Legislature(1997 - 1998)
05/07/1997 08:45 AM Senate FIN
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
MINUTES SENATE FINANCE COMMITTEE 7 May 1997 8:45 a.m. TAPES SFC-97, #145, Side 1, (000 - 590) 145, Side 2, (590 - 000) 146, Side 1, (000 - 507) CALL TO ORDER Senator Bert Sharp, Co-chairman, convened the meeting at approximately 8:45 a.m. PRESENT In addition to Co-chairman Sharp, Senators Phillips, Torgerson and Adams were present when the meeting convened. Senators Pearce, Donley and Parnell arrived shortly thereafter. ALSO ATTENDING: Senator Gary Wilken; Senator John Ellis; Representative Mark Hodgins; Representative Pete Kott; Commissioner Wilson Condon, Department of Revenue; Deborah Vogt, Deputy Commissioner, Department of Revenue; Bob Bartholomew, Deputy Director, Division of Income & Excise Audit, Department of Revenue; Nanci Jones, Director, Division of Permanent Fund Dividend, Department of Revenue; Bob Cole, Director, Division of Administrative Services, Department of Corrections; Nancy Kelly, staff to Rep. Therriault; Jeff Cook, MAPCO; Kim Ross, Executive Director, Alaska Air Carriers; aides to committee members and other legislators. SUMMARY INFORMATION Senator Sharp called meeting to order and outlined schedule of bills to be heard. SENATE CS FOR HOUSE BILL NO. 11(JUD) "An Act relating to driver's licensing; and providing for an effective date." Senator Adams referred to the twenty-four hour rule and requested the chair to hold HB 11 until tomorrow. It was necessary to do some research on the bill before it be heard. Co-chair Sharp concurred and held HB 11 in committee. Co-chair Sharp called SB 139. CS FOR SENATE BILL NO. 139(CRA) "An Act relating to state aid for volunteer services; and providing for an effective date." Senator Torgerson explained SB 139. He referred to EMS and volunteer services. This bill would help to alleviate some problems by allowing some state aid for the volunteer and EMS services. Senator Adams concurred. Senator Adams moved CSSB 139(CRA) with individual recommendations and accompanying fiscal notes. Without objection it was reported out. CS FOR HOUSE BILL NO. 250(O&G) "An Act establishing a North Slope Gas Commercialization Team to develop recommendations regarding a North Slope gas project; and providing for an effective date." Representative Mark Hodgins was invited to join the committee. He read the sponsor statement into the record. Commissioner Wilson Condon, Department of Revenue was invited to join the committee. He said he was available to answer any questions the committee may have. Co-chair Sharp felt the bill would be better for prospective producers and buyers. Confidentiality of matters would be enhanced with the Commissioner of Revenue being a board member. Senator Phillips moved CSHB 250(O&G) with individual recommendations and accompanying fiscal notes and without objection it was reported out. There followed a brief at ease. Co-chair Sharp called SB 25. CS FOR SENATE BILL NO. 25(JUD) "An Act relating to authorizing the Department of Corrections to provide an automated victim notification and prisoner information system." Senator Johnny Ellis, sponsor of SB 25, was invited to join the committee. He explained his bill. The notification system to the victim would be automated. This would do away with unnecessary delay caused by the present system of notifying the victim by mail. The fiscal note had been whittled down to a bare minimum. The bill had received wide support across the State. In response to a question by Co- chair Sharp, Senator Ellis reviewed the Department of Corrections fiscal note. He said the $3,000 represented emergency notification in case of failure of the system. Senator Donley explained a memo from Senator Taylor, dated 28 April 1997. Senator Ellis concurred with the conforming changes and recommended they be rolled into a Finance CS. Senator Donley therefore moved amendment #1, memo dated 28 April 1997 from Senator Taylor and without objection it was adopted. Bob Cole, Director, Division of Administrative Services, Department of Corrections, was invited to join the committee. He referred to the current paper-driven system for victim notification. He said this was an obsolete system and the department was doing design work for replacement of OPSIS. The cost of $150,000 was justified. Senator Pearce suggested the department seek information on a contractual system. Mr. Cole advised the department would charge for phone calls and said this revenue would be helpful. Senator Torgerson asked if this was an unfunded mandate and Mr. Cole advised that it was not. Senator Donley moved CSSB 25(FIN) with individual recommendations and accompanying fiscal notes. Without objection it was reported out. Co-chair Sharp called HB 2. HOUSE BILL NO. 2 "An Act allowing, for the purposes of permanent fund dividend eligibility, an individual to accompany, as the spouse or minor or disabled dependent, another eligible resident who is absent for any of the following reasons: vocational, professional, or other specific education for which a comparable program is not reasonably available in the state; secondary or postsecondary education; military service; medical treatment; service in the Congress or in the peace corps; to care for the individual's terminally ill parent, spouse, sibling, child, or stepchild; for up to 220 days to settle the estate of the individual's deceased parent, spouse, sibling, child, or stepchild; to care for a parent, spouse, sibling, child, or stepchild with a critical life-threatening illness whose treatment plan, as recommended by the attending physician, requires travel outside of the state for treatment at a medical specialty complex; or other reasons that the commissioner of revenue may establish by regulation; requiring, for the purposes of permanent fund dividend eligibility, a state resident to have the intent to remain indefinitely; relating to the eligibility for 1992, 1993, 1994, 1995, 1996, and 1997 permanent fund dividends of certain spouses and dependents of eligible applicants; and providing for an effective date." Representative Pete Kott, sponsor of the bill was invited to join the committee. He read his sponsor statement into the record. It was noted that eligibility should not be determined through marriage. Representative Kott said they were trying to restore the bill to its' original intent. The state has filed an appeal with the Supreme Court. Approximately 7,500 applicants would be affected by the bill at present. Senator Adams asked for an explanation of the Superior Court ruling. Representative Kott noted there was a copy of the December 1976 Superior Court ruling (Joan Hale vs. State of Alaska, Department of Revenue, Permanent Fund Division) enclosed as back-up material in committee members' files. Senator Phillips asked about page 3, line 17. Representative Kott said this referred to current status. Co-chair Sharp asked about those applicants who were denied and now out of state. He had a hard time accepting those out of state could apply for the dividend but some of his elderly constituents were unable to apply retroactively. He wanted to know how intent to remain in Alaska was established. Representative Kott said it was always difficult to establish intent. However, each applicant must satisfy eligibility for the dividend. Senator Adams voiced concern giving the dividend to those with intent and in the process denying real Alaskans. Representative Kott further advised that those not applying before 1998 would not be allowed to file. One could always submit supplemental documents and then wait for a determination of eligibility. Senator Donley asked about a penalty for falsely applying for the dividend. Representative Kott explained that it was a criminal offense. Senator Donley again asked about the penalty. Representative Kott said the dividends must be paid back and there was a fine of $5,000. Witnesses on the application were also subject to the same penalty. Senator Donley felt it was hard for the state to collect the $5,000 fine and in addition it should be increased. Due to the abuse situation of the dividend if this bill is to pass there should be a stiffer penalty and there should be additional tools available to law enforcement officials. Representative Kott concurred. Senator Adams referred to page 4, section 4. Representative Kott said those in the military must return once every two years for thirty days in order to remain eligible for the dividend. Co-chair Sharp, at this point, advised there was to be a statewide teleconference regarding this bill tomorrow evening at 5:00 p.m. Any interested individual could also fax their comments to the Senate Finance Committee Secretary's office. He asked Senator Torgerson to hold his amendment pending the statewide teleconference. Senator Donley offered his further comments stating that he would be willing to work with the department over the next year in order to alleviate some standards. He referred specifically to page 3, line 10. Nanci A. Jones, Director, Division of Permanent Fund Dividend, Department of Revenue was invited to join the committee. She said the division did not support retroactivity of the bill. She opposed section 4 (retroactive payments to spouses) and piecemeal absences. She said reopening the filing date of applications was not a good policy procedure. However, basically, she had always encouraged the filing of this bill. Senator Phillips asked if any benefits given out by the State since statehood had been made retroactive. Ms. Jones said she could not think of any. Deborah Vogt, Deputy Commissioner, Department of Revenue, was invited to join the committee. She said as far as she could recall and had researched there was no precedence of retroactivity. She felt this bill would set a very bad precedence regarding retroactivity. Senator Phillips recalled retroactivity regarding the veterans' discount for land. Senator Adams said that bill passed because the money had already been collected from the veterans so therefore was a different matter. He further commented on eligibility status and the intent of Alaskans to retain their residency. He recommended that money could be held in escrow pending proof of residency. Ms. Jones advised that this had been looked into. Ms. Vogt further advised the committee that all pending applications per HB 4 of last year had been denied. Co- chair Sharp indicated that failure of the legislature to pass a bill meant "no". Senator Phillips further commented on the topic stating that just because the legislature did not pass the bill did not mean they did not take action on the bill in committee. Hearings were scheduled and testimony was taken. Senator Parnell felt that the department could not deviate from a specific deadline regarding filings and agreed that any retroactivity or delay would set a bad precedence. Co-chair Sharp said the title was too tight and nothing could be changed. It would required a title change to get out of committee that would need a 2/3 vote and that would be very difficult. Senator Donley requested Ms. Jones provide an executive summary and she said one would be provided the committee. She referred to an Anchorage case where a sister had continued to file on behalf of a deceased sister. In this case the defendant was allowed to pay back the monies by working in community service. Co-chair Sharp asked Ms. Jones to include in her executive summary the total dollars for retroactivity and the number of fraud connected with out-of-state filings. Senator Donley also asked that penalties, how the cases were prosecuted, fines, etc. be included. Co-chair Sharp also offered his concern about the filing deadline and said he opposed those out of state being able to file; but not those in state. In response to a question by Co-chair Sharp, Ms. Vogt said that the division had always paid legal resident aliens. Co-chair Sharp asked the requested information be submitted as soon as possible. He set aside HB 2. After a brief at ease, Co-chair Sharp called HB 63. CS FOR HOUSE BILL NO. 63(2d RLS) "An Act amending the definition of `motor fuel' under the state's motor fuel tax to add, as a part of the tax exemption set out in that definition, exemption from the tax for fuel sold for use in jet propulsion aircraft operating in flights that continue from foreign countries, subject to termination of the exemption for that fuel if a refiner operating a refinery at which the fuel was produced fails to comply with terms of a voluntary agreement entered into by the refiner to use Alaska residents, contractors, and suppliers to provide goods and services when the refinery's capacity is expanded, t o add exemption from the tax for certain number 6 `residual fuel oil,' also known as bunker fuel, and to delete the exemption from the tax for fuel that is at least 10 percent alcohol by volume; and repealing ch. 42, SLA 1994, the Act providing for the imposition of a different tax levy on residual fuel oil used in and on certain watercraft until June 30, 1998; and providing for an effective date." Nancy Kelly, staff to Representative Gene Therriault, was invited to join the committee. She read the sponsor statement into the record and explained the federal definition of "federal flights". Jeff Cook, MAPCO, was invited to join the committee. He said this was a pro-Alaska bill and urged its passage. Bob Bartholomew, Assistant Director, Division of Income and Excise Audit, Department of Revenue, was invited to join the committee. He said it was appropriate to change the tax schedule. "Bunker Fuel" is very low grade and there is not a lot of consumption in Alaska. The department is comfortable with no tax on "bunker fuel". In 1994 EPA required Anchorage and Fairbanks to burn clean fuel. Motor fuel tax should be applicable to everyone and therefore there should be a motor fuel tax base. After a brief at ease, Senator Parnell explained amendment Mr. Bartholomew responded regarding amendment #2. It referred to section 2(a)(1). Senator Parnell said the title was too tight to delete section 2(a)(1). Mr. Bartholomew said he had no concerns regarding amendment #2. Co-chair Sharp explained his understanding of (f), page 4. Senator Donley voiced his concern that only Anchorage residents would be hit with the motor fuel tax. The Department of Revenue had not taken the time to discern the impact in Anchorage. Co-chair Sharp referred to the fiscal note. He said it was not up to the department to control retail dealers. He asked Mr. Bartholomew to provide the requested information. Kim Ross, Executive Director, Alaska Air Carriers was invited to join the committee. She said the association opposed HB 63 and she read their opposition statement into the record. The bill would have an adverse effect on domestic industry. This industry provided mail, freight, transportation, passenger, medivac to rural as well as urban Alaska. She provided direct quotes from MAPCO press release and the Anchorage Daily News. It was not accurate to compare jet and motor fuel. Many questions concerning the bill have gone unanswered. In response to Co-chair Sharp, Ms. Ross said she had been with the association for ten years. Co-chair Sharp advised he would hold HB 63 in committee until tomorrow at 8:00 a.m. ADJOURNMENT Co-chair Sharp adjourned the committee at 11:10 a.m. until 8:00 a.m. tomorrow.