Legislature(1995 - 1996)

02/02/1995 03:37 PM Senate STA

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
 SSTA - 2/2/95                                                                 
                                                                               
       SB  37 END PERMANENT FUND DIVIDEND HOLD HARMLESS                      
                                                                               
 Number 375                                                                    
                                                                               
 SENATOR SHARP brings up SB 37 as the next order of business before            
 the Senate State Affairs Committee and calls the first witness.               
                                                                               
 Number 380                                                                    
                                                                               
 SENATOR RANDY PHILLIPS, prime sponsor of SB 37, says the bill would           
 eliminate what he sees as a tax on permanent fund dividends: the              
 hold-harmless provision for people receiving public assistance.               
 The hold-harmless provision amounted to a reduction of $41.45 to              
 each permanent fund dividend last year.  Senator Phillips relays              
 information contained in his sponsor statement.                               
                                                                               
 Number 402                                                                    
                                                                               
 ELMER LINDSTROM, Special Assistant to Commissioner Perdue,                    
 Department of Health & Social Services (DHSS), states the                     
 department is opposed to SB 37.  Previous administrations have                
 considered elimination of the hold-harmless provision and have                
 concluded that elimination is neither desirable nor cost-effective.           
 Mr. Lindstrom states elimination of the provision would lead to               
 additional administrative costs.  Mr. Lindstrom reads a prepared              
 statement.  DHSS submitted six fiscal notes with analysis and a               
 synopsis of a study showing spending patterns of dividends by                 
 persons receiving public assistance to the committee.  Mr.                    
 Lindstrom adds that the premise of the hold-harmless program is               
 that all Alaskans are entitled to share equally in the permanent              
 fund dividend program.                                                        
                                                                               
 Number 455                                                                    
                                                                               
 SENATOR LEMAN does not agree with Mr. Lindstrom's assertion that              
 eliminating the hold-harmless provision would have the practical              
 effect of denying persons on public assistance a permanent fund               
 dividend.  By eliminating the provision, Senator Leman thinks the             
 drain on the federal and state treasuries caused by welfare                   
 benefits will be reduced.  Senator Leman wants to know if DHSS has            
 talked to line staff in the Division of Public Assistance about who           
 is going on public assistance, and why they are coming to Alaska.             
 Senator Leman says Alaska's public assistance programs are a magnet           
 for people from other states, and that people he has talked to from           
 the line staff think the hold harmless provision is part of what is           
 attracting people from other states.  Senator Leman wants to know             
 how DHSS came to it's position statement, when line staff in the              
 Division of Public Assistance are making an assertion different               
 from Mr. Lindstrom's.                                                         
                                                                               
 Number 490                                                                    
                                                                               
 SENATOR RANDY PHILLIPS adds he has heard comments similar to those            
 Senator Leman has heard from line staff.                                      
                                                                               
 Number 495                                                                    
                                                                               
 MR. LINDSTROM says SB 37 deals specifically with the permanent fund           
 dividend's hold-harmless provision.  There has been much discussion           
 lately relating to the much broader question of welfare reform.  If           
 we could all wipe the slate clean, and there were no public                   
 assistance programs, and we were going to start from the beginning            
 to develop a program to meet the needs of the needy people of this            
 state and this country, the program certainly would not look at all           
 like the programs in existence today.  But the programs that are in           
 place today are the programs DHSS must administer.  DHSS                      
 recognizes, as does everyone, that there are problems that need to            
 be fixed.  However, the programs serve a valuable purpose: that of            
 providing basic sustenance for many poor people.  It works very               
 well for the majority of people on the programs.  The majority of             
 DHSS's AFDC (Aid to Families with Dependent Children) caseload                
 turns over every two years.  So there are problems with a                     
 percentage of the population, and that needs to be looked at.  SB
 37, when translated to terms of a rateable reduction in benefits,             
 would approach an 8% reduction in benefits to persons on public               
 assistance.                                                                   
                                                                               
 Number 526                                                                    
                                                                               
 CHAIRMAN SHARP asks Mr. Lindstrom if the figures on the fiscal                
 notes represent the federal share of benefits lost, or the federal            
 and state shares.                                                             
                                                                               
 MR. LINDSTROM replies that the hold-harmless provision applies to             
 the state and federal shares of benefits.                                     
                                                                               
 Number 540                                                                    
                                                                               
 RUPE ANDREWS, American Association of Retired Persons (AARP),                 
 states the AARP is strongly opposed to SB 37.  About 40,000                   
 Alaskans receive AFDC, so children would be affected substantially            
 by this legislation.  AARP also fails to see any benefit to the               
 state by eliminating the hold-harmless, as it will cause an                   
 increase to the general fund budget of about 1.5 million dollars.             
 In regards to Senator Phillips concern that the cost of continuing            
 the hold-harmless provision will increase in years to come, the               
 AARP asks that the legislature consider the option of perhaps                 
 capping the amount taken to fund the provision at, say, $40.  The             
 AARP is not aware of a great number of Alaskans being concerned               
 with the reduction of their permanent fund dividends to fund the              
 hold-harmless provision.  Mr. Andrews recalls that when the hold-             
 harmless provision was initiated, Alaskans felt proud to be able to           
 help other Alaskans.                                                          
                                                                               
 Number 558                                                                    
                                                                               
 SENATOR RANDY PHILLIPS says a lot of his constituents object to the           
 hold-harmless provision.  They consider it a tax on their permanent           
 fund dividends.                                                               
                                                                               
 Number 565                                                                    
                                                                               
 SENATOR LEMAN asks Mr. Andrews if he thinks forced compassion feels           
 better than voluntary compassion.                                             
                                                                               
 MR. ANDREWS responds that voluntary compassion feels better, but as           
 he understands it, the hold-harmless provision was enacted by the             
 legislature, through representative government elected by the                 
 people.  Since then, the AARP has not heard that much objection to            
 the provision.  Apparently Senator Leman and Senator Phillips are             
 hearing objection in their districts now.  Mr. Andrews says the               
 AARP would rather see a cap on the amount taken for hold harmless,            
 rather than eliminate it altogether.                                          
                                                                               
 Number 584                                                                    
                                                                               
 SENATOR RANDY PHILLIPS states he has opposed the hold-harmless                
 provision, permanent fund dividends, and voted against everything             
 from the beginning.                                                           
                                                                               
 SIDE B                                                                        
                                                                               
 Number 590                                                                    
                                                                               
 SHERRIE MARKIN GOLL, Alaska Women's Lobby, KIDPAC, states the                 
 groups she represents oppose SB 37.  From her point of view, the              
 permanent fund dividends are not earned income, and are not                   
 something that any one person, rich or poor, has earned or deserves           
 more than another person.  The hold-harmless provision is not a               
 tax, recipients who complain about the provision are still                    
 benefitting by $950 that they would not have had before.  When a              
 person of moderate or high-income receives a dividend, it is simply           
 discretionary income.  When a poor person receives a permanent fund           
 dividend, it is spent on necessities, and it is spent in Alaska.              
 Ms. Goll thinks SB 37 would favor persons of moderate and high-               
 income who do not need the additional money.  Ms. Goll suggests               
 looking at capping the amount of permanent fund dividends to save             
 money, instead of continuing to provide free money to people who              
 have no needs while taking money away from the state's poorest                
 citizens.                                                                     
                                                                               
 Number 554                                                                    
                                                                               
 SENATOR LEMAN states his objective is to make sure that those in              
 need are properly taken care of.  He thinks the current public                
 assistance programs are inefficient.  He wants recipients of                  
 assistance to become self-sufficient.  Senator Leman states SB 37             
 will not take away a person's right to receive a permanent fund               
 dividend.                                                                     
                                                                               
 Number 532                                                                    
                                                                               
 MS. GOLL doesn't think SB 37 will lead to self-sufficiency for                
 public assistance recipients.  It will lead to people getting of              
 assistance, and then reapplying as soon as they are eligible again.           
 It will not lead to self-sufficiency.                                         
                                                                               
 Number 512                                                                    
                                                                               
 MR. LINDSTROM suggests, as a technical point, that the effective              
 date of SB 37 be changed.  The current effective date of January 1,           
 1996, will fall right in the middle of the period of time in which            
 the hold-harmless provision is in effect, causing perhaps half of             
 the public assistance recipients to be held-harmless, while the               
 other half are not.  DHSS prefers either an effective date prior to           
 October 1, 1995, or prior to October 1, 1996.                                 
                                                                               
 SENATOR RANDY PHILLIPS notes that the committee substitute for SB
 37 has an effective date of July 1, 1995.                                     
                                                                               
 CHAIRMAN SHARP notes the existence of a committee substitute.                 
                                                                               
 Number 496                                                                    
                                                                               
 SENATOR RANDY PHILLIPS moves the adoption of CSSB 37 (STA).                   
                                                                               
 Number 494                                                                    
                                                                               
 CHAIRMAN SHARP, hearing no objection, states CSSB 37(STA) has been            
 adopted in lieu of the original bill.                                         
                                                                               
 CHAIRMAN SHARP asks the pleasure of the committee.                            
                                                                               
 Number 490                                                                    
                                                                               
 SENATOR RANDY PHILLIPS makes a motion to discharge SB 37 from the             
 Senate State Affairs Committee with individual recommendations.               
                                                                               
 Number 488                                                                    
                                                                               
 CHAIRMAN SHARP, hearing no objection, orders SB 37 released from              
 committee with individual recommendations.                                    

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