04/11/2012 09:00 AM Senate STATE AFFAIRS

                  HB 190-PFD ALLOWABLE ABSENCE                                                                              
                                                                                                                                
9:29:02 AM                                                                                                                    
CHAIR  WIELECHOWSKI  announced  that  the next  bill  before  the                                                               
committee  would  be  HB 190,  which  amends  statutes  regarding                                                               
Permanent Fund Dividend (PFD) allowable  absences and removes the                                                               
10-year rule that  prohibits an Alaskan living  outside the state                                                               
from receiving a dividend under certain circumstances.                                                                          
                                                                                                                                
REPRESENTATIVE  ERIC FEIGE,  sponsor  of HB  190, introduced  the                                                               
bill. He  related that  last year  legislators received  an email                                                               
from an Alaskan  in the U.S. Navy who was  denied his PFD because                                                               
of a 1998 law that prevents  those in the military from receiving                                                               
a  dividend when  otherwise eligible  for  an allowable  absence.                                                               
Those serving Congress  in Washington, DC, continue  to receive a                                                               
dividend. The bill will bring equality  to those who serve in the                                                               
military,  while  tightening  the   restrictions  on  those  that                                                               
qualify for an allowable absence longer than five years.                                                                        
                                                                                                                                
MICHAEL PASCHALL,  staff to Representative Eric  Feige, explained                                                               
HB 190 on behalf of the sponsor.  He said the purpose of the bill                                                               
is  to provide  equity to  those residents  who are  absent while                                                               
serving  the state.  He explained  the eligibility  rules of  PFD                                                               
allowable  absences. The  PFD Division  hears from  approximately                                                               
1,300 absentees after five years  when intent to return to Alaska                                                               
must  be  proven. He  said  that  putting that  presumption  into                                                               
statute  should  reduce the  number  of  appeals. At  ten  years,                                                               
everyone  is   denied  a  PFD   except  for  a  small   class  of                                                               
individuals.                                                                                                                    
                                                                                                                                
MR. PASCHALL related  that Section 1 is  conforming regarding the                                                               
repeal that  takes place in  Section 3. Section 2  establishes in                                                               
law the  presumption that  someone who is  absent from  the state                                                               
for more than  180 days in each of the  previous five years, does                                                               
not plan to return to the state  and is not eligible to receive a                                                               
PFD. It  also provides  a method  to appeal  a denial.  Section 3                                                               
repeals  AS 43.23.008(C),  the ten-year  rule.  Section 4  allows                                                               
someone who was  previously denied a PFD under  the ten-year rule                                                               
to be  eligible to obtain the  current year PFD. Section  5 makes                                                               
the law retroactive to January 1,  2012. Section 6 makes the bill                                                               
effective immediately.                                                                                                          
                                                                                                                                
CHAIR  WIELECHOWSKI thanked  Mr.  Paschall for  his  work on  the                                                               
bill.                                                                                                                           
                                                                                                                                
DEBBIE  BITNEY,  Director,   Permanent  Fund  Dividend  Division,                                                               
Department of Revenue, offered to  answer questions related to HB
.                                                                                                                            
                                                                                                                                
CHAIR  WIELECHOWSKI   asked  how   many  Alaskans   are  declared                                                               
ineligible for a PFD because of the ten-year rule.                                                                              
                                                                                                                                
MS. BITNEY related that it was in the 100's.                                                                                    
                                                                                                                                
CHAIR WIELECHOWSKI  asked which situations were  causing Alaskans                                                               
to remain out of state for ten years.                                                                                           
                                                                                                                                
MS. BITNEY  replied that  it was, by  far, for  military reasons,                                                               
but also, students and family care-givers.                                                                                      
                                                                                                                                
CHAIR WIELECHOWSKI  asked for data  regarding persons  who return                                                               
to Alaska after being gone for ten years.                                                                                       
                                                                                                                                
MS. BITNEY  reported that only  80 people returned to  the state,                                                               
which shows a need for the "intent" aspect of the bill.                                                                         
                                                                                                                                
9:37:18 AM                                                                                                                    
CHAIR  WIELECHOWSKI noted  support  for those  who are  sincerely                                                               
coming back to  Alaska. He questioned if the  5-year provision in                                                               
the  bill would  help weed  people out  who are  not planning  to                                                               
return to Alaska.                                                                                                               
                                                                                                                                
MS. BITNEY  said it  makes determining who  has intent  to return                                                               
easier for  the division and is  clearer for the applicant  as to                                                               
how to show intent to return.                                                                                                   
                                                                                                                                
SENATOR PASKVAN  asked for more information  about "30 cumulative                                                               
days over a five-year period."                                                                                                  
                                                                                                                                
MS.  BITNEY  noted a  rule  which  states  in order  to  maintain                                                               
residency, a person  must return to the state for  72 hours every                                                               
two years,  with the exception  of military families  who qualify                                                               
for hostile  fire pay. The  "30 cumulative days over  a five-year                                                               
period" is a separate requirement.                                                                                              
                                                                                                                                
SENATOR  PASKVAN asked  about a  connection between  children and                                                               
spouses regarding the residency requirements.                                                                                   
                                                                                                                                
MS. BITNEY  said that residency  requirements are  individual and                                                               
each person has to come back.                                                                                                   
                                                                                                                                
CHAIR WIELECHOWSKI asked how often the 72-hour rule is waived.                                                                  
                                                                                                                                
MS. BITNEY did not have those numbers.                                                                                          
                                                                                                                                
9:41:16 AM                                                                                                                    
CHAIR WIELECHOWSKI requested a ballpark figure.                                                                                 
                                                                                                                                
MS. BITNEY guessed it was less than 500 per year.                                                                               
                                                                                                                                
CHAIR WIELECHOWSKI  gave an example  of a military  situation and                                                               
asked if the 72-hour rule would be waived for whole family.                                                                     
                                                                                                                                
MS. BITNEY  said, as the  statute is currently written,  it would                                                               
be waived for the family, also.                                                                                                 
                                                                                                                                
CHAIR WIELECHOWSKI asked if the division supports the bill.                                                                     
                                                                                                                                
MS. BITNEY said the bill would help the division do its work.                                                                   
                                                                                                                                
CHAIR  WIELECHOWSKI  summarized that  the  new  CS has  a  5-year                                                               
provision, but  keeps the 10-year requirement,  with an exemption                                                               
for military members.                                                                                                           
                                                                                                                                
9:43:52 AM                                                                                                                    
MICHAEL  BARBER,  Assistant   Attorney  General,  Commercial/Fair                                                               
Business Section,  Department of Law, answered  questions related                                                               
to HB 190.                                                                                                                      
                                                                                                                                
CHAIR WIELECHOWSKI  requested a motion  to adopt the new  SCS for                                                               
CSSSHB 190(FIN), version Y.                                                                                                     
                                                                                                                                
SENATOR  PASKVAN  moved to  adopt  the  proposed SCS  for  CSSSHB
(FIN), labeled 27-LS0564\Y, as the working document.                                                                         
                                                                                                                                
CHAIR WIELECHOWSKI objected for discussion purposes.                                                                            
                                                                                                                                
He restated the contents of the  bill and asked if the Department                                                               
of Law had any concerns.                                                                                                        
                                                                                                                                
MR.  BARBER  related   that  the  bill  may   violate  the  equal                                                               
protection  law. The  main consideration  for PFD  eligibility is                                                               
residency or  physical presence in  the state with the  intent to                                                               
remain  indefinitely.  The   allowable  absences  provisions  are                                                               
designed to  help the  department determine  who is  eligible and                                                               
are  consistent   with  the  intent   to  return.  In   1998  the                                                               
legislature created a  bright line rule that  exempted members of                                                               
Congress  and  their  staff  who   are  not  similarly  situated.                                                               
Military members  are also  not similarly  situated and  are more                                                               
likely to return  after ten years, which would  satisfy the equal                                                               
protection concern.                                                                                                             
                                                                                                                                
CHAIR  WIELECHOWSKI spoke  of  unique  concerns of  congressional                                                               
members   and  military   members  because   of  their   on-going                                                               
connectedness to the state. He  maintained that they should still                                                               
receive a PFD.                                                                                                                  
                                                                                                                                
9:48:52 AM                                                                                                                    
SENATOR  PASKVAN asked  if it  were possible  to have  forfeiture                                                               
provisions for those who say they are going to return but don't.                                                                
                                                                                                                                
MR.  BARBER thought  that would  be problematic.  He referred  to                                                               
discussions  in House  Finance providing  that the  PFD could  be                                                               
deposited as an incentive to return to the state.                                                                               
                                                                                                                                
SENATOR PASKVAN  agreed with  that concept.  He stated  that with                                                               
only 80  people out  of thousands returning  to Alaska,  the bill                                                               
may be unnecessary.                                                                                                             
                                                                                                                                
CHAIR WIELECHOWSKI  agreed with  Senator Paskvan's  statement. He                                                               
recalled his  discomfort with the  previous version of  the bill.                                                               
He asked Ms. Bitney for  suggestions on solutions for the problem                                                               
of  people claiming  intent to  return to  Alaska and  collecting                                                               
PFD's, but then not returning as promised.                                                                                      
                                                                                                                                
MS. BITNEY  suggested that  clearly defining  proof of  intent to                                                               
return would achieve that goal.                                                                                                 
                                                                                                                                
9:52:38 AM                                                                                                                    
CHAIR  WIELECHOWSKI  asked if  there  were  legal concerns  about                                                               
using an escrow account after five years.                                                                                       
                                                                                                                                
MR.  BARBER  said  he  thought   it  was  attractive  because  it                                                               
incentivized people,  but he requested  more time to  think about                                                               
it.                                                                                                                             
                                                                                                                                
CHAIR  WIELECHOWSKI  requested  that   Mr.  Barber  provide  more                                                               
information at a later date.                                                                                                    
                                                                                                                                
CHAIR  WIELECHOWSKI asked  for  a legal  opinion  on whether  the                                                               
exception  for  active  duty military  would  violate  the  equal                                                               
protection clause.                                                                                                              
                                                                                                                                
9:54:11 AM                                                                                                                    
LISA  KIRSCH,  Attorney,  Legislative   Legal,  agreed  with  Mr.                                                               
Barber's opinion.  She added that  the legislature would  have to                                                               
show there  was a rational  basis for  the decision, such  as the                                                               
military is a unique situation.  She cautioned that one can never                                                               
predict a court decision. She  opined that it would survive equal                                                               
protection scrutiny.                                                                                                            
                                                                                                                                
CHAIR WIELECHOWSKI closed public testimony and set HB 190 aside.                                                                
                                                                                                                                
SENATOR PASKVAN  asked the division to  provide information about                                                               
the very few  military families who did return to  Alaska and how                                                               
much money was spent on dividends for those who did not return.