Legislature(1995 - 1996)
02/13/1995 01:05 PM House JUD
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE JUDICIARY STANDING COMMITTEE
February 13, 1995
1:05 p.m.
MEMBERS PRESENT
Representative Brian Porter, Chairman
Representative Joe Green, Vice Chairman
Representative Con Bunde
Representative Bettye Davis
Representative Al Vezey
Representative David Finkelstein
MEMBERS ABSENT
Representative Cynthia Toohey
COMMITTEE CALENDAR
Confirmation Hearing: Board of Governors of the Alaska Bar
Association; Joseph N. Faulhaber, Fairbanks
HB 70:"An Act relating to treatment of permanent fund dividends
for purposes of determining eligibility for certain
benefits; and providing for an effective date."
PASSED OUT OF COMMITTEE
HJR 5:Proposing amendments to the Constitution of the State of
Alaska relating to terms of legislators.
PASSED OUT OF COMMITTEE
HJUD - 02/13/95
HB 25:"An Act revising Rule 16, Alaska Rules of Criminal
Procedure, relating to discovery and inspection in
criminal proceedings, to adopt the comparable federal
rule."
SCHEDULED BUT NOT HEARD
WITNESS REGISTER
JOSEPH N. FAULHABER
105 Adak Avenue
Fairbanks, AK 99701
Telephone: (907) 452-5186
POSITION STATEMENT: Testified on own behalf for reappointment
ROD MOURANT, Administrative Assistant
Representative Pete Kott
Alaska State Legislature
State Capitol, Room 432
Juneau, AK 99811-1182
Telephone: (907) 465-3777
POSITION STATEMENT: Introduced HB 70
ELMER LINDSTROM, Special Assistant
Office of the Commissioner
Department of Health and Social Services
P.O. Box 110601
Juneau, AK 99811-0601
Telephone: (907) 465-3030
POSITION STATEMENT: Testified against HB 70
CURTIS LOMAS, Director
Division of Public Assistance
Department of Health and Social Services
P.O Box 110640
Juneau, AK 99811-0640
Telephone: (907) 465-3347
POSITION STATEMENT: Provided information on HB 70
DEBBIE POE, Anchorage resident
841 North Bliss
Anchorage, AK 99508
Telephone: (907) 333-5630
POSITION STATEMENT: Testified against HB 70
RUPE ANDREWS, Executive Coordinator of Legislation
American Association of Retired Persons, Alaska Branch
9416 Long Run Drive
Juneau, AK 99801
Telephone: (907) 789-7422
POSITION STATEMENT: Testified against HB 70
SHERRI GOLL
Alaska Women's Lobby
P.O. Box 210685
Anchorage AK 99521
Telephone: (907) 274-2010
POSITION STATEMENT: Testified against HB 70
THOMAS C. WILLIAMS, Director
Permanent Fund Dividend Division
Department of Revenue
P.O. Box 110460
Juneau, AK 99811-0460
Telephone: (907) 465-2323
POSITION STATEMENT: Provided information on HB 70
SARAH FISHER, Legislative Aide
Representative Gene Therriault
Alaska State Legislature
State Capitol, Room 421
Juneau, AK 99801-1182
Telephone: (907) 465-4797
POSITION STATEMENT: Introduced CSHJR 5
ANNE CARPENETI, Aide
House Judiciary Committee
State Capitol, Room 120
Juneau, AK 99801-1182
Telephone: (907) 465-4990
POSITION STATEMENT: Provided information on CSHJR 5
REPRESENTATIVE GENE THERRIAULT
Alaska State Legislature
State Capitol, Room 421
Juneau, AK 99801-1182
Telephone: (907) 465-4797
POSITION STATEMENT: Sponsor of CSHJR 5
PREVIOUS ACTION
BILL: HB 70
SHORT TITLE: END PERMANENT FUND DIVIDEND HOLD HARMLESS
SPONSOR(S): REPRESENTATIVE(S) KOTT,Green,Toohey
JRN-DATE JRN-PG ACTION
01/06/95 39 (H) PREFILE RELEASED
01/16/95 39 (H) READ THE FIRST TIME - REFERRAL(S)
01/16/95 39 (H) STATE AFFAIRS, JUDICIARY, FINANCE
01/24/95 (H) STA AT 08:00 AM CAPITOL 102
01/24/95 (H) MINUTE(STA)
01/25/95 135 (H) COSPONSOR(S): GREEN
01/26/95 (H) MINUTE(STA)
01/31/95 (H) MINUTE(STA)
02/01/95 191 (H) STA RPT 1DP 2DNP 3NR 1AM
02/01/95 191 (H) DP: OGAN
02/01/95 191 (H) DNP: ROBINSON, WILLIS
02/01/95 191 (H) NR: JAMES, PORTER, IVAN
02/01/95 191 (H) AM: GREEN
02/01/95 191 (H) FISCAL NOTE (8-DHSS) 2/1/95
02/01/95 191 (H) ZERO FISCAL NOTE (REV) 2/1/95
02/08/95 284 (H) COSPONSOR(S): TOOHEY
02/13/95 (H) JUD AT 01:00 PM CAPITOL 120
BILL: HJR 5
SHORT TITLE: LIMITING TERMS OF STATE LEGISLATORS
SPONSOR(S): REPRESENTATIVE(S) THERRIAULT, Rokeberg, Porter, Green,
Bunde
JRN-DATE JRN-PG ACTION
01/06/95 17 (H) PREFILE RELEASED
01/16/95 17 (H) READ THE FIRST TIME - REFERRAL(S)
01/16/95 17 (H) STATE AFFAIRS, JUDICIARY
01/18/95 73 (H) COSPONSOR(S): GREEN
01/19/95 86 (H) COSPONSOR(S): BUNDE
02/02/95 (H) STA AT 08:00 AM CAPITOL 102
02/02/95 (H) MINUTE(STA)
02/03/95 224 (H) STA RPT CS(STA) 5DP 1NR
02/03/95 224 (H) DP: JAMES, OGAN, WILLIS,
ROBINSON,PORTER
02/03/95 224 (H) NR: IVAN
02/03/95 224 (H) FISCAL NOTE (GOV) 2/3/95
02/13/95 (H) JUD AT 01:00 PM CAPITOL 120
BILL: HB 25
SHORT TITLE: CRIMINAL DISCOVERY RULES
SPONSOR(S): REPRESENTATIVE(S) PARNELL,Porter,Green,Bunde
JRN-DATE JRN-PG ACTION
01/06/95 27 (H) PREFILE RELEASED
01/16/95 27 (H) READ THE FIRST TIME - REFERRAL(S)
01/16/95 27 (H) JUDICIARY, FINANCE
01/18/95 75 (H) COSPONSOR(S): GREEN
01/19/95 89 (H) COSPONSOR(S): BUNDE
01/27/95 (H) JUD AT 01:00 PM CAPITOL 120
01/27/95 (H) MINUTE(JUD)
01/30/95 (H) JUD AT 01:00 PM CAPITOL 120
01/30/95 (H) MINUTE(JUD)
02/01/95 (H) FIN AT 01:30 PM HOUSE FINANCE 519
02/06/95 (H) JUD AT 01:00 PM CAPITOL 120
02/06/95 (H) MINUTE(JUD)
02/08/95 (H) JUD AT 01:00 PM CAPITOL 120
02/08/95 (H) MINUTE(JUD)
02/13/95 (H) JUD AT 01:00 PM CAPITOL 120
ACTION NARRATIVE
TAPE 95-11, SIDE A
Number 000
The House Judiciary Standing Committee was called to order at 1:05
p.m. on Monday, February 13, 1995. A quorum was present. CHAIRMAN
BRIAN PORTER noted that Representative Cynthia Toohey was in an
Ethics Committee meeting and would be available if required. He
stated that a confirmation hearing for the appointment of Joseph
Faulhaber was first on the agenda. There are normally 12 members
on the Board, 3 of which are appointed by the Governor, and
confirmed by the legislature. The other members are attorneys
selected by the Bar Association on a geographically diverse basis.
Next on the agenda would be HB 70 and CSHJR 5.
HJUD - 02/13/95
CONFIRMATION HEARING: JOSEPH N. FAULHABER TO THE BOARD OF
GOVERNORS OF THE ALASKA BAR ASSOCIATION
Number 045
JOSEPH FAULHABER noted he had been in a number of businesses over
the past 20 years, and while in small business, civil law gets to
be a project you spend a lot of time on whether you want to or not.
That is where his interest comes from. He had also been recruited
to be a mediator and an expert witness in matters regarding
business and real estate. The reason he was initially appointed to
this board, is that he had talked with the Governor's Office about
the Federal Rule 82 situation in Alaska (attorney's fees in civil
cases), where we are actually progressive, and often times here the
prevailing party receives more of their attorney costs than in
other states.
Number 088
REPRESENTATIVE AL VEZEY moved that the nomination of Joseph
Faulhaber to the Board of Governor's Association be forwarded to
the Speaker's Office for consideration in the Joint Session.
Hearing no objection, it was so ordered.
Number 095
CHAIRMAN PORTER announced that HB 25 would not be heard, as the
committee substitute was not ready yet. He then announced the
first bill heard would be HB 70, sponsored by Representative Kott,
who was not available due to a death in the family. His aide, Rod
Mourant was available to introduce the bill.
HJUD - 02/13/95
HB 70 - END PERMANENT FUND DIVIDEND HOLD HARMLESS
Number 130
ROD MOURANT, Administrative Assistant to Representative Kott,
offered apologies to the committee for Representative Kott's
absence, due to yet another death in the family. He then read the
following sponsor statement:
"This legislation would eliminate the hold harmless provision
relating to receipt of a Permanent Fund Dividend (PFD) by a welfare
recipient.
"At the present time, a recipient of welfare who receives a PFD
fails to qualify for continued welfare benefits. Depending on
their personal circumstance the disqualification from welfare
benefits may last up to four months. Welfare benefits are then
made to the individual under the "hold harmless" program. This
program is funded by deducting the amount necessary for welfare
benefits and administrative costs of the program from the PFD for
all eligible recipients. When the program first started in
dividend year 1985 the amount deducted from each dividend was
$6.94. In dividend year 1994, the "hold harmless" program cost
each PFD recipient $41.45. The Department of Health and Social
Services now has eight permanent full-time employees to administer
the program.
"HB 70 would eliminate the "hold harmless" program. It would mean
that Permanent Fund Dividends would be treated as ordinary income
for the purposes of determining welfare eligibility. This is the
same manner in which the Internal Revenue Service treats dividends.
It also means that Permanent Fund Dividend recipients would not
continue to fund a program that allows individuals to receive a PFD
and still remain on welfare.
"I firmly believe that this legislation is a necessary step in the
`self-sufficiency process' of accomplishing welfare reform. That
is, that all money received is income and should be handled in the
same responsible manner. Welfare recipients will learn that there
are no bonuses for remaining on welfare.
"I urge your support for this legislation."
MR. MOURANT felt there should be no bonuses to recipients for
remaining on welfare, and the "hold harmless" does exactly that.
Certainly the involuntary taxation of the PFD through the deduction
takes it one step further.
MR. MOURANT pointed out, to demonstrate the need for welfare
reform, 61 percent of families currently on Aid to Families with
Dependent Children (AFDC), have been on AFDC for longer than 24
months. He said Representative Kott feels a need for some type of
incentive program to bring these folks off of the AFDC program.
Two years ago, when the comment cards were sent out with everyone's
PFDs, the most commonly received comment was people objected to the
automatic deduction of the hold harmless dollar amount from their
individual PFD. The statute does contain provision for funding the
hold harmless program through a calculation of eligible PFD
recipients. This legislation is necessary to eliminate that.
MR. MOURANT continued, explaining what this legislation does not
do, is that if the legislature wants to continue the hold harmless
program, it does not stop the possibility of the legislature
funding a hold harmless program from the general fund, the earnings
reserve account, the permanent fund, or any other funding source
chosen. All this legislation does is eliminate the automatic
deduction from the permanent fund dividend hold harmless program.
Number 260
REPRESENTATIVE DAVID FINKELSTEIN said Mr. Mourant was saying the
people need some sort of incentive to get off of welfare, but that
this legislation will not end the hold harmless. What is the
point? How can both arguments be made at the same time?
Number 270
MR. MOURANT explained this legislation does not eliminate the
possibility of the legislature appropriating money from other
funding sources, for a continuation of the hold harmless. This
legislation does not do away with welfare recipient hold harmless.
It merely stops the automatic payment from the dividend program for
the hold harmless program.
Number 277
REPRESENTATIVE FINKELSTEIN expressed extreme concerns for this
bill. He felt the arguments were contradictory, to say there are
all these people on welfare who need some incentive to get off of
it and by denying them their dividend, we are going to do it. Then
to say this bill does not deny them their dividend, that is up to
the legislature; obviously, that is the point of this legislation,
no matter what the sponsor says. The goal here is to remove
dividends from people who are on welfare, and that subject has two
sides.
Number 298
ELMER LINDSTROM, Special Assistant to Commissioner Perdue,
Department of Health and Social Services, stated the department is
opposed to HB 70. Previous Administrations have considered
elimination of the PFD hold harmless program, but have concluded
that elimination is neither desirable, nor cost effective. The
last legislature apparently reached the same conclusion.
Legislation introduced previously, eliminating the hold harmless
program, did not pass. Elimination of the hold harmless will lead
to additional administrative costs in the Division of Public
Assistance. Currently, special interagency agreements exist
between the Division of Public Assistance and the federal
government, which reduce the amount of case processing required
when recipients receive dividends. Elimination of the hold
harmless will nullify these agreements. With the elimination of
the program, the administrative efforts to process hold harmless
entitlement, would be supplanted by additional case processing
efforts to suspend public assistance payments when dividends are
distributed.
MR. LINDSTROM explained the net general fund cost to the state is
calculated to be in excess of a half million dollars if the hold
harmless program is eliminated. Elimination of the hold harmless
provision would also result in increased demands on the general
relief program, which is funded entirely by the state. The
division has calculated this additional general fund cost to be in
excess of $1 million. In short, while the elimination of the hold
harmless will show a net reduction of public assistance payments to
individuals, there will be a net increase in cost in state general
funds, because the cost of the hold harmless program is born, not
by the general fund, but by the earnings of the permanent fund
itself.
MR. LINDSTROM continued to inform the committee that the department
is extremely concerned about the elimination of the hold harmless
on individual clients. All of the recipients are poor. The hold
harmless funds replace federal and state funds which go only to
persons who meet strict eligibility requirements. These
individuals are poor families with dependent children, the aged,
the blind, and the disabled. It is important to note that over the
past several years, all recipients of hold harmless funds have
already seen a reduction in their benefits. Two years ago,
legislation was passed which reduced payments to clients of the Aid
to Families with Dependent Children, and of the Adult Public
Assistance program. The same legislation eliminated the automatic
cost of living adjustments for these programs. No cost of living
adjustment has been made since that time, nor is one included in
the budget bill released in December.
MR. LINDSTROM noted, also a number of bills have been introduced
and passed this session, which have a substantial impact on persons
currently eligible for hold harmless funds. At least one of these
bills proposes a further reduction in the basic benefits provided
to families with dependent children, the aged, the blind, and the
disabled. The cumulative impact of past reduction of benefits,
elimination of the hold harmless program, and possible further
reductions of benefits, would simply be too great.
MR. LINDSTROM said it has been suggested that elimination of the
hold harmless program is the first step in welfare reform. If you
believe welfare reform consists of simply cutting benefits, then
perhaps this is the case. If, on the other hand, you believe the
issue of welfare dependency is more complicated than just cutting
benefits, then real reform requires consideration of a number of
complex issues, including the lack of employment opportunities in
many areas of the state, lack of health care for marginally
employed Alaskans, failure of absent parents to provide support for
their dependent children, and a host of federal requirements which
may encourage dependency, you will conclude, just as the department
has concluded, that elimination of the hold harmless program
contributes absolutely nothing to genuine welfare reform. In fact,
the general fund cost of eliminating the program may actually make
real welfare reform more difficult by diverting skills and
resources away from productive activities that could reduce welfare
dependency in favor of additional paperwork, which would benefit no
one.
MR. LINDSTROM said finally, when considering HB 70, it is important
to remember the basic premise of the hold harmless program. All
Alaskans are entitled to share in the benefits of the PFD program.
Elimination of the hold harmless provision would have the practical
effect of denying the most needy of all Alaskans (poor families
with dependent children, the aged, the blind, and the disabled),
the benefits of the PFD program.
MR. LINDSTROM stated that according to a 1989 survey conducted by
the Division of Public Assistance, which describes how clients make
use of their PFD check, the pattern that emerges is one of
expenditures on basic expenses, including food, clothing, household
expenses, and payment on bills. Elimination of the hold harmless
program will mean the poor individuals and families on assistance
will have fewer resources to meet their basic needs.
Number 400
REPRESENTATIVE CON BUNDE asked what would happen if a minor child's
sponsor did not apply for the child's PFD. Would it have an impact
on that family's ability to apply for assistance? Does that income
that is just not realized in real life have an impact?
Number 415
MR. LINDSTROM said the Department of Health and Social Services
does not administer the dividend program, so he spoke off the top
of his head. He believed if a parent does not apply for a minor's
dividend, that minor would have an opportunity, subsequently,
within a year, or two years, after their eighteenth birthday, to
apply for those dividends which were not applied for previously.
Secondly, no one is compelled to apply for the permanent fund
dividend.
Number 425
REPRESENTATIVE BUNDE said they agreed on those points, but his
question was, "Would a sponsor not applying for this dividend that
could be collected by the child in the future, impact that family's
application for assistance that month?"
MR. LINDSTROM said if that dividend is not applied for, and
therefore not received, there is no income, and there is no impact
on eligibility, even though the child has potential for receiving
that income after turning 18.
Number 435
CHAIRMAN PORTER understood while there might be an IRS
consideration, there is not a state consideration.
MR. LINDSTROM said, on the point of the IRS income, for people who
are on public assistance, the IRS does not treat a dividend any
differently than it would any other income. This hold harmless is
solely for the purpose of the public assistance. The IRS has a
regulation that gets into the area of available revenue you do not
choose to take. They will get you anyway, sometimes, but probably
not in this case.
REPRESENTATIVE FINKELSTEIN recalled a number of years ago, a
discussion of one of their state entitlement programs. Under
federal requirements, if you have some benefit due to you, that
will go into your calculation of your welfare benefits. If you
fail to go and get a benefit you are entitled to, that is still
factored into the consideration of your other benefits.
Number 475
CURTIS LOMAS, Program Officer, Division of Public Assistance, said
that question comes up from time to time. In the PFD program,
there is no requirement that applicants apply for it. There are
rules in some programs, that require a benefit received on a
regular basis, at least quarterly, would have to be applied for -
something that is available for support, on a year-round basis, has
to be applied for. The best example he could think of is
unemployment insurance, social security, and the longevity bonus.
Because the dividend fund comes in an annual lump sum, those rules
do not fit.
REPRESENTATIVE FINKELSTEIN asked if that applied to all state
administered programs, such as Adult Public Assistance and Aid to
Families with Dependent Children. Is that equally applicable to
all of them?
MR. LOMAS replied that it applies to all Division of Public
Assistance programs, all the ones Representative Finkelstein had
named, but he did not know about the programs administered by other
state agencies.
MR. LINDSTROM added it does apply to Medicaid, as well.
CHAIRMAN PORTER said right under the laws that are being suggested
to be amended by this bill, is a general provision that says, "A
program administered by the state or any of its instrumentalities
or municipalities, the eligibility for which is based on financial
need, may not consider a PFD as income, or resource, unless
required to do so by federal law or regulation." He asked if it is
not necessary to amend this law to accomplish what it is that this
bill purports to want to do?
MR. LINDSTROM said suggesting this simply eliminates the
requirement that the PFD account funds be used for the hold
harmless. The bill eliminates the mechanism by which they replace
the dividend funds. It was conceivable that the legislature could
make a general fund appropriation, and a title that says dividend
hold harmless. But in this area, that would be very problematic
and difficult for administration, if the framework is removed by
repeal. He said it would be a possible and valid appropriation.
Number 565
DEBBIE POE, democrat from Anchorage, said as a disabled person,
this hold harmless program keeps her state disability aid benefits
coming in. Otherwise, they would be over income, and would not
receive Medicaid, food stamps, and social security disability
checks. They use the money to have their car worked on, to buy
clothes for the kids, things they cannot do any other time of year,
because their money is so budgeted to going out to bills. Without
the hold harmless, they would have to use their dividends to pay
for things that they would be eliminated from, because of being
over income. The hold harmless prevents that from happening. It
keeps them on line with all their benefits, and gives them this
extra money they need but cannot afford any other time of the year.
She said it is not that she does not want to work; she cannot work,
and does not feel they should punish people that cannot work, that
are disabled, or elderly; trying to encourage people that cannot
work, to go to work. The money is spent only on things that they
need, and she felt the bill would hurt a lot of people. She would
like to see the legislature make two categories. One, including
those who can work; and one including the disabled, the
handicapped, and the elderly, because they cannot work.
Number 600
RUPE ANDREWS, Representing the American Association of Retired
Persons, stated they are opposed to this legislation. It will cost
the Department of Health and Social Services about a half million
dollars extra out of the general fund, and they fail to see how
this is logical. The program has worked for about 13 years, in its
present state. Rather than throw the whole program out, they would
like to see the amount capped. He understood this to be increasing
over the years to now be $21. They did not feel this to be a good
step towards welfare reform. He felt everyone would like to see a
level playing field, and the poor are ready to pull their fair
share, but that is the key word, fair share. A lot of people will
be impacted and are concerned about that. We are talking about
children, too, because of the Aid to Dependent Families with
Children; people on medicare. He also understood it to be an
administrative nightmare. When people go off, they need to
reapply, and in the meantime, lose benefits up to four months. It
is really disruptive; so, if you are looking at this as a welfare
reform issue, then look at welfare reform as a total package,
rather that just a piecemeal effort.
Number 635
SHERRI GOLL, representing Alaska Women's Lobby and KIDPAC, said
they were very much in opposition to this bill. This kind of
legislation has been around since the inception of the PFD hold
harmless program. The idea of the program was to assure that every
person in the state has an equal opportunity to share in the oil
wealth of this state. They certainly do not believe that one
person is any more deserving of getting their PFD than any other
person. This particular legislation is actually taking from the
poor, to give more to the rich. It strikes her as one of the most
mean spirited pieces of legislation she has seen being seriously
considered. A few years ago, you cut the poor by 1/2 percent in
the budget, and what you are proposing to do here is actually
something more like an 8 percent cut. You have heard from the
disabled people and the elderly. You could try to separate the
deserving poor from the undeserving poor, and say, okay, if you are
disabled, then we will let you have your permanent fund and stay
on, but if you are just a poor child, you will not be able to, if
you judge that their parents are not deserving enough of support.
It is completely unfair to say people who have high incomes should
be able to keep their PFDs, and people who are poor should have to
give their's up.
Number 670
REPRESENTATIVE BETTYE DAVIS said she was not ready to move the
bill. She was opposed to the bill, and felt it was a waste of the
committee's time to be hearing the bill at this point; particularly
with what is going on in the nation now, and with all the federal
people talking about leaving welfare reform to the states, and
allowing them to spend their money as they see fit. There will be
a bill passed sometime in March, perhaps, and if that be the case,
there would be no need for the committee to even take the $41 out
of each individual PFD check to hold harmless so that everyone
would be able to receive the money; because we would be able to say
it is not income, and everybody would get it. There would be no
need for any of this. She said they should talk about this later.
She felt sadly about the possibility of this bill passing, because
it could hurt children, and they all needed to be concerned about
that.
REPRESENTATIVE DAVIS stated this is not the way to provide an
incentive for people to get off of welfare. Even if the facts show
that 60 percent of people who are on welfare have been on it more
than 2 years, that is no way to get them off of it. If you want
them off of welfare, you educate them, train them, get them jobs,
and give them the benefits they need, such as Medicaid, day care
assistance, and child care, so that they will be able to work, and
stay off of the rolls. Most people who go off of welfare and get
a job have to get back on it, because they do not make enough money
to meet the household needs, and they do not have any health
insurance, nor do they have money for child care. We are saying
people on welfare cannot get the PFD, but those people that qualify
for day care assistance can get their PFD check, because that money
is administered by the state; and therefore, the state can say that
is not income. Those people are in a different category than the
people on AFDC; the aged, the blind, the people who cannot work,
are not going to get their benefits. This would cause us to pay
more money than we are paying. We might be able to give the $41
back to each individual so they can have an increase in their
permanent fund, but it would increase the general fund, and boost
our budget. That is not what we want, because we are talking about
cutting the budget.
REPRESENTATIVE DAVIS felt the bill should be held somewhere until
they could determine there is no need for it. She thought the bill
was mean spirited, and not an incentive of income. When she runs
into people on the street and they ask her why the $41 was taken
out of their check, and she explains it; almost every person says
they would like to have that $41. First of all, they did not work
for that money. This is money we are paying back to everybody who
is a citizen of this state, which means we should not take one
group and tell them to make a decision between taking the permanent
fund or the benefits. They should not have to make that decision.
We as legislators are down here to make decisions that are going to
be helpful to people, not harmful to people; and this is definitely
harmful to compare one person against another. Amongst her
constituency, 9 out of 10 opposed this bill. The remaining 10
percent were concerned about receiving their $41. If they had not
decided to put this program in place, they would not be getting the
permanent fund, so they do not have anything to lose. We need to
take that into consideration when getting ready to move or not move
this bill on. We should not forget about the children, and if we
pass this bill, we will hurt children. She stated she would not be
voting to move this out of committee.
Number 740
REPRESENTATIVE FINKELSTEIN said this bill begs the question of what
they really intend as use of the permanent fund, because we do have
to make the decision on how the money derived from the permanent
fund income is spent. We have made a decision in the past that
they want to take the benefits from the permanent fund, and give
them to the residency of the state. Some argument has been made
that somehow, the current system takes away this money from the
others. All this is, is a calculation. No one has any inherent
right to some set amount of money from the permanent fund. Someone
decided on the way, to lay it out in a format making it appears
that this money is being taken from these individual's dividends.
The bottom line is, anything they get is a gift from the state. It
is money we are giving them, and we have made a decision that we
want to take the benefits of the permanent fund and give it to all
the residents of the state. In order to do that, it requires us to
adjust for those people who would get no benefit from it if there
was not a hold harmless provision. That formula happens to result
in a loss to the others, but only if you think it is some inherent
right that everyone gets these. The permanent fund dividend is not
that, and he predicted in not so many years, they would see a
variety of other changes in the expenditures of the permanent fund
because we will not be able to afford them anymore. Very tough
choices are ahead of us, but if we were to try to limit the
dividend program - if we were to decide that we have 600,000 people
in the state, and we are giving them close to $1,000 each; a half
billion dollars in distribution each year - what we would look at
if we were looking at it in a fair way, is the cost of the things
being needs based.
REPRESENTATIVE FINKELSTEIN said there has been a theme in recent
years that some of these entitlement programs, and some of our
distributions are going to have to be needs based. But this
approach is the opposite of needs based. This is to say that
people who are the neediest, people at the very bottom, are the
ones who are not going to get a benefit from our oil wealth. And
the people who are millionaires, and whose role in the state is
very large, that money means very little to, they are going to get
it. He could not think of a more illogical and unfair basis for
distribution of the permanent fund wealth. He could not imagine
that is what we had in mind when we established the dividend
program; that it is only going to go to the portion of the state
that needs it the least.
REPRESENTATIVE FINKELSTEIN explained the other reason we have a
dividend program, and certainly one of the stated goals of the
supporters of the program, is to try to get money back into the
economy. It serves a purpose in sort of boosting the economy up
when the dividends are given out. We had plenty of evidence of
that throughout the state when a variety of vendors take up special
programs during that period. Every time you give a dividend to
someone like me, 28 percent of that money goes to the federal
government. If you give that money to a poor person, very few, if
any pay federal taxes; so all of the money is locally available.
That alone is a switch that is going to mean more money to the
federal government, and less money to the people of Alaska. When
Representative Finkelstein gets a dividend, he is more likely to
take a trip out of state, and spend money there. Based on the
previous testimony and things he has seen in the past, it is fair
to conclude that a poor person is more likely to pay local bills,
meet local debts, make local purchases; whereas, a more wealthy
person is likely to buy something, such as a trip out of state,
that would have less benefit to our local economy. He did not see
any reason they would want to pass this bill.
Number 800
REPRESENTATIVE BUNDE heard from a number of his constituents who do
not like this tax, which has not gone through the legislative
process. So he did not know if this would be called "mean
spirited" but they just want it to go through the process - not
just have some bureaucrat somewhere be determining taxes. We do
not need to debate the merits of the permanent fund here. That is
money that belongs to us. It is not that we, the legislature, in
our great largess, are giving that money out to the people. The
people are letting government use $9,000 or $10,000 of their money,
and we are passing $1,000 back to them when we get through with our
spending spree. So, whether it is a gift or a tax is the question
that is in debate here. He agreed with Representative Davis in
thinking about the future and how changes come about. Poor people
who are used to getting the permanent fund better get used to the
idea that the permanent fund will not be around forever. In the
foreseeable future, that may be history. While money is often
spent on necessities, there is another case of a family with eight
children who received permanent fund checks, and $4,000 of the
$8,000 was spent on a one-night drug spree. There are stories back
and forth about how the money is spent. He was not opposed to
deciding who are the deserving and the undeserving, and would like
to see some differentiation. There should be a difference between
the disabled, and the more traditional welfare recipient.
Number 840
REPRESENTATIVE FINKELSTEIN noted this legislation is necessary
because the legislature enacted the program under AS 43.23.070, and
therefore the legislature should repeal that now.
Number 847
CHAIRMAN PORTER mentioned that it is an agency who determines how
much money will be put in and taken out. He then explained why he
intends to support this bill. As has been characterized, this is
not welfare reform. It certainly is not the beginning and end of
welfare reform, but it does provide an element of the beginning of
welfare reform.
TAPE 95-11, SIDE B
Number 000
CHAIRMAN PORTER explained they were trying to create a situation
encouraging people to get off of welfare. He intends to support
those efforts that would set up some reasonable transition off of
welfare. In other words, some of the existing welfare regulations
are ridiculous provisions that have been set up with the wrong
philosophy in mind, and should be addressed. Recipients are only
allowed to make so much money; after which, if you make five cents
too much, you cannot get your welfare or you lose your medical
benefits. There are some bills coming forth that will address
these regulations. If we are trying to motivate people to get off
of welfare and get on employment, providing additional money from
the state, whether it is a right or a privilege or however you want
to characterize the PFD, is not an incentive to get off; it is an
incentive to get on. The impact to the department that is net
$500,000, presumes that recipients will continue to apply and
receive the PFDs. It would be incumbent upon the department, if
this legislation passed, to immediately inform their welfare and
public assistance clients that if they do that, they will have
greater problems than benefits by applying for the PFD. These
people would then be advised to consider whether or not they want
to apply. Most rational people would make the appropriate decision
to take $5 rather than $3.
CHAIRMAN PORTER continued, in addition, there has been a lot of
consideration to what really does happen to PFDs paid to children.
There are many situations where it is very beneficial to the
overall family, and then there are others where it gets frittered
away. There is serious consideration among some members to
consider saying that money should not be paid out until the child
reaches majority, so they have the option in deciding what to do
with that money. That provision is still available, and would even
be aided by this piece of legislation to encourage parents not to
apply now for that money. A child could and most certainly would
be encouraged to apply for it after they reach 18, and would
receive all of that money.
CHAIRMAN PORTER explained this bill is being characterized as a
reverse Robin Hood; stealing from the poor and giving to the rich.
There is a large group of people in the middle who need
encouragement, not discouragement. Those are the people who are
working, although very close to the poverty level. Because they
are doing what it is we say we are encouraging people to do, they
are not entitled to any of these other kinds of benefits; but we
are taking $41 out of their check, and the wife's check, and the
kids' checks. They could use that money too, and they would not be
going to Hawaii on it. For all those reasons, he intended to
support this legislature.
Number 100
REPRESENTATIVE FINKELSTEIN felt there would be a transition period
of a year and a half, until the new provisions took effect. The
Administration is committed, as is the legislature, to taking up
this subject. What we are really talking about is interim
provisions. Do we, in the meantime, and before next year, go and
eliminate dividends for the poorest people in Alaska? That is a
bad idea. He offered an amendment changing the effective date on
page 2, line 26 from 1996 to January 1, 1997. Then we could at
least honestly say it fits into some sort of welfare reform,
because that would be a point in time at which those provisions
might be going into effect, where they may want to be including
hold harmless dividends as part of the benefits being paid out. In
the meantime, we would not be eliminating the dividends just for
the poorest people in the state.
REPRESENTATIVE VEZEY objected, so there was a roll call vote.
Representatives Bunde, Vezey, Green and Porter voted no.
Representatives Finkelstein and Davis voted yes. The amendment
failed 4 to 2.
REPRESENTATIVE DAVIS asked what the implications would be with the
effective date of 1996, when people apply for their permanent fund.
REPRESENTATIVE VEZEY answered that without an effective date, this
bill would take effect 90 days after it was signed. If the
effective date is 1996, then we know it would not affect anybody
this year.
MR. LINDSTROM explained the January effective date in any year is
a problematic month for the department. The dividends come out in
October, and then for some months after that, the effect on your
eligibility for public assistance is two months after you receive
the dividend. So the January effective date would make half of the
people in a given year fall on one side of the line, while the
other half would fall on the other side of the line. If it is the
wish of the committee for the next round of dividends, those that
start going out in October of 1995, not be subject to hold
harmless; an effective date prior to October 1, 1995, would be
appropriate for administrative purposes. He felt the best date for
changing the hold harmless would be July 1, 1996.
REPRESENTATIVE DAVIS moved to amend the bill to make the date July
1, 1996, on page 2, line 26. There was further discussion on the
proposed amendment.
Number 235
REPRESENTATIVE GREEN asked about the modifications in the
applications, since the applications would be coming out before
July 1, 1996.
TOM WILLIAMS, Director, Permanent Fund Dividend Division,
Department of Revenue, explained that the application for the 1996
dividend would need to be available from January 1 through March
31, 1996. Should this legislation pass, there could be something
in the application that would advise applicants of the change in
law. We routinely do that.
CHAIRMAN PORTER asked if there was objection to moving the
amendment. Seeing none, the amendment was adopted.
REPRESENTATIVE VEZEY made a motion to move HB 70, as amended out of
committee, with individual recommendations.
REPRESENTATIVE FINKELSTEIN objected so a roll call vote was taken.
Representatives Bunde, Vezey, Green and Porter voted yes.
Representatives Finkelstein and Davis voted no. The bill was
moved, as amended, with attached fiscal notes.
MR. LINDSTROM informed the committee that the amendment to the bill
would require new fiscal notes.
HJUD - 02/13/95
CSHJR 5 - LIMITING TERMS OF STATE LEGISLATORS
Number 365
SARAH FISHER, Aide to Representative Gene Therriault, introduced
the State Affairs Committee Substitute for HJR 5. The following
sponsor statement was provided:
"It proposes to limit terms by limiting the number of regular
legislative sessions a person may serve. The resolution proposes
that a person may not serve consecutively more than 12 full regular
sessions in the legislature. The person may not again serve in the
legislature as a result of an election or appointment to fill a
vacancy until two consecutive sessions have elapsed. Also for the
purposes of tabulating the number of sessions served, special
sessions shall not be counted nor shall time served as a result of
an appointment to fill a vacancy.
"Term limits are a positive legislative reform, guaranteeing a flow
of new legislators with new ideas. The popularity of term limits
demonstrates that career politicians are not desirable. Term
limits will also level the playing field for challengers facing
long time incumbents, whose power is often times derived primarily
from seniority.
"Placing a constitutional amendment limiting the terms of state
legislators on the ballot is a measure that is long overdue."
MS. FISHER said she has been working with committee staff for a
proposed committee substitute, dated 2/13/95, that makes just a few
changes. There are three minor changes. On page 1, line 9 of the
work draft, we took out the word "full" and changed the sentence to
say, "A person may not serve consecutively during more than twelve
regular sessions." The concern there was when you use the term
"full", if someone for some reason after they are elected does not
show up in Juneau at the start of the regular session on the first
day, if they arrive on the second day, they are not serving a full
legislative session. Periods served in the legislature as a result
of appointment under this draft do not count towards the tabulation
of a term limit. But what Representative Therriault wanted to make
sure did count is if, in a situation which did happen in recent
history, where a person resigned their position in the House, and
then was appointed to fulfill a term in the Senate, those terms,
because they are still serving consecutively, but because of the
resignation, they are all of a sudden not under this. Under the
first version, they would not be serving consecutively, so we
wanted to make it a situation where, if you are fulfilling another
appointment in another body, that did count towards your term
limit.
CHAIRMAN PORTER clarified if you had served half of your session in
the House, and the other half in the Senate, that would be
considered one session.
MS. FISHER explained the second change proposed in the committee
substitute. On page 2, line 5, paragraph (c), because of the
concerns raised in the State Affairs Committee, we wanted to make
sure a person who has served, or on their tenth year, is elected to
the Senate, would not have to resign after 12 years. That would
be an exception where they would be serving 13 or 14 years,
possibly.
Number 440
REPRESENTATIVE VEZEY felt the wording was too detailed, in Sections
2, 3 an 4. He felt they were not really necessary to be included
in legislation, but perhaps just part of the explanation of the
amendment when placed before the voters. Would it be interpreted
by the courts as having a reasonable intent of the legislature, and
a reasonable understanding of the people that supported it? There
is nothing wrong with filling the Constitution up with a lot of
verbiage, but if we had this kind of explanation on every paragraph
in our Constitution, it would be a rather unruly document.
Number 460
ANNE CARPENETI, Aide, House Judiciary Committee, stated she had
asked that very question of Tam Cook about writing such great
detail in the Constitution. Tam said you need to have term limits
in the Constitution if they are to be upheld, and if you want to
ensure that those limits would not be changed from year to year.
You could put term limits in the Constitution and leave it up to
legislation to flush out the details; but then again, what you
would be dealing with is something that would be easier to change
year in and year out.
Number 475
REPRESENTATIVE VEZEY had no problem with the verbiage in Section 1.
We have verbiage in Article 3 of the Constitution now, limiting the
Governor to eight years. That constitutional amendment does not go
into three paragraphs of verbiage explaining what two terms are.
Number 490
MS. CARPENETI mentioned that leaving the language vague could
result in running the risk of the legislative intent not being
followed by a court.
Number 505
CHAIRMAN PORTER said it comes down to the traditional debate on how
detailed your Constitution should be made. He felt a
constitutional amendment ought to be pretty straightforward and
simple; but the difference between a Governor's 8 years, and 12
sessions for a legislator, is that you can get a lot more of a
variation in those 12 sessions than you can in 8 years for a
Governor.
REPRESENTATIVE BUNDE reminded the committee if this were left as a
letter of legislative intent, any Governor could veto it, as
governors do quite frequently.
MS. CARPENETI mentioned that the wording limiting the terms of a
Governor state that no person who has been elected Governor for two
full successive terms shall be, again, eligible for that office
until one full term has intervened. She suggested the committee
could provide that the legislature would adopt statutes or
regulations to interpret this, which would make it a matter of
legislation.
CHAIRMAN PORTER said the problem with that is then we do not really
have it immortalized; we have it at the whim of the legislature.
MS. CARPENETI noted it has to be in the Constitution for the fact
of establishing term limits. Doing it by statute would not survive
a challenge, based on the fact that term limits are not in the
Constitution.
CHAIRMAN PORTER stated that the things left for interpretation by
statute could be changed. Leaving all of the language in here,
leaves no more "what if" questions.
Number 700
REPRESENTATIVE FINKELSTEIN described his amendment. He felt eight
years in one body was fair. That would lead to the best public
policy, and he wanted to offer that as an alternative.
CHAIRMAN PORTER felt 12 years was a compromise between what some
felt was fair and what others thought was fair. If it were left at
16 years, that would be pretty close to a career.
REPRESENTATIVE FINKELSTEIN then made the motion to amend his own
amendment to say, "either body" rather than "one body" on page 1,
line 10.
REPRESENTATIVE BUNDE wanted to clarify that now they were talking
about a total of eight years.
CHAIRMAN PORTER asked Representative Finkelstein if his intent was
to take his original amendment of 16 years back to 8 years total.
REPRESENTATIVE FINKELSTEIN said that was correct. You would have
to sit out a term after eight years, at which time you would be
able to run again. After a little discussion, he decided to take
out the word either, which could be misinterpreted to mean one or
the other; but for the sake of clarity, he wanted to scratch the
part of his amendment that changes page 1, line 10; leaving the
change to page 1, line 9, deleting the word "twelve", and replacing
it with the word "eight".
CHAIRMAN PORTER asked Representative Finkelstein to hold his motion
while he made a motion to first adopt the committee substitute as
described. Seeing no objection, it was so ordered.
Number 740
REPRESENTATIVE FINKELSTEIN again offered his amendment to change
page 1, line 9, as described above.
REPRESENTATIVE BUNDE asked if they could hear the bill sponsor
speak.
Number 770
REPRESENTATIVE GENE THERRIAULT explained what went into selecting
12 as the number of years. It was just coming up with a number
that was devisable by Senate and House terms, leaving 12. Over the
past 2 years, some people had desired 8 years, and other desired 16
years. Knowing this was a constitutional amendment requiring 27
votes, he had to ask himself what he could get 27 votes for.
Number 800
REPRESENTATIVE FINKELSTEIN moved to adopt his amendment as
described. There was objection, so a roll call vote was taken.
Representatives Davis, Finkelstein and Bunde voted yes.
Representatives Vezey, Green and Porter voted no. The amendment
failed 3 to 3.
TAPE 95-12, SIDE A
Number 000
REPRESENTATIVE FINKELSTEIN then made the motion to amend Section 3
of the bill to say the effective date applying to the next
legislature, which would be the Twenty-first Alaska Legislature.
This would ensure that the elections for the Twentieth Legislature
would not be affected.
CHAIRMAN PORTER said it could still result in a Senator losing two
years of a four year term.
REPRESENTATIVE FINKELSTEIN wanted to re-craft Section 3 to say that
any person elected in the 1996 election would be allowed to serve
out their term. It is very hard to write constitutional language
off the cuff, and felt the bill drafters could interpret it better.
REPRESENTATIVE VEZEY objected to the amendment and a roll call vote
was taken. Representatives Finkelstein and Davis voted yes.
Representatives Bunde, Vezey, Green and Porter voted no.
The amendment failed 4 to 2.
Number 125
REPRESENTATIVE GREEN made a motion to move the draft committee
substitute, version M, from committee, with individual
recommendations and the zero fiscal note. Seeing no objection, the
bill was moved.
ADJOURNMENT
The House Judiciary Committee adjourned at 2:55 p.m.
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