Legislature(1995 - 1996)

02/13/1995 01:05 PM JUD

Audio Topic
* first hearing in first committee of referral
+ 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                         
 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                                                               
 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                                                                
 SPONSOR(S): REPRESENTATIVE(S) THERRIAULT, Rokeberg, Porter, Green,            
 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,                          
 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                                                               
 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           
 "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            
 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              
 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                
 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           
 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                 
 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             
 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                 
 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,                   
 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                  
 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                
 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                
 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                
 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.                                                               
 The House Judiciary Committee adjourned at 2:55 p.m.                          

Document Name Date/Time Subjects