1996-01-12                     Senate Journal                      Page 2127
SB 217                                                                       
Dear President Pearce:                                                         
                                                                               
Under the authority of art. III, sec. 18 of the Alaska Constitution, I         
am transmitting a bill that makes Alaska senior citizens with high             
incomes ineligible to receive the longevity bonus.  The bill also              
disqualifies longevity bonus recipients who are absent from the state,         
for reasons within their control, for 180 days or more within any              
one-year period.  I believe that these changes in the program are              
necessary as a cost containment measure as we look for ways to                 
reduce state spending and to address our budget gap.                           
                                                                               
The income maximum portion of this bill would disqualify a senior              
citizen from receiving the bonus if his or her gross income exceeds            
$60,000 a year.  A married couple would be disqualified if the                 
spouses combined gross income exceeds $80,000 a year.                          
                                                                               
Although the 1993 amendments to the bonus statutes, which closed               
the program to people not applying by the end of this year, will               
eventually lead to reduced costs for the longevity bonus, the short-           
term savings have been relatively small, as expected.  We estimate             
that enacting the income maximum for eligibility could reduce the              
cost of the program by about eight percent, or about $6 million                
annually.                                                                      
                                                                               
I am aware that many seniors within the state oppose needs-basing              
the bonus program, somehow equating it to welfare.  This bill does             
not do that.  Approximately 92 percent of seniors currently on the             
program, or more than 27,000 people, would see no change in their              
bonuses.  Setting income caps at a relatively high level does not              
limit the bonus to only those senior citizens who rely on it for the           
necessities of life.  Instead, the high cap is intended to take the            
bonus away from only those recipients who should not be even                   
minimally affected by the loss.                                                
                                                                               
The bill looks only at income, and not assets, so that recipients with         
moderate incomes will continue to receive the bonus even if they               
own valuable but nonliquid assets, such as homestead property or a             
residence that has greatly increased in value over the years.  The bill        
also  provides  that a recipient  disqualified by reason of the income