Legislature(1993 - 1994)
03/26/1993 01:55 PM Senate JUD
| Audio | Topic |
|---|
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
SENATOR TAYLOR introduced SB 58 (PHASE OUT LONGEVITY BONUS) introduced by request of the Governor. He announced there would be testimony taken from teleconference sites in Sitka, Dillingham, Kodiak, Tok, Anchorage, and MatSu. Number 061 JOHN SHAFFER testified both for the American Association of Retired Persons and from his experience living in Alaska for thirty one years. He praised the policies put in place to improve the quality of life for the senior citizens of Alaska, but he expressed his concern for the change in those policies. In order to access the impact of the change in policy which would discourage senior citizens from staying in the state, he requested hearings not just on the budget, but the impact on the quality of life. MR. SHAFFER used the term, elder business, to identify the economic benefits from the present policies, and he reviewed the support for the proposed annuity program to benefit people in the future. He described communities where the senior citizens were not only an economic benefit, but through their volunteer work, they were an asset to their community. SENATOR TAYLOR returned the testimony to Juneau to call on his friend, ROBERT KALLENBERG. Number 108 MR. KALLENBERG, born May 26, 1903, arrived in Dillingham in August, 1926, and now resides in Chugiak. He reviewed the changes during the 66 years he has been in Alaska, such as the delivery of mail nine times a year when he first arrived, as compared to daily delivery now. MR. KALLENBERG described making his living fishing a sail boat in Bristol Bay, but watching his retired friends leave Alaska because their retirement compensation would not meet the cost of living in Alaska. he quoted MR. SHAFFER'S testimony to explain the policies that permit retired people to remain in the state, but he claimed the legislation being considered eroded that policy. MR. KALLENBERG explained he was in this controversy because he served on the special committee to solve the problem of the longevity bonus. He gave some background information from committee meetings in 1983 and 1984 when they realized, before the year 2000, funding the longevity bonus would be a problem. After a year of study, MR. KALLENBERG said the committee brought recommendations to the governor and the legislature that embodied the basic concepts of the annuity approach to solving the problem. He explained he had considered all of the solutions that have been offered in the mean time, and he was well aware of the bill being considered today, SB 58. He continued to explain why he thought the annuity approach was the best answer that has been offered to the problem and why the present legislation is short sighted. MR. KALLENBERG urged the committee to be concerned with the age group from 50 to 65 years of age, who will be deciding whether or not they are going to retire in Alaska. He has talked to many who are going to leave the state when they quit earning money and take their money with them, which will be a considerable amount. He referred to the statistics, calling it a mail box industry, and said it was close to $600 million a year. He asked the committee to consider his testimony and thanked them for listening to him. Number 200 JOE MCGILL from Dillingham, said he was co-sponsor for an earlier bill for $200 a month, and presently representing the Dillingham Senior Center with 138 members, all of whom are not in favor of SB 58. He reviewed the involvement of those 65 years and older in the community, and he gave himself as an example of someone heavily committed to local government and to fishing organizations. He also got married at 65 because he could afford to do so. MR. MCGILL took on the argument of many seniors coming to Alaska for the longevity bonus, and he explained these people also brought other retirement money such as social security or other income. He thought it would be less expensive to give the seniors $250 so they can take care of themselves, and he described those people who came here after World War 1, lived off the land, and didn't have much retirement. RUPE ANDREWS, representing the Capital City Task Force for the AARP, said some of his comments had already been made, but he wanted to let people know the Governor was convening a meeting with people representing organizations or agencies dealing with senior citizens in the state. He said the governor was aware the bill would eliminate a standing policy of some 20 years which has created economic stability for seniors, allowing them to remain in their own homes, and to make the choice to remain in Alaska. He hoped, out of the meeting, would come some policy that would replace the policy changed by SB 58. He suggested postponing a final decision on the bill until the results of the meeting becomes available. Number 279 SENATOR TAYLOR introduced the Commissioner of Administration, COMMISSIONER NANCY USERA, to testify, after which he would be returning to the teleconference network. COMMISSIONER USERA reviewed the provisions of the bill: a. Grandfathers in all recipients currently on the program. b. Provide a three year stepped down phase out at the rate of $200, $150, and $100 per month for life. COMMISSIONER USERA indicated interest at the comments with regard to the public policy represented by the longevity bonus, and she remembered listening to previous crisis budget meetings, where doing away with the longevity bonus was discussed. She reviewed the fiscal problems at that time with the drop in oil prices and the suggestions presented at the committee meetings was always to cut the longevity bonus. She described these as a crisis management approach. COMMISSIONER USERA talked about the original design of the longevity bonus, which was declared unconstitutional in 1982. Consequently, she said each year there is a financial crisis, this program becomes vulnerable, and she quoted concerns from the governor that the current recipients would be affected by some sort of a last minute crisis management approach to balancing the state's budget. COMMISSIONER USERA reviewed a variety of proposals to deal with the program for the past seven years, but there has not been the collective will to fix it. She agreed with the governor this would provide a window of opportunity for the next three or four years to pay for the bonus and to provide a reasonable transition for the people receiving the bonus. COMMISSIONER USERA explained the fatal flaws in the annuity program. First, if it was an incredibly successful program, it would remove from the local economy a significant portion of the permanent fund dividends, that are currently being circulated. She explained how the removal of the dividends would impact the businesses in the communities. Number 333 COMMISSIONER USERA described what would become a government banking bureaucracy invested similar to the permanent fund in a mix of equities and bonds outside the State of Alaska. It would only served a small number of people who could afford to invest their permanent fund dividends into the programs, and the state could become liable for taking care of long term annuity accounts for a few people, who might retire to Florida, for about 40 years. She suggested people do their own investing in monetary institutions such as I.R.A's, annuity programs, and investment houses. COMMISSIONER USERA agreed with the seniors that testified on the success for the longevity bonus, but she didn't think it was a sustainable program. She explained she had solicited solutions from the senior groups for two years, but she had not found an adequate solution that meets all of the considerations. SENATOR TAYLOR opened the discussion to the committee members. SENATOR LITTLE expressed her concern as to whether SB 58 was constitutional and defensible. She reviewed the provisions of the three year phase out. COMMISSIONER USERA referred to an opinion from the Attorney General's office, JOHN GAGUINE, and she summarized the constitutional provisions from MR. GAGUINE, which she felt protected the legislation. She explained how the program could end in a positive fashion, while meeting the public good, the public purpose, and the legislative intent. SENATOR LITTLE and COMMISSIONER USERA discussed the original intent of the longevity bonus, which was to be a self-ending program. Number 389 SENATOR HALFORD was concerned the legislature had created a program that tells a life-long Alaskan that after 1997 they get nothing, but someone close to 65, who moves here from another state close to the cut-off date, can get money from the state treasury. He said the original purpose of the legislation was to address those inequities, and he thought the inequity is easy to see. COMMISSIONER USERA shared SENATOR HALFORD'S frustration at a program originally designed for life-long Alaskans, who had lived here. She said, had the annuity program been adopted in 1986, the annuity would have been in place for seven years and probably be successful. She said the administration was still amenable to alternative suggestions on the phase-out approach, but she reminded committee members there were still a large number of persons who would qualify under the original criteria. She said there was no constitutional way to deliver a program specifically for those people. SENATOR HALFORD asked permission from the chair to discuss the annuity as an alternative to the bill, and he referred to the annuity bill. He gave a scenario where each annuity share, in the 60 to 65 age, was matched by a state contribution to the permanent fund dividend, thus making the annuity steps twice as big. Under this scenario, the longevity bonus would be phased out in 7 years, and there would be a substantial cost saving due to the small number of participants. Number 439 COMMISSIONER USERA clarified the notion the annuity would replace the longevity bonus as much as it is a trade-off for the permanent fund dividends. She continued to describe the annuity in which a person would invest 100% of their permanent fund for at least fifteen years. She reiterated her offer to assist with any alternate idea that was proposed, but she expressed concerns with the annuity bill introduced this session. Number 488 SENATOR TAYLOR explained there were suggestions made on how to solve the entire problem up front through the refunding of income taxes for those long-term tax payers from territorial days, and he gave some legislative history on this possible solution. He also explained it wouldn't have paid a permanent dividend check to people on welfare during that time, but he blamed the administration at the time for using the program to build a constituency. SENATOR TAYLOR said the records for those original tax- payers was still available, so the state could create that fund, pay the people who were here before statehood and had paid taxes until 1978. He voiced objections to paying the newly arrived seniors for the programs that are currently available to them, although he didn't argue with MILLIE TERWILLIGER that seniors generate a large chunk of money. He wanted COMMISSIONER USERA to know there were people who felt differently about the longevity bonus. SENATOR TAYLOR returned to the teleconference sites to hear from EVELYN MORTIMER from Kodiak. MS. MORTIMER identified herself as the president of the Senior Center Board representing about 180 seniors, who feel that SB 58 is fair in that it does not put the current recipients in jeopardy. She said they had not discussed the annuity, nor any of the details referenced in the meeting. SENATOR DONLEY, testifying from the LIO in Anchorage, said he had listened to the testimony from around the state and did not support the legislation. (SENATOR DONLEY was not able to vote on HB 58 from of Anchorage.) Number 537 SENATOR TAYLOR next moved to Tok to hear from MS. TERWILLIGER. MS. TERWILLIGER testified in support of SB 6 (ANNUITY PROGRAM AMENDMENTS) because it had been supported by the voters in the State of Alaska, and she reviewed the provisions of the bill. She described the Alaska tradition of taking care of the old timers, and she discussed her belief in an old timers pension. She explained how the longevity bonus had allowed old-timers to live in their homes longer instead of going to the pioneer homes, and she gave some statistics on the amount that would have been spent on the current seniors moving into the pioneer home. Number 555 JERRY MCCUTCHEON from Anchorage testified in agreement with the solution outlined by SENATOR TAYLOR to refund the income tax to those who earned it before 1978. He thought the state could still divide up a collected amount among those who are still here from that era. He thought that would answer the claims of the military and the new comers. MS. ALICE OATES from Tok testified in support of the longevity bonus and thought there should be a tobacco tax to support the bonus. SENATOR TAYLOR next called on ROSE PALMQUIST from the MatSu Valley to testify. MS. PALMQUIST said she was going to testify in reference to previous testimony, with which she agreed. She gave some background information on the longevity bonus in relation to the economy of the state, which she though was a positive impact. TAPE 93-32, SIDE B Number 001 MS. PALMQUIST listed all of the programs or pensions received by seniors, and she said the state received more money from seniors that from tourism. She addressed the demographic mix which has given the state a balance of youth and elderly, and she agreed with the testimony from MS. TERWILLIGER on the annuity plan. MS. PALMQUIST referred to testimony on the reason for the longevity bonus, which was to encourage people to remain in the state, and she continued her support for the proposals of the annuity plan. She claimed the legislature had not supported it adequately to put it across, and she claimed the state could afford the annuity plan. She quoted recent surveys done with the help of the Republican Party in which the money could be salvaged from oil field operations in the amount of $2.5 million. MS. PALMQUIST expressed dismay that anyone in the government would commit another legislature to keep the promises of the present one, and she thought it was a shame and a crime to tell the current recipients they were grandfathered into the program. MS. PALMQUIST expressed interest in SENATOR HALFORD'S remarks, which she considered sensible proposals, and she suggested using the BP settlement money to carry out his proposals. SENATOR TAYLOR noted that ROBERT BERRYHILL from Juneau was in attendance to listen only. Number 064 SENATOR TAYLOR explained he was one of the original co- sponsors along with SENATOR BILL RAY, of the only annuity bill that was passed and vetoed by GOVERNOR STEVE COWPER. SENATOR TAYLOR said he still strongly believed in the concept of that annuity bill and would like to see it work, but he doubted there was presently any support for the concept. SENATOR DONLEY spoke from Anchorage in agreement with SENATOR TAYLOR on his support for the original annuity plan since the people voted in favor of it in 1986. He thought it could be saving the state money now. (Since there was not a quorum, no additional action was taken on the bill.)
| Document Name | Date/Time | Subjects |
|---|