Legislature(1997 - 1998)
03/15/1997 11:07 AM STA
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
HOUSE STATE AFFAIRS STANDING COMMITTEE March 15, 1997 11:07 a.m. MEMBERS PRESENT Representative Jeannette James, Chair Representative Ethan Berkowitz Representative Fred Dyson Representative Kim Elton Representative Mark Hodgins Representative Ivan Ivan Representative Al Vezey MEMBERS ABSENT All members present. COMMITTEE CALENDAR HOUSE BILL NO. 83 "An Act relating to commercial motor vehicle inspections; and providing for an effective date." - HEARD AND HELD HOUSE JOINT RESOLUTION NO. 25 Proposing amendments to the Constitution of the State of Alaska to guarantee the permanent fund dividend, to provide for inflation-proofing, and to require a vote of the people before spending undistributed income from the earnings reserve of the permanent fund; and relating to the permanent fund. - MOVED CSHJR 25(STA) OUT OF COMMITTEE *HOUSE BILL NO. 153 "An Act relating to the eligibility of aliens for state public assistance and medical assistance programs affected by federal welfare reform legislation; and providing for an effective date." - MOVED HB 153 OUT OF COMMITTEE *HOUSE BILL NO. 84 "An Act limiting the authority to conduct pull-tab charitable gaming to qualified organizations that are exempt from taxation under 26 U.S.C. 501(c)(3) or (19); and providing for an effective date." - HEARD AND HELD (* First public hearing) PREVIOUS ACTION BILL: HB 83 SHORT TITLE: COMMERCIAL VEHICLE INSPECTIONS SPONSOR(S): REPRESENTATIVE(S) MARTIN JRN-DATE JRN-PG ACTION 01/22/97 122 (H) READ THE FIRST TIME - REFERRAL(S) 01/22/97 122 (H) TRANSPORTATION, STATE AFFAIRS 02/03/97 (H) TRA AT 1:00 PM CAPITOL 17 02/03/97 (H) MINUTE(TRA) 02/10/97 (H) MINUTE(TRA) 02/12/97 306 (H) TRA RPT CS(TRA) NT 3DP 2NR 02/12/97 307 (H) DP: SANDERS, KOOKESH, MASEK 02/12/97 307 (H) NR: ELTON, COWDERY 02/12/97 307 (H) ZERO FISCAL NOTE (DPS) 02/12/97 307 (H) REFERRED TO STATE AFFAIRS 03/11/97 (H) STA AT 8:00 AM CAPITOL 102 03/11/97 (H) MINUTE(STA) 03/13/97 (H) STA AT 8:00 AM CAPITOL 102 03/13/97 (H) MINUTE(STA) 03/15/97 (H) STA AT 11:00 AM CAPITOL 102 BILL: HJR 25 SHORT TITLE: CONST. AM: PERM. FUND INCOME & DIVIDEND SPONSOR(S): REPRESENTATIVE(S) AUSTERMAN JRN-DATE JRN-PG ACTION 02/26/97 483 (H) READ THE FIRST TIME - REFERRAL(S) 02/26/97 483 (H) STATE AFFAIRS, JUDICIARY, FINANCE 03/11/97 (H) STA AT 8:00 AM CAPITOL 102 03/11/97 (H) MINUTE(STA) 03/13/97 (H) STA AT 8:00 AM CAPITOL 102 03/13/97 (H) MINUTE(STA) 03/15/97 (H) STA AT 11:00 AM CAPITOL 102 BILL: HB 153 SHORT TITLE: ALIENS AND ASSISTANCE PROGRAMS SPONSOR(S): RULES BY REQUEST OF THE GOVERNOR JRN-DATE JRN-PG ACTION 02/24/97 442 (H) READ THE FIRST TIME - REFERRAL(S) 02/24/97 442 (H) STATE AFFAIRS, HES, FINANCE 02/24/97 442 (H) 3 FISCAL NOTES (DHSS) 02/24/97 442 (H) 2 ZERO FISCAL NOTES (DHSS) 02/24/97 442 (H) GOVERNOR'S TRANSMITTAL LETTER 03/11/97 (H) STA AT 8:00 AM CAPITOL 102 03/11/97 (H) MINUTE(STA) 03/13/97 (H) STA AT 8:00 AM CAPITOL 102 BILL: HB 84 SHORT TITLE: PULL-TABS LIMITED TO 501(C)(3) OR (19) SPONSOR(S): REPRESENTATIVE(S) MARTIN JRN-DATE JRN-PG ACTION 01/22/97 122 (H) READ THE FIRST TIME - REFERRAL(S) 01/22/97 122 (H) STATE AFFAIRS, L&C, FINANCE 03/11/97 (H) STA AT 8:00 AM CAPITOL 102 03/11/97 (H) MINUTE(STA) 03/13/97 (H) STA AT 8:00 AM CAPITOL 102 03/13/97 (H) MINUTE(STA) 03/15/97 (H) STA AT 11:00 AM CAPITOL 102 WITNESS REGISTER MIKE FORD, Attorney Legislative Legal and Research Services Legislative Affairs Agency 130 Seward Street, Suite 409 Juneau, Alaska 99801-2105 Telephone: (907) 465-2450 POSITION STATEMENT: Provided testimony on HB 83. FRANK DILLON, Executive Director Alaska Trucking Association 3443 Minnesota Drive Anchorage, Alaska 99503 Telephone: (907) 276-1145 POSITION STATEMENT: Provided testimony on HB 83. SERGEANT BRAD BROWN Commercial Vehicle Enforcement Unit Division of State Troopers Department of Public Safety 117 West 4th Avenue Anchorage, Alaska 99501 Telephone: (907) 278-1779 POSITION STATEMENT: Provided testimony on HB 83. REPRESENTATIVE ALAN AUSTERMAN Alaska State Legislature State Capitol, Room 434 Juneau, Alaska 99801-1182 Telephone: (907) 465-2487 POSITION STATEMENT: Sponsor of HJR 25. REPRESENTATIVE TERRY MARTIN Alaska State Legislature State Capitol, Room 502 Juneau, Alaska 99801-1182 Telephone: (907) 465-3783 POSITION STATEMENT: Provided testimony on HJR 25; sponsor of HB 84 and HB 83. RICK TESSANDORE, Executive Director Disability Law Center of Alaska 615 East 82nd Avenue, Suite Number 101 Anchorage, Alaska 99518 Telephone: (907) 344-1002 POSITION STATEMENT: Provided testimony in support of HB 153. SYLVIA CARVAJAL, Project Coordinator Disability Law Center of Alaska 615 East 82nd Avenue, Suite Number 101 Anchorage, Alaska 99518 Telephone: (907) 344-1002 POSITION STATEMENT: Provided testimony in support of HB 153. MADELEINE GRANT, M.D., Co-Medical Director Anchorage Neighborhood Health Center 1217 East 10th Avenue Anchorage, Alaska 99501 Telephone: (907) 257-4600 POSITION STATEMENT: Provided testimony in support of HB 153. JAY LIVEY, Deputy Commissioner Office of the Commissioner Department of Health and Social Services P.O. Box 110601 Juneau, Alaska 99811-0601 Telephone: (907) 465-3030 POSITION STATEMENT: Provided testimony on behalf of the Governor on HB 153. JOHN SHERWOOD, Medical Assistance Administrator Division of Medical Assistance Department of Health and Social Services P.O. Box 110660 Juneau, Alaska 99811-0660 Telephone: (907) 465-3355 POSITION STATEMENT: Provided testimony on behalf of the Governor on HB 153. ACTION NARRATIVE TAPE 97-28, SIDE A Number 0001 The House State Affairs Standing Committee was called to order by Chair Jeannette James at 11:07 a.m. Members present at the call to order were Representatives James, Elton, Hodgins, Ivan and Vezey. Members absent were Berkowitz and Dyson. HB 83 - COMMERCIAL VEHICLE INSPECTIONS The first order of business to come before the House State Affairs Standing Committee was HB 83, "An Act relating to commercial motor vehicle inspections; and providing for an effective date." CHAIR JEANNETTE JAMES asked Representative Vezey, chair of the subcommittee, how he would like to proceed on this issue? Number 0076 REPRESENTATIVE AL VEZEY explained that Mike Ford, Attorney, Legislative Legal and Research Services, Legislative Affairs Agency, was working on two committee substitutes. They had yet to be reviewed, however, by the subcommittee. Number 0136 MIKE FORD, Attorney, Legislative Legal and Research Services, Legislative Affairs Agency, explained he had prepared two committee substitutes. CHAIR JAMES asked Representative Vezey if the committee should adopt the committee substitute as a working document? REPRESENTATIVE VEZEY replied the proposed committee substitute was written in response to version "H" which had yet to be adopted. He suggested adopting version "H" first and then discussing the proposed changes. Number 0212 REPRESENTATIVE VEZEY moved to adopt the committee substitute, 0- LSO384/H, Ford, 3/12/97. There was no objection, the committee substitute was so adopted. CHAIR JAMES noted for the record the arrival of Representative Ethan Berkowitz at 11:09 a.m. Number 0446 MR. FORD explained he started with version "H" of which four changes were made to create version "K." The issue of how to deal with the problem of the federal system changing in a manner that conflicted with the state regulations was to provide that a violation of a state law that was not a violation of the federal system was an affirmative defense. MR. FORD further explained that the amount of the fine of $300 was raised to $5,000. MR. FORD further explained that the committee substitute also addressed the issue of the definition of "commercial motor vehicle." It followed closer with the federal definition. MR. FORD further explained that Sec. 2 of version "H" had been deleted adding a repeal to the section by taking AS 28.32.040 out of law. Number 0492 REPRESENTATIVE KIM ELTON asked Mr. Ford why Sec. 4 did not handle the using of the federal law as an affirmative defense? It seemed that the Commissioner of the Department of Public Safety was authorized to update the regulations to achieve compatibility with federal law. Number 0548 REPRESENTATIVE VEZEY replied that the federal law changed several times per year and the state's ability to change regulations was substantially slower. Therefore, operators were put into a position of having to comply with federal law while at the same time being in jeopardy of not complying with state law. There were situations on the books like that at this time. "I think it's proper to say the Department of Public Safety is really just turning their back on the state law which is not really what we want them to do." The affirmative defense clause said that a person would have good reason to not follow the state law and that good reason would be enough so that the court would not find that person guilty. Number 0630 REPRESENTATIVE ELTON asked Mr. Ford if it was possible to draft this piece of legislation in a manner that said state regulations would always mirror federal regulations? Number 0684 MR. FORD replied there was concern about due process in the manner that Representative Elton suggested. There was a ruling from a building code case from the Alaska Supreme Court that said, "you cannot delegate the authority to adopt regulations and all future amendments to it." The court also suggested that due process concerns were more difficult to determine at the federal level. Therefore, it would be best to say to adopt regulations that would be compatible and if there was a problem a person would have a defense avoiding the legal issues. Number 0776 REPRESENTATIVE VEZEY noted that there was no enforcement agency for building codes, therefore, there was no conflicting enforcement from the feds. The trucking industry, on the other hand, was regulated stringently by the feds so there were two agencies looking over its shoulders. Number 0826 FRANK DILLON, Executive Director, Alaska Trucking Association, was the first person to testify via teleconference in Anchorage. The industry appreciated the work of the subcommittee. He apologized that it was such a confusing issue. "I think we're getting real close to having what we think is a real satisfactory bill." Number 0847 CHAIR JAMES commented she was pleased with Representative Vezey and his extra efforts with this bill. It was a good case in the area of regulation review to evaluate where the regulations would fit into the whole process. Number 0875 REPRESENTATIVE ETHAN BERKOWITZ commented on the increase in the fine from $300 to $5,000. He wondered about its impact on the court process. Number 0901 REPRESENTATIVE VEZEY replied that the increase was keeping within the trend of civil enforcement of safety violations. "We didn't want to make most of these violations of this chapter a misdemeanor because we didn't want to take these working people into jail, and we didn't want to build more jails to house them, and we didn't want to pay for their room and board when they were perfectly capable of working." These were economic crimes, therefore, an economic penalty would be an incentive to comply with the law. "Safety is simply a question of dollars." A $300 fine was easier to pay than it was to comply with the safety regulations. A $5,000 maximum fine would be an economic incentive to influence a person's behavior. Number 0992 MR. FORD stated that he was concerned about the limit because at some point the courts would find that the penalty was high enough to implicate criminality. In which case, a person received a trial, a jury, and a defense, if he or she could not afford it. He did not know if there was a problem at this point, however. Number 1039 MR. DILLON stated that the association would like to see the fine substantially higher. A $5,000 fine did not seem exorbitant for the sorts of safety problems that could be caused by ignoring the regulations. It would be to the advantage of the state and to the industry to have a high fine in order to get people away from the idea of taking chances. "By substantially increasing that fine and using the process that we have available to educate members that run trucks in the state, I think we're going to achieve compliance and actually stay out of the courts more than we will with a lower fine schedule." Number 1103 REPRESENTATIVE BERKOWITZ stated that he was supportive of the raise in the fine to $5,000. He agreed with Mr. Ford that it might not be high enough. Number 1119 REPRESENTATIVE VEZEY stated that we were reserving the violation to Part 3-90 of the Code of Federal Regulations and still classifying a violation of the certificate of inspection program as a misdemeanor. There was concern that the statute needed to be incorporated so that there would not be any confusion about whether it would be a misdemeanor or an infraction. Number 1168 MR. FORD stated that the only other issue left was how to incorporate part of the federal regulations into the existing statutory scheme. Representative Vezey suggested to simply cite the federal regulations, however, there were portions of the federal regulations that the state did not want. Therefore, it was a process of determining those that it wanted to exclude and to develop a way to reference those provisions. "Everyone should understand that we are incorporating that federal provision so we get whatever comes along with that, whether we like it or not." Number 1218 CHAIR JAMES replied we do anyway. She asked Mr. Ford if he would have that information by next Thursday, March 20, 1997? Number 1239 REPRESENTATIVE VEZEY replied that the subcommittee would have time to go over the committee substitute by then. CHAIR JAMES replied it would save time if the subcommittee came back at the next meeting with an explanation of the committee substitute to speed up the process. CHAIR JAMES noted for the record that Representative Fred Dyson arrived at 11:20 a.m. CHAIR JAMES further said that this was a beginning exercise on how to do away with statutory law by trying to make it the federal law, which the state knew it had to follow anyway. Number 1296 REPRESENTATIVE VEZEY explained there was also the issue of federal jurisdiction over inter-state trucking versus intra-state trucking. The federal regulations applied to intra-state trucking, but the enforceability of the feds was questionable. "We know that if we are going to have those enforced at the state level that it's either going to be done by the state or it's not going to be done." That was why this bill was needed to be looked at further. CHAIR JAMES announced the bill would be held until Thursday, March 20, 1997, at which time a final committee substitute would be looked at. Number 1344 MR. DILLON declared that the association stood ready and willing to work with the chair of the subcommittee at any time. Number 1356 REPRESENTATIVE BERKOWITZ asked Mr. Brown if there was any reason to pursue reckless endangerment as a way of effectuating criminal prosecution? Number 1369 SERGEANT BRAD BROWN, Commercial Vehicle Enforcement Unit, Division of State Troopers, Department of Public Safety, was the next person to testify via teleconference in Anchorage. He would stay away from reckless endangerment because it seemed to be a catch-all law. Therefore, he would not want to abuse it. In addition, for a class A misdemeanor the state had to demonstrate that the person or the company knowingly committed the offense. "And, so it's just not a matter of going out and throwing a bunch of people in jail or anything else like that. We have to prove that they knowingly failed to do an annual inspection." HJR 25 - CONST. AM: PERM. FUND INCOME & DIVIDEND The next order of business to come before the House State Affairs Standing Committee was HJR 25, Proposing amendments to the Constitution of the State of Alaska to guarantee the permanent fund dividend, to provide for inflation-proofing, and to require a vote of the people before spending undistributed income from the earnings reserve of the permanent fund; and relating to the permanent fund. CHAIR JAMES announced she worked with the sponsor and with Mike Greany, Legislative Fiscal Analyst, Legislative Finance Division, on a committee substitute because she was concerned about putting a statute in the constitution. It was a misuse of constitutional space. She did not have a problem with establishing the priorities of the use of the earnings in the constitution, however. Number 1624 REPRESENTATIVE ALAN AUSTERMAN, Alaska State Legislature, explained that the committee substitute, version "B", took the actual formula that they had been using for the dividend program and for the inflation-proofing and kept it in the statute as a mandate. The formulas stayed in the statute in order not to bind future legislatures. If the formulas were in the constitution, "You'd be in a world of hurt if you had a crash in the market or something like that." Therefore, if there was a problem, the formula could be adjusted easily in statute. Number 1705 CHAIR JAMES explained the committee substitute, version "B," took the existing constitutional language minus the following statement: "All income from the Permanent Fund shall be deposited in the General Fund unless otherwise provided by law." CHAIR JAMES further read the following from the committee substitute, version "B": "(b) Income from the permanent fund shall be deposited into a separate account in the fund, the earnings reserve account, as soon as it is received. Money in the account shall be invested in investments designated by law under (a) of this section, and income from the investments shall also be deposited into the account. "(c) On the first day of each fiscal year, an amount of income shall be transferred from the earnings reserve account for distribution as dividends to State residents as provided by law. An amount of income shall also be transferred as provided by law from the earnings reserve account to the principal of the permanent fund to offset the effect of inflation on the principal of the fund during the fiscal year just ended. Income distributed as dividends or transferred to the principal is not subject to appropriation. "(d) Appropriations may be made from the earnings reserve account; however, the amount appropriated during a fiscal year may not exceed the amount in the account on the first day of that fiscal year after transfers have been made under (c) of this section." CHAIR JAMES stated that the committee substitute, version "B", protected the permanent fund dividend program as the first use of the funds and protected the inflation-proofing as the second use of the funds. If there were any funds left over, it authorized the legislature to appropriate them. The original draft also said that the balance of the earnings reserve could not be utilized without a vote of the people which was taken out in version "B." Number 1839 REPRESENTATIVE ELTON stated the major problem that he had with the original bill was the vote of the people. That was now gone in the committee substitute. The committee substitute did not say that the income from the Permanent Fund would go into the General Fund, but rather the income would go into a special account within the Permanent Fund. And from that special account, there would be an appropriation; first, for the dividend and; second, for inflation- proofing. It would also authorize the legislature to appropriate the remainder of the funds from that income account. Therefore, the only thing that the committee substitute would do would be to change the earnings from being designated as general funds to a special account within the Permanent Fund, but those earnings would still be available for appropriation by the legislature after the two priorities. CHAIR JAMES stated the biggest difference was that the original draft put the statute in the constitution so that the way it was calculated would be a constitutional mandate. Generally, statutory language was not put in the constitution. The constitution was a guide to establish mandates. Number 1971 REPRESENTATIVE ELTON wondered if an analogy would be "us determining the statutory language, we may not want to be too specific in statutory language, let's handle that through regulation to allow for changing circumstances that a department may...." Number 1981 CHAIR JAMES replied it was not so much regulative change as it was statutory change. The statute was being put in and not the regulation. Number 2031 REPRESENTATIVE AUSTERMAN stated that the language of the vote of the people had been taken out because once it was in the constitution it would take the vote of the people to change it. Number 2048 CHAIR JAMES explained the legislature could appropriate funds that were left over for anything. The legislature had consistently appropriated it back into the fund because the public believed that anything the legislature would do to it would affect the dividend and they feared that the dividend would be taken away. Therefore, this was an opportunity to put into statute that there would be a dividend program which gave them some protection. The original bill indicated that in order to spend the money left over the legislature would have to go to the vote of the people, even if the legislature wanted to put it back into the corpus of the fund. It was possible that some of the money would need to be used in the future. In fact, it was available with a simple majority vote; not the three-quarters vote that it would take for the budget reserve. Number 2153 REPRESENTATIVE ELTON asked Representative Austerman, if he wanted to appropriate money from the left-over dollars to help built the Kodiak launch facility for example, could if be done with a simple majority vote? REPRESENTATIVE AUSTERMAN replied, "Currently." REPRESENTATIVE ELTON asked Representative Austerman, if he wanted to appropriate more money than what was left in the account, would it require a vote of the people to lower the amount of the dividend appropriation or to lower the amount used for inflation-proofing? Number 2208 REPRESENTATIVE AUSTERMAN replied, "Correct." The committee substitute read: "(d) Appropriations may be made from the earnings reserve account; however, the amount appropriated during a fiscal year may not exceed the amount in the account on the first day of that fiscal year after transfers have been made under (c) of this section." REPRESENTATIVE ELTON stated a third scenario could be to change the statute to change the inflation-proofing rate so that there would be more money left in. Number 2226 CHAIR JAMES replied, "That's right. In fact, you can't take any more money out that's in there because you can not go to the corpus." The statement made by Representative Elton was not totally correct. The only reason he would have to go to the vote of the people would be if the legislature said there was not a reason for inflation-proofing anymore, for example. But, the statute would need to be changed first. Number 2249 REPRESENTATIVE ELTON stated the inflation-proofing formula in statute would have to be changed. CHAIR JAMES replied, currently, that could be done without changing the constitution. "You just can't give up inflation-proofing. It's there and it has to have a program." Number 2258 REPRESENTATIVE AUSTERMAN explained the bill would not change either of the current statutes or the formulas. Number 2276 CHAIR JAMES called for a motion to adopt the committee substitute. Number 2283 REPRESENTATIVE HODGINS moved to adopt the committee substitute, 0- LS0659/B, Cook, 3/14/97. There was no objection, the committee substitute was so adopted. Number 2305 REPRESENTATIVE BERKOWITZ wondered if there was anybody from the Permanent Fund to talk on this issue today. CHAIR JAMES replied no one was here. She talked with the fellow that was here from the trust after the last meeting. He was concerned about putting statutory language in the constitution. Otherwise, he believed that they did not have a dog in this fight because they were there to manage the fund and what was done with the earnings was up to the legislature. Number 2335 REPRESENTATIVE AUSTERMAN stated he also agreed that the statutory language should not go into the constitution. He called the committee substitute excellent. Number 2354 REPRESENTATIVE MARTIN, Alaska State Legislature, stated that the Permanent Fund Corporation had very wisely over the years resisted giving testimony on legislation because they did not want to get into the dog fight. The last time that they did, however, was over the warning of the investment in gold, of which, the state lost millions of dollars. CHAIR JAMES called for a motion to move the bill out of the committee. Number 2370 REPRESENTATIVE HODGINS moved that HJR 25, as amended, move from the committee with individual recommendations and the attached fiscal note(s). There was no objection, CSHJR 25(STA) was so moved from the House State Affairs Standing Committee. HB 153 - ALIENS AND ASSISTANCE PROGRAMS The next order of business to come before the House State Affairs Standing Committee was HB 153, "An Act relating to the eligibility of aliens for state public assistance and medical assistance programs affected by federal welfare reform legislation; and providing for an effective date." Number 2468 RICK TESSANDORE, Executive Director, Disability Law Center of Alaska, was the next person to testify via teleconference in Anchorage. TAPE 97-28, SIDE B Number 0001 MR. TESSANDORE stated that 1,850 folks were on Medicaid, of which, 800 were Supplemental Security Income (SSI) recipients. The center was working with Catholic Social Services, the Division of Public Assistance and the Mental Health Trust Authority to try to identify and to find the legal immigrants with disabilities who were at risk of losing federal and state benefits in the near future. The process of finding these individuals had been quite difficult due to language barriers, for example. Many of these folks had lived and worked in Alaska for many years but had never become naturalized U.S. citizens. There were waiver processes that were being used by the protection and advocacy system around the country to identify these folks and to get them through the process of naturalization. Thus, the center was concerned about the time frame involved. The bill could extend the time needed to identify and help these folks. He asked the committee members to support the bill and to give the center the time to complete its search and process to determine if these individuals would be eligible to maintain their benefits. Number 0105 SYLVIA CARVAJAL, Project Coordinator, Disability Law Center of Alaska, was the next person to testify via teleconference in Anchorage. She had conducted a research project for the Municipality of Anchorage and Catholic Social Services to determine the impact of the welfare reform law on lawful permanent residents mostly in Anchorage and Kodiak. The research indicated that many of the lawful and permanent residents were disabled and elderly. They had little or no income or other resources. They received social security assistance. They used the money to pay for their rent, their utilities, and their basics for survival. They consistently ranked social security as the benefit that would greatly affect them if they lost it. They also listed Medicaid and Food Stamps. Some of the reactions from the individuals who were interviewed were: crying, hopelessness, fear, desperation and pleading for help. The center supported the bill and encouraged its passage. Number 0176 MADELEINE GRANT, M.D., Co-Medical Director, Anchorage Neighborhood Health Center, was the next person to testify via teleconference in Anchorage. She was testifying today on a personal and a professional level. Personally, she thought it was morally reprehensible to deny services to those who immigrated to this country legally. She was not a Native American, therefore, her relatives had immigrated at some time to the country. Medically, she thought the denial of assistance led to problems in their personal lives and to a cost for the community. For example, prenatal and antenatal care could prevent premature babies who often had life-long disabilities. She cited several other examples of scenarios that preventative medicine could stop or prevent life- long disabilities. Hypertension was common in the immigrant population and treatment prevented major strokes that caused disabilities. She urged the committee members to support the bill. Number 0333 JAY LIVEY, Deputy Commissioner, Office of the Commissioner, Department of Health and Social Services, was the first to testify on behalf of the Governor on HB 153. The bill responded to the federal government's welfare reform bill. The federal government restricted services to legal aliens for all federally funded programs which included Food Stamps and Supplemental Security Income regardless of when they entered the country. Supplemental Security Income was a federal program for individuals who were blind and disabled. It was about $460 per month in cash. There was nothing that the state could do about this, however, because it was a federal law. The programs that were half-state and half- federal which included Medicaid and the Alaska Temporary Assistance Program (ATAP) were funded by the federal government and matched by the state. Therefore, the federal government said the states could choose what to do about them. Those individuals, as far as the state was concerned, would be barred from the services for five years. The third program affected was the Adult Public Assistance (APA) program. It was a state program that provided a cash supplement to those who were found to be disabled under SSI. The state could write the eligibility rules for that program. The Governor's bill said that if a person was on Medicaid, Alaska Temporary Assistance program, or Adult Public Assistance, the state would continue coverage as long as the person was in the country by August 22; otherwise, the state would bar that individual for five years. As a result, there was no additional cost to the state. The fiscal note showed a savings because currently there was a defined pool of those who were eligible as of August 22 and through normal attrition people would be leaving that pool. MR. LIVEY further stated that the issue involved legal aliens who had been told that they could be in the country from the federal government. There were 2,100 legal aliens currently on programs, of which, 801 were on the Adult Public Assistance, 818 were on the Alaska Temporary Assistance Program, and 1,900 were on the Medicaid program. MR. LIVEY further stated that they were eligible for these programs essentially because they had met all of the eligibility criteria, not because they were legal aliens. Therefore, those who were on the SSI and Adult Public Assistance were disabled or blind and could not work. MR. LIVEY referred the committee members to a handout titled, "Legal Aliens," a comparison of the current law and the proposed change under the Governor's bill for the five affected programs. Food Stamps and SSI were federal programs so the legal alien was no longer eligible under the current law and the proposed change. Medicaid and the Alaska Temporary Assistance Program were state- federal programs, of which, the federal government barred coverage and the proposed change would bar the legal alien for five years for those who entered the country after August 22, 1996. The Adult Public Assistance program was a state-only program so it could do anything it wanted to it. MR. LIVEY referred the committee members to a handout title, "FY 97 Budgeted Expenditures," showing the benefit packages. Before the passage of the federal law, a blind or disabled individual received $70 in Food Stamps, $484 in SSI, $362 in APA and they were eligible for Medicaid. After the federal law and under current state law, the blind or disabled individual would lose Food Stamps, SSI, and Medicaid while retaining APA. Under the Governor's proposed bill, the blind or disabled individual who arrived in the country prior to August 22, 1996, received only $362 in APA and was eligible for Medicaid. Number 0775 REPRESENTATIVE DYSON asked Mr. Livey what would be the fiscal note if the bill was not passed? The question did not indicate how he was going to vote. Number 0785 MR. LIVEY replied if no bill was passed then the state would have to continue to cover APA recipients for those that were here as of August 22, 1996; as-well-as, any new aliens coming into the country who were eligible for the program. There was nothing in the state law to restrict that eligibility. It would be the same for the ATAP program. The only difference was that because of the federal welfare reform all of the services would be from state funds for those that arrived after August 22, 1996 because the federal government said the state could not use federal funds for five years. It was different for Medicaid because an individual had to be listed to be eligible. Legal aliens were not listed specifically. Therefore, if no bill passed then legal immigrants would lose their eligibility for Medicaid. MR. LIVEY further explained that the legislature could craft its own response to the federal law. If it did craft its own response then there would be a difference in the combinations of eligibility. Number 0912 REPRESENTATIVE DYSON asked Mr. Livey if the state did nothing would it still be paying its component of the Medicaid program? MR. LIVEY replied, "No." REPRESENTATIVE DYSON asked Mr. Livey if the state did nothing would there be a savings in the Medicaid component? MR. LIVEY replied, "Yes." REPRESENTATIVE DYSON asked Mr. Livey what would be the magnitude of the savings? MR. LIVEY asked that Mr. Sherwood, Division of Medical Assistance, come forward and explain the Medicaid fiscal note. JOHN SHERWOOD, Medical Assistance Administrator, Division of Medical Assistance, Department of Health and Social Services, was the next person to testify on behalf of the Governor. He explained there were two fiscal notes - facility and non-facility - which was how the budget was broken up. Both were zero fiscal notes and on page 2 of each one showed the scenario if the legislature did not pass the bill. Under the federal law the state still had to provide emergency medical services to legal immigrants who did not qualify for regular Medicaid. And the General Relief Medical (GRM) program would provide coverage for certain services such as maintenance drugs for certain chronic conditions. There would be a shift, therefore, of the cost from the regular Medicaid program to the Medicaid emergency medical coverage and for the GRM program. The division estimated that on an annual basis there would be a reduction in total spending of about $2.4 million if the bill did not pass. That would only be a general fund reduction, however, of approximately $750,000 because of the five year ban and the division would continue to receive bills from those that were eligible from providers. Number 1056 CHAIR JAMES stated if the state did nothing it would not continue to give Medicaid assistance, except in emergencies. The Medicaid program was a matching program; therefore, she wondered if the federal government did not give any money, would the state have to match. Was that why the state did not have to fix the Medicaid part? she asked. Number 1090 MR. SHERWOOD replied, "Yes." Under state law, Medicaid services could not be provided to individuals unless they were listed in state law as being eligible. Once the federal government gave the option to provide eligibility, there was no listing of this group. Therefore, even under state law, the state could not continue to provide that benefit. Number 1115 CHAIR JAMES commented on the certification process of the SSI program. She asked Mr. Livey who paid for the qualification now and who would paid for it if the law changed? Number 1164 MR. LIVEY replied the federal government paid for the recertification. CHAIR JAMES replied but now that the federal government did not allow for the SSI program, it would not continue to pay for recertification. Thus, would the state have to pay for it, or would the state let the program go on without recertification? MR. SHERWOOD replied the state had a contract with the Division of Vocational Rehabilitation that provided recertification for the Social Security Administration and for the state programs. Number 1207 CHAIR JAMES wondered if the state had been taking advantage of the designation with SSI. She knew a lot of people who had to qualify for SSI before the state would do anything for them at all. There was a piggyback approach. Correct? she asked. Number 1227 MR. LIVEY replied, "Yes. That's right." CHAIR JAMES stated then there would not be anything kicked in until the five years had gone by for the new aliens, except for recertification. Therefore, the state would have to do more now then when the feds were doing the recertification. Number 1251 CHAIR JAMES asked Mr. Livey why negative income was tied to the bill because the state would not get any of that income? Number 1267 MR. LIVEY replied the two negative fiscal notes were tied to the ATAP and APA programs. The notes represented time because there would not be any new people coming into the programs because it barred eligibility for five years. The fiscal notes really represented the pool of eligible people now. Some, over the next several years would leave that pool decreasing the General Fund contribution. The notes were actually dollar cost savings. Number 1309 CHAIR JAMES replied that really did not have anything to do with the bill. MR. LIVEY replied it had to do with the bill because it allowed the state to not put new people onto the program. CHAIR JAMES explained she had a real problem assigning a negative fiscal note to the bill because it appeared it was the result of the federal welfare reform as opposed to HB 153. "It seems to me like were being defensive here as opposed to being aggressive." She understood what Mr. Lively was saying, however. If the bill was not passed, the statute said that the state had to deal with legal aliens and the federal government would not give to the state any more money. Therefore, the money that it would not give the state would be a negative fiscal note. If the bill was not passed the state would also have a positive expense. "It's confusing." It seemed that there should be a notation indicating the savings and the costs, if the bill was not passed. It appeared that the notes only indicated the negative federal funds that the state would get. Number 1458 MR. LIVEY replied the notes did not indicate what the cost would be if the bill did not pass. CHAIR JAMES stated there was a negative cost as well as the income. There was also a negative fiscal note in the expense-line for introducing the bill. Number 1481 MR. LIVEY replied the APA fiscal note of $156,000 indicated that the state would save that amount in fiscal year 98. It was a combination of people coming off of the program and new people not coming onto the program. The net effect was that the program would not have to pay out $156,000 creating a savings to the General Fund. CHAIR JAMES stated that the figure was under grants and claims. Therefore, if the fiscal note was true, the legislature could reduce the department's budget by that much. MR. LIVEY replied if the bill was to pass, "Yes." MR. LIVEY further asked the committee members to keep in mind that these were folks who did have a disability and who did have a need for this type of support, or they would not have been on the program in the first place. The federal government had already taken a lot of that support away. This was a way for the state to maintain support for those individuals while at the same time changing the rules for those who entered the country after August 22, 1996. Number 1597 CHAIR JAMES asked Mr. Livey what did the state plan to do to address the additional needs that the aliens would have? She did not think the $362 from the state would cover their concerns. Number 1642 MR. LIVEY replied that was a difficult question. The federal welfare reform changes created a cost-shift from the federal government to the state government and frankly some of that cost would go down to the municipal government. The department did not have any other items in its budget to make up for the cash portion that the recipients would be loosing. The department had been working with the Municipality of Anchorage and Catholic Social Services to determine how programs and services could be absorbed at the local level. "Your question is a very, very good one. It's going to be very difficult." Number 1683 CHAIR JAMES stated that the department knew who these people were. She asked Mr. Livey if the department had done anything to notify the local governments and/or United Way, besides Catholic Social Services, to let them know where the need would be for a response? Number 1704 MR. LIVEY replied the department had a contract with the Municipality of Anchorage to work with the population of immigrants. The municipality worked directly with Catholic Social Services that had an immigration assistance program. The department was also working with the Disability Law Center of Alaska to find these folks and to help them become a naturalized citizen. It was probably not enough, however. CHAIR JAMES called for a motion to move the bill out of the committee. Number 1756 REPRESENTATIVE DYSON moved that HB 153 move from the committee with individual recommendations and the attached fiscal note(s). There was no objection, HB 153 was so moved from the House State Affairs Standing Committee. HB 84 - PULL-TABS LIMITED TO 501(C)(3) OR (19) The next order of business to come before the House State Affairs Standing Committee was HB 84, "An Act limiting the authority to conduct pull-tab charitable gaming to qualified organizations that are exempt from taxation under 26 U.S.C. 501(c)(3) or (19); and providing for an effective date." CHAIR JAMES called on Representative Terry Martin, sponsor of HB 84, to present the bill. Number 1806 REPRESENTATIVE MARTIN explained that it had been ten years now since the legislature had legalized slot machines as a way to make money. They were called pull-tabs and they were used as a way to raise money for charitable purposes that would in turn relieve the state and federal governments of meeting their annual budgets for charities. Now, it was time to call for the "opening of the books" to see how many of the pull-tab permits were meeting the goals in the name of charity. He knew that the legislators were being swamped from phone calls and visitors who were impacted by this bill. He believed that the state had every right to question what they were doing with the public money. "They have every right to question my integrity too, if there's any there. But, in the meantime to threaten me with votes, I could care less if they vote." If they were doing such a good job, they should come to the committee and brag about their great things that they were doing with the millions of dollars that were coming into their coffers in the name of charity. He suspected that some would not come at all. The legislature had the obligation to challenge them to see what they were doing with the money. Were they using the money for internal purposes? Were they using the money for purposes that they had before pull-tabs? Were pull-tab monies being used to supplement the money of the members of the Moose Club, for example, that was used out of their own pockets? If the pull-tabs were being used to supplement what the charitable and non-profit organizations used to do on their own, then they were greatly misusing the purpose of the program. He reiterated it was a good time for the individuals to feel proud of what they were doing if it was in the interest of the public. But, "I suspect that there's many of them not giving the full amount of monies to a charitable purpose, but may be using them for in-house purposes that they had been doing for years." The Moose Club explained to him that it had been in business for 85 years. Representative Martin responded, "Wonderful. Fabulous. What did you do before pull-tabs came in?" The Moose Club was an honorable, fraternal organization that helped its members. He wondered, therefore, if the pull-tab monies were only restricted to its members, or was it reaching out to others. The Moose Club explained to him that it gave a scholarship. Representative Martin replied the club took in $60,000. What happened to the rest of the money? The Moose Club replied it was 8,500 members strong statewide. Representative Martin still wondered what it was doing for the people. Was the money just helping its own? Some of the organizations were going to shine because every penny went to a charitable purpose. Some organizations, such as, the Anchorage Baseball Team was on Representative Martin's back. He did not consider it a charitable organization because the money helped semi-professional baseball teams. That was not charity. He reiterated it was time to find out what was happening with all of the charitable dollars. Number 2202 REPRESENTATIVE HODGINS asked Representative Martin what would be the chance of doing away with vendors in Sec. 8 (a).? Would it be possible in this bill? Number 2218 REPRESENTATIVE MARTIN replied that was done in another bill. It was deliberately split by advise from individuals who knew the gaming industry. House Bill 84 would help the Internal Revenue Service (IRS) because it did not want to get involved in Alaska's situation, but it realized that gambling laws undercut what it was doing. Thus, he limited the bill to those permitted under charities right now by the IRS. It was possible to add others; such as, the operators and other permits. That was addressed in HB 56. This bill was to clean up what the state already had. Number 2296 CHAIR JAMES stated that Representative Martin should not have told the committee members that this bill helped the IRS. "We hate them with a passion." REPRESENTATIVE MARTIN asked what was worse? He answered, professional gamblers. REPRESENTATIVE BERKOWITZ replied the IRS. Number 2312 REPRESENTATIVE ELTON stated that he understood the testimony of Representative Martin. The bill sought to solve the problem of limiting the groups that could do pull-tabs. He wondered if another approach would be to redefine what was a charity and what the revenues could be used for in order not to limit the number of groups. He would be interested in hearing why he chose this route rather than the other. Number 2391 REPRESENTATIVE MARTIN replied it was up to the committee and that was where the challenge was. Let's look at the charitable law, and let's look at the organizations and how they respond to the bill. It was going to be a hard decision to determine which organizations were charitable and which took advantage of the pull-tabs. ADJOURNMENT Number 2449 CHAIR JAMES adjourned the House State Affairs Standing Committee meeting at 12:40 p.m.