE OGAN said he believes the sponsor's constituent received a dividend for that particular year. CHAIR JAMES suggested asking Nanci Jones, Department of Revenue, about that. Number 642 REPRESENTATIVE WHITAKER expressed his frustration with HB 132. CHAIR JAMES remarked that she, and other folks, share his frustration on this issue. REPRESENTATIVE SMALLEY noted that HB 132 looks at those individuals that are actually residents of the state, but because of their employment situation are out of the state. He said, from a policy standpoint, he feels comfortable with it. REPRESENTATIVE HUDSON said he has a concern with being "required" to be outside the state of Alaska, because the department will have to determine when somebody "has" to be outside. He mentioned that people want to know how they can become a resident of the state of Alaska to be eligible for the dividend. REPRESENTATIVE OGAN commented that there is a danger of bills turning into Christmas trees. CHAIR JAMES asked why the peace corps was put back in when it was removed last year. Number 698 PETER TORKELSON, Researcher to Representative Cowdery, stated that, "We've really tried to sidestep the military issue, although I understand that it's part of the larger policy question. On the Peace Corps, the original language in the bill (Representative Smalley noted) was such that it probably would have included members of the Peace Corps, but it was questionable. And the AG's [Attorney General's] office expressed their intent that if you're going to include them just say so, let's avoid the legal hairball of trying to decide afterwards what you really meant. And that's where the Peace Corps came from essentially, and with Representative Smalley's concerns the committee chose to move that way." REPRESENTATIVE OGAN said he told Representative Smalley that it would be included in the committee substitute that it will fly or not fly based on the will of the committee. Number 718 DEBORAH VOGT, Deputy Commissioner, Department of Revenue, noted that (in the context of the legislation [HB 157] which was earlier considered with respect to the merchant marines) the way this legislation is now drafted [HB 132], a person in the merchant marines would probably qualify under this exemption. The difference is that the spouse and family of the person would probably also qualify because the general allowable absence for accompanying a person who is on an allowable absence would apply to a person who is out-of-state at the direction of his or her employer. She said it's something the committee might want to think about real seriously. MS. VOGT said, "As I have heard the justification for folks being sent outside for employment purposes, it's always been in the context of people who really do maintain a home here, their family is here, and so on, and they leave for a short period of time for employment and then return, but their families don't move. The way this is currently drafted, we would be presented with the situation of people who took their families with them and perhaps stayed for a number of years - coming back to work in Alaska for the mandatory, I believe the bill does require that the person work in Alaska for some part of the year, ... what I'm pointing out is that this broadens considerably the pool of people that are going to be asking to come within the exemption and it's going to be real hard for us to find ... where to draw the line." CHAIR JAMES said she also sympathizes with that issue. She then referred to page 2, line 19, and asked Representative Ogan what are the residency requirements and how do they differ from the domiciled. in addition to satisfying the residency requirements, the individual is domiciled in the state; and Number 756 REPRESENTATIVE OGAN said he believes the residency requirements are based on Title 1, which doesn't specifically mention anything about domicile. He indicated Legal [and Research Services Division] throws up red flags when the legislature starts talking about residency because it's usually litigated. CHAIR JAMES asked Representative Ogan to read Title 1. REPRESENTATIVE OGAN read: Residency - a person who establishes residency in the state by being physically present in the state with intent to remain in the state indefinitely to make a home in the state. He said this is AS 10.055: A person demonstrates intent under (a) of this section (that was (a) of the section) by maintaining principle place of abode in the state for at least 30 days or longer. Or if a longer period is required by law or regulation and by providing proof of intent. As may be required by law or regulation which may include proof that the persons claiming residency outside the state or obtaining benefits and (indisc.) claiming residency outside the state. REPRESENTATIVE OGAN further noted that under Title 16, place of abode is basically a house, or was interpreted by the courts actually to be a mobile home. He mentioned that Fish and Wildlife Protection had a hard time convicting people who have mobile homes parked year-round in the state because they were maintaining a Title 16 residency to obtain lowcost hunting and fishing licenses and free hunting tags. He emphasized that domicile is a much higher standard. Representative Ogan continued, "We had originally attempted to put some of the descriptions of domicile into the statute and - that was a request we - the case law is very clear and well established on what domicile is and we felt that all we had to do is just mention domicile as a higher standard and I can explain the differences if you'd like." Number 795 CHAIR JAMES said she has a problem with the word "intent," because she doesn't know how a person's intent can be measured. REPRESENTATIVE OGAN read [Black's Law Dictionary], "A domicile is a person's legal home, that place where a man, or woman I assume, has his true fixed and permanent home and principal establishment into which whenever he is absent he has the intention of returning," that's a case law Smith vs. Smith. CHAIR JAMES said that, unless you're in the military, that you're required by law to go where you're told. She asked how required do they have to be, is it just being asked to go, and if you don't go you lose your job, how do we measure required? Number 816 MR. TORKELSON replied, "I believe the draft is fairly clear that as the condition of employment - which would mean at the threat of losing your job, which isn't maybe like the military but it certainly could be a pretty coercive situation for some people." MR. TORKELSON said a representative from the Department of Revenue said perhaps the whole family could go out and stay for a number of years and come back for certain periods of time. He stated, "I suppose well that's possible. The intent of the subcommittee was that with domicile it would be a pretty tough standard to show. You've got your whole family out there, your kids are going to school in another school, or not going to school at all. ... That you're really domiciled here, I think that's the point that domicile does - a true and permanent home and it includes a number of things you can show including the existing regulatory definition that defines it as - one of the evidence for domicile - is where you store your household goods. So, I'm not sure that it would be quite as broad as is (indisc.--fading)." Number 820 REPRESENTATIVE HUDSON mentioned he has seen so many different descriptions by statutes of residency. For a student loan it takes so many years, he believes for a fishery's loan it takes two years, to vote it only takes 30 days and shows an intent. He emphasized that the state had a large lawsuit with the employees of the Alaska Marine Highways System where they were claiming that they were being disenfranchised because they were sailing on the system and they chose to live in Seattle, the policy is pretty clear. He said, "I think the policy is whether or not we want to make that first leap - which is going beyond the required absences outside the state of Alaska. I don't know how you'd be able to determine - for example if the guy was a contractor..." TAPE 99-25, SIDE A Number 001 REPRESENTATIVE HUDSON continued, "Add ornaments on this Christmas tree." MR. TORKELSON noted that the question has come up in the context of the bill previously heard [HB 157]. He said he would like to make a distinction. In that policy call a select class of employees were chosen and given, if that bill passes, were giving that entitlement to select classes. He said, "This does not distinguish among different classes of employees, we recognize that all employment is equally valuable to the state. The money that you bring in whether you're the other type of employee or contractor, is just as valuable. So from a policy perspective I'm not sure that perhaps leaps have to be made." REPRESENTATIVE HUDSON asked if the previous discussion would fall into the same category. CHAIR JAMES added, overlapping. REPRESENTATIVE HUDSON noted that it will absorb them as well so, if you had this you wouldn't need that and you would expand it to... CHAIR JAMES remarked, but if you have this [HB 132] you also include their family. CHAIR JAMES further noted that their family has to stand on their own and in HB 132 they still have to come back to the state (indisc.--simult. speech) every year. Every year they have to work in the state of Alaska for part of the qualifying year. She said that might exclude some of the merchant mariners, but if they're sailing out of the state they would return to Alaska every year for a certain extent. Chair James said, "It [HB 132] does say that they have to be domiciled in the state, that might protect them from taking their family and leaving their family somewhere else." Number 064 MS. VOGT stated, "In the merchant marine legislation which was considered [HB 157] was specifically drafted to address the issue of the spouses and the dependents. In the allowable absences, currently listed as number 12 in the statute, which is accompanying another eligible resident who is absent for a reason permitted under the subsection as the spouse, minor dependent, or disabled dependent of the eligible resident, that's the allowable absence (that we have now) that applies to every other allowable absence." MS. VOGT continued, "In the merchant marine statutes that we considered this morning, the language was inserted to say that accompanying eligibility only went for reasons' 1-3 and 5-12, leaving out reason number 4, which was the merchant marine. And so I would say if this legislation [HB 132] that we're now considering also passed, which does not exclude that allowable absence for spouses, we would have to say that it was intended that spouses be included. And so if a person went, for example for a construction contract, outside for eight months ... and took the family with him or her, then that family would qualify under the way this is currently drafted." CHAIR JAMES said, if that's the case, if you take your family along, then the family would be excused as well. MS. VOGT replied right. Number 116 CHAIR JAMES asked if the family can stay out during that period of time. REPRESENTATIVE OGAN said he assumed that the individual maintains the domicile in the state and that this exemption only applies to the individual, it's not a condition of the family's employment to live there, it's an option for them to go and wouldn't qualify. MS. VOGT pointed out that the department would have a difficult time because the separate allowable absence for the spouse or dependent of a person who is on an allowable absence would appear to cover that spouse. She explained that the allowable absence that HB 132 is talking about is the employee, but the other allowable absence, currently number 12, is toward the spouse of a person who is an allowable absence. She said she believes that person would qualify as an eligible spouse even though they weren't required to leave the state. (12) for employment if in addition to satisfying the residency requirements, the individual is domiciled in the state; and the employer certifies in writing that the absence was a condition of the employment and that the individual was required to work in the state for part of the qualifying year; Number 182 REPRESENTATIVE COWDERY said he doesn't have a problem with having every individual, whether it's family, provide the same proof as the individual who has the job if that would help matters. Number 199 NANCI JONES, Director, Permanent Fund Dividend Division, Department of Revenue, explained that the law currently states that in this situation, if HB 132 were to pass, then the person's family would only be obligated to come back every two years for 72 hours. The individual who's trying to qualify under this employment has the obligation to come back in the state and work part of that time in the state. She mentioned that person can go back and forth, and the family could remain out there which is one of the problems. CHAIR JAMES said the individual must be domiciled in the state, does that change that at all. MS. JONES responded that the division has a slight difficulty with the domicile competing with the definition of residency - that you have this kind of higher order. She noted that it is still based on intent - domicile is saying that you have a higher intent that you show means that you actually have a house in Alaska, and residency - you're saying the same thing. Ms. Jones said it is a fuzzy line that the division will have to deal with if this legislation passes. Number 226 MS. VOGT agreed that domicile in the common law has a stricter meaning than residency. She said, "The issue that we discussed in the subcommittee is that for permanent fund dividend purposes we use a lot of the attributes of domicile to determine PFD (permanent fund dividend) residency. There may still be a slight shading of difference - a person can only have one domicile, a person can have more than one residence. And certainly under, even Title 1 in the PFD, we require the principle place of abode to be Alaska, but they get fuzzy when a person is in the military or a student for a number of years and they really don't maintain a physical home in Alaska but they are still qualified. It adds something to add the word domicile, but it's still going to be a difficult question of proof to determine if a family goes outside for a number of years and still owns a home in Anchorage, they rent it out on a long-term lease, I don't know how we're going to decide that kind of a case." Number 256 REPRESENTATIVE COGHILL said he attended some of the subcommittee meetings. Part of the inequity, as he understands it, started with the State of Alaska having the ability to have employees out of the state for a period of time [page 2, line 15, (10)]. He said he believes there is a problem and that we can certify a state employee a lot easier that we can almost any other kind for state purposes, but for these purposes. serving as an employee of the state in a field office or other location; REPRESENTATIVE COGHILL continued, "There are several things in this that trouble me. One of them is that we end up having to become discerners of intent and that's bad policy. It's almost like when somebody brings a bill before a committee and we question their motives, and really that's what we're putting in statute saying we are reserving the right to judge your intentions and then there are certain proving factors to that intention. I find that kind of troublesome because I am one that doesn't like the state doing that. I'd rather have a nice clear line that says if you're out of the state 180 days you don't get it. And, even though I've got a military base right in the middle of my district, I also have trouble with the military exemption." REPRESENTATIVE COGHILL emphasized that either you should be here or you shouldn't be here. However, he has the dilemma of if they are fellow Alaskans, he doesn't want to just cut them off. He further stated, "That's the problem that we've got ourselves into here and I'm, for one, really reluctant to pass this bill out [HB 132] and I let the other one go [HB 157] without comment, but my point was made when that precedent of letting that bill out started this one, and we'll probably have 20 more that come up. And I think, like the peace corps, it was taken out for a good reason, they're just not here, you know. And I think we're going to have to now be a discerner if an employer is telling the truth or not when he certifies, and that could be a cause of litigation ... was that a bogus certification, and now they become open to a civil liability - all for a dividend check. And so I'm really cautious, I really want to see equity, but my thinking would be to take this section out and take section 10 out and go home. I just had to put that on the record that I'm really having a struggle with the precedent of what we're saying here and I think Mr. Hudson made a really good point in what we're doing is we're shifting the whole philosophy and so, at this point I am really reluctant to move this." Number 338 MS. VOGT said she would like to address a couple of issues and one of them is the issue of intent for the requirements that the employers certify that, under the conditions of employment, that the individual be outside. The question is going to arise, "But did you have to have that job." Certainly volunteering to join the military is a voluntary act and once you're in the military your desires are no longer your own. She said the peace corps really focuses on this issue because there was discussion about whether the peace corps would come under this exemption because once you're in the peace corps, which is a voluntary choice, then the peace corps tells you where you go. Some members of the committee [HB 132 subcommittee] said, "Well, but that's a voluntary choice to go volunteer in the peace corps," others said, "But the peace corps tells you where you go," and for that reason the language was added so that there's no question. Ms. Vogt said, "But you can see the dilemma that it raises for us, then what do we do with Americorps or VISTA [Volunteers in Service to America] once you've made the choice to volunteer - you're assigned where you're assigned. And so it's that kind of issue that is going to come up." MS. VOGT stated that, "The other point I wanted to make about the peace corps was the reason that it was removed from the allowable absence lists last year was really largely because folks focused it on the inequities that it raises - that it came about with a suggestion to add volunteering for FEMA [Federal Emergency Management Agency] to the list because we pay volunteers, we pay VISTA, then folks recognize that, well we don't pay most volunteers, we don't pay VISTA, we don't Americorps, we don't volunteering for religious organizations for doctors without (indisc.). All the other kinds really laudatory reasons that Alaskans leave the state, and so it was decided then that it was more fair not to pay the peace corps then to try to find a line between what kinds of volunteering service we would choose to pay and what we wouldn't pay." CHAIR JAMES said she understands the dilemma. Number 397 REPRESENTATIVE HUDSON asked for a list of positions (for employees which are receiving the permanent fund dividend) outside the state. MS. VOGT pointed out that the folks who are on sabbatical from the university system should be treated as employees of the state since they are still employed by the university. She noted that they used to be paid under another allowable absence which was in regulation. Ms. Vogt said, since that wasn't incorporated into the statute last year (that people on sabbatical would no longer be paid) then the area was raised that they are employees of the state, so that's one category that comes within that definition. REPRESENTATIVE HUDSON asked if sabbaticals are required or are they by choice. MS. VOGT said she believes sabbaticals are by choice (indisc.--simult. speech). REPRESENTATIVE HUDSON remarked that you apply for it. CHAIR JAMES commented, "Take a year off." MS. VOGT noted the point is that they are continually paid because they are still employed. REPRESENTATIVE COGHILL recommended that HB 132 be held because he believes it needs to be amended. [HB 132 was held for further consideration].
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