Legislature(1993 - 1994)

03/25/1993 08:37 AM House FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
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                     HOUSE FINANCE COMMITTEE                                   
                         March 25, 1993                                        
                            8:37 a.m.                                          
                                                                               
  TAPE HFC 93-60, Side 1, #000 - end.                                          
  TAPE HFC 93-60, Side 2, #000 - end.                                          
                                                                               
  CALL TO ORDER                                                                
                                                                               
  Co-Chair Larson called the House  Finance Committee to order                 
  at 8:37 a.m.                                                                 
                                                                               
  PRESENT                                                                      
                                                                               
  Co-Chair Larson             Representative Hoffman                           
  Co-Chair MacLean            Representative Martin                            
  Vice-Chair Hanley           Representative Navarre                           
  Representative Brown        Representative Parnell                           
  Representative Foster       Representative Therriault                        
  Representative Grussendorf                                                   
                                                                               
  ALSO PRESENT                                                                 
                                                                               
  Representative      Brice;     Representative      Nordland;                 
  Representative  MacKie;  Mike Greany,  Director, Legislative                 
  Finance Division;  Arthur  H.  Snowden,  II,  Administrative                 
  Director,   Alaska  Court   System;   Tam  Cook,   Director,                 
  Legislative Services Division;  Gerald J. Dorsher,  Veterans                 
  of  Foreign  Wars;  Drew  Scalzi,  Kenai  Peninsula  Borough                 
  Assembly; Vicky Borrego  Catholic Community Service; Sherrie                 
  Goll, Alaska  Women's Lobby; Kent Swisher,  Alaska Municipal                 
  League; Ruth Gubyas, Older Alaskans Commission.                              
                                                                               
  SUMMARY INFORMATION                                                          
                                                                               
  HB 66     "An  Act   relating  to  municipal   property  tax                 
            exemptions for certain residences  and to property                 
            tax  equivalency  payments for  certain residents;                 
            and providing for an effective date."                              
                                                                               
            CSHB  66  (FIN)  was  reported  out  of  Committee                 
            with"no recommendation"  and with two  zero fiscal                 
            notes by  the Department of Community and Regional                 
            Affairs  and  with  a  zero  fiscal  note  by  the                 
            Department  of Administration  and  with a  fiscal                 
            impact note by Department of Education.                            
                                                                               
  HB 67     "An Act relating  to eligibility for  and payments                 
            of  public  assistance;   and  providing  for   an                 
            effective date."                                                   
                                                                               
            HB 67 was HELD in Committee.                                       
                                                                               
                                1                                              
                                                                               
                                                                               
  HB 151    "An  Act relating to  payment by  indigent persons                 
            for   legal  services   and  related   costs;  and                 
            providing for an effective date."                                  
                                                                               
            CSHB 151 was reported out  of Committee with a "do                 
            pass" recommendation and  with a zero fiscal  note                 
            by the Alaska Court System, dated 2/24/93 and with                 
            two  zero  fiscal  notes  by  the   Department  of                 
            Administration and  with a  fiscal impact  note by                 
            the Department of Law.                                             
  HOUSE BILL NO. 66                                                            
                                                                               
       "An Act relating to  municipal property tax  exemptions                 
       for certain residences and to property  tax equivalency                 
       payments for  certain residents;  and providing  for an                 
       effective date."                                                        
                                                                               
  Members  adopted Work  Draft 8-GH1032\R, 3/15/93  during the                 
  March  18, 1992 House  Finance Committee meeting (Attachment                 
  1).                                                                          
                                                                               
  Co-Chair  MacLean  noted  that   members  had  received  two                 
  amendments from Representative  Brown.   Amendment 1 adds  a                 
  new  section  to  create  a  mandatory low  income  deferral                 
  program for seniors,  disabled veterans,  and widows on  the                 
  first $150.0 thousand  dollars of the assessed value of real                 
  property (Attachment 2).   Amendment 2 gives  municipalities                 
  the option to add hardship language to  either the exemption                 
  program or  the deferral program (Attachment 3).   She noted                 
  that  members  also  received a  memorandum  from  Tam Cook,                 
  Director, Legislative Services Division (Attachment 4).  Co-                 
  Chair MacLean also referenced a letter from Marjorie Odlund,                 
  Assistant Attorney General (Attachment 5).                                   
                                                                               
  Co-Chair  MacLean indicated that  she supported Amendment 2.                 
  She felt municipalities should be  given the option to offer                 
  hardship deferments.   She explained that Amendment  2 would                 
  allow  the municipalities  to develope  local ordinances  to                 
  defer or  exempt senior  citizen or  veterans from  property                 
  tax.  She  relayed that the Legal  Services Division advised                 
  that the two amendments are incompatible.                                    
                                                                               
  GERALD DORSHER, VETERANS  OF FOREIGN  WARS spoke against  HB
  66.  He asked that the  Senior Citizen and Veterans Property                 
  Tax Exemption  Program be kept  intact.  He  emphasized that                 
  veterans may lose their state death gratuity.  He noted that                 
  federal taxes  on heating will also hurt  veterans and other                 
  fixed income persons.                                                        
                                                                               
  Co-Chair  Larson   noted  that   Amendment  2   would  allow                 
                                                                               
                                2                                              
                                                                               
                                                                               
  municipalities to continue the tax  exemption or institute a                 
  deferment.   Co-Chair MacLean  observed that  municipalities                 
  would define "hardship" through ordinances.                                  
                                                                               
  Co-Chair  Larson reviewed  the Senior  Citizen and  Veterans                 
  Property Tax Exemption Programs.  He noted that the programs                 
  were begun around 1973.  The State fully funded the programs                 
  until 1985.  Since then the  municipalities have had to fund                 
  the  portion   not  funded   by  the     State  of   Alaska.                 
  Municipalities have requested that the  State fully fund the                 
  programs or give them the option  to fund the programs.  The                 
  program  cost  approximately $9  million  dollars in  FY 93.                 
  Two-thirds of  the FY  93 program  cost was  carried by  the                 
  municipalities.                                                              
                                                                               
  DREW  SCALZI,  KENAI  PENINSULA  BOROUGH  ASSEMBLY spoke  in                 
  support  of HB  66.   He  noted that  state  funding of  the                 
  mandatory exemption  has been steadily  declining each year.                 
  He observed that municipalities only  received 20 percent of                 
  the  total amount  exempted  in 1992.    He emphasized  that                 
  municipalities should be  given the opportunity to  draft an                 
  exemption ordinance.  He added that voter approval should be                 
  included.   Mr. Scalzi supported a January 1, 1994 effective                 
  date and exclusion for full value determination.                             
                                                                               
  Co-Chair  MacLean   observed  that   under  CSHB   66  (FIN)                 
  municipalities   have  the  option  to  exclude  full  value                 
  determination.  She added that the effective date of CSHB 66                 
  (FIN) is January 1, 1994.                                                    
                                                                               
  KATE SWISHER, ALASKA MUNICIPAL  LEAGUE expressed support for                 
  HB 66. He  spoke in support of  Amendment 2.   He emphasized                 
  that  the   Alaska  Municipal   League  will   assist  local                 
  governments  in  creating   programs.  He  reiterated   that                 
  municipalities are  paying 80 percent  of the  program.   He                 
  stated that the  Alaska Municipal  League would prefer  that                 
  the program be fully funded by the State of Alaska.                          
                                                                               
  Representative Brown  asked if the  Alaska Municipal  League                 
  could  live with  the mandatory deferral.   Mr  Swisher felt                 
  that  the  majority  of  municipalities  would  be  able  to                 
  institute the mandatory deferral.                                            
                                                                               
  Representative Martin asked if the assess value should  be a                 
  formula to allow for area differentials and inflation.                       
                                                                               
  Mr. Swisher stated  that the  Alaska Municipal League  would                 
  prefer that no specific level be established.  He noted that                 
  municipalities  could  exempt  more  than the  first  $150.0                 
  thousand dollars.                                                            
                                                                               
  Representative Martin MOVED to ADOPT, Amendment 2.                           
                                                                               
                                3                                              
                                                                               
                                                                               
  Co-Chair MacLean reiterated that Amendment 1 and Amendment 2                 
  are  not compatible.   Representative  Brown questioned  the                 
  amendments incompatibility.                                                  
                                                                               
  PAM COOK, DIRECTOR,  LEGISLATIVE SERVICES DIVISION clarified                 
  that Amendment 1 would provide a  mandatory deferral with an                 
  income cap in lieu of an optional deferral.   Municipalities                 
  would have  an  obligation to  provide  a deferral  for  low                 
  income seniors  and veterans.   In  addition, municipalities                 
  would have the  option of exempting property  for categories                 
  of  individuals  without  the  income  test.   The  optional                 
  deferral portion of CSHB 66 (FIN) is deleted by Amendment 1.                 
  She noted it would be possible to layer an optional deferral                 
  on Amendment 1.                                                              
                                                                               
  Representative Martin asked if Amendment  1 should be split.                 
  Ms. Cook explained that she could reconcile Amendments 1 and                 
  2 if both are adopted.                                                       
                                                                               
  Representative Brown asked if the deletion of "Page 3, lines                 
  9  -  31:   Delete  all  material" would  allow  an optional                 
  deferral,  a mandatory deferral  and an  optional exemption.                 
  Ms. Cook agreed that such an  amendment to Amendment 1 would                 
  allow  an  optional deferral,  a  mandatory deferral  and an                 
  optional exemption.                                                          
                                                                               
  Representative Hanley noted that Amendment 1 would determine                 
  the income level for deferrals.   He asked if municipalities                 
  could  deferral  assessed property  at  a higher  value than                 
  $150.0.    Ms.  Cook  explained   that  under  Amendment  1,                 
  municipalities would  not be  able to  change  the level  of                 
  deferral or the classification of qualified individuals.  If                 
  an  optional deferral  is added, municipalities  could defer                 
  seniors and  veterans whose  income is  above the  mandatory                 
  level.    Under  Amendment   2  municipalities  would   have                 
  flexibility to defer  at any level  they wished seniors  and                 
  disabled veterans.                                                           
                                                                               
  Representative Brown stated that  a mandatory exemption must                 
  be accompanied by  a dollar  amount.  Ms.  Cook agreed  that                 
  municipalities  must  be  told  specifically what  they  are                 
  mandated to defer.                                                           
                                                                               
  Representative Martin asked if a formula could be used.  Ms.                 
  Cook agreed that a formula could be devised.  Representative                 
  Martin expressed  his concern  that rural  areas could  feel                 
  they were being discriminated against.   Ms. Cook emphasized                 
  that tax  codes use the same specific  dollar amounts across                 
  the board, statewide.                                                        
                                                                               
  Representative Martin WITHDREW  HIS MOTION.  There  being NO                 
                                                                               
                                4                                              
                                                                               
                                                                               
  OBJECTION, the motion was withdrawn.                                         
                                                                               
  Representative Brown MOVED to AMEND,  Amendment 1, to delete                 
  "Page 3, lines 9 - 31:  Delete all material."  She explained                 
  that  Amendment  1, as  amended,  would provide  a mandatory                 
  floor for defer  of low income  seniors and veterans and  an                 
  optional exemption or  deferral of others.   There being  NO                 
  OBJECTION, it was so ordered.                                                
                                                                               
  Representative  Hanley  expressed support  for  Amendment 2.                 
  Representative  Grussendorf  felt that  municipalities would                 
  have difficulty  instituting programs unless  guidelines are                 
  provided.                                                                    
                                                                               
  Representative   Brown   emphasized  that   the  over-riding                 
  consideration  is  to provide  a safety  net to  the poorest                 
  people.   She urged the  Committee to not  force individuals                 
  out  of their homes.   She stressed that  a new property tax                 
  will be a  problem to  many individuals on  a fixed  income.                 
  She acknowledged that many municipalities  are moving in the                 
  direction of providing deferrals.                                            
                                                                               
  Mr. Swisher, in response to a question from Co-Chair Larson,                 
  stated that the Alaska Municipal  League preference is for a                 
  minimum  of   mandates  and  maximized   flexibility.     He                 
  acknowledged that  Amendment 1  is less  onerous than  other                 
  options.                                                                     
                                                                               
  Representative Grussendorf noted  that he has been  a member                 
  of the Alaska Municipal  League.  He observed that  if there                 
  is  legislation  that is  "too wide  open,  then there  is a                 
  tendency for nothing to happen."   He felt that it would  be                 
  easy to  ignore the need  without specific guidelines.   Mr.                 
  Swisher felt that seniors and veterans groups would pressure                 
  local governments to address the issue.                                      
                                                                               
  (Tape Change, HFC 93-60, Side 2)                                             
                                                                               
  Representative  Brown MOVED to  ADOPT Amendment  1.   A roll                 
  call vote was taken on the motion.                                           
                                                                               
  IN FAVOR: Brown, Foster, Grussendorf, Hoffman, Navarre                       
  OPPOSED:  Hanley,  Martin,  Parnell,   Therriault,  MacLean,                 
                 Larson                                                        
                                                                               
  The MOTION FAILED (5-5).                                                     
                                                                               
  Representative  Brown  MOVED to  ADOPT  Amendment 2.   There                 
  being NO OBJECTION, it was so ordered.                                       
                                                                               
  Representative Brown referred  to the  effective date.   She                 
  asked how the  effective date relates  to the fiscal  notes.                 
                                                                               
                                5                                              
                                                                               
                                                                               
  She noted that  the State  would be responsible  for half  a                 
  year of  support to  the exemption.   Representative  Martin                 
  noted that taxes are collected on the calendar year.                         
                                                                               
  Representative Brown  asked what  is the  intention for  the                 
  first   half   of   FY   94   in  regards   to   reimbursing                 
  municipalities.      Co-Chair  Larson  emphasized  that  the                 
  legislature must decide if they are going to appropriate for                 
  a  half  a   year.    Representative  Brown  asked   for  an                 
  explanation of the zero fiscal notes.  Co-Chair Larson noted                 
  that  fiscal  notes  reflect  the  Governor's  proposed zero                 
  funding.                                                                     
                                                                               
  Representative  Navarre  asked  if  the   tax  exemption  is                 
  prospective or retrospective.                                                
                                                                               
  Representative  Martin MOVED to report CSHB  66 (FIN) out of                 
  Committee  with  individual  recommendations  and  with  the                 
  accompanying fiscal notes.   Representative Brown  OBJECTED.                 
  She emphasized that the bill  should stay in Committee until                 
  an option is developed which will protect poor persons.  She                 
  stressed  that  programs  aiding   low  income  people   are                 
  receiving reductions  in other  areas of  the  budget.   She                 
  asserted that the State  will incur other costs as  a result                 
  of the legislation.   She  maintained that individuals  will                 
  "fall threw the cracks" as a result of the legislation.                      
                                                                               
  A roll call vote was taken on the motion.                                    
                                                                               
  IN FAVOR: Grussendorf, Hanley, Martin,  Parnell, Therriault,                 
                 MacLean, Larson                                               
  OPPOSED:  Navarre, Brown                                                     
                                                                               
  The MOTION PASSED (7-9).                                                     
                                                                               
  Representatives  Foster  and  Hoffman were  absent  from the                 
  vote.                                                                        
                                                                               
  CSHB  66  (FIN)  was  reported   out  of  Committee  with"no                 
  recommendation"  and  with  two  zero  fiscal notes  by  the                 
  Department of Community and Regional Affairs and with a zero                 
  fiscal note by  the Department of Administration  and with a                 
  fiscal impact note by Department of Education.                               
  HOUSE BILL NO. 151                                                           
                                                                               
       "An Act  relating to  payment by  indigent persons  for                 
       legal services and related costs;  and providing for an                 
       effective date."                                                        
                                                                               
  House Bill  151 was  in a  subcommittee consisting  of Chair                 
  Representative Hanley with members  Representatives Parnell,                 
                                                                               
                                6                                              
                                                                               
                                                                               
  MacLean and Hoffman.                                                         
                                                                               
  Representative   Hanley  explained   changes  made   by  the                 
  subcommittee.   Changes were  made to  ensure that  indigent                 
  people would not be  charged for facilities not paid  for by                 
  non-indigent.                                                                
                                                                               
  Co-Chair Larson MOVED to ADOPT,  Work Draft 8-LS061\J, dated                 
  33/17/93.   Members discussed  the meaning  of "facilities".                 
  There  being  NO  OBJECTION,  Work  Draft  8-LS061\J,  dated                 
  33/17/93 was adopted.                                                        
                                                                               
  ARTHUR H. SNOWDEN, II, ADMINISTRATIVE DIRECTOR, ALASKA COURT                 
  SYSTEM explained the Supreme Court asked that legislation be                 
  introduced  to  recover  costs  incurred  by indigent.    He                 
  asserted  that  indigent are  protected  by language  in the                 
  legislation allowing deferment for "manifest hardship."  The                 
  Court maintains  that "upon the  person's conviction" should                 
  be deleted.                                                                  
                                                                               
  Representative  Hanley  pointed   out  that  enforcement  of                 
  judgments  can  be   stayed.    He  emphasized   that  extra                 
  protection has been added for indigent people.                               
                                                                               
  Representative Brown stressed that the provision which would                 
  delay repayment for three years after incarceration has been                 
  deleted.   She asked  if persons  should have  more time  to                 
  reestablish  themselves  after release.  She  emphasized the                 
  difficulty of individuals to transition back into society.                   
                                                                               
  Mr. Snowden  noted that some individuals will  only serve 30                 
  to 90 days.   He  stressed that the  collection delay  would                 
  cause difficulties in the Department  of Law.  He maintained                 
  that some individuals  may have money  at the time of  trail                 
  that is hidden from the court.                                               
                                                                               
  Representative  Therriault  stressed   that  due  to   civil                 
  exclusion a  judge could not  go after an  individuals "last                 
  penny".   He felt that there  is no reason the  State should                 
  wait three years to recoup  the costs of some one who  spent                 
  30 days in jail for a DWI.                                                   
                                                                               
  Representative Grussendorf spoke  in support of  maintaining                 
  "upon the person's conviction".                                              
                                                                               
  Mr.  Snowden  clarified,  in  response  to a  question  from                 
  Representative Parnell, that  a "no  contest" plea would  be                 
  considered a conviction in regards to cost recover.                          
                                                                               
  Representative  Navarre  MOVED  to  TABLE  CSHB  151  (FIN).                 
  Representative  Martin  OBJECTED.    Representative  Navarre                 
  WITHDREW HIS MOTION.   Representative  Brown MOVED to  TABLE                 
                                                                               
                                7                                              
                                                                               
                                                                               
  CSHB 151 (FIN).  A roll call vote was taken on the motion.                   
                                                                               
  IN FAVOR: Grussendorf,  Navarre,  Foster,   Hanley,  Martin,                 
                 Parnell, Therriault MacLean, Larson                           
  OPPOSED:  Brown                                                              
                                                                               
  Representative Hoffman was absent from the vote.                             
                                                                               
  The MOTION FAILED (9-1).                                                     
                                                                               
  Representative Martin MOVED to report  CSHB 151 (FIN) out of                 
  Committee  with  individual  recommendations  and  with  the                 
  accompanying fiscal notes.   Representative Brown  OBJECTED.                 
  A roll call vote was taken on the motion.                                    
                                                                               
  IN FAVOR: Grussendorf,  Navarre,  Foster,   Hanley,  Martin,                 
                 Parnell, Therriault MacLean, Larson                           
  OPPOSED:  Brown                                                              
                                                                               
  Representative Hoffman was absent from the vote.                             
  The MOTION FAILED (9-1).                                                     
                                                                               
  CSHB 151  (FIN) was  reported out  of Committee  with a  "do                 
  pass"  recommendation and  with a  zero fiscal  note by  the                 
  Alaska Court System, dated 2/24/93 and  with two zero fiscal                 
  notes by the Department of Administration and with  a fiscal                 
  impact note by the Department of Law.                                        
  HOUSE BILL NO. 67                                                            
                                                                               
       "An Act  relating to  eligibility for  and payments  of                 
       public  assistance;  and  providing  for  an  effective                 
       date."                                                                  
                                                                               
  VICKY  BORREGO,  LEGISLATIVE  LIAISON,   CATHOLIC  COMMUNITY                 
  SERVICE spoke in opposition to HB 67.  She stressed that  HB
  67 would:                                                                    
                                                                               
       *    Reduce  the  amount  of public  assistance  grants                 
            Alaskan families may receive.                                      
                                                                               
       *    Take out any  cost of living allowances  available                 
            through the law beginning January 1, 1994.                         
                                                                               
       *    Rollback public assistance  benefit levels to what                 
            was in effect on January 1, 1990.                                  
                                                                               
  Ms.  Borrego noted that  the most needy  senior citizens and                 
  disabled adults will be affected.  Seniors will lose as much                 
  as  $36 dollars  a  month.   An  estimated 23,000  dependent                 
  children will be affected.   She maintained that HB  67 does                 
  not  promote  greater   self-sufficiency,  independence   or                 
                                                                               
                                8                                              
                                                                               
                                                                               
  empowerment but  reduces an already spartan monthly benefit.                 
  She felt that  other options should be  sought before taking                 
  away basic benefits.                                                         
                                                                               
  RUTH GULYAS, OLDER ALASKANS COMMISSION  spoke against HB 67.                 
  She stressed  that poor  seniors and  disabled   adults will                 
  loose $36.00 dollars a month.  The Older Alaskans Commission                 
  (OAC)  is  concerned  about  the   bill's  effects  on  poor                 
  Alaskans, Children and  disabled adults.  She  stressed that                 
  nearly  14  percent  of Alaskans  over  the  age  of 65  are                 
  recipients of  old age assistance.   she observed  that many                 
  seniors and all disabled adults under age 65 are not covered                 
  by Medicare.  She noted that Alaska has a high percentage of                 
  persons who are  not eligible for social  security benefits.                 
  The Commission feels that seniors are  not likely to be able                 
  to reverse their current economic situations.                                
                                                                               
  SHERRIE GOLL, ALASKA WOMEN'S LOBBY spoke in opposition to HB
  67.  She asserted that HB 67 contains the "most sweeping set                 
  of cuts to  public assistance that has  ever been considered                 
  by the  Alaska  Legislature."   She  maintained that  HB  67                 
  contains everything  that can be done to  reduce benefits to                 
  poor people.                                                                 
  She  noted  that testimony  in  previous hearings  have been                 
  overwhelmingly against HB 67.  She  asserted that HB 67 will                 
  be particularly devastating to rural Alaskans.                               
                                                                               
  Ms. Goll  reiterated statistics  noted by  the previous  two                 
  speakers.  She  noted that there  are 5,438 disabled and  89                 
  blind adults that will be affected.   She denied that people                 
  move  to  Alaska  to  receive  higher  AFDC  benefits.   She                 
  maintained that the growth in caseload for public assistance                 
  programs has  remained constant in comparison  to population                 
  growth.  She  noted that  an additional  growth in  caseload                 
  resulted  from   federally  mandated   changes  in   program                 
  eligibility.  She stressed that the  standard of need is the                 
  standard  of basic decency and  health.  She maintained that                 
  the basic standard of  decency and health will no  longer be                 
  met if HB 67 is passage.                                                     
                                                                               
  Ms. Goll  noted that  AFDC is  designed to  help parents  of                 
  children to get back into the job market.  She asserted that                 
  adult  public  assistance  clients  have  little  chance  of                 
  improving their financial  picture.   She stressed that  the                 
  alternative  to  assistance  is institutionalization.    She                 
  noted  that  one in  five  children are  dependent  on AFDC.                 
  Eighteen percent  of Alaskan  children are  involved in  the                 
  program.  She emphasized that  other assistance programs are                 
  also being reduced.   There is a three year waiting list for                 
  assisted housing in  Juneau.  The  poor spend 70 percent  of                 
  their income on housing.  They will pay 78 percent if  HB 67                 
  passes.  She  asserted that  Permanent Fund Dividend  checks                 
                                                                               
                                9                                              
                                                                               
                                                                               
  are not spent on luxuries.                                                   
                                                                               
  Ms. Goll stated  that unemployed parents should  be targeted                 
  by jobs programs.   She urged the Committee to  consider the                 
  Adult Public  Assistance Program separate  from AFDC.    She                 
  stressed  that  CSHB   67  (HESS)  goes  further   than  the                 
  Administration   planned.      She   maintained   that   the                 
  Administration did not intend to delete the COLA.                            
  ADJOURNMENT                                                                  
                                                                               
  The meeting adjourned at 10:12 p.m.                                          
                                                                               
                                                                               
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