Legislature(2007 - 2008)BELTZ 211

04/12/2007 09:00 AM Senate STATE AFFAIRS


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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ HB 171 ACCOMMODATE 90-DAY SESSION TELECONFERENCED
Heard & Held
+= SB 135 ACCOMMODATE 90-DAY SESSION TELECONFERENCED
Heard & Held
+ SB 40 LONGEVITY BONUS REAPPLICATIONS TELECONFERENCED
Heard & Held
+ Bills Previously Heard/Scheduled TELECONFERENCED
             SB  40-LONGEVITY BONUS REAPPLICATIONS                                                                          
                                                                                                                                
10:01:47 AM                                                                                                                   
CHAIR MCGUIRE announced the consideration of SB 40.                                                                             
                                                                                                                                
SENATOR BILL  WIELECHOWSKI, Alaska State Legislature,  sponsor of                                                               
SB 40, said the longevity  bonus program still exists in statute;                                                               
however  it  has  not  been  funded since  2003.  SB  40  doesn't                                                               
reinstate the  bonus but it  corrects the application  process to                                                               
allow  those seniors  who were  receiving  the bonus  in 2003  to                                                               
reapply if the  program ever gets funded. The  program would fade                                                               
out  as  seniors  pass  away.  The current  CS  is  the  work  of                                                               
Legislative  Legal  Services,  the  Department of  Law,  and  the                                                               
Department  of Health  and  Social  Services. The  administration                                                               
supports the longevity  bonus, he noted. The  program was enacted                                                               
in  1972 for  Alaska pioneers  65  and older.  In 1993,  Governor                                                               
Hickel proposed  the phased  reduction and  eventual elimination.                                                               
Seniors  who were  receiving  the bonus  were  assured that  they                                                               
would be allowed to continue  benefiting from the program as long                                                               
as they  were living in  Alaska. Many  have counted on  the bonus                                                               
for their retirement.                                                                                                           
                                                                                                                                
10:04:08 AM                                                                                                                   
CHAIR MCGUIRE  said she firmly  believes a good  culture supports                                                               
its seniors.  In Asia  it is  a sign of  disrespect to  leave the                                                               
elderly  without a  home. She  asked about  the equal  protection                                                               
constitutional problems in recreating  a program that only allows                                                               
some  seniors to  get it.  She then  asked how  the program  will                                                               
merge with the senior care program.                                                                                             
                                                                                                                                
SENATOR  WIELECHOWSKI  said  there are  potential  constitutional                                                               
issues. There  was a  challenge to the  longevity bonus  in 1996,                                                               
and the Superior Court upheld  the program. It provides merely an                                                               
economic interest. Since  the money has been phased  out there is                                                               
potential for  the court to  strike it down  now. SB 4  would not                                                               
allow people who are receiving  senior care to receive the bonus.                                                               
He doesn't know if that exclusion exists today.                                                                                 
                                                                                                                                
10:07:44 AM                                                                                                                   
TAMARA COOK,  Director, Legislative Legal and  Research Services,                                                               
said  the  court  found that  the  stair-stepping  phase-out  was                                                               
constitutional even  though it grandfathered in  some recipients,                                                               
because  on the  reliance the  recipients had  on the  bonus. The                                                               
reliance  principle is  fairly well  developed in  case law.  The                                                               
difference now is the four-year  gap where the reliance issue has                                                               
not been protected,  so that weakens the argument  that the state                                                               
is protecting  a relying  interest. A  remnant interest  could be                                                               
argued, but it won't be resolved until it is attempted.                                                                         
                                                                                                                                
CHAIR MCGUIRE  said the remnant  reliance issue would have  to be                                                               
argued;  otherwise it  is denying  some  seniors a  bonus with  a                                                               
seemingly arbitrary date.                                                                                                       
                                                                                                                                
MS. COOK  said the longevity  bonus does not  classify recipients                                                               
based on length of residency.  It is not a discrimination against                                                               
newcomers.                                                                                                                      
                                                                                                                                
CHAIR MCGUIRE asked about senior care.                                                                                          
                                                                                                                                
MS.  COOK  said  if  the  current senior  care  program  and  the                                                               
longevity  bonus   were  on  the   books  and   superimposed,  an                                                               
individual could  get both, but  the value  of the bonus  will go                                                               
into  the eligibility  calculation for  the senior  care program.                                                               
Some very  poor elders  could qualify for  both. The  senior care                                                               
program didn't exist when the longevity bonus was enacted.                                                                      
                                                                                                                                
10:13:43 AM                                                                                                                   
ELLIE   FITZJARRALD,   Acting   Director,  Division   of   Public                                                               
Assistance,  Department  of  Health  and  Social  Services,  said                                                               
currently the  senior care program  has not  considered longevity                                                               
bonus income because it  has not been there. In SB  4 there is no                                                               
specific  provision  about  whether  the  bonus  would  count  in                                                               
determining  eligibility. The  fiscal notes  assume that  seniors                                                               
must choose to either receive  the longevity bonus or participate                                                               
in the senior  care program, but not both. It  is not spelled out                                                               
in the bill, so that decision needs to be made, she concluded.                                                                  
                                                                                                                                
CHAIR  MCGUIRE  asked  if  the  permanent  fund  dividend  counts                                                               
towards income for qualifying for the senior care program.                                                                      
                                                                                                                                
10:15:06 AM                                                                                                                   
MS. FITZJARRALD said it doesn't count.                                                                                          
                                                                                                                                
SENATOR BUNDE pointed  out that "for those that  are aghast about                                                               
spending  any of  the earnings  of the  permanent fund,  we spend                                                               
about $30  million a  year on  the hold  harmless for  people who                                                               
would lose their welfare if  they received a dividend." He agreed                                                               
with the need  to provide respect for elders;  however, he doubts                                                               
that not giving  the Hickels, Murkowskis, or  himself a longevity                                                               
bonus  would  show a  lack  of  respect.  He  asked Ms.  Cook  if                                                               
reliance means needs-based.                                                                                                     
                                                                                                                                
10:16:36 AM                                                                                                                   
MS. COOK  said reliance interest  is not defined  as needs-based.                                                               
It  is  the notion  of  the  government changing  something  that                                                               
someone  relied  on.  The  judge  in the  case  didn't  make  any                                                               
suggestion  that the  reliance being  protected was  needs-based,                                                               
only that a person might make  a financial decisions based on the                                                               
continuation of a program.                                                                                                      
                                                                                                                                
SENATOR BUNDE said the sponsor  noted that Governor Hickel made a                                                               
promise, but  there was  no promise  from the  legislature. "When                                                               
the sponsor  statement said  'we made a  promise,' I  reject that                                                               
notion. I  was no party  to any  promise like that."  The sponsor                                                               
statement speaks  of Alaska settlers,  but most people  that were                                                               
receiving  the  bonus were  not  longtime  Alaskans. He  said  he                                                               
rejects the notion that it is a moral obligation.                                                                               
                                                                                                                                
10:18:50 AM                                                                                                                   
SENATOR STEVENS noted that he also  hears from people that it was                                                               
a promise  given. When he was  on the borough assembly,  a person                                                               
could not  encumber future assemblies  by decisions.  "What legal                                                               
grounds are  we on when  someone says that  it was a  promise and                                                               
you have an obligation to fulfill it?"                                                                                          
                                                                                                                                
MS. COOK  said every obligation on  the books is dependent  on an                                                               
appropriation. Even private contracts,  implied or explicit, rely                                                               
on the  continuation of appropriated money.  Whenever any citizen                                                               
does business  with the  state, there  is always  the possibility                                                               
that a program  will not continue, especially  a benefit program.                                                               
It is a well-understood legal  principle, but it may have nothing                                                               
to do with how the common person views it.                                                                                      
                                                                                                                                
10:20:47 AM                                                                                                                   
SENATOR FRENCH  said beneficiaries  are dying.  How old  will the                                                               
youngest be if the program is continued?                                                                                        
                                                                                                                                
SENATOR BUNDE said the cost will be over $150 million.                                                                          
                                                                                                                                
MS. FITZJARRALD said she believes it is age 75.                                                                                 
                                                                                                                                
SENATOR BUNDE  pointed out the  senior property tax  exemption is                                                               
on the books, but the state has chosen not to fund it.                                                                          
                                                                                                                                
10:21:57 AM                                                                                                                   
RALPH  HUNT, Pioneers  of Alaska,  Juneau,  said he  has been  in                                                               
Alaska for 57 years. He said  he is 90-years-old and supports the                                                               
program. There  are a lot  of seniors  that the money  meant they                                                               
could  do  things  they  couldn't do  otherwise.  "It  should  be                                                               
reinstated."  He  once  suggested to  former  Governor  Murkowski                                                               
another way to save money and was told it wasn't feasible.                                                                      
                                                                                                                                
SENATOR BUNDE  said there was  a proposal  from the AARP  to make                                                               
the  bonus  a  needs-based  program.  That  seemed  like  a  good                                                               
compromise.                                                                                                                     
                                                                                                                                
MR. HUNT  said he  would support  that. It is  nice to  have, but                                                               
there are  quite a  few people  who do need  it. There  have been                                                               
people who left the state because it was gone.                                                                                  
                                                                                                                                
10:24:34 AM                                                                                                                   
RITA  HATCH,  Volunteer, Older  Persons  Action  Group, said  she                                                               
volunteers  with seniors  everyday, many  of whom  have lost  the                                                               
bonus and want it back. Many  have hardly a decent living without                                                               
it.  If funded,  "SB 40  will be  a technical  fix that  will re-                                                               
qualify all of us so that we would be eligible again."                                                                          
                                                                                                                                
10:25:40 AM                                                                                                                   
PAT LUBY,  Director, AARP Alaska, said  SB 40 is a  technical fix                                                               
that  if  the  longevity  bonus should  be  restored,  previously                                                               
eligible seniors will again be eligible. This is a good idea.                                                                   
                                                                                                                                
SENATOR  BUNDE said  he worked  with him  before senior  care was                                                               
available,  and Mr.  Luby said  AARP would  accept a  needs-based                                                               
benefit.                                                                                                                        
                                                                                                                                
MR. LUBY  said an  AARP principle is  that government  will never                                                               
have enough  money to do what  needs to be done,  so money should                                                               
go  to  those  in  need.  We  definitely  support  a  needs-based                                                               
program, he stated.                                                                                                             
                                                                                                                                
10:27:35 AM                                                                                                                   
CHAIR MCGUIRE closed public testimony on SB 40 and held the bill                                                                
in committee.                                                                                                                   
                                                                                                                                

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