Legislature(1993 - 1994)

03/25/1994 03:00 PM House HES

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
                                                                               
           HOUSE HEALTH, EDUCATION AND SOCIAL SERVICES                         
                       STANDING COMMITTEE                                      
                         March 25, 1994                                        
                            3:00 p.m.                                          
                                                                               
  MEMBERS PRESENT                                                              
                                                                               
  Rep. Cynthia Toohey, Co-Chair                                                
  Rep. Con Bunde, Co-Chair                                                     
  Rep. Gary Davis, Vice Chair                                                  
  Rep. Al Vezey                                                                
  Rep. Pete Kott                                                               
  Rep. Harley Olberg                                                           
  Rep. Bettye Davis                                                            
  Rep. Irene Nicholia                                                          
  Rep. Tom Brice                                                               
                                                                               
  MEMBERS ABSENT                                                               
                                                                               
  None                                                                         
                                                                               
  COMMITTEE CALENDAR                                                           
                                                                               
  HB 362:   "An Act establishing the crime of aiding the                       
            nonpayment of child support."                                      
                                                                               
            PASSED OUT OF COMMITTEE                                            
                                                                               
  WITNESS REGISTER                                                             
                                                                               
  NANCY MANLEY                                                                 
  Legislative Aide                                                             
  Rep. Terry Martin                                                            
  Alaska State Legislature                                                     
  State Capitol                                                                
  Juneau, Alaska 99801                                                         
  Phone:  (907) 465-3783                                                       
  Position Statement:  Testified in support of HB 362                          
                                                                               
  MARY GAY, Director                                                           
  Child Support Enforcement Division                                           
  Department of Revenue                                                        
  550 W. 7th, Ste. 312                                                         
  Anchorage, Alaska 99501-3556                                                 
  Phone:  (907) 269-6800                                                       
  Position Statement:  Testified in support of HB 362                          
                       (spoke via offnet)                                      
                                                                               
  PHILLIP PETRIE                                                               
  Acting Operations Manager                                                    
  Child Support Enforcement Division                                           
  Department of Revenue                                                        
  550 W. 7th Ave., Ste. 312                                                    
  Anchorage, Alaska 99501-3566                                                 
  Phone:  (907) 269-6800                                                       
  Position Statement:  Testified in support of HB 362                          
                       (spoke via offnet)                                      
                                                                               
  PREVIOUS ACTION                                                              
                                                                               
  BILL:  HB 362                                                                
  SHORT TITLE: AIDING NONPAYMENT OF CHILD SUPPORT                              
  SPONSOR(S): REPRESENTATIVE(S) MARTIN,B.Davis                                 
                                                                               
  JRN-DATE    JRN-PG                     ACTION                                
  01/11/94      2033    (H)   READ THE FIRST TIME/REFERRAL(S)                  
  01/11/94      2033    (H)   HES, JUDICIARY                                   
  01/13/94      2056    (H)   COSPONSOR(S):  B. DAVIS                          
  02/22/94              (H)   HES AT 03:00 PM CAPITOL 106                      
  02/22/94              (H)   MINUTE(HES)                                      
  03/25/94              (H)   HES AT 03:00 PM CAPITOL 106                      
                                                                               
                                                                               
  ACTION NARRATIVE                                                             
  TAPE 94-61, SIDE A                                                           
  Number 000                                                                   
                                                                               
  CHAIR BUNDE called the meeting to order at 3:07 p.m., noted                  
  members present and announced the calendar.  He brought HB
  362 to the table.                                                            
                                                                               
  HB 362 - AIDING NONPAYMENT OF CHILD SUPPORT                                  
                                                                               
  CHAIR BUNDE explained that the bill had been heard                           
  previously and had been referred to a subcommittee which at                  
  the present time had not come forth with recommendations.                    
                                                                               
  (Chair Bunde indicated that Rep. B. Davis arrived at 3:07                    
  p.m.)                                                                        
                                                                               
  REP. TOOHEY asked if NANCY MANLEY would come forward to                      
  answer questions.                                                            
                                                                               
  Number 010                                                                   
                                                                               
  NANCY MANLEY, Legislative Aide to Rep. Terry Martin, Prime                   
  Sponsor of HB 362, stated that the legislation was designed                  
  to make it illegal to aid in the nonpayment of child                         
  support.  She indicated that the Child Support Enforcement                   
  Division would target those people who intentionally are                     
  aiding obligors who are avoiding child support payments.                     
  She also indicated there is a committee substitute (CS) that                 
  she would defer to MARY GAY to explain.                                      
                                                                               
  Number 110                                                                   
                                                                               
  (Chair Bunde indicated that Reps. Olberg and Nicholia                        
  arrived at 3:11 p.m.)                                                        
                                                                               
  CHAIR BUNDE asked Ms. Gay to address the CS.                                 
                                                                               
  Number 111                                                                   
                                                                               
  MARY GAY, Director, Child Support Enforcement Division,                      
  Department of Revenue, testified via offnet in support of HB
  362.  She stated that currently the statute of limitations                   
  on child support arrears is ten years.  She said there is                    
  $7.1 million in unpaid child support that "is currently 69                   
  years old."  She indicated that as arrears reach the ten                     
  year limit the division must have the Department of Law                      
  reset the arrears judgement, which is quite expensive.  She                  
  said if the statute of limitations could be extended just                    
  for child support, "we would save the state money in AG                      
  time."  She also indicated that a considerable portion of                    
  that money is owed to the state of Alaska because AFDC was                   
  provided to the families who did not receive child support.                  
                                                                               
  Number 199                                                                   
                                                                               
  CHAIR BUNDE clarified and said the division would be                         
  attempting to collect arrearage up until the child is 21                     
  years of age, but not asking for child support up until the                  
  age of 21.                                                                   
                                                                               
  MS. GAY answered yes.                                                        
                                                                               
  Number 217                                                                   
                                                                               
  CHAIR BUNDE observed that Representatives G. Davis and Vezey                 
  had concerns regarding the original bill and indicated that                  
  the CS was before the committee.                                             
                                                                               
  REP. TOOHEY made a motion to adopt the CS for HB 362.  She                   
  further indicated that the work draft was version J                          
  (8-LS1459\J).                                                                
                                                                               
  CHAIR BUNDE asked if there were any objections.  Hearing                     
  none, he stated that the CS for HB 362 was so moved.                         
                                                                               
  REP. TOOHEY asked Ms. Gay if there would be a "plus fiscal                   
  note" for the bill.                                                          
                                                                               
  MS. GAY said yes.                                                            
                                                                               
  Number 254                                                                   
                                                                               
  REP. G. DAVIS related that his initial concern with the bill                 
  was that the law requires employers to assist the Child                      
  Support Enforcement Division in collecting back child                        
  support.  He asserted that the division has numerous powers                  
  that affect the opportunity to collect the payments.  He                     
  questioned how many cases the division is following or how                   
  much money they are spending trying to prove that people are                 
  intentionally being deceptive in regards to their employees                  
  and their support payments.  He felt there is not much value                 
  in the legislation.  Rep. Davis indicated that the division                  
  has subpoena powers now and doubted that the proposal would                  
  help to increase their receivables.  He further indicated                    
  that he did not have a problem with the CS regarding the                     
  collections of arrearage up to the age of 21.  He felt more                  
  testimony should be heard.                                                   
                                                                               
  Number 338                                                                   
                                                                               
  MS. GAY asserted that the aiding portion of the proposal is                  
  not directed at employers.  She said the division is                         
  concerned with cases where the obligor transfers their                       
  assets over to relatives, friends, or new spouses.  She                      
  explained a case where a girlfriend of an obligor owned a                    
  couple of businesses and the obligor worked in the                           
  businesses, but the businesses maintained that the obligor                   
  was not involved.  She said the girlfriend takes the assets                  
  and the profits of the company while the two cohabitate and                  
  reap the benefits while the children of the obligor are                      
  unable to collect.  She asserted that the legislation will                   
  deter people from setting up those types of arrangements                     
  because there will be punitive consequences.  She said under                 
  the most serious situations, the division will want to                       
  prosecute the people, but hopefully once the violators are                   
  made aware of the impending prosecution, the money will be                   
  forthcoming and the charges would not be pursued.                            
                                                                               
  Number 406                                                                   
                                                                               
  REP. G. DAVIS asked if there is more than one case.                          
                                                                               
  MS. GAY responded that there are many cases that would                       
  benefit from the legislation.                                                
                                                                               
  REP. G. DAVIS said it sounded as though the division was                     
  focusing the proposal on one case.                                           
                                                                               
  MS. GAY stated that she was describing one situation as to                   
  enlighten the committee to the seriousness of the situation.                 
  She related another case where an obligor "put his airplanes                 
  in his brother's name."  She said it is common practice that                 
  they list their assets under other people's names to avoid                   
  support.                                                                     
                                                                               
  Number 429                                                                   
                                                                               
  CHAIR BUNDE asked how the division would go about proving                    
  that the situation was not the actual sale of the assets.                    
                                                                               
  MS. GAY replied that an investigator follows the case and                    
  that often there is a large transfer of assets "just before                  
  a (indiscernible word) court order."  She said the division                  
  looks to prove that there was no transfer of money.                          
                                                                               
  MS. GAY further indicated that a fiscal note is not attached                 
  to the bill because the cases must be worked on regardless                   
  of whether or not the bill is passed.  She said the                          
  legislation would assist the division by enabling them to                    
  address those people who are aiding the obligor in                           
  nonpayment.                                                                  
                                                                               
  CHAIR BUNDE asked if there are any other ways the bill would                 
  assist in collecting child support payments besides proving                  
  the transfer of assets.                                                      
                                                                               
  MS. GAY said, "...if assets, or tax, or property, so there's                 
  not any other vehicle other than the different cases where                   
  it's just obvious that they're not paying, but they're doing                 
  something under the table to get out of paying."                             
                                                                               
  Number 487                                                                   
                                                                               
  REP. TOOHEY asked if it would be her obligation to notify                    
  the division if she hires an employee that she knows has                     
  children and suspects that the person is in arrears for                      
  child support.                                                               
                                                                               
  MS. GAY said only if the division has requested an employer                  
  to notify them of rehires and new hires.  She explained that                 
  with businesses that have less than 20 individuals, the                      
  business would not be required to notify the division.                       
                                                                               
  Number 500                                                                   
                                                                               
  REP. TOOHEY asked if direct contact would be made with the                   
  obligor.                                                                     
                                                                               
  MS. GAY explained that if the division finds out that                        
  someone is employed or suspects that someone is employed, an                 
  order to withhold income and property is sent to the                         
  business.  The business would respond by informing the                       
  division whether or not the obligor is being paid or is not                  
  working for them.                                                            
                                                                               
  MS. GAY related another case where a person was being                        
  investigated because he was seeking disability insurance                     
  while employed as a construction worker.  She indicated that                 
  there was no money changing hands in the form of paychecks                   
  and surmised that it was cash.  She said the bill would                      
  deter people from entering into such arrangements.                           
                                                                               
  Number 561                                                                   
                                                                               
  CHAIR BUNDE referred to the original bill and related a                      
  scenario where a business was notified that an employee was                  
  not paying child support.  He further speculated that the                    
  employee left the business for several years, comes back,                    
  and is rehired.  He asked if the business would be in                        
  violation of the law if they do not notify the division of                   
  the employee's return.  He asked if there was a time                         
  limitation once a business has been notified.                                
                                                                               
  MS. GAY indicated that the legislation's focus is on the                     
  aiding of nonpayment of child support.                                       
                                                                               
  Number 595                                                                   
                                                                               
  REP. VEZEY interjected and said that Chair Bunde was                         
  referring to Title 25, Chapter 27.  He said he was concerned                 
  that the bill would focus on employers especially under the                  
  similar scenario that Chair Bunde had just offered.  He felt                 
  that the legislation needs to clarify that the focus is on                   
  aiding in nonpayment and not on the employer who fails to                    
  keep a running diary of every employee they've had with                      
  child support obligations.                                                   
                                                                               
  CHAIR BUNDE asked Rep. Vezey if he saw a way that the bill                   
  could be strengthened to provide that direction and intent.                  
  He asked if perhaps an amendment was necessary.                              
                                                                               
  REP. VEZEY felt that there are a number of amendments                        
  necessary, but his greatest concern regarding the bill is                    
  that he had not heard any testimony that indicates that the                  
  division has attempted to use courts to prosecute fraud.  He                 
  also stated that if a person accepts property for less than                  
  fair market value, that person has received taxable income                   
  in the eyes of the Internal Revenue Service (IRS).  He                       
  questioned as to whether the IRS has been brought in to                      
  collect their due.  He indicated that there is a 10% percent                 
  finder's fee for turning those people in.  He further stated                 
  that there are ample statutes on the books to allow for the                  
  prosecution of fraud and said the proposal is superfluous.                   
                                                                               
  Number 656                                                                   
                                                                               
  CHAIR BUNDE asked Ms. Gay if the division is currently                       
  prosecuting for fraud.                                                       
                                                                               
  MS. GAY said no and asserted that it is a much more                          
  difficult statute to prove.  She reiterated that the                         
  division is concerned with conspiracy to assist another                      
  person in fraud.                                                             
                                                                               
  Number 675                                                                   
                                                                               
  REP. TOOHEY asked Ms. Gay approximately how many cases the                   
  division is working on and how many they suspect are out                     
  there.                                                                       
                                                                               
  MS. GAY indicated that the division is currently working on                  
  30 cases and said there are more out there.  She said at the                 
  present time the division has only one investigator, but                     
  there will be two by the end of the month.  There are $320                   
  million in arrears that have not been collected.  She                        
  speculated that 10% of that figure constitutes people who                    
  are hiding their assets in one form or another.                              
                                                                               
  Number 701                                                                   
                                                                               
  CHAIR BUNDE asked Ms. Gay approximately how much of the $320                 
  million would go back to the general fund to replace AFDC                    
  payments.                                                                    
                                                                               
  MS. GAY guessed that 30 to 40% would be conservative.                        
                                                                               
  CHAIR BUNDE observed that the division is currently having                   
  problems investigating cases and asked, if the bill passed,                  
  would there be enough personnel to handle the case load or                   
  would there be a need to hire more staff?                                    
                                                                               
  MS. GAY explained that the division does not need more                       
  personnel and indicated that they already have one                           
  investigator and will be getting two more that will work on                  
  current cases.  She said it was her hope to prosecute some                   
  of the cases, bring it to the public's attention to deter                    
  these types of situations.  She said the division is more                    
  focused on deterring the situations than they are on                         
  prosecuting them.                                                            
  Number 750                                                                   
                                                                               
  REP. VEZEY asked Ms. Gay if the division at any time has                     
  turned information over to the IRS for prosecution of                        
  individuals who appear to be avoiding income tax.                            
                                                                               
  MS. GAY said yes.                                                            
                                                                               
  REP. VEZEY asked if the IRS responded.                                       
                                                                               
  MS. GAY indicated that the IRS is very pleased when the                      
  division reports information to them.  She said, "They like                  
  to hear from us.  And they do use our information."                          
                                                                               
  REP. VEZEY asked if it has been helpful to the division.                     
                                                                               
  MS. GAY said yes.                                                            
                                                                               
  Number 768                                                                   
                                                                               
  REP. G. DAVIS thanked Ms. Gay for her clarification.  He                     
  said he was reading Section 3 strictly as it relates to                      
  employers.  He said her testimony has made it clear that the                 
  legislation targets those individuals who are aiding                         
  obligors in nonpayment.  He said the testimony addressed the                 
  majority of concerns he had.  He observed that the                           
  legislation should separate a current employer's legal                       
  responsibility in the matter.                                                
                                                                               
  MS. GAY asserted that there is already a statute that                        
  provides for employers who refuse to respond to a request                    
  from the division.                                                           
                                                                               
  Number 807                                                                   
                                                                               
  CHAIR BUNDE referred to the list of the 100 worst offenders                  
  that Rep. Martin had supplied to the committee at a previous                 
  meeting.  He asked Ms. Gay, if HB 362 passed, would it                       
  address any of the 100 worst offenders?                                      
                                                                               
  MS. GAY said most certainly it would.  She said not all the                  
  violators would be addressed as some of the arrearage                        
  amounts may be incorrect or some violators may have no                       
  assets at all.                                                               
                                                                               
  CHAIR BUNDE observed that not all the people on the list                     
  would be guilty of hiding assets, but certainly some                         
  percentage would be.                                                         
                                                                               
  Number 837                                                                   
                                                                               
  REP. VEZEY observed that little or no effort has been made                   
  to use the courts to prosecute for fraud, which is a serious                 
  felony.  He asked Ms. Gay to address the issue.                              
                                                                               
  MS. GAY deferred to PHILLIP PETRIE to answer the question.                   
                                                                               
  Number 840                                                                   
                                                                               
  PHILLIP PETRIE, Acting Operations Manager, Child Support                     
  Enforcement Division, Department of Revenue, testified via                   
  offnet in support of HB 362.  He stated that the last case                   
  that was prosecuted was in the Juneau area.  Also, earlier                   
  in the week, he submitted a case to the attorney general                     
  (AG) in Anchorage that pertains to defrauding a creditor and                 
  fraud.  He said AG's are reluctant to try cases that are not                 
  directly related to child support because they are viewed as                 
  domestic cases, and the division works primarily with the                    
  Human Services Division of the Department of Law.  He said,                  
  "We're currently preparing 20 cases that would fall under                    
  this category for a referral to the Department of Law for                    
  legal action.  And, because of a federal statute change,                     
  they may eventually go on to the federal court.  Federal law                 
  says that we must examine all legal remedies.  The problem                   
  you have is gathering specific evidence.  And in our state,                  
  not being a community property state, if someone places the                  
  assets in a current spouse's name or a girlfriend's name,                    
  it's difficult to prove that they did that solely for the                    
  basis of fraud or defrauding the state."                                     
                                                                               
  MR. PETRIE related a scenario where two current spouses                      
  formed a company to do substantial long haul trucking.  He                   
  said both the current and ex-husband drive the trucks for no                 
  salary and the corporation is all in the wife's name.  He                    
  indicated that withholding orders have been sent to the                      
  company and have been returned asserting that the husbands                   
  are not employed, "they just help out."  He said it's                        
  obvious the obligor has no visible means of support and                      
  still applies for loans and buys a house -- all in the                       
  girlfriend's or wife's name.                                                 
                                                                               
  MR. PETRIE stated that fraud is a possibility in that case                   
  if it can be proven.  He urged that the proposal would                       
  assist in proving fraud.                                                     
                                                                               
  CHAIR BUNDE asked Mr. Petrie to identify himself for the                     
  record.                                                                      
                                                                               
  MR. PHILLIP PETRIE said he is the Acting Operations Manager                  
  for the Child Support Enforcement Division in Anchorage.                     
                                                                               
  Number 927                                                                   
                                                                               
  REP. VEZEY asked if the arrearage figures on the top 100                     
  list are accurate.  He asked how much of the total debt from                 
  the list is represented by underlying assets.                                
                                                                               
  MR. PETRIE said no concerted effort has been made to                         
  identify which figures are represented by assets.  However,                  
  he said the division is making efforts in that direction.                    
  He indicated that there will be two new investigators and an                 
  accountant will be moved to the Non-Wage Earners Section                     
  within the division.  He also said that data base                            
  information will be exchanged with the municipality of                       
  Anchorage regarding the personal property records section.                   
  He also pointed out that the division's efforts have been                    
  hampered because there has only been one criminal                            
  investigator.                                                                
                                                                               
  MR. PETRIE stated that within a year the division should                     
  have a better understanding of exactly which figures                         
  represent actual assets.  He indicated that the division is                  
  only receiving collections from 46% of their case load, and                  
  a majority of those cases have sizable assets.  He then                      
  referred to Ms. Gay's statement that the top 100 list                        
  figures may not be accurate and asserted that the figures                    
  are accurate on their computers today, but many of the                       
  figures represent default orders where a person failed to                    
  provide income information or they have multiple cases.  He                  
  explained that a person can provide adequate income                          
  information to the division to have their arrearage amount                   
  adjusted.                                                                    
                                                                               
  MR. PETRIE then estimated that approximately 25% of                          
  collections could be increased if the division can target                    
  the non-wage earners.  He indicated that Washington state                    
  has been able to collect several million dollars annually by                 
  targeting vehicles that belong to non-wage earners.                          
                                                                               
  Number 011                                                                   
                                                                               
  CHAIR BUNDE asked if the division is capable of seizing                      
  limited entry fishing permits and then sell it.                              
                                                                               
  MR. PETRIE said yes; and a supreme court decision supports                   
  the process.  He also indicated that the IRS has attempted                   
  to seize limited entry permits of obligors who owe child                     
  support, and under IRS regulation the division receives                      
  payment before the IRS.                                                      
                                                                               
  Number 039                                                                   
                                                                               
  MS. GAY interjected that the division also places liens on                   
  limited entry permits, which in most cases prevents their                    
  transfer.                                                                    
                                                                               
  MR. PETRIE offered that there are over 460 fisherman who owe                 
  over $10 million in arrearages based on 1993 data, and the                   
  1994 figures would be available April 1.  He said the                        
  division is also trying to gain permission to place liens on                 
  limited entry international permits.                                         
                                                                               
  Number 067                                                                   
                                                                               
  CHAIR BUNDE asked if the division would send copies of the                   
  April 1 report to the legislature.                                           
                                                                               
  MR. PETRIE said yes and explained that copies are sent to at                 
  least 580 processors and brokers throughout the state.                       
                                                                               
  CHAIR BUNDE encouraged Mr. Petrie to send a copy to the                      
  entire House of Representatives.                                             
                                                                               
  REP. TOOHEY stated for the record, "I am awed and inspired                   
  that there is somebody greater than the IRS.  And, it's an                   
  absolute privilege to be talking to you."                                    
                                                                               
  MS. GAY explained that the IRS experiences the same problems                 
  in collection that the division does regarding those persons                 
  who are not traditional wage earners.                                        
                                                                               
  REP. TOOHEY asked that Ms. Gay accept her gratitude.                         
                                                                               
  (Chair Bunde indicated that Rep. Kott arrived at 3:34 p.m.)                  
                                                                               
  REP. G. DAVIS said, "I would hope that you people are aware                  
  of Sen. Jacko's bill.  You might be collecting a lot of your                 
  money from Sea Fab here in the near future, if a certain                     
  bill goes through."                                                          
                                                                               
  MS. GAY pointed out that the child support provision in that                 
  bill was removed.                                                            
                                                                               
  REP. G. DAVIS agreed.                                                        
                                                                               
  REP. VEZEY clarified that Ms. Gay never said the division                    
  was more powerful than the IRS and pointed out that she said                 
  the division is first in line.  He then expressed further                    
  concern regarding the effect of the legislation on law                       
  abiding employers.  He asserted that currently under Title                   
  25, Chapter 27, there are civil penalties for employers                      
  "which quite frankly I believe are onerous."  He felt it                     
  would be possible to clarify in the legislation that the                     
  intent is not focused on traditional wage paying employers                   
  who have merely, in oversight, failed to report to the                       
  division.                                                                    
                                                                               
  TAPE 94-61, SIDE B                                                           
  Number 000                                                                   
                                                                               
  REP. VEZEY felt the legislation could be construed to                        
  threaten an employer with a felony crime for failing to                      
  honor a withholding order that could conceivably be 21 years                 
  old.                                                                         
                                                                               
  MS. GAY explained that the division does not rely on an                      
  employer to notify them of the rehire of a former employer                   
  who is an obligor.  She said the division sends a reminder                   
  notification to the business.  There is no way of tracking                   
  until the withholding orders are sent and the obligors are                   
  found to be not complying.  She assured the committee that                   
  the division does not bring charges against any employers or                 
  obligors that have not been fully investigated.  She                         
  asserted that the division will not waste the Department of                  
  Law's time with cases that they are not absolutely sure are                  
  fraudulent.                                                                  
                                                                               
  Number 055                                                                   
                                                                               
  REP. VEZEY related to Ms. Gay that he was aware of at least                  
  one employer that has been assessed an administrative                        
  penalty equal to the amount of child support that was not                    
  withheld from an employee.  He explained that the employee                   
  had been rehired after several years and was terminated                      
  before the new withholding order reached the employer.  He                   
  felt the situation to be a grave miscarriage of justice.                     
                                                                               
  MR. PETRIE asked Rep. Vezey or his constituent to contact                    
  him at a later time so he could further review the case.  He                 
  then indicated that the last employer noncompliance                          
  judgement the division obtained was in 1989.  He said he was                 
  unaware of any cases since that time.  He said for                           
  noncompliance to be proven the division must prove that the                  
  employer received the "certified mail green card" and did                    
  not act.                                                                     
                                                                               
  REP. VEZEY said the case was not processed through the                       
  courts or the Department of Law.  He said it was done at an                  
  administrative level.  He said rather than fight the case,                   
  the employer opted to pay the penalty because it was cheaper                 
  than attorney's fees.                                                        
                                                                               
  MR. PETRIE asked if the cited case pertains to a contractor                  
  in Fairbanks.                                                                
                                                                               
  REP. VEZEY said no, the case pertains to Western Mechanical.                 
                                                                               
  MR. PETRIE responded that he would be happy to review the                    
  case.  He also said the division will try to settle out of                   
  court first.                                                                 
                                                                               
  MS. GAY further explained that if the money is recovered it                  
  goes to the state, not to the children.                                      
                                                                               
  MR. PETRIE said the division would not object to an                          
  amendment that would clarify the issue.  He explained that                   
  in most of the cases he works on, the individuals are not                    
  listed as employees, are not reporting wages to the IRS or                   
  the Department of Labor, and they usually are paid cash for                  
  their services.  He reiterated that the bill is targeted at                  
  people who deliberately are evading child support by placing                 
  their assets in someone else's name or creating companies in                 
  someone else's name.                                                         
                                                                               
  Number 181                                                                   
                                                                               
  REP. VEZEY said there are some employers that are criminals,                 
  but expressed the feeling that most are law abiding                          
  citizens.                                                                    
                                                                               
  MR. PETRIE stated that his focus is on those who are aiding                  
  nonpayment.                                                                  
                                                                               
  CHAIR BUNDE said, "I'd like to interject here that certainly                 
  for the record, it's not the Chairman's interpretation of                    
  this bill that an employer who in good faith reemploys an                    
  employee after a period of time should be held liable                        
  without further notification from the Division of Child                      
  Support Enforcement."  He said he would take into                            
  consideration any amendment that would better clarify the                    
  issue.                                                                       
                                                                               
  Number 234                                                                   
                                                                               
  REP. KOTT referred to page 2, lines 25-31, regarding                         
  penalties.  He stated that criminal nonsupport is a Class A                  
  misdemeanor and the bill indicates that aiding nonpayment of                 
  child support would be a Class C felony.  He said the charge                 
  is "one step further" than criminal nonsupport and asked if                  
  that was the intent of the division.                                         
                                                                               
  MS. MANLEY asserted that the sponsor attempted to put more                   
  "teeth" into the bill by making it a Class C felony.                         
                                                                               
  REP. KOTT said, "My question, I guess, is we're making                       
  aiding the nonpayment of child support more serious than the                 
  person who is in violation of criminal nonsupport."                          
                                                                               
  MS. MANLEY felt that both crimes should be Class C felonies.                 
                                                                               
  REP. KOTT agreed and expressed that continuity should be                     
  ensured in the penalties.                                                    
                                                                               
  MS. MANLEY agreed.                                                           
                                                                               
  CHAIR BUNDE said, "Do I anticipate a bill changing penalties                 
  for lack of child support?"                                                  
                                                                               
  Number 298                                                                   
                                                                               
  REP. VEZEY maintained that he has attempted to pen an                        
  amendment that would address his concerns regarding                          
  employers, but has yet to come up with the appropriate                       
  language.  He suggested Mr. Petrie offer appropriate                         
  language for the amendment that would clarify that the                       
  target of the bill is for fraudulent activity and not for                    
  mere oversight by an employer.  He felt the proposal could                   
  be improved if the term aiding nonpayment of child support                   
  is better defined and also if the bill could be expanded to                  
  include the obligor as well as the person who aids and                       
  abets.                                                                       
                                                                               
  CHAIR BUNDE asked Mr. Petrie to respond.                                     
                                                                               
  MR. PETRIE said he would work on language for an amendment                   
  that would address Rep. Vezey's concerns.                                    
                                                                               
  MS. GAY said, "One thought I had was that this law not be                    
  used unless other laws that Child Support Agency has                         
  available are first addressed."                                              
                                                                               
  REP. VEZEY expressed that what Ms. Gay had proposed would                    
  address his concerns.  But, he felt it would not be too                      
  difficult to include the violation of the obligor in the                     
  statute.                                                                     
                                                                               
  CHAIR BUNDE observed that perhaps there is a need for                        
  drafting language for the amendment.  He asked Mr. Petrie if                 
  he was clear as to the direction of the committee.                           
                                                                               
  MR. PETRIE said yes.                                                         
                                                                               
  CHAIR BUNDE asked if Rep. Vezey and Mr. Petrie could make a                  
  collaborative effort to draft an appropriate amendment.                      
                                                                               
  MR. PETRIE said he would.                                                    
                                                                               
  Number 389                                                                   
                                                                               
  REP. OLBERG referred to Rep. Kott's earlier point regarding                  
  penalties.  He said it is theoretically possible that a                      
  person could be unable to pay child support because he/she                   
  has no money.  But, he said if a person conspires to aid                     
  nonpayment of child support, they are well aware that they                   
  are participating in fraudulent activities.  He expressed                    
  that he could justify a more serious penalty for aiding than                 
  "being the victim of financial circumstances and being                       
  guilty of nonpayment."                                                       
                                                                               
  CHAIR BUNDE said it was his understanding that individuals                   
  would be held responsible for accrued payments, but would                    
  not be in violation if they have kept in contact with the                    
  division and have kept them abreast of their dire financial                  
  situation.                                                                   
                                                                               
  MR. PETRIE concurred.  He said there must be an ability to                   
  pay.  He also said the division must prove beyond a doubt                    
  that the obligor has resources or assets to pay the support.                 
                                                                               
  MS. GAY also explained that obligors can come in for                         
  modifications if their wages have decreased in a new job.                    
                                                                               
  Number 440                                                                   
                                                                               
  MS. MANLEY asserted that the bill is directed at people who                  
  are intentionally aiding nonpayment of child support.  She                   
  also indicated that the term "intentional" is defined in                     
  statute.                                                                     
                                                                               
  CHAIR BUNDE asked if the potential amendment is addressed in                 
  the definitions in statute.                                                  
                                                                               
  MS. MANLEY explained that she spoke with Legal Services                      
  specifically regarding the issue.  She related that Legal                    
  Services said those concerns are addressed in statute.                       
                                                                               
  REP. VEZEY indicated that in reading the statute he                          
  overlooked the word "intentionally."  He felt the statute                    
  addresses his concerns and asked if Mr. Petrie would concur.                 
                                                                               
  MR. PETRIE concurred and said the burden of proof would                      
  exclude those who unintentionally "try to help someone."                     
                                                                               
  Number 510                                                                   
                                                                               
  CHAIR BUNDE withdrew his request that Rep. Vezey and Mr.                     
  Petrie craft an amendment.                                                   
                                                                               
  REP. BRICE offered to move the bill out of committee.                        
                                                                               
  REP. VEZEY referred to Rep. Kott's statement regarding                       
  penalties.  He said if the obligor could be included in the                  
  legislation it would be an improvement in the legislation.                   
                                                                               
  CHAIR BUNDE asked if the penalty of the obligor could be                     
  addressed under the title of the bill.                                       
                                                                               
  REP. BRICE said he felt the title "is sort of tight."                        
                                                                               
  MS. MANLEY suggested that it perhaps be included in another                  
  statute.                                                                     
                                                                               
  Number 542                                                                   
                                                                               
  REP. KOTT maintained that the issue needs to be addressed as                 
  to afford continuity to the penalties.  He said he knew of                   
  no other crime where aiding and abetting is a higher                         
  sentence than the actual crime committed.  He then related a                 
  scenario where a man is guilty of not paying child support                   
  and has remarried.  He said if the new wife is aware that he                 
  is not paying support, she is guilty of aiding nonpayment.                   
                                                                               
  REP. B. DAVIS disagreed and said the wife would be guilty                    
  only if she intentionally helped him avoid payments.                         
                                                                               
  MS. MANLEY explained that the wife would only be guilty if                   
  she continued to help him evade his responsibilities.  She                   
  said she agreed with Rep. Kott that the obligor should                       
  receive the same penalty.                                                    
                                                                               
  REP. KOTT said a wife would be guilty if the division asked                  
  her where her husband is employed and she refuses to answer.                 
  He further indicated that currently the courts do not                        
  require a spouse to testify against her husband.                             
                                                                               
  Number 591                                                                   
                                                                               
  CHAIR BUNDE suggested that the penalty be increased for the                  
  obligor.                                                                     
                                                                               
  REP. BRICE made a motion to pass the CS for HB 362 with                      
  individual recommendations out of committee.                                 
                                                                               
  CHAIR BUNDE, hearing no objections, declared that HB 362 was                 
  so moved.  He then read the calendar for the next meeting.                   
                                                                               
  Seeing no further business before the committee, CHAIR BUNDE                 
  adjourned the meeting at 4:07 p.m.                                           

Document Name Date/Time Subjects