04/05/2013 09:00 AM Senate FINANCE

HOUSE BILL NO. 52 am                                                                                                          
                                                                                                                                
     "An Act relating to allowable absences from the state                                                                      
     for purposes of eligibility for permanent fund                                                                             
     dividends; and providing for an effective date."                                                                           
                                                                                                                                
9:51:43 AM                                                                                                                    
                                                                                                                                
MICHAEL PASCHALL,  STAFF, REPRESENTATIVE ERIC  FEIGE, stated                                                                    
that the  bill was introduced  as an outfall of  a provision                                                                    
in the  allowable absences pertaining to  the Permanent Fund                                                                    
Dividend  (PFD). The  provision  created  a situation  where                                                                    
members of  congress and  their staff  were allowed  to keep                                                                    
their  PFD  on an  allowable  absence  for longer  than  ten                                                                    
years.  He mentioned  that military  members were  sometimes                                                                    
denied  their   PFD  because  of   the  10-year   rule.  The                                                                    
individuals  working  in  Washington  DC and  those  in  the                                                                    
military  were representing  the state  while serving  their                                                                    
country.                                                                                                                        
                                                                                                                                
Mr.  Paschall commented  that the  bill removed  the 10-year                                                                    
rule  from   statute,  which   opened  the   eligibility  to                                                                    
approximately  100 people.  He mentioned  that the  existing                                                                    
regulations  used by  the division  were sometimes  bypassed                                                                    
with  a  justifiable  excuse,  but   when  in  statute,  the                                                                    
division was  bound. The bill  created a  provision allowing                                                                    
an individual  to be  absent for less  than five  years with                                                                    
documentation   of  an   allowable   absence.  Examples   of                                                                    
allowable absences were  accredited educational institution,                                                                    
military,  staff  or  staff of  congress  and  Peace  Corps.                                                                    
During the period of time  the individual must return to the                                                                    
state for a consecutive 72  hours every two years. Following                                                                    
the fifth year,  a person must prove they were  in the state                                                                    
for  30 cumulative  days over  the previous  five years  and                                                                    
provide proof of residency for purposes of a PFD.                                                                               
                                                                                                                                
9:56:41 AM                                                                                                                    
                                                                                                                                
Mr. Paschall  shared that there  was an outline  of criteria                                                                    
in  the bill  used to  evaluate  the intent  to return.  The                                                                    
criteria included a  measurement of the length  of time away                                                                    
from  the  state   versus  the  length  of   time  that  the                                                                    
individual  was   present  in  the  state   along  with  the                                                                    
frequency  and duration  of voluntary  return  trips to  the                                                                    
state during  the past five  years. Always in  the preceding                                                                    
five  years, the  individual  must  be in  the  state for  a                                                                    
cumulative of  30 days.  He added the  criteria of  owning a                                                                    
home in  Alaska, payment of resident  taxes, registration of                                                                    
a   vehicle,  voter   registration  and   history,  driver's                                                                    
license,  business  license   or  professional  license  and                                                                    
receipt of benefits under a  claim of residency in the state                                                                    
or  other  jurisdiction.  The  hope  was  for  an  objective                                                                    
scoring  system based  upon the  length of  absence to  help                                                                    
make  the   determination.  The  final  criterion   was  the                                                                    
priority  given  by  the  individual  to  the  state  on  an                                                                    
employment  assignment  preference   list.  He  provided  an                                                                    
example  in  military  service when  a  member  requested  a                                                                    
location for service.                                                                                                           
                                                                                                                                
10:00:24 AM                                                                                                                   
                                                                                                                                
Mr. Paschall explained the zero  fiscal note. He shared that                                                                    
the   allotment  of   the  dividend   was  based   upon  the                                                                    
performance of the fund. The  dividend amount was calculated                                                                    
as a  total number  based upon  the fund's  performance. The                                                                    
number of  eligible individuals did  not have impact  on the                                                                    
how  much  the state  dispersed  as  part  of the  PFD.  The                                                                    
division  would  not  alter their  staff  because  the  same                                                                    
investigative staff would continue to inspect applications.                                                                     
                                                                                                                                
10:01:50 AM                                                                                                                   
                                                                                                                                
Co-Chair  Meyer  opined that  more  division  time would  be                                                                    
spent  in  the  investigation   process.  He  remarked  that                                                                    
multiple exceptions could result  in a significant financial                                                                    
impact  to the  PFD and  further changes  would continue  to                                                                    
add-up. He agreed that the  military personnel were valuable                                                                    
and should be held harmless.                                                                                                    
                                                                                                                                
10:02:22 AM                                                                                                                   
                                                                                                                                
Senator Bishop  surmised that the division  must develop the                                                                    
objective   scoring  system.   Mr.  Paschall   replied  that                                                                    
guidelines within  the division provided the  opportunity to                                                                    
develop  new  regulations  to  implement  the  legislature's                                                                    
requests.  The opportunity  was available  to create  a more                                                                    
objective scoring  system than  the one currently  in place.                                                                    
He provided  an example  of an applicant  and noted  that an                                                                    
individual who had lived in  Alaska during their youth would                                                                    
score higher than an individual  who had lived in Alaska for                                                                    
a brief time.                                                                                                                   
                                                                                                                                
10:04:15 AM                                                                                                                   
                                                                                                                                
Senator  Bishop asked  if section  2 identified  the scoring                                                                    
system  needs. Mr.  Paschall deferred  the  question to  the                                                                    
division director.  He knew that many  discussions regarding                                                                    
the scoring  system had  occurred, but  he was  unsure about                                                                    
the amount of time that the division spent on the process.                                                                      
                                                                                                                                
10:04:51 AM                                                                                                                   
                                                                                                                                
Senator  Olson  stressed  that  he  had  great  respect  for                                                                    
military  service.  He  wondered  how  to  ensure  that  the                                                                    
exceptions would not take time  or resources from the state.                                                                    
Mr.  Paschall explained  that  there was  no  change in  the                                                                    
definition  of  an  "allowable absence."  The  justification                                                                    
would be mandatory  for those who were not  returning to the                                                                    
state after  the five  years. The  provision changed  in the                                                                    
legislation   addressed   the   tenth  year.   The   current                                                                    
guidelines would be  tightened up after the  sixth year with                                                                    
the legislation.                                                                                                                
                                                                                                                                
10:07:30 AM                                                                                                                   
                                                                                                                                
Senator  Olson  stressed  that   the  division  would  spend                                                                    
additional   time   investigating   the   applications   and                                                                    
allowable absences. He questioned  the zero fiscal note. Mr.                                                                    
Paschall deferred the question to the division director.                                                                        
                                                                                                                                
10:08:41 AM                                                                                                                   
                                                                                                                                
Co-Chair Meyer CLOSED public testimony.                                                                                         
                                                                                                                                
10:08:53 AM                                                                                                                   
                                                                                                                                
DAN DEBARTOLO,  DIVISION DIRECTOR, PERMANENT  FUND DIVISION,                                                                    
DEPARTMENT OF NATURAL RESOURCES  testified that both the ten                                                                    
and the  five year rules were  in place. He stated  that the                                                                    
average technician  spent an average  of eight to  ten hours                                                                    
on the discussed cases. If  the ten-year rule was eliminated                                                                    
the technicians no longer had  that responsibility. He noted                                                                    
that  the  five year  rule  was  in regulation  with  "soft"                                                                    
language.  The division  opined that  moving the  regulation                                                                    
into  statute  provided  a more  powerful  statement.  If  a                                                                    
person did  not return to the  state for a cumulative  of 30                                                                    
days over the five years,  the action demonstrated that they                                                                    
did not intend to return.                                                                                                       
                                                                                                                                
10:11:30 AM                                                                                                                   
                                                                                                                                
Senator Olson expressed satisfaction with the answer.                                                                           
                                                                                                                                
Co-Chair Meyer noted that there was a proposed amendment.                                                                       
                                                                                                                                
10:12:10 AM                                                                                                                   
AT EASE                                                                                                                         
                                                                                                                                
10:13:47 AM                                                                                                                   
RECONVENED                                                                                                                      
                                                                                                                                
Vice-Chair  Fairclough  stated  that she  had  reviewed  the                                                                    
Alaska  State  Statutes.  She  related  that  the  amendment                                                                    
proposed another exemption by  inserting "or a United States                                                                    
national team  for an Olympic  sport." She pointed  out that                                                                    
exemption  15  in  AS  43.23.08   stated  that  "because  of                                                                    
training  or competing  as  a member  of  the United  States                                                                    
Olympic  team," which  covered her  concerns. Mr.  Debartolo                                                                    
responded that  that the division's interpretation  was that                                                                    
the individual was  a selected Olympic team  member, but not                                                                    
one selected for the national team.                                                                                             
                                                                                                                                
10:15:38 AM                                                                                                                   
                                                                                                                                
Vice-Chair  Fairclough  observed  that  the  department  had                                                                    
inappropriately interpreted  the intent of  the legislature.                                                                    
She proposed review of her amendment.                                                                                           
                                                                                                                                
10:16:02 AM                                                                                                                   
                                                                                                                                
Co-Chair Kelly requested an  explanation of the department's                                                                    
interpretation.  Mr. DeBartolo  replied that  the division's                                                                    
interpretation of the legislation was  that a "member of the                                                                    
United States Olympic  team" had been selected  for the team                                                                    
and  was on  the  team while  the games  were  in play.  The                                                                    
division  did not  consider a  person  who was  part of  the                                                                    
United States National team a member of the Olympic team.                                                                       
                                                                                                                                
10:17:02 AM                                                                                                                   
                                                                                                                                
Vice-Chair  Fairclough  wished  to  investigate  the  matter                                                                    
further.  She  understood  the division's  distinction,  but                                                                    
wondered if the amendment  would be considered "friendly" by                                                                    
the sponsor.                                                                                                                    
                                                                                                                                
10:17:34 AM                                                                                                                   
                                                                                                                                
Co-Chair  Meyer  asked  if  the   sponsor  agreed  with  the                                                                    
amendment. Mr. Paschall replied in the affirmative.                                                                             
                                                                                                                                
10:17:45 AM                                                                                                                   
                                                                                                                                
Senator Hoffman  cited section 2,  "an individual  may rebut                                                                    
this presumption by providing  clear and convincing evidence                                                                    
to  the  department."  He  pointed out  line  29  number  4,                                                                    
"additional items that can be  used for rebuttal." He called                                                                    
into  question registration  of a  vehicle, voting  history,                                                                    
and driver's license.  He asked if a person  who could prove                                                                    
that they had  a registered vehicle outside of  the state or                                                                    
was registered to  vote or licensed to drive  outside of the                                                                    
state would  be ineligible  for the  PFD under  the proposed                                                                    
legislation.  Mr.  Debartolo  noted  that  taking  steps  to                                                                    
register  to  vote  outside  of   the  state  was  typically                                                                    
considered  a "severing  action," which  could affect  one's                                                                    
eligibility determination. College  students were encouraged                                                                    
to vote absentee for that purpose.                                                                                              
                                                                                                                                
10:19:56 AM                                                                                                                   
                                                                                                                                
Senator  Hoffman  inquired  what circumstances  would  allow                                                                    
someone  to  get  a  dividend when  they  had  a  registered                                                                    
vehicle  or  voter  registration or  driver's  license  from                                                                    
another  state. Mr.  Debartolo replied  that there  were few                                                                    
circumstances where a person could  receive a dividend under                                                                    
the stated circumstances.                                                                                                       
                                                                                                                                
10:20:46 AM                                                                                                                   
                                                                                                                                
Vice-Chair Fairclough  inquired when the state  might expect                                                                    
to  hit   a  tipping   point.  She  observed   17  different                                                                    
exceptions  to  the   original  residency  requirements  and                                                                    
Alaskan's were losing money in  their dividends as a result.                                                                    
Mr.  Paschall  replied  that  many  different  options  were                                                                    
available. The  sponsor chose to  address only the  issue of                                                                    
treating  individuals differently  at ten  years. The  state                                                                    
Supreme  Court stated  that  economic  protection under  the                                                                    
equal  protection  clause placed  the  change  at the  least                                                                    
scrutiny. He  did not  feel that  the state  was close  to a                                                                    
tipping point. While he did  not object to the amendment, it                                                                    
did  add another  opening that  fell outside  of the  bill's                                                                    
intentions.                                                                                                                     
                                                                                                                                
10:23:39 AM                                                                                                                   
                                                                                                                                
Vice-Chair  Fairclough stated  that she  would like  to hear                                                                    
from the  legislative legal  department. She  wondered where                                                                    
the  hurdle was  for those  who  would not  testify and  who                                                                    
expand  in  their  generosity to  share  with  others  being                                                                    
disenfranchised by access to that  resource. She wondered if                                                                    
a  higher hurdle  for  access to  the PFD  would  be a  wise                                                                    
decision.                                                                                                                       
                                                                                                                                
10:25:05 AM                                                                                                                   
                                                                                                                                
Co-Chair Meyer  noted that Vice-Chair Fairclough  brought up                                                                    
a good point  and that permanent fund had  been around since                                                                    
1981 with  17 exceptions made.  He opined that  the military                                                                    
personnel were  important as members  of Congress  and their                                                                    
staff,  but  felt   that  Vice-Chair  Fairclough's  concerns                                                                    
warranted attention.                                                                                                            
                                                                                                                                
10:26:07 AM                                                                                                                   
                                                                                                                                
Senator   Hoffman  related   a  hypothetical   scenario.  He                                                                    
inquired if  a minor could  reapply for a dividend  in cases                                                                    
where  a parent  neglected to  submit their  application. He                                                                    
noted  that  minors  were  at the  mercy  of  their  parents                                                                    
regarding filing for  a PFD. Mr. DeBartolo  responded that a                                                                    
provision  existed  for  a  child that  did  not  receive  a                                                                    
dividend.  Filing for  prior dividends  could occur  between                                                                    
their 18th and 20th  birthday. Eligibility was then reviewed                                                                    
by the division staff.                                                                                                          
                                                                                                                                
10:28:39 AM                                                                                                                   
                                                                                                                                
Co-Chair Meyer  appreciated the  questions brought  forth by                                                                    
the committee.                                                                                                                  
                                                                                                                                
Senator  Hoffman  inquired how  many  minors  fell into  the                                                                    
category  described. Mr.  DeBartolo offered  to provide  the                                                                    
data to Senator Hoffman.                                                                                                        
                                                                                                                                
10:29:42 AM                                                                                                                   
                                                                                                                                
Vice-Chair Fairclough  inquired if the example  that Senator                                                                    
Hoffman  had  defined  was in  regulation  or  statute.  Mr.                                                                    
DeBartolo responded  that the provision  for an 18  year old                                                                    
to reapply for their missed dividends was in statute.                                                                           
                                                                                                                                
10:30:47 AM                                                                                                                   
                                                                                                                                
HB  52  was   HEARD  and  HELD  in   committee  for  further                                                                    
consideration.                                                                                                                  
                                                                                                                                
10:31:04 AM