Legislature(2005 - 2006)HOUSE FINANCE 519
04/18/2006 10:00 AM House FINANCE
| Audio | Topic |
|---|---|
| Start | |
| HB426 | |
| HB500 | |
| HB496 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| = | HB 304 | ||
| + | HB 426 | TELECONFERENCED | |
| + | HB 496 | TELECONFERENCED | |
| *+ | HB 500 | TELECONFERENCED | |
| + | TELECONFERENCED |
log
HOUSE FINANCE COMMITTEE
April 18, 2006
10:16 A.M.
CALL TO ORDER
Co-Chair Meyer called the House Finance Committee meeting
to order at 10:16:09 AM.
MEMBERS PRESENT
Representative Mike Chenault, Co-Chair
Representative Kevin Meyer, Co-Chair
Representative Bill Stoltze, Vice-Chair
Representative Richard Foster
Representative Jim Holm
Representative Reggie Joule
Representative Mike Kelly
Representative Carl Moses
Representative Bruce Weyhrauch
MEMBERS ABSENT
Representative Mike Hawker
Representative Beth Kerttula
ALSO PRESENT
Representative John Coghill; Rynnieva Moss, Staff,
Representative John Coghill; Kevin Henderson, Medical
Assistance Administrator, Division of Public Assistance,
Department of Health & Social Services; Elinor Fitzgerald,
Division of Public Assistance, Department of Health &
Social Services; Duane Peeples, Director, Division of
Health Care Services, Department of Health and Social
Services; Stacy Kraly, Assistant Attorney General,
Department of Law; John Duffy, Borough Manager, Mat-Su
Borough; Jim McMillan, Deputy Director of Credit & Business
Development, Alaska Industrial Development and Export
Authority, (AIDEA), Department of Revenue, Anchorage; David
Germer, Project Manager, Hatcher Pass Project, JL
Properties; Sharon Barton, Director, Permanent Fund
Division, Department of Revenue; Janet Clarke, Assistant
Commissioner, Division of Finance and Management Services,
Department of Health and Social Services; Louie Flora,
Staff, Representative Paul Seaton;
Diane Kaplan, Rasmuson Foundation
PRESENT VIA TELECONFERENCE
Jim Davis, Northern Justice Project, Anchorage
SUMMARY
HB 426 An Act relating to medical assistance eligibility
and coverage for persons less than 21 years of
age.
CS HB 426 (FIN) was reported out of Committee
with "individual" recommendations and with zero
note #1 by the Department of Health and Social
Services and fiscal notes #2, #3, #4 & #5 by the
Department of Health and Social Services.
HB 496 An Act relating to contributions from permanent
fund dividends to certain educational
organizations and to certain charitable
organizations that provide a positive youth
development program, workforce development, aid
to the arts, or aid and services to the elderly,
low-income individuals, individuals in emergency
situations, disabled individuals, or individuals
with mental illness; and providing for an
effective date.
HB 496 was HEARD and HELD in Committee for
further consideration.
HB 500 An Act amending the principal amount of bonds
that may be issued by the Alaska Industrial
Development and Export Authority for the purpose
of financing the development of Hatcher Pass.
HB 500 was reported out of Committee with "no"
recommendation and with a new zero note by the
Department of Commerce, Community & Economic
Development.
10:17:08 AM
HOUSE BILL NO. 426
An Act relating to medical assistance eligibility and
coverage for persons under 21 years of age.
REPRESENTATIVE JOHN COGHILL, SPONSOR, stated that in times
when federal dollars are diminishing, the Legislature will
have to review policies for providing for public health.
To better provide medical assistance to the needy,
eligibility requirements need to be changed.
rd
HB 426 puts best practices to use by increasing 3 party
reimbursement, reducing Medicaid abuse and fraud. The bill
requires that a person applying for medical assistance for
a minor be the parent or legal guardian. If the child is
in State custody, an employee of the Department can apply
for the coverage. The House HESS Committee placed a waiver
for unemancipated children, in the bill.
Representative Coghill observed that at this time, an
unmarried father's income and resources are not considered
when determining eligibility of a pregnant woman for
Medicaid. The committee substitute eliminates income
guidelines for the unmarried fathers; his office is
exploring ways to make the father financially responsible
for medical costs. The bill also repeals a statute that
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allowed the Department to waive subjugation rights to 3
party reimbursements in cases of undue hardship. The
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Department will not require pursuit of all 3 party
reimbursement.
Representative Coghill advised that Section 8 of the bill
addresses a lawsuit filed against the State that would
require the determination of a medical condition of the
client on the Medicaid waiver be "materially improved"
before removing the client from the waiver. The section
also adds that requirement to the Alaska Statute.
HB 426 directs the Department to report back no later than
th
the first day of the 25 Legislature regarding ways to
reduce medical assistance expenditures for services
received in residential psychiatric treatment centers by
enhancing parental financial responsibilities and
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maximizing 3 party resources available.
10:20:37 AM
RYNNIEVA MOSS, STAFF, REPRESENTATIVE JOHN COGHILL, noted
that Section 10 provides an applicibility clause regarding
subjugation, assignment or lien in existence on the date
listed, added to statute. The effective date would be July
st
1, 2006 or the date the federal plan is approved -
language indicated in Section 12.
Ms. Moss advised that Section 11 is the "meat" of the
original bill. In subcommittee discussions, it was
determined to send some children outside the State to
treatment centers and after 30 days, they would become
qualified for Medicaid services. She indicated that
addressing that concern is the priority for the interim.
Their office has asked the Department to investigate
concerns including the authorization process with
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comparison to private insurance companies; maximizing 3
party coverage.
10:24:50 AM
DWAYNE PEEPLES, DIRECTOR, DIVISION OF HEALTH CARE SERVICES,
DEPARTMENT OF HEALTH AND SOCIAL SERVICES, stated that over
the past couple years, the Department has been pursuing
cost containment activities in Medicaid services. One area
being addressed is the coordination of benefits with other
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3 party payers and subjugation of claims that other payers
paid for services received by Medicaid participants.
Within the past 18 months, the Department of Health and
Social Services has increased collaboration with the
Department of Law to pursue that.
Mr. Peeples highlighted each section:
• Section 1 brings the Department of Health and Social
Services in line with the recently passed federal
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Budget Reduction Act (BRA), which requires that 3
party payers in the State of Alaska cooperate with the
Department.
10:26:52 AM
• Section 2 puts the Department and the State of
Alaska into a more aggressive stance on subjugation
in any medical claim. The claims will be pursued by
the Department of Law.
Representative Coghill asked about the subjugation process.
STACY KRALY, ASSISTANT ATTORNEY GENERAL, DEPARTMENT OF LAW,
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explained that subjugation claims are 3 party claims,
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should the Department act as a collector of 3 party
claims. If an individual receives Medicaid and is injured
in an accident, the Department pays Medicaid coverage for
services related to that accident. The Department has the
ability to go in and recover the cost of the Medicaid
rd
expenditures if there is a 3 party claim. Sometimes
attorneys are involved but generally there is insurance
involved. The Department will notify the insurer regarding
the lien for the cost of the Medicaid coverage and will
rd
seek reimbursement out of the 3 party's recovery.
Representative Kelly asked if the federal government also
tracks insurance companies. Ms. Kraly advised that the
State seeks the recovery for both the State and federal
portions.
stnd
Representative Joule asked who the 1 and 2 parties would
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be. Ms. Kraly explained that the 3 party indicates that
there is an additional party to the accident who is
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responsible for the payment of the services. The 3 party
recovery refers to the insurance company or responsible
stnd
individual. The 1 and 2 are generally the insurers and
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the 3 party references the payer.
10:30:13 AM
Mr. Peeples continued:
• Section 3 reinforces the Departments ability and
rd
information to obtain any subjugation or other 3
party payments.
rd
Representative Kelly asked if the 3 party could be someone
other than an insurance company. Ms. Kraly replied
correct.
10:31:16 AM
Mr. Peeples noted:
• Section 4 delineates the priority of recoveries and
liens for the subjugation, putting the State only
after tax and attorney fees.
Vice Chair Stoltze asked if it would be placed behind child
support due. Ms. Kraly did not know for sure. She knew
that section clarifies that the State has a lien ahead of
the hospital & doctors. She offered to research the
priority for the Child Support Enforcement Agency (CSEA).
st
Representative Holm asked why the State could take the 1
position before providers of the services. Ms. Kraly
responded that the State actually pays for those services
and should be able to recover before the other entity.
Representative Joule questioned if the service providers
could anticipate timely payments. Ms. Kraly explained that
generally, in Medicaid payments, the provider is paid
within 90-days, depending on how fast they submit the
claims.
10:34:51 AM
KEVIN HENDERSON, MEDICAL ASSISTANCE ADMINISTRATOR, DIVISION
OF PUBLIC HEALTH, DEPARTMENT OF HEALTH & SOCIAL SERVICES,
spoke to Section 5:
• Section 5 addresses recipients. He pointed out that
Federal law mostly applies to providers; there is not
much that identifies recipients. That section allows
the Department to garnish the Permanent Fund Dividend
of a recipient and address the abuse of fair hearings
so that they can continue some months of benefits.
Vice Chair Stoltze asked if there were safe guards for the
garnishments made by CSEA. Mr. Henderson explained that
with the continued benefit recovery, there is a series of
fair hearing rights; the PFD cannot be garnished without
opportunity to make their case. He thought there were
adequate safeguards.
10:39:40 AM
Mr. Henderson continued:
• Section 6 - Currently, federal law has a number of
rules for the "transfer of assets" at fair market
value. Research is done to see if the recipient gave
money away in order to qualify for Medicaid services.
There are a number of ways that people can establish
Medicaid trusts that would allow them to transfer
resources. The provision in Section 6 results from
the Deficit Reduction Act (DRA). Any new annuity
after the effective date of the legislation would need
to contain a provision that the Department could be
paid back for any costs to Medicaid. It is a
preemptive provision.
10:42:12 AM
Mr. Henderson noted:
• Section 7 addresses a combination of concerns:
• Subsection J & K restricts who can apply. It
obligates the Department to make contact with the
parent of the minor seeking services, if appropriate.
If the parent has insurance, making sure the insurance
company pays before Medicaid. The language provides a
"gate-keeping provision" regarding who can apply on
behalf of a child.
• Subsection L indicates a requirement that provides
federal approval for those eligible for Medicare; they
would be required to apply for the Medicare first. He
clarified that there are services, paid for by
Medicare and not by Medicaid.
• Subsection M gets to the "heart" of new federal law.
The federal act made changes that tend to "tighten up"
the area for individuals seeking long-term care
services. The Department supports the provision as it
makes a "clean-tie" to the Deficit Reduction Act (DRA)
in State law. The provisions in the DRA change the
"back window" date from 36 months to 60 months. It
also changes the penalty period for transferring
assets & restricting life estates.
• Subsection N resulted from the DRA. The home would be
exempt for long-term care recipients. Federal law
provided a requirement that if the equity value of the
home exceeds $500 thousand dollars, they would not be
eligible for Medicaid, unless they had a spouse, a
minor, or a disabled child still living at home. It
also extends the requirement to almost all eligibility
categories.
10:49:04 AM
Ms. Kraly continued:
• Section 8 resulted from a proposed amendment by
Representative Cissna. The Department has been sued
in a couple different cases regarding the
determination of how waivers are made for individuals.
The context of the amendment identifies how to
characterize material improvement for purposes of
eligibility determination.
10:51:15 AM
Mr. Peeples continued:
• Section 9 waives a previous standing section under AS
47.05.070, indicating that the Department may waive
the rights of subjugation. That section removes that
option for the Department.
10:52:10 AM
Mr. Peeples reminded members that Representative Coghill
reviewed Sections 10 & 11.
10:53:13 AM
JANET CLARKE, ASSISTANT COMMISSIONER, DIVISION OF FINANCE
AND MANAGEMENT SERVICES, DEPARTMENT OF HEALTH AND SOCIAL
SERVICES, spoke to the five fiscal notes and distributed a
spreadsheet outlining the overall view for the notes.
(Copy on File).
The summary highlights the fiscal impact through 2012,
resulting from the legislation, indicated by section.
The assumption is that in FY07, regulations will not be in
place until the fourth quarter, showing savings for only
25% of the fiscal year. Overall, in FY07, the Department
calculates a savings of $2.6 million federal and General
Fund dollars. For FY08, that number jumps dramatically to
a reduction of $10.9 million dollar savings. The primary
savings is calculated under Section 7(L). She pointed out
that it addresses mandatory requirements for individuals
eligible for Medicare, apply for Medicare first. She
assumed the numbers could reach 1,800.
Ms. Clarke discussed cost avoidance areas, particularly
Sections 6 & 8. There will be smaller savings in other
categories (Sections 1-4 & 9-10). Those numbers are
consistent throughout the fiscal notes.
10:57:00 AM
Co-Chair Chenault referenced the spreadsheet, fourth
quarter savings and asked if there could be any assurances
that the regulations would be assembled by then. Ms.
Clarke stated that was their best assumption and is top
priority if the legislation is passed.
Co-Chair Chenault questioned if the Department was close to
having regulations in place. Ms. Clarke responded they
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could be in effect April 1.
Vice Chair Stoltze questioned if the Denali Kid Care
program recipients were eligible for Medicaid.
Representative Coghill replied that was the original
concern with discussion regarding determination of
household income. They did look at the Denali Kid Care
program & there should be more to come.
Co-Chair Chenault referenced spreadsheet percentages. Ms.
Clarke explained that the numbers are estimates based on
the National Formula related to the State's Federal
Medicaid Authorized Percentage (FMAP). The Deficit
Reduction Act held the State of Alaska harmless for two
years. Through FY07, the federal Medicaid percentage will
be 57.5% and then the State will move to the national
formula. Estimates indicated that in FY08, the formula
rate would drop to 53.2%.
11:00:59 AM
ELINOR FITZGERALD, DIVISION OF PUBLIC ASSISTANCE,
DEPARTMENT OF HEALTH & SOCIAL SERVICES, offered to answer
questions of the Committee.
11:01:39 AM
JIM DAVIS, (TESTIFIED VIA TELECONFERENCE), ATTORNEY,
NORTHERN JUSTICE PROJECT, ANCHORAGE, stated that Section 8
was "bad policy" for the State. The Choice Waiver Program
for older Alaskans is a program where seniors with serious
disabilities are provided a waiver of benefits in lieu of
being institutionalized or placed into nursing homes. He
thought it would save the State more money opting for the
waiver program.
Mr. Davis noted that assessments are subjective, depending
on the various nature of each assessor. He pointed out
that lawsuits have been filed, and that two Alaskan
Superior Courts found that if the State finds someone
disabled, they cannot withdraw benefits.
Mr. Davis advised that Section 8 attempts to legalize
something that has been found to be illegal. That process
will lead to further litigation and many Alaskan pioneers
would be placed in life threatening situations or at the
very least having their quality of life diminished. He
encouraged the Committee carefully consider whether elders
ought to have their benefits subject to a 45 minute
evaluation.
PUBLIC TESTIMONY CLOSED
11:07:58 AM
Co-Chair Meyer MOVED to ADOPT Amendment #1. Vice Chair
Stoltze OBJECTED.
Ms. Kraly noted that the amendment is a "word-smith" of the
existing Section 8. There are nuances in that section that
need to be clarified. She referenced concerns voiced by
Mr. Davis, indicating that the filed lawsuits spoke to the
concept of "material improvement". The amendment attempts
to fashion a remedy to the allegation, which would
establish a standard for assessment of each individual
placed in the waiver program. She stressed the importance
of understanding that a waiver is a benefit provided for
the determination of eligibility. The old assessment tool
used by the Department was not medically based. Presently,
there are two preliminary injunctions issued and there has
been no determination of that merit.
Amendment #1 attempts to qualify and define material
improvement so that it can be assessed. A waiver is a
yearly benefit following an assessment. There is no
assumption that you receive a waiver for the rest of your
life.
Ms. Kraly addressed Mr. Davis' inference that the review
was a "rubber stamp", pointing out that it establishes a
premise to analyze improvement. Under the premise, prior
years would be examined. She disagreed with the
characterizations, proposing that a high burden had been
established to show waiver benefits.
11:13:51 AM
Representative Joule inquired if an assessment could
be made without the actual observation. Ms. Kraly stated
that assessments are done in person. Currently, a
contractor, receiving information from the individual,
family members and care providers, as well as actually
observing the individual in their home environment,
provides the assessment. If there is a conflict regarding
the assessment, a further one can be made.
Representative Joule asked who determined the
qualifications of the assessor. Ms. Kraly noted that the
amendment defines a qualified health care professional.
She noted that the assessors are specialized individuals
defined by statute, including nurses, nurse practitioners,
etc. She also noted that the waivers dealt with a nursing
level care and are not medically based decisions.
11:17:02 AM
Representative Weyhrauch inquired if Mr. Davis was
currently in litigation with the State. Ms. Kraly replied
he is. Representative Weyhrauch questioned if the
amendment would remedy such legal issues and the costs
incurred. Ms. Kraly hoped that the amendment could resolve
the pending litigation. The premise of the amendment is to
clearly identify the rules of the program, as well as
responding to injunctive orders, which are currently
restraining any decisions being made by the Department,
creating an administrative burden.
11:19:06 AM
Representative Weyhrauch expressed a concern for those
individuals who were currently engaged in a grievance as
identified by Mr. Davis. Ms. Kraly said if the legislation
passes, the issue is mute; those individuals would still
have the authority to seek attorney fees and recoveries.
Vice Chair Stoltze WITHDREW his OBJECTION. There being NO
further OBJECTION, Amendment #1 was adopted.
11:20:19 AM
Representative Kelly thanked the Sponsor for the cost
saving measures of the legislation. He asked about
communication through our US Congressional delegation for
assistance on the matter. Representative Coghill affirmed
that requests were underway.
11:21:37 AM
Representative Holm pointed out that many Alaskans have
experienced difficulty, obtaining waivers. He questioned
if the legislation would result in transferring of assets
to those that are in real need. Representative Coghill
said that was his intent.
Representative Holm emphasized the obligation of government
to care for those in need, even in the face of cost
cutting.
11:23:19 AM
Representative Foster MOVED to REPORT CS HB 426 (FIN) out
of Committee individual recommendations and with the
accompanying fiscal notes. There being NO OBJECTION, it
was so ordered.
CS HB 426 (FIN) was reported out of Committee with
"individual" recommendations and with zero note #1 by the
Department of Health and Social Services and fiscal notes
#2, #3, #4 & #5 by the Department of Health and Social
Services.
11:23:53 AM
HOUSE BILL NO. 500
An Act amending the principal amount of bonds that may
be issued by the Alaska Industrial Development and
Export Authority for the purpose of financing the
development of Hatcher Pass.
REPRESENTATIVE BILL STOLTZE, SPONSOR, pointed out that the
Matanuska-Susitna (MatSu) Borough has been working with JL
Properties, Inc. and the Alaska Industrial Development and
Export Authority (AIDEA) in examining the potential for a
Hatcher Pass Development Project. HB 500 allows for the
next step to discuss financing of the project.
Provisions for HB 500 are to:
• Amend current language so that AIDEA may issue bonds
or provide other financing for the development of
Hatcher Pass, not just for the construction and
improvement of Phase 1 of a ski resort.
• Increase the principal amount of the bonds and other
financing AIDEA provides from $15 million to $25
million dollars.
Vice Chair Stoltze urged consideration of the bill.
11:25:19 AM
DAVID GERMER, PROJECT MANAGER, HATCHER PASS PROJECT, JL
PROPERITIES, noted that HB 500 would increase Alaska
Industrial Development Export Authority (AIDEA) existing
authorization to finance the Hatcher Pass project from $15
million dollars to $25 million dollars. AIDEA's financing
can only be made available after a due diligence analysis.
All regulatory and statutory requirements must first be met
and in addition, the AIDEA Board must approve the
financing.
Mr. Germer provided historical background on the project.
In October 2003, JL Properties responded to a public
solicitation from the MatSu Borough to develop an alpine
and Nordic ski venue. Over a two-year period, JL
Properties worked with the Borough and AIDEA to develop a
preliminary, conceptual & financial plan that met the goals
of the Borough. The development plan consists of three
pieces. He referenced the handout. (Copy on File).
11:27:02 AM
Mr. Germer noted the location of the various components.
The alpine area would house the regional ski resort, having
a 2,300 capacity per day. He detailed various aspects of
the resort.
11:28:50 AM
Mr. Germer pointed out the residential area involved, 26
residential development pods in the guidelines. He
discussed the trail system proposed for the project and
activities related to them.
11:31:11 AM
Mr. Germer noted the importance that each aspect of the
project be integrated to succeed. He noted that financing
by AIDEA was necessary for the financial success of the
project. He advised that each entity would complete its
own due diligence before the project could proceed and
hoped construction could begin by spring 2008.
Vice Chair Stoltze asked about the compatibility of the
project with the adjacent mining development. Mr. Germer
replied that area under consideration is 3-4 miles away
from the mining spots.
11:33:03 AM
Representative Kelly inquired about other owners. Mr.
Germer replied that the principle owners of JL properties
are Jonathan Rabini and Leonard Hyde.
Representative Kelly asked about land ownership. Mr.
Germer replied the MatSu Borough would make it a
public/private partnership, as they own the land.
Responding to another question regarding the risk
assessment, Mr. Germer affirmed that AIDEA would complete a
due diligence analysis along with JL Properties and the
MatSu Borough; financial feasibility will be determined by
AIDEA.
11:34:14 AM
Representative Holm noted the road on the map through
Hatcher Pass. Mr. Germer confirmed there is an existing
lodge on the road, located at a spot lower than the
proposed project.
JOHN DUFFY, BOROUGH MANAGER, MAT-SU BOROUGH, testified in
favor of the legislation. He stated that the MatSu Borough
is in full support of the project, stressing the critical
nature of AIDEA's involvement in financing. He reiterated
that it would be a public/private partnership, with
property obtained through the municipal entitlement
program. He noted that they have utilized both Borough &
State funding in the past for certain projects.
Mr. Duffy continued, an economic feasibility study has been
completed, conducted by a private firm in San Francisco,
who confirmed the project's viability. That firm also
completed an economic impact statement.
Mr. Duffy addressed the number of jobs that would be
created through the project. He summarized that by
supporting ADIEA's involvement in the project, fulfills a
long-term economic development goal of the Borough creates
numerous jobs.
11:38:07 AM
Representative Kelly asked the level of involvement
from JL Properties. Mr. Germer replied that all proceeds
from development of the project would go into a general
fund to pay off all project debt. At that point, profits
would be distributed equally between JL Properties, ADIEA
and the Mat-Su Borough.
JIM MCMILLAN, DEPUTY DIRECTOR OF CREDIT & BUSINESS
DEVELOPMENT, ALASKA INDUSTRIAL DEVELOPMENT AND EXPORT
AUTHORITY, (AIDEA), ANCHORAGE, responded to further
question by Representative Kelly, outlining the levels of
debt retained by each entity.
• JL Properties @ $5 million dollars
• MatSu Borough @ $10 million dollars
• AIDEA up to $25 million dollars
The initial financing structure concept is an equity role
for AIDEA, along with the other two entities. The final
structure would be based upon due diligence & feasibility
reports.
11:40:43 AM
Representative Kelly asked if AIDEA would hold the
mortgage. Mr. McMillan stressed the importance of
development rights in the project. He noted that although
the land has intrinsic value, the real value will be the
development.
11:41:45 AM
Representative Kelly voiced concern regarding other
AIDEA financed projects that have not work. Mr. McMillan
said that AIDEA has learned from past, noting the history
of the proposed project. He stated AIDEA supports the
legislation; the bill does not guarantee the financing of
the project. He noted that only after all issues have been
examined and a finance plan established, would financing be
voted on.
11:44:09 AM
Vice Chair Stoltze expressed his concerns, noting his role
in facilitating discussion about the potential project. He
noted that in the past, AIDEA might have been forced into
unsuccessful projects. He indicated his "comfort" in the
proposed process.
11:45:05 AM
Representative Kelly observed that J&L Properties had
been successful in other projects; he questioned their
amount of equity in the project @ $5 million dollars. He
worried that AIDEA might be left holding a large mortgage
on the project and encouraged an appropriate level of
control.
11:46:30 AM
Mr. McMillan reiterated the long history AIDEA has had with
the project. He noted the worthwhile aspects of the
concept as proposed by JL Properties and the success rate
of their company. He agreed that some previous projects
had not been successful without such an integrative nature.
AIDEA believes it is worthwhile to take the next steps.
11:48:40 AM
Representative Weyhrauch asked the intended public process,
noting concerns about development projects and their impact
on the habitat. He questioned if the legislation provides
authority to create bonds in advance of the public comment
process.
11:49:47 AM
Mr. Duffy affirmed that an extensive public process had
been planned.
Representative Joule asked about the projected
completion date. Mr. McMillan stated that under AIDEA's
statutes for development projects, any project funded in
excess of $10 million dollars, requires legislative
authorization to move forward. He added, in addition to
the MatSu Borough public process, AIDEA also has a public
process period. The local governing body must pass a
resolution consenting to the project.
11:51:40 AM
Representative Foster MOVED to REPORT HB 500 out of
Committee with individual recommendations and with the
accompanying zero note. There being NO OBJECTION, it was
so ordered.
HB 500 was reported out of Committee with a "no"
recommendation and with new zero note by the Department of
Commerce, Community & Economic Development.
11:53:39 AM
HOUSE BILL NO. 496
An Act relating to contributions from permanent fund
dividends to certain educational organizations and to
certain charitable organizations that provide a
positive youth development program, workforce
development, aid to the arts, or aid and services to
the elderly, low-income individuals, individuals in
emergency situations, disabled individuals, or
individuals with mental illness; and providing for an
effective date.
LOUIE FLORA, STAFF, REPRESENTATIVE PAUL SEATON, explained
that the bill would create a funding mechanism for
charitable organizations in Alaska with a check-off on the
electronic Permanent Fund Dividend (PFD) application form
that would allow them to donate a portion of their check to
an eligible organization, a community foundation, a campus
of the University of Alaska or vocational training program.
To qualify for the program, a charitable organization must
provide a positive youth development programs, workforce
development, aid to the arts, or aid and services to the
elderly, low-income individuals and/or individuals with
mental illness.
HB 496 includes further eligibility requirements for
charitable organizations to ensure that the organizational
fit within the sideboards of the program. To qualify, an
organization must:
• Apply for inclusion on the contribution list for the
st
current dividend year before September 1 of the
qualifying year
• Have been exempt from taxation under 26 USC 501 ©(3)
for the two calendar years preceding the year the
application is filled
• Be directed by a voluntary board or local advisory
board, whose members are all residents of the State of
Alaska and provide a qualifying service
• Receive the lesser of $100,000 or 5% of its total
annual receipts from contributions
• Provide a financial audit for the preceding fiscal
year if its annual budget exceeds $250,000
• Not make grants or contributions to an organization
that is exempt from taxation under 15 USC 501©(4) or
(6)
Mr. Flora continued, HB 496 defines a community foundation
and stipulates that they may make no more than 10% of their
income from grants to ©(4)(6) organizations. That provides
community foundations with flexibility in grant making to
such organizations as a chamber of commerce; it promotes
the continued growth of the local community foundations in
Alaska. The program has a sunset date of 2009. The
funding required to enact the pilot program will be
provided through an agreement with the Rasmuson Foundation.
11:58:53 AM
Representative Weyhrauch asked why it was limited to those
that file electronically. Mr. Flora replied it was a cost
issue.
11:59:33 AM
SHARON BARTON, DIRECTOR, PERMANENT FUND DIVISION,
DEPARTMENT OF REVENUE, pointed out that a Senate sponsor to
simplify, on the behalf of the Permanent Fund Division had
inserted language.
Representative Weyhrauch inquired the percentage that file
electronically. Ms. Barton responded that 55% filed
electronically for the FY06 dividend. She agreed that the
note will increase if paper applications are included and
the costs have not been calculated.
12:01:14 PM
Representative Weyhrauch asked the anticipated number of
pages. Ms. Barton replied the Division hasn't "scoped that
out yet". The Senate sponsor requested a sort function.
Representative Weyhrauch asked how the chosen options were
picked. Ms. Barton responded those were proposals by the
sponsor; the Division was not consulted.
Representative Weyhrauch worried about problems for the
public in determining the amount to donate; he recommended
adding percentages of the actual check. Ms. Barton thought
that would be more complicated on the administrative side.
Representative Weyhrauch asked the intent of the section
involving the Certified Public Accountant (CPA) if assets
exceed $250 thousand dollars. Mr. Flora explained that
they had been working from the Senate State Affairs version
including that criterion. He offered to research it.
Representative Weyhrauch pointed out in Section D, the
deduction of administrative costs, asking if there was a
need for a fiscal note. Ms. Barton replied that Section D
had been envisioned for a time after the agent was
involved, the program would need to stand-alone. She
understood that was the intent and that there would be no
administrative fees deducted from the charitable donations.
The sponsor and the Rasmuson Foundation established the
arrangement.
12:07:29 PM
Representative Weyhrauch asked if the fiscal note
considered the hearing process. Ms. Barton did not know
the number of hearings that might be encountered. She
thought costs were included for one or two hearings.
Representative Weyhrauch referenced the list-included
recipients; he thought that the aid to the arts was an
unusual placement. Mr. Flora understood that the human
services matching grants had been decreasing; the
legislation appears to be a way to boost funding for those
organizations. He was not certain about that inclusion.
12:10:24 PM
Representative Holm asked if all funding would come through
the Rasmuson Foundation. Mr. Flora understood that was
correct.
12:11:02 PM
DIANE KAPLAN, PRESIDENT, RASMUSON FOUNDATION, stated that
the foundation is prepared to cover the costs for the first
three years. In the interest of promoting philanthropy in
Alaska, the Foundation is willing to cover those costs for
that time.
12:11:53 PM
Representative Holm appreciated the interest of the
Foundation. He voiced concern that the legislation would
really accomplish anything except bringing a "false-hope",
resting on the dividend program.
Ms. Kaplan pointed out that they had looked at other states
that offered a similar donation credit on taxes; there are
about 25-30 states that allow individuals do it. In
Alaska, individual giving is far below what is occurring in
thth
other states. Alaska ranks 49 or 50 in charitable
giving. There is a lot of capacity to give in this State
and sometimes the citizens need more encouragement. The
anticipated estimate is $3-$5 million dollars.
Representative Holm pointed out the high cost of living in
Alaska.
12:15:30 PM
Representative Weyhrauch stated there was no intent to
limit it to the Rasmuson Foundation. Ms. Kaplan noted that
the Foundation has no intent of being a recipient.
12:16:17 PM
Representative Joule commented on the foundation grant
awards and asked if it would influence other community
grant programs. Ms. Kaplan replied that most grant
reviews, look at the amount of local support. She hoped
the legislation would provide a tool to get other members
in the community to help leverage money.
Representative Joule asked if there would be a way to track
the contributions at the local level. Ms. Kaplan responded
that any organization that holds a designation from the
Internal Revenue Service (IRS) would be eligible.
12:20:11 PM
PUBLIC TESTIMONY CLOSED
Representative Weyhrauch MOVED to ADOPT Amendment #1. Co-
Chair Chenault OBJECTED.
Representative Weyhrauch noted that the amendment consists
of three parts. He offered to speak with the sponsor
regarding the amendment.
12:22:18 PM
Representative Kelly voiced concern with the legislation,
however, thanked the Rasmuson Foundation for their
participation.
HB 496 was HELD in Committee for further consideration.
ADJOURNMENT
The meeting was adjourned at 12:23 P.M.
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