04/19/2004 08:07 AM Senate JUD
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ALASKA STATE LEGISLATURE
SENATE JUDICIARY STANDING COMMITTEE
April 19, 2004
8:07 a.m.
TAPE(S) 04-44,45
MEMBERS PRESENT
Senator Ralph Seekins, Chair
Senator Scott Ogan, Vice Chair
Senator Gene Therriault
Senator Johnny Ellis
Senator Hollis French
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
HOUSE BILL NO. 503
"An Act relating to the tobacco product Master Settlement
Agreement; and providing for an effective date."
MOVED HB 503 OUT OF COMMITTEE
CS FOR HOUSE BILL NO. 514(FIN) am
"An Act relating to child support modification and enforcement,
to the establishment of paternity by the child support
enforcement agency, and to the crimes of criminal nonsupport and
aiding the nonpayment of child support; amending Rule 90.3,
Alaska Rules of Civil Procedure; and providing for an effective
date."
HEARD AND HELD
CS FOR HOUSE BILL NO. 414(JUD)
"An Act relating to filling a vacancy in the office of United
States senator, and to the definition of 'political party.'"
MOVED SCS CSHB 414(JUD) OUT OF COMMITTEE
CS FOR HOUSE BILL NO. 285(JUD)
"An Act adopting the Uniform Electronic Transactions Act;
repealing certain statutes relating to electronic records and
electronic signatures; amending Rule 402, Alaska Rules of
Evidence; and providing for an effective date."
MOVED CSHB 285(JUD) OUT OF COMMITTEE
SENATE BILL NO. 318
"An Act relating to the individual right of Alaska residents in
the consumptive use of fish and game."
SCHEDULED BUT NOT HEARD
PREVIOUS COMMITTEE ACTION
BILL: HB 503
SHORT TITLE: TOBACCO MASTER SETTLEMENT AGREEMENT
SPONSOR(s): FINANCE
02/16/04 (H) READ THE FIRST TIME - REFERRALS
02/16/04 (H) FIN
02/25/04 (H) FIN AT 1:30 PM HOUSE FINANCE 519
02/25/04 (H) Moved Out of Committee
02/25/04 (H) MINUTE(FIN)
02/26/04 (H) FIN RPT 5DP 1NR
02/26/04 (H) DP: HAWKER, FATE, FOSTER, HARRIS,
02/26/04 (H) WILLIAMS; NR: STOLTZE
04/01/04 (H) TRANSMITTED TO (S)
04/01/04 (H) VERSION: HB 503
04/02/04 (S) READ THE FIRST TIME - REFERRALS
04/02/04 (S) JUD, FIN
04/16/04 (S) JUD AT 8:00 AM BUTROVICH 205
04/16/04 (S) Scheduled But Not Heard
04/19/04 (S) JUD AT 8:00 AM BUTROVICH 205
BILL: HB 514
SHORT TITLE: CHILD SUPPORT ENFORCEMENT/ CRIMES
SPONSOR(s): REPRESENTATIVE(s) KOTT
02/16/04 (H) READ THE FIRST TIME - REFERRALS
02/16/04 (H) JUD
02/23/04 (H) JUD AT 1:00 PM CAPITOL 120
02/23/04 (H) Heard & Held
02/23/04 (H) MINUTE(JUD)
02/27/04 (H) JUD AT 1:00 PM CAPITOL 120
02/27/04 (H) Moved CSHB 514(JUD) Out of Committee
02/27/04 (H) MINUTE(JUD)
03/03/04 (H) JUD RPT CS(JUD) 5DP
03/03/04 (H) DP: GARA, SAMUELS, GRUENBERG, OGG,
03/03/04 (H) MCGUIRE
03/03/04 (H) FIN REFERRAL ADDED AFTER JUD
03/08/04 (H) FIN AT 1:30 PM HOUSE FINANCE 519
03/08/04 (H) Heard & Held
03/08/04 (H) MINUTE(FIN)
03/23/04 (H) FIN AT 1:30 PM HOUSE FINANCE 519
03/23/04 (H) Moved CSHB 514(FIN) Out of Committee
03/23/04 (H) MINUTE(FIN)
03/24/04 (H) FIN RPT CS(FIN) 4DP 3NR 2AM
03/24/04 (H) DP: HAWKER, FOSTER, FATE, WILLIAMS;
03/24/04 (H) NR: JOULE, CHENAULT, HARRIS;
03/24/04 (H) AM: STOLTZE, CROFT
03/31/04 (H) TRANSMITTED TO (S)
03/31/04 (H) VERSION: CSHB 514(FIN) AM
04/01/04 (S) READ THE FIRST TIME - REFERRALS
04/01/04 (S) JUD, FIN
04/16/04 (S) JUD AT 8:00 AM BUTROVICH 205
04/16/04 (S) Scheduled But Not Heard
04/19/04 (S) JUD AT 8:00 AM BUTROVICH 205
BILL: HB 414
SHORT TITLE: U.S.SENATE VACANCY/DEF OF POLITICAL PARTY
SPONSOR(s): JUDICIARY
01/28/04 (H) READ THE FIRST TIME - REFERRALS
01/28/04 (H) STA, JUD
02/03/04 (H) STA AT 8:00 AM CAPITOL 102
02/03/04 (H) Heard & Held
02/03/04 (H) MINUTE(STA)
02/04/04 (H) JUD AT 1:00 PM CAPITOL 120
02/04/04 (H) -- Meeting Canceled --
02/05/04 (H) STA AT 8:00 AM CAPITOL 102
02/05/04 (H) Moved CSHB 414(STA) Out of Committee
02/05/04 (H) MINUTE(STA)
02/09/04 (H) JUD AT 1:00 PM CAPITOL 120
02/09/04 (H) <Bill Hearing Postponed to 2/16/04>
02/12/04 (H) STA RPT CS(STA) 3DP 1DNP 3NR
02/12/04 (H) DP: SEATON, COGHILL, WEYHRAUCH;
02/12/04 (H) DNP: BERKOWITZ; NR: GRUENBERG, HOLM,
02/12/04 (H) LYNN
02/16/04 (H) JUD AT 1:00 PM CAPITOL 120
02/16/04 (H) Moved CSHB 414(JUD) Out of Committee
02/16/04 (H) MINUTE(JUD)
02/18/04 (H) JUD RPT CS(JUD) NT 5DP 2NR
02/18/04 (H) DP: SAMUELS, ANDERSON, OGG, HOLM,
02/18/04 (H) MCGUIRE; NR: GRUENBERG, GARA
03/04/04 (H) TRANSMITTED TO (S)
03/04/04 (H) VERSION: CSHB 414(JUD)
03/05/04 (S) READ THE FIRST TIME - REFERRALS
03/05/04 (S) STA, JUD
03/18/04 (S) STA AT 3:30 PM BELTZ 211
03/18/04 (S) Moved SCS CSHB 414(STA) Out of
Committee
03/18/04 (S) MINUTE (STA)
03/22/04 (S) STA RPT SCS 3DP 1DNP SAME TITLE
03/22/04 (S) DP: STEVENS G, COWDERY, STEDMAN;
03/22/04 (S) DNP: GUESS
03/24/04 (S) JUD AT 8:00 AM BUTROVICH 205
03/24/04 (S) Heard & Held
03/24/04 (S) MINUTE (JUD)
04/19/04 (S) JUD AT 8:00 AM BUTROVICH 205
BILL: HB 285
SHORT TITLE: ELECTRONIC TRANSACTIONS & SIGNATURES
SPONSOR(s): REPRESENTATIVE(s) MCGUIRE
04/25/03 (H) READ THE FIRST TIME - REFERRALS
04/25/03 (H) L&C, JUD
05/07/03 (H) L&C AT 3:15 PM CAPITOL 17
05/07/03 (H) Scheduled But Not Heard
05/09/03 (H) L&C AT 3:15 PM CAPITOL 17
05/09/03 (H) Scheduled But Not Heard
05/12/03 (H) L&C AT 3:15 PM CAPITOL 17
05/12/03 (H) Moved Out of Committee
05/12/03 (H) MINUTE (L&C)
05/13/03 (H) L&C RPT 2DP 4NR
05/13/03 (H) DP: LYNN, ANDERSON; NR: GATTO,
05/13/03 (H) CRAWFORD, GUTTENBERG, DAHLSTROM
01/21/04 (H) JUD AT 1:00 PM CAPITOL 120
01/21/04 (H) Moved CSHB 285(JUD) Out of Committee
01/21/04 (H) MINUTE (JUD)
01/23/04 (H) JUD RPT CS (JUD) 7DP
01/23/04 (H) DP: SAMUELS, HOLM, GARA, OGG,
01/23/04 (H) GRUENBERG, ANDERSON, MCGUIRE
02/19/04 (H) TRANSMITTED TO (S)
02/19/04 (H) VERSION: CSHB 285(JUD)
02/20/04 (S) READ THE FIRST TIME - REFERRALS
02/20/04 (S) L&C, JUD
03/25/04 (S) L&C AT 1:30 PM BELTZ 211
03/25/04 (S) Moved CSHB 285(JUD) Out of Committee
03/25/04 (S) MINUTE (L&C)
03/26/04 (S) L&C RPT 2DP 2NR
03/26/04 (S) DP: BUNDE, DAVIS; NR: FRENCH,
03/26/04 (S) STEVENS G
04/19/04 (S) JUD AT 8:00 AM BUTROVICH 205
WITNESS REGISTER
Mr. Mike Barnhill
Assistant Attorney General
Department of Law
PO Box 110300
Juneau, AK 99811-0300
POSITION STATEMENT: Answered questions about HB 503
Mr. John Main
Staff to Representative Kott
Alaska State Capitol
Juneau, AK 99801-1182
POSITION STATEMENT: Presented HB 514 for the sponsor
Ms. Landa Baily
Special Assistant
Department of Revenue
PO Box 110400
Juneau, AK 99811-0400
POSITION STATEMENT: Answered questions about HB 514
Mr. Heath Hilyard
Staff to Representative McGuire
Alaska State Capitol
Juneau, AK 99801-1182
POSITION STATEMENT: Presented HB 414 for the sponsor
Ms. Vanessa Tondini
Staff to the House Judiciary Committee
Alaska State Capitol
Juneau, AK 99801-1182
POSITION STATEMENT: Presented HB 285
Ms. Sara Felix
Assistant Attorney General
Department of Law
PO Box 110300
Juneau, AK 99811-0300
POSITION STATEMENT: Answered questions about HB 414
ACTION NARRATIVE
TAPE 04-44, SIDE A
CHAIR RALPH SEEKINS called the Senate Judiciary Standing
Committee meeting to order at 8:07 a.m. All members were
present. The committee took up HB 503.
HB 503-TOBACCO MASTER SETTLEMENT AGREEMENT
MR. MIKE BARNHILL, Assistant Attorney General, Department of Law
(DOL), told members that HB 503 seeks to close a loophole in a
statute that was enacted pursuant to the tobacco Master
Settlement Agreement. He gave the following background of that
agreement.
In 1997 or 1998, Alaska, in conjunction with 46 other states,
sued the major tobacco companies, settled the case, and entered
into an agreement called the Master Settlement Agreement (MSA).
Under that agreement, the state relinquished its claims against
the tobacco companies for money lost related to Medicaid
payments. In exchange, the tobacco companies agreed to an
indefinite payment of money to the states. As part of that
settlement, the states enacted a non-participating manufacturer
(NPM) statute. Alaska enacted its NPM statute in 1999, with the
intent of leveling the playing field between those tobacco
manufacturers that participated in the MSA and those that did
not. Without a way to level the playing field between the two
groups, the NPMs could potentially keep their prices of
cigarettes low, grab market share from the participating
companies, and undermine the entire MSA. Alaska's NPM statute
requires all non-participating manufacturers to deposit into an
escrow account a certain amount of money, per cigarette, to
mimic the amount the participating manufacturers are paying the
states. This year that amount is about 2 cents per cigarette.
Under Alaska's NPM statute, the money in the escrow account can
be used for three reasons. First, if the state or someone in the
state sues a NPM, the money can be released to pay for a
judgment against the NPM or for a settlement. Second, the excess
of the money in the escrow account over the amount the NPMs
would have paid the state had they participated in the agreement
can be withdrawn. Third, the money can be taken out after 25
years. The loophole in the law is in the second provision.
MR. BARNHILL referred to a spreadsheet in members' packets to
explain the loophole and gave the following scenario.
If a hypothetical company named Cheap Smokes sold 100 million
cigarettes per year and participated in the MSA, it would pay $2
million to the state. Under the MSA, that payment would be
disbursed among all 46 states and of that amount Alaska would
receive about $6,800; Washington about $41,000; California about
$255,000; and Oregon about $23,000. Because Cheap Smokes is a
NPM, it would be depositing 2 cents per cigarette into an escrow
account. If that company sold 1 million cigarettes in Alaska, 20
million in Washington, 75 million in California, and 4 million
in Oregon, it would be required under Alaska law to deposit
$20,000 in Alaska; $400,000 in Washington; $750,000 in
California; and $80,000 in Oregon.
Under the second part of the MSA escrow release provisions,
Cheap Smokes could get reimbursed for the amount it paid in
excess of the MSA. Under the MSA, Alaska would only receive
$6,800 so Cheap Smokes would be reimbursed $13,800. Cheap Smokes
would receive substantial reimbursements from each state.
He explained the loophole is that assuming that Alaska,
Washington, California and Oregon are the only states that Cheap
Smokes sells in, the total amount it can be reimbursed is $1.6
million, because had Cheap Smokes been a participant in the MSA,
it would have paid a total of $2 million. Because it is not a
participant and concentrates its market in four states, it gets
reimbursed $1.6 million so is only depositing $400,000, which
amounts to less that one cent per cigarette. This enables Cheap
Smokes to sell cigarettes cheaper than participating
manufacturers and will create problems for the MSA.
Alaska has not experienced this problem yet and has only had one
request for an escrow release since 1999. However, other states
with larger markets have had significant problems. NPMs are
concentrating their markets in those states. They ask for their
money back and are able to expand their market share by under
pricing MSA participants.
HB 503 will solve that problem by assuring that NPMs put 2 cents
per cigarette in an escrow account and not allow them to get
reimbursed for more than that, irrespective of whether they had
participated in the MSA. He explained that HB 503 contains a
number of contingent provisions in Section 2 in case this fix is
found to be unconstitutional. Section 2 says an NPM cannot be
reimbursed except to pay for a judgment or if the money has been
held in an escrow account for 25 years. If that provision is
found to be unconstitutional, the bill reverts to the status
quo.
MR. BARNHILL informed members that HB 503 was drafted by a
working committee of the national committee of attorneys general
in conjunction with the participating manufacturers. It was
unanimously endorsed last December by all of the attorneys
general at the National Association of Attorneys General
meeting. To date, it has been enacted by 29 states.
SENATOR FRENCH asked Mr. Barnhill to describe how that anomaly
crept into the MSA.
MR. BARNHILL said he believes the assumption, when drafting the
NPM statute for states to enact in 1998, was that all
manufacturers would sell to all states. The rationale behind
maximizing the amount deposited into escrow to reflect the
states' interest in the MSA was that manufacturers' sales in
each state would be the same. He does not believe anyone
contemplated the possibility that smaller companies would
concentrate their markets in a few states.
With no further interest, CHAIR SEEKINS closed public testimony.
SENATOR THERRIAULT moved HB 503 from committee with individual
recommendations and its accompanying fiscal note.
CHAIR SEEKINS announced that without objection, the motion
carried.
HB 514-CHILD SUPPORT ENFORCEMENT/ CRIMES
MR. JOHN MAIN, staff to Representative Pete Kott, sponsor of HB
514, told members that HB 514 touches on six major areas of the
child support statutes. First, it raises criminal non-support
from a misdemeanor to a felony. Currently 33 states and the
federal government classify criminal non-support as a felony.
Raising that crime to a felony will give the Child Support
Enforcement Division (CSED) a tool to negotiate for payment of
child support. Individuals sometimes do not pay child support
knowing the penalty is a misdemeanor.
MR. MAIN stated that since 2000, the court has convicted 24
people of non-payment of child support. The difference between a
misdemeanant and a felon is the conduct. CSED is forced to treat
both the individual who owes $5,000 and the individual who owes
$60,000 the same and believes that is unfair. The statute of
limitations for a misdemeanor is five years and 10 years for a
felony. Sentencing is also a major factor: a misdemeanor can
carry up to 10 years of informal probation and one year
suspended sentence; a felony carries up to ten years of formal
probation and a five-year suspended sentence. CSED monitors
people on informal probation, while the Department of
Corrections monitors people on formal probation.
MR. MAIN said the felony charge would apply to parents who owe
at least $10,000 and are in arrears for two years. In
comparison, an individual who steals or conceals $500 worth of
merchandise would also be charged with a class C felony, as
would an individual who defrauds a creditor for $500 or more.
MR. MAIN said HB 514 also makes aiding and abetting in the non-
payment of child support a class C felony. That would apply to
individuals who help a person conceal assets or an employer who
knows an employee owes child support.
The third area of the statute that would be affected applies to
judicial jurisdiction. The change would give the court the
authority to require obligors to pay on an approved payment
plan, to seek work, and to submit permanent fund dividend
applications if they qualify. The bill will allow obligors, who
have struggled for years to pay a large debt, to resume paying
that obligation and reduce the debt through a forgiveness
provision. CSED has been unable to collect about $250 million in
arrears. At the same time, many obligors have been unable to pay
because of the amount of debt that has been imposed upon them.
In some cases, a man might learn that he is a father and that he
owes $30,000 at the same time. That puts a tremendous burden on
that individual and his family. CSED is asking that it be able
to provide those individuals some relief from a large state
debt.
MR. MAIN said the next change in the bill will allow CSED to
establish paternity of the children of victims of rape and
incest for the purpose of collecting child support. CSED
believes that omission was an oversight when the law was
enacted. In those situations, CSED would only establish
paternity if requested by the victims.
The last change pertains to modifications to amounts paid. Right
now, CSED reviews child support obligations every three years
and if the obligor's income has changed 15 percent, the monthly
payment is adjusted. However, the federal government has
determined that CSED must modify the monthly payment amount no
matter how much the obligor's income has changed. As a result,
CSED will not be in compliance with the federal law if this
provision is not adopted and could face the loss of $14 to $17
million in federal funds, which would affect both CSED and the
Temporary Assistance for Needy Families' (TANF) program.
8:30 p.m.
SENATOR OGAN asked Mr. Main how he reconciles creating a crime
for non-payment of debt with the provisions in art. 17 of the
Alaska Constitution, which says there shall be no imprisonment
for debt.
MR. MAIN said that criminal non-support was created in 1971 to
address the fact that children need to be supported. He lamented
the need for child support enforcement and that both parents are
not always involved with their children. He said non-support is
a travesty on society and he sees it as something that should
not be tolerated. He does not believe that imposing penalties
will resolve the problem but it will awaken people to the fact
that if they don't pay, they will not be free. He noted that
this law places a tremendous burden on some people to pay child
support but, at the same time, he hopes those parents who pay
are involved with their children on a regular basis. This bill
will stiffen penalties for those people who are able to support
their children but do not do so and will help those who are
unable to pay due to lack of funds.
SENATOR OGAN said a civil process exists for all other debts. He
then asked if all child support cases are automatically referred
to CSED or whether parents can make arrangements on their own
upon divorce.
MR. MAIN said parties can be exempted from using CSED if a
specific process is used. The parties must petition the court at
the time of divorce to handle the payments between themselves.
In those cases, the payments are routed through CSED for
recordkeeping purposes but CSED takes no enforcement action
unless requested by one of the parties.
CHAIR SEEKINS asked if CSED requires that a minimal amount be
paid for child support by the non-custodial parent.
MR. MAIN said the minimum is $50.
CHAIR SEEKINS asked if a divorcing couple decides to deal with
that payment independent of CSED, and the non-custodial parent
makes no payment for 24 months, that person could be charged
with a felony.
MR. MAIN said the 24-month provision was included in the bill
because some people have the ability to pay but do not even pay
the minimum amount.
CHAIR SEEKINS asked if the 24-months must be consecutive.
MR. MAIN said yes. He noted that when these cases are referred
to the investigative section at CSED, the investigators make
sure that all of the criteria that applies to the civil process
have been met; then the case is referred to the attorney
general. He clarified that the c felony applies to a person who
owes at least $10,000 or is in arrears for 24 months or more.
CHAIR SEEKINS asked if the aggrieved parent would go to CSED or
the attorney general to charge the obligor with a felony.
MR. MAIN said the aggrieved parent would go to CSED, and an
investigation would ensue to determine whether or not to pursue
the case.
CHAIR SEEKINS asked if CSED would give the obligor an
opportunity to pay.
MR. MAIN said the obligor would have been given several
opportunities to pay the funds but when CSED has found a lack of
cooperation and ability to pay, it will turn the case over to
the Department of Law.
CHAIR SEEKINS noted that Mr. Main likened this crime to thievery
and asked if he believes that support payments in arrears have
been stolen from the child.
MR. MAIN said that is the irony because in actuality, it is like
taking money from a child's piggy bank. He said when parents
bring children into the world, those children should expect to
be emotionally and financially supported. A parent who does not
do that places a burden on the state or someone else to do that
job and is taking away something from that child.
CHAIR SEEKINS asked if a non-custodial parent made one payment
after 30 months, a second 24-month cycle would begin.
MR. MAIN was unsure how CSED would deal with that but thought it
might lower the penalty if it chose to charge that individual
for the 30 months of non-payment. He noted that CSED will have
to choose the most egregious cases to deal with.
CHAIR SEEKINS noted the crime is a misdemeanor at 23 months but
a felony at 24 months. He asked if at 24 months the statute of
limitations is expanded to bring a claim against a person.
MR. MAIN said that is correct.
SENATOR OGAN asked about the current sanctions for non-payment
of child support.
MR. MAIN responded that depending on the amount owed, the person
is reported to the credit bureau, can lose a permanent fund
dividend, can lose a driver's license, can have an occupational
license revoked or suspended, and could lose a passport. All of
those things might occur yet an individual may still choose not
to comply.
SENATOR OGAN expressed concern that an obligor would need an
occupational license and driver's license to make a living to
pay the debt and that HB 514 will add another level of
difficulty by making non-payment a felony. He felt that approach
is counterproductive.
SENATOR ELLIS asked for further explanation of the forgiveness
provisions.
MR. MAIN deferred to Ms. Baily.
MS. LANDA BAILY, special assistant to the Department of Revenue,
said that CSHB 514(FIN)am contains some minimum qualifications
for participation in the forgiveness program. Those
qualifications will ensure that only those people who should
qualify do, without compromising collectible state debt. She
noted a proposed amendment had been distributed.
SENATOR ELLIS asked Ms. Baily for a comparison [of the contents
in the proposed amendment] to the approach contained in CSHB
514(FIN)am.
MS. BAILY said CSHB 514(FIN)am says the agency "may", by
regulation, establish procedures..., while the amendment changes
that language to read the agency "shall", by regulation,
establish procedures and standards for forgiveness and arrearage
programs. The second change authorizes withholding payments from
a self-employed person. The third change says for each year a
person participates in the forgiveness program, up to 20 percent
of his or her indebtedness could be forgiven. She said the key
will be to make sure the program does not imperil the federal
incentive funding that requires Alaska to keep a competitive
profile. CSED is largely funded with federal funds and the state
relies on those funds to benefit the children of Alaska. She
added that the amendment also requires CSED to adopt regulations
within nine months of the effective date of the bill.
MS. BAILY maintained that CSED and the commissioner are
committed to a program that addresses non-collectible debt. DOR
needs to know why that debt is uncollectible in order to come up
with tight regulations that will create an effective process.
The amendment will allow CSED to tailor the regulations to get
the right people into the program by looking at employment
opportunities in Alaska and using effective tools already
available in the state.
MR. MAIN explained how the forgiveness program would work.
First, CSED and the obligor must agree to a payment plan after
the obligor has met the criteria. If the obligor complies with
the payment plan, CSED could forgive up to 20 percent [per year]
of the state debt as long as the obligor continues in the
program. As an example of an obligor who might qualify, he
described a man who was not informed he had fathered a child.
The mother had moved to Alaska and applied for public assistance
when the child was born. The father was not named right away but
was eventually found living in Mississippi. He had worked on an
oilrig for three years making about $75,000 per year but was
laid off from that job and took other employment at the minimum
wage. CSED determined the father owed roughly $30,000, primarily
due to the public assistance payments collected by the mother.
The father is unable to pay that amount because he is supporting
another family and is barely making ends meet. Under the
arrearage compromise program, CSED would be able to work with
him and set up a program where he would pay a monthly obligation
and simultaneously have his debt reduced.
TAPE 04-44, SIDE B
SENATOR THERRIAULT asked for clarification of the provision that
allows the court to require the non-custodial parent to work. He
said he sees that as more of a problem for a non-custodial
mother who might remarry. He questioned whether the court could
require the woman to work so that the children could receive a
higher payment.
MR. MAIN said the court could do that. He explained that two
jurisdictions within the state have made different
determinations regarding whether the courts can require
individuals to seek work: one believes it can, the other does
not. That is why that provision is in the bill. He said the
obligor would have to prepare applications, go to interviews and
report that activity to the court.
SENATOR THERRIAULT asked if any penalty exists for a person who
refuses to take any job or quits a series of jobs.
MR. MAIN said the court could impose sanctions against that
individual, such as contempt of court.
CHAIR SEEKINS said in the case of a father who does not know he
has a child, the forgiveness would be limited to the debt owed
to the state for public assistance payments made on behalf of
the child and not for other child support that the state was not
involved in.
MS. BAILY clarified that the forgiveness section addresses
state-owed arrearages only. Those arrearages occur when a child
is in foster care or on public assistance. She then noted that
Diane Wendlandt and John Mallonee were available to answer
questions via teleconference.
MS. DIANE WENDLANDT, Assistant Attorney General, Department of
Law (DOL), said the forgiveness provision in the bill is limited
to state debt because the state would not have the ability to
settle private debts at this time because private debt is owed
to the parent and not to the state.
CHAIR SEEKINS asked if the statute of limitations differs for
private versus state debt.
MS. WENDLANDT said there are some differences but not in terms
of the collection. Once a child support order has been issued,
the custodial parent may continue to collect until that debt is
paid, regardless of whether the debt is state or private.
9:00 a.m.
CHAIR SEEKINS asked how far back the state can go to collect
arrearages if a child is 17 years old when paternity is
determined.
MS. WENDLANDT said under the current statute of limitations, DOL
can go back six years to establish state debt. For private debt,
however, the custodial parent can go back to the date of birth.
SENATOR OGAN asked for a description of the federal compliance
sections of the bill that must pass for the state to receive
federal funds.
MR. MAIN said Section 15 must pass.
CHAIR SEEKINS entertained a motion to consider the proposed
amendment [Amendment 1], which reads as follows.
A M E N D M E N T 1
OFFERED IN THE SENATE JUDICIARY COMMITTEE
TO: CSHB 514(FIN)am
Page 5, Section 12, beginning on line 20, and ending on page 6,
line 18:
Delete all material and insert:
AS 25.27.020(d) is amended by adding new subsections to read:
(f) The agency shall, by regulation, establish procedures
and standards for the forgiveness of an arrearage owed to the
state under AS 25.27.120. The agency may forgive arrears under
this section, with the approval of the commissioner and without
the approval of the Department of Law, if
(1) the obligor
(A) has or obtains employment for which income
withholding is initiated under AS 25.27.250
within 60 days of the date the obligor is
approved for the forgiveness program;
(B) enrolls in and successfully completes an
employment training program approved by the
agency and obtains employment for which income
withholding is initiated under AS 25.27.150
within 30 days after completion of the employment
training program; or
(C) enters into an agreement with the agency for
alternative payment procedures, if the agency
determines that there are unusual circumstances
justifying a waiver of income withholding; and
(2) is in compliance with additional requirements and
limitations imposed by the agency by regulation to assure that a
forgiveness is in the best interest of the child and of the
state; and
(3) the obligor makes monthly payments pursuant to a
payment agreement approved by the agency; if the obligor misses
more than two monthly payments in a calendar year, or more than
two consecutive payments without approval of the agency for good
cause, the obligor will not be eligible to continue in the
arrears forgiveness program under this section.
(g) During each year in which an obligor complies with the
requirements for the forgiveness of an arrearage under (f) of
this section and any regulations adopted by the agency under
that subsection, the agency may forgive up to 20 percent of the
total arrearage owed to the state under AS 25.27.120, including
any interest owed on that debt. For purposes of determining the
amount of the forgiveness, the arrears will be calculated as of
the date the obligor is approved for participation in the
forgiveness program.
(h) The forgiveness program authorized under (f) and (g) of
this section may not be implemented until the agency has adopted
regulations setting standards and procedures. Regulations under
this section must be adopted within nine months after the
effective date of this section. The agency may establish by
regulation requirements and limitations on eligibility in
addition to those stated in (f) and (g) of this section.
SENATOR THERRIAULT moved to adopt Amendment 1.
SENATOR ELLIS objected and asked if the House contemplated
Amendment 1 and rejected it.
MR. MAIN said the House did not consider this particular
language but when DOR told Representative Kott the amendment
would improve CSED's ability to compromise arrearages, he felt
it would be fine. He noted it was not imposed upon Speaker Kott.
The amendment will make the language cleaner, the program more
effective and allow obligors who are burdened by debt to be part
of society again.
SENATOR ELLIS asked if the distinction between the private and
state portion of the debt is that the state debt is only that
portion paid through temporary assistance to needy families so
this will not apply to the amount owed directly to the custodial
parent.
MR. MAIN said that is correct.
SENATOR ELLIS asked why the forgiveness amount is "up to 20
percent." He said that amount will not repair a person's credit
or finances in any way.
MR. MAIN said any number could be used but the goal is to get
the obligor to begin paying ongoing child support. The federal
and state governments believe that as more obligors pay their
ongoing payments, the better those people will feel and will
have relationships with their children. Also, custodial parents
need assurance that they will receive some amount of support on
an ongoing basis. This bill seeks to get those people who are
struggling to make ongoing payments to pay some amount. He said
some people feel they will never get out from under that debt so
this provision will give people the possibility of eventually
being debt free after five years.
SENATOR ELLIS asked for more information on who has a statutory
duty to disclose [regarding the aiding and abetting provision].
MR. MAIN said that would be an employer or individuals who have
knowledge that the person owes child support, such as a current
wife or a bookkeeper. Anyone who receives a withholding order
would be statutorily responsible.
SENATOR FRENCH asked for the citation.
MS. WENDLANDT said the statutes are AS 25.27.060, AS 25.27.085
and AS 25.27.062.
SENATOR ELLIS asked why Amendment 1 includes the words "and
without the approval of the Department of Law,". He asked if the
obligor meets the other requirements, the commissioner would
have the sole authority to grant up to 20 percent forgiveness of
the state debt.
MR. MAIN said the belief is that CSED has a great many qualified
individuals that should be able to approve the forgiveness
without DOL's approval.
SENATOR ELLIS asked if CSED staff will make recommendations to
the commissioner of revenue, who will sign off on them. He said
he does not have a problem with not requiring the approval of
DOL, but he has heard many people argue over the years that CSED
is an agency that needs outside review.
CHAIR SEEKINS said those arguments probably did not relate to
state debt forgiveness.
MS. BAILY added that DOL will help promulgate CSED's regulations
to avoid any problems associated with the public purpose
doctrine or equal protection, regarding who gets to participate,
and to protect the best interests of the children and the state.
SENATOR THERRIAULT asked what incentive this will provide to
prevent people from going into default so that they qualify for
the forgiveness provision.
MS. BAILY said that is why DOR feels it is necessary to make
sure that the best interest of the child and the state is the
statutory direction. She said it is her understanding that no
one wants to create an incentive for an obligor to rack up child
support to qualify for forgiveness but no one wants to punish
those who have lived up to their obligations. DOR believes CSED
can design regulations to really look at who owes, why they owe,
and whether they intentionally did not pay to qualify for
forgiveness of their arrearages. She noted the federal office of
child support enforcement has consistently warned states to not
create that sort of incentive.
SENATOR THERRIAULT asked if the regulations will have some kind
of an income limit so that if a person had a lot of assets, they
would be calculated into the equation.
MS. BAILY said she believes CSED will evaluate model legislation
from other states to see what will work in Alaska. Alaska
differs from other states in terms of employment and
transportation. CSED will also look at a person's health,
whether the person is incarcerated, and whether the person has
drug, alcohol or mental health issues. If so, CSED hopes to tie
into the therapeutic court system and require parenting classes
in some cases.
SENATOR ELLIS withdrew his objection to the adoption of
Amendment 1.
SENATOR FRENCH commented that it appears that the crime of
aiding and abetting must be intentional. A House committee
considered adding the words "intentionally" and "unreasonably,"
but those words do not appear in the CS. He asked for an
explanation.
MR. MAIN said DOL testified [before a House committee] that
adding the word "unreasonably" would create an obstacle to
bringing a case to court.
SENATOR FRENCH said he objects to the drafting style of the CS
because the word "intentionally" appears on line 20 and that
word modifies three subsections. However, the subsections,
particularly the third one, are worded so that a "knowingly"
state of mind could apply. He suggested removing the word
"intentionally" on line 20 and specifying the state of mind in
each subsection.
MR. MAIN said the Criminal Division of DOL reviewed the language
in the CS and felt it was adequate.
MS. WENDLANDT recalled that "unreasonably" was included in a
prior version but prosecutors felt the inclusion of that word
would make prosecuting that crime very difficult.
MS. BAILY added the House Judiciary Committee discussed this
issue, where Anne Carpeneti looked at that closely. She noted
that "unreasonably" would include a lot of people who might not
want to take money away from their existing family, such as a
new spouse, and that would not be unreasonable.
CHAIR SEEKINS commented that Senator French's concern is the
structure of that section. He agreed that language is awkward
and felt Senator French's suggested language is favorable. He
noted his intention to hold the bill and have that section
redrafted.
SENATOR OGAN noted his desire to work with the bill sponsor on
the question of the constitutionality of debtor's prison.
SENATOR FRENCH asked if these cases will be prosecuted by one
prosecutor who works two-thirds of her time on these cases.
MR. MAIN said that is correct.
SENATOR FRENCH pointed to the indeterminate fiscal note and
asked if CSED intends to expand that prosecutor's hours or give
her additional resources. He noted that a felony charge will
require a grand jury hearing, which will drive the cost of
prosecution up. He opined that if she is paid for two-thirds
time, it is unfair to give her a full time caseload. He then
asked for the list of recreational licenses that will be revoked
if a person does not follow this law.
MR. MAIN said recreational licenses are sport fishing and sport
hunting licenses.
SENATOR OGAN repeated his concern that this bill will not let a
person own a business, drive, or feed himself with fish and
game.
CHAIR SEEKINS replied, "With that, I think this is a very
interesting bill. I think the intent is not to allow people to
live large by stealing from their kids and I agree with that."
He then set the bill aside and announced a five-minute recess.
Upon reconvening, the committee took up HB 414.
9:35 p.m.
HB 414-U.S.SENATE VACANCY/DEF OF POLITICAL PARTY
MR. HEATH HILYARD, staff to Representative Lesil McGuire,
informed members that version W was before the committee. He
explained that the definition of "political party" was
reinserted in version W, which was present in the original
version of the bill.
CHAIR SEEKINS asked Mr. Hilyard if he wanted to add any
information to his last presentation on the bill.
MR. HILYARD said the question of why the language regarding
political parties was included has been discussed, particularly
by the House State Affairs Committee. He stated, "Our main
concern was to address some of the concerns brought up, and the
court order and the litigation from last fall. I believe that
does that, and that's exactly why we included the language
originally."
SENATOR FRENCH noted one CS contained intent language regarding
the legislature's desire to not tamper with this law for the
next two years and asked what happened to that language.
MR. HILYARD said he cannot say why that language was removed
from version W.
SENATOR FRENCH said his concern goes back to the minimum wage
issue a few years ago. The voters adopted a ballot proposition
for a minimum wage increase with inflation proofing. Then, the
legislature passed a law with the same provisions and, before
inflation proofing ever took effect, the legislature voted to
strip out the inflation proofing provision, thereby negating the
will of the people. He again asked what happened to that intent
language that would have expressed the legislature's intent to
not tamper with the statute for the next few years.
SENATOR OGAN commented that the will of the people was expressed
when they approved the Constitution, which allows the
legislature to amend an initiative at any time. He said that
constitutional provision recognizes the fact that initiative
promoters might have certain agendas and that they do not have
the ability to have their wordsmithing scrutinized by
legislative drafters, resulting in unintended consequences.
SENATOR THERRIAULT pointed out the minimum wage initiative had
two sections: raising the minimum wage and inflation proofing.
Although the people approved that initiative, he sides with
Senator Ogan in that the legislature has the constitutional
authority to make adjustments. He then asked Mr. Hilyard why the
definition of "political party" was originally included in the
bill.
MR. HILYARD repeated that the concern was to address some of the
points brought up in the court order last fall.
SENATOR THERRIAULT asked if the court made a finding based on
the merits of the case and issued a temporary order granting the
injunction.
MR. HILYARD said that is his understanding.
MS. VANESSA TONDINI, staff to Representative McGuire, told
members the second part of the bill addresses litigation brought
by the Green Party against the Division of Elections. That
litigation grew out of the Green Party's dissatisfaction with
the interplay between the results of the 2002 gubernatorial
election and the definition of "political party" in the Alaska
Elections Act. That definition currently requires a party to
nominate a candidate for governor who manages at least three
percent of the popular vote in a gubernatorial election.
Alternatively, a party can register voters under its banner if
the number equals three percent of the total number of votes
cast for governor in the immediately preceding general election.
MS. TONDINI explained that Diane Benson, the Green Party
candidate in 2002, garnered less than the three percent needed
to maintain Green Party status. In the lawsuit, the Green Party
asked the court to enjoin enforcement of the law for the period
through the 2004 election so it could continue to participate in
politics for the benefit of being a full political party. Judge
Reese seceded to the Green Party's request and granted a
preliminary injunction on November 3, 2003. Judge Reese noted in
his court order that the Green Party had been successful in
winning over six percent of the votes in races for federal
elections, namely for U.S senator and U.S. representative. He
determined that the Green Party would face irreparable harm if
denied party status. Therefore, HB 414 directly responds to the
court order by expanding the types of statewide races that the
Division of Elections can review to ascertain whether a party
enjoys enough popular support to merit official status. The
House Judiciary Committee felt it was its place to fix the
definition to undo the gridlock caused by the injunction.
SENATOR THERRIAULT pointed out the injunction has three parts:
it was granted until the general election in 2004 and it says
the legislature can correct the problem statutorily or it can be
corrected by further order of the court. There is some
uncertainty because the court could come back and modify the
injunction. Therefore Representative McGuire chose the option of
fixing the problem with a statutory change.
MS. TONDINI said that is correct and that Representative McGuire
felt fixing the problem was within the legislature's purview and
was the better choice.
SENATOR THERRIAULT asked which races received six percent of the
Green Party vote.
MS. TONDINI did not have the names of the individuals in the
U.S. senate and representative races at that time.
SENATOR ELLIS asked if the sponsor asked that the intent
language be omitted.
CHAIR SEEKINS said it is his personal philosophy that the
legislature should do nothing to restrict a future legislature
from considering any question it wants to. In addition, he
reminded members that intent language is not binding.
SENATOR ELLIS asked if it was Chair Seekins' decision to omit
the intent language in the CS.
CHAIR SEEKINS said it was his intent that the committee
reconsider the original version of the bill. He said he would be
glad to address a motion to include that language.
MS. TONDINI indicated the intent language was added to clarify
the sponsor's intent to not circumvent the binding effect that
the initiative process would have. Although one legislature
cannot bind the next, Representative McGuire wanted to make it
clear that she did not intend to make any changes to this law
shortly after it passed.
CHAIR SEEKINS said he appreciates her intent but he did not want
to say that someone else could not do that.
TAPE 04-45, SIDE A
SENATOR THERRIAULT asked if the sponsor intends that the
definition of political party apply retroactively to the current
case.
MS. TONDINI said it would apply prospectively.
MS. SARA FELIX, Assistant Attorney General, Department of Law
(DOL), offered to answer questions.
SENATOR THERRIAULT commented that the judge has granted an
injunction until the November election unless the legislature
changes the statute or the court takes further action. He asked
Ms. Felix if the court will consider a new statute enacted by
the legislature.
MS. FELIX said it is her understanding, from the terms of the
court order, that the court would consider it. She would
certainly submit the bill in the litigation, which is ongoing.
SENATOR THERRIAULT asked if the legislature wants Section 7 to
only apply after the November election, it could do so by using
a delayed effective date.
MS. FELIX said that could also be accomplished using
transitional language. She said the general rule is that a law
that is enacted subsequent to an event applies prospectively,
not retroactively.
SENATOR THERRIAULT asked Ms. Felix if there was any discussion
[during the litigation] about whether the races that garnered
six percent of the Green Party vote were contested races.
MS. FELIX told members the candidates in the November 2002
election for U.S. Senate were Jim Dore for the Alaska
Independence Party, Frank Vandersaar for the Democratic Party,
Ted Stevens for the Republican Party, Jim Sykes for the Green
Party, and Leonard Karpinski for the Libertarian Party. In that
race, Mr. Sykes received 7.24 percent of the vote. The
candidates for U.S. Representative in that election were Don
Young for the Republican Party, Russell DeForest (ph) for the
Green Party, Rob Cliff for the Green Party, and Clifford Green
for the Democratic Party. In the briefing on the motion for
preliminary injunction, the issue of whether or not those two
races were contested was not discussed. The focus of the
briefing was the reasonableness of the statute, which ties the
modicum of the political support requirement to the
gubernatorial race rather than the other races that the Green
Party was advocating for. The state argued that the
legislature's choice of the gubernatorial race was reasonable.
SENATOR THERRIAULT asked when that litigation will be completed.
MS. FELIX said the trial is set to begin November 22, 2004. By
court rule, judges have six months in which to issue an order.
She noted that Judge Reese has retired so a new judge will be
assigned to the case.
SENATOR OGAN asked how the court determines which judge gets
assigned to a case.
SENATOR FRENCH said the presiding judge makes the decision.
CHAIR SEEKINS questioned the Green Party's purpose in filing the
lawsuit.
MS. FELIX explained that at the 2002 general election, the Green
Party candidate did not receive the required three percent of
the gubernatorial vote so it lost political party status. The
party wanted to retain that status, which allows participation
in the primary election and offers certain fundraising
advantages under the APOC statutes. Therefore, the Green Party
sued the state contesting the lost party status determination.
CHAIR SEEKINS said in effect, the Green Party is saying that
this one race should not affect its ability to be a recognized
political party.
MS. FELIX thought the Green Party's position is that it has been
a legitimate, recognized political party for the last 12 years
and had one bad gubernatorial race so it should not be denied
political party status. Treating the Green Party differently
from other similarly situated parties would be a denial of equal
protection of the law.
CHAIR SEEKINS asked if the judge is saying that is a legitimate
question that needs to be answered and it would be helpful for
the legislature to clarify its position.
MS. FELIX felt that is a very fair characterization.
CHAIR SEEKINS asked if this legislation, if enacted, will help
to clarify the issue as to whether the Green Party should be a
recognized political party for the next election and in
elections thereafter.
MS. FELIX said that is correct.
SENATOR THERRIAULT asked Ms. Felix to describe how Section 7
would work.
MS. FELIX said it appears that Section 7(A) would require
nominating a candidate for governor who received three percent
of the vote. Section 7(B) says if the office of governor is not
on the ballot, the office of U.S. senator would be used to
determine whether that nomination received three percent of the
vote at the last election. Section 7(C) says if neither the
office of governor nor the office of U.S. senator is on the
ballot, the office of U.S. representative would be used.
SENATOR THERRIAULT asked if the legislation would essentially
create a specific chain of which election should be looked to.
MS. FELIX agreed it would create a hierarchy of which race to
use.
SENATOR FRENCH did not believe this legislation would fix the
problem that occurred in 2002 since the gubernatorial race is
the first one that would be considered. He noted the Green Party
could have won the U.S. senate seat that year but still not be a
recognized political party.
MS. FELIX said it leaves the office of governor as the primary
touchstone. She said it does not appear to fully address the
concerns set out in the order for injunctive relief.
SENATOR FRENCH asked if the party candidate gets two percent in
the governor's race and wins the U.S. senate race, the party
will not be recognized as a political party if both of those
occur on the same ballot under the definition in the bill.
MS. FELIX said that is how she sees it.
SENATOR THERRIAULT suggested that a person who won a statewide
race would have more than three percent of the vote.
CHAIR SEEKINS asked if the judge did not make a decision based
on the merits at this time; he only granted a preliminary
injunction, which grants the Green Party continued recognition
until the earlier of the general election in 2004, a statutory
change, or the court takes further action.
MS. FELIX said that is a correct summation. She said the merits
of the case remain to be litigated and it is possible that the
current statute could be upheld.
CHAIR SEEKINS asked if the intent is that HB 414 be prospective
so that the new rules apply to the general election this fall so
that the legislature does not foul up the Green Party status in
2004.
MS. FELIX said if Chair Seekins' concern is that litigation will
not be resolved until after the general election and this bill
might affect the general election and he does not want it to
affect the Green Party's current status as a recognized
political party, the committee could put transitional language
in the bill. She expressed concern about relying on the
assumption that passage of this bill would not impact the
litigation. She said if that legislative intent is put on the
record, she would not go to court and say the legislature has
enacted this bill and it applies to the lawsuit.
SENATOR THERRIAULT felt the legislature should speak to that
directly. He then moved a conceptual amendment [Amendment 2]
that would place a delayed effective date on Section 7 until
after the November 2004 general election.
CHAIR SEEKINS announced that without objection, Amendment 2 was
adopted.
SENATOR THERRIAULT asked if the court looked at the competitive
nature of the races.
MS. FELIX said the court did not.
SENATOR THERRIAULT recalled the dynamics of the races that Ms.
Felix spoke to earlier were that the candidates fielded in those
races by the Democratic Party did not garner any kind of
excitement. He questioned whether those races can be viewed as a
sudden groundswell of support for the Green Party and what it
stands for, rather than a mere lack of options. He said the
intent is to measure recognition of political parties via the
depth of support by the general voters. He repeated that he does
not know that two races, just due to lack of competition, are a
true indication of support.
CHAIR SEEKINS said the U.S. senate race in 2004 will certainly
be a competitive race, as will Senator Ted Stevens' seat when he
retires. He said the contested races determine where the real
support for the parties is and he believes this next race will
show that.
CHAIR SEEKINS then noted with no further testimony or
discussion, public testimony was closed.
SENATOR THERRIAULT moved SCS CSHB 414(JUD) from committee with
individual recommendations and its attached zero fiscal notes.
SENATOR ELLIS objected.
SCS CSHB 414(JUD) moved from committee with Senators Ogan,
Therriault and Seekins in favor, and Senators Ellis and French
opposed.
HB 285-ELECTRONIC TRANSACTIONS & SIGNATURES
MS. VANESSA TONDINI, staff to Representative Lesil McGuire,
sponsor of HB 285, informed members that HB 285 would adopt the
Uniform Electronic Transactions Act (UETA), a uniform law
promulgated by the Uniform Law Commissioners in 1999 in an
effort to prepare state law for the electronic commerce era. The
objective of UETA is to establish the legal equivalent of
electronic records and signatures with paper writings and manual
signatures to remove barriers to electronic commerce and give an
electronic signature the same legal effect as a manual
signature. UETA is not an attempt to create a new system of
legal rules for the electronic marketplace and it does not
change any current substantive rules of law, such as contract
law, fraud or agency law. It is simply a framework that allows
for regulation and acceptance if both parties choose to use
electronic communication. If this framework is not set up on the
state level, the federal e-sign law will apply. UETA is much
more comprehensive than the federal law. To date, 45 states have
adopted UETA so it is time that Alaska join the rest of the
nation in adopting UETA.
SENATOR FRENCH stated support for CSHB 285(JUD), as it is a
straightforward bill.
SENATOR OGAN said although he is uncomfortable with electronic
signatures, he believes this bill may provide more protections
for the consumer.
SENATOR THERRIAULT moved CSHB 285(JUD) from committee with
individual recommendations and its attached zero fiscal notes.
CHAIR SEEKINS announced that with no objection, the motion
carried. He then adjourned the meeting at 10:13 a.m.
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