05/09/2004 12:10 PM Senate FIN

                                                                                                                                
     CS FOR HOUSE BILL NO. 536(MLV)                                                                                             
     "An Act relating  to applications for permanent  fund dividends                                                            
     by  certain individuals  serving  in the armed  forces, and  to                                                            
     payment of  certain 2003 and 2004 dividends;  and providing for                                                            
     an effective date."                                                                                                        
                                                                                                                                
                                                                                                                                
This  was the first  hearing  for this  bill in  the Senate  Finance                                                            
Committee.                                                                                                                      
                                                                                                                                
Co-Chair Wilken  commented that this  bill, version 23-LS1796\C,  is                                                            
sponsored  by the  House  Rules Committee,  at  the  request of  the                                                            
Special Committee on Economic  Development. He stated that this bill                                                            
"would  allow members  of the armed  services  who received  hostile                                                            
fire and imminent danger  pay during the FY 03 and FY 04 application                                                            
period an extension  to their 90-day  application period."  He noted                                                            
that a zero fiscal note  accompanies the bill from the Department of                                                            
Revenue.                                                                                                                        
                                                                                                                                
JON BITTNER,  Staff to Representative  Cheryll Heinze, the  Chair of                                                            
the Special  Committee  on Economic  Development,  stated that  this                                                            
legislation would basically  provide members of the armed forces who                                                            
"are in war  zone situations" an extension  on their Permanent  Fund                                                            
Dividend  (PFD) application  period. Continuing,  he noted  that the                                                            
legislation  was  developed  at the  request  of the  PFD  Division,                                                            
Department  of Revenue,  after  they  received appeal  letters  from                                                            
Alaska military  personnel who served  in war in Iraq during  the FY                                                            
03  and FY  04  PFD  application  periods.  He stated  that  due  to                                                            
inoperable communication  systems these people were unable to access                                                            
or remit  their PFD applications.  Therefore,  he stated, this  bill                                                            
would provide  military personnel a 90-day extension,  once they are                                                            
out of a war zone  situation and in an area that would  provide them                                                            
the ability  to access and submit  required PFD paperwork.  He noted                                                            
that the bill  contains retroactive language that  would allow those                                                            
"who  served in  the last  Iraqi and  Afghanistan war"  to file  for                                                            
their PFD dividends.                                                                                                            
                                                                                                                                
Mr. Bittner stated  that the bill would also allow  the Commissioner                                                            
of the Department  of Revenue to further accommodate  the filings of                                                            
war zone  military personnel  who were  unable to  file, due  to war                                                            
related  injuries,  within the  specified  90-day period  once  they                                                            
recovered and were able to provide proof of reasonable cause.                                                                   
                                                                                                                                
Senator  Olson  asked  the number  of  applications  that  might  be                                                            
pending.                                                                                                                        
                                                                                                                                
Mr. Bittner  replied  that, while  Alaska has  approximately  14,000                                                            
active armed  service members,  the number  who might qualify  under                                                            
this legislation,  is undetermined.  He noted that the PFD  Division                                                            
does not  currently analyze  whether pending  military applications                                                             
were war-zone related.                                                                                                          
                                                                                                                                
Senator Hoffman asked therefore  whether the PDF Division would seek                                                            
out these  individuals  or whether  it  would be  incumbent for  the                                                            
applicant to notify the Division, were this legislation adopted.                                                                
                                                                                                                                
Mr. Bittner responded that  the Division would notify those Alaskans                                                            
to whom this legislation would apply.                                                                                           
                                                                                                                                
Senator   Hoffman,  noting   that   the  annual   dividend   formula                                                            
calculation  is  determined  by the  total  number  of applications                                                             
received, asked  the funding source for the additional  dollars that                                                            
would be required for these applicants.                                                                                         
                                                                                                                                
Mr. Bittner responded  that the PFD Division director  has indicated                                                            
that  this would  not be  "a problem"  as the  number of  qualifying                                                            
applicants is expected to be minimal.                                                                                           
                                                                                                                                
Senator Hoffman  continued his questioning,  as he noted,  while the                                                            
Permanent  Fund consists  of millions of  dollars, these  applicants                                                            
would not have been factored into the dividend amount formula.                                                                  
                                                                                                                                
Mr. Bittner deferred to the Division to provide the answer.                                                                     
                                                                                                                                
SHARON   BARTON,  Director,   Permanent  Fund   Dividend   Division,                                                            
Department of  Revenue, testified via teleconference  from an offnet                                                            
site, and informed  the Committee that the Division  would calculate                                                            
the number  of active duty  personnel who  might qualify under  this                                                            
legislation.  This projection,  she stated,  would then be  factored                                                            
into the following  year's dividend formula "and held  in reserve in                                                            
the Permanent  Fund  Dividend Fund."  She noted  that reserves  have                                                            
already been set aside pending additional information.                                                                          
                                                                                                                                
Senator  Hoffman inquired  as to where  the funds  to support  FY 03                                                            
dividend payments would be derived.                                                                                             
                                                                                                                                
Ms. Barton  responded that  the Division  has "a rough projection,"                                                             
and that  reserves have  already been established.  She assured  the                                                            
Committee  that the  numbers would  not be  so many  as to "cause  a                                                            
problem."                                                                                                                       
                                                                                                                                
Senator  Bunde  moved  to  report  the  bill   from  Committee  with                                                            
individual recommendations and accompanying fiscal notes.                                                                       
                                                                                                                                
There  being  no  objection,  CS  HB  536(MLV)   was  REPORTED  from                                                            
Committee  with zero fiscal  note #2,  dated May  6, 2004, from  the                                                            
Department of Revenue.