Legislature(2003 - 2004)
04/17/2003 09:04 AM Senate FIN
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
CS FOR SENATE BILL NO. 58(JUD)
"An Act relating to permanent fund dividend program notice
requirements and to the ineligibility for permanent fund
dividends of certain persons sentenced for crimes involving
mandatory motor vehicle liability insurance."
This was the first hearing for this bill in the Senate Finance
Committee.
Co-Chair Wilken explained this bill "makes a person convicted of
failing to carry mandatory vehicle liability insurance of proof
thereof, ineligible for a permanent fund dividend for the
qualifying year in which he or she was convicted. The person is
ineligible for five years for a second or subsequent offense."
CRYSTAL MOORE, Staff to Senator Cowdery, testified that this
legislation pertains to uninsured motorists who cause an accident
or are otherwise caught without proper insurance coverage.
SENATOR JOHN COWDERY expressed his intent that dividends would not
be denied to motorists who have adequate insurance coverage, but
are unable to provide proof at the time of an accident.
Co-Chair Wilken clarified that a motorist would have an opportunity
to provide proof of insurance and upon such proof would not be
subject to forfeiture of the permanent fund dividend.
Senator Cowdery noted similar provisions apply to proof of vehicle
registration whereby a motorist is allowed a certain period of time
to provide proof of registration.
Senator Taylor understood State statute contains no current
requirement to carry insurance unless the vehicle is involved in an
accident. He suggested that a person of "imminent wealth" is not
required to purchase insurance coverage.
Senator Cowdery informed that motorists must sign an affidavit
attesting to insurance coverage when obtaining a drivers' license.
Senator Taylor corrected that the affidavit affirms that the
motorist either has purchased insurance or has the means to pay the
costs incurred in any accident.
Senator Cowdery acquiesced but noted proof is required to
demonstrate the motorist has adequate means.
Senator Taylor commented that the absence of a "totally mandatory
system" is "troubling".
Senator Cowdery countered that the ability to pay for any damages
caused is essentially insurance.
Senator Taylor opined that some people allege to have adequate
funding, but in actuality do not. He noted that in these instances,
the motorist's drivers' license is revoked.
Senator Taylor admitted this would impact a small percentage of
population, but that the issue could be problematic to those
motorists who have the means to pay accident expenses. He explained
that an uninsured motorist involved in an accident who pays the
costs incurred, should not be denied a permanent fund dividend.
Senator Cowdery had understood that insurance coverage is
mandatory. He emphasized the intent of the bill is to make drivers
responsible, whether they purchase insurance coverage or have
adequate means to pay costs themselves.
Senator Taylor stated this legislation would be appropriate if
statute required every motorist to carry insurance. He asserted
that reimbursement must be paid to accident victims, noting that
Alaska operates as a "fault system".
Senator Taylor surmised that the Child Support Enforcement Division
and other State agencies oppose this legislation arguing that
denying some people a permanent fund dividend would result in
creditors unable to collect repayment of debt. He expressed his
primary concern relates to victims of an accident caused by an
uninsured motorist, having no means to collect damages because the
perpetrator was denied a dividend.
Senator Cowdery remarked that a person made ineligible to receive a
dividend is similar to a nonresident, felon or other individual
ineligible to receive a dividend. Therefore, he stated, "There is
no dividend to divvy up. There is nobody to fight over anything."
He furthered, "and nobody will be out anything - the child support
people or anything - unless the guy violates the law."
Senator Bunde shared concerns that in some instances a permanent
fund dividend could be only funds a victim could recover. He asked
if consideration was given to surrendering these dividends into the
State general fund. He opined this would put
Senator Cowdery reiterated his comment that if no funds are
available via a permanent fund dividend, there would be no dispute
over which creditor is entitled to garnishment. He therefore,
argued that no party would lose money over this legislation rather
"they're not going to lose it unless they break the law."
Senator Bunde asserted this would only punish people who would have
otherwise benefited from garnishment of a dividend.
LANDA BAILY, Special Assistant and Legislative Liaison, Department
of Revenue, stressed, "any policy intended to deter the type of
conduct that Senator Cowdery seeks to deter, is absolutely a good
endeavor." She qualified that her forthcoming comments are not
intended to be oppositional but informational. She reported that
the Child Support Enforcement Division was one of the top ten
garishers of the permanent fund dividend in FY 01. She elaborated
that the Division submitted 12,821 records with 10,448 requests
paid, amounting to $12,846,911.89 for delinquent child support
payments. She estimated that one to ten percent of those records
could be impacted by this legislation.
Ms. Baily cautioned that the Division would be unable to access the
"offending parent's" permanent fund dividend in order to pay child
support arrearages, which would be an unintended consequence of
this legislation.
Co-Chair Wilken asked for a response to Senator Bunde's suggestion
to relinquish the permanent fund dividends of these offenders to
the State general fund.
Ms. Baily relayed her consultation with Larry Persily, Deputy
Commissioner of Department of Revenue, and his efforts to punish
offenders without causing unintended consequences to others. She
stated she would continue these efforts.
Senator Olson asked the number of qualified dividend recipients who
chose to not apply for a dividend, knowing that dividend would have
been garnished.
Ms. Baily responded that she would attempt to provide that
information, noting she was unsure whether such data was available.
Ms. Baily commented on a need to identify the number of people who
would be denied a dividend under this legislation and who are also
in arrearage.
Senator Bunde understood the existence of a program whereby the
State could apply for the dividend of those qualified residents who
refused to apply for a dividend knowing it would be garnished.
Ms. Baily deferred to others within the Department of Revenue.
Co-Chair Wilken suggested working with the bill sponsor to address
this matter.
Co-Chair Wilken referenced statutes relating to mandatory insurance
requirements.
Senator Taylor noted the requirement to obtain a certificate of
self-insurance upon completion of an affidavit asserting the holder
has the ability to pay damages of any accident the motorist might
cause.
Senator Taylor suggested amending this legislation to include
"insurance or self-insurance" coverage.
Senator Taylor surmised that many of the motorists operating a
vehicle without insurance also do not have a valid driver's
license, as it was suspended after the motorist caused an accident
or was convicted of a Driving Under the Influence (DUI), or similar
offense. He noted these motorists are unable to pay the higher
premiums of the "SR22" insurance, required for motorists convicted
of these offenses. He commented this provides victims little
financial recourse in future incidents. He was concerned that
withholding permanent fund dividends would further hinder these
motorists in their ability to purchase insurance.
Senator Cowdery asserted that if a person could afford a vehicle
and gasoline, that person must take responsibility.
Senator B. Stevens directed attention to Fiscal Note #5 from the
Department of Law, noting the analysis references a "unit" as
follows.
The collections unit of the Department of Law is responsible
for collecting civil and criminal judgments owed to the State
of Alaska, and beginning in January 2002, restitution on
behalf of victims of all types of crimes (violent, non-
violent, and property crimes) and delinquent acts…
…During FY 02, the unit collected $3,574,907 of which
$2,960,210 was through the dividend attachment.
Senator B. Stevens asked for an explanation of this unit.
Senator Taylor replied that this section operates within the
Department of Law with the sole function to collect fines and
restitution payments.
Senator B. Stevens asked if this unit collects funds for
distribution to victims or collects revenue for the Department of
Law.
SHARON BARTON, Director, Division of Administrative Services,
Department of Revenue, shared that in her experience at the
Department of Administration, she learned that some funds collected
by this unit are transferred to the Office of Public Advocacy.
Senator B. Stevens supported the collection of funds for
distribution to victims but opposed collection for the Department
of Law.
Senator Taylor commented that the unit collects funds for both
victims and the Department. He explained the unit acts as the
enforcement "arm" of restitution requirements and operates as a
"pass through" for funding.
Co-Chair Wilken stated this issue would be addressed later.
DWAYNE BANNOCK, Director, Division of Motor Vehicles, Department of
Administration, testified via teleconference from an offnet
location that he was available for questions.
Senator Olson noted some rural areas have no state road system and
vehicles are operated on private land, for example in a mining
area, and are not required to be registered. He asked if this proof
of insurance would be necessary in this situation.
Senator Cowdery responded the legislation is intended only for
vehicles traveling on publicly maintained roads.
Senator B. Stevens referenced a spreadsheet titled, "DWI
Misdemeanors & Felonies FY 02 and July-Department of Environmental
Conservation. FY 03, Driving Without Insurance" [copy on file]
compiled by the Alaska Court System.
Ms. Moore detailed the spreadsheet lists the number of first time
and multiple Driving While Intoxicated (DWI) incidences. She
exampled that in Homer during FY 03, of the four first time DWI
arrests and 76 second or more DWI arrests, 19 of the offenders did
not have insurance.
Senator Cowdery stated he would clarify the information.
Co-Chair Wilken noted questions remain on this matter and ordered
the bill HELD in Committee.
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