05/08/2003 08:52 AM House FIN

HOUSE BILL NO. 205                                                                                                            
                                                                                                                                
     An  Act relating  to service  in the peace  corps  as an                                                                   
     allowable  absence  from   the  state  for  purposes  of                                                                   
     eligibility  for  permanent fund  dividends  and to  the                                                                   
     period for  filing an application  for a  permanent fund                                                                   
     dividend;  authorizing  the  Department  of  Revenue  to                                                                   
     issue  administrative  orders   imposing  sanctions  for                                                                   
     certain misrepresentations  or other actions  concerning                                                                   
     eligibility for a permanent  fund dividend and providing                                                                   
     for   administrative  appeal   of   those  orders;   and                                                                   
     providing for an effective date.                                                                                           
                                                                                                                                
REPRESENTATIVE LESIL  MCGUIRE, Sponsor, provided  information                                                                   
on  the bill.  She noted  that similar  legislation had  been                                                                   
passed out of the  House in the last session,  but it was not                                                                   
acted upon in the Senate.  She  explained that in 1982 a list                                                                   
of  exemptions  were put  in  place  for the  Permanent  Fund                                                                   
Dividend  to recognize  that there  were  true Alaskans  that                                                                   
live in  and contribute to  the State  but were forced  to be                                                                   
out of the  State for limited  time periods.  She  noted that                                                                   
the exemptions  were very narrow.   She pointed out  that for                                                                   
sixteen  years   Peace  Corps   volunteers  had   been  given                                                                   
exemptions, added  along with  the military, since  they were                                                                   
in a competitive national program  to serve the country.  She                                                                   
recalled that  the bill had received  a wide array  of public                                                                   
testimony during  its hearing in the House  Finance Committee                                                                   
in the  last legislature.   She  emphasized that Peace  Corps                                                                   
volunteers  received   only  a  small  living   stipend,  and                                                                   
maintained  that the dividend  made a  significant impact  on                                                                   
their livelihood.   She noted that volunteers  could not have                                                                   
any debts,  other than  student loans.   She maintained  that                                                                   
the bill  recalled the  initial intent of  1982.   She stated                                                                   
that in  1998, Peace Corps  volunteers were removed  from the                                                                   
list  of  exemptions.    She   maintained  that  this  was  a                                                                   
politically motivated action based  on biases.  She contended                                                                   
that volunteers come  from a wide variety of  backgrounds and                                                                   
did not represent any one political viewpoint.                                                                                  
                                                                                                                                
Representative  McGuire proposed  that this  time in  history                                                                   
called for more  volunteerism in third world  countries.  She                                                                   
discussed  the skills  and services provided  by Peace  Corps                                                                   
volunteers,   which  she   maintained  were   equal  to   the                                                                   
importance of  service provided  by military personnel.   She                                                                   
also pointed out services, such  as teaching, provided to the                                                                   
state of Alaska by Peace Corps  volunteers when they returned                                                                   
to  the  state  at  a  rate  of  roughly  82  percent.    She                                                                   
emphasized  that these  volunteers  had been  a  part of  the                                                                   
original  list of  exemptions.   She pointed  out that  there                                                                   
were on  average 32 volunteers  per year, which  would impact                                                                   
dividend payments by about 3 cents.                                                                                             
                                                                                                                                
Representative McGuire  also pointed out the  real problem of                                                                   
dividend fraud.   She stated that  although it resulted  in a                                                                   
loss  of  thousands  of  dollars each  year,  fraud  was  not                                                                   
prosecuted since it required a  costly jury trial.  She noted                                                                   
that  Section 4  of the  bill  established an  administrative                                                                   
penalty for dividend fraud.  She  explained that in the House                                                                   
State  Affairs  Committee  discussion   had  occurred,  which                                                                   
resulted  in the implementation  of a  $3,000 penalty  level.                                                                   
Rules of  case law require  a jury trial once  administrative                                                                   
penalties  reach a  certain threshold.   In  addition to  the                                                                   
penalty,  those  found  guilty  of fraud  will  be  denied  a                                                                   
permanent fund dividend  for five years.  She  suggested that                                                                   
to  impose  penalties  for  fraud   would  provide  a  needed                                                                   
deterrent.  She  concluded that the bill provided  a dividend                                                                   
for true Alaskans who participate  in a national program, and                                                                   
a penalty for fraudulent applicants.                                                                                            
                                                                                                                                
TRACY TOWNSEND,  ANCHORAGE, testified  via teleconference  in                                                                   
support of the  bill.  As a former peace corps  volunteer, he                                                                   
indicated  that   the  bill   would  encourage   peace  corps                                                                   
volunteers to return to Alaska.                                                                                                 
                                                                                                                                
BRIAN BRUBAKER,  ANCHORAGE, testified  via teleconference  in                                                                   
support  of  the bill.    He  referred  to friends  who  were                                                                   
volunteers.                                                                                                                     
                                                                                                                                
Representative  Foster   MOVED  to  report  HB   205  out  of                                                                   
Committee   with    individual   recommendations    and   the                                                                   
accompanying fiscal note.  There  being NO OBJECTIONS, it was                                                                   
so ordered.                                                                                                                     
                                                                                                                                
HB  205  was REPORTED  out  of  Committee  with a  "do  pass"                                                                   
recommendation  and  one  new   zero  fiscal  note  from  the                                                                   
Department of Revenue.