02/03/1993 09:06 AM Senate STA

  SENATOR LEMAN announced SB 6 (ANNUITY PROGRAM AMENDMENTS) to                 
                                                                               
                                                                               
  be up for consideration.                                                     
                                                                               
  Number 750                                                                   
                                                                               
  SENATOR KERTTULA,  Sponsor, asked Ted Beilman to join him at                 
  the committee table.   SENATOR KERTTULA explained  that this                 
  particular  piece  of  legislation or  a  very  close cousin                 
  passed the Senate  last term.   This was a bill  that almost                 
  100,000  people  voted for.   He  said  he knows  the budget                 
  process and the  state can afford the annuity.  This time it                 
  should be adopted.                                                           
                                                                               
  Number 650                                                                   
                                                                               
  In December the  Wasilla Chamber of Commerce  again endorsed                 
  the annuity bill.  As far as he is concerned, the Department                 
  of Administration, the  people in  the Office of  Management                 
  and  Budget,  the third  floor  influence peddlers  with new                 
  master's  degrees who have never  been north of Yakutat have                 
  back doored and  confused this issue.   Their stair stepping                 
  program was  uneven  and puts  the  whole program  at  risk,                 
  because it may be unconstitutional.  He asked that they pass                 
  the bill and speed it on its way.                                            
                                                                               
  Number 550                                                                   
                                                                               
  NANCY    BEAR    USERA,    Commissioner,    Department    of                 
  Administration, explained that  the Governor has  introduced                 
  an  alternative to SB  6.   She  said the governor supported                 
  the annuity in 1986  when it was on the ballot, as she and a                 
  lot of Alaskans did.  Had that  bill passed at that time, we                 
  would be a long way down  the road toward resolving some  of                 
  these issues and narrowing the  funnel of people coming into                 
  the program.  The fact is for  whatever reason, the bill did                 
  not pass, it did not pass in 86,  87, 88, 89, 90, 91, 92 and                 
  here we are in l993 and the governor continues to support an                 
  annuity concept.                                                             
                                                                               
  She said she didn't think we could discuss this bill without                 
  admitting  it is a  bill for the middle  aged.  According to                 
  the Governor's  bill, anyone who is now  62 or older will be                 
  protected for  life as the  seniors are grandfathered  in in                 
  Senator Kerttula's bill.                                                     
                                                                               
  Number 500                                                                   
                                                                               
  COMMISSIONER USERA said  it was appropriate that  people who                 
  were  40-55 years old  enter into  this discussion,  and let                 
  them know what kinds  of programs they want to  be available                 
  for them when they  look to the state for  some supplemental                 
  support.                                                                     
                                                                               
  COMMISSIONER  USER thought  the  financial aspects  of  this                 
  annuity simply would not make it viable.  The administrative                 
                                                                               
                                                                               
  costs are to  come out of  proceeds.   I takes a  tremendous                 
  amount of capitalization  to be able to  generate sufficient                 
  money to pay market  return on those investments as  well to                 
  absorb the  rate.  She also didn't think it was realistic to                 
  say that 50% of  the people were going to participate in the                 
  program.  And the people who do participate are probably the                 
  people least likely  to need  supplemental income when  they                 
  are older.  The fact is that most people take their dividend                 
  and spend it on current monthly  needs, so assuming there is                 
  going to be a high participation level is not realistic.                     
                                                                               
  Thirdly, she said, the there are financial institutions that                 
  have savings programs.  Certainly we would like to encourage                 
  savings for our future years.  The Department of Revenue has                 
  developed a direct deposit program  so people can have their                 
  dividend  check  deposited   directly  into  their   savings                 
  account.                                                                     
                                                                               
  Fourth and finally, she  didn't think it was the  right time                 
  for the state to be setting up new government bureaucracies.                 
                                                                               
  SENATOR LEMAN thanked  Commissioner Usera  and said that  he                 
  would like additional input from her in the future.                          
                                                                               
  Number 450                                                                   
                                                                               
  MARY LOU MEINERS,  American Association of  Retired Persons,                 
  supportED SB 6.                                                              
                                                                               
  SENATOR  LEMAN thanked everyone  for their participation and                 
  adjourned the meeting at 10:46 a.m.