Legislature(1995 - 1996)
02/02/1995 03:37 PM Senate STA
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* first hearing in first committee of referral
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+ teleconferenced
= bill was previously heard/scheduled
SSTA - 2/2/95
SB 37 END PERMANENT FUND DIVIDEND HOLD HARMLESS
Number 375
SENATOR SHARP brings up SB 37 as the next order of business before
the Senate State Affairs Committee and calls the first witness.
Number 380
SENATOR RANDY PHILLIPS, prime sponsor of SB 37, says the bill would
eliminate what he sees as a tax on permanent fund dividends: the
hold-harmless provision for people receiving public assistance.
The hold-harmless provision amounted to a reduction of $41.45 to
each permanent fund dividend last year. Senator Phillips relays
information contained in his sponsor statement.
Number 402
ELMER LINDSTROM, Special Assistant to Commissioner Perdue,
Department of Health & Social Services (DHSS), states the
department is opposed to SB 37. Previous administrations have
considered elimination of the hold-harmless provision and have
concluded that elimination is neither desirable nor cost-effective.
Mr. Lindstrom states elimination of the provision would lead to
additional administrative costs. Mr. Lindstrom reads a prepared
statement. DHSS submitted six fiscal notes with analysis and a
synopsis of a study showing spending patterns of dividends by
persons receiving public assistance to the committee. Mr.
Lindstrom adds that the premise of the hold-harmless program is
that all Alaskans are entitled to share equally in the permanent
fund dividend program.
Number 455
SENATOR LEMAN does not agree with Mr. Lindstrom's assertion that
eliminating the hold-harmless provision would have the practical
effect of denying persons on public assistance a permanent fund
dividend. By eliminating the provision, Senator Leman thinks the
drain on the federal and state treasuries caused by welfare
benefits will be reduced. Senator Leman wants to know if DHSS has
talked to line staff in the Division of Public Assistance about who
is going on public assistance, and why they are coming to Alaska.
Senator Leman says Alaska's public assistance programs are a magnet
for people from other states, and that people he has talked to from
the line staff think the hold harmless provision is part of what is
attracting people from other states. Senator Leman wants to know
how DHSS came to it's position statement, when line staff in the
Division of Public Assistance are making an assertion different
from Mr. Lindstrom's.
Number 490
SENATOR RANDY PHILLIPS adds he has heard comments similar to those
Senator Leman has heard from line staff.
Number 495
MR. LINDSTROM says SB 37 deals specifically with the permanent fund
dividend's hold-harmless provision. There has been much discussion
lately relating to the much broader question of welfare reform. If
we could all wipe the slate clean, and there were no public
assistance programs, and we were going to start from the beginning
to develop a program to meet the needs of the needy people of this
state and this country, the program certainly would not look at all
like the programs in existence today. But the programs that are in
place today are the programs DHSS must administer. DHSS
recognizes, as does everyone, that there are problems that need to
be fixed. However, the programs serve a valuable purpose: that of
providing basic sustenance for many poor people. It works very
well for the majority of people on the programs. The majority of
DHSS's AFDC (Aid to Families with Dependent Children) caseload
turns over every two years. So there are problems with a
percentage of the population, and that needs to be looked at. SB
37, when translated to terms of a rateable reduction in benefits,
would approach an 8% reduction in benefits to persons on public
assistance.
Number 526
CHAIRMAN SHARP asks Mr. Lindstrom if the figures on the fiscal
notes represent the federal share of benefits lost, or the federal
and state shares.
MR. LINDSTROM replies that the hold-harmless provision applies to
the state and federal shares of benefits.
Number 540
RUPE ANDREWS, American Association of Retired Persons (AARP),
states the AARP is strongly opposed to SB 37. About 40,000
Alaskans receive AFDC, so children would be affected substantially
by this legislation. AARP also fails to see any benefit to the
state by eliminating the hold-harmless, as it will cause an
increase to the general fund budget of about 1.5 million dollars.
In regards to Senator Phillips concern that the cost of continuing
the hold-harmless provision will increase in years to come, the
AARP asks that the legislature consider the option of perhaps
capping the amount taken to fund the provision at, say, $40. The
AARP is not aware of a great number of Alaskans being concerned
with the reduction of their permanent fund dividends to fund the
hold-harmless provision. Mr. Andrews recalls that when the hold-
harmless provision was initiated, Alaskans felt proud to be able to
help other Alaskans.
Number 558
SENATOR RANDY PHILLIPS says a lot of his constituents object to the
hold-harmless provision. They consider it a tax on their permanent
fund dividends.
Number 565
SENATOR LEMAN asks Mr. Andrews if he thinks forced compassion feels
better than voluntary compassion.
MR. ANDREWS responds that voluntary compassion feels better, but as
he understands it, the hold-harmless provision was enacted by the
legislature, through representative government elected by the
people. Since then, the AARP has not heard that much objection to
the provision. Apparently Senator Leman and Senator Phillips are
hearing objection in their districts now. Mr. Andrews says the
AARP would rather see a cap on the amount taken for hold harmless,
rather than eliminate it altogether.
Number 584
SENATOR RANDY PHILLIPS states he has opposed the hold-harmless
provision, permanent fund dividends, and voted against everything
from the beginning.
SIDE B
Number 590
SHERRIE MARKIN GOLL, Alaska Women's Lobby, KIDPAC, states the
groups she represents oppose SB 37. From her point of view, the
permanent fund dividends are not earned income, and are not
something that any one person, rich or poor, has earned or deserves
more than another person. The hold-harmless provision is not a
tax, recipients who complain about the provision are still
benefitting by $950 that they would not have had before. When a
person of moderate or high-income receives a dividend, it is simply
discretionary income. When a poor person receives a permanent fund
dividend, it is spent on necessities, and it is spent in Alaska.
Ms. Goll thinks SB 37 would favor persons of moderate and high-
income who do not need the additional money. Ms. Goll suggests
looking at capping the amount of permanent fund dividends to save
money, instead of continuing to provide free money to people who
have no needs while taking money away from the state's poorest
citizens.
Number 554
SENATOR LEMAN states his objective is to make sure that those in
need are properly taken care of. He thinks the current public
assistance programs are inefficient. He wants recipients of
assistance to become self-sufficient. Senator Leman states SB 37
will not take away a person's right to receive a permanent fund
dividend.
Number 532
MS. GOLL doesn't think SB 37 will lead to self-sufficiency for
public assistance recipients. It will lead to people getting of
assistance, and then reapplying as soon as they are eligible again.
It will not lead to self-sufficiency.
Number 512
MR. LINDSTROM suggests, as a technical point, that the effective
date of SB 37 be changed. The current effective date of January 1,
1996, will fall right in the middle of the period of time in which
the hold-harmless provision is in effect, causing perhaps half of
the public assistance recipients to be held-harmless, while the
other half are not. DHSS prefers either an effective date prior to
October 1, 1995, or prior to October 1, 1996.
SENATOR RANDY PHILLIPS notes that the committee substitute for SB
37 has an effective date of July 1, 1995.
CHAIRMAN SHARP notes the existence of a committee substitute.
Number 496
SENATOR RANDY PHILLIPS moves the adoption of CSSB 37 (STA).
Number 494
CHAIRMAN SHARP, hearing no objection, states CSSB 37(STA) has been
adopted in lieu of the original bill.
CHAIRMAN SHARP asks the pleasure of the committee.
Number 490
SENATOR RANDY PHILLIPS makes a motion to discharge SB 37 from the
Senate State Affairs Committee with individual recommendations.
Number 488
CHAIRMAN SHARP, hearing no objection, orders SB 37 released from
committee with individual recommendations.
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