Legislature(2003 - 2004)
03/30/2004 08:03 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 547-PFD: DELAY PAYMENT FOR ALLOWABLE ABSENCES Number 1748 CHAIR WEYHRAUCH announced that the next order of business was HOUSE BILL NO. 547, "An Act relating to the dividends of individuals claiming allowable absences; and providing for an effective date." Number 1723 REPRESENTATIVE GRUENBERG stated his support of HB 547. He stated for the record that his recollection from his previous term as legislator was that a bill had to be noticed [through the Chief Clerk's office] by the bill name and number. That notice had to be made on the Thursday before the week in which the bill would be heard. He said he understands that's no longer the requirement and that, currently, only the subject matter has to be noticed. He said, "I'm just calling that to the committee's attention, because in the final days - particularly in the second session - it's important that the public be fully aware of what we're dealing with. CHAIR WEYHRAUCH concurred. Number 1680 CHRIS KNIGHT, Staff to Representative Paul Seaton, Alaska State Legislature, introduced HB 547 on behalf of Representative Seaton, sponsor. He indicated that most people know a story of someone who has committed fraud when applying for the permanent fund dividend (PFD). He revealed that in 2000, approximately $30 million left the State of Alaska in PFDs paid to people living outside of the state. He noted that the legislature has set up a guideline for allowable absences from the state and a detailed list of those allowable absences is in the committee packet. MR. KNIGHT said the proposed legislation would not change the current system of allowable absences. He indicated that the intention of the bill is to get people to come back to Alaska and to "remove this ... thought that there might be fraud of the PFD application or the distribution of [the] PFD." He explained, "The thought was that if we created some sort of structural change, in the sense that if you have an allowable absence and you return to the state and actually spend time in the state, then you could receive your PFD." Mr. Knight indicated that HB 547 may reduce that amount of claims that the Permanent Fund Dividend Division has, which would potentially result in putting money back into the state's economy. Number 1574 REPRESENTATIVE SEATON clarified that the bill takes most allowable absences and "has the person return to the state [and] reestablish residency after that allowable absence, before they receive the past dividend ... that they qualified for." He asked Mr. Knight to indicate which allowable absences are not included in HB 547. MR. KNIGHT noted that members of Congress are not included in the bill as those who qualify for an allowable absence. He said, "Mainly, the absences we were trying to capture within this bill are people that leave for college." He related having been one of eight or nine men who attended college out of state. He noted that he and one other man returned to Alaska after school, while the rest did not. He predicted that if the dividends [had been held until their return], those who took jobs in the Lower 48 would probably have returned to Alaska to work. REPRESENTATIVE SEATON said, "This doesn't apply to the 180-day absence that anybody is entitled to, so it doesn't interfere there. Number 1472 REPRESENTATIVE LYNN asked how [HB 547] would relate to the military. MR. KNIGHT answered that, currently, military personnel [who claim Alaska residency and file for a PFD] must return to the state for 72 hours, every two years. He offered his understanding that a military person who lives in Alaska for two years and is then transferred to, for instance, Oklahoma can receive his/her dividend for 10 more years, as long as that person's intent is to move back to Alaska, and if that person meets the requirement of returning to the state for 72 hours, every two years. He concluded, "So, realistically, we're not changing the eligibility requirements whatsoever; we're just making it clear that if you are going to live in the state and you're going to continue to claim to be a resident of the state, then you'll receive your dividend." Number 1413 REPRESENTATIVE LYNN pointed out that no one knows how long a military assignment might be. A person may be assigned for four years and may not be able to afford to come back for 72 hours. He noted that that's particularly true for the lower ranking individuals. He said it's an area that concerns him. MR. KNIGHT revealed that he had previously worked in an office that sent out a quarterly publication detailing how a person could continue to be eligible for the PFD while serving in the military. For example, he noted, when not involved in combat, most people have access to cargo planes back to the states, in order to meet the 72-hour requirement. He noted that HB 547 would not change that process. He added, "The only thing that changes is that if you have no intention of returning to the state within 10 years, you're going to lose all your dividends, which is also current statute, except that you're not going to be paid your dividends until you actually come back to the state." Number 1270 REPRESENTATIVE SEATON revealed that the idea for HB 547 came from a military person who is in the U.S. Coast Guard and is disturbed that many members that he served with have no intention of coming back. He said the man would think that receiving six or eight held back PFDs upon his return to Alaska would serve as a great nest egg. He stated that the point of the proposed legislation is to make people who say they will come back to the state actually do so before they can receive their held dividends. Number 1181 REPRESENTATIVE HOLM said people have related to him that they know a lot of people [in the military] who never have any intention of staying in Alaska, but still accept the PFD. He noted that he was also told that Alaska is the most asked-for place to go, by military people, because of the PFD. He noted that military people with large families can augment their incomes in this manner. Number 1080 REPRESENTATIVE SEATON mentioned the "brain drain" [Alaska losing people to other states]. He suggested that the nest egg [PFDs held back while people are out of state] would be a good incentive to people to return to the state. He added that he hasn't seen anything else that has the potential for doing that. Number 1040 PAUL DICK, Chief, PFD Operations, Central Office, Permanent Fund Dividend Division, Department of Revenue, testifying on behalf of the division, noted that the largest group of people on the 180-day allowable absence are the spouses and children accompanying either military personnel, predominately, or students. He said there have been comments made about these people reestablishing residency upon their return to Alaska; however, Mr. Dick clarified that they never lost their residency, and it's just a matter of them coming back to live in Alaska. They are eligible for the dividend because they have maintained their residency during the period of time [in which they were out of the state]. Number 0973 CHAIR WEYHRAUCH referred to a handout in the committee packet entitled, "Why Applicants Were Absent From the State." He noted that the total for students enrolled full-time in postsecondary education is 5,365. He asked if that number has grown over time or remains stable, and how much the bulk payout would be when those students return. Number 0950 MR. DICK answered that there is not a dramatic growth in those numbers. He stated that the amount they would get when they get back would obviously be dependent on how much the dividend was for each year. In response to a follow-up question from Chair Weyhrauch, he said [the division] has not analyzed how many years students are out of the state; however, he said he would assume that students would be out for four years. Number 0905 REPRESENTATIVE HOLM asked what percent of the PFDs are mailed out of the state each year. MR. DICK said he doesn't know the percentage, but 18,000 is the total number of PFDs mailed [out of state] out the 620,000 applicants. He noted that approximately $20 million was sent out of state last year. Number 0863 REPRESENTATIVE GRUENBERG opined, "If you have these figures, you ought to be able to break down the raw data for us." Referring to the most recently mentioned handout, he noted that "the largest category are people who have accompanied an Alaska resident who's eligible for a PFD." He asked if [the division] can break down who the Alaska residents are that these people are accompanying to show whether they are students, or military, or other. MR. DICK said that it would be possible to conduct a study for that information. In response to a question from Representative Gruenberg, he said he believes "the numbers would come out showing that they are mostly military, particularly with the children." In response to follow-up questions from Representative Gruenberg, he said the full-time student category would be adults in a post-secondary education. He stated that adults have to have their own eligibility. Full-time students enrolled in grades 7-12, he confirmed, would predominately not be accompanying their parents. REPRESENTATIVE GRUENBERG asked how long the various categories remained out of state and how many people eventually returned. MR. DICK said he believes those numbers could be found. REPRESENTATIVE GRUENBERG said he thinks this is information that he would like. He offered to work with Mr. Dick to arrive at the best questions to ask. MR. DICK, in response to a question from Representative Gruenberg, said he could not pin down a time in which he would have that information, but he said [the division] would work diligently to get it. Number 0660 REPRESENTATIVE HOLM asked what the tax implication might be of extending payments for years. He said he would assume that the tax would be greater on the individual payments, rather than on a grouping of payments. REPRESENTATIVE HOLM noted that Alaska loves having military here. Notwithstanding that, he observed that it is somewhat curious that Alaska, as a state, has chosen to participate [in] greater payment of the military than the other 49 states, by virtue of the PFD. He said he thinks the legislature should think about those things. Number 0562 REPRESENTATIVE SEATON offered his understanding that there is currently a program where if someone dies, the PFD is in trust in his or her estate for a certain amount of time. He said, "We have ..., basically, the same kind of a program of holding those checks. Do we have that for any other categories, as well?" MR. DICK answered, "We would just hold that dividend for that one year only, and once we're notified that the person's deceased, we would ... put the check 'to the estate of'." He clarified that in that circumstance, PFD checks are not held for years. REPRESENTATIVE SEATON asked if there is any circumstance of disputed checks, for example, where the [PFD] checks are held in abeyance until administrative processes go forward. MR. DICK replied that there is a denial and appeal process where a dividend would be pended until it's adjudicated and resolved. He stated that [the division] has those resolved within a year of the application deadline. Number 0471 CHAIR WEYHRAUCH indicated that in some cases, the Alaska Supreme Court has been involved in those disputes. He said, "You still hold the check during the pendency of those litigations." MR. DICK concurred. Number 0445 SHARON BARTON, Director, Central Office, Permanent Fund Dividend Division, Department of Revenue, added that when a child reaches the age of 18, if the parents or guardian have not filed for him/her over the years, they can, at that point, file for prior year dividends. She said [the division] reserves an estimate of that amount of money each year for that purpose. REPRESENTATIVE GRUENBERG suggested a work group or subcommittee be formed to get the information from [the aforementioned testifiers] as efficiently as possible. CHAIR WEYHRAUCH said Mr. Knight would arrange that. [HB 547 was heard and held.]
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