Legislature(1995 - 1996)

02/27/1996 09:10 AM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
                                                                               
                             MINUTES                                           
                    SENATE FINANCE COMMITTEE                                   
                        February 27, 1996                                      
                            9:10 a.m.                                          
                                                                               
  TAPES                                                                        
                                                                               
  SFC-96, #30, Side 1 and 2                                                    
  SFC-96, #30-A, Side 1 (000-080)                                              
                                                                               
  CALL TO ORDER                                                                
                                                                               
  Senator Rick Halford,  Co-chairman, convened the  meeting at                 
  approximately 9:10 a.m.                                                      
                                                                               
  PRESENT                                                                      
                                                                               
  In  addition  to  Co-chairmen  Halford  and  Frank, Senators                 
  Phillips, Rieger, and Zharoff were  present.  Senator Donley                 
  arrived soon after the meeting began.  Senator Sharp did not                 
  attend.                                                                      
                                                                               
  ALSO ATTENDING:  Jim Nordlund,  Director, Division of Public                 
  Assistance, Dept. of Health and Social Services; Curt Lomas,                 
  Welfare Reform Program, Division of Public Assistance, Dept.                 
  of  Health  and  Social   Services;  Jon  Sherwood,  Program                 
  Coordinator, Division of Medical Assistance, Dept. of Health                 
  and  Social   Services;  Juanita   Hensley,  Chief,   Driver                 
  Services,  Division  of  Motor  Vehicles,  Dept.  of  Public                 
  Safety; Mike Greany, Director, Legislative Finance Division;                 
  and aides  to committee  members  and other  members of  the                 
  legislature.                                                                 
                                                                               
  SUMMARY INFORMATION                                                          
                                                                               
  SB  37 -  END PERMANENT FUND DIVIDEND HOLD HARMLESS                          
                                                                               
            Discussion was had with  Jim Nordlund, Curt Lomas,                 
            and Jon Sherwood.  A draft  CSSB 37 (Fin) dated 3-                 
            9-95 was  adopted with  an updated  1996 effective                 
            date.    The bill  was  held in  committee pending                 
            department  preparation  of:   (a)  fiscal   notes                 
            pertinent to the Finance Committee Substitute, (b)                 
            a  budgetary breakdown  showing  use of  permanent                 
            fund hold harmless moneys, (c) the statutory basis                 
            for each permanent fund hold harmless expenditure,                 
            (d)   information   on   whether  expenditure   is                 
            automatically prorated based on funding.                           
                                                                               
  SB 226 -  MOTOR VEHICLE REGISTRATION/EMISSIONS                               
                                                                               
            Discussion was  had among committee members.   The                 
            bill was  subsequently held in  committee for work                 
            on  Senator  Phillips'  request  that  it  contain                 
                                                                               
                                                                               
            language   providing   a   discount  for   mail-in                 
            registration and Senator Donley's request that the                 
            legislation limit fees for emission testing.                       
                                                                               
  SB 232 -  PFD NOTICES AND ELIGIBILITY                                        
                                                                               
            A draft CSSB 232 (Fin)  dated 2-27-96 was adopted.                 
            The bill  was subsequently  held in committee  for                 
            further testimony.                                                 
                                                                               
                                                                               
  SENATE BILL NO. 37                                                           
                                                                               
       An  Act  relating  to   treatment  of  permanent   fund                 
       dividends for purposes  of determining eligibility  for                 
       certain benefits; and providing for an effective date.                  
                                                                               
  Co-chairman Halford directed  that SB 37  be brought on  for                 
  discussion  and advised that since extensive public hearings                 
  were had last year, additional public testimony would not be                 
  taken at  this time.   He  then directed  attention to  nine                 
  updated fiscal  notes and  a draft  CSSB 37  which he  noted                 
  would require an effective date change.                                      
                                                                               
  Senator  Randy   Phillips,  sponsor   of  the   legislation,                 
  explained that it was introduced due to constituent concerns                 
  and  support  for  elimination  of   hold  harmless  funding                 
  relating  to  receipt  of  permanent  fund  dividends.    He                 
  stressed  that the legislation  does not  impact SSI  or APA                 
  recipients.    In  the  past  year,  $40.36  was  taken from                 
  everyone's dividend to fund  hold harmless.  That totals  in                 
  excess of $21 million.   Senator Phillips MOVED for adoption                 
  of  CSSB  37  (9-LS0449\K,  Cook,  3/8/95) with  an  updated                 
  effective date  to July 1,  1996.   He added  that the  only                 
  difference between  the present  draft and  a draft  adopted                 
  last year is  tightened title language.  No objection having                 
  been  raised,  CSSB  37  (Fin) was  ADOPTED  with  the  1996                 
  effective date.                                                              
                                                                               
  JIM NORDLUND, Director, Division of Public Assistance, Dept.                 
  of  Health  and  Social Services,  and  CURT  LOMAS, Welfare                 
  Reform  Program,  Division  of Public  Assistance,  Dept. of                 
  Health and Social  Services, came before committee  to speak                 
  to fiscal aspects of the bill.  Co-chairman Halford asked if                 
  non-permanent  fund  welfare obligations  would  increase or                 
  decrease  if the  proposed legislation  were to  pass.   Mr.                 
  Lomas said he would first speak  to the AFDC component since                 
  it is the  largest.   The FY  97 budget for  AFDC is  $122.8                 
  million.  PFD hold harmless funding contributes "roughly $12                 
  million"  to  the total.    If  PFD funding  was  removed, a                 
  shortfall of 10%  would occur.   The  department expects  to                 
  spend approximately $50 million for  the food stamp program.                 
  Those funds are not general fund because they flow through a                 
                                                                               
                                                                               
  direct federal program.   However,  PFD hold harmless  money                 
  would be expended  to replace FY  97 food stamp benefits  of                 
  approximately $3.6 million.   Co-chairman Halford voiced his                 
  view that if the proposed bill were to pass and there was no                 
  hold harmless funding,   there would be no cost to the state                 
  for the program, but there would be a reduction in available                 
  services.  Mr.  Lomas concurred, saying  that the amount  of                 
  benefits available for distribution would be reduced by that                 
  amount.   New general  fund costs would  result from program                 
  administration because  a portion  of the  administration of                 
  all public assistance programs impacted  by hold harmless is                 
  funded from  PFD hold  harmless moneys.   The  FY 97  budget                 
  anticipates  $480.0 of  such funding.   With passage  of the                 
  bill,  $360.0  of  those costs  would  require  coverage via                 
  general funds.                                                               
                                                                               
  Mr. Lomas further directed attention to the fiscal  note for                 
  increased general relief  assistance.  He explained  that it                 
  reflects the emergency  needs of  recipients who would  lose                 
  eligibility for public  assistance two months  after receipt                 
  of the dividend.  In  most instances, assistance would  help                 
  meet rent payments.                                                          
                                                                               
  Passage would also result in a funding shift in the Medicaid                 
  program.                                                                     
                                                                               
  Co-chairman  Halford voiced  his  understanding that  Native                 
  corporation  dividends  are  exempt  up  to  $2,000.00,  but                 
  amounts over  that are  included in  need evaluations.   Mr.                 
  Lomas  concurred.    The  Co-chairman  then  asked  how  the                 
  department handles dividends that exceed the exemption.  Mr.                 
  Lomas explained that  in most instances where  the situation                 
  is temporary and  that form of income is not  expected to be                 
  available  in  the succeeding  month,  the department  would                 
  suspend benefits  for the  particular month  and reopen  the                 
  case the following month.  Co-chairman Halford asked if that                 
  procedure would also  apply to the permanent  fund dividend.                 
  Mr.  Lomas   responded  affirmatively.     In   most  cases,                 
  suspension would  last  for only  a month.   Federal  policy                 
  requires that dividends  be counted as  income in the  month                 
  received.   A  redetermination  is then  made  in the  month                 
  following receipt as to whether  the household qualifies for                 
  assistance.    The decision  is  based  on assets.    If the                 
  dividend has been  used in a  manner that results in  family                 
  requalification,  the family  could  be  eligible after  one                 
  month.   If the  dividend was  retained or  converted to  an                 
  asset  that   impacts  eligibility,  the  family   would  be                 
  ineligible until it again passes the eligibility test.                       
                                                                               
  Senator Rieger advised  of his understanding that  for those                 
  who become ineligible in the month of receipt of a dividend,                 
  there  is  a waiting  period of  several months  before they                 
  requalify.   Mr.  Lomas  said that  under the  AFDC program,                 
  certain  lump-sum  payments  that   are  not  recurring  are                 
                                                                               
                                                                               
  required by federal policy  to be averaged over a  period of                 
  time.    That  results  in  potentially  longer  periods  of                 
  ineligibility.   Recurring sums  like the  dividend are  not                 
  treated that way.  The hold harmless program protects people                 
  up to four months if they retain "enough of the dividend . .                 
  . to result in their ineligibility."                                         
                                                                               
  Senator Rieger next asked if, on average, the  hold harmless                 
  program   picks  up  only   one-month  worth  of  individual                 
  benefits.  Or,  does it  pick up  two to four  months?   Mr.                 
  Lomas replied that the most  recent report indicates that in                 
  "better than 95% of the cases,  the hold harmless program is                 
  only  picking  up one  month."   It  is relatively  rare for                 
  families to hold onto the cash beyond the month in which  it                 
  is treated as income.                                                        
                                                                               
  Senator Zharoff  referenced last  year's position  paper and                 
  asked if  the administration's  position had  changed.   Jim                 
  Nordlund  advised  of  no  change  in  the  administration's                 
  opposition to  the legislation.   He added that,  during the                 
  interim, the administration worked extensively  on a welfare                 
  reform  plan.   That  plan  is now  before  the legislature.                 
  Benefit  cuts are  part  of the  plan.   The  administration                 
  opposes the across-the-board cut in the proposed bill.  Cuts                 
  made by the  administration are  "more surgical" in  nature,                 
  provide  incentives  for  individuals  to  go to  work,  and                 
  equalize benefits among  the eligible  population.  The  10%                 
  AFDC  cut  resulting from  the  proposed bill  would  be the                 
  largest single cut in the history of the program.                            
                                                                               
  Discussion followed between Senator Zharoff and Mr. Nordlund                 
  regarding changes  in federal law.   Mr. Nordlund  said that                 
  fiscal  notes were  written  for the  present  program.   If                 
  federal reform passes, it would have some impact on the hold                 
  harmless program  in that the  department would  be able  to                 
  annualize the effect of  the cut over  the entire year.   It                 
  would not be  necessary to move  individuals on and off  the                 
  program  and   incur  general  fund   administrative  costs.                 
  Passage of the  proposed bill  would still result  in a  10%                 
  benefit cut to recipients.                                                   
                                                                               
  Senator Zharoff expressed  concern regarding  the impact  of                 
  the legislation on  senior citizens  and the  disabled.   He                 
  further   emphasized  key  points   on  the  position  paper                 
  indicating  the   effect  on  children  and   other  program                 
  recipients.                                                                  
                                                                               
  Senator Phillips pointed to questions raised by constituents                 
  regarding why those  who are employed  should pay twice  for                 
  benefits for welfare recipients:  once through federal taxes                 
  and a second time through  reduction of their permanent fund                 
  dividend.                                                                    
                                                                               
  Referencing a listing of fiscal notes accompanying the bill,                 
                                                                               
                                                                               
  Co-chairman Halford  voiced his  understanding that most  of                 
  the costs apply to  the general fund, and the  savings apply                 
  to the dividend hold harmless program.  Mr. Lomas concurred.                 
  The Co-chairman then noted that AFDC is 50% state funded and                 
  50% federal.  In response to a further question from the Co-                 
  chairman, Mr. Lomas explained that the hold harmless program                 
  covers not only the federal but the state share as well--the                 
  entire  cost  of  one month  of  benefits  lost  to an  AFDC                 
  recipient.  Co-chairman Halford asked if the foregoing means                 
  that "We're using the hold harmless as an excuse to hold the                 
  general fund harmless . . . thereby taking from the dividend                 
  to support the general fund."   Mr. Lomas answered that that                 
  has been the mechanism since 1988.  Prior to  that time, the                 
  PFD hold  harmless program covered only federal moneys.  Co-                 
  chairman Halford suggested  that not  only is the  foregoing                 
  inequitable, it is  used as  an excuse to  take more out  of                 
  individual dividends than would otherwise be deducted.                       
                                                                               
  Co-chairman Frank voiced his  understanding that costs shown                 
  on  fiscal  notes  are  administrative  costs.    Mr.  Lomas                 
  disagreed, advising that the $1,052.8 in general relief is a                 
  benefit cost  based on  department projections of  increased                 
  need.  The maximum payment is  $120.00 per person per month.                 
  Payment is made to a vendor, generally a landlord, for those                 
  who are either  homeless or facing  eviction.  In  emergency                 
  circumstances,  benefits can be used to  pay for other needs                 
  such as food  or clothing.  The department  anticipates that                 
  15% may  need food  because they  lose eligibility for  food                 
  stamps at the  same time they  lose eligibility for AFDC  or                 
  other benefits.                                                              
                                                                               
  In response to further discussion  of eligibility, Mr. Lomas                 
  explained that  if a whole  family received the  dividend in                 
  October,  members  would  not  be  eligible for  a  December                 
  payment.    Should the  proposed  bill pass,  the department                 
  would encourage the present caseload to spend dividend money                 
  on "things that would  help them get through the  month when                 
  they would not  be eligible for public  assistance--stock up                 
  on food, prepay rent, get their utility bills paid off . . .                 
  ."  The  15% is an estimate  of how many families  might not                 
  heed  department  advice  and  would  "come  up  against  an                 
  emergency situation where  they were facing homelessness  or                 
  no food . . . ."  Individuals in this category would have to                 
  be homeless or facing eviction before they would qualify for                 
  benefits.    For those  needing  food, the  department would                 
  require verifying evidence from someone who knows the family                 
  circumstances.                                                               
                                                                               
  Discussion followed  regarding the  shift of  administrative                 
  costs from hold harmless moneys to general funds.  Mr. Lomas                 
  noted that  the hold  harmless program  buys the  state some                 
  administrative  economies.   He then  cited agreements  with                 
  federal agencies for AFDC accounting.                                        
                                                                               
                                                                               
  In response to further questions from Co-chairman Frank, Mr.                 
  Lomas  commented  that  the  fiscal  note   for  ($21,738.6)                 
  reflects  the total cost  of the PFD  hold harmless program.                 
  It includes coverage for benefits in AFDC, food stamps, APA,                 
  SSI,  Medicaid Programs,  and administrative  costs of  hold                 
  harmless.  The foregoing total is  broken out in some of the                 
  other fiscal notes as  well.  The ($1.1) million  in Medical                 
  Assistance, ($2.6) million in  Adult Public Assistance,  and                 
  ($12.1) million in AFDC were cited.                                          
                                                                               
  Co-chairman Frank  stressed that hold  harmless funding  for                 
  APA and  SSI would  not be  repealed by  the Senate  Finance                 
  bill.   He then voiced  need to focus  on fiscal  notes that                 
  apply to  only that version.  Co-chairman Halford asked that                 
  department  staff cite  statutory  authorization to  replace                 
  federal food stamp  benefits which  do not  "go through  the                 
  process at all."                                                             
                                                                               
  Co-chairman  Halford next  noted  that  updated 1996  fiscal                 
  notes   apply  to  neither  the  current  finance  committee                 
  substitute nor the finance committee substitute adopted last                 
  year.  Department staff acknowledged that the new notes were                 
  written for  CSSB 37  (STA).   Mr. Nordlund  advised of  the                 
  administration's policy of not "doing  fiscal notes on draft                 
  bills."   Although drafts  were adopted  by committee,  they                 
  were not reported out as a  formal committee substitute.  He                 
  further  advised  that he  had  pertinent figures  and could                 
  quickly update the notes.  Co-chairman Halford stressed need                 
  for new notes  when a committee substitute  is adopted since                 
  they  are  needed  before  the  bill  is reported  out,  not                 
  thereafter.                                                                  
                                                                               
  Co-chairman  Frank raised  questions regarding  benefits for                 
  those,  other  than  the elderly  and  disabled,  who remain                 
  covered under the bill.                                                      
                                                                               
  END:      SFC-96, #30, Side 1                                                
  BEGIN:    SFC-96, #30, Side 2                                                
                                                                               
  He  then   inquired  concerning  Medicaid  coverage.     JON                 
  SHERWOOD,   Program   Coordinator,   Division   of   Medical                 
  Assistance, Dept. of Health and Social Services, came before                 
  committee.  He  explained that  Medicaid budgeting does  not                 
  "look  back  retrospectively at  income."   It  always looks                 
  forward prospectively.   Most people are not  ineligible for                 
  Medicaid in  the month  in which  the dividend is  received.                 
  Only if they  retain the earnings and  become over-resourced                 
  do they become  ineligible.  Most  of the PFD hold  harmless                 
  for  Medicaid  applies  to  nursing  home recipients.    The                 
  department  works   with  nursing   homes  to  ensure   that                 
  recipients  understand  they  should spend  down.    A small                 
  percentage retains earnings.                                                 
                                                                               
  In  response  to  a  question  from Co-chairman  Frank,  Mr.                 
                                                                               
                                                                               
  Sherwood advised that  one could apply  for Medicaid "up  to                 
  three   months  retroactively."     An  example  of  January                 
  application to cover  unpaid medical  bills from October  or                 
  November was cited.                                                          
                                                                               
  Mr. Sherwood  referenced the  fiscal note  showing a  $660.0                 
  increase  to  the medical  assistance budget,  advising that                 
  $330.0 of the total represents general funds.                                
                                                                               
  Co-chairman  Frank  cited the  case  of  a  mother  and  two                 
  children  on AFDC  and  asked if  they  would lose  Medicaid                 
  eligibility.  Mr. Sherwood said  they could lose eligibility                 
  if they choose to retain the dividend.  If  it was expended,                 
  they would probably not become ineligible.                                   
                                                                               
  Co-chairman Frank  then  voiced his  understanding that  the                 
  current finance  committee substitute  exempts the  disabled                 
  and the elderly.   Mr. Sherwood said that the  draft exempts                 
  recipients of SSI and APA.  Those living in institutions are                 
  only eligible for a  small personal needs payments of  up to                 
  $75.00 a  month.   Those with that  level of income  are not                 
  recipients of either of  the above programs.  They  are only                 
  Medicaid  recipients.    Their room  and  board  is  paid by                 
  Medicaid as part of the cost of nursing home  care.  Nursing                 
  home residents are not eligible for  Medicaid if they retain                 
  the dividend.  Medicaid eligibility looks at what a resident                 
  has  "essentially the  first moment  of  the next  month, in                 
  terms   of   resources."     Senator  Phillips   voiced  his                 
  understanding that  the majority  of such  residents do  not                 
  retain the dividend.  Their benefits will thus be continued.                 
  Mr.  Sherwood  concurred.    He  noted, however,  that  some                 
  residents do  not manage  their finances  closely enough  to                 
  ensure that  the dividend  is disbursed  and eligibility  is                 
  retained.                                                                    
                                                                               
  Discussion followed regarding income  reporting requirements                 
  for Medicaid  eligibility.   Mr. Sherwood  advised that  the                 
  department provides nursing homes  with information on means                 
  of disbursing the dividend.  He cautioned  that nursing home                 
  residents have  to be  careful when  giving away  resources.                 
  There is a Medicaid penalty for  giving away money to remain                 
  eligible  for nursing  home  care.   The  asset standard  is                 
  $2,000.00.  The  $330.0 in general  fund costs assumes  that                 
  those  who are  not now  spending down  would do  so in  the                 
  future and would become eligible for Medicaid.                               
                                                                               
  Mr.  Lomas referenced  earlier  comments  that the  Medicaid                 
  program looks forward rather than  back.  He explained  that                 
  that approach is based on a  theory and arrangement with the                 
  federal  government,  since  commencement  of  the  dividend                 
  program.    The  theory  is  based  on  the  fact  that  the                 
  department  cannot  anticipate  when  people  are  going  to                 
  receive  dividend payments.    It is  becoming  increasingly                 
  difficult  to  adhere to  that  philosophy because  Dept. of                 
                                                                               
                                                                               
  Revenue  processing   has  become  so  efficient  that  most                 
  individuals receive the  dividend in  October.  If  Medicaid                 
  determines the  dividend is not unanticipated,  the scenario                 
  would be different  and potentially large numbers  of people                 
  would  lose eligibility as a result.   That is of concern to                 
  the department.                                                              
                                                                               
  In  response to  comments by  Co-chairman  Halford regarding                 
  timing of receipt of the dividend to allow sufficient spend-                 
  down time, Mr. Lomas said that recipients have two months in                 
  which to spend the dividend.   The federal government allows                 
  some processing time.  A payment  received in October is not                 
  viewed as an asset until the  first of December.  Recipients                 
  are  allowed  a  reporting  period,  and the  department  is                 
  allowed processing time.                                                     
                                                                               
  Co-chairman  Frank again  referenced  the  fiscal notes  and                 
  asked how the ($21) million savings  would be achieved.  Mr.                 
  Lomas directed attention to the tabulation set forth on page                 
  2  of  the  fiscal  note for  public  assistance,  PFD  hold                 
  harmless  (File note no.  5).  Co-chairman  Frank noted that                 
  amounts for  SSI and  APA should  not be  included, and  the                 
  Medicaid number should be reviewed.                                          
                                                                               
  Discussion  followed regarding  the  $3,624.1 shown  for the                 
  food stamp  program.   Mr. Lomas  described the  arrangement                 
  with  the federal  government whereby the  state administers                 
  food   stamp   benefits.     State   funds   "go   into  the                 
  administration  of  the program  but  not into  the benefits                 
  themselves."    The  administrative  match  is 50/50.    The                 
  federal government pays  the entire cost  of benefits.   Co-                 
  chairman Frank  voiced his understanding  that the  negative                 
  ($21) million fiscal note shows  reductions in hold harmless                 
  funding while the  negative ($12) million note  evidences an                 
  offsetting reduction in benefits.  Mr. Lomas concurred.                      
                                                                               
  In the course of discussion of  hold harmless moneys for the                 
  food  stamp  program,  Mr.  Lomas  advised  that  department                 
  attempts to negotiate  with the federal government  to allow                 
  the  state to pay  for food  stamps for  those who  are held                 
  harmless were not successful.  The department thus pays cash                 
  in lieu of  food stamps  in the month  that individuals  are                 
  held harmless.   The  funding source is  the PFD fund.   The                 
  expenditure to replace food  stamps is one of the  pieces of                 
  PFD  hold  harmless  budget components.    Senator  Phillips                 
  voiced his  understanding that those  held harmless  receive                 
  both  the dividend and  cash in place  of food stamps.   Mr.                 
  Lomas described the situation whereby recipients receive the                 
  dividend in October,  become ineligible  for food stamps  in                 
  December, and receive a cash payment  in lieu of food stamps                 
  in December.   There are  no restrictions on  expenditure of                 
  the cash.  Mr.  Lomas said that the department  explored use                 
  of  a  voucher system  instead  of cash,  but administrative                 
  costs appeared prohibitive.                                                  
                                                                               
                                                                               
  Co-chairman Halford directed that the department provide the                 
  following:                                                                   
                                                                               
       1.   Updated  fiscal notes  for  the finance  committee                 
            substitute.                                                        
                                                                               
       2.   A budget  breakdown of  complete use of  permanent                 
  fund hold           harmless  moneys.    (While   funds  are                 
                      appropriated as one line,  the breakdown                 
                      should   include   every   category   in                 
                      eventual expenditure.)                                   
                                                                               
       3.   The statutory basis  for each expenditure in  hold                 
  harmless       law.                                                          
                                                                               
       4.   Whether  or  not   expenditure  is   automatically                 
  prorated       based on funding.                                             
                                                                               
  He said that the legislation would  be held in committee for                 
  further discussion.                                                          
                                                                               
  Mr. Nordlund referenced earlier remarks  that removal of APA                 
  recipients from the legislation leaves only able bodied AFDC                 
  recipients to bear the  impact.  He reminded members  that a                 
  number of  individuals  on  AFDC  are disabled.    They  are                 
  disabled heads of households, heads of households caring for                 
  disabled children, and battered women.   Federal legislation                 
  anticipates the foregoing and contains a 15 to 20% exemption                 
  of  the  caseload  from  the  five-year  time limit.    That                 
  recognizes that there  are individuals  who "are simply  not                 
  going to be  able to work."  The benefit cut in the proposed                 
  bill  impacts the  entire population,  including the  above-                 
  mentioned individuals.  He urged that the committee consider                 
  an exemption.   Co-chairman  Frank asked  if the  department                 
  would   propose    amendments   that   would    change   the                 
  administration's opposition to the bill.   Mr. Nordlund said                 
  the department would  review the  matter.  Senator  Phillips                 
  said he would be receptive to review of amendments.                          
                                                                               
                                                                               
  SENATE BILL NO. 226                                                          
                                                                               
       An  Act  relating  to biennial  registration  of  motor                 
       vehicles; imposing biennial registration  fees on motor                 
       vehicles and authorizing a scheduled biennial municipal                 
       tax  on  motor  vehicles; relating  to  fees  for motor                 
       vehicle emissions control  programs; and providing  for                 
       an effective date.                                                      
                                                                               
  Co-chairman Halford directed that  SB 226 be brought  on for                 
  discussion.    Co-chairman  Frank  explained  that  the bill                 
  represents  an  attempt  to reduce  the  burden  incurred by                 
                                                                               
                                                                               
  annual   vehicle   registration   by    requiring   biennial                 
  registration.   The  department was  planning  to  implement                 
  biennial registration in  Anchorage and Fairbanks.   The Co-                 
  chairman expressed his belief  that it makes sense to  do so                 
  statewide.  The legislation contains a slight price break in                 
  that registration  would cost  $68.00 for  two years  rather                 
  than $35.00 annually.                                                        
                                                                               
  Senator Donley voiced  support for the bill.   He referenced                 
  last year's  passage of  legislation providing  for biennial                 
  emission  testing and  noted  ongoing discussion  of testing                 
  fees.  He then asked  that Senator Frank consider  inclusion                 
  of fee guidelines within SB 226.  It appears the cities want                 
  to double fees even though they are "only doing half as much                 
  work." Sen Donley suggested it might be appropriate to place                 
  a cap on fees.   Fairbanks has established a  $35.00 maximum                 
  for tests  while the  maximum in  Anchorage is  $50.00.   It                 
  might  be appropriate to  set a consistent  level to prevent                 
  future abuses.                                                               
                                                                               
  JUANITA HENSLEY, Chief,  Driver Services, Division of  Motor                 
  Vehicles,  Dept.   of  Public   Safety,  next  came   before                 
  committee.    She  noted that  vehicle  registration  is the                 
  simplest transaction performed  by the division.   The state                 
  presently contracts  with 20 offices  which perform  vehicle                 
  registration at  the same time   emission  testing is  done.                 
  Vehicles may  also  be registered  by  mail.   Mrs.  Hensley                 
  acknowledged that the department hoped to implement biennial                 
  registration by July 1 to allow  those who choose to license                 
  for  two  years to  do  so.   The  proposed bill  would make                 
  biennial registration  a requirement.   Mrs.  Hensley voiced                 
  department support for the legislation.                                      
                                                                               
  Senator  Randy  Phillips  noted  that  those who  choose  to                 
  register in  person, rather than  through the  mail, pay  an                 
  additional $10.00 fee  and suggested that the  proposed bill                 
  might  provide  a remedy  for  problems associated  with the                 
  extra charge.  Co-chairman Halford asked if the intent is to                 
  provide  a discount for  mail renewal rather  than a penalty                 
  for registration at a division of motor vehicles' office.                    
                                                                               
  Discussion followed regarding  municipal motor vehicle taxes                 
  collected by the division on behalf of municipalities.  Mrs.                 
  Hensley explained  that  municipalities  which  collect  the                 
  personal property tax themselves set  the level of taxation.                 
  If the municipality  elects to have the division collect the                 
  tax at the time of registration, the tax schedule is set  by                 
  statute.    The  emission  test  fee   is  set  by  the  two                 
  communities  that   require  the   test.     The  Dept.   of                 
  Environmental   Conservation    also   sets   a    fee   for                 
  administration of the program.  Co-chairman Frank asked that                 
  Mrs. Hensley provide information on the state charge as well                 
  as fees  levied by Fairbanks  and Anchorage  municipalities.                 
  Further discussion  of certificate  and test  fees followed.                 
                                                                               
                                                                               
  Co-chairman Frank  voiced his  understanding that fees  were                 
  intended to cover costs rather than to be applied  as a tax.                 
  Senator Rieger advised of his  recollection that the fee  in                 
  Anchorage was  intended to cover publicity at  the outset of                 
  the program.                                                                 
                                                                               
  Co-chairman  Halford  suggested  that  addition of  language                 
  relating  to  a   discount  for  mail  registration   and  a                 
  limitation of emission test fees occur  while the bill is in                 
  committee rather than via floor amendment.                                   
                                                                               
  Senator  Donley  voiced   concern  regarding  reductions  to                 
  division   of  motor   vehicle  offices  contained   in  the                 
  Governor's  budget.    He  acknowledged  that  the  division                 
  generates greater revenue  than it is given  for operations.                 
  He then  reiterated support  for the  proposed bill,  saying                 
  that  resulting  reductions  in revenues  would  not  impact                 
  division funding.  He voiced  further concern regarding cuts                 
  that   would   eliminate   enforcement   of  the   financial                 
  responsibility act because it directly serves needy Alaskans                 
  who are innocently victimized in  accidents.  Senator Rieger                 
  remarked  that   the  $40.00  reduction  in  everyone's  PFD                 
  mentioned  in  discussion  of SB  37  is  comparable  to the                 
  increase  that  everyone   purchasing  insurance  pays  when                 
  uninsured  motorist coverage  is  added to  policies because                 
  Alaska  still has  the one free  accident rule.   A fix here                 
  would benefit every Alaskan who purchases auto insurance.                    
                                                                               
  END:      SFC-96, #30, Side 2                                                
  BEGIN:    SFC-96, #30-A, Side 1                                              
                                                                               
  Co-chairman  Halford  directed  that  SB   226  be  held  in                 
  committee for subsequent discussion.                                         
                                                                               
                                                                               
  SENATE BILL NO. 232                                                          
                                                                               
       An  Act relating  to  permanent fund  dividend  program                 
       notice requirements, to the ineligibility for dividends                 
       of individuals  convicted of  felonies or  incarcerated                 
       for  misdemeanors,  and  to  the determination  of  the                 
       number and identity of  certain ineligible individuals;                 
       and providing for an effective date.                                    
                                                                               
  Co-chairman Halford directed that SB 232 be brought back for                 
  discussion.  Co-chairman Frank  reiterated that the proposed                 
  bill  updates legislation vetoed  last year.   It would make                 
  those convicted of a  felony or incarcerated for a  third or                 
  subsequent   misdemeanor   ineligible  for   permanent  fund                 
  dividends.  The bill was held from a prior hearing to review                 
  the possibility  of including the child  support enforcement                 
  division.     Legislative  attorneys   had  earlier   raised                 
  constitutional questions surrounding inclusion.  Co-chairman                 
                                                                               
                                                                               
  Frank  advised that staff would  brief members on the status                 
  of that concern.                                                             
                                                                               
  Co-chairman  Halford  referenced   an  impending   resources                 
  committee  meeting  and  the  number  of people  wishing  to                 
  testify on the bill  and suggested that time did  not permit                 
  further discussion.  Co-chairman Frank MOVED for adoption of                 
  a draft  CSSB 323 (9-LS1455\F,  Cook, 2/27/96) as  a working                 
  document and  requested  unanimous consent.    No  objection                 
  having been raised, CSSB 232 (Fin) was ADOPTED.  Co-chairman                 
  Halford  directed  that  the  bill  be held  for  subsequent                 
  hearing.                                                                     
                                                                               
  ADJOURNMENT                                                                  
                                                                               
  The meeting was adjourned at approximately 10:45 a.m.                        
                                                                               

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