Legislature(1995 - 1996)

01/26/1995 08:03 AM STA

Audio Topic
* first hearing in first committee of referral
+ 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                                                                
 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                                                               
 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                                                               
 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                                                                
 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                                                                
 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             
 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           
 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               
 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               
 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               
 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               
 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                
 Number 220                                                                    
 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                       
 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.                                
 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               
 "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           
 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           
 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              
 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                                                                    
 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.                                                 
 CHAIR JAMES adjourned the meeting at 10:00 a.m.                               

Document Name Date/Time Subjects