Legislature(1995 - 1996)
01/26/1995 08:03 AM House STA
| Audio | Topic |
|---|
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE STATE AFFAIRS STANDING COMMITTEE
January 26, 1995
8:03 a.m.
MEMBERS PRESENT
Representative Jeannette James, Chair
Representative Scott Ogan, Vice Chair
Representative Joe Green
Representative Ivan Ivan
Representative Brian Porter
Representative Caren Robinson
Representative Ed Willis
MEMBERS ABSENT
None
COMMITTEE CALENDAR
*HJR 4:Proposing amendments to the Constitution of the State of
Alaska authorizing the use of the initiative to amend the
Constitution of the State of Alaska.
HEARD AND HELD
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."
HEARD AND HELD
*HB 44:"An Act providing that a political use is not an
authorized use of charitable gaming proceeds; prohibiting
the contribution of charitable gaming proceeds to
candidates for certain public offices, their campaign
organizations, or to political groups; providing that a
political group is not a qualified organization for
purposes of charitable gaming; relating to what is a
qualified organization for the purpose of charitable
gaming permitting; and providing for an effective date."
SCHEDULED BUT NOT HEARD
HB 81:"An Act relating to the preservation of public facilities
and to appropriations for annual maintenance and repair,
periodic renewal and replacement, and construction of
public facilities."
SCHEDULED BUT NOT HEARD
(* First public hearing)
WITNESS REGISTER
REPRESENTATIVE TERRY MARTIN
Alaska State Legislature
Capitol Building, Room 502
Juneau, AK 99801
Telephone: 465-3783
POSITION STATEMENT: Sponsor of HJR 4
MIKE SAVILLE, FINANCE MINISTER
Hope Cottages
540 W. International Road
Anchorage, AK 99518
POSITION STATEMENT: Testified against HB 70
ANGELA SALERNO, REPRESENTATIVE
National Association of Social Workers,
Alaska Chapter
1727 Wickersham Drive
Anchorage, AK 99507
POSITION STATEMENT: Testified against HB 70
PUDGE KLEINKAUF
4201 Macinnes
Anchorage, AK 99508
POSITION STATEMENT: Testified against HB 70
ELMER LINDSTROM, SPECIAL ASSISTANT
Office of the Commissioner
Department of Health and Social Services
P. O. Box 110601
Juneau, AK 99811
Telephone 465-3068
POSITION STATEMENT: Testified against HB 70
CURTIS LOMAS, LEGISLATIVE LIAISON/
WELFARE REFORM PROGRAM OFFICER
Department of Health and Social Services
P.O. Box 110601
Juneau, AK 99811
Telephone 465-3068
POSITION STATEMENT: Testified against HB 70
SHERRIE GOLL
Alaska Women's Lobby
P.O. Box 22156
Juneau, AK 99802
POSITION STATEMENT: Testified against HB 70
REPRESENTATIVE PETE KOTT
Alaska State Legislature
Capitol Building, Room 432
Juneau, AK 99801
Telephone: 465-3777
POSITION STATEMENT: Sponsor of HB 70
TOM WILLIAMS, DIRECTOR
Permanent Fund Dividend Division
Alaska Department of Revenue
P.O. Box 110460
Juneau, AK 99811
Telephone: 465-2096
POSITION STATEMENT: Provided information
PREVIOUS ACTION
BILL: HJR 4
SHORT TITLE: USE OF INITIATIVE TO AMEND CONSTITUTION
SPONSOR(S): REPRESENTATIVE(S) MARTIN,Rokeberg
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) STA, JUD
01/26/95 (H) STA AT 08:00 AM CAPITOL 102
BILL: HB 70
SHORT TITLE: END PERMANENT FUND DIVIDEND HOLD HARMLESS
SPONSOR(S): REPRESENTATIVE(S) KOTT,Green
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) STA, JUD, FIN
01/24/95 (H) STA AT 08:00 AM CAPITOL 102
01/25/95 135 (H) COSPONSOR(S): GREEN
BILL: HB 44
SHORT TITLE: GAMING PROCEEDS/DEFINE CHARITABLE ORG'NS
SPONSOR(S): REPRESENTATIVE(S) MARTIN,Rokeberg,Porter,Bunde
JRN-DATE JRN-PG ACTION
01/06/95 32 (H) PREFILE RELEASED
01/16/95 32 (H) READ THE FIRST TIME - REFERRAL(S)
01/16/95 32 (H) STA, JUD
01/19/95 90 (H) COSPONSOR(S): BUNDE
01/26/95 (H) STA AT 08:00 AM CAPITOL 102
BILL: HB 81
SHORT TITLE: PRESERVATION OF PUBLIC FACILITIES
SPONSOR(S): REPRESENTATIVE(S) JAMES
JRN-DATE JRN-PG ACTION
01/13/95 42 (H) PREFILE RELEASED
01/16/95 42 (H) READ THE FIRST TIME - REFERRAL(S)
01/16/95 42 (H) STA, TRA, FIN
01/24/95 (H) STA AT 08:00 AM CAPITOL 102
01/26/95 (H) STA AT 08:00 AM CAPITOL 102
ACTION NARRATIVE
TAPE 95-3, SIDE A
Number 000
The House State Affairs Committee was called to order by Chair
Jeannette James at 8:03 a.m. Members present at the call to order
were Representatives James, Ogan, Green, Porter, Robinson and
Willis. Representative Ivan arrived shortly after roll call.
Chair James stated a quorum was present.
HSTA - 01/26/95
Number 020
HJR 4 - USE OF INITIATIVE TO AMEND CONSTITUTION
REPRESENTATIVE TERRY MARTIN, SPONSOR OF HJR 4, gave a history of
state constitutions and the rights of people to change them. He
said a constitution is a contract between the state and its people
and thus people have a right to change it. Constitutional
conventions were instigated as an alternative to revolution as a
method for change, but they became too cumbersome and the public
initiative came into being. In Alaska, over 500 initiatives have
been introduced by legislators, but less than 20 of them have
passed. He added that the people of Alaska need a way to change
their constitution.
Number 133
REPRESENTATIVE ED WILLIS asked what states allow a change in the
constitution by just a simple majority of the voters on a ballot.
REPRESENTATIVE MARTIN replied that most do, although it is more
difficult for a legislature to get an issue on the ballot,
requiring a two-thirds vote of the legislators in most states.
REPRESENTATIVE WILLIS asked how many signatures are required on a
citizen's petition, and then what happens.
REPRESENTATIVE MARTIN replied that the figures of the National
Conference of State Legislatures show between five and ten percent
of the number of voters in the most recent election. Then there is
a five-step procedure. A group forms with one hundred members
throughout the state and three officers; they create a stated
mission, which they take to the Lt. Governor's office for approval
to petition. When enough signatures are gathered and certified by
the Division of Elections, corresponding legislation is then
required. He stated it is not a very easy process and people don't
sign a petition blindly.
Number 226
REPRESENTATIVE IVAN IVAN commented this resolution scares him and
some of his constituents. He stated that Alaska reviews its
constitution every ten years. He added he thought that the voters
in his district would be outvoted by the voters in the more urban
districts and that because English is a second language to many
voters in his district, they might be confused by the technical
wording of the language on the ballot.
REPRESENTATIVE MARTIN disagreed, stating that Alaska has this
option but has never exercised it because the voters have always
voted down a constitutional convention.
Number 281
CHAIR JAMES commented that, while not coming out in support or
against this resolution, she felt that if the voters had had this
right in the past, they would have supported a number of issues to
the ballot, including term limits and the subsistence issue,
possibly without the rationality or balance of power that the
legislature can provide. She added though, that the people in
California had used the initiative process numerous times to the
extent that the legislature and administration of that state
complained about the massive intrusion of the people into their
affairs, and that the question had to be asked whether this was
good or bad. She said she had mixed feelings about the resolution,
but also knew that for some issues you would never get a two-thirds
majority of the legislature to agree, and this could prevent the
voice of the people from being heard. She further stated today we
have professional petitioners who can, for a few bucks, circulate
petitions and gather signatures, and she wasn't sure that everyone
who signed a petition knew exactly what they were signing. She
said that, in fact, she's heard a lot of people, who after signing
a petition say they don't go along with this process, but think the
people should have a right to vote on it. She further stated many
times the people only get one side of the argument, because one
side has more money to spend than the other. "The bottom line is
that the needs of the people are not met," she said. She concluded
by saying that no matter what they did, they were going to be
infringing on the rights of someone, and the best thing they could
do was to try and find a balance and to do the best job they could
do to have a democratic society, and that it is never going to be
perfect.
Number 337
REPRESENTATIVE JOE GREEN concurred with Chair James and said he
felt that it probably summarized the position of a lot of
legislators. He said it was possible that, because of the formal
presentations given to legislative committees, legislators may be
more informed about an issue than the average citizen on the
street. He agreed with Chair James, that if you have a
preponderance of information on one side and not the other, you can
sway the public. He said one thing that should be pointed out is
that although legislators are elected by their constituents, it is
not necessarily representative of the whole voting public because
some legislators, especially Chairs, have the ability to kill
certain legislation, which the rest of the elected body doesn't
have a chance to vote on. He thought there was an imperfect
situation of being able to represent the will of the people without
their direct vote.
Number 362
REPRESENTATIVE BRIAN PORTER was concerned that the actual wording
that would ultimately change the constitution would be written by
special interest groups, instead of going through a set process as
it has to now. He said this was what had happened in California,
and this was what they could not live with down there. He further
stated he wasn't sure the voting public was that interested in this
issue.
Number 380
REPRESENTATIVE SCOTT OGAN stated he had read this resolution very
carefully because it had long-term ramifications. He stated he
viewed the constitution as something almost sacred, and he had
taken an oath to uphold and defend it to the best of his ability.
He said he wasn't sure that it was something that should be changed
by whims or popular ideas of a time. He said the constitution was
something that had had a lot of thought go into it, and the
forefathers of the Alaska Constitution had framed our constitution
much on the U.S. Constitution. He stated his biggest problem with
this resolution was that it allowed for changes to the constitution
with a simple majority of the people. He thought it might be more
appropriate if changes could only be made with a two-thirds
majority, as was required of the legislature. He thought this
would give a more true indication of the will of the people. He
said this was a tough call for him because he thought the people
should have a right to change their government by referendum.
Number 415
REPRESENTATIVE CAREN ROBINSON said she agreed with many of the
comments already made, but was also concerned with what might be
the fiscal impact of this resolution. She said she could see where
there could be increased costs to the election department and
attorney general's office, and she was curious as to whether the
departments were just not finished with the fiscal note or whether
it was just too difficult to determine the costs on this one.
REPRESENTATIVE MARTIN responded that the cost would be $2,200; the
cost of ballot printing. He said in most cases the people paid for
the costs, which he thought demonstrated their sincerity over that
of the legislature, who didn't have to pay for the costs of
legislation. He explained the initiative process was something
that was very time consuming and which was paid for by the sponsors
of the initiative and not the public treasury.
REPRESENTATIVE ROBINSON verified that the reason there was no
fiscal note was that it was just going to cost the $2,200 for the
printing of the ballot.
REPRESENTATIVE MARTIN agreed.
REPRESENTATIVE ROBINSON asked which other states allowed the
initiative process of amending their constitution.
REPRESENTATIVE MARTIN replied there were several. He further
stated that everyone seemed to be bringing up the case of
California as an example of where the people used the initiative
process often, and reminded the committee that the sponsors paid
the cost of the initiative and not the government. "Even though
California pushes through a lot of initiatives and they have a lot
of excitement about democracy, relatively few of the ballot
questions pass" he said. He continued, "I bet it's less than
fifteen percent. But the ones that do pass are well thought of."
He added that most of the time, the only reason it cost the state,
was when the government fought the decision of the initiative. He
further stated the advantage of this resolution was that it
required legislation accompany the initiative, and if the
legislation was better worded and met the intent of the initiative,
it could be chosen as the one to go on the ballot. He added that
the legislators hadn't been the best proposition writers either,
and the courts had even, on occasion, thrown out ballot
propositions from the legislature because the intent wasn't clear.
REPRESENTATIVE ROBINSON requested an example of what type of
initiatives could be sponsored by the people, and where the
stopping point of these constitutional initiatives was. She
wondered if they could bring up just anything?
Number 498
REPRESENTATIVE MARTIN replied that they most certainly could bring
up whatever they wanted. It was, after all, their government, but
he cautioned there would be checkpoints along the process; one of
the main ones would be the Lt. Governor's office. He said citizens
weren't expected to know the constitution or the procedures like
legislators were, and they might get angry and propose something
that wasn't workable. Thus, there were checkpoints along the way
to tone down outrageous initiatives. He also added that we could
get an idea of what type of issues might be brought up by looking
at the history of states, such as California, that allow the
initiative process.
CHAIR JAMES responded that currently the citizens of Alaska could
change the law by initiative, just not the constitution. She added
if the legislature puts out a ballot issue that is not a
constitutional mandate, then it is only an advisory vote, which the
legislature can choose to follow or reject. She also commented
that almost every organization has a committee to review its
bylaws, because life changes and things need to be modified. So,
she said, it is evident that we need a method to change our
constitution. The question is what is the best way and what is the
best way to represent the people. She added it was never a mistake
to ask the people, but the people had to be informed of the issue.
She said sometimes the information given to the people was
misleading or overwhelming in favor of one side or the other.
REPRESENTATIVE PORTER informed the committee that over the interim
there was a constitutional amendment commission formed, which
resulted in a request for legislation to form a citizens committee
to review requests for constitutional amendments coming from the
public or the legislature. He added there would be checks and
balances in the system, such as having the judiciary committees in
both the House and Senate review the requests and modify them as
necessary to put them in there proper form. Thus, there have been
steps to try and get more citizens involved in the process, but
short of the initiative process, he said.
REPRESENTATIVE MARTIN said several states had tried this method,
and that currently two states included having commission review as
a step in the initiative process. He said, though, the final
decision was still left up to the people, not the legislature. He
said what he was trying to do was to knock down the barriers to the
people; adding that, of the 500 or so proposed initiatives, there
was really only 20 or so that kept getting brought up because the
legislature wouldn't pass the issue. He also stated the biggest
thing that was always brought up was fear, fear, fear and reminded
the committee of the fear that the Founding Fathers must have felt
during the Revolutionary War with the British. He said they had to
constantly remind themselves of what they were fighting for - the
right of the individual citizen over government. He further stated
that people shouldn't judge Anchorage as being white, middle-class,
because he could remember when he represented the largest Native
village in Alaska in Mountain View, and could remember seeing fish
wheels and catch in their backyards and having to fight for their
subsistence rights. He added if you wanted a divisive community on
any issue, it was Anchorage. He went on to state the groups
opposed to the constitutional convention always used fear, fear,
fear as a tactic, and we shouldn't fear change, but should have
faith.
CHAIR JAMES called for a break so Representative Green and
Representative Porter could attend to some urgent business. She
called the meeting back to order shortly before 9 a.m.
Number 625
REPRESENTATIVE OGAN called for an amendment to line 17, page 2 of
the resolution to require a two-thirds majority of votes to pass a
constitutional amendment.
CHAIR JAMES called for comments on the proposed amendment.
REPRESENTATIVE MARTIN objected saying history had proven that such
a large majority being required guaranteed minority rule, and this
was the exact opposite of representative democracy. He pointed out
that if legislators needed a two-thirds vote to get elected, not
many of them would be there. He also pointed out the initiative
process is a long process, requiring large public input. He said
it would be over a year-long process, requiring input from the
legislature. He said a two-thirds majority requirement was simply
too large, and it simply defied the wonderful experience of our
democracy.
CHAIR JAMES allowed Representative Ogan to respond.
REPRESENTATIVE OGAN said he wanted a two-thirds majority
requirement because he felt the constitution shouldn't be so easy
to change according to the popular ideas and political doctrines of
the day. He said we needed to have this protection for minority
viewpoints, and that an overwhelming majority should be required to
amend the constitution.
REPRESENTATIVE GREEN said he could appreciate the sentiments of
Representative Ogan, but pointed out that in the 17 years he had
lived in Alaska, we had yet to elect a governor with even a simple
majority, and that such a large majority being required would just
ensure that no amendments would ever be made via the initiative
process.
CHAIR JAMES commented that there was a difference between voting
for a candidate and an issue, in that an issue was simply a yes/no
vote. She said there was only two choices. Whereas with
candidates there were many choices to choose from.
REPRESENTATIVE PORTER agreed, saying there were remedies to getting
a majority vote for candidates and he would support those proposals
as well as this amendment. He said he agreed with Representative
Ogan in that the constitution shouldn't be something that could be
tinkered with so easily. He stated he recognized there were
safeguards put in, including the requirement of a legislative
review, but they could only change the wording, not the intent of
a particular initiative.
REPRESENTATIVE WILLIS agreed that the constitution must require
more than a simple majority to be changed, and a two-thirds
majority requirement would offer this protection. He said he would
support this amendment to the resolution.
REPRESENTATIVE MARTIN said the original constitutional convention
made decisions by a simple majority, and it was a simple majority
that elected the delegates. He added that it was barely a simple
majority that voted for the constitution itself. He said that
two-thirds was simply an astronomical number, which was simply
impossible to achieve. He cited the sixty percent requirement to
increase the tax cap in Anchorage as an example. He stated if the
committee wanted to kill the resolution, then they would succeed
with a two-thirds majority requirement, because no initiative in
the country would ever succeed in getting a two-thirds majority
approval.
TAPE 95-3, SIDE B
Number 000
CHAIR JAMES asked if there was some other number between fifty and
sixty-six percent that would be reasonable and attainable.
REPRESENTATIVE MARTIN replied that no number this high would be
achievable when talking about a citizen initiative. He said the
constitution was never meant to be sacred; it was simply an
agreement between the citizens and those that were elected to
govern. He said the Alaska Constitution was so limiting in so many
ways, that it defied democracy. He said the more that it was
brought out to the people, they would see that they didn't have
that many rights in this state.
CHAIR JAMES questioned Representative Martin as to how he would
respond that it took a two-thirds majority of the legislature to
pass a constitutional amendment.
REPRESENTATIVE MARTIN replied this was because the people didn't
trust their legislators.
Number 080
CHAIR JAMES called for a roll call vote of the committee regarding
the proposed amendment to the resolution. Representatives James,
Ogan, Ivan, Porter, Robinson and Willis voted in favor of the
amendment. Representative Green voted against the amendment; so
the amendment passed.
Number 095
REPRESENTATIVE MARTIN requested the resolution be held, saying that
with the new amendment, it was a worthless issue unless he could
get more information to persuade the committee otherwise.
CHAIR JAMES responded that she would hold the resolution, but urged
Representative Martin to try and find some percentage that was
agreeable over fifty percent, so he could get the needed support to
pass it through the legislature. She asked whether he would be
ready for the next committee meeting or if he wanted to make
another request for a new hearing.
REPRESENTATIVE MARTIN responded that he needed to talk with
constitutional experts, and would prefer to make another request.
He said a two-thirds majority was just too high of a requirement in
order for this resolution to be effective.
CHAIR JAMES replied that she personally agreed with him, but she
thought that in order to get the needed support to get it passed
through the legislature, he would need to find some percentage
between fifty and sixty-six percent. She reiterated that the
committee would hold the resolution until he said what he wanted
the committee to do with it.
CHAIR JAMES said the next item on the agenda was HB 70.
HSTA - 01/26/95
HB 70 - END PFD HOLD-HARMLESS
Number 131
MIKE SAVILLE, FINANCE MINISTER, HOPE COTTAGES, testified via
teleconference from Anchorage. He said we could have a potential
effect on three groups of people if we did away with the
hold-harmless clause. He said the people affected are, in many
cases, very marginally employed or attending school. He stated if
the hold-harmless provision of the permanent fund was removed, it
would represent a one-to-one reduction in other benefits. He
claimed that most of the people affected use this money for their
basic needs. He further stated many of the recipients were
medically needy and this could potentially mean a direct loss of
medical eligibility. He said they were participating more with
many federal programs and that a loss of one month's funding could
mean a direct loss of a recipient's eligibility in many of these
federal programs. "I think that we ought to be very careful about
considering this, because what might represent a minor saving could
end up costing the state of Alaska a significant amount of money in
keeping programs and providers whole," he said. He further stated
that on a social level, most citizens consider the permanent fund
a nice thing to have, but the individuals they support depend on it
for their basic needs. "I would hate to turn a program that most
people consider very positive into one that was a penalty," he
said.
Number 220
ANGELA SALERNO, REPRESENTATIVE, NATIONAL ASSOCIATION OF SOCIAL
WORKERS, ALASKA CHAPTER, testified via teleconference from
Anchorage. She agreed with many of the statements that Mike
Saville made. She said she thought the permanent fund dividend
program (PFD) was set up as a universal program for all Alaskans to
enjoy. She declared HB 70 to be a very unfair and discriminatory
move. She said it restricted benefits. She stated an AFDC
recipient must apply for the permanent fund, and so the recipient
cannot even choose between the PFD and their other benefits. She
said the legislature would be forcing people to lose benefits if
they passed HB 70, and urged them not to do so.
REPRESENTATIVE OGAN asked Ms. Salerno what would be the net loss to
the recipient if the hold-harmless provision was removed.
MS. SALERNO replied it would be dependent on the amount of benefits
an individual was currently receiving. She said it would range
from about $800 a month on up, depending on the size of the family.
She further stated that by receiving the permanent fund, the
individual becomes ineligible for AFDC and must reapply. She
mentioned this could take two to three months to get through the
process. "And so it could become a devastating loss of income to
the individual," she said.
REPRESENTATIVE OGAN asked if there was a provision to prevent this
from happening, would that take care of this concern.
MS. SALERNO replied any provision that would ease the
administrative procedure would be appreciated, but this wasn't the
issue. She said the issue was one of unfairness and discrimination
against a whole group of people simply because they are
disadvantaged.
CHAIR JAMES asked for Pudge Kleinkauf to give her testimony.
Number 290
PUDGE KLEINKAUF testified via teleconference from Anchorage, and
said she agreed with the two previous speakers. She stated that
almost from the beginning of the permanent fund program, the state
has seen it to be good policy to not discriminate against those who
receive public assistance and to set up a program that allowed
these people to receive their permanent fund check. She thought
the state has always believed that the right to apply for and
receive permanent fund dividends should apply to everyone. She
also said that under federal law, a recipient of public assistance
must apply for any source of income for which they are eligible.
And so a public assistance recipient doesn't even have a choice in
their decision to apply. She said this was one of the main reasons
the hold-harmless program was set up in the first place. She
further stressed that a recipient forced off of public assistance
loses their Medicaid. This would either devastate the recipient or
their family. She commented that not everyone uses their permanent
fund to go to Hawaii or Disneyland; many put the money aside for
their children's education. She said many seniors use this money
to pay for health insurance to supplement their Medicaid. Thus,
when you deny recipients their permanent fund dividend, those
people would not have the opportunity that the rest of us have to
take our permanent fund and put it away for more important or more
long-range goals. She claimed it was very difficult to live on
public assistance in Alaska, and so many recipients use their
permanent fund to buy essential basic needs and this would go away
if the hold-harmless program was removed. She urged the committee
to look very carefully before they decided to remove the
hold-harmless provision of the permanent fund.
CHAIR JAMES asked Ms. Kleinkauf how she would respond to the people
who felt they were being taxed each year with a designated tax
(referring to the hold-harmless provision) and didn't necessarily
want to pay for this, but felt they didn't have a choice.
MS. KLEINKAUF responded this money was equivalent to the
administrative costs that the state would otherwise have to pay
taking people off public assistance and putting them back on after
they spent their permanent fund.
Number 412
CHAIR JAMES called Elmer Lindstrom to testify.
ELMER LINDSTROM, SPECIAL ASSISTANT TO COMMISSIONER PURDUE,
DEPARTMENT OF HEALTH AND SOCIAL SERVICES, apologized for not having
the fiscal note to the committee before the meeting and announced
that it should be ready later that day. He stated the Department
of Health and Social Services is opposed to the passage of HB 70.
He said the department will provide the committee with a detailed
fiscal analysis of the bill by the end of the week. He apologized
for not being able to provide the committee with this material
prior to the meeting, but said the bill requires extensive
analysis, involving six separate detailed fiscal notes and
coordination between two divisions in the department. He said,
"Previous administrations have considered elimination of the
permanent fund dividend hold-harmless program; but have concluded
that elimination is neither desirable nor cost effective. The last
legislature apparently reached the same conclusion - legislation
eliminating the hold-harmless program introduced in the previous
legislature 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 and the administrative efforts to
process hold-harmless entitlements would be supplanted by
additional case processing efforts to suspend public assistance
payments when dividends are distributed. Last year, the net
general fund cost to the state was calculated to be in excess of
one-half million dollars if the hold-harmless program were
eliminated and I believe that will be reflected in the new fiscal
notes this year, as well. Elimination of the hold-harmless
provisions would also result in increased demands on the general
relief program which is funded entirely by the state. Last year,
the division calculated this additional general fund cost to be
$871,000.
"In short, while the elimination of the hold-harmless will show a
net reduction in public assistance payments to individuals, there
will be a net cost in state general funds. This is because the
cost of the hold-harmless program is borne, not by the general
fund, but by the earnings of the permanent fund itself. The
department is also extremely concerned about the impact of 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's
important to note that over the past several years, all of these
groups have already seen a reduction in their benefits. Two years
ago, legislation was passed which reduced payments to clients in
the aid to families with dependent children and adult public
assistance programs. 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 introduced last week. The savings to the state
generated by the legislation passed two years were, and continue to
be, significant. Also, a number of bills have been introduced this
session which, if passed, would 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 families with dependent children, the aged, the blind and
the disabled. The cumulative impact of past reductions to
benefits, elimination of the hold-harmless program and possible
further reduction in benefits would simply be too great.
"Finally, when considering HB 70, it is important to remember the
basic premise of the program. That premise is that all Alaskans
are entitled to share in the benefits of the Alaska permanent fund
dividend 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 permanent fund dividend
program." He said he was willing to answer any questions and
announced that Kurt Lomas from the Division of Public Assistance
could answer more technical budget questions.
Number 480
REPRESENTATIVE GREEN asked if there could be an innovative
application process for the permanent fund which would allow
recipients of public assistance to receive the permanent fund
without losing their benefits, by either having it spread out over
a period of time, and either dispersed by the permanent fund
division or the Department of Health and Social Services.
MR. LINDSTROM said he assumed that it was possible, but would like
to defer that question to Kurt Lomas, who was shaking his head.
CHAIR JAMES asked Kurt Lomas to step forward and testify.
Number 500
KURT LOMAS, DIVISION OF PUBLIC ASSISTANCE, stated there had been
such legislation proposed in the past, but the fiscal analysis
showed that either a monthly dispersal or a quarterly dispersal
would increase the cost of the hold-harmless program. He said
under the current system of one annual payment of the permanent
fund, recipients lose only one month of eligibility for their
benefits, but if you spread the payment of the permanent fund over
the year, recipients generally see a dollar-for-dollar reduction in
their benefits from receipt of their permanent fund payment and
this usually adds up to more than the loss of one month's benefits.
He said this would actually drive up the costs of the hold-harmless
program.
Number 517
REPRESENTATIVE PORTER asked if such a proposal would keep
recipients eligible for their Medicaid benefits.
MR. LOMAS responded that although it would if it were below the
level required for eligibility of Medicaid. Although he wanted to
point out that, in fact, most recipients will not lose their
eligibility for Medicaid under the provisions of HB 70. He said
federal law allows that cash assistance benefits be suspended for
a month and Medicaid be continued during that month of suspension.
He said if this bill passed, the Department of Health and Social
Services would do everything it could to protect the Medicaid
eligibility of its clients.
REPRESENTATIVE ROBINSON asked if Mr. Lomas could speak to the
general relief part of public assistance, saying that as she
understood it, if people were removed from the program, there would
be kind of a bulge later. She said she knew that the fiscal note
would probably display the costs better, but asked if he could
speak generally as to what they might be.
MR. LOMAS replied that because of the way public assistance is
budgeted, income received in one month actually impacts benefits a
couple of months later. He said their projections of increased
general relief costs are based on their belief that a proportion of
their recipients would spend their permanent fund and then
experience a loss of their benefits later. He said then they would
face basic need costs and come to the department for general relief
assistance.
REPRESENTATIVE ROBINSON asked what the number might actually be in
costs to the agency, because of increased administrative costs.
MR. LOMAS stated he couldn't remember the details of the fiscal
note, but it was a question of workload. He said the department
projected a small proportion of recipients would apply for general
relief assistance, largely because the department would advise
people to set aside a portion of their dividend for when they saw
a loss of their benefits.
CHAIR JAMES asked if someone who received their dividend one month
was reinstalled in the program the next month, and then found
employment the following month, if they would have to pay back the
benefits they had received the same month as they received their
dividend.
MR. LOMAS said she raised an interesting question. He said in the
eyes of the federal government, the department would be required to
pursue the recovery of that payment as an overpayment to the
recipient, but this was a point of contention between the
department and the federal government and the agency does not
currently pursue the recovery of such payments.
CHAIR JAMES said she was assuming that the reason it took so long
for recipients to feel the loss of benefits due to receiving their
permanent fund, was it took that long to process the paperwork and
stop the payment, similar to Social Security. She further stated
she would like to think there are a lot of recipients that do get
off public assistance because they find employment, as that was one
of their goals.
MR. LINDSTROM said the department had consulted with the sponsor of
HB 70, after finding that the listed effective date of this bill
was January 1, 1996. They asked the sponsor if his intent was that
this legislation would apply to the next round of permanent fund
dividends, to which the sponsor replied yes. Mr. Lindstrom noted
that this creates a problem, as the effective date falls right in
the middle of the time when the department is processing
applications for the hold-harmless provision. Conceivably, some
applications would be affected, while others were not. He said it
would be the desire of the department if this bill did move
forward, that it have an effective date of prior to October 1995,
if it was the intent that it apply to the next round of permanent
fund dividends.
REPRESENTATIVE WILLIS asked for some historical perspective of the
hold-harmless act.
MR. LINDSTROM stated it was his understanding the hold-harmless
provision was part of the original permanent fund program. He said
it had really been an integral part of the permanent fund program
from the beginning. He stated he was sure there was some initial
opposition at the beginning, and there certainly has been numerous
attempts by legislators to remove the provision, but it was part of
the original permanent fund program.
REPRESENTATIVE WILLIS asked if there was any legal reasons for
including the hold-harmless provision in the permanent fund
program, or what was the impetus for including it.
MR. LINDSTROM said he thought the impetus was simply the belief
that the dividend program should benefit all Alaskans. He said the
fact was that if this bill passed, that although welfare recipients
would still receive dividends, they wouldn't see the practical
benefit of it as they would lose eligibility for their other
benefits. He thought it was further recognition that the public
assistance program was based on need. He said it was simply a
matter of equity as to why the program was formed.
Number 622
CHAIR JAMES asked if there was any calculation as to the amount of
federal income tax that the recipient would have to pay on the
permanent fund dividend.
MR. LINDSTROM deferred the question to Kurt Lomas.
MR. LOMAS said there was no such calculation.
CHAIR JAMES verified that recipients were paying the same amount of
income tax as everyone else and the state was not reimbursing them
for this cost.
Number 630
REPRESENTATIVE WILLIS asked if there was a compilation of the
numbers this bill would affect, breaking down various categories
such as senior citizens in Pioneer Homes, disabled veterans, and
other categories of people who were disabled or had special needs.
MR. LOMAS responded that the department didn't have the ability to
do such a breakdown of effected people. He said they did have the
numbers of people who would be affected by categories of public
assistance programs.
CHAIR JAMES asked if that response was because we had a lot of
people on adult public assistance who were not eligible for the
permanent fund dividend.
MR. LOMAS said this was not the case. He said they did not have
that kind of cross-match of data about their caseloads. He pointed
out that people who were in Pioneer Homes were not eligible for
public assistance so were not affected by this legislation.
CHAIR JAMES called for Sherrie Goll to testify.
Number 650
SHERRIE GOLL, ALASKA WOMEN'S LOBBY, said she was there to speak for
the Alaska Women's Lobby, adding their comments to those who had
testified via teleconference. She said they were opposed to this
legislation. She said they had been for many years. She said this
program was part of the original permanent fund program, and almost
every year since 1982, a piece of legislation had been introduced
to repeal the hold-harmless program. She said each previous
legislature had decided not to repeal the program. She said this
would not be a cost saving measure but, in fact, what they were
doing was taking costs that were not general fund costs, but coming
out of the permanent fund, and making a program that will incur
general fund costs of well over $1 million. She said the Lobby
agreed there was a discriminatory side to this bill, in that we
were saying the only people who could benefit from the permanent
fund dividend were the people who could afford to - those people of
moderate to high income. She claimed that a person on public
assistance didn't have the opportunity to save their permanent fund
or use it for pleasure because they weren't allowed to have any
assets such as savings accounts. She said the department had
reviewed how people on public assistance spent their permanent fund
and found that the vast majority of those people were using this
money for their basic needs. She said the Lobby would hope that
the committee would closely consider this bill, and that if it
moved forward, the Finance Committee would consider the
ramifications on the general fund, and try to include all Alaskans
in the benefits of the permanent fund program.
CHAIR JAMES verified there was no one else that wished to testify.
She called for the bill sponsor to come back to the table and
answer committee questions.
Number 692
REPRESENTATIVE PETE KOTT, SPONSOR OF HB 70, commented he wanted to
clarify some misunderstandings about the hold-harmless program. He
said that recipients of public assistance were not, according to
his discussions with the Department of Revenue, required to apply
for the permanent fund. This, he said, would be a determination of
the individual. He thought that most recipients would choose their
benefits over receiving the permanent fund. He said the program
mainly applied to Alaska families with dependent children, adult
public assistance, and the food stamp program. He said it was not
a huge administrative process to place recipients, who were removed
from public assistance due to receiving the permanent fund, back on
to the program. It was simply a matter of hitting a key on the
computer. He commented that he didn't see this bill as
discriminatory, and if it was, we had been discriminating for a
long time in that we urged people to get off of welfare and were
reducing the benefits. He thought these reductions acted as
incentives to cause people to seek employment. He said this
program was not doing what it was intended to do. He said when
this program was first started, we were paying about $6.00 per
dividend check, and because of the growth of welfare recipients in
the state, we were now paying about $40.00 per dividend check. As
a side note, he said this was actually one more attraction to
people from other states to come up here and apply for our
extravagant welfare benefits. He said that additionally, when
someone came up here as a recipient of food stamps, the state gave
them a warrant, cash, and he thought we might actually be paying
for a federal program with state money. He said he would be happy
to answer any questions from the committee.
TAPE 95-4, SIDE A
Number 000
REPRESENTATIVE ROBINSON asked how Representative Kott saw this as
a step in self-sufficiency, in that this only knocks recipients off
for a month and then they are reinstalled in the program. She
understood this might also apply to the child support enforcement
agency; that the repeal of the hold-harmless provision would result
in most aid for dependent children cases becoming ineligible for at
least one month per year, and the child support division would be
required to process each case as a change. She thought this was
another place where they would have to look at the impact. She
said they already knew they had another overburdened system over
there and the state had over $3 million in back income owed to the
children of this state. She said she also understood that under
the housing program, this would be another area where there would
be an adjustment of around 2000 families. She was confused as to
how he really perceived this. She said she saw this as a kind of
temporary knock out of the system. A program she saw with the
welfare reform under President Reagan, would be one that helped
recipients move on. She also noted there was an option on the
permanent fund form for selecting a fund for education, and she
thought by doing this, we would be telling the poorest people in
our state that they didn't have this option. She said she would
encourage Representative Kott to consider amending his bill to
allow recipients of public assistance to keep their permanent fund
if they chose to put it in the education fund option.
REPRESENTATIVE KOTT replied he was sure that in some cases this
wouldn't be helpful to some recipients, who, no matter what you
cut, would not actively go out and seek employment. He said he
thought that when you started to reduce benefits and bonuses, you
encouraged these recipients to go out and actively seek
self-sufficiency. He said in considering education, this could be
a bit of a problem. But when you weighed things out, you had to
ask how many of the recipients who receive public assistance,
actually check off the education option for their permanent fund.
He said he thought it was relatively very few. He said you could
always theorize how these recipients were spending their permanent
fund, but he would submit that after traveling through his
district, they were not using their dividends for basic needs. He
said there was no conclusive support for any one theory.
REPRESENTATIVE ROBINSON said she had a study from the Department of
Health and Social Services dated March 25, 1993, that she would try
and get to the rest of the committee. She said it showed that
public assistance recipients don't spend frivolously. Sixty
percent buy clothing for their children, fifty-eight percent buy
food, forty-four percent buy household goods, and forty percent pay
bills. She said most of their money goes back to stimulating the
economy. She said they might want to check education, but they
were just trying to make ends meet. She also said many of the
recipients were a result of domestic abuse and this was, in many
cases, a temporary situation. She said as the rest of us get the
windfall of the permanent fund, she thought they deserved it also.
CHAIR JAMES asked the department to come back to testify and to
verify whether the parents were required to apply for their
children's dividends, and if they don't, that that child can upon
turning eighteen, go back and apply for their back dividends. She
also asked if it was true that an underage child of a public
assistance recipient who gets any income which is reserved in some
type of trust situation, whether that money is counted as income in
determining the parent's eligibility for public assistance or aid
for families with dependent children.
MR. LOMAS responded he wasn't that knowledgeable in the rules of
the permanent fund, but he could say that no recipient of public
assistance in any program, was required to apply for the permanent
fund. He said he didn't know the rules about a parent who doesn't
apply for the permanent fund on behalf of their minor child.
REPRESENTATIVES PORTER AND GREEN pointed out that Tom Williams,
Director, Permanent Fund Dividend Division, Department of Revenue,
was in the audience.
Number 208
TOM WILLIAMS, DIRECTOR, PERMANENT FUND DIVIDEND DIVISION, ALASKA
DEPARTMENT OF REVENUE, said that any child whose sponsor did not
file for their permanent fund dividend on their behalf, could upon
reaching eighteen years old or the age of majority, apply within
that first year for missed dividends, providing they could show
they had an eligible sponsor during the time period in question.
REPRESENTATIVE ROBINSON asked if all departments impacted could
have their fiscal notes available before they met to discuss this
bill at the next meeting.
CHAIR JAMES verified with Mr. Lindstrom of the Department of Health
and Social Services that it could be ready by the next meeting
scheduled for January 31, 1995.
MR. LINDSTROM replied theirs should be ready by that afternoon, but
he wasn't sure that other departments, such as child support, had
even been notified of the need. He offered to check on this for
the committee.
CHAIR JAMES said she thought that it might be better for
Representative Robinson to consult with the bill sponsor; that as
Chair, she wasn't planning to make it a function of the committee.
She offered to allow Representative Kott, sponsor of the bill, to
make a closing comment before the meeting adjourned.
Number 245
REPRESENTATIVE KOTT closed by saying that he was not privy to the
study that Representative Robinson was referring to, but he would
have to verify the study's integrity and validity before he could
comment on it. He said you could make studies to reflect whatever
you wanted. He said we had plenty of studies sitting on shelves
collecting dust and he would not believe that a recipient who was
asked how they spent their money, would suggest they spent it on
alcohol, drugs, or any other non-essential item. He said he
wouldn't suggest they are, but if they did, he wouldn't believe
they would admit to it. He said he had information which
documented that only 6,500 people statewide chose the option of
funding future education; so there was a very few people who chose
this option, and he would imagine that most of those individuals
were children.
Number 269
CHAIR JAMES announced that the committee would be holding the bill
over to the next meeting on Tuesday, January 31, 1995. She
mentioned there were two bills on the agenda, HB 81 and HJR 3,
which they hadn't gotten to discuss and those would be rescheduled
for the next meeting as well.
ADJOURNMENT
CHAIR JAMES adjourned the meeting at 10:00 a.m.
| Document Name | Date/Time | Subjects |
|---|