Legislature(2015 - 2016)HOUSE FINANCE 519

04/07/2016 08:30 AM House FINANCE

Note: the audio and video recordings are distinct records and are obtained from different sources. As such there may be key differences between the two. The audio recordings are captured by our records offices as the official record of the meeting and will have more accurate timestamps. Use the icons to switch between them.

Download Mp3. <- Right click and save file as

* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
-- Delayed to 8:45 a.m. Today --
Moved HB 259 Out of Committee
+ Bills Previously Heard/Scheduled TELECONFERENCED
Moved CSHB 188(FIN) Out of Committee
                  HOUSE FINANCE COMMITTEE                                                                                       
                       April 7, 2016                                                                                            
                         8:48 a.m.                                                                                              
8:48:51 AM                                                                                                                    
CALL TO ORDER                                                                                                                 
Co-Chair Thompson called the House Finance Committee                                                                            
meeting to order at 8:48 a.m.                                                                                                   
MEMBERS PRESENT                                                                                                               
Representative Mark Neuman, Co-Chair                                                                                            
Representative Steve Thompson, Co-Chair                                                                                         
Representative Dan Saddler, Vice-Chair                                                                                          
Representative Bryce Edgmon                                                                                                     
Representative Les Gara                                                                                                         
Representative Lynn Gattis                                                                                                      
Representative David Guttenberg                                                                                                 
Representative Scott Kawasaki                                                                                                   
Representative Cathy Munoz                                                                                                      
Representative Lance Pruitt                                                                                                     
Representative Tammie Wilson                                                                                                    
MEMBERS ABSENT                                                                                                                
ALSO PRESENT                                                                                                                  
Mark Luiken, Commissioner,  Department of Transportation and                                                                    
Public   Facilities;  Heather   Fair,  Right-Of-Way   Chief,                                                                    
Department of  Transportation and Public  Facilities; Brodie                                                                    
Anderson,   Staff,   Representative  Steve   Thompson;   Kim                                                                    
Skipper, Staff, Representative Dan Saddler;                                                                                     
PRESENT VIA TELECONFERENCE                                                                                                    
HB 259    RELOCATION ASSISTANCE FOR FED. PROJ/PROG                                                                              
          HB 259 was REPORTED out of committee with a "do                                                                       
          pass" recommendation and with a previously                                                                            
          published zero fiscal note: FN1 (DOT).                                                                                
HB 188    PERSON W/DISABILITY SAVINGS ACCOUNTS                                                                                  
          CSHB 188 (FIN) was  REPORTED out of committee with                                                                    
          a  "do  pass"  recommendation and  with  one  zero                                                                    
          fiscal  note  by  the  Department  of  Health  and                                                                    
          Social Services and one fiscal  impact note by the                                                                    
          Department of Revenue.                                                                                                
Co-Chair Thompson reviewed the agenda for the day.                                                                              
HOUSE BILL NO. 259                                                                                                            
     "An Act relating to relocation assistance for                                                                              
     federally   assisted   projects   and   programs;   and                                                                    
     providing for an effective date."                                                                                          
8:50:17 AM                                                                                                                    
MARK LUIKEN, COMMISSIONER,  DEPARTMENT OF TRANSPORTATION AND                                                                    
PUBLIC FACILITIES,  explained that  the purpose of  the bill                                                                    
was to  bring Alaska  statutes into compliance  with federal                                                                    
law. He continued that when  right-of-ways were acquired for                                                                    
public  transportation  purposes  federal law  required  the                                                                    
department to  compensate property  owners for the  value of                                                                    
the  property   and  to   provide  relocation   benefits  to                                                                    
displaced  families,   businesses,  and  farms.   Under  the                                                                    
federal  initiative  known  as  MAP  21  [Moving  Ahead  for                                                                    
Progress], the  previous federal transportation  bill passed                                                                    
in 2012, the state's funding  partners had made it easier to                                                                    
qualify  and  increase  the  maximum  relocation  assistance                                                                    
available to  the affected parties. Benefits  paid to Alaska                                                                    
families  and   businesses  related  to  the   program  were                                                                    
eligible   for  federal   reimbursement.   He  thanked   the                                                                    
committee for hearing the bill  and considering its passage.                                                                    
He was happy to respond to any questions.                                                                                       
Co-Chair Neuman  asked why the  state needed the  bill since                                                                    
the  state  could  already   accept  federal  funds  without                                                                    
legislative approval.                                                                                                           
8:51:53 AM                                                                                                                    
HEATHER    FAIR,   RIGHT-OF-WAY    CHIEF,   DEPARTMENT    OF                                                                    
TRANSPORTATION AND PUBLIC  FACILITIES, asked Co-Chair Neuman                                                                    
to elaborate on his question.                                                                                                   
Co-Chair Neuman  restated his  question. Ms.  Fair confirmed                                                                    
that the  state already had authorization  to accept federal                                                                    
funding.   However,  the   current  statutes   limited-  the                                                                    
department's ability to pay  the funding to families, farms,                                                                    
and businesses.  There was  a statutory  limit that  did not                                                                    
currently  comply with  the new  federal maximums.  The bill                                                                    
would bring the  state into compliance with  the new federal                                                                    
8:52:56 AM                                                                                                                    
Co-Chair Neuman  asked Ms. Fair  to explain further.  He had                                                                    
worked  with  the  commissioner  on  expansions  within  the                                                                    
state.  He asked  her to  provide  sideboards including  the                                                                    
previous  limit and  the current  limit. Ms.  Fair explained                                                                    
that the  limits had been raised  under the MAP 21  bill for                                                                    
federal  highways. Under  previous legislation  by congress,                                                                    
business  reestablishment  payments  were  only  limited  to                                                                    
$10,000. They  were now $20,000 under  federal limits. Fixed                                                                    
payments  in lieu  of  actually  moving and  reestablishment                                                                    
used to be only $20,000  and was now $40,000. The perimeters                                                                    
around replacement  housing for home owners  used to include                                                                    
having to  live in your  home 180 days  and now was  only 90                                                                    
days. The limit  used to be $22,500 and now  it was $31,000.                                                                    
The final increase was replacement  housing for tenants that                                                                    
were not  owners. She explained  that being a 90  day tenant                                                                    
used to be $5250 and was now $7200.                                                                                             
8:54:18 AM                                                                                                                    
Co-Chair  Neuman clarified  that the  state was  required to                                                                    
assist  people that  had been  displaced because  of eminent                                                                    
domain.  Commissioner Luiken  responded in  the affirmative.                                                                    
He emphasized  that it was purely  the relocation assistance                                                                    
piece  of  the process  -  to  help  people when  they  were                                                                    
8:54:53 AM                                                                                                                    
Representative Wilson  asked if  it was all  federal funding                                                                    
or if  there was state  funding as well. Ms.  Fair responded                                                                    
that  there was  a portion  of state  funding that  could be                                                                    
applicable. The state's share was  roughly 9 percent. It was                                                                    
a small  amount relative  to the  total cost  of relocation.                                                                    
The federal government's share was about 91 percent.                                                                            
8:55:34 AM                                                                                                                    
Representative  Wilson  asked  her  for  the  definition  of                                                                    
"reasonable" noted  in the  language of  the bill.  Ms. Fair                                                                    
replied  that   there  were   definitions  in   the  federal                                                                    
regulations  to which  they were  being referred  to in  the                                                                    
bill under Section 1.                                                                                                           
8:55:59 AM                                                                                                                    
Representative  Munoz asked  how the  department dealt  with                                                                    
businesses  that   had  a   loss  of   business  due   to  a                                                                    
transportation  project.   She  wondered  if  there   was  a                                                                    
reimbursement  policy  to  deal  with the  issue.  Ms.  Fair                                                                    
reported  that the  state did  not  compensate for  business                                                                    
losses,  but  it  did  compensate  for  relocation  and  for                                                                    
reestablishment of a business under federal law.                                                                                
Representative  Kawasaki  asked  if similar  legislation  in                                                                    
other states had  eased eminent domain takings.  He asked if                                                                    
that was the purpose of the legislation.                                                                                        
Ms. Fair  stated that it  was specific to  relocations apart                                                                    
from the acquisitions. In general,  congress' purpose was to                                                                    
help  assist  families  for relocation  and  businesses  for                                                                    
reestablishment. Any type of  relocation could be disruptive                                                                    
and congress  recognized that prices  had gone up,  costs to                                                                    
relocate  had  increased, and  it  was  time to  adjust  the                                                                    
amounts available to eligible parties.                                                                                          
Representative Kawasaki suggested that  it was a substantive                                                                    
policy call when discussing eminent  domain and federal road                                                                    
projects which he wanted the committee to be aware of.                                                                          
8:57:56 AM                                                                                                                    
Representative  Guttenberg  relayed  being involved  with  a                                                                    
project  in  his  district. The  right-of-way  had  been  on                                                                    
private property. The department had  been willing to move a                                                                    
building  or a  septic  system.  He asked  if  there was  an                                                                    
example  of a  building needing  to  be moved  or a  similar                                                                    
situation. He  wondered about  the qualifications.  Ms. Fair                                                                    
replied  that the  bill  assisted  with some  qualifications                                                                    
which allowed  an easier pathway  by reducing the  number of                                                                    
days that a person had to  be a homeowner or tenant from 180                                                                    
to 90  days. As  far as  relocating a  building or  a septic                                                                    
system, that  fell under the  category of  acquisition which                                                                    
the  bill  did  not  address.  Relocation  meant  moving  to                                                                    
another site.                                                                                                                   
8:59:52 AM                                                                                                                    
Representative Gattis  asked about  farms. She  wondered why                                                                    
farms were  mentioned independent  of businesses.  She asked                                                                    
about the distinction for farming.                                                                                              
Ms.  Fair  suggested  that  in   federal  law  there  was  a                                                                    
distinction for farming. The law  was referred to in the new                                                                    
legislation.  She  admitted  that  she  was  also  a  fellow                                                                    
Representative Gattis thought it  was important to recognize                                                                    
issues that  accompanied a  right-of-way on  a farm.  It was                                                                    
possible that with a  right-of-way farming could potentially                                                                    
not  be  possible  on  either  side  or  crossing  could  be                                                                    
impeded.  There had  been certain  situations  that came  up                                                                    
around these  issues. She wondered  if such issues  were the                                                                    
reason  for   farming  having   a  distinction   over  other                                                                    
Ms.  Fair  stated  that  the  federal  government  made  the                                                                    
distinction  because of  the  reasons Representative  Gattis                                                                    
had  brought  up. The  bill  did  not address  the  specific                                                                    
issues  mentioned,  only  the  relocation  of  a  farm,  for                                                                    
9:01:35 AM                                                                                                                    
Representative   Gattis   thought   it   was   a   lengthier                                                                    
conversation.  She suggested  that some  of the  same issues                                                                    
could apply to any business.                                                                                                    
9:02:05 AM                                                                                                                    
Vice-Chair  Saddler  wanted  to  know  historic  numbers  of                                                                    
people  that  had  been   displaced  by  federally  assisted                                                                    
programs and the associated costs.                                                                                              
Ms.  Fair stated  that  the effective  date  was in  October                                                                    
2014. There  was just a  hand full of people  and businesses                                                                    
that  had increased  eligibility. The  state's share  of the                                                                    
costs were estimated to be  $12,000 in retroactive payments.                                                                    
Through  a  design  process  the  state  tried  to  minimize                                                                    
relocations   as   best   as  possible   understanding   how                                                                    
disruptive they could be.                                                                                                       
9:03:04 AM                                                                                                                    
Vice-Chair Saddler wanted a firm number.                                                                                        
Ms. Fair  stated that there  were about a dozen  people that                                                                    
qualified for  additional money under the  statute since the                                                                    
effective date.                                                                                                                 
9:03:35 AM                                                                                                                    
Representative  Kawasaki  referenced   Section  3  regarding                                                                    
business  and  moving  expenses  but  not  acquisitions,  he                                                                    
wondered if  there had been  any relocations  resulting from                                                                    
various right-of-way acquisitions in  the Fairbanks area. He                                                                    
asked if there  were examples of a business  having to move.                                                                    
He provided an example of  a veterinary clinic on the corner                                                                    
of  a  Fairbanks  intersection  that had  to  be  moved.  He                                                                    
wondered if his  example was one where  moving expenses were                                                                    
compensated above the $10,000 cap.                                                                                              
Ms.  Fair  responded that  the  veterinarian  clinic was  an                                                                    
example  where  the state  assisted  in  relocation. It  was                                                                    
prior  to October  2014.  However, it  would  be an  example                                                                    
where they would be eligible  for more in relocation but not                                                                    
acquisition.   Acquisition  was   always  market   value  or                                                                    
9:04:51 AM                                                                                                                    
Co-Chair Thompson OPENED public testimony.                                                                                      
9:05:06 AM                                                                                                                    
Co-Chair Thompson CLOSED public testimony.                                                                                      
9:05:11 AM                                                                                                                    
AT EASE                                                                                                                         
9:06:46 AM                                                                                                                    
Commissioner  Luiken reemphasized  that the  purpose of  the                                                                    
bill was  to bring  the state  into compliance  with federal                                                                    
law so that the state was  able to pay Alaska residents what                                                                    
they would be due in additional relocation benefits.                                                                            
Co-Chair  Neuman MOVED  to REPORT  HB 259  out of  committee                                                                    
with individual recommendations  and the accompanying fiscal                                                                    
note(s). There being NO OBJECTION, it was so ordered.                                                                           
HB  259 was  REPORTED  out  of committee  with  a "do  pass"                                                                    
recommendation and  with a previously published  zero fiscal                                                                    
note: FN1 (DOT).                                                                                                                
9:07:49 AM                                                                                                                    
AT EASE                                                                                                                         
9:10:22 AM                                                                                                                    
HOUSE BILL NO. 188                                                                                                            
     "An  Act relating  to  financial  accounts for  persons                                                                    
     with disabilities; relating  to financial institutions;                                                                    
     relating   to   property    exemptions;   relating   to                                                                    
     securities; and providing for an effective date."                                                                          
9:10:41 AM                                                                                                                    
Co-Chair  Neuman  MOVED  to  ADOPT  the  proposed  committee                                                                    
substitute  for  HB  188, Work  Draft  (29-LS0787\G).  There                                                                    
being NO OBJECTION, it was so ordered.                                                                                          
Representative Thompson  invited his staff, Mr.  Anderson to                                                                    
the table to  explain the differences between  Version I [N]                                                                    
and the committee substitute version G.                                                                                         
BRODIE  ANDERSON,  STAFF,   REPRESENTATIVE  STEVE  THOMPSON,                                                                    
explained  the changes  to the  committee substitute.  There                                                                    
were four changes in the  bill from the previous version. He                                                                    
noted  the  first change  was  on  Page  1 of  the  previous                                                                    
Version P  [N] on  lines 2  and 3 in  the title.  It deleted                                                                    
"Creating a limited property exemption  for money in or paid                                                                    
from a financial  account in the program  with an individual                                                                    
with a disability".  The second change was on  Page 9, lines                                                                    
2-8  of Version  P [N].  It deleted  Section 06.65.260,  the                                                                    
exemption from  creditor claims which removed  the exemption                                                                    
from the  bill. The third change  was also in Version  P [N]                                                                    
on Page 11 [12], lines  20-12 [17-18]. It deleted conforming                                                                    
language from subsection 11. The  final change was all other                                                                    
sections after the deletion were  remunerated to reflect the                                                                    
new sections.                                                                                                                   
9:12:37 AM                                                                                                                    
Representative Munoz asked Mr.  Anderson to repeat the first                                                                    
change. Mr.  Anderson responded that  it was a  title change                                                                    
which  deleted the  sections referencing  the exemption.  In                                                                    
the previous version the lines were on Page 1, lines 2-3.                                                                       
Vice-Chair  Saddler  wanted  to answer  two  questions  from                                                                    
earlier meetings.  There had been  a question  about whether                                                                    
there  was a  need  for  funds in  the  ABLE  account to  be                                                                    
protected  from creditors.  In the  CS before  the committee                                                                    
the  section  was  deleted  that  would  have  provided  the                                                                    
protection against  creditors and state law  including child                                                                    
support  orders.  There  was  no  inhibition  to  prevent  a                                                                    
creditor  from  going  after  the amount  of  funds  in  the                                                                    
account. One of the questions  that had been asked concerned                                                                    
the lack  of a  zero fiscal note  from Department  of Health                                                                    
and  Social Services  (DHSS). The  department had  consulted                                                                    
with Department of  Revenue (DOR) and currently  there was a                                                                    
zero  fiscal note  reflecting the  minimal to  implement the                                                                    
bill.  The  cost  could be  covered  with  the  department's                                                                    
existing budget.  There had been some  discussion about what                                                                    
level  of disability  qualified  a person  to  open an  ABLE                                                                    
account  and how  a disability  was determined.  He answered                                                                    
that a  person had  to either  be eligible  for supplemental                                                                    
security  income or  meet the  same  standard. The  standard                                                                    
stated  that  the  disability   standard  for  children  for                                                                    
claiming  benefits under  the  supplemental security  income                                                                    
program was  based on the  disability which meant  that they                                                                    
had to  have marked  and severe functional  limitations. The                                                                    
certification of  the limitations had  to include a  copy of                                                                    
the  individual's   diagnosis  relating  to   that  person's                                                                    
relative  impairments and  signed  by  a licensed  physician                                                                    
under the penalty of perjury.                                                                                                   
Vice-Chair Saddler  continued that  there was a  question as                                                                    
to how to be sure a  person was using their ABLE account for                                                                    
the appropriate  expenses. The answer  was that they  had to                                                                    
file  the appropriate  paperwork  with the  IRS to  document                                                                    
their  deposits  and  their disbursements  from  their  ABLE                                                                    
account. If  someone were  to lie on  their tax  return they                                                                    
would be subject  to the same penalty that  placed Al Capone                                                                    
in jail.  Lastly, it was  asked at what level  of precedence                                                                    
did the state  have in recovering Medicaid  expenses from an                                                                    
ABLE account.  The state was  fifth. He elaborated  that the                                                                    
order of precedence was that  first their estate went to pay                                                                    
the  costs  and  expenses  for  the  administration  of  the                                                                    
estate; second, the regional  funeral expenses; third, debts                                                                    
and taxes with  a federal preference for  child support past                                                                    
due  payments;  fourth,  reasonable  and  necessary  medical                                                                    
expenses of the last illness  of the person who died; fifth,                                                                    
debts   and  taxes   with   preference  including   Medicaid                                                                    
payments;  and sixth,  all other  claims. If  there was  any                                                                    
other money remaining it would  go to the person's estate to                                                                    
be  disposed  of  by  will  or  through  the  probate  court                                                                    
9:15:50 AM                                                                                                                    
Representative Gattis  thanked the sponsor. She  thought the                                                                    
bill  was better  in the  current day  than in  the previous                                                                    
Vice-Chair  Saddler  appreciated  the  thoroughness  of  the                                                                    
committee process.                                                                                                              
9:16:16 AM                                                                                                                    
Representative  Kawasaki asked  about  the  fiscal note.  He                                                                    
stated  that part  of  the  ABLE Act  was  to shield  assets                                                                    
within  the  account  for purposes  of  Medicaid  and  other                                                                    
programs. He  thought it would  have a fiscal impact  if the                                                                    
account was no longer an asset of the individual.                                                                               
Vice-Chair Saddler  responded in the negative.  He explained                                                                    
that  Medicaid  was not  a  means  except for  the  original                                                                    
qualification.  He  relayed  that   the  means  testing  was                                                                    
primarily for supplemental security income.                                                                                     
9:17:03 AM                                                                                                                    
Representative Kawasaki asked if  it included other programs                                                                    
the state had  specifically through the group  that also had                                                                    
asset tests.                                                                                                                    
Vice-Chair Saddler responded in the affirmative.                                                                                
9:17:18 AM                                                                                                                    
Representative Gara  remarked that there would  be a certain                                                                    
number of  additional people who would  qualify for Medicaid                                                                    
which he thought was appropriate.  He hoped in the following                                                                    
year the legislature would not  have to make additional cuts                                                                    
to  make up  for  it. He  thought  the individuals  deserved                                                                    
treatment. He asked Vice-Chair Saddler  if he had an opinion                                                                    
on the issue.                                                                                                                   
Vice-Chair  Saddler did  not see  how  it would  add to  the                                                                    
categories of people who qualified for Medicaid.                                                                                
9:17:56 AM                                                                                                                    
Representative  Gara indicated  the bill  would help  shield                                                                    
assets from  being counted which  he thought  was completely                                                                    
fine. He thought some people  would qualify for Medicaid who                                                                    
currently did not.                                                                                                              
9:18:15 AM                                                                                                                    
KIM  SKIPPER, STAFF,  REPRESENTATIVE DAN  SADDLER, responded                                                                    
that the  bill was  intended for  disabled people,  some who                                                                    
could be  on Medicaid  and social security  income. However,                                                                    
she did  not think it would  add to the number  of people on                                                                    
Medicaid  but  would  enable  the  people  in  the  disabled                                                                    
condition to save money.                                                                                                        
Vice-Chair Saddler  added that it  would be people  who were                                                                    
disabled and often  did not have income. He  did not believe                                                                    
there would  be many people  that would be  working, earning                                                                    
income, and  having an ABLE  account sheltering  income. The                                                                    
point of the bill was  to shelter their income from interest                                                                    
on an account.                                                                                                                  
9:19:14 AM                                                                                                                    
Representative Gara  did not have a  problem with additional                                                                    
recipients.  He  just  did  not  want  to  have  to  see  an                                                                    
additional  reduction  to  offset   it.  He  also  asked  if                                                                    
disabled people would no longer  be protected from creditors                                                                    
on the  ABLE account with  the new  version of the  bill. He                                                                    
wondered  if the  representative  was  comfortable with  the                                                                    
Vice-Chair  Saddler   stated  that   he  was   correct.  The                                                                    
protections were removed in the  newest version of the bill.                                                                    
He was comfortable because he did  not see much of a risk of                                                                    
someone going  bankrupt. There was  an interest  and concern                                                                    
expressed about people that would  potentially seek to abuse                                                                    
the  account. He  did not  see much  of a  risk and  did not                                                                    
think the  protection was  all that  effective in  the first                                                                    
9:20:22 AM                                                                                                                    
Representative Wilson  stated that  the definition  from the                                                                    
previous  day versus  how  it was  depicted  in the  current                                                                    
version of the  bill was much different. She  was in support                                                                    
of the bill. She knew folks  who had wanted to get part time                                                                    
jobs. However,  social security took  $2 away from  a person                                                                    
for every dollar they made which  was not a big incentive to                                                                    
get a job.  She thought  any extra income was a benefit. The                                                                    
bill  would  allow   folks  to  get  a   job  without  being                                                                    
penalized. She really appreciated  a better definition which                                                                    
made  her feel  more comfortable  with the  legislation. She                                                                    
thanked the bill sponsor.                                                                                                       
9:21:28 AM                                                                                                                    
Co-Chair Neuman reviewed the fiscal notes from the bill.                                                                        
9:22:07 AM                                                                                                                    
Co-Chair  Neuman  MOVED to  REPORT  CSHB  188 (FIN)  out  of                                                                    
committee   with   individual    recommendations   and   the                                                                    
accompanying zero  and fiscal impact  notes. There  being NO                                                                    
OBJECTION, it was so ordered.                                                                                                   
CSHB  188 (FIN)  was REPORTED  out of  committee with  a "do                                                                    
pass" recommendation  and with one  zero fiscal note  by the                                                                    
Department  of Health  and Social  Services  and one  fiscal                                                                    
impact note by the Department of Revenue.                                                                                       
Co-Chair  Thompson reviewed  the  agenda  for the  following                                                                    
9:23:01 AM                                                                                                                    
The meeting was adjourned at 9:23 a.m.                                                                                          

Document Name Date/Time Subjects
HB 188 NEW FN DOR T&T 4-6-16.pdf HFIN 4/7/2016 8:30:00 AM
HB 188
HB 188 CS WORKDRAFT FIN vG.pdf HFIN 4/7/2016 8:30:00 AM
HB 188