Legislature(2003 - 2004)
04/17/2003 09:04 AM Senate FIN
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
MINUTES
SENATE FINANCE COMMITTEE
April 17, 2003
9:04 AM
TAPES
SFC-03 # 59, Side A
SFC 03 # 59, Side B
CALL TO ORDER
Co-Chair Gary Wilken convened the meeting at approximately 9:04 AM.
PRESENT
Senator Gary Wilken, Co-Chair
Senator Con Bunde, Vice Chair
Senator Robin Taylor
Senator Ben Stevens
Senator Donny Olson
Also Attending: SENATOR JOHN COWDERY; CRYSTAL MOORE, Staff to
Senator Cowdery; LANDA BAILY, Special Assistant and Legislative
Liaison, Department of Revenue; SHARON BARTON, Director, Division
of Administrative Services, Department of Revenue; MARK RIEHLE,
Staff to Senator Cowdery; KIERKE KUSSART;
Attending via Teleconference: From an offnet location: DWAYNE
BANNOCK, Director, Division of Motor Vehicles, Department of
Administration
SUMMARY INFORMATION
SB 58-PFD INELIGIBILITY/MOTOR VEHICLE INSURANCE
The Committee heard from the sponsor and the Department of Revenue.
The bill was held in Committee.
SB 59-PERMANENT FUND INELIGIBILITY FOR DUI
The Committee heard from the sponsor and the Department of Revenue.
The bill was held in Committee.
SB 148-PFD: ALLOWABLE ABSENCE FOR MILITARY SVC
The Committee heard from the sponsor, the Department of Revenue and
a member of the public. The bill was held in Committee.
HB 159-FINANCIAL INSTITUTION EXAMINATIONS/CFAB
This bill was scheduled but not heard.
CS FOR SENATE BILL NO. 58(JUD)
"An Act relating to permanent fund dividend program notice
requirements and to the ineligibility for permanent fund
dividends of certain persons sentenced for crimes involving
mandatory motor vehicle liability insurance."
This was the first hearing for this bill in the Senate Finance
Committee.
Co-Chair Wilken explained this bill "makes a person convicted of
failing to carry mandatory vehicle liability insurance of proof
thereof, ineligible for a permanent fund dividend for the
qualifying year in which he or she was convicted. The person is
ineligible for five years for a second or subsequent offense."
CRYSTAL MOORE, Staff to Senator Cowdery, testified that this
legislation pertains to uninsured motorists who cause an accident
or are otherwise caught without proper insurance coverage.
SENATOR JOHN COWDERY expressed his intent that dividends would not
be denied to motorists who have adequate insurance coverage, but
are unable to provide proof at the time of an accident.
Co-Chair Wilken clarified that a motorist would have an opportunity
to provide proof of insurance and upon such proof would not be
subject to forfeiture of the permanent fund dividend.
Senator Cowdery noted similar provisions apply to proof of vehicle
registration whereby a motorist is allowed a certain period of time
to provide proof of registration.
Senator Taylor understood State statute contains no current
requirement to carry insurance unless the vehicle is involved in an
accident. He suggested that a person of "imminent wealth" is not
required to purchase insurance coverage.
Senator Cowdery informed that motorists must sign an affidavit
attesting to insurance coverage when obtaining a drivers' license.
Senator Taylor corrected that the affidavit affirms that the
motorist either has purchased insurance or has the means to pay the
costs incurred in any accident.
Senator Cowdery acquiesced but noted proof is required to
demonstrate the motorist has adequate means.
Senator Taylor commented that the absence of a "totally mandatory
system" is "troubling".
Senator Cowdery countered that the ability to pay for any damages
caused is essentially insurance.
Senator Taylor opined that some people allege to have adequate
funding, but in actuality do not. He noted that in these instances,
the motorist's drivers' license is revoked.
Senator Taylor admitted this would impact a small percentage of
population, but that the issue could be problematic to those
motorists who have the means to pay accident expenses. He explained
that an uninsured motorist involved in an accident who pays the
costs incurred, should not be denied a permanent fund dividend.
Senator Cowdery had understood that insurance coverage is
mandatory. He emphasized the intent of the bill is to make drivers
responsible, whether they purchase insurance coverage or have
adequate means to pay costs themselves.
Senator Taylor stated this legislation would be appropriate if
statute required every motorist to carry insurance. He asserted
that reimbursement must be paid to accident victims, noting that
Alaska operates as a "fault system".
Senator Taylor surmised that the Child Support Enforcement Division
and other State agencies oppose this legislation arguing that
denying some people a permanent fund dividend would result in
creditors unable to collect repayment of debt. He expressed his
primary concern relates to victims of an accident caused by an
uninsured motorist, having no means to collect damages because the
perpetrator was denied a dividend.
Senator Cowdery remarked that a person made ineligible to receive a
dividend is similar to a nonresident, felon or other individual
ineligible to receive a dividend. Therefore, he stated, "There is
no dividend to divvy up. There is nobody to fight over anything."
He furthered, "and nobody will be out anything - the child support
people or anything - unless the guy violates the law."
Senator Bunde shared concerns that in some instances a permanent
fund dividend could be only funds a victim could recover. He asked
if consideration was given to surrendering these dividends into the
State general fund. He opined this would put
Senator Cowdery reiterated his comment that if no funds are
available via a permanent fund dividend, there would be no dispute
over which creditor is entitled to garnishment. He therefore,
argued that no party would lose money over this legislation rather
"they're not going to lose it unless they break the law."
Senator Bunde asserted this would only punish people who would have
otherwise benefited from garnishment of a dividend.
LANDA BAILY, Special Assistant and Legislative Liaison, Department
of Revenue, stressed, "any policy intended to deter the type of
conduct that Senator Cowdery seeks to deter, is absolutely a good
endeavor." She qualified that her forthcoming comments are not
intended to be oppositional but informational. She reported that
the Child Support Enforcement Division was one of the top ten
garishers of the permanent fund dividend in FY 01. She elaborated
that the Division submitted 12,821 records with 10,448 requests
paid, amounting to $12,846,911.89 for delinquent child support
payments. She estimated that one to ten percent of those records
could be impacted by this legislation.
Ms. Baily cautioned that the Division would be unable to access the
"offending parent's" permanent fund dividend in order to pay child
support arrearages, which would be an unintended consequence of
this legislation.
Co-Chair Wilken asked for a response to Senator Bunde's suggestion
to relinquish the permanent fund dividends of these offenders to
the State general fund.
Ms. Baily relayed her consultation with Larry Persily, Deputy
Commissioner of Department of Revenue, and his efforts to punish
offenders without causing unintended consequences to others. She
stated she would continue these efforts.
Senator Olson asked the number of qualified dividend recipients who
chose to not apply for a dividend, knowing that dividend would have
been garnished.
Ms. Baily responded that she would attempt to provide that
information, noting she was unsure whether such data was available.
Ms. Baily commented on a need to identify the number of people who
would be denied a dividend under this legislation and who are also
in arrearage.
Senator Bunde understood the existence of a program whereby the
State could apply for the dividend of those qualified residents who
refused to apply for a dividend knowing it would be garnished.
Ms. Baily deferred to others within the Department of Revenue.
Co-Chair Wilken suggested working with the bill sponsor to address
this matter.
Co-Chair Wilken referenced statutes relating to mandatory insurance
requirements.
Senator Taylor noted the requirement to obtain a certificate of
self-insurance upon completion of an affidavit asserting the holder
has the ability to pay damages of any accident the motorist might
cause.
Senator Taylor suggested amending this legislation to include
"insurance or self-insurance" coverage.
Senator Taylor surmised that many of the motorists operating a
vehicle without insurance also do not have a valid driver's
license, as it was suspended after the motorist caused an accident
or was convicted of a Driving Under the Influence (DUI), or similar
offense. He noted these motorists are unable to pay the higher
premiums of the "SR22" insurance, required for motorists convicted
of these offenses. He commented this provides victims little
financial recourse in future incidents. He was concerned that
withholding permanent fund dividends would further hinder these
motorists in their ability to purchase insurance.
Senator Cowdery asserted that if a person could afford a vehicle
and gasoline, that person must take responsibility.
Senator B. Stevens directed attention to Fiscal Note #5 from the
Department of Law, noting the analysis references a "unit" as
follows.
The collections unit of the Department of Law is responsible
for collecting civil and criminal judgments owed to the State
of Alaska, and beginning in January 2002, restitution on
behalf of victims of all types of crimes (violent, non-
violent, and property crimes) and delinquent acts…
…During FY 02, the unit collected $3,574,907 of which
$2,960,210 was through the dividend attachment.
Senator B. Stevens asked for an explanation of this unit.
Senator Taylor replied that this section operates within the
Department of Law with the sole function to collect fines and
restitution payments.
Senator B. Stevens asked if this unit collects funds for
distribution to victims or collects revenue for the Department of
Law.
SHARON BARTON, Director, Division of Administrative Services,
Department of Revenue, shared that in her experience at the
Department of Administration, she learned that some funds collected
by this unit are transferred to the Office of Public Advocacy.
Senator B. Stevens supported the collection of funds for
distribution to victims but opposed collection for the Department
of Law.
Senator Taylor commented that the unit collects funds for both
victims and the Department. He explained the unit acts as the
enforcement "arm" of restitution requirements and operates as a
"pass through" for funding.
Co-Chair Wilken stated this issue would be addressed later.
DWAYNE BANNOCK, Director, Division of Motor Vehicles, Department of
Administration, testified via teleconference from an offnet
location that he was available for questions.
Senator Olson noted some rural areas have no state road system and
vehicles are operated on private land, for example in a mining
area, and are not required to be registered. He asked if this proof
of insurance would be necessary in this situation.
Senator Cowdery responded the legislation is intended only for
vehicles traveling on publicly maintained roads.
Senator B. Stevens referenced a spreadsheet titled, "DWI
Misdemeanors & Felonies FY 02 and July-Department of Environmental
Conservation. FY 03, Driving Without Insurance" [copy on file]
compiled by the Alaska Court System.
Ms. Moore detailed the spreadsheet lists the number of first time
and multiple Driving While Intoxicated (DWI) incidences. She
exampled that in Homer during FY 03, of the four first time DWI
arrests and 76 second or more DWI arrests, 19 of the offenders did
not have insurance.
Senator Cowdery stated he would clarify the information.
Co-Chair Wilken noted questions remain on this matter and ordered
the bill HELD in Committee.
CS FOR SENATE BILL NO. 59(JUD)
"An Act relating to permanent fund dividend program notice
requirements and to the ineligibility for permanent fund
dividends of certain persons sentenced for driving while under
the influence of an alcoholic beverage, inhalant, or
controlled substance, or for refusal to submit to a chemical
test."
This was the first hearing for this bill in the Senate Finance
Committee.
Co-Chair Wilken stated this bill, sponsored by Senator Cowdery
"makes the person convicted of driving under the influence of
alcoholic beverage or refusal to submit to a chemical test,
ineligible for a permanent fund dividend for the qualifying year in
which he or she was convicted.
CRYSTAL MOORE, Staff to Senator Cowdery, testified this bill is
identical to SB 58 with the exception that it applies to Driving
Under the Influence (DUI) offenses rather than uninsured motorists.
She noted that after the first offence, the dividend it forfeited
for one year, and following subsequent offenses, the dividend is
denied for five years.
Senator Cowdery reiterated his earlier comments to SB 58 stressing
they apply to this legislation as well: "Nobody is going to lose
anything unless they're caught". He added that the provisions in
both bills are not retroactive.
LANDA BAILY, Special Assistant and Legislative Liaison, Department
of Revenue stated the intent of this bill is "to deter specific
conduct that we as a society absolutely do not condone." She opined
that any policy intended to deter driving while under the influence
is of "critical importance to the State of Alaska, to everyone who
lives here." She repeated that her comments are not intended to be
oppositional, rather informational.
She again reported that the Child Support Enforcement Division was
one of the top ten garishers of the permanent fund dividend in FY
01. She elaborated that the Division submitted 12,821 records with
10,448 requests paid, amounting to $12,846,911.89 for delinquent
child support payments. She estimated that one to ten percent of
those records could be impacted by this legislation.
Ms. Baily repeated her caution that the Division would be unable to
access the "offending parent's" permanent fund dividend in order to
pay child support arrearages, which would be an unintended
consequence of this legislation.
Senator Cowdery asserted that most Driving While Intoxicated (DWI)
offenders honor their obligations to their family. He was unsure
how to address those that do not.
Senator Taylor asked if this legislation requires a conviction of
DUI or rather an arrest or refusal to submit to a chemical test.
Senator Cowdery assumed a conviction would be required before the
legislation would apply.
Senator Taylor noted that when a motorist refuses to submit to a
chemical test, the driver's license is suspended as an
administrative action.
Co-Chair Wilken asked if the intent is to deny a dividend only in
instances of a conviction and not in the case of a motorist who
refuses to submit to a chemical test.
Senator Cowdery understood that a refusal to submit to a chemical
test is the same as a conviction.
Senator Taylor corrected that these are separate crimes, although
the penalties are the same.
Co-Chair Wilken noted several of the questions posed to SB 58 also
apply to this bill and would be addressed at a later date.
Senator Bunde posed a scenario of an uninsured motorist arrested
for DWI and asked if the offender would be denied a permanent fund
dividend to two years given the two offenses.
Senator Olson asked if the provision of this bill would apply to
operators of boats, off-road vehicles, etc.
Senator Cowdery expressed his intent that this legislation would
apply only to vehicles traveling on publicly maintained roadways.
He stated he does not intend the bill to impact pilots or
watercraft operators.
Co-Chair Wilken ordered the bill HELD in Committee.
SENATE BILL NO. 148
"An Act relating to allowable absences for certain members of
the armed forces and their spouses and dependents for purposes
of eligibility for permanent fund dividends; and providing for
an effective date."
This was the first hearing for this bill in the Senate Finance
Committee.
Co-Chair Wilken stated this bill sponsored by Senator Cowdery
"amends the State statute governing allowable absences for the
permanent fund dividend for members of the United States armed
forces."
MARK RIEHLE, Staff to Senator Cowdery, testified this legislation
is a "correction of an oversight" in allowable permanent fund
dividend absences. He shared that a discrepancy arose in the
instance of a 20-year Alaska resident and member of the Navy
Reserve who was activated to military service following the
terrorist events of September 11, 2001. This resident, Mr. Riehle
reported, was recently denied a dividend after serving overseas for
ten months and upon return to the country, spending seven weeks in
California caring for his quadriplegic brother. Mr. Riehle pointed
out the time spent on active military duty is an allowable absence
and that under normal circumstances a seven week absence from the
State is also allowable. However, he stated that because the seven-
week absence immediately followed discharge from active duty, the
resident was disqualified from receiving a dividend. He explained
this is due to separate requirements applied to military personal
that require a resident to return to Alaska within 45 days of
discharge.
Mr. Riehle requested the Committee join Senator Cowdery "in
sponsoring this cause in demonstrating your patriotic thank you to
the members of the Reserves, the Guards, and those in active duty
military."
KIERKE KUSSART testified as a private citizen although she is
employed by the Permanent Fund Dividend Division. She stated the
argument that because civilians are allowed to be absent 180 days
during a qualifying year, military personnel should be granted the
same allowance.
Ms. Kussart referenced a handout titled, "A brief overview of PFD
rules pertaining to SB 148," which reads as follows.
Civilian (no special circumstances)
Can be gone up to 180 days in a calendar year for any reason
as long as home is maintained in state (own, rent, storage)
and residency ties are not created in other states.
Military Active Duty
Must have AK as home of record.
Can be gone a whole year - must return for 3 days every 2
years minimum.
After 5 years absence must have 30 days in AK.
Does not have to maintain home in AK.
Can obtain other states drivers license, vehicle registration,
resident hunting and fishing licenses.
Can purchase home in another state.
Spouse can work full time in another state.
Once out of AK for over 180 days in a calendar year only 45
days can be for non-military reasons.
Main Points
1. Discharge is a scheduled event and can be planned for. Upon
discharge the military will ship the applicant's belongings
to any address the applicant chooses.
2. Once returns to civilian status the applicant may have many
more ties to outside than to AK. Needs to return to fulfill
statement of intent.
3. In my opinion six months is an excessive amount of time for
a move back to AK, especially since military members are
used to moving without much notice. Now that they are free
from military obligation it is time to come home.
SFC 03 # 59, Side B 09:52 AM
Ms. Kussart opined that six months is an excessive amount of time
to be absent from Alaska for discharged military personnel who have
possibly established residency in another state. She suggested two
or three months was adequate.
Senator Cowdery commented that military personnel should be given
some freedoms when not on active duty.
Senator Bunde clarified that while on active duty, military
personnel could be absent from the State more than 180 but that
only 45 of those days could be for non-military activities.
Ms. Kussart affirmed.
Senator Cowdery indicated he had been unaware of the 45-day absence
limitation.
Ms. Kussart noted for the record that she was on leave status from
the State during this hearing.
Senator Olson asked the percentage of military personnel who become
ineligible for the permanent fund dividend after leaving military
duty.
Ms. Kussart did not have that information as a private citizen and
indicated the Division could provide it upon request.
Senator B. Stevens pointed out the matter addresses two different
types of active duty. He listed one as regular military personnel
serving on active duty and the other as reservists or National
Guard members called to deployment. He told of a reservist residing
in his district who was deployed and is now "facing a similar
challenge" in eligibility for Public Employees Retirement System
(PERS) benefits. He asked whether the differences could be defined
in statute.
Senator Cowdery learned this situation is a rare occurrence. He
shared that the Department had suggested granting discretionary
authority to the commissioner to grant exceptions; however, Senator
Cowdery indicated he does not favor this option.
Senator B. Stevens expressed that a distinction must be made.
Senator Cowdery stated the intent of the legislation would apply to
those military personnel on active duty and that no specific
distinction was made.
Senator B. Stevens stressed the issue is that the resident in
question was not on active duty but rather a reservist who was
deployed. He stated that if the resident had not been deployed, his
seven-week absence would not have disqualified him from receiving a
dividend.
Senator Taylor remarked that this resident should have been treated
as any other citizen. He agreed with Senator B. Stevens that a
distinction should be made. He surmised that this affects many
residents, as many reservists have been deployed.
Co-Chair Wilken ordered the bill HELD in Committee.
ADJOURNMENT
Co-Chair Gary Wilken adjourned the meeting at 10:03 AM
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