Legislature(2019 - 2020)BUTROVICH 205
03/12/2019 03:30 PM Senate STATE AFFAIRS
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| Audio | Topic |
|---|---|
| Start | |
| SB23 | |
| SB24 | |
| SB33 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | SB 23 | TELECONFERENCED | |
| += | SB 24 | TELECONFERENCED | |
| += | SB 33 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| + | TELECONFERENCED |
SB 23-APPROP:SUPP. PAYMENTS OF PRIOR YEARS' PFD
3:36:24 PM
CHAIR SHOWER announced the consideration of SENATE BILL NO. 23
"An Act making special appropriations from the earnings reserve
account for the payment of permanent fund dividends; and
providing for an effective date."
He recapped that the bill was introduced at the request of the
governor; it was last heard on 3/7/19; and public testimony was
heard and closed. He said written testimony will be accepted
until 6:00 pm this evening.
CHAIR SHOWER solicited a motion to adopt Amendment 1.
3:36:47 PM
SENATOR COGHILL moved to adopt Amendment 1, work order 31-
GS1014\A.7 dated 3/9/19.
AMENDMENT 1
OFFERED IN THE SENATE BY SENATOR SHOWER
TO: SB 23
Page 1, line 13:
Delete "$1,328"
Insert "$1,388"
3:37:06 PM
SENATOR KAWASAKI objected for discussion purposes.
3:37:23 PM
At ease
3:37:49 PM
CHAIR SHOWER reconvened the meeting. He asked Mr. Tangeman to
speak to Amendment 1, which the Department of Revenue (DOR)
requested.
3:38:10 PM
BRUCE TANGEMAN, Commissioner Designee, Department of Revenue,
Anchorage, explained that Amendment 1 is technical to correct a
miscalculation on the amount of the 2018 dividend. The amount
$1,328 is replaced with $1,388.
SENATOR KAWASAKI noted that the legislature puts placeholders in
the budget for the PFD because the exact amount of the dividend
is unknown until the applicants have been certified. He asked
what factors will cause this payment to change.
COMMISSIONER DESIGNEE TANGEMAN explained that DOR estimated the
number of applicants that will be eligible for the payment and
they acknowledge that may change. However, the dollar amount of
the payment will remain the same.
3:39:47 PM
SENATOR KAWASAKI removed his objection.
CHAIR SHOWER asked if there was any further discussion of
Amendment 1.
SENATOR REINBOLD asked how it happened that the number was
miscalculated.
COMMISSIONER DESIGNEE TANGEMAN replied it was nothing more than
a simple miscalculation in the spreadsheet.
SENATOR REINBOLD asked what the total unstructured draw would
be, should the bill pass with the amendment.
COMMISSIONER DESIGNEE TANGEMAN replied it would be between $4
million and $5 million, depending on the number of people who
receive the dividend.
CHAIR SHOWER found no further discussion.
3:40:45 PM
At ease
3:41:33 PM
CHAIR SHOWER reconvened the meeting and asked Mr. Tangeman if he
had something to add.
COMMISSIONER DESIGNEE TANGEMAN clarified that DOR estimated that
about 530,000 people would qualify for the repayment. That
number multiplied by $1,388 is in the $40 million range, not $4
million to $5 million.
3:42:04 PM
CHAIR SHOWER found no further discussion or objection and
Amendment 1 was adopted.
3:42:21 PM
SENATOR KAWASAKI moved Amendment 2, [work order 31-GS1014\A.4
dated 3/8/19].
AMENDMENT 2
OFFERED IN THE SENATE BY SENATOR KAWASAKI
TO: SB 23
Page 1, line 5, following "of":
Insert "a supplemental permanent fund dividend
of"
Page 1, line 6:
Delete "and who are eligible to receive a 2019
permanent fund dividend,"
Page 1, line 9, following "of":
Insert "a supplemental permanent fund dividend
of"
Page 1, lines 10 - 11:
Delete "and who are eligible to receive a 2020
permanent fund dividend,"
Page 1, line 13, following "of":
Insert "a supplemental permanent fund dividend
of"
Page 1, line 14, through page 2, line 1:
Delete "and who are eligible to receive a 2021
permanent fund dividend,"
Page 2, following line 18:
Insert new subsections to read:
"(h) An amount equal to $1,061 for each
individual who was ineligible to receive a 2016
permanent fund dividend under AS 43.23.005(d) is
appropriated from the earnings reserve account
(AS 37.13.145) to the restorative justice account
(AS 43.23.048).
(i) An amount equal to $1,289 for each
individual who was ineligible to receive a 2017
permanent fund dividend under AS 43.23.005(d) is
appropriated from the earnings reserve account
(AS 37.13.145) to the restorative justice account
(AS 43.23.048).
(j) An amount equal to $1,328 for each
individual who was ineligible to receive a 2018
permanent fund dividend under AS 43.23.005(d) is
appropriated from the earnings reserve account
(AS 37.13.145) to the restorative justice account
(AS 43.23.048)."
Page 2, line 21:
Delete "include certain payments"
Insert "make certain payments to individuals who
were eligible"
Page 2, lines 22 - 23:
Delete "to be made to eligible individuals with
2019, 2020, and 2021 permanent fund dividend payments"
SENATOR COGHILL objected for discussion purposes.
SENATOR KAWASAKI said he distributed a memo from Legislative
Legal Services that discusses the legality and constitutionality
of SB 23. He noted that the packets also contain a memo from the
Civil Division of the Department of Law that discusses the
reasons they view the bill constitutional. According to
legislative legal, there are two solutions that would cure the
suspected infirmity. One solution is to issue the supplemental
payment to all individuals that received a dividend in 2016,
2017, or 2018. The alternative is to issue the supplemental
payment to all individuals that receive the dividend in 2019,
2020, or 2021, regardless of their residency in 2019, 2020, or
2021. He noted that both SB 23 and SB 24 would need to be
changed.
He acknowledged that the two memos are in conflict and offered
his view that as currently written, the bill won't pass
constitutional muster. Should the bill become law, his worry is
that just one person could object to the rational and jeopardize
future PFD payouts. He asked to hear from the commissioner.
3:44:55 PM
COMMISSIONER DESIGNEE TANGEMAN stated that the Alaska Department
of Law believes the bill is constitutional. He acknowledged that
Legislative Legal Services came to a different conclusion. He
opined that Amendment 2 strays from the governor's intent and
greatly over complicates the bill. The larger concerns include
that DOR would be tasked with locating all the individuals that
received the dividend in 2016 but no longer live in Alaska. "Are
we going to then have to track these people down to every corner
of the globe in order for them to get their dividend?" He
pointed out that the PFD application asks the applicant to
certify that on the date of application they are and intend to
remain an Alaska resident indefinitely. He acknowledged that is
intent language and explained that the bill uses the approach it
does because the individual signs that they are still an Alaska
resident. This is a less complicated approach that is more
streamlined and easier to implement, he said. He added that DOR
estimates that over a three-year span about 100,000 individuals
that received a dividend no longer reside in Alaska, have died,
or no longer qualify for some reason. Should the amendment be
adopted, it would increase the cost of the back payments between
$150 million and $160 million. He reiterated that implementation
would be onerous for the department.
3:47:41 PM
SENATOR KAWASAKI questioned why DOR wouldn't use the 2016 list
of applicants, that includes their addresses, to process the
repayment in 2019.
COMMISSIONER DESIGNEE TANGEMAN replied it's not as easy as that
because many of the 600,000 plus applicants may have changed
bank accounts, moved within the state, moved out of Alaska, or
died. It would be an onerous undertaking.
3:49:10 PM
CHAIR SHOWER commented that the committee can argue about
complications but there's not much choice if it's a
constitutional issue. He asked Mr. Milks to provide the
Department of Law's view of the bill.
3:49:45 PM
WILLIAM MILKS, Assistant Attorney General, Civil Division,
Department of Law, stated that at the committee's request, DOL
submitted a memo articulating the critical facts that led the
department to conclude that a court would determine SB 23
constitutional. He said he respects the opinion of Legislative
Legal Services on this matter and understands that the analysis
is based on general case law about general residency
requirements. Nevertheless, it is the Department of Law's
opinion that the legislature has the means to accomplish the
limited objective of SB 23. That is to provide PFD back payments
for a specific group of Alaska residents. He highlighted that
the Permanent Fund Dividend Program is uniquely different than
any other benefit program that states have enacted, that SB 23
is not a long-term change to the PFD program, and that the bill
is addressed to specific facts.
MR. MILKS explained that the rational basis review is the most
common review of any legislature's enactments. The U.S. Supreme
Court has said that for this analysis it looks at whether the
legislature had any reasonably conceivable state of facts that
could provide a rational basis for the classification. In this
case the classification is between two groups of Alaska
residents; those who qualified for a PFD in the past but did not
receive the statutory payment and those who didn't qualify for
that past payment. The Department of Law believes there is a
rational basis to address that set of facts.
Furthermore, the Alaska Supreme Court has talked about the
concern that the PFD program is susceptible to individuals
establishing minimal and temporary ties to Alaska to take
advantage of the state's benefit program because the benefit is
portable. That, too, leads DOL to the rational basis review when
the legislature tries to impose safeguards. The legislature has
the ability to address the issue, he said.
3:54:04 PM
SENATOR KAWASAKI said he very recently received the Department
of Law's memo, but it doesn't seem to address the issue of
somebody who is a resident now versus somebody who had been
entitled to the PFD but hadn't gotten it.
MR. MILKS replied the memo addresses this bill that provides for
two residency requirements. Somebody who is eligible to receive
the dividend this year who received the reduced PFD payment in
2016 would be eligible to receive the back payment. The
Department of Law believes that is a rational approach the
legislature could take. It is not similar to legislation that's
been challenged and reviewed by the U.S. Supreme Court for
having an excessive residency requirement to receive a
particular benefit such as welfare.
SENATOR KAWASAKI asked if he believes this could be challenged
by an Alaska resident who qualified and received the 2016
dividend but isn't eligible to apply in 2019.
MR. MILKS replied an individual certainly could bring a legal
challenge, but he believes it would be unsuccessful.
3:58:19 PM
CHAIR SHOWER asked what would happen to the payback if the bill
passed and somebody filed a legal challenge.
MR. MILKS responded that a legal challenge would probably be an
effort to get an injunction to stop the back payment.
CHAIR SHOWER commented that could put the supplemental payment
in limbo for some time.
MR. MILKS clarified that the judicial branch can review all laws
the legislature passes.
3:59:19 PM
SENATOR COGHILL asked for help understanding the criteria the
court will use to analyze each of the legal opinions.
MR. MILKS said the courts generally do not want to second-guess
the elected branches of government, but the typical standard is
whether there is a set of facts that could rationally support
the legislature making the distinction.
If a bill passed that made a distinction between residents based
on age, race, gender, or sex, it would be reviewed under the
highest standard of review, which is strict scrutiny. The court
would be looking for compelling governmental reasons to accept
the distinction on those criteria. Residency requirements are
usually analyzed on a rational basis, but it could go to strict
scrutiny, he said.
A few years ago the Alaska Supreme Court talked about the right
to travel when it upheld residency requirements for the PFD. The
court contrasted cases that used strict scrutiny and said even
the U.S. Supreme Court recognized that the legislature is given
much greater leeway when a state is providing a highly portable
benefit. The permanent fund dividend was specifically discussed.
Zobel is the only case Alaska has about the PFD program and the
U.S. Supreme Court applied rational basis standard review in
that case, not strict scrutiny.
MR. MILKS summarized that the Department of Law looked at SB 23
as a unique bill that deals with a unique program and they
believe the courts will conclude that the legislative branch has
the ability to address these unique set of facts.
4:05:23 PM
SENATOR COGHILL said he asked because he wanted to hear the
Department of Law talk about the tests.
4:06:50 PM
SENATOR MICCICHE said he approaches this from both the practical
and legal perspectives. Practically, he opposes Amendment 2
because the PFD was designed for Alaska residents and it
provides a payment to people who are no longer residents. The
original dividend program required longevity and commitment to
stay in Alaska. The Zobel case did away with the longevity
requirement for the dividend, but applicants must still check
the box on their application indicating their intention to
remain in Alaska.
He said that from the legal perspective he believes Harris v.
Hahn is a fair comparison on the rational basis. At issue in
that case were the residency requirements for veterans to
qualify for tuition benefits while attending public universities
- they either enlisted in Texas or were a resident of Texas at
the time of enlistment. Senator Micciche summarized, "The
rational basis that found it constitutional was for its
residency at enlistment requirement." He said he believes the
residency at the time of payment of the dividend to be a fair
comparison. "I can't think of a more rational basis for the
consideration of the administration and I support their
approach." he said.
4:08:50 PM
SENATOR KAWASAKI asked what would happen to the PFD payout if
somebody challenged the payout and the law was found
unconstitutional.
MR. MILKS said if the state lost a challenge at the trial court
level, it would review the case with the attorney general and
decide whether or not to file an appeal.
SENATOR KAWASAKI clarified that he was asking what would happen
to the PFD payout if all appeals are exhausted and the court
agrees with the legislative legal memo and deems the entire law
unconstitutional.
MR. MILKS said the payout wouldn't be paid if the court ruled it
unconstitutional.
SENATOR KAWASAKI suggested a different approach to cure the
infirmity in the proposed law would be to have people reapply
for the 2016 additional payment.
4:12:00 PM
COMMISSIONER DESIGNEE TANGEMAN explained that if people apply
for the 2016 additional payment though the 2019 dividend it is a
simple exercise to marry the two lists.
SENATOR KAWASAKI said he didn't intend to push Amendments 2 or
3, but his concern is that if the PFD is a benefit owed to
Alaskans, then the addition payments should be paid to all the
people who received [the 2016, 2017, and 2018] dividends whether
they're still in the state or not. He said people have left the
state for a lot of reasons. There's been a down market economy
and someone in a trade union, for example, could be working in
Seattle because they couldn't find a job in the state. They
would be denied the ability to have the back payment even though
the governor and many legislators believe that person should
have had the full PFD the whole time. He said that's why he
introduced the amendments, but he'll review the legal memos
further.
4:14:05 PM
SENATOR KAWASAKI withdraw Amendment 2 and did not offer
Amendment 3.
4:14:49 PM
CHAIR SHOWER said the amended bill is before the committee for
discussion. Finding none, he solicited a motion.
4:15:08 PM
SENATOR COGHILL moved to report SB 23, work order 31-GS1014\A as
amended, from committee with individual recommendations,
attached fiscal note(s), and any technical changes necessary to
conform Amendment 1.
CHAIR SHOWER found no objection and CSSB 23(STA) was reported
from the Senate State Affairs Standing Committee.
| Document Name | Date/Time | Subjects |
|---|---|---|
| SSTA OFFICIAL AGENDA MEMO.pdf |
SSTA 3/12/2019 3:30:00 PM |
agenda |
| SB 23 TL - Senate President.pdf |
SSTA 2/5/2019 3:30:00 PM SSTA 2/28/2019 3:30:00 PM SSTA 3/5/2019 3:30:00 PM SSTA 3/7/2019 3:30:00 PM SSTA 3/12/2019 3:30:00 PM |
SB 23 |
| SB0023A.PDF |
SSTA 2/5/2019 3:30:00 PM SSTA 2/26/2019 3:30:00 PM SSTA 2/28/2019 3:30:00 PM SSTA 3/5/2019 3:30:00 PM SSTA 3/7/2019 3:30:00 PM SSTA 3/12/2019 3:30:00 PM |
SB 23 |
| SB23 Sectional.pdf |
SSTA 2/5/2019 3:30:00 PM SSTA 2/26/2019 3:30:00 PM SSTA 2/28/2019 3:30:00 PM SSTA 3/5/2019 3:30:00 PM SSTA 3/7/2019 3:30:00 PM SSTA 3/12/2019 3:30:00 PM |
SB 23 |
| SB 24 TL - Senate President.pdf |
SSTA 3/7/2019 3:30:00 PM SSTA 3/12/2019 3:30:00 PM |
SB 24 |
| SB0024A.PDF |
SSTA 3/7/2019 3:30:00 PM SSTA 3/12/2019 3:30:00 PM |
SB 24 |
| SB24 Sectional.pdf |
SSTA 2/5/2019 3:30:00 PM SSTA 2/26/2019 3:30:00 PM SSTA 2/28/2019 3:30:00 PM SSTA 3/5/2019 3:30:00 PM SSTA 3/7/2019 3:30:00 PM SSTA 3/12/2019 3:30:00 PM |
SB 24 |
| SB 24 Fiscal Note.PDF |
SSTA 2/5/2019 3:30:00 PM SSTA 2/26/2019 3:30:00 PM SSTA 2/28/2019 3:30:00 PM SSTA 3/5/2019 3:30:00 PM SSTA 3/7/2019 3:30:00 PM SSTA 3/12/2019 3:30:00 PM |
SB 24 |
| SB 23 and 24 presentation.pptx |
SSTA 2/5/2019 3:30:00 PM SSTA 2/26/2019 3:30:00 PM SSTA 2/28/2019 3:30:00 PM SSTA 3/5/2019 3:30:00 PM SSTA 3/7/2019 3:30:00 PM SSTA 3/12/2019 3:30:00 PM |
SB 23 SB 24 |
| DOR S STA Letter.2.26.2019.pdf |
SSTA 3/12/2019 3:30:00 PM |
|
| SB23 Follow up to SSA.3.6.2019.pdf |
SSTA 3/12/2019 3:30:00 PM |
SB 23 |
| LEG.PFD.Supplemental.SB23.SB24.2.8.19.pdf |
SSTA 3/12/2019 3:30:00 PM |
SB 23 SB 24 |
| Letter re SB 23 and SB 24 permanent fund dividend payments.pdf |
SSTA 3/12/2019 3:30:00 PM |
SB 23 SB 24 |
| SB23-24 (IN FAVOR) Written Testimony(uploaded 03-06-19).pdf |
SSTA 3/12/2019 3:30:00 PM |
SB 23 |
| SB23-24 (NOT IN FAVOR) Written Testimony(uploaded 03-06-19).pdf |
SSTA 3/12/2019 3:30:00 PM |
SB 23 |
| SB23-24 (VARIOUS TESTIMONY) (uploaded 03-06-19).pdf |
SSTA 3/12/2019 3:30:00 PM |
SB 23 |
| SB 23 Amendments.pdf |
SSTA 3/12/2019 3:30:00 PM |
SB 23 |
| SB 24 Amendments.pdf |
SSTA 3/12/2019 3:30:00 PM |
SB 24 |
| SB 33 Transmittal Letter.pdf |
SSTA 2/21/2019 3:30:00 PM SSTA 3/12/2019 3:30:00 PM SSTA 3/14/2019 3:30:00 PM SSTA 3/19/2019 3:30:00 PM |
SB 33 |
| SB0033A.PDF |
SSTA 2/21/2019 3:30:00 PM SSTA 3/12/2019 3:30:00 PM SSTA 3/14/2019 3:30:00 PM |
SB 33 |
| SB 33 - Pretrial Highilghts.pdf |
SSTA 2/21/2019 3:30:00 PM SSTA 3/12/2019 3:30:00 PM SSTA 3/14/2019 3:30:00 PM SSTA 3/19/2019 3:30:00 PM |
SB 33 |
| SB 33 - Pretrial Sectional.pdf |
SSTA 2/21/2019 3:30:00 PM SSTA 3/12/2019 3:30:00 PM SSTA 3/14/2019 3:30:00 PM SSTA 3/19/2019 3:30:00 PM |
SB 33 |
| SB33-DOL-FN#1.pdf |
SSTA 2/21/2019 3:30:00 PM SSTA 3/12/2019 3:30:00 PM SSTA 3/14/2019 3:30:00 PM |
SB 33 |
| SB33-DPS-FN#2.pdf |
SSTA 2/21/2019 3:30:00 PM SSTA 3/12/2019 3:30:00 PM SSTA 3/14/2019 3:30:00 PM |
SB 33 |
| SB33-DOA-FN#3.pdf |
SSTA 2/21/2019 3:30:00 PM SSTA 3/12/2019 3:30:00 PM SSTA 3/14/2019 3:30:00 PM |
SB 33 |
| SB33-DOA-FN#4.pdf |
SSTA 2/21/2019 3:30:00 PM SSTA 3/12/2019 3:30:00 PM SSTA 3/14/2019 3:30:00 PM |
SB 33 |
| SB33-DOC-FN#5.pdf |
SSTA 2/21/2019 3:30:00 PM SSTA 3/12/2019 3:30:00 PM SSTA 3/14/2019 3:30:00 PM |
SB 33 |
| SB33-DOC-FN#6.pdf |
SSTA 2/21/2019 3:30:00 PM SSTA 3/12/2019 3:30:00 PM SSTA 3/14/2019 3:30:00 PM |
SB 33 |
| SB33-Court System-FN.pdf |
SSTA 2/21/2019 3:30:00 PM SSTA 3/12/2019 3:30:00 PM SSTA 3/14/2019 3:30:00 PM |
SB 33 |
| SB 23 & 24 Written Testimony (In Favor) - additional final tally.pdf |
SSTA 3/12/2019 3:30:00 PM |
SB 23 SB 24 |
| SB 23 & 24 Written Testimony (Organizations Opposed).pdf |
SSTA 3/12/2019 3:30:00 PM |
SB 23 SB 24 |
| SB 23 & 24 Written Testimony (Opposed) - additional final tally.pdf |
SSTA 3/12/2019 3:30:00 PM |
SB 23 SB 24 |
| SB 23 & 24 Written Testimony (Various) - additional final tally.pdf |
SSTA 3/12/2019 3:30:00 PM |
SB 23 SB 24 |