Legislature(2001 - 2002)

03/04/2002 09:10 AM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                     SENATE FINANCE COMMITTEE                                                                                 
                          March 04, 2002                                                                                      
                              9:10 AM                                                                                         
SFC-02 # 24, Side A                                                                                                             
SFC 02 # 24, Side B                                                                                                             
CALL TO ORDER                                                                                                               
Co-Chair Pete  Kelly convened the meeting at approximately  9:10 AM.                                                            
Senator Pete Kelly, Co-Chair                                                                                                    
Co-Chair Dave Donley, Co-Chair                                                                                                  
Senator Jerry Ward, Vice Chair                                                                                                  
Senator Lyda Green                                                                                                              
Senator Gary Wilken                                                                                                             
Senator Alan Austerman                                                                                                          
Senator Lyman Hoffman                                                                                                           
Senator Donald Olson                                                                                                            
Senator Loren Leman                                                                                                             
Also Attending:  SENATOR  BEN STEVENS; SENATOR RANDY PHILLIPS; PEGGY                                                          
BROWN, Public  Policy Analyst, Alaska  Network on Domestic  Violence                                                            
and  Sexual Assault;  JIM  NORDLUND,  Director, Division  of  Public                                                            
Assistance, Department  of Health and Social Services; SUE ASPELUND,                                                            
Executive Director,  Cordova Fisherman United; JERRY  MCCUNE, United                                                            
Fishermen  of Alaska; KATHY  HANSON, Executive  Director,  Southeast                                                            
Alaska Fishermen's  Alliance; BARBARA  BELKNAP, Executive  Director,                                                            
Alaska  Seafood   Marketing  Institute;   JIM  NORDLAND,   Director,                                                            
Division  of Public  Assistance,  Department  of Health  and  Social                                                            
Attending via Teleconference:   From Anchorage: BOB LABBE, Director,                                                          
Division  of Medical  Assistance,  Department of  Health and  Social                                                            
Services;  SUSAN SULLIVAN,  Division of  Child Support Enforcement,                                                             
Department  of Revenue;  JOHN MALLONEE,  Division  of Child  Support                                                            
Enforcement,  Department of Revenue;  From Kodiak: BRUCE  SCHACTLER,                                                            
Commercial  salmon fisherman, At-Large  Member, Board of  Directors,                                                            
United   Fishermen  of   Alaska,   and  President,   United   Salmon                                                            
SUMMARY INFORMATION                                                                                                         
SB 341-APPROP:STUDY WELFARE /MEDICAID RECIPIENTS                                                                                
The  Committee  heard  from  the Department  of  Health  and  Social                                                            
Services  and the  Alaska Network  on Domestic  Violence and  Sexual                                                            
Assault. The bill was held in Committee.                                                                                        
SCR 28-JOINT LEGIS SALMON INDUSTRY TASK FORCE                                                                                   
The Committee  heard  from the  sponsor and  representatives of  the                                                            
fishing industry. The bill was held in Committee.                                                                               
SB 282-ALASKA SEAFOOD MARKETING INSTITUTE/TAX                                                                                   
The Committee  heard from the sponsor, the Alaska  Seafood Marketing                                                            
Institute and  representatives of  the commercial fishing  industry.                                                            
The bill was held in Committee.                                                                                                 
SB 340-HOLD HARMLESS PROVISIONS OF PFD PROGRAM                                                                                  
The Committee  heard  from the sponsor,  the Division  of Legal  and                                                            
Research Services, the  Department of Health and Social Services and                                                            
the Department of Revenue. The bill was held in Committee.                                                                      
     SENATE BILL NO. 341                                                                                                        
     "An Act making a special appropriation for a study of                                                                      
     recipients of welfare and Medicaid; and providing for an                                                                   
     effective date."                                                                                                           
This  was the first  hearing  for this  bill in  the Senate  Finance                                                            
Co-Chair  Kelly  spoke  to the  bill,  relaying  conversations  held                                                            
during  hearings  on the  FY  03 supplemental  budget  requests  for                                                            
Medicaid  funding,  regarding the  "root  causes" of  state  welfare                                                            
dependency. He  noted studies have been conducted  to determine age,                                                            
income levels  and other factors of welfare recipients.  However, he                                                            
remarked there  is no data reflecting, "exactly why  it is that they                                                            
got there in the  first place." He spoke to the correlation  between                                                            
recipients  and  drug  abuse,  alcoholism,   single  parenthood  and                                                            
limited education  as found in national  research, although  no such                                                            
studies have been conducted in Alaska.                                                                                          
Co-Chair  Kelly stated  this legislation  is "designed  to find  out                                                            
what kind of choices people  are making in their lives that possibly                                                            
they  have some  control  over that  ultimately  leads  to being  on                                                            
Senator Ward asked  if the proposed study would attempt  to identify                                                            
why certain recipients  relocated to this state and whether Alaska's                                                            
benefit programs are a "magnet".                                                                                                
Co-Chair Kelly  responded it is his  intention such questions  would                                                            
be included in the survey.                                                                                                      
BOB LABBE, Director,  Division of Medical Assistance,  Department of                                                            
Health  and  Social  Services,  testified  via  teleconference  from                                                            
Anchorage  and suggested  conducting the study  in conjunction  with                                                            
the Division.  He listed a cost-benefit of this option  would be the                                                            
ability  to  receive  50-percent  federal  matching  funds  for  the                                                            
project.  He   referenced  a  January   1996  Division  of   Medical                                                            
Assistance  report  prepared by  the  McDowell Group  regarding  the                                                            
characteristics  of Alaska  Medicaid  recipients.  He recalled  this                                                            
report was undertaken to  answer the question of whether people were                                                            
relocating  to Alaska  specifically  to receive  benefits, and  more                                                            
generally, what factors  were responsible for the increased caseload                                                            
at that time.                                                                                                                   
Co-Chair  Kelly  commented  this  is a  good  suggestion  and  worth                                                            
Co-Chair  Kelly shared he  had reviewed the  1996 report, which  was                                                            
useful although  it must be updated  due to changes in demographics                                                             
in the  age of the population.  He repeated  "consistent"  testimony                                                            
relating to Medicaid  indicates, "one of the biggest  drivers is the                                                            
aging population."                                                                                                              
PEGGY  BROWN, Public  Policy  Analyst,  Alaska Network  on  Domestic                                                            
Violence  and Sexual Assault  testified she  was present to  monitor                                                            
the legislation and welfare reform in general.                                                                                  
Senator Hoffman asked if the witness supports the legislation.                                                                  
Ms. Brown supported  the knowledge  of why recipients are  dependant                                                            
upon  welfare,  as  it would  assist  agencies  in  providing  aide.                                                            
However, she did  not think such a study would benefits  recipients.                                                            
She understood the purpose  of identifying those recipients from out                                                            
of state given  the increased costs in Medicaid, but  her concern is                                                            
for those who already live in Alaska.                                                                                           
Co-Chair  Kelly asked  if the  Department  would be  subject to  any                                                            
restrictions on the perimeters of such a study.                                                                                 
Mr. Labbe  surmised it would  not, so long  as the study focused  on                                                            
the factors  influencing the  cost of the  Medicaid program,  or had                                                            
another Medicaid-related purpose.                                                                                               
Co-Chair  Kelly asked  if such a  study could  address other  public                                                            
assistance programs as well.                                                                                                    
Mr.  Labbe answered  the study  could  be "constructed"  to  include                                                            
other  state public  assistance  programs  as  well and  still  meet                                                            
federal standards.  He explained this  is because many participants                                                             
of other public assistance  programs also receive Medicaid benefits.                                                            
Co-Chair Kelly  asked if there would be restrictions  on the kind of                                                            
information a  study could collect if federal funding  was involved.                                                            
Mr. Labbe was  unaware of any restrictions  imposed with  the use of                                                            
this  federal  funding. He  noted  the Division  has  undertaken  "a                                                            
number  of activities  over the  years" utilizing  federal  Medicaid                                                            
matching  funds. "Sometimes  the relationships  are very direct  and                                                            
some  are a  little  less direct,"  he  stated  with regard  to  the                                                            
correlation  between  the  projects  and the  Medicaid  program.  He                                                            
suggested  the  proposed  survey questions  should  be  reviewed  to                                                            
determine any conflict with receipt of the federal funding.                                                                     
Co-Chair Kelly  had concern "that we couldn't get  the scope of what                                                            
we  need  if we're  attached  to  federal  dollars  and any  of  the                                                            
requirements  they might  have." He appreciated  the suggestion  and                                                            
stated the  Committee would  discuss the  option. He encouraged  the                                                            
Division to update the 1996 McDowell study.                                                                                     
JIM NORDLUND,  Director, Division  of Public Assistance,  Department                                                            
of Health and  Social Services, testified in Juneau  that he did not                                                            
foresee  any  difficulty  in  utilizing   federal  funding  for  the                                                            
proposed study. He noted,  "there is a great deal of overlap between                                                            
those people"  who receive temporary public assistance  and Medicaid                                                            
Co-Chair Kelly ordered the bill HELD in Committee.                                                                              
     CS FOR SENATE CONCURRENT RESOLUTION NO. 28(RES)                                                                            
     Establishing the Joint Legislative Salmon Industry Task Force.                                                             
This  was the first  hearing  for this  bill in  the Senate  Finance                                                            
Senator Austerman,  sponsor, testified this resolution  was proposed                                                            
to address  the  "evolution"  in the  salmon industry,  which  would                                                            
continue for several years.                                                                                                     
Senator Austerman  detailed that meetings  would be held  before the                                                            
2001  salmon fishing  season  begins,  and  again after  the  season                                                            
concludes.  The purpose  of the  task force,  he said,  would be  to                                                            
identify  solutions,   including   finding  methods  in   which  the                                                            
legislature  could assist  in "resolving some  of the problems  that                                                            
are in  this industry".  Just as  important, he  stressed, the  task                                                            
force would  identify efforts  that could  be undertaken within  the                                                            
SUE  ASPELUND,   Executive   Director,  Cordova   Fisherman   United                                                            
testified in Juneau in  support of the bill on behalf of the fishing                                                            
fleets in the  Copper River and Prince William Sound  represented by                                                            
the organization.  She asserted the fishing industry  is "in crisis"                                                            
and there is  a need to "comprehensively  evaluate where  we are and                                                            
how  we  can  move  forward  into  the  future."  She  emphasized  a                                                            
successful  approach to a solution  would include three components:                                                             
the issue must  be addressed on a statewide basis,  in Alaska and by                                                            
Alaskans;  fishing industry  representatives,  including  fisherman,                                                            
tenders, and processors,  must be involved in the  evaluation at the                                                            
"very basic level and throughout  the process" and; a funding method                                                            
is required  because  the industry  does not have  the resources  to                                                            
address all the impacts  to stakeholders in the state. She expressed                                                            
that commercial  fishing is the "lifeblood"  of many communities  in                                                            
coastal Alaska.                                                                                                                 
Senator Ward remarked,  "Clearly, this is something that needs to be                                                            
done." However,  he questioned the limited panel membership  of nine                                                            
public members, as he identified more than nine user groups.                                                                    
Ms.  Aspelund responded  that  "the fishing  industry  in Alaska  is                                                            
extremely  complex" and  there are  many user  groups involved.  She                                                            
relayed discussions  on the  issue, which  determined that  the task                                                            
force is the "starting  point" to address the problems. She asserted                                                            
the public  members would  need to  "leave their  peer group  at the                                                            
door". She stated the resolution  allows "plenty of opportunity" for                                                            
discussions   involving  the   impacts  to   all  stakeholders   and                                                            
communities. Therefore,  she said, it is anticipated the nine public                                                            
members  of the task  force would  serve as  representatives  of the                                                            
balance of the  stakeholders in the area they represented  and would                                                            
be  responsible  for  consulting  and  obtaining  input  from  their                                                            
respective communities.                                                                                                         
Senator Ward  clarified the task force  would be comprised  of a 13-                                                            
member panel with subcommittees operating within the group.                                                                     
Senator  Austerman  affirmed  and  detailed the  intent  to  utilize                                                            
subcommittees  to take up  "specific issues  in specific areas".  He                                                            
stressed the  intent to address the  salmon industry as a  statewide                                                            
industry,  while recognizing  there  are regions  in the state  with                                                            
different problems.                                                                                                             
Ms. Aspelund added  to her testimony that government  involvement is                                                            
required to enable  the seafood processing sector  to participate in                                                            
this effort, to  protect them from anti-trust violations.  She noted                                                            
the  inability to  gather  with this  group, because  of  anti-trust                                                            
issues,  has  hindered  earlier  efforts  at  identifying   possible                                                            
solutions for the fishing industry.                                                                                             
JERRY  MCCUNE, United  Fishermen of  Alaska testified  in Juneau  in                                                            
support of the proposed  task force. He stated that the organization                                                            
anticipates the  task force would "answer a lot of  the questions we                                                            
haven't been  able to answer  in the past"  due to the inability  to                                                            
gather the  harvesters, processors,  hatcheries  and the public.  He                                                            
expressed  the pink salmon  fishery is of  particular concern  given                                                            
competition with farmed fish.                                                                                                   
KATHY  HANSON,  Executive  Director,  Southeast  Alaska Fishermen's                                                             
Alliance, testified  in Juneau and  described the organization  that                                                            
represents salmon, crab,  shrimp and long-line fishermen. She stated                                                            
the  organization  supports the  proposed  task force.  She  further                                                            
described  the  anti-trust   issue  and  the  need  for   government                                                            
involvement   to  allow   meetings   between  the   harvesters   and                                                            
Ms. Hanson  stressed that  although salmon  is the primary  focus of                                                            
the  task  force,   other  fisheries  and  "gear  groups"   must  be                                                            
considered  as well as they could  be impacted either positively  or                                                            
BRUCE  SCHACTLER,  Commercial  salmon  fisherman,  At-Large  Member,                                                            
Board  of Directors,  United Fishermen  of Alaska,  and,  President,                                                            
United Salmon Association,  testified via teleconference from Kodiak                                                            
that  this resolution  is  "a  wonderful  piece of  leadership".  He                                                            
approved of  the public participation  on the taskforce membership,                                                             
noting it gives  latitude to appoint  the most qualified  people. He                                                            
stressed  the salmon fishery  is "tremendously  complicated"  and is                                                            
specifically designed to be such.                                                                                               
Co-Chair  Kelly  commented  that  his  only  disagreement  with  the                                                            
witness'  statement is  that this  action is "timely"  as it  should                                                            
have been addressed sooner.                                                                                                     
AT EASE 9:34 AM / 9:37 AM                                                                                                       
Senator  Ward   thanked  Senator   Austerman  for  sponsoring   this                                                            
resolution.  He referenced US Senator  Frank Murkowski's  address to                                                            
the Legislature  where  he called  for  a task force  consisting  of                                                            
federal  and state  officials.  He asked  if Senator  Austerman  had                                                            
discussed the matter with the Congressman.                                                                                      
Senator Austerman  replied  he had not spoken  to Senator  Murkowski                                                            
directly  about this although  he had discussions  with Senator  Ted                                                            
Stevens on the matter.                                                                                                          
SENATOR BEN STEVENS  shared he had conversations with  Dave Russell,                                                            
staff to US Senator Ted  Stevens, with regards to coordinating these                                                            
efforts.   Senator   Ben  Stevens   noted   Alaska's  congressional                                                             
delegation supports  SCR 28. He said the understanding  is that most                                                            
of the changes  must be made  at the state  level, but that  federal                                                            
resources could assist in the process.                                                                                          
Senator  Ward   pointed  out  that   federal  assistance   would  be                                                            
necessary, for instance in relation to the Canadian government.                                                                 
Co-Chair Kelly surmised  the task force would not be restricted from                                                            
addressing matters not specifically listed in this resolution.                                                                  
Senator Green  questioned  the change made  in the Senate  Resources                                                            
committee substitute  with regards  to the public membership  on the                                                            
task  force. This  change  stipulated the  public  members would  be                                                            
representatives  of the commercial salmon fishing  industry. She did                                                            
not support  the restriction to commercial  fishing representatives                                                             
when decisions  made  by this body  could impact  the sport  fishing                                                            
Senator Austerman  explained the change  was made to avoid  a region                                                            
sending a representative  that is not "in tune" with  the situation.                                                            
He assured  the intent  to involve  people who  want to resolve  the                                                            
issue  and for  the  process to  be "industry  driven"  rather  than                                                            
Co-Chair  Kelly  opined the  intent  of  the task  force  is not  to                                                            
address  the  relationship  between  commercial  fishing  and  sport                                                            
fishing,  but  rather  to  identify  ways  the  commercial   fishing                                                            
industry could  adapt to a changing  world market and technologies.                                                             
Senator  Austerman agreed,  but stressed this  discussion must  take                                                            
place as sport fishing activities do impact commercial fishing.                                                                 
Senator  Olson asked  for assurances  that the  proposed task  force                                                            
would not adversely impact other "harvesters of the sea".                                                                       
Senator Austerman  agreed all uses  must be considered and  stressed                                                            
the primary  intent  of the  task force  is to  consider the  issues                                                            
related to salmon.                                                                                                              
Senator  Austerman mentioned  the rising  mari-culture industry  and                                                            
the  impacts  it  would  have  on salmon.  He  warned  that  as  the                                                            
aquaculture  industry evolves,  "it will have  some real impacts  on                                                            
the salmon industry."                                                                                                           
Co-Chair Kelly  requested Senator Austerman work with  Senator Green                                                            
and Senator Ward to address their concerns.                                                                                     
Co-Chair Kelly ordered this bill HELD in Committee.                                                                             
     CS FOR SENATE BILL NO. 282(L&C)                                                                                            
     "An Act extending  the termination dates of certain  activities                                                            
     and salmon  marketing programs of the Alaska  Seafood Marketing                                                            
     Institute  and  of  the salmon  marketing  tax;  expanding  the                                                            
     allowable use of that  tax for the salmon marketing programs of                                                            
     the Alaska Seafood  Marketing Institute; relating to the Alaska                                                            
     Seafood Marketing  Institute's salmon marketing  committee; and                                                            
     providing for an effective date."                                                                                          
This  was the first  hearing  for this  bill in  the Senate  Finance                                                            
SENATOR  BEN STEVENS, sponsor,  testified  this legislation  extends                                                            
the termination date of  the one-percent salmon tax to the year 2008                                                            
and  permits  the revenue  to  be  used in  current  Alaska  Seafood                                                            
Marketing Institute  (ASMI) programs. He informed  this would be the                                                            
second extension of this tax since its enactment in 1993.                                                                       
Senator Stevens told how  ASMI uses the funds to promote the quality                                                            
and "superiority" of Alaskan  seafood products and to increase world                                                            
consumption.  He emphasized  this  is the  only generic  program  in                                                            
Alaska  to promote  all  Alaska's  seafood  products in  the  global                                                            
protein market.                                                                                                                 
Senator Ward  asked if "niche"  marketing is  necessary to  focus on                                                            
certain fisheries, such as the Copper River sockeye salmon.                                                                     
Senator  Stevens replied  the "brand marketing  program" debate  has                                                            
been ongoing in ASMI but  that the organization continues to operate                                                            
as  a generic  marketing  program.  He expressed  that  to  allocate                                                            
funding to regional efforts would dilute the overall efforts.                                                                   
Senator Ward stated this  legislation may not be the entity to begin                                                            
these efforts,  but shared that Cook Inlet fisherman  have requested                                                            
a portion of the salmon tax be utilized to market their catch.                                                                  
Senator  Olson asked  about the  opinions from  within the  industry                                                            
regarding continuation of the one-percent tax.                                                                                  
Senator  Stevens relayed  the ASMI  Board favors  the extension  and                                                            
that  no testimony  heard  on  this bill  in  the Senate  Labor  and                                                            
Commerce Committee  opposed elimination of ASMI. He  qualified there                                                            
are some concerns that have always been present.                                                                                
Senator  Green  noted the  sponsor  statement  references  the  One-                                                            
Percent  Domestic Salmon  Marketing  Tax and  asked if  this is  the                                                            
official name.                                                                                                                  
Senator Stevens  affirmed  this is the official  name although  this                                                            
legislation would change the name to the Salmon Marketing Tax.                                                                  
BRUCE  SCHACTLER,  Commercial  salmon  fisherman,  At-Large  Member,                                                            
Board  of Directors,  United  Fishermen  of Alaska,  and  President,                                                            
United Salmon Association,  testified via teleconference from Kodiak                                                            
about a perceived  rush to pass this legislation.  He stated he does                                                            
not oppose using a portion  of the tax revenue for foreign marketing                                                            
efforts; however, the tax  originally gained approval in part from a                                                            
promise  that the  funds would  be expended  solely  to develop  the                                                            
domestic  market and  the  matter should  be discussed  before  such                                                            
changes  are  made. He  also  encouraged  further  consideration  of                                                            
expending  funds for lobbying  efforts in  Washington DC to  address                                                            
farmed salmon and foreign competition.                                                                                          
CHRIS BERNS  testified via  teleconference  from Kodiak that  he has                                                            
fished since 1970 and he  supported the one-percent industry tax and                                                            
had lobbied for  its implementation in 1993 based  on the assumption                                                            
that it  would be used  for domestic marketing.  He stated  that the                                                            
United States is the primary  market for farmed salmon. While he did                                                            
not oppose "giving  flexibility" to the ASMI marketing  committee to                                                            
expend funds  for foreign marketing,  he asserted, "foreign  markets                                                            
are just a big  giant hole" and past efforts have  been ineffective.                                                            
He suggested  giving this legislation  further consideration  as the                                                            
current extension does not expire until the following year.                                                                     
SFC 02 # 24, Side B 10:00 AM                                                                                                    
Mr. Berns  continued that  the salmon industry  is the only  seafood                                                            
producer  in the state to  pay a tax for  the marketing efforts.  He                                                            
did not see any benefit for himself from this tax.                                                                              
Co-Chair Kelly asked Senator Stevens to address the comments.                                                                   
Senator  Stevens  addressed   Mr.  Schactler's  comments   regarding                                                            
utilizing funds  to lobby in the nation's  capital. Senator  Stevens                                                            
noted this  was discussed but not  incorporated in the legislation,                                                             
as  the United  Salmon  Association  was  the only  organization  in                                                            
support of the  plan and because it was determined  this was not the                                                            
best use of  the funds given the limited  amount available.  He also                                                            
noted this  legislation  is not being  rushed and  that most  of Mr.                                                            
Schactler's  concerns   were  addressed  at  the  Senate  Labor  and                                                            
Commerce  Committee.   He  stated   the  extension  date   is  being                                                            
implemented one year earlier  to allow ASMI to make long-term plans.                                                            
Senator Ward  understood one witness  suggested that a subcommittee                                                             
of the proposed  salmon task could  address the concerns  raised. He                                                            
asked the sponsor's opinion.                                                                                                    
Senator Stevens  responded ASMI needs stability to  allow it to plan                                                            
for the future. He expressed  there is uncertainty as to the results                                                            
of the task force and therefore  ASMI should not be dependant on its                                                            
Senator Stevens  referenced the statement  that the salmon  industry                                                            
is the  only seafood  industry  paying a  tax. He  pointed out  that                                                            
processors pay a .3 percent tax for all seafood products.                                                                       
Senator   Austerman  supported   reauthorizing   ASMI  during   this                                                            
legislative session  because of the time lapse involved  in planning                                                            
efforts. He suggested the  task force could review the issues and if                                                            
it recommended, the extension could be repealed.                                                                                
SUE ASPELUND,  Executive Director,  Cordova Fisherman United,  spoke                                                            
to  the knowledge  of  the  organization  and  the full  support  of                                                            
continuation  of  the  one-percent  tax.  She  relayed  support  for                                                            
lifting  the restrictions  against foreign  marketing. She  stressed                                                            
the importance of seafood  marketing and preferred funding marketing                                                            
versus lobbying efforts.                                                                                                        
BARBARA  BELKNAP,  Executive  Director,  Alaska   Seafood  Marketing                                                            
Institute,  testified in  Juneau to respond  to witness statements.                                                             
She told  of the  history  and diversity  of representation  on  the                                                            
board. She  stated that the board  of directors supports  removal of                                                            
the domestic  marketing limitation,  and that the issue of  lobbying                                                            
was not addressed  during the previous  board meeting. She  stressed                                                            
ASMI is not a trade organization.  She spoke to the disadvantages of                                                            
lobbying, as any  standpoint the agency lobbies in  support of would                                                            
meet opposition from other  entities the agency represents. She told                                                            
of the Salmon  Marketing Committee that oversees the  expenditure of                                                            
the  marketing  funds.  She  mentioned  difficulties   incurred  the                                                            
previous time ASMI was  due for reauthorization as commitments could                                                            
not be made until continuance of the program was guaranteed.                                                                    
JERRY  MCCUNE, United  Fishermen  of  Alaska, testified  in  Juneau,                                                            
about the 29 groups represented  by the organization, which supports                                                            
the committee  substitute and international marketing.  He noted the                                                            
original intent  of the tax was to  focus marketing on the  domestic                                                            
market,  which  he  stated  has  occurred.  However,  he  noted  new                                                            
international markets are emerging for generic salmon.                                                                          
KATHY  HANSON,  Executive  Director,  Southeast  Alaska Fishermen's                                                             
Alliance testified  in Juneau in support of the renewal  of ASMI and                                                            
the importance  of renewing this year rather then  waiting until the                                                            
term expires.  She stated that removing the restrictions  related to                                                            
international  marketing would  be beneficial,  noting that  most of                                                            
the  funds  would  continued  to  be  used  for domestic   marketing                                                            
although  ASMI should  have  flexibility to  take  advantage of  the                                                            
international market. She  spoke of ASMI successes in using funds to                                                            
leverage additional funds.                                                                                                      
Ms. Hanson  addressed  changing the  number of members  on the  ASMI                                                            
board. She  stated the organization  was unable to reach  consensus.                                                            
She relayed some of the arguments in favor and opposition.                                                                      
AT EASE 10:17 AM / 10:19 AM                                                                                                     
Senator Austerman  emphasized this  bill must be adopted  this year.                                                            
He informed  that the original  version of  the bill maintained  the                                                            
domestic  marketing  restrictions  and  it  reduced  the  number  of                                                            
members on the board. He  relayed that productive debate occurred in                                                            
the Senate Labor  and Commerce Committee about these  issues as well                                                            
as the  potential for utilizing  a portion  of the tax revenues  for                                                            
lobbying  efforts.  He  stated  his opinion  is  that  the  domestic                                                            
marketing restriction  should remain  as it weakens the program.  He                                                            
shared that  he had made  the suggestion to  expend some of  the tax                                                            
revenues for lobbying efforts,  but withdrew after hearing arguments                                                            
against the proposal.  He expressed he would not offer  an amendment                                                            
to the committee substitute,  citing that "the industry has spoken".                                                            
Co-Chair  Kelly noted Co-Chair  Donley had  questions regarding  the                                                            
fiscal note and requested he consult with the sponsor.                                                                          
Co-Chair Kelly ordered the bill HELD in Committee.                                                                              
AT EASE 10:21 AM / 10:32 AM                                                                                                     
     SENATE BILL NO. 340                                                                                                        
     "An Act relating to treatment of permanent fund dividends for                                                              
     purposes of determining eligibility for certain benefits; and                                                              
     providing for an effective date."                                                                                          
SENATOR RANDY  PHILLIPS, sponsor,  testified that the hold  harmless                                                            
clause  has  been  a  "spur  under  the  saddle"  for  some  of  his                                                            
constituents.  He noted a predicted increase of $37  million over FY                                                            
02  Medicaid   expenditures  and   stated  this  bill  attempts   to                                                            
"alleviate some  of that burden." He explained this  bill eliminates                                                            
the hold harmless  provision for all  but Social Security  Insurance                                                            
(SSI) and Adult  Public Assistance  (APA) recipients. The  remaining                                                            
recipients of  public assistance would decide whether  to receive an                                                            
Alaska permanent fund dividend or public assistance payments.                                                                   
Senator  Phillips noted this  bill would  generate approximately  $6                                                            
million,  which he  pointed  out would  offset the  state's  revenue                                                            
TAMARA  COOK, Director,  Division  of Legal and  Research  Services,                                                            
Legislative  Affairs Agency, testified  in Juneau that all  Alaskans                                                            
qualify for public  assistance, although some programs  are based on                                                            
need.  She  stated  that current  statute  provides  that  a  person                                                            
receiving a  permanent fund dividend  is not disqualified  from also                                                            
receiving  public  assistance benefits  in  the event  the  dividend                                                            
increases the  person's income above  that allowed for the  program.                                                            
She  noted statute  directs  state agencies  to  disregard  dividend                                                            
income when  calculating  eligibility for  state-operated  programs.                                                            
She said in cases involving  federal programs that require dividends                                                            
to be included  as income, current  state statute provides  that the                                                            
state "make up the difference"  so the recipient does not experience                                                            
a decrease in the amount of aide under these programs.                                                                          
Ms.  Cook explained  this  bill  repeals  the broad  provision  that                                                            
authorizes  the state to hold harmless  any program administered  by                                                            
the Department  of Health and Social  Services. She stated  the bill                                                            
provides that  the state would continue to hold harmless  only those                                                            
individuals  who receive  benefits from  two programs: supplemental                                                             
security income from the  federal Social Security Administration and                                                            
the state-operated  APA program. She noted these programs  primarily                                                            
serve physically disabled,  mentally disabled, the blind and certain                                                            
seniors. With these exceptions,  she continued, recipients of public                                                            
assistance  under other eligibility  criteria  and who do receive  a                                                            
permanent  fund  dividend  would "suffer  the  consequences"  of  an                                                            
increase of their economic  ability as a result of the dividend. She                                                            
stated the recipient  could make the choice, and noted  the programs                                                            
provide counseling for  recipients regarding the affects of applying                                                            
for a dividend.                                                                                                                 
Senator Phillips referenced  a chart titled "Hold Harmless" [copy on                                                            
file] that outlines  the $5,953,800 total estimated  savings of this                                                            
legislation. He  suggested this could be applied to  the $37 million                                                            
Medicaid increase  and subsequently  for, "the very people  who have                                                            
been benefiting" from the Medicaid program.                                                                                     
Co-Chair Kelly informed  the Committee that the "transfer mechanism"                                                            
necessary  for  this  application  is not  included  in  this  bill;                                                            
however an amendment would be drafted to include it.                                                                            
Senator  Olson asked  how  recipients would  know  whether they  are                                                            
"borderline"  for discontinued benefits  if they accept a  dividend.                                                            
Ms.  Cook  responded   that  program  administrators   would  review                                                            
recipients' finances  and provide counseling on the  matter. She was                                                            
unaware of the details  of this counseling, but assured that it does                                                            
occur.  She agreed a  recipient must  make the  decision whether  to                                                            
file for a dividend early in the year.                                                                                          
Senator Olson predicted this would be cumbersome.                                                                               
Ms. Cook responded  the Department  would have to address  this. She                                                            
reiterated  this exercise is already  undertaken, although  it would                                                            
have to occur more often and for more programs.                                                                                 
Senator Hoffman  requested the witness  expand upon the impact  this                                                            
would  have  for  recipients  of  Temporary   Assistance  for  Needy                                                            
Families (TANF) services.                                                                                                       
Ms. Cook did not  know and deferred to the Department  of Health and                                                            
Social  Services.  She emphasized  the  hold harmless  provision  is                                                            
"drafted with  a very broad brush,"  in that it could be  applied to                                                            
any existing  and future program.  This bill, she noted,  limits the                                                            
provision to the  two aforementioned programs. She  suggested other,                                                            
yet unidentified programs, could be added if desired.                                                                           
Senator Hoffman  referenced the Hold Harmless chart  and asked about                                                            
the Contractual  Services  program  that is indicated  would  remain                                                            
covered under the hold harmless provision.                                                                                      
JIM NORDLAND,  Director, Division  of Public Assistance,  Department                                                            
of Health and Social Services,  testified the Division has questions                                                            
as  to what  programs  would be  affected  by this  legislation.  He                                                            
presumed that  the Alaska Temporary Assistance Program  (ATAP), food                                                            
stamps and possibly Medicaid  would be affected. He was unsure about                                                            
the reference to contractual services.                                                                                          
Senator  Austerman  asked if  children's  permanent  funds would  be                                                            
included in the calculation of a parent's income.                                                                               
Ms. Cook answered yes;  the major programs calculate total household                                                            
income in determining eligibility.                                                                                              
Senator  Olson asked  about the  $4.1 million  expenditure for  ATAP                                                            
referenced  on the chart and asked  what specific services  would be                                                            
affected by this legislation.                                                                                                   
Mr. Nordland explained  ATAP is the "basic cash welfare program" for                                                            
poor families with children in Alaska.                                                                                          
Senator Ward  expressed that this  bill would not affect  the actual                                                            
programs.  It would  not eliminate  any  services;  rather it  would                                                            
require recipients  to choose  between receiving  a dividend  or the                                                            
Mr. Nordland understood that is the intention of the bill.                                                                      
Mr.  Nordland   next   gave  testimony   on  the   bill,  which   he                                                            
characterized  as seemingly  simple,  but actually  complicated.  He                                                            
stated that  currently, the  department is  not allowed to  consider                                                            
permanent  fund  dividend  income  against  eligibility  for  public                                                            
assistance  programs.   This  bill,  he  understood,   removes  this                                                            
restriction  and  gives  an  option,   but  does  not  require,  the                                                            
Department to consider the dividend as income.                                                                                  
Mr.  Nordland  stated  the  Department  would  therefore  choose  to                                                            
continue to utilize the  hold harmless provision; because of this, a                                                            
fiscal  note  has not  been  prepared.  He said  that  because  this                                                            
legislation  would  no  longer  allow  use  of  the  permanent  fund                                                            
earnings  reserve fund to  offset the hold  harmless provision,  the                                                            
Department  would utilize  general funds to  cover the $3.1  million                                                            
cost. He  continued that  if the  bill were amended  to require  the                                                            
Department  to consider  permanent  fund  dividends  as income,  the                                                            
fiscal note  would be zero,  as those recipients  would not  receive                                                            
benefits during  the month that the dividend was received.  He added                                                            
that the  recipients would  regain eligibility  the following  month                                                            
and benefits would resume.                                                                                                      
Mr.  Nordland stated  the  hold harmless  provision  was  originally                                                            
implemented  so  poor families  in  Alaska  would receive  the  same                                                            
benefits  from  the permanent  fund  dividend  as all  Alaskans.  He                                                            
informed  that the  total annual  income, including  permanent  fund                                                            
dividends,  of  the  average  family  served  by  public  assistance                                                            
programs is still  below the federal poverty level.  He granted that                                                            
the  amount of  the dividends  are  increasing, but  stressed  these                                                            
funds  are  often  used  for  such  modest  purchases  as  clothing,                                                            
educational opportunities,  eyeglasses and dental care, and beds for                                                            
Mr. Nordland  reminded that  this issue has  been considered  in the                                                            
past. He pointed  out the provision  would not increase the  general                                                            
fund,  but  rather  would withdraw  less  from  the  permanent  fund                                                            
dividend program. He calculated  this would result in an increase of                                                            
approximately  $13  to each  dividend.  He predicted  most  Alaskans                                                            
would defer that amount to poor families.                                                                                       
Co-Chair  Kelly  informed  that the  intent  of  the sponsor  is  to                                                            
transfer the savings of  this legislation from the permanent fund to                                                            
the general fund.                                                                                                               
Mr. Nordland  noted a "dramatic decline"  in the caseload  of public                                                            
assistance  programs and  subsequent reduction  of the amount  taken                                                            
from the permanent  fund to offset  the hold harmless provision.  At                                                            
the same time, he pointed  out the dividend payments have increased.                                                            
Mr. Nordland added  that the permanent fund dividends  of 37 percent                                                            
of TANF clients  are garnished. He  warned that some families  would                                                            
therefore receive  neither public assistance benefits  for one month                                                            
nor a  dividend.  He spoke  to "timing",  pointing  out that  public                                                            
assistance  payments are mailed  on the first  of each month,  while                                                            
permanent  fund  dividends   are issued   on  the fifteenth;   those                                                            
families would be without any income for two weeks.                                                                             
Mr. Nordland  mentioned the  "administrative  hassle" of removing  a                                                            
recipient from public assistance  programs for one month only to re-                                                            
enlist them the following month.                                                                                                
Mr. Nordland concluded  the Department "stands by" the hold harmless                                                            
provision and opposes this bill.                                                                                                
Co-Chair Kelly  understood that Denali  KidCare provides  dental and                                                            
eye care services.                                                                                                              
Mr. Nordland affirmed  these services are provided  for children but                                                            
not for their parents.                                                                                                          
Senator Ward asked  how many recipients of public  assistance do not                                                            
qualify for  a permanent fund dividend.  He also asked what  form of                                                            
counseling  the Department  provides  to recipients  to inform  them                                                            
that applying  for a dividend would  disqualify them from  receiving                                                            
public assistance benefits.                                                                                                     
Mr. Nordland  was unsure  of the  answer to the  first question.  He                                                            
responded  that  because  of  the  hold  harmless   provision,  such                                                            
counseling is unnecessary and therefore not provided.                                                                           
Senator Ward  asked if the Department  informs recipients  that they                                                            
are eligible  to receive  both a  dividend and  benefits, or  if the                                                            
Department "is silent" on the matter.                                                                                           
Mr. Nordland  responded the Department  essentially "is silent".  He                                                            
stated if  the legislation  stipulated the  recipient had to  make a                                                            
choice,  the  Department  would  have to  consider  the  matter.  He                                                            
expressed it  is hard for him to conceive  of an instance  where the                                                            
Department would counsel  a family to forgo the dividend in favor of                                                            
continuing  to receive  public assistance  benefits  because of  the                                                            
amount of  money involved.   He qualified  this matter has  not been                                                            
determined yet and his answer is unofficial.                                                                                    
Senator Green  asked why dividends  were subject to a hold  harmless                                                            
provision, as she considered dividends income.                                                                                  
Mr. Nordland  replied this issue has  been discussed in the  context                                                            
of, "at what time is a  poor person not poor any more." He suggested                                                            
the distinction be made  at the point where additional income raises                                                            
a person's  total income  above the  federal poverty  level,  or the                                                            
amount determined to be "what it takes for a family to live".                                                                   
Co-Chair Kelly  referenced a $50,000  dividend paid to shareholders                                                             
of  the  CIRI Native  Corporation.   He wanted  to  know  how  those                                                            
shareholders who  continued receiving public assistance  spent those                                                            
funds.  He also  wanted to  know how  other shareholders  used  that                                                            
dividend to  "improve themselves"  to become "productive  members of                                                            
our state."                                                                                                                     
Mr. Nordland  relayed that  the Cook Inlet  Tribal Council  provided                                                            
counseling  to shareholders  to help  them utilize  the dividend  in                                                            
such a way as to remain self-sufficient.                                                                                        
Senator  Green asked  if this legislation  would  apply to  non-cash                                                            
benefits  available to public  assistance  recipients, such  as work                                                            
services, food stamps and Medicaid.                                                                                             
Mr.  Nordland was  unsure.  He added  childcare support  as  another                                                            
work-related benefit  and stated the Department supports  continuing                                                            
to provide  these  services regardless  of permanent  fund  dividend                                                            
Senator  Green referenced  other  proposed federal  legislation  and                                                            
asked if it would  allow a dividend recipient to continue  receiving                                                            
work-related services.                                                                                                          
Mr.  Nordland replied  that  bill would  give the  Department  "more                                                            
flexibility in that regard".                                                                                                    
SUSAN SULLIVAN,  Division of Child  Support Enforcement,  Department                                                            
of Revenue, testified via  teleconference from Anchorage that during                                                            
the  time  a  custodial  parent  receives  public   assistance,  the                                                            
Division  retains any  child  support collected  on  behalf of  that                                                            
payment. She stated this  amounted to $1.9 million in October of the                                                            
previous year.  She pointed out that  under SB 340, the state  would                                                            
not retain any until the  custodial parent has been paid in full for                                                            
current support  in arrears.  She informed the average  arrear owned                                                            
to custodial parents is approximately $15,000.                                                                                  
JOHN MALLONEE, Division  of Child Support Enforcement, Department of                                                            
Revenue, testified  via teleconference  from Anchorage to  reiterate                                                            
Ms. Sullivan's testimony                                                                                                        
Co-Chair  Kelly informed  that  Senator  Phillips working  with  the                                                            
Division  of  Legal  and  Research  Services  to  address  the  fund                                                            
transfer issue.                                                                                                                 
Senator Phillips  replied an amendment  would be available  later in                                                            
the day.                                                                                                                        
Senator Ward asked  about the $455,000 Contractual  Services program                                                            
listed on the aforementioned chart.                                                                                             
Senator  Phillips   explained  this   is  a  reimbursable   services                                                            
agreement  (RSA)  between  the  Department   of  Health  and  Social                                                            
Services  and the Department  of Administration  for the  day-to-day                                                            
operations of the hold harmless provision.                                                                                      
Senator Ward asked if the  amount of this RSA could be reduced given                                                            
that the workload would decrease.                                                                                               
Senator Phillips deferred to the Departments.                                                                                   
Co-Chair Kelly asked Senator Phillips to research the matter.                                                                   
Co-Chair Kelly ordered the bill HELD in Committee.                                                                              
Co-Chair Pete Kelly adjourned the meeting at 11:01 AM                                                                           

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