HOUSE STATE AFFAIRS STANDING COMMITTEE March 27, 1997 8:04 a.m. MEMBERS PRESENT Representative Jeannette James, Chair Representative Ethan Berkowitz Representative Fred Dyson Representative Kim Elton Representative Mark Hodgins Representative Ivan Ivan Representative Al Vezey MEMBERS ABSENT All members present. COMMITTEE CALENDAR HOUSE BILL NO. 67 "An Act relating, for purposes of eligibility for a permanent fund dividend, to an absence from the state while on an unpaid sabbatical under the longevity bonus program; and providing for an effective date." - MOVED CSHB 67(STA) OUT OF COMMITTEE HOUSE BILL NO. 143 "An Act relating to the art in public places requirements for state-owned and state-leased buildings and facilities." - MOVED HB 143 OUT OF COMMITTEE HOUSE BILL NO. 81 "An Act relating to the members of the board and staff of the Alaska Permanent Fund Corporation." - SCHEDULED BUT NOT HEARD (* First public hearing) PREVIOUS ACTION BILL: HB 67 SHORT TITLE: LONGEVITY BONUS SABB'TCL:PFD ELIGIBILITY SPONSOR(S): REPRESENTATIVE(S) RYAN JRN-DATE JRN-PG ACTION 01/15/97 66 (H) READ THE FIRST TIME - REFERRAL(S) 01/15/97 67 (H) STATE AFFAIRS, LABOR & COMMERCE, FIN 02/25/97 (H) STA AT 8:00 AM CAPITOL 102 02/25/97 (H) MINUTE(STA) 03/27/97 (H) STA AT 8:00 AM CAPITOL 102 BILL: HB 143 SHORT TITLE: REPEAL ART IN PUBLIC PLACES REQUIREMENT SPONSOR(S): REPRESENTATIVE(S) VEZEY, Hodgins JRN-DATE JRN-PG ACTION 02/17/97 374 (H) READ THE FIRST TIME - REFERRAL(S) 02/17/97 375 (H) STATE AFFAIRS 03/20/97 (H) STA AT 8:00 AM CAPITOL 102 03/20/97 (H) MINUTE(STA) 03/22/97 (H) STA AT 10:00 AM CAPITOL 102 03/25/97 841 (H) COSPONSOR(S): HODGINS 03/27/97 (H) STA AT 8:00 AM CAPITOL 102 WITNESS REGISTER REPRESENTATIVE JOE RYAN Alaska State Legislature State Capitol, Room 420 Juneau, Alaska 99801-1182 Telephone: (907) 465-3875 POSITION STATEMENT: Sponsor of HB 67. NANCI A. JONES, Director Permanent Fund Dividend Division Department of Revenue P.O. Box 110460 Juneau, Alaska 99811-0460 Telephone: (907) 465-2323 POSITION STATEMENT: Provided testimony on HB 67. ACTION NARRATIVE TAPE 97-35, SIDE A Number 0001 The House State Affairs Standing Committee was called to order by Chair Jeannette James at 8:04 a.m. Members present at the call to order were Representatives James, Berkowitz, Dyson, Elton, Ivan and Vezey. Members absent were Hodgins. Representative Mark Hodgins arrived at 8:20 a.m. HB 67 - LONGEVITY BONUS SABB'TCL:PFD ELIGIBILITY The first order of business to come before the House State Affairs Standing Committee was HB 67, "An Act relating, for purposes of eligibility for a permanent fund dividend, to an absence from the state while on an unpaid sabbatical under the longevity bonus program; and providing for an effective date." CHAIR JEANNETTE JAMES called on Representative Joe Ryan, sponsor of HB 67, to present the bill. Number 0054 REPRESENTATIVE JOE RYAN, Alaska State Legislature, explained HB 67 allowed an exception for folks who were taking an unpaid sabbatical to retain their eligibility for the permanent fund check. A sabbatical could only be taken once every five years. There were only 139 people who had taken advantage of it. "We actually save money on this thing because for the time they're on a sabbatical they don't get their longevity bonuses." They retain their eligibility for their longevity bonus when they return, however. The exception in HB 67 allowed for them to retain their eligibility for their permanent fund checks so that they were not penalized twice. This small concession was the least that the state could do for them. Number 0209 REPRESENTATIVE AL VEZEY asked somebody to explain an "unpaid sabbatical". Number 0219 REPRESENTATIVE RYAN replied people were allowed to leave the state once every five years for certain purposes while not losing their eligibility for the permanent fund check. Number 0281 CHAIR JAMES explained - generally - it was time off from work with pay. In the beginning it had a religious connotation, but had transcended into time off to do something entirely different for one year. Number 0375 REPRESENTATIVE RYAN explained it allowed for seniors, who had stayed in Alaska for a long period of time withstanding the hardships of Alaska, to go outside and travel without being penalized by losing their longevity bonuses. For many, the longevity bonus was a substantial part of their retirement income. "I don't think it's an undue hardship on the state to allow these people to enjoy some time in their later years to do some of the things that they worked very hard for." Number 0443 REPRESENTATIVE KIM ELTON stated in this context an unpaid sabbatical meant a long vacation. The difference was that a person could reestablish his or her eligibility for the permanent fund dividend program; whereas, a person would loose his or her eligibility forever for the longevity bonus program. Number 0496 REPRESENTATIVE RYAN replied there was an exception made for the sabbatical. Seniors would retain their eligibility for the longevity bonus program, but they would lose it for the time that they were absent. The state, therefore, was saving money because the longevity bonus came out of the General Fund. So, we were saving money on one hand and just allowing for the participation in the permanent fund program on the other hand. Number 0556 NANCI A. JONES, Director, Permanent Fund Dividend Division, Department of Revenue, was the first person to testify in Juneau. The division would like to offer an alternative to HB 67. Currently, a person taking a sabbatical, depending on when he or she left, would not disqualify for the permanent fund dividend. The regulations allowed for 180 days of absence in one calendar year. Therefore, if a person straddled a year; for example, six months of absence in one year, he or she would not lose eligibility for a dividend check. As an alternative, the division could by regulation or statute ensure that a person would not lose eligibility in the second year, if he or she chose not to straddle a year. For example, if a person was gone an entire calendar year, he or she would not be eligible for the first dividend and because he was not in the state prior to the new qualifying year he would also miss eligibility for the second dividend. By addressing this through regulation, it put both programs on equal footing. Moreover, there were 29,733 people who received at least one longevity bonus last year. The bill would segregate these people by creating an elite group. Number 0730 CHAIR JAMES wondered if HB 67 would allow for the 29,733 people Ms. Jones referenced to receive their permanent fund dividend check. How would they affect the longevity bonus program negatively? Number 0781 MS. JONES replied it was an impact on the differences between the permanent fund dividend and the longevity bonus program. She was not inferring that the bill would impact the longevity bonus program. Number 0795 CHAIR JAMES asked Representative Ryan if the 139 people he referenced earlier had already taken their sabbaticals since passing the bill last year? Number 0808 REPRESENTATIVE RYAN replied the 139 people were either taking advantage of the opportunity, or who would take advantage of the opportunity. In addition, these were older people so the numbers would change due to the natural attrition rate of death, for example. Number 0829 CHAIR JAMES stated there would be 139 more people who would receive a permanent fund dividend check under HB 67 than otherwise. MS. JONES replied, "Correct." But only if they were not gone more than 180 days in one calendar year. Number 0859 CHAIR JAMES stated if they were gone more than 365 days the whole thing did not apply to them. CHAIR JAMES further stated the alternative, according to Ms. Jones, was to ensure by statute or regulation that a person would not lose eligibility in the second year; however, there was no protection for the first year. She asked Ms. Jones how the first year would be protected? Number 0952 MS. JONES replied to be on equal footing with the longevity bonus program they would not be eligible the year that they took their sabbatical. But, they would be eligible upon return for the second year. Number 0980 CHAIR JAMES stated that was less of a deal than what HB 67 was asking for. House Bill 67 asked for no cessation of the permanent fund dividend while a person was gone. Number 0996 REPRESENTATIVE ELTON stated, under the current rules, a person could be gone from July 15, 1997 to June 15, 1998; still receive a dividend for this year and next year; and still be able to take two weeks of vacation in each of the two years. MS. JONES replied, "Correct." REPRESENTATIVE ELTON asked Ms. Jones if he took a two year sabbatical, for example, would he still be covered? There did not appear to be a time-frame involved. Number 0996 MS. JONES replied the sabbatical was a 12-month program. Number 1065 REPRESENTATIVE VEZEY wondered how the Governor's bill that put a ceiling on income for recipients of the longevity bonus would affect those who would not be taking a sabbatical leave. Number 1124 MS. JONES responded that as long as they were not absent there would not be a problem with their dividend. Number 1143 REPRESENTATIVE VEZEY asked Ms. Jones if they would be eligible to take a sabbatical leave because their incomes were too high? MS. JONES replied, "No." The only sabbatical that the permanent fund dividend program recognized was from the university system statewide. REPRESENTATIVE VEZEY asked Ms. Jones if that was provided for in statute? MS. JONES replied, "Yes." Number 1166 REPRESENTATIVE ETHAN BERKOWITZ wondered if a person would still be eligible under HB 67 to take a permanent fund sabbatical if a person's income was outside of the cap proposed by the Governor. Number 1198 CHAIR JAMES replied the disallowance would have to be included in the second piece of legislation; otherwise, there would be a conflict. House Bill 67 referred to those who qualified for a longevity bonus and if something else would supersede that qualification then it should be referenced. Number 1251 REPRESENTATIVE RYAN stated the exemption was under AS 47.45.030. If a person did not qualify as a result of a subsequent piece of legislation for the longevity bonus sabbatical, then it would not apply and there would be nothing to lose. Under As 47.45.030, a person could be gone for a whole year, but he or she would have to give up the longevity bonus while retaining eligibility for the permanent fund dividend upon return. If a person did not have a longevity bonus to give up then he or she would not qualify for the sabbatical. Number 1287 CHAIR JAMES said everyone had a different view of who the recipients of the longevity bonus were: seniors in the Pioneer Homes, seniors who gathered at senior centers, and seniors who were still working. Therefore, sabbatical for some would be a choice and for others it would be an assignment. In addition, in-light-of the Governor's bill, there was an argument that those who were working did not need the permanent fund dividend or a sabbatical. In summary, she did not know how she felt about the issue. She mentioned she had a conflict of interest because she was a recipient of the longevity bonus. She did see the merits of the bill, however. Number 1470 REPRESENTATIVE RYAN explained, as a scenario, there were very few people in Alaskan who had an extended family here because most of us were from somewhere else. In addition, our children lived outside because of the lack of employment opportunities in Alaska. The sabbatical provision, therefore, gave the seniors an opportunity to renew family relations outside of Alaska with their children and grandchildren. It also allowed for them to tie up their loose ends before their time came without being penalized. That was what the original longevity bonus exemption was for. "I thought that this would be more of an effort to help those folks because traditionally older folks did not have a lot of money to do these things." Number 1525 REPRESENTATIVE ELTON stated the provision only allowed for the longevity recipients which was a diminishing pool of people. Therefore, there would be those seniors in time who would not be able to visit their grandchildren on a sabbatical without losing their permanent fund dividend. Number 1555 CHAIR JAMES replied, "Correct." That was the way the bill was written. Number 1561 REPRESENTATIVE BERKOWITZ wondered if the longevity bonus problem could be side stepped if the language in AS 47.45.035 was adopted. If the intent was to ensure that Alaska's seniors could take a sabbatical while retaining their permanent fund eligibility, there was no reason to relate it to the receipt of the longevity bonus. Number 1595 CHAIR JAMES replied that was an option. She was not sure if Representative Ryan intended to open the bill up that big, however. Number 1603 REPRESENTATIVE RYAN stated he had not planned at this time to offer that opportunity. "I just thought that since these people were giving up one thing, we wouldn't double their penalties." It was a good subject for another bill, but he did not want to include it in HB 67; it would be a difficult proposition to sell. Number 1639 CHAIR JAMES stated there was an assumption that longevity bonus recipients had been in Alaska longer than others. In 1992, 40 percent of the recipients had not been in the state for more than 3 years. However, now that it was phased out and the longer that it went by, it meant that those people had been in Alaska longer than just anybody who qualified for a permanent fund. Number 1664 REPRESENTATIVE MARK HODGINS moved that HB 67 move from the committee with individual recommendations and the attached fiscal note(s). Number 1676 REPRESENTATIVE BERKOWITZ objected for discussion purposes. REPRESENTATIVE BERKOWITZ stated he was unclear if there had been any modification of the concerns raised about attaching eligibility to the receipt of the longevity bonus. He wanted to be sure that people retained their ability to collect on the permanent fund dividend even if their ability for the longevity bonus was challenged through the Governor's bill. In his district, there were a lot of seniors who qualified for the longevity bonus. He did not want it so that they did not receive their permanent fund as well because they took a sabbatical. Number 1719 CHAIR JAMES stated she was concerned about opening the provision up broadly. She was also concerned about creating a benefit for newcomers. She did not know how to identify them without including the newcomers, however. REPRESENTATIVE BERKOWITZ stated a time limit could be included. Otherwise, the Governor's bill would disqualify people in the future. Number 1780 REPRESENTATIVE RYAN responded the thrust of the bill was quid pro quo. "You give up your longevity bonus but we will help you retain your permanent fund eligibility." He did not intend to open the subject up for everybody. The merits were fine, but he did not want to go that far in HB 67. Number 1810 CHAIR JAMES asked Representative Berkowitz if he was offering a conceptual amendment? Number 1816 REPRESENTATIVE BERKOWITZ explained he did not want to expand the universe of those who would be eligible today under HB 67. However, tomorrow a different contingency could shrink the universe through means testing. For example, "My feeling is people who get means tested out of a longevity bonus have already made a sacrifice and for them to stand by and watch while their friends go on a sabbatical and still retain their permanent fund eligibility while they're unable to do so. The equal protection specter was much stronger in the situation that I have described than it is currently where there are people who are not even eligible for the longevity bonus as opposed to people who would be eligible but they made too much money." Number 1868 CHAIR JAMES asked the committee members if they understood the discussion on the conceptual amendment? She explained it would include all of the people who currently qualified for the longevity bonus and an effective date. Number 1889 REPRESENTATIVE RYAN stated we have this issue before us now. We did not know what would happen to the Governor's bill. He suggested taking the issues one at a time. He reiterated the sabbatical was established so that individuals would lose something. Therefore, if they were ruled out by the Governor's bill they would have nothing to lose. There would not be a reason to give them a permanent fund dividend because they had already lost their longevity bonus through means testing. Number 1919 CHAIR JAMES stated she understood the concerns of Representative Ryan, but a member of the House State Affairs Standing Committee had offered a conceptual amendment so it was up to the committee members now. Number 1928 REPRESENTATIVE BERKOWITZ moved the conceptual amendment to include the following language: "Those who qualify for the longevity bonus as of January 1, 1997 would as of that date be eligible for an unpaid sabbatical." CHAIR JAMES asked the committee members if they understood the conceptual amendment offered by Representative Berkowitz? Number 1946 REPRESENTATIVE IVAN IVAN asked Representative Berkowitz to run that by him again. CHAIR JAMES replied HB 67 would enable seniors to not lose their permanent fund dividend eligibility while they were on an unpaid sabbatical under the longevity bonus program. The conceptual amendment would qualify those as of January 1, 1997, to prevent a subsequent bill from denying them for another reason from getting their longevity bonus and permanent fund dividend if they went on a sabbatical. CHAIR JAMES asked if there was any objection to the conceptual amendment? Number 2004 REPRESENTATIVE HODGINS objected. A roll call vote was taken. Representatives James, Berkowitz, Dyson, Elton, Ivan and Vezey voted in favor of the motion. Representative Hodgins voted against the motion. The conceptual amendment was accepted. CHAIR JAMES asked if there was an objection to moving the bill from the committee as amended? There was no objection, CSHB 67(STA) was so moved from the House State Affairs Standing Committee. HB 143 - REPEAL ART IN PUBLIC PLACES REQUIREMENT The next order of business to come before the House State Affairs Standing Committee was HB 143, "An Act relating to the art in public places requirements for state-owned and state-leased buildings and facilities." CHAIR JAMES called on Representative Vezey, sponsor of HB 143, to present the bill. Number 2068 REPRESENTATIVE VEZEY said he did not have any further comments to make on HB 143. The committee had debated the bill and there had been public testimony. Number 2074 REPRESENTATIVE VEZEY moved that HB 143 move from the committee with individual recommendations and the attached fiscal note(s). Number 2079 REPRESENTATIVE ELTON objected. Number 2088 REPRESENTATIVE IVAN commended the efforts of the sponsor and the intention of the bill. However, as a minority member of the majority, he did not see how an appropriation bill of his would go through. Currently, the 1 percent protected the interest and included local culture. He, therefore, saw the program as including ownership and giving respect while furthering local cultures. He would vote against the bill, but he did respect the intent. Number 2159 CHAIR JAMES stated she supported art in public places without a doubt and saw the benefits. She had a problem, however, with the percent for art program as a mandate. She would vote to move the bill from the committee, but she did not know how she would vote on the bill on the floor of the House of Representatives. Number 2217 REPRESENTATIVE BERKOWITZ stated he just listened to a "no frills" prison bill in another committee - the House Judiciary Standing Committee. It was unfortunate that this bill was also imposing "no frills" to the rest of us. The percent for art program did not cost the state anything and it benefitted the artists and the communities. CHAIR JAMES called for the roll call vote. Representatives James, Dyson, Hodgins and Vezey voted in favor of the motion. Representatives Berkowitz, Elton and Ivan voted against the motion. House Bill 143 was so moved from the House State Affairs Standing Committee. ADJOURNMENT Number 2217 CHAIR JAMES adjourned the House State Affairs Standing Committee meeting at 8:45 a.m.