03/29/2000 02:00 PM House FIN

HOUSE BILL NO. 428                                                                                                              
                                                                                                                                
"An Act relating to interest on child support                                                                                   
overpayments that are disbursed to the obligor."                                                                                
                                                                                                                                
WILDA RODMAN, STAFF, REPRESENTATIVE THERRIAULT spoke in                                                                         
support of the legislation. She noted that CSHB428(FIN)                                                                         
requires the Child Support Enforcement Division to pay                                                                          
interest on the return of overpayments of child support when                                                                    
the overpayment is due to a mistake made by the agency.  The                                                                    
agency would be required to pay obligors six percent, the                                                                       
same amount of interest the agency can charge on child                                                                          
support arrearages set out in AS 25.27.025, imposed under AS                                                                    
25.27.020(a)(2)(B).  The requirement to pay interest on                                                                         
returns of overpayment is not a new precedent; AS 43.05.280                                                                     
imposes a similar requirement on the Department of Revenue                                                                      
when refunding or crediting an overpayment of tax.                                                                              
                                                                                                                                
CSHB 428(FIN) is in response to an inequity in the child                                                                        
support collection system that allows the agency to charge                                                                      
interest when an obligor is late paying support, but does                                                                       
not require the agency to pay interest when returning                                                                           
overpayments that are the direct result of a mistake made by                                                                    
the agency.  The bill would provide incentive to the agency                                                                     
to be more careful when calculating support and more prompt                                                                     
about returning overpayments.  House Bill 428 carries no                                                                        
fiscal note as the agency would be expected to absorb the                                                                       
cost of paying the interest out of its annual budget.                                                                           
                                                                                                                                
The Committee Substitute for HB 428 changes the amount of                                                                       
interest the Division of Child Support Enforcement must pay                                                                     
under AS 25.27.062(l)(1) when it is delinquent returning                                                                        
overpayments that have been withheld by an employer after                                                                       
the support order has been satisfied. CSHB 428(FIN) changes                                                                     
the rate of interest to make it consistent with the rate set                                                                    
in AS 25.27.320.                                                                                                                
                                                                                                                                
Vice Chair Bunde observed that the Division's budget is                                                                         
$16.5 million dollars.  He questioned how much leverage the                                                                     
legislation would apply.                                                                                                        
                                                                                                                                
Co-Chair Therriault explained that the department estimated                                                                     
that it would take $3 thousand dollars to fund the interest.                                                                    
He observed that it would not be his intent to give the                                                                         
department separate funding for the interest. He maintained                                                                     
that the department could absorb the cost.                                                                                      
                                                                                                                                
Vice Chair Bunde agreed that obligors should have right to                                                                      
have interest on their money.                                                                                                   
                                                                                                                                
Co-Chair Therriault observed that the department has been                                                                       
careful to repay funds owed in other programs.                                                                                  
                                                                                                                                
Co-Chair Therriault stressed that it is fair for the state                                                                      
or the obligor to the state to pay interest if the money is                                                                     
late.                                                                                                                           
                                                                                                                                
LARRY PERSILY, DEPUTY COMMISSIONER, DEPARTMENT OF REVENUE                                                                       
spoke in support of the bill. He acknowledged that the state                                                                    
should pay interest if the department makes a mistake. He                                                                       
observed that paying the same 6% interest that the state                                                                        
would charge seems reasonable.                                                                                                  
                                                                                                                                
Co-Chair Therriault questioned if it would be fair to take                                                                      
the interest out of the department's existing budget. Mr.                                                                       
Persily agreed and stated that he did not expect to have                                                                        
many cases.                                                                                                                     
                                                                                                                                
Co-Chair Therriault observed that the House Finance                                                                             
Committee would submit a zero fiscal note.                                                                                      
                                                                                                                                
Vice Chair Bunde MOVED to report CSHB 428 (FIN) out of                                                                          
Committee with the accompanying fiscal note. There being NO                                                                     
OBJECTION, it was so ordered.                                                                                                   
                                                                                                                                
CSHB 428 (FIN) was REPORTED out of Committee with a "do                                                                         
pass" recommendation and with a zero fiscal note by the                                                                         
House Finance Committee.