Legislature(2005 - 2006)HOUSE FINANCE 519

02/08/2006 01:30 PM FINANCE

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
<Bill Hearing Postponed>
Heard & Held
+ Bills Previously Heard/Scheduled TELECONFERENCED
Moved CSHB 245(FIN) Out of Committee
                  HOUSE FINANCE COMMITTEE                                                                                       
                      February 8, 2006                                                                                          
                         1:46 p.m.                                                                                              
CALL TO ORDER                                                                                                                 
Co-Chair Meyer called the House  Finance Committee meeting to                                                                   
order at 1:46:54 PM.                                                                                                          
MEMBERS PRESENT                                                                                                               
Representative Kevin Meyer, Co-Chair                                                                                            
Representative Bill Stoltze, Vice-Chair                                                                                         
Representative Richard Foster                                                                                                   
Representative Mike Hawker                                                                                                      
Representative Jim Holm                                                                                                         
Representative Reggie Joule                                                                                                     
Representative Mike Kelly                                                                                                       
Representative Carl Moses                                                                                                       
Representative Bruce Weyhrauch                                                                                                  
Representative Beth Kerttula                                                                                                    
MEMBERS ABSENT                                                                                                                
Representative Mike Chenault, Co-Chair                                                                                          
ALSO PRESENT                                                                                                                  
Terry Harvey,  Staff, Representative Bruce  Weyhrauch; Sharon                                                                   
Barton, Director, Alaska Permanent  Fund Division, Department                                                                   
of Revenue;  Representative  Bob Lynn;  Ralph Taylor,  Homer;                                                                   
Suzanne Cunningham, Staff, Co-Chair Meyer                                                                                       
PRESENT VIA TELECONFERENCE                                                                                                    
Christopher    C.   Poag,    Assistant   Attorney    General,                                                                   
Commercial/Fair Business Section,  Civil Division, Department                                                                   
of Law; Duane Bannock, Director,  Division of Motor Vehicles,                                                                   
Department of  Administration; Ron  Hoyt, Homer;  Vi Gerrell,                                                                   
HB 273    "An  Act relating to  the dividends of  individuals                                                                   
          claiming allowable absences; and providing for an                                                                     
          effective date."                                                                                                      
          HB 273 was heard and HELD in Committee for further                                                                    
HB 245    "An Act relating to  registration and license plate                                                                   
          fees for Purple Heart recipients, prisoners of                                                                        
          war, Congressional Medal of Honor recipients, and                                                                     
          spouses of current prisoners of war."                                                                                 
          HB 245 CS HB 245 (FIN) was REPORTED out of                                                                            
          Committee with a "do pass" recommendation and with                                                                    
          a new fiscal note by the Department of                                                                                
HB 12     "An Act relating to televisions and monitors in                                                                       
          motor vehicles."                                                                                                      
          HB 12 was SCHEDULED but not HEARD.                                                                                    
1:47:02 PM                                                                                                                    
HOUSE BILL NO. 273                                                                                                            
     "An Act relating to the dividends of individuals                                                                           
     claiming allowable absences; and providing for an                                                                          
     effective date."                                                                                                           
Representative Weyhrauch,  sponsor, explained  that currently                                                                   
every Alaskan who is a resident  of the state is qualified to                                                                   
receive  a Permanent  Fund  Dividend  (PFD).   Under  certain                                                                   
circumstances, physical  presence in the state  can be waived                                                                   
and a resident  can still receive  a PFD.  HB 273  would make                                                                   
sure  that  a person  who  qualifies  for  a dividend  is  an                                                                   
Alaskan  resident, and  upon  return to  the  state after  an                                                                   
allowed absence,  would receive  a PFD.   The impetus  behind                                                                   
the bill  is the  $150 million  sent out  of the state  under                                                                   
absentee exceptions.  Certain  categories of exemptions never                                                                   
return to  the state.   HB 273 would  give a PFD  to everyone                                                                   
who  qualifies, upon  return  to the  state  from an  allowed                                                                   
absence, and would benefit the economy of the state.                                                                            
1:51:45 PM                                                                                                                    
Representative  Joule asked  if a person  whose dividend  has                                                                   
been  held for  several  years  would receive  any  interest.                                                                   
Representative  Weyhrauch  said  that no  interest  would  be                                                                   
Representative Holm inquired if  there were any limits to the                                                                   
amount of time  a person could be gone and still  be eligible                                                                   
for a  dividend.   Representative Weyhrauch  deferred  to Mr.                                                                   
1:53:08 PM                                                                                                                    
TERRY HARVEY, STAFF, REPRESENTATIVE  WEYHRAUCH, reported that                                                                   
there  is a  10-year moratorium  on  absences allowed,  which                                                                   
will go into effect in 2008.                                                                                                    
Mr.  Harvey related  that the  permanent fund  dividend is  a                                                                   
very touchy  subject.  Many  arguments are demanding  in tone                                                                   
when  expressing  a need  for  the  dividend.   The  original                                                                   
public purpose  of the  PFD was  about physical residency  in                                                                   
Alaska, not about need.  He shared  other arguments put forth                                                                   
by  people as  to  Alaskan residency.    The legislature  has                                                                   
established residency  as being physically present  in Alaska                                                                   
for 185 days  and the Supreme  Court has backed that  up.  He                                                                   
emphasized  that a person  with an  allowable absence  is not                                                                   
committing  fraud by  collecting a dividend  from outside  of                                                                   
the state.   He discussed the fairness issue  regarding those                                                                   
who collect a dividend, but do not return to the state.                                                                         
1:56:27 PM                                                                                                                    
Representative   Stoltze  asked   for  the   Administration's                                                                   
position on the bill.                                                                                                           
SHARON  BARTON,  DIRECTOR, ALASKA  PERMANENT  FUND  DIVISION,                                                                   
DEPARTMENT  OF REVENUE, stated  the Administration's  support                                                                   
for HB 273.                                                                                                                     
Representative  Weyhrauch requested  that Ms. Barton  explain                                                                   
the Permanent  Fund Dividend Division's  report.   Ms. Barton                                                                   
referred  to a  report  entitled  "HB 273,  Delayed  Payments                                                                   
Analysis, February  6, 2006" (copy on file.)   A considerable                                                                   
number of categories  were added to the samples  and the data                                                                   
was  fine-tuned at  the request  of the  House State  Affairs                                                                   
Committee.   The rates of  those absent groups  not returning                                                                   
grew larger.   The  four largest  groups, those  accompanying                                                                   
someone on an  allowable absence such as military  or student                                                                   
dependants, do not  return at a rate of 82  percent.  College                                                                   
students  do not  return at  a rate  of 67  percent.   Active                                                                   
military do  not return at a rate  of 72 percent.   Those out                                                                   
receiving  medical  care  do  not  return at  a  rate  of  63                                                                   
percent.  The  report is broken down into  various categories                                                                   
of  time  spent  outside  of Alaska,  from  1  to  10  years.                                                                   
Students  who only  go out  to school  for one  or two  years                                                                   
return  at a  higher  rate.   The  weighted  average for  all                                                                   
absent types is 72 percent not returning after 10 years.                                                                        
2:00:50 PM                                                                                                                    
Ms. Barton  shared financial data  on the projected  costs of                                                                   
those who do not return to the state.                                                                                           
Representative Kerttula  asked how the survey  was organized.                                                                   
Ms. Barton  explained how the  individuals were tracked.   No                                                                   
persons  included  in  the  group   only  applied  one  year.                                                                   
Representative  Kerttula asked  if people  in previous  years                                                                   
were included.   Ms. Barton explained that they  were not and                                                                   
that  the data  was done  by hand.   Representative  Kerttula                                                                   
asked how  many people are  claiming exceptions.   Ms. Barton                                                                   
referred to  attachment one, which  lists exceptions  by year                                                                   
and by category.                                                                                                                
2:03:58 PM                                                                                                                    
Representative  Joule  asked   for  clarification  about  the                                                                   
secondary school  category on page  2.  He asked  if graduate                                                                   
students were included  in the college category.   Ms. Barton                                                                   
replied that  graduate students  are included in  the college                                                                   
Representative  Stoltze  asked if  HB 2  had  not passed,  if                                                                   
there  would  be no  need  for  spouses  and children  to  be                                                                   
included  in this  bill.  Ms.  Barton said  there would  have                                                                   
been less of an impact if HB 2 had not passed.                                                                                  
2:06:59 PM                                                                                                                    
Representative Kelly asked if  five years was ever considered                                                                   
as the  limit to be  absent from  the state.   Representative                                                                   
Weyhrauch said  it was not considered.   Representative Kelly                                                                   
asked if  the clock could be  reset if the person  comes back                                                                   
and  re-qualifies.   Representative  Weyhrauch  said that  is                                                                   
2:08:36 PM                                                                                                                      
Representative Kerttula  asked for a definition  of secondary                                                                   
school.   Ms.  Barton replied  that it  is high  school.   In                                                                   
response  to a  question  from Representative  Kerttula,  Ms.                                                                   
Barton replied  that the  last pages of  the handout  are the                                                                   
delayed  payment  analysis  figures requested  by  the  House                                                                   
State  Affairs Committee.   Representative  Kerttula noted  a                                                                   
higher  return rate  for  those  gone only  two  years.   Ms.                                                                   
Barton  said that  is  true for  college  students and  small                                                                   
groups.   An amendment was made  to allow for students  to be                                                                   
out   for  two   years   without  losing   their   dividends.                                                                   
Representative Kerttula asked  if it were possible to know if                                                                   
students were  remaining out of  state longer for  medical or                                                                   
law school.  Ms. Barton replied no.                                                                                             
Representative Weyhrauch noted  that those returning students                                                                   
would get a large check upon return.   He clarified that many                                                                   
students who  leave for school  apply for in-state  residency                                                                   
to  get  a better  tuition  rate,  which  has a  far  greater                                                                   
economic benefit to them than a PFD.                                                                                            
2:11:49 PM                                                                                                                    
Mr.   Harvey  spoke   to  the   original   purpose  of   this                                                                   
legislation.   The argument  heard was  that there  should be                                                                   
reasons why a resident can leave  temporarily, with intent to                                                                   
return.   That  language  is in  the  PFD application.    The                                                                   
sponsor  feels  that  making  eligibility  conditional  is  a                                                                   
return to the original  intent of the bill.   Over a ten-year                                                                   
period,  97,000  individuals   applied  from  out  of  state,                                                                   
received  $136  million  as  a PFD,  and  never  returned  to                                                                   
Ms.  Barton added  that  as the  bill  is currently  written,                                                                   
college students  would receive  a dividend  for the  first 3                                                                   
years,  not just  two.   The first  year  students leave  for                                                                   
school in the fall and are not "out of state" that year.                                                                        
2:14:07 PM                                                                                                                    
RALPH TAYLOR,  NOME, voiced  appreciation  for the hard  work                                                                   
done on the bill.  He related  that there are a lot of checks                                                                   
and balances  in place at  this time.   He shared a  story of                                                                   
his  daughter's  experience in  the  army  when she  did  not                                                                   
receive a  PFD at one  point.  He  maintained that  there are                                                                   
checks and  balances already in  place, which should  be used                                                                   
to deny those not returning to the state.                                                                                       
Representative  Weyhrauch  related  that  the bill  does  not                                                                   
interfere with the rights of PFD  applicants.  The full range                                                                   
of  checks and  balances  is still  intact  and available  to                                                                   
Representative Foster thanked Mr. Taylor.                                                                                       
2:19:06 PM                                                                                                                    
RON HOYT,  HOMER,  shared that  he is  a WW II  veteran.   He                                                                   
spoke  in support  of the  bill and  in favor  of a  two-year                                                                   
absence limit.   He suggested the  time be capped at  5 years                                                                   
and that interest need not be paid.                                                                                             
VI  GERRELL,  PhD,  spoke  in  opposition to  HB  273.    She                                                                   
maintained that the most recent  sampling is inadequate.  She                                                                   
suggested  that  the  bill  is  unconstitutional  because  it                                                                   
targets groups, gives no proper  notice, and denies the right                                                                   
to due  process and  protection under the  laws.   She opined                                                                   
that military people and students  are Alaskans who intend to                                                                   
return to the state.                                                                                                            
2:27:08 PM                                                                                                                    
Representative Weyhrauch  asked Mr. Poag to  review the legal                                                                   
aspects  of HB 273.   He  maintained that  the bill  does not                                                                   
target a  specific group, nor does  it comment on fraud.   He                                                                   
requested  Mr.  Poag  address the  problems  associated  with                                                                   
identifying a class as "needing  a dividend" and the issue of                                                                   
equal treatment.                                                                                                                
CHRISTOPHER  C.  POAG,  ASSISTANT   ATTORNEY  GENERAL,  CIVIL                                                                   
DIVISION, related  that the persons  who qualify for  the PFD                                                                   
are  Alaska  residents.    The   bill  provides  that  Alaska                                                                   
residents who  are not physically  present in the  state must                                                                   
have  a  subjective intent  to  return  to  the state.    The                                                                   
legislature has  given the PFD  Division broad  discretion to                                                                   
decide the  criteria regarding reasonable  subjective intent.                                                                   
He related  a case of Church  vs. State where Mr.  Church did                                                                 
not  qualify for  an allowable  absence.   The Supreme  Court                                                                   
expressed  that  the  PFD  is  an  economic  interest.    The                                                                   
objective is to encourage Alaskans  to remain or to return so                                                                   
that only  permanent Alaskan residents  receive the PFD.   As                                                                   
long  as the  enactment  by this  legislative  body has  this                                                                   
legitimate government  objective, it  would survive  an equal                                                                   
protection  challenge.   This legislation  does not  target a                                                                   
specific group and  has no "notice" issue because  it applies                                                                   
to the future.   He spoke to the due process  issue regarding                                                                   
the bill  and stated  that the interest  issue does  not come                                                                   
into play.                                                                                                                      
2:34:40 PM                                                                                                                    
HB  273  was   heard  and  HELD  in  committee   for  further                                                                   
2:35:39 PM                                                                                                                    
HOUSE BILL NO. 245                                                                                                            
     "An Act relating to registration  and license plate fees                                                                   
     for   Purple  Heart   recipients,   prisoners  of   war,                                                                   
     Congressional Medal of Honor  recipients, and spouses of                                                                   
     current prisoners of war."                                                                                                 
Representative Hawker  MOVED to ADOPT the  proposed committee                                                                   
substitute (CS)  for HB 245, labeled 24-LS0604\S,  Luckhaupt,                                                                   
2/6/06.    Representative  Stoltze  OBJECTED  for  discussion                                                                   
SUZANNE  CUNNINGHAM, STAFF,  CO-CHAIR  MEYER, explained  that                                                                   
the new CS has two changes.  It  includes Congressional Medal                                                                   
of Honor  recipients under the  same paragraph  that provides                                                                   
license  plates   for  Pearl  Harbor  survivors   and  former                                                                   
prisoners of war (POW).  It also  provides for no fee for the                                                                   
registration  of the plates  or for the  plates.   The second                                                                   
change is that  the current POW and spouse  eligibility for a                                                                   
plate was removed and an immediate  effective date was added.                                                                   
Representative  Kerttula asked why  current POWs  and spouses                                                                   
were cut  out.  Ms. Cunningham  related that when  looking at                                                                   
the  specialty  license  plates  as  a  class,  there  is  no                                                                   
eligibility  for  those  categories.    The  intent  of  this                                                                   
legislation is to honor those who serve our country.                                                                            
Representative  Kerttula asked  how many  current POWs  there                                                                   
are.  Ms. Cunningham replied that  she is unsure if there are                                                                   
any at this time.                                                                                                               
2:39:51 PM                                                                                                                    
REPRESENTATIVE BOB LYNN, SPONSOR,  shared disappointment that                                                                   
the POW  and spouse categories were  removed.  He spoke  of a                                                                   
preference to leave them in, in order to honor them.                                                                            
Representative Weyhrauch  asked if a Missing  in Action (MIA)                                                                   
category  should be included.   Representative  Lynn  said he                                                                   
had  no problem  with that  idea.   Representative  Weyhrauch                                                                   
asked  how  a   MIA  veteran  would  apply   for  a  license.                                                                   
Representative Lynn  replied that the spouse  would apply for                                                                   
Ms.  Cunningham  referred  to  earlier  legislation  in  2003                                                                   
whereby anyone  could purchase a commemorative  license plate                                                                   
to  support veterans.   The  money  raised from  the sale  of                                                                   
those plates would  be appropriated back to  support services                                                                   
for veterans.                                                                                                                   
2:44:03 PM                                                                                                                    
DUANE  BANNOCK,   DIRECTOR,  DIVISION   OF  MOTOR   VEHICLES,                                                                   
DEPARTMENT  OF  ADMINISTRATION,   opined  that  many  of  the                                                                   
automobiles are  in the name of  the veteran and  the spouse.                                                                   
He gave an example.   Under Chapter 48 when two  names are on                                                                   
the vehicle title,  either party can make an  application for                                                                   
a license.  He discussed the Commemorative  Veteran's License                                                                   
Plate, which honors military personnel.                                                                                         
Representative Stoltze noted that  the license plate bill has                                                                   
become  more complicated.   He asked  Representative  Lynn if                                                                   
the  CS  was   acceptable.    Representative   Lynn  noted  a                                                                   
preference for  the original bill,  but stated  acceptance of                                                                   
the new CS.                                                                                                                     
2:48:06 PM                                                                                                                    
Representative Stoltze WITHDREW his OBJECTION.                                                                                  
Co-Chair Meyer asked that the  OBJECTION remain on the table.                                                                   
Representative Foster noted that  he had recently been in two                                                                   
Division  of Motor  Vehicle offices  and did  not notice  the                                                                   
commemorative veterans display.                                                                                                 
Mr. Bannock commented  that he would be disappointed  if each                                                                   
office  did  not show  a  display  of all  available  license                                                                   
Representative Kerttula  inquired if language  in the current                                                                   
law would  include those  that who are  currently POWs.   Mr.                                                                   
Bannock replied that he was referring  to past tense (former)                                                                   
prisoners of war.   He understood that the  statute indicates                                                                   
past tense.                                                                                                                     
Representative Kerttula  questioned the circumstances  if the                                                                   
person  has been,  and  is currently,  a  POW.   Mr.  Bannock                                                                   
responded that if a person came  in with a document that tied                                                                   
POW to a name  that was listed on the vehicle,  that customer                                                                   
would receive  the plate.  He  acknowledged that it  could be                                                                   
challenged.   There  are  a total  of  34 vehicles  with  POW                                                                   
license plates.                                                                                                                 
2:52:57 PM                                                                                                                    
Representative Stoltze  WITHDREW his OBJECTION.   There being                                                                   
NO further OBJECTION, CSHB 245 was adopted.                                                                                     
Representative  Hawker noted concerned  that the  proper term                                                                   
for Congressional Medal of Honor  should be "Medal of Honor".                                                                   
Representative Lynn  responded that he  did not know,  but he                                                                   
offered to  research it.   Representative Foster  stated that                                                                   
he also did not know.                                                                                                           
2:56:28 PM                                                                                                                    
Discussion occurred  between committee members  regarding the                                                                   
possibility of clarifying the Prisoner of War status.                                                                           
Representative Lynn  offered to check with the  Department of                                                                   
Defense regarding that language.                                                                                                
Co-Chair Meyer  recommended that the number of  amendments be                                                                   
Representative  Hawker commented that  he would vote  with an                                                                   
"amend" recommendation.                                                                                                         
2:58:24 PM                                                                                                                    
Representative Foster  MOVED to REPORT CSHB 245  (FIN) out of                                                                   
Committee  with  individual  recommendations   and  with  the                                                                   
accompanying fiscal  note.  There being NO  OBJECTION, it was                                                                   
so ordered.                                                                                                                     
CSHB  245 (FIN)  was reported  out  of Committee  with a  "do                                                                   
pass"  recommendation  and with  a  new  fiscal note  by  the                                                                   
Department of Administration.                                                                                                   
The meeting was adjourned at 2:59 PM.                                                                                           

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