01/26/2006 08:00 AM House STATE AFFAIRS
| Audio | Topic |
|---|---|
| Start | |
| HB349 | |
| HB273 | |
| Confirmation Hearing(s): || Commissioner, Department of Administration | |
| Lieutenant Governor Designee | |
| Alaska Public Offices Commission (apoc) | |
| HB278 | |
| Adjourn |
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HB 349 | TELECONFERENCED | |
| += | HB 273 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| = | HB 278 | ||
ALASKA STATE LEGISLATURE
HOUSE STATE AFFAIRS STANDING COMMITTEE
January 26, 2006
8:05 a.m.
MEMBERS PRESENT
Representative Paul Seaton, Chair
Representative Carl Gatto, Vice Chair
Representative Jim Elkins
Representative Bob Lynn
Representative Jay Ramras
Representative Berta Gardner
Representative Max Gruenberg
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
HOUSE BILL NO. 349
"An Act relating to legislator salary and benefits; establishing
the Citizens' Commission on Legislative Salary and Benefits and
defining its powers and duties and abolishing the State Officers
Compensation Commission; and providing for an effective date by
repealing secs. 9 and 12, ch. 124, SLA 1986."
- HEARD AND HELD
HOUSE BILL NO. 273
"An Act relating to the dividends of individuals claiming
allowable absences; and providing for an effective date."
- MOVED CSHB 273(STA) OUT OF COMMITTEE
CONFIRMATION HEARINGS(S)
Commissioner, Department of Administration
Scott J. Nordstrand - Juneau
- CONFIRMATION ADVANCED
Lieutenant Governor Designee
William A. Corbus - Juneau
- CONFIRMATION ADVANCED
Alaska Public Offices Commission (APOC)
William Walters - Fairbanks
- CONFIRMATION ADVANCED
HOUSE BILL NO. 278
"An Act relating to the Alaska Municipal Bond Bank Authority;
permitting the Alaska Municipal Bond Bank Authority or a
subsidiary of the authority to assist state and municipal
governmental employers by issuing bonds and other commercial
paper to enable the governmental employers to prepay all or a
portion of the governmental employers' shares of the unfunded
accrued actuarial liabilities of retirement systems and
authorizing governmental employers to contract with and to issue
bonds, notes, or commercial paper to the authority or its
subsidiary corporation for that purpose; and providing for an
effective date."
- MOVED HB 278 OUT OF COMMITTEE
PREVIOUS COMMITTEE ACTION
BILL: HB 349
SHORT TITLE: COMMISSION ON LEG. COMP. & ALLOWANCES
SPONSOR(s): REPRESENTATIVE(s) WEYHRAUCH
01/09/06 (H) PREFILE RELEASED 1/6/06
01/09/06 (H) READ THE FIRST TIME - REFERRALS
01/09/06 (H) STA, FIN
01/26/06 (H) STA AT 8:00 AM CAPITOL 106
BILL: HB 273
SHORT TITLE: PFD: DELAY PAYMENT FOR ALLOWABLE ABSENCES
SPONSOR(s): REPRESENTATIVE(s) WEYHRAUCH
04/18/05 (H) READ THE FIRST TIME - REFERRALS
04/18/05 (H) STA, FIN
05/05/05 (H) STA AT 8:00 AM CAPITOL 106
05/05/05 (H) Heard & Held
05/05/05 (H) MINUTE(STA)
01/12/06 (H) STA AT 8:00 AM CAPITOL 106
01/12/06 (H) Scheduled But Not Heard
01/17/06 (H) STA AT 8:00 AM CAPITOL 106
01/17/06 (H) Heard & Held
01/17/06 (H) MINUTE(STA)
01/19/06 (H) STA AT 8:00 AM CAPITOL 106
01/19/06 (H) Heard & Held
01/19/06 (H) MINUTE(STA)
01/26/06 (H) STA AT 8:00 AM CAPITOL 106
BILL: HB 278
SHORT TITLE: RETIREMENT SYSTEM BONDS
SPONSOR(s): REPRESENTATIVE(s) HAWKER
04/19/05 (H) READ THE FIRST TIME - REFERRALS
04/19/05 (H) STA, FIN
01/12/06 (H) STA AT 8:00 AM CAPITOL 106
01/12/06 (H) Heard & Held
01/12/06 (H) MINUTE(STA)
01/17/06 (H) STA AT 8:00 AM CAPITOL 106
01/17/06 (H) Heard & Held
01/17/06 (H) MINUTE(STA)
01/19/06 (H) STA AT 8:00 AM CAPITOL 106
01/19/06 (H) Heard & Held
01/19/06 (H) MINUTE(STA)
01/24/06 (H) STA AT 8:00 AM CAPITOL 106
01/24/06 (H) Heard & Held
01/24/06 (H) MINUTE(STA)
01/26/06 (H) STA AT 8:00 AM CAPITOL 106
WITNESS REGISTER
REPRESENTATIVE BRUCE WEYHRAUCH
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Introduced HB 349, as sponsor; testified
during the hearing on HB 273, as sponsor.
JACQUELINE TUPOU, Staff
to Representative Bruce Weyhrauch
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: On behalf of Representative Weyhrauch,
sponsor, reviewed the changes made in Version L of HB 349.
CHRIS POAG, Assistant Attorney General (AG)
Civil Division
Department of Law
Juneau, Alaska
POSITION STATEMENT: Answered questions during the hearing on HB
273.
SHARON BARTON, Director
Permanent Fund Dividend Division
Department of Revenue
Juneau, Alaska
POSITION STATEMENT: Answered questions during the hearing on HB
273.
MARY LOU KELSEY
Homer, Alaska
POSITION STATEMENT: Testified on behalf of herself in
opposition to HB 273.
TRACIE L. BROWN
Homer, Alaska
POSITION STATEMENT: Testified on behalf of herself during the
hearing on HB 273.
MIKE MILLIGAN
Kodiak, Alaska
POSITION STATEMENT: Testified on behalf of himself during the
hearing on HB 273.
REPRESENTATIVE MIKE HAWKER
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Testified as sponsor of HB 278.
ACTION NARRATIVE
CHAIR PAUL SEATON called the House State Affairs Standing
Committee meeting to order at 8:05:58 AM. Representatives
Gatto, Elkins, Lynn, Gardner, and Seaton were present at the
call to order. Representatives Ramras and Gruenberg arrived as
the meeting was in progress.
HB 349-COMMISSION ON LEG. COMP. & ALLOWANCES
CHAIR SEATON announced that the first order of business was
HOUSE BILL NO. 349, "An Act relating to legislator salary and
benefits; establishing the Citizens' Commission on Legislative
Salary and Benefits and defining its powers and duties and
abolishing the State Officers Compensation Commission; and
providing for an effective date by repealing secs. 9 and 12, ch.
124, SLA 1986."
8:06:50 AM
REPRESENTATIVE BRUCE WEYHRAUCH, Alaska State Legislature,
introduced HB 349, as sponsor. He paraphrased part of his
sponsor statement [included in the committee packet], which
read:
House Bill 349 creates a commission that will make
recommendations regarding legislative pay. It does
not raise salaries of legislators, but does provide an
increase for the Speaker of the House and President of
the Senate from $500 per year to $500 per month.
REPRESENTATIVE WEYHRAUCH indicated which version of the bill he
would like the committee to work with.
8:08:50 AM
REPRESENTATIVE LYNN moved to adopt committee substitute (CS) for
HB 349, Version 24-LS1391\L, Wayne, 1/25/06, as a work draft.
There being no objection, Version L was before the committee.
8:09:41 AM
JACQUELINE TUPOU, Staff to Representative Bruce Weyhrauch,
Alaska State Legislature, on behalf of Representative Weyhrauch,
sponsor, reviewed the changes made in Version L of HB 349. She
said most of the changes were just a matter of semantics and
logistical problems. One substantive change was to the
timeframe of the bill, making it "a little more indefinite."
She said that will allow the commission to flesh out what it
wants its process to be.
8:10:30 AM
REPRESENTATIVE GARDNER said until HB 349, she wasn't aware that
current statute already provides a commission to review
legislative salaries, and that that commission includes a
business executive, a representative from a nonpartisan voters'
organization, a person with public administration experience,
and a representative of a labor organization appointed by the
governor and confirmed by the legislature. Under the new plan,
she noted, the members of the commission would be appointed by
the President of the Senate and the [Speaker] of the House and
there would be no provision to have those appointees confirmed
by the legislature. She stated that she is uncomfortable with
potentially removing all public participation.
8:11:18 AM
MS. TUPOU explained that the legislature currently has the power
to set its own pay and can't delegate that to someone else;
therefore, "for that citizens' commission currently on the
statutes book to be implemented there would have to be a
constitutional change."
8:12:03 AM
REPRESENTATIVE WEYHRAUCH noted that attorneys said delegating
the authority to set legislative pay to the executive branch
seems to a cause a problem between separation of powers.
Regarding Representative Gardner's concern about public notice,
he said, "... You can bet that if the legislature's going to
raise its pay, there better be a public process or there'll be
heck to pay from the public."
REPRESENTATIVE GARDNER stated for clarification, "That's not in
this bill; that's a decision that could be made down the road
one way or the other ...."
8:13:12 AM
MS. TUPOU directed attention to page 4, beginning on line 5 of
Version L, which read:
The commission shall give reasonable public notice of
its preliminary findings and recommendations, solicit
public comments, and give due regard to the public
comments, before submitting a final report under (d)
of this section.
8:13:26 AM
REPRESENTATIVE GARDNER said, "I'll stand corrected."
8:13:32 AM
REPRESENTATIVE LYNN asked if there is anything in the bill that
relates to "office allowance." He said that has not been
changed for several years.
8:13:46 AM
REPRESENTATIVE WEYHRAUCH replied, "No, that per diem - none of
that - is addressed. All this does is set a salary."
MS. TUPOU, in response to a comment by Representative Weyhrauch,
noted that legislators are currently paid at a range 7.
REPRESENTATIVE WEYHRAUCH surmised, "Per diem, I suppose, as part
of ... pay to a legislator would be considered, but that's up to
the commission and the legislature. All this does is really set
up the mechanism for determining all this."
8:14:41 AM
REPRESENTATIVE LYNN concluded, "So, ... they could look at
office lounge, or per diem, or anything else."
8:14:54 AM
REPRESENTATIVE WEYHRAUCH said, "There's no restriction on what
they would look at."
8:15:08 AM
MS. TUPOU, in response to a follow-up question from
Representative Lynn, surmised that a legislative page is paid at
least at a Range 10.
8:15:35 AM
REPRESENTATIVE GATTO said, "Separate from this group is the
$500. My first impression is ... we're making a decision on
just two members. Wouldn't the committee be a better group to
make the determination of $500, whether it's a month or a year
...?"
8:16:05 AM
REPRESENTATIVE WEYHRAUCH responded as follows:
When I read through the statute in preparing for the
bill, I saw that those positions were already
segregated out, and it already said "$500 per year"
for the [Senate] President and the Speaker [of the
House]. And so, ... just in the process of drafting
the bill ... with the drafter, I said, "Well, change
the ... word 'year' to 'month'." So, the statute had
already segregated those offices out and ... I don't
remember the year that that was implemented - decades
ago. And again, just knowing how much work the
Speaker [of the House] and the [Senate] President do
throughout the year, every day, I just thought $500
per month, ... even that, seemed (indisc.) compared to
the workload.
8:16:50 AM
MS. TUPOU noted that the Alaska State Constitution shows that
segregation.
8:17:10 AM
REPRESENTATIVE GATTO asked if Legislative Council is currently
authorized to change "our salary."
8:17:24 AM
MS. TUPOU responded that the legislative body, as a whole, has
the authority to set their own pay.
8:17:46 AM
MS. TUPOU, in response to a follow-up question from
Representative Gatto, said HB 349 provides that the commission
would release [its preliminary findings]. Ninety days from the
release date, if Legislative Council does not take any action,
the report of those preliminary findings would be adopted in the
policies therein by Legislative Council.
8:18:07 AM
REPRESENTATIVE GARDNER stated her concern regarding the lack of
public process. Even though the language, as previously
discussed, would require the commission to report to Legislative
Council, the language on page 4, line 17, shows that Legislative
Council "may publish the final report". She emphasized the word
"may" and said it makes her a little uncomfortable that there
would be no requirement that the report be made available to the
public.
MS. TUPOU surmised that the reason for the use of the permissive
"may" is because the commission would have already printed a
report and distributed it to the public. If Legislative Council
doesn't make any changes, she suggested, it would be redundant
to publish the report again.
8:19:38 AM
REPRESENTATIVE GARDNER asked, "If [Legislative] Council doesn't
act, and the recommendations become public, then there isn't
necessarily any report or announcement of that. Is that
correct?"
8:19:58 AM
MS. TUPOU replied, "Not past the commission's report." She
explained that if Legislative Council accepts the report from
the commission by doing nothing, then that becomes "the report"
at that point.
8:20:37 AM
MS. TUPOU, in response to a request for clarification from Chair
Seaton, said the language in the bill regarding public notice
[is on page 4, lines 5-8] and follows the previously noted
language about the commission's preliminary findings. She
reiterated that if Legislative Council does nothing, the final
report that was provided by the commission becomes policy.
8:21:30 AM
CHAIR SEATON pointed out that there is nothing in the language
that says the final report is given to the public. He remarked
that the final report could be significantly different than the
preliminary report. He asked, "Was it the intent to not make
that public?"
8:22:02 AM
REPRESENTATIVE WEYHRAUCH suggested the concern stated by both
Representative Gardner and Chair Seaton is in reference to the
use of the word "may" on page 4, line 17. He mentioned changing
"may" to "shall" to ensure that the report is made public. He
said there is no desire to pull the wool over anyone's eyes. He
added, "Ultimately the truth will out." He asked if the
committee would like a conceptual amendment to change "may" to
"shall".
8:22:57 AM
CHAIR SEATON answered in the affirmative. He said the committee
would probably offer a conceptual amendment to require that the
final report be sent to Legislative Council and to the public.
8:23:16 AM
REPRESENTATIVE GRUENBERG mentioned the "Madison amendment,"
which he said provided that U.S. Congress may not raise its own
salary. He explained that this means no salary increase can
become effective until after the next Congress convenes. He
said when he served [in the legislature] in the past, he
introduced a ratification of the Madison Amendment, which was
not adopted. He stated he thinks it would be a good idea to add
that provision to HB 349. He clarified that the language would
provide that no legislative pay raise can become effective until
after the next election. That way, he said, people will have a
chance to vote "if they don't like the way this is going to take
place."
8:24:44 AM
REPRESENTATIVE WEYHRAUCH stated that he is not in favor of
adding that language at this point, but would like to have a
chance to consider that issue separately.
8:25:11 AM
CHAIR SEATON clarified that no amendments had been made yet and
won't be until after public testimony has been taken.
8:25:38 AM
REPRESENTATIVE GARDNER turned to [the last sentence] of Section
13 [on page 4], which read as follows:
Any part of the commission's report not rejected or
amended by the Alaska Legislative Council and any
amendment to the report made by the Alaska Legislative
Council under AS 24.10.130 take effect on the first
day of the first full month following the last day of
the legislative session in which the final report is
issued or the amendment is passed.
REPRESENTATIVE GARDNER asked if that means that if the
commission recommends that legislators are paid $100,000, for
example, and Legislative Council amends that to $120,000, that
would automatically become law without any other review, debate,
or discussion.
8:26:10 AM
MS. TUPOU suggested that Mr. Wayne, the attorney who drafted the
bill, would be better suited to answer questions regarding
wording.
8:27:14 AM
CHAIR WEYHRAUCH, in response to follow-up questions from
Representative Gardner, reiterated that there is no intent to
"sneak one past anyone," and he would not object to a conceptual
amendment that would include some sort of discussion or review
"by somebody else."
8:27:56 AM
MS. TUPOU said it's important to note that the legislature has
the power to set its own pay and cannot delegate that job to
someone else. She said, "... What we've tried to do is put the
public in the process, because they currently aren't."
8:28:12 AM
REPRESENTATIVE WEYHRAUCH recognized that unfortunately many
amendments are adopted without any public comment or testimony
whatsoever and become law without people knowing the effect or
meaning of them.
8:28:30 AM
CHAIR SEATON directed attention to Section 8 of Version L, which
read as follows:
*Sec.8.AS 39.23.210 is amended to read:
A member of the commission shall meet the
qualifications of AS 39.05.100 and may not be employed
by the state, including the University of Alaska,
serve as a member of another state board, commission,
or authority, or hold elective state or municipal
office during membership on the commission.
CHAIR SEATON indicated that that language shows a significant
change in the bill.
8:29:48 AM
REPRESENTATIVE GRUENBERG directed attention to page 4, line 19
and said potentially [the commission] could give the report five
days before the end of the session without giving anyone a
chance for anyone to do anything, and it would take effect
immediately. He questioned why the phrase, "[DURING THE FIRST
10 DAYS OF A LEGISLATIVE SESSION]" was deleted.
8:30:46 AM
REPRESENTATIVE WEYHRAUCH said he views that decision as "wanting
to give some more leeway to both the legislature and the
commission in reporting, as opposed to restricting it to
providing it within the first 10 or 15 days and [putting] some
arbitrary number on it."
8:31:20 AM
REPRESENTATIVE GRUENBERG said he thinks it would do just the
opposite. He explained that that effective date would remain
the same, which would be after session ended. By allowing the
report to be given later, less time is being given for public
scrutiny, he said.
8:31:50 AM
REPRESENTATIVE WEYHRAUCH said he thought 15 days would be too
restrictive.
8:32:07 AM
MS. TUPOU pointed out that if Legislative Council does not take
action, there would always be a 90-day review period "before it
would take effect." In response to request a from
Representative Gruenberg, she offered to find where that
language is in the bill.
8:33:01 AM
CHAIR SEATON said he wanted to clarify that the report published
by Legislative Council would be the final report issued.
8:33:16 AM
REPRESENTATIVE WEYHRAUCH added that Legislative Council serves
as a conduit for the commission's report. In response to Chair
Seaton, he confirmed that the dates that are being discussed are
in regard to the issuance of the Legislative Council report.
8:33:41 AM
REPRESENTATIVE GRUENBERG said the only reference to "90 days"
that he could find in the bill is on page 5, line 24. He stated
that lots of commissions make their reports on the first day of
the session. He asked the sponsor to consider that, and said he
would be inclined to offer such an amendment.
8:34:33 AM
REPRESENTATIVE GATTO turned to page 4, line 22, and suggested
the word "take" should have an "s" at the end.
8:35:11 AM
CHAIR SEATON, after ascertaining that there was no one to
testify, closed public testimony.
CHAIR SEATON announced that HB 349 was heard and held.
HB 273-PFD: DELAY PAYMENT FOR ALLOWABLE ABSENCES
8:35:58 AM
CHAIR SEATON announced that the next order of business was HOUSE
BILL NO. 273, "An Act relating to the dividends of individuals
claiming allowable absences; and providing for an effective
date."
[Before the committee was CSHB 273, Version 24-LS0871\G, Cook,
5/3/05.]
8:36:18 AM
REPRESENTATIVE BRUCE WEYHRAUCH, Alaska State Legislature, as
sponsor of HB 273, stated his concern regarding the legal
implications of allowing stair-stepping exemptions, for example.
He said he spoke with the director of the Permanent Fund
Dividend Division and the Office of the Attorney General and
suggested representatives from those entities present feedback
to the committee.
8:38:31 AM
CHRIS POAG, Assistant Attorney General (AG), Civil Division,
Department of Law, said he has been attending hearings on the
bill and heard discussion on amendments, some of which raise
equal protection concerns. He mentioned an amendment idea from
Representative Gardner that he said would not be a problem. He
mentioned an amendment idea by Representative Lynn that would
exempt out the allowable absences of the military. He said
given the statistics he has seen, he has a problem with treating
that class separately.
8:39:45 AM
CHAIR SEATON clarified that the committee had adopted an
amendment that would let anyone with an allowable absence
receive his/her permanent fund dividend (PFD) for the first two
years and after that it would be held until the person returned
to Alaska. He said that applied to all classes of allowable
absences. He asked Mr. Poag to confirm that that amendment is
the one he did not think would raise a constitutional problem.
8:40:09 AM
MR. POAG responded that the amendment does not pose a problem
"on the face of it." He said there is a common sense approach
that the longer a person is gone, the less likely he/she is to
return. He said, "Representative Gardner's amendment seems to
adopt that common sense approach, and as long as it applies to
all categories, it doesn't raise the protection concern."
8:40:57 AM
CHAIR SEATON asked what the impact of the amendments that raised
the problems of equal protection would have on "the program."
8:41:19 AM
MR. POAG responded as follows:
Well, I suspect ... we would have an individual who
would apply for a permanent fund dividend on one of
these allowable absence categories. They'd be denied
the dividend, and they would appeal, and they would
allege that they're being treated disparately from a
specific group - the military - and that they should
also have been given the exemption that the military
was given.
MR. POAG noted that military and students statistically have
about the same rate of return; approximately 65 percent do not
return. So, if a student were to challenge that in court by
arguing the statistics, inevitably [the State of Alaska] would
end up before the [Alaska] Supreme Court trying to justify why
it treated one category differently than another. Mr. Poag said
his concern was that the exemption for military seemed to be
based on need; however, the provision for allowable absences is
really designed to say that if a person is not physically
present in Alaska during the qualifying year, that person's
absence has to be consistent with his/her intent to return. He
clarified, "Exempting a group based on their need to receive the
PFD is inconsistent with the purpose of ensuring that they're
permanent residents."
8:42:55 AM
CHAIR SEATON said he has heard that "those kind of cases" might
result in other problems concerning the Internal Revenue Service
(IRS) and taxability.
8:43:09 AM
MR. POAG said he hasn't heard any testimony regarding IRS
qualifications or disqualifications.
8:43:42 AM
SHARON BARTON, Director, Permanent Fund Dividend Division,
Department of Revenue, in response to a question from
Representative Gruenberg regarding a survey the committee had
requested on allowable absences, said she could offer some
information verbally, but the job ended up being a bigger one
than anticipated, thus the written report is still not "polished
up." She said information was also requested regarding return
trends. At end of ten years, the percentage of people who do
not return to Alaska in the following categories was found to
be: Secondary school, 67 percent; Caring for the terminally
ill, 38 percent; merchant marines, 50 percent; settling an
estate, 33 percent; and caring for a family member, 43 percent.
In response to Representative Gruenberg, she said those are the
primary categories. She said there is a congressional staff
category, and the data shows that about 50 percent of them have
not returned after 10 years. She added, however, that some of
those people are still in office.
8:46:25 AM
REPRESENTATIVE GRUENBERG observed that the accompanying
dependents, active military, secondary schools, and students,
are "far and away higher than the other categories in not
returning."
8:47:32 AM
MS. BARTON confirmed that's correct.
8:47:38 AM
REPRESENTATIVE GRUENBERG asked, "If we looked at those
categories as presenting a much higher statistical rate of
nonreturn and [treated] those differently from the other
categories, would that be legally defensible?"
8:48:14 AM
MR. POAG said if the committee decides to treat allowable
absences differently based upon statistics, then he strongly
agrees with Representative Gruenberg's suggestion [at the
previous hearing] to have legislative findings and purposes.
However, if allowable absences will be treated equally across
the board, there would be less of a need for those legislative
purposes and findings. He continued:
The allowable absence categories go to the heart of
whether or not the person applying for the permanent
fund dividend is an Alaska resident. Alaska residency
is physical presence with the intent to remain
indefinitely. It also is, if you're not physically
present, your intent to return and remain
indefinitely. ... One of the objective areas we look
at is: Is your absence consistent with your intent to
return? Those 13 allowable absence categories that
you all have adopted in this statutory section are a
legislative finding that we believe ... their absence
is consistent with their intent to return. ... You
folks probably did that based on common sense approach
and also looking at the need - the reason why they
were gone. It almost seemed that it was beyond their
control.
... We've now discovered, statistically, that a good
portion of those folks aren't returning like we had
probably presumed they were. However, you folks get
the ability to draw the line in the sand to say when
it is that there rate of return is too low ... to say
that it's palatable - that they are likely to remain
Alaska residents. In other words, "Is their absence
truly consistent with their intent to return?"
MR. POAG said he thinks that's a policy call. He said he thinks
Representative Gruenberg is absolutely correct that a person's
case will be better in front of whatever court if the
statistical evidence is higher. He offered further details. He
said, "You folks get to draw that conclusion as to what is the
amount of rate of return that is palatable ...." He said the
[Alaska] Supreme Court has said that the legislature has given
[the Permanent Fund Dividend Division] broad discretion to
decide who are permanent Alaska residents. He continued:
We've gotten great rulings from them, and if this body
... makes findings that 10 percent is just not
acceptable, I think the supreme court would probably
acknowledge that. However, clearly I feel on better
ground standing before the supreme court if it's 60-70
percent of nonreturn rates.
8:51:52 AM
REPRESENTATIVE GATTO offered an example of two people leaving
for school, one born in Alaska and the other a two-year
resident, and he asked if the rate of return is different.
MR. POAG said he doesn't know the statistical answer to that;
however, based on statute, both those people are considered
Alaska residents and have to be treated the same.
8:52:59 AM
MS. BARTON confirmed that that information had not been broken
down in that manner.
8:53:22 AM
REPRESENTATIVE GARDNER said she would like to know how the
probability of return changes for each class after two years.
8:53:33 AM
MS. BARTON said currently the trend looks like most people from
the military and "accompanying groups" don't come back after the
first year, and by five years most have dropped off the radar
screen. She said it is a little bit different with students.
More students that leave for one to two years tend to come back
to the state than not. Once the students stay Outside for three
or more years, most of them don't come back. The other groups
are so small, Ms. Barton said, that making generalities about
them is difficult. Notwithstanding that, she said, "They too
appear that if they don't come back in the first year or two,
they don't come back."
8:54:54 AM
REPRESENTATIVE GRUENBERG expressed his appreciation of the
answers from the witnesses. Regarding Representative Gatto's
previously stated question regarding whether a person who is
born here is treated differently than a person who has come to
the state for only a few years, he suggested that that sort of
analysis may run afoul of a certain supreme court decision.
8:55:39 AM
MR. POAG responded:
We'd be on thin ice. ... It depends on how that
legislation was crafted and it would depend on what
the statistical evidence showed. If we're ...
creating allowable absence categories because we've
discovered that certain folks who are absent are more
likely to return than other folks, I think maybe we
would be okay; but if we attempt in any way, shape, or
form to ... create classes of permanent Alaska
residents, we're definitely in trouble. We cannot do
that. Once you meet the standard of the PFD
eligibility, you have to be treated just as everybody
else, whether you need the PFD, whether you don't need
the PFD, whether you came here two years ago, or
whether you've been here for 25 years. You're an
Alaska resident for purpose of the PFD and you get it.
However, ... if we are talking about categories of
folks who we have evidence to show that they're more
likely to return than other categories, that's the
heart and spirit of what the allowable absence and
exceptions are. They're bright line rules that make
it administratively practical for Director Barton's
division to say, "These 12 categories get to be absent
because we've decided they're likely to return; the
rest of you can only be absent for up to 180 days, and
you're absence also needs to be consistent with your
intent to return. So, I think those bright line rules
are allowable, but I think there would have to be
pretty strong statistical evidence to treat different
categories of Alaska residents differently. And ... I
think there would have to be a lot more on the record
than there is today.
8:57:27 AM
REPRESENTATIVE GRUENBERG said it would be dangerous not to treat
the statistically similar categories the same.
8:58:52 AM
MR. POAG emphasized his agreement. He said, "If we have
statistical evidence that these five categories are not likely
to return and statistical evidence that these three categories
are likely to return, we should follow that statistical evidence
and treat them accordingly."
8:58:59 AM
REPRESENTATIVE GRUENBERG noted that the committee had not
received the statistics regarding secondary education students.
8:59:21 AM
MS. BARTON mentioned other data she has begun to compile.
9:01:20 AM
CHAIR SEATON, in response to the discussion about data, said,
"The whole purpose of this discussion is to make sure we treat
everybody equally." He indicated that [focusing on the data
could result in] the committee getting far off its objective of
ensuring that "the permanent fund reflects Alaska residency."
He stated:
We have to remember that under this program, as
proposed in the bill, everyone has the opportunity to
qualify for allowable absences and everyone has the
opportunity to return. And that these are choices
that those people make not to return to Alaska, in
every category. And so, people can simply qualify for
their allowable absence permanent fund dividend by
doing exactly what they're certifying, and that is
[by] returning to Alaska at the end of that allowable
absence. And so, personally, as the chairman, I'm not
going to support it, and I hope the rest of the
committee doesn't get into trying to parse difference
between people on allowable absences ....
9:03:27 AM
REPRESENTATIVE WEYHRAUCH said he appreciates Chair Seaton's
comments. He remarked that the bill is based upon an idea that
Chair Seaton articulated last year.
9:03:55 AM
REPRESENTATIVE GRUENBERG commented that he put his name on the
bill because he was concerned that lots of people were abusing
the system.
9:04:20 AM
REPRESENTATIVE GATTO noted that some college students have to go
Outside because a line of study is not offered in Alaska. He
said students may make financial and career decisions based on
an assumption that was in place at the time of the decision. He
stated his concern that those students could come back and sue
the state because the parameters were changed mid course. He
asked if that could be a legitimate argument.
9:05:46 AM
MR. POAG said they could make the claim, but his response would
be that the PFD is a statutory devise and not a vested property
right; a person only gets one if he/she qualifies on an annual
basis. He said the supreme court has said this, as well. He
noted that any changes effected to the PFD today would be for
next year's PFD and would not affect "the PFD they're applying
for now."
9:06:31 AM
REPRESENTATIVE WEYHRAUCH said students could choose to drop
their Alaska residency and become a resident of the state in
which they attend school and, doing so, would receive instate
tuition, which he said is of far greater value than the PFD.
9:07:17 AM
MR. POAG told Representative Gatto that those students who may
be counting on receiving a PFD would get one, they would just
get it when they returned to the state.
9:07:22 AM
CHAIR SEATON reminded Representative Gatto that the students on
allowable absences would get their PFD for the first two years,
after which time it would be held.
9:07:31 AM
REPRESENTATIVE GATTO said he was thinking about the Longevity
Bonus [which Alaska seniors received until the program was
ended]. He indicated that [the seniors] had an expectation in
that case, and asked, "Has that ever been challenged and
defeated, or has it simply never been challenge?"
9:07:35 AM
MR. POAG said he has never participated in "giving legal advise
to the Longevity Bonus fund" and is not familiar with that
program.
REPRESENTATIVE WEYHRAUCH proffered, "The case, as I understand
it, was dismissed as summary judgment grounds as legislative
policy and has not appealed to the supreme court ...."
9:08:58 AM
MR. POAG, in response to a suggestion from Representative
Gruenberg, said currently a person is only allowed to qualify
for allowable absences for 10 years. He said the legislature
needs to make a policy decision based on the statistical
evidence that it is acceptable for those on an allowable absence
to be gone "with 10, or 20, or 30 percent rates of return." He
said, "I don't know if it's any more defensible." He continued:
I guess if I had to choose one of the two options for
defense purposes, I would think a three-, or a five-,
or six-year ... cut-off would be easier to defend than
a series of categories and exceptions, because groups
are always going to say, "Well, what about me, how
come there's not a category for me?" And then one
category may say, "Well, why are they getting treated
this way and I'm not getting treated this way?
REPRESENTATIVE GRUENBERG noted that the legislature constantly
sees people requesting to add new categories to allowable
absences. He concluded that if the cut-off time were changed to
five years, "that would be defensible," easier for the Permanent
Fund Dividend Division to manage, and would probably result in
less lawsuits in the long run.
9:10:48 AM
CHAIR SEATON, in response to Representative Gruenberg and
comments from Mr. Poag, said the latter was discussing current
statute.
9:11:11 AM
MR. POAG, in response to a request from Representative Gruenberg
for overall clarification, said current statute provides that a
person may get an allowable absence for up to 10 years, no more.
The bill would broaden that language and allow someone an
allowable absence for up to 10 years, after which the person's
eligibility would be conditioned upon his/her return. He stated
that Version G, assuming it "has Representative Gardner's
provision in it," would provide that allowable absence
categories get the PFD for the first two years, after which
their eligibility is conditioned upon their return and their
being present in the state without an allowable absence
necessary. At that point, he said, those people would be
eligible for the PFDs that had been held back.
9:12:53 AM
CHAIR SEATON reopened public testimony only for those who had
not had a chance to testify already.
9:12:58 AM
MARY LOU KELSEY testified on behalf of herself in opposition to
HB 273. She stated that students are Alaska residents, even
while studying Outside; they live and work in Alaska when out of
school and pay out of state tuition. She asked the committee
not to penalize these students by denying and delaying their
PFDs, which are greatly needed for current college costs. By
delaying payment of the PFD, she opined, the legislature is
punishing those Alaska residents just because they are students.
She said it is a hardship on families. She asked the committee
to give these students equal protection and not terminate their
constitutional rights based on arbitrary guesses about their
intent to return, but rather to pursue those who are really
committing fraud concerning the PFD.
9:14:29 AM
TRACIE L. BROWN, testifying on behalf of herself, said her son
is currently a college student paying out-of-state tuition. She
concurred with the previous testimony of Ms. Kelsey. She said
she feels that "this bill arose from the insinuation of fraud,"
which she said is insulting. She said her son spends the summer
session at home, working in Alaska. She indicated that asking
students to commit to living in Alaska is a double standard.
She explained by asking, out of the entire population of
Alaskans living in state who are receiving their PFDs, how many
would still be residents in 10 years.
9:16:54 AM
REPRESENTATIVE RAMRAS told Ms. Brown that he is sensitive to her
situation, but asked her to answer the following question:
If this legislation were enacted and your son's
permanent fund [dividend] was held until he returned
to Alaska, what would his life be like four years from
now if, when he came home from college, he was the
beneficiary of the four permanent funds ...? Wouldn't
that ... be of some value unto itself that he would
have a nest egg?
[AN UNIDENTIFIED PERSON uttered a remark that was heard via the
Legislative Information Office (LIO) teleconference system, but
was not intended for public record.]
9:18:12 AM
MS. BROWN, after emphasizing that the remark of the unidentified
speaker was not her own response, stated that what
Representative Ramras said seems valid - it seems like it would
be a positive thing for her son to get a chunk of money upon his
return. However, she stressed her son's need is to receive the
money now.
9:19:02 AM
REPRESENTATIVE RAMRAS clarified that his question is not about
what is lost by surrendering the permanent fund [dividend] each
year. He said he wants to know "what benefit would be derived
from college students or military whose permanent [fund
dividends] are held until they do return." He said it wouldn't
be money lost forever, but rather money held until their return
to Alaska.
9:19:39 AM
MS. BROWN said it would be the same as if her own PFD had been
held and she was given a lump sum every four years, rather than
receiving the PFD every year. She stated, "There's no time in
our life that our money is more valuable to us than those
college days." She asked Representative Ramras if that answered
his question.
9:20:20 AM
REPRESENTATIVE RAMRAS replied, "No, it did not, but I thank you
anyway."
9:21:17 AM
MIKE MILLIGAN, testifying on behalf of himself, said the PFD was
never meant to be an entitlement, but rather a way to keep
Alaska's money in the hands of Alaskans versus in the hands of
government. He said the children [of the previous testifiers]
are not being punished if they don't get their PFD checks, "they
would be punished if they ... [had] to pay a fee." He revealed
that he is the parent of three students in Alaska - two in state
and one out of state. The one who is going to school Outside is
in her second year of [doctoral] school and "she doesn't claim a
residency."
MR. MILLIGAN focused on who is being punished. He stated,
"There's no group of Alaskans more punished under current tax
code and our PFD-awarding scenario than people who own property
in Alaska and pay tax on that property. He said Alaskans have
not been asked to be citizens of the state by paying an income
tax. He mentioned a bill by former House Representative
Jeannette James, which proposed a property tax exemption from
state income tax and "hobbled that to a PFD application." He
questioned how many people would be willing to "drop $100 during
the PFD application in order to get $700 or $900 in the fall."
MR. MILLIGAN stated that he thinks HB 273 is a courageous
proposal. He recalled hearing that approximately 17,000 people
"get a check Outside." He indicated that the bill has a
positive benefit of educating the public. He said he thinks
it's time to ask who is being rewarded on the state's tax policy
and whom the state wants to reward. He predicted everyone would
want to sign up for a private account to be managed by the
government. He added, "Everybody would sign up for that, and
they could still leave after a certain amount of time." He
concluded, "I applaud the debate, but I think it's time to look
at possibly [an] absolute small half a percent of your federal
income tax ... hobble that to a PFD application."
9:25:19 AM
CHAIR SEATON closed public testimony.
9:25:41 AM
REPRESENTATIVE GATTO regarding Representative Ramras' previous
question about receiving a nest egg, said:
I think the correct answer to that is: if a person is
Outside on an allowable absence in a school and does
not receive their permanent fund dividend, they've
simply raised their debt on their Outside costs. I
don't believe that the people who are attending school
Outside, by and large, have all the money they need to
do that. I think they engage in debt. The nest egg
that would be here would simply not be a nest egg as
much as it would be a way to pay off the debt. But it
would also be interest-free, while the debt would have
... interest. So, in the end, I believe the woman who
was testifying is indicating there is a net loss to a
student doing that.
9:26:38 AM
REPRESENTATIVE RAMRAS interpreted that a lot of the testimony
that has been heard on HB 273 suggests that "once you lose your
permanent fund [dividend] it goes away forever." He said it's
not a net loss bill. When a student comes back to Alaska, he
said, he/she is made "almost whole." He said [Ms. Barton]
manages a small group of people that work hard and many of the
questions being asked are difficult to answer. He provided an
analogy of going through security at an airport even if a person
is not a terrorist, and he explained that he is an advocate of
setting standards. He noted that 55 percent of the people in
his district are in the military, thus he has a hypersensitivity
to those in the military. He also noted that he was a student
who would have been hurt had he not been able collect a PFD;
however, he reemphasized the importance of setting a standard.
Representative Ramras concluded by stating his support of HB
273.
9:28:37 AM
REPRESENTATIVE LYNN asked what would stop someone from coming
back to get their money and then turning around and leaving the
state again.
9:28:57 AM
CHAIR SEATON explained that the purpose of the bill is to ensure
that people do exactly what they say they will do, which is to
come back and establish their residency. To do so, he said,
they would have to reside in the state for 185 days in a year.
After that, there is nothing to stop those people from leaving;
however, he expressed the hope that after coming back and
reestablishing themselves, people would decide to stay.
9:31:02 AM
REPRESENTATIVE LYNN moved to adopt Amendment 1, labeled 24-
LS0871\F.2, Cook, 1/23/06. He said it is basically an amendment
to protect the military. Amendment 1 read as follows:
Page 4, line 6, following "AS 43.23.008(a)(1) - (8) or
(10) - (13).":
Insert "This subsection does not apply to the
payment of a current year dividend to an individual
claiming an allowable absence under AS 43.23.008(a)(3)
if, for a period during the qualifying year, the
individual
(1) was serving as a member of the armed
forces of the United States on active duty
(A) at a location outside of the United
States and outside of North, South, and Central
America;
(B) considered to be a remote tour of duty
by the armed forces of the United States; or
(C) at a location outside of the state, has
a spouse or minor or disabled dependent, and the
spouse and each minor or disabled dependent is
eligible for the current year dividend without
claiming an allowable absence under AS 43.23.008; or
(2) received care in a hospital outside the
state while
(A) serving on active duty as a member of
the armed forces of the United States; or
(B) a spouse or minor or disabled dependent of an
individual serving on active duty as a member of the
armed forces of the United States who is eligible for
a current year dividend."
9:31:46 AM
CHAIR SEATON noted that the committee did not yet have a copy of
Amendment 1.
9:32:01 AM
REPRESENTATIVE LYNN, at the request of Chair Seaton, withdrew
his motion to adopt Amendment 1 until the committee received a
copy.
The committee took an at-ease from 9:32:14 AM to 9:36:06 AM.
9:36:09 AM
REPRESENTATIVE LYNN repeated his motion to adopt Amendment 1
[text provided previously].
9:37:19 AM
CHAIR SEATON stated his understanding that Version F was already
before the committee as a work draft.
9:37:35 AM
REPRESENTATIVE LYNN stated that Amendment 1 would protect the
military, which, he added, protects "us." He offered further
details.
9:38:10 AM
CHAIR SEATON objected. He said [Amendment 1] would violate the
state's constitutional due process and equal protection.
9:38:36 AM
A roll call vote was taken. Representative Lynn voted in favor
of Amendment 1. Representatives Gatto, Elkins, Ramras,
Gruenberg, and Seaton voted against it. Therefore, Amendment 1
failed by a vote of 1-5.
9:39:26 AM
REPRESENTATIVE ELKINS moved to report CSHB 273, Version 24-
LS0871\F, Cook, 1/18/06, out of committee with individual
recommendations and a zero fiscal note.
9:40:16 AM
REPRESENTATIVE LYNN objected. He emphasized that he thinks the
intent of bill is good, but he wants to make it better. He
stated that the bill brings blatant discrimination against
military and students. He said the bill holds the PFD hostage
and is bad public policy. He suggested the appropriate policy
for getting people to return to the state is to provide better
educational and job opportunities, and to go after fraudulent
claims. He stated his understanding that Alaska has the highest
percent of military retirees and veterans of almost any other
state in the union. He stated his opposition of the bill.
9:42:01 AM
REPRESENTATIVE LYNN, in response to a comment from
Representative Gatto, explained that although there is no
reference to students in the failed Amendment 1, he had added a
reference to students in his comments.
9:42:15 AM
REPRESENTATIVE GATTO recalled that Mr. Poag had testified that
sub-groups cannot be made without jeopardizing the entire bill.
He stated, "While I certainly support the military saving their
dividend - and the students, and allowable absences for all
reasons, I think it's unfair to jeopardize the bill with the
information that we have before us. And I'll be voting in favor
of it."
9:42:48 AM
REPRESENTATIVE ELKINS concurred with Representative Gatto's
comments and said he would support the bill "for the same
reasons."
9:43:04 AM
CHAIR SEATON expressed his appreciation to the Permanent Fund
Dividend Division for its work in pulling together the
information requested by the committee. He summarized that $154
million has been paid out in PFDs to people who left the state
and did not return "to the qualifications." That money would
have gone into the PFDs of true Alaska residents; none of the
money would go to financing state government.
9:43:55 AM
REPRESENTATIVE GRUENBERG said he would like Ms. Barton to
continue her investigation and make her findings available to
the committee.
9:44:11 AM
CHAIR SEATON said he has asked Ms. Barton to finish the
requested work so that it could be reported to the committee and
"follow the bill."
9:44:27 AM
REPRESENTATIVE GRUENBERG said he is conflicted on the bill, even
though he is a co-sponsor of it. He said his mind is "still
open on the subject," and he reiterated that he wants to see Ms.
Barton's future findings.
9:44:44 AM
A roll call vote was taken. Representatives Elkins, Ramras,
Gardner, Gruenberg, Gatto, and Seaton voted in favor of
reporting CSHB 273, Version 24-LS0871\F, Cook, 1/18/06, out of
committee with individual recommendations and a zero fiscal
note. Representative Lynn voted against it. Therefore, CSHB
273(STA) was reported out of the House State Affairs Standing
Committee by a vote of 6-1.
^CONFIRMATION HEARING(S):
^Commissioner, Department of Administration
9:45:44 AM
CHAIR SEATON again brought before the committee the appointment
of Scott J. Nordstrand to the position of Commissioner of the
Department of Administration. [The confirmation hearing was
initiated on 1/24/06.]
REPRESENTATIVE GATTO moved to advance the name of Scott J.
Nordstrand to the joint session of the House and Senate; he
requested unanimous consent. There being no objection, the
nomination of Scott J. Nordstrand as Commissioner of the
Department of Administration was advanced.
^Lieutenant Governor Designee
9:46:03 AM
CHAIR SEATON again brought before the committee the appointment
of William A. Corbus to the position of Lieutenant Governor
Designee. [The confirmation hearing was initiated on 1/24/06.]
REPRESENTATIVE GATTO moved to advance the confirmation of
William A. Corbus to the joint session of the House and Senate;
he requested unanimous consent. There being no objection, the
nomination of William A. Corbus to the position of Lieutenant
Governor Designee was advanced.
^Alaska Public Offices Commission (APOC)
9:46:16 AM
CHAIR SEATON again brought before the committee the appointment
of William Walters to the Alaska Public Offices Commission
(APOC). [The confirmation hearing was initiated on 1/24/06.]
REPRESENTATIVE GATTO moved to advance the confirmation of
William Walters to the joint session of the House and Senate; he
requested unanimous consent. There being no objection, the
nomination of William Walters to the Alaska Public Offices
Commission was advanced.
HB 278-RETIREMENT SYSTEM BONDS
9:46:46 AM
CHAIR SEATON announced that the last order of business was HOUSE
BILL NO. 278, "An Act relating to the Alaska Municipal Bond Bank
Authority; permitting the Alaska Municipal Bond Bank Authority
or a subsidiary of the authority to assist state and municipal
governmental employers by issuing bonds and other commercial
paper to enable the governmental employers to prepay all or a
portion of the governmental employers' shares of the unfunded
accrued actuarial liabilities of retirement systems and
authorizing governmental employers to contract with and to issue
bonds, notes, or commercial paper to the authority or its
subsidiary corporation for that purpose; and providing for an
effective date."
CHAIR SEATON noted that included in the committee packet is a
memorandum from Tamara Cook, Director, Legal Services, dated
1/6/06, and he asked the sponsor of the bill to address it.
9:46:58 AM
REPRESENTATIVE MIKE HAWKER, Alaska State Legislature, as sponsor
of HB 278, stated that the memorandum is a response to a
question from Representative Weyhrauch regarding whether state
law prevents municipalities from issuing pension bonds.
Representative Hawker interpreted Ms. Cook's response to mean
that there are prohibitions in the constitution; however, other
structures exist that may very well meet constitutional muster.
He said he suspects Ms. Cook's answer was generic because she
did not have any specific proposal before her to evaluate.
Furthermore, the bill does not contemplate any specific
structure.
9:49:33 AM
REPRESENTATIVE HAWKER said that based on the concerns of the
House State Affairs Standing Committee and a request made by
Chair Seaton, he did some research and developed an amendment to
ensure that smaller municipalities could band together and not
be excluded. He said he learned from Legislative Legal and
Research Services that AS 29.35.010(13) authorizes
municipalities to enter into cooperative agreements. Section 13
read as follows:
(13) to enter into an agreement, including an
agreement for cooperative or joint administration of
any function or power with a municipality, the state,
or the United States;
REPRESENTATIVE HAWKER encouraged the committee to reach the
conclusion that he has reached: an amendment is not necessary,
as the power exists in current statute [to allow municipalities
to enter into cooperative agreements for pension obligation
bonds (POBs)].
9:51:29 AM
REPRESENTATIVE GRUENBERG, referring back to the previously
mentioned legal memorandum, said by "reading between the lines"
he believes Ms. Cook is saying that municipalities cannot issue
general obligation bonds, but could issue moral obligation
bonds. He asked Representative Hawker if that is his
interpretation.
9:52:13 AM
REPRESENTATIVE HAWKER responded as follows:
If you were [implying] a specific limitation to moral
obligation debt, I don't believe that's a correct
statement. I believe there would be a variety of debt
vehicles to which she would be inferring in this ....
REPRESENTATIVE HAWKER said he is hesitant to provide testimony
regarding the intent of someone else's work product. His
interpretation, he said, is that there are constitutional
prohibitions against specific forms of debt, but there are other
forms of debt available that would be constitutional and have
been proven already with precedent established in the Alaska
Court System.
9:53:03 AM
REPRESENTATIVE GRUENBERG offered his understanding that general
obligation (GO) bonds are specifically prohibited.
9:53:15 AM
REPRESENTATIVE HAWKER concurred that "general obligation bonding
by the State of Alaska would be inappropriate and unacceptable."
9:53:40 AM
REPRESENTATIVE GRUENBERG added, "Or a political subdivision."
9:53:50 AM
REPRESENTATIVE HAWKER answered yes.
9:53:55 AM
CHAIR SEATON cited a sentence in the memorandum at the end of
paragraph 3, which read:
Other exceptions to the restraint on borrowing are
found in Art. IX, sec. 11, but it is not obvious to me
how these exceptions might be used to fund pension
plans.
CHAIR SEATON advised the committee that that remark by Ms. Cook
raises some flags, and he said he thinks it might be necessary
to get further [legal] clarification as the bill moves along
through the process.
CHAIR SEATON directed attention to page 7, line 24, of the bill,
which [with the preceding lines 21-23] read:
(a) Subject to AS 44.85.100(b), the bond bank
authority may issue its bonds or notes in principal
amounts that it considers necessary to provide funds
for any purposes under this chapter, including
(1) the purchase of municipal bonds
CHAIR SEATON said he thought the Alaska Municipal Bond Bank
Authority ("Bond Bank") issued bonds. He asked for
clarification.
9:55:37 AM
REPRESENTATIVE HAWKER explained that that language, which is in
Section 5 of the bill, is not new statute and amends the
language on page 8, lines 5-7, which read as follows:
(5) assisting governmental employers to
prepay all or a portion of their share of the unfunded
accrued actuarial liabilities of retirement systems,
with security as the bond bank authority considers
reasonable.
9:56:09 AM
CHAIR SEATON directed attention to page 8, subsection (c), the
original language of which shows a bonding authority of
$500,000,000. He interpreted the new language in the subsection
to mean "there's no limit at all." The new language read as
follows:
This subsection does not apply to (1) bonds or notes
issued to fund or refund bonds or notes; (2) bonds,
notes, commercial paper, and other obligations issued
under AS 44.85.086 or 44.85.180(a)(5).
9:56:33 AM
REPRESENTATIVE HAWKER indicated that there are no limits in
regard to refunding or obligations issued under the statutes
previously noted in subsection (c). In regard to aggregating
pension liabilities, he said, "The best execution would be if
municipalities chose to come together and place larger
securities on the market and get a much more efficient execution
with a ... greater ultimate savings to the issuer."
9:57:20 AM
CHAIR SEATON recalled that the Department of Revenue testified
to the committee that the moral bonding authority was "somewhat
south of $6 billion." He said, "So, maybe as this goes into
[the House Finance Committee] you can see whether we want this
unlimited amount, which could be more than the moral bonding
authority of the state."
9:57:49 AM
REPRESENTATIVE HAWKER stated for the record that he is committed
to getting a thorough review and analysis by the Department of
Law, the Department of Revenue, the Bond Bank, and outside bond
counsel and authorities to ensure that the financial management
aspect of the bill will be strongly addressed.
9:58:51 AM
CHAIR SEATON referred to a sentence in Ms. Cook's memorandum,
which read:
Art. IX, sec. 9 states in full: "No debt shall be
contracted by any political subdivision of the State,
unless authorized for capital improvements by its
governing body and ratified by a majority vote of
those qualified to vote and voting on the question."
CHAIR SEATON indicated that he does not see that issue addressed
anywhere in the bill "one way or the other." He stated the need
to find out if that requirement is in place or exempted.
9:59:43 AM
REPRESENTATIVE GRUENBERG said he doesn't see any legal
requirement "that this be approved by a vote of the people." He
mentioned an amendment could be offered "to do that" and asked
Representative Hawker if he would object.
10:00:13 AM
REPRESENTATIVE HAWKER reiterated his sincere belief that the
existing statutory regulatory structure, as it applies to
municipalities and the authorities the state vests in those
municipalities, is adequate and provides appropriate public
protections. He continued:
Certainly we've discussed the possibility of a broader
authority being extended, specifically for this type
of transaction, through a constitutional amendment
process to a general obligation bond. ... I believe
the subject and the question you're broaching would be
best discussed in that context rather than in this
context, which is where we are definitely not making
any changes in our current constitutional authorities.
10:01:27 AM
REPRESENTATIVE GRUENBERG said he is looking into the drafting of
a constitutional amendment. He said he was concentrating on
amending the article dealing with state contraction of debt and
he had not looked as much at the constitutional provisions
regarding the local contracting of debt. He mentioned the
concept of putting both those issues together in the same
amendment.
10:02:12 AM
CHAIR SEATON suggested that, in the interest of time, the issue
be brought up at another time. He stated his concern regarding
hard debt versus soft debt in relation to pension bonds. He
said the committee was been told that the hard debt is a debt
obligation. He said, "I don't want this to end up in court
later as to whether it should be a vote or not." He stated his
desire to get a full legal opinion as to whether pension bonds
would be exempt from the requirement of a vote of the people.
10:03:36 AM
REPRESENTATIVE GRUENBERG moved to report HB 278 out of committee
with individual recommendations and the attached fiscal note.
10:03:56 AM
REPRESENTATIVE HAWKER noted that he had not received a copy of
the fiscal note.
10:04:26 AM
CHAIR SEATON asked if there was any objection. There being
none, HB 278 moved out of the House State Affairs Standing
Committee.
ADJOURNMENT
There being no further business before the committee, the House
State Affairs Standing Committee meeting was adjourned at
10:05:06 AM.
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