Legislature(2021 - 2022)BUTROVICH 205
01/31/2022 03:30 PM Senate RESOURCES
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| Audio | Topic |
|---|---|
| Start | |
| SB84 | |
| SB133 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | SB 84 | TELECONFERENCED | |
| += | SB 133 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
SB 84-LAND VOUCHERS; PFDS
3:34:37 PM
CHAIR REVAK announced the consideration of SENATE BILL NO. 84
"An Act relating to the veterans' land purchase discount;
establishing state land vouchers; relating to the permanent fund
dividend; relating to the duties of the Department of Revenue;
authorizing the Department of Natural Resources to accept state
land vouchers; relating to eligibility for public assistance;
and providing for an effective date."
3:36:30 PM
BRIAN FECHTER, Deputy Commissioner, Department of Revenue,
Anchorage, Alaska, presented a slideshow on SB 84: PFD Land
Vouchers. He advanced to slide 1, SB 84 Creates the PFD Land
Voucher Program:
• PFD applicants can elect a land voucher in lieu of a
cash PFD
• Face value of the land voucher is 2x the statutory
formula value of the PFD
MR. FECHTER elaborated, stating a $3,000 statutory PFD would
result in a $6,000 land voucher.
• PFD Land Vouchers can be used to purchase state land
offered for sale by DNR
• Land vouchers have long historic precedent
• Payment to American Revolution veterans
MR. FECHTER said that from the American Revolution through WWII,
there is a precedent of giving land vouchers to veterans.
American Revolution soldiers received land vouchers as payment,
and WWII veterans received land vouchers in appreciation for
their service.
• Used at statehood by various states to distribute and
settle land
• Objective: Get State Land into the Hands of Alaskans
3:37:38 PM
MR. FECHTER advanced to Slide 2, Land Voucher Program Details:
• Vouchers can't be used to buy Mental Health Trust
lands
• Parents can't apply for vouchers for their children
MR. FECHTER stated that this policy encourages parents to
contribute to the Alaska 529 university savings plan rather than
apply for land vouchers on behalf of their children. Only adults
may apply for land vouchers.
• Vouchers can't be used to pay rents or fees just
sale price
MR. FECHTER stated that the voucher only applies to the initial
purchase price of the land.
• Vouchers only available to PFD applicants who use the
electronic application
MR. FECHTER said this is consistent with "Pick, Click, Give,
the education raffle, and other voluntary election programs.
• PFD applicants need to be determined eligible within
the PFD year
• Vouchers are transferable and never expire
MR. FECHTER explained that an individual may give away or sell a
land voucher to transfer ownership.
• Dept of Revenue will track voucher transfers, and will
replace lost, stolen or destroyed vouchers
• Vouchers may be garnished up to the value of the cash
PFD
MR. FECHTER offered a hypothetical example of how the land
voucher garnishment would work. Suppose the legislature
appropriates a $1,000 PFD, and the individual, who elects a land
voucher, owes $1,000 in unpaid child support. $1,000 cash will
go to the Child Support Division, and the individual will
receive what remains. The garnished land voucher will total the
value of the land voucher minus the garnished amount.
• Cash from PFDs not paid in cash because of voucher
election lapses to General Fund
• DHSS and other benefits programs must consider voucher
as income or resources in determining benefits
eligibility
3:39:41 PM
MR. FECHTER advanced to Slide 3, Lands in Alaskan Hands. He
stated that the Department of Natural Resources contributed this
slide.
Help fulfill the Alaska Constitution's mandate to
develop state resources to benefit the public.
Make Alaska land more accessible to all by making it
easier for Alaskans to purchase land.
No other state has less land in private hands than
Alaska.
The PFD Land Voucher Bill is a response to the demand,
by helping individual Alaskan's realize land
ownership.
The PFD Land Voucher Bill would be a win-win for both
the individual Alaskan and the state treasury.
MR. FECHTER reiterated that the purpose of SB 84 is to fulfill
the constitutional mandate to develop state resources for the
maximum benefit of the public. In stark contrast to Rhode
Island's 97 percent, private ownership of land in Alaska is only
three percent.
3:40:20 PM
MR. FECHTER advanced to slide 4, Cashflow Hypothetical. The
following numbers are hypothetical for illustrative purposes
only.
Cashflow Hypothetical
CY2022 Statutory PFD: $2,300/person
FY2023 Approp. PFD: $1,000/person
Land voucher: $4,600/person
Cash PFD elections: 600,000
Land voucher elections: 40,000
Amount appropriated
from ERA to GF to PFD Fund: $640mm
Cash PFDs: $600mm
Lapse to GF from unelected cash PFDs: $40mm
Face value of land vouchers: $184mm
Land ultimately sold: $300mm
Cash to GF from land sales: $116mm
Total Cash to GF: $156mm
MR. FECHTER explained that, in this hypothetical example, a
person elects $1,000 cash or a $4,600 land voucher. Suppose
40,000 individuals elect land vouchers. Of the $640,000,000
appropriated for PFDs, $600,000,000 will be distributed in cash
and $40,000,000 will lapse to the general fund. As land is
purchased, revenue generated from land sales will grow the
general fund over time.
3:41:20 PM
SENATOR KIEHL asked about the assumption of induced effect
versus just putting more land up for sale.
MR. FECHTER answered that question brings up a major governor's
initiative. The governor has invested a lot of resources in the
Department of Natural Resources and has pressed the department
to maximize land sales. The governor wants unallocated lands
available for sale, so Alaskans can make purchases and
participate in sales.
MR. FECHTER stated that the department has not done an analysis
to determine the proportion of land sales that would occur with
or without this program. He expressed his belief that the
program would incentivize Alaskans to participate in land sales
and get more land in the hands of Alaskans. The ripple effects
of land sales are numerous, especially with property taxes in
organized communities.
SENATOR KIEHL asked whether the hypothetical example proportions
are based on the average parcel value, one voucher applied per
parcel, multiple vouchers applied per parcel, or anything in
particular. He asked how the figure, $300,000,000 for the amount
of land sold, was derived.
MR. FECHTER answered that this is an illustrative example of how
the cash flow would work. Absent an accurate number to put in
front of the committee, illustrative numbers, not backed by
science, were used.
3:43:58 PM
SENATOR STEVENS commented that lands available for purchase over
the years have not always been in desirable areas. He asked what
process the department uses to announce land sales, whether this
sale would be more significant than in the past, and how to
select and purchase land.
MR. FECHTER deferred the question to Ms. Colles, Division of
Mining, Land, and Water, Department of Natural Resources.
3:44:39 PM
CHRISTY COLLES, Operations Manager, Division of Mining, Land,
and Water, Department of Natural Resources, Anchorage, Alaska,
provided invited testimony on SB 84. The department has over-
the-counter sales comprised of unsold auction parcels and unsold
parcels from the remote recreational staking cabin program sale.
MS. COLLES said auctions are the main way the department
notifies the public of a land sale. The department identifies
land, ensures it is properly classified and develops
subdivisions with road access. The department determines a
starting price based on an appraisal, for which individuals may
submit bids. Lands are available across the state, and auctions
occur once every year.
MS. COLLES explained that the remote recreational cabin staking
program works differently than an auction. The department
identifies a large area, and a limited number of individuals are
allowed to stake 5 to 20 acres of land. It is a competitive
process because the program may limit the number of
authorizations in certain areas. So, there may be more interest
than parcels available.
MS. COLLES said auctions and remote recreational cabin staking
go through a decision process and are available online for
individuals to place a bid.
3:46:35 PM
SENATOR STEVENS surmised that if SB 84 were to pass, it would
generate a lot of interest in and applications for state lands.
He asked whether the department was prepared to identify more
lands or if the availability of land will remain status quo.
MS. COLLES answered that there are limitations with the current
statutes, but the goal is to make more land available. The
governor has introduced a couple of bills to increase the
availability of land.
3:47:24 PM
SENATOR KIEHL asked what proportion of the state's sales price
the state uses to prepare parcels for sale through auction or
over the counter. The purpose of the question is to compare
preparation costs incurred by individuals against costs incurred
by the state.
MS. COLLES answered that an exact percentage depends. The
department puts a lot upfront into subdivision sales, including
appraisals and surveys. The sale price reflects those costs. She
stated that through the land disposal income fund (LDIF), the
department tries to cover the cost of all employees that
administer the program, including appraisal and survey costs.
The department tries to redeposit recouped expenditures back
into the LDIF to fund future projects.
SENATOR KIEHL stated that the mean, median, and mode parcel sale
proportions would be helpful as a follow-up.
CHAIR REVAK requested that the department provide the
information to the committee.
3:49:18 PM
SENATOR KIEHL referred to Mr. Fechter's hypothetical example
that outlined the garnishment process for land vouchers. He
asked why the multiplier applied to the land voucher's issuance
is not similar to its reduction.
MR. FECHTER answered that this was a policy decision. In SB 84,
the cash value set aside for individuals is less than the land
voucher value. Garnishing the total value of the land voucher
might cause the PFD fund to go underwater.
MR. FECHTER explained that the maximum amount a PFD may be
garnished is not to exceed the appropriated value of the PFD.
The idea is to have a level playing field so that the maximum
amount deductible is the same for any PFD, whether a cash PFD or
a land voucher.
SENATOR KIEHL inquired further into the possible imbalance of
the land voucher garnishment calculation in SB 84. An individual
with a partially garnished PFD comes out way ahead of those
whose PFD is not garnished. The garnished individual gets their
debt satisfied and almost the full voucher amount. They get the
full multiplier on the plus side without the multiplier on the
minus side.
MR. FECHTER answered that is accurate. The physical asset, the
land voucher, could be garnished by implementing a garnishment
process. However, it is much more valuable to the garnishing
agency to satisfy a debt with cash. While the land voucher has
intrinsic value, it is more challenging to turn it into cash to
satisfy a debt.
3:51:51 PM
CHAIR REVAK asked whether the land vouchers would be
transferable.
MR. FECHTER answered yes. Individuals may sell their land
vouchers for whatever someone is willing to pay, or they can
give them away.
CHAIR REVAK asked who would create and oversee the land voucher
program, including the prevention of fraud and counterfeit
vouchers.
MR. FECHTER answered that the state would benefit from its
existing, robust PFD application process as a control to verify
identity, prevent scams, and ensure security, are already in
place. The Department of Revenue (DOR) envisions holding
vouchers in a database. DOR will verify a person's identity in
the event of a voucher exchange. DOR will track certificate
holders, so holders must report voucher transfers. The
certificate itself is just a piece of paper; it is not a bearer
instrument. The database will contain certificate ownership data
and data on the number of vouchers redeemed. DOR will work with
the Department of Natural Resources (DNR) to track the outcome
of all its land sales.
CHAIR REVAK commented a paper certificate opens up an
opportunity for fraud. He asked whether land vouchers would have
a digital tracking mechanism.
MR. FECHTER answered that the paper certificate associates the
voucher owner with a unique identifying number and gives the
owner a tangible record to possess. The core balance of vouchers
would be kept with DOR and tracked digitally. An individual
could not steal a voucher by merely taking possession of the
paper certificate.
3:55:02 PM
SENATOR STEVENS said that this is a great idea, but if there is
no more land than currently available, the state will not wind
up with more money in the treasury. He expressed his belief that
the obligation is to identify more land to sell; he hoped the
administration would attempt to do so.
MR. FECHTER answered that is precisely the intent. He expressed
his belief that the Department of Natural Resources (DNR) spoke
earlier about a series of bills that would remove barriers to
making land available. He deferred to DNR to speak more about
those bills.
SENATOR STEVENS commented that it is a lot of work, and he hopes
the administration achieves its goal.
3:55:52 PM
CHAIR REVAK expressed concern that the $40,000 [$40.6 per OMB
Component Number 981] operating budget expense indicated on the
fiscal note is insufficient. He asked what software the
Department of Revenue intends to implement to track land voucher
activity and land voucher transfers. He wondered whether the
department would require additional staff to track vouchers,
prevent fraud, and prevent counterfeiting.
MR. FECHTER answered that the amount is in line with the last
major PFD election program. Raffle programming changes required
$20,000 to $40,000. DOR has a dedicated IT team that uses EDIUS,
the backend software for the PFD eligibility system. He
expressed his belief that the existing software could easily
integrate the land voucher program. DOR does not know the demand
for the land voucher program but does not envision half the
applicants choosing the land voucher election the first year. As
the program moves forward, DOR may come back to the legislature
if the program becomes a burden.
3:57:26 PM
SENATOR KIEHL commented that various assistance programs would
consider land vouchers as income and resources. A fiscal note
indicates that the Division of Public Assistance estimates a
one-time mailing to its clients to notify them of the land
voucher's impact on their eligibility for public assistance
programs. He asked why this notification could not be sent every
year.
SHAWNDA O'BRIEN, Director, Division of Public Assistance,
Department of Health and Social Services, Juneau, Alaska,
provided invited testimony on SB 84. She expressed her belief
that the division could automate the notification system to send
a standardized notification to new program recipients. The cost
would fluctuate depending on the number of new recipients in the
program. The $140,000 [139.8 per OMB Component Number 236]
ballpark fiscal note estimate is based on the number of
recipients currently in the division's program.
SENATOR KIEHL commented that, in his experience, recipients at
the edge of the income ladder for these programs are working,
not unemployed. He emphasized that it is difficult for these
recipients to work multiple jobs, get food on the table, and get
the kids to school. He asked what the education success rate is
when the requirements of a program change; in other words, how
effective is the uptake from one letter for one notice.
MS. O'BRIEN answered that the educational part of the process
mostly happens during the program's interview stage. Many
programs require an interview with recipients to cover details
like fraud, changes that require reporting, and other items. It
is a hands-on, face-to-face opportunity to educate recipients
about the program's rules and how changes affect them. Message
repetition is often more successful in multiple venues, like
incorporating a message into a written notification to build on
the same message given in an interview.
4:01:04 PM
CHAIR REVAK inquired about the land voucher garnishment process,
asking whether the deduction would occur on the land voucher
instead of the PFD.
MR. FECHTER answered yes. Everyone would have the same level of
garnishment whether an individual selects cash or voucher. The
individual would receive the balance after the garnishment.
Suppose an individual elects a land voucher, has a $1,000
garnishment, and the cash value of the PFD is $1,000. The
individual would receive the total value of the land voucher
minus $1,000.
CHAIR REVAK repeated the garnishment process and questioned
whether the calculation method was equitable.
MR. FECHTER reiterated that if the cash value of the PDF is
$1,000, an individual, who owes back child support and elects a
cash PFD, could be garnished up to $1,000 to satisfy their debt.
The same is true for an individual who elects a land voucher. Up
to $1,000 could be garnished from the value of their land
voucher to satisfy up to $1,000 of their debt.
CHAIR REVAK asked whether the proposed garnishment method would
affect state garnishment receipts.
MR. FECHTER expressed his belief that it would not affect state
receipts. The net effect is the same whether an individual
elects a land voucher or a cash PFD.
4:04:25 PM
CHAIR REVAK announced that the committee had received department
answers to previous questions.
CHAIR REVAK opened public testimony on SB 84.
4:04:44 PM
EDWARD MARTIN, Representing Self, Kenai, Alaska, testified in
support of SB 84. He played previously recorded testimony,
stating the PFD land voucher was an idea he dreamed up years ago
when the state was faced with $9 per barrel of oil and the state
government attempted to access the permanent fund dividend. He
expressed his belief that it was inappropriate then and is not
appropriate now. The permanent fund dividend belongs to the
people. As it concerns transferability, a parent could transfer
land to their children in a trust. He recommended the program be
open exclusively to Alaskans. Alaska has been a state for far
too long without making land available. The state will generate
tremendous revenue when land development creates a tax base. He
suggested a simpler method to purchase land, mainly using
unencumbered PFD money to make a land purchase.
4:09:48 PM
CHAIR REVAK closed public testimony on SB 84.
4:10:00 PM
CHAIR REVAK held SB 84 in committee.
| Document Name | Date/Time | Subjects |
|---|---|---|
| DB 84 DOR Response Letter 1.31.2022.msg |
SRES 1/31/2022 3:30:00 PM |
|
| SB 84 Fiscal Note DHSS 1.28.2022.pdf |
SRES 1/31/2022 3:30:00 PM |
SB 84 |
| SB 84 Department of Revenue Presentation 1.31.2022.pdf |
SRES 1/31/2022 3:30:00 PM |
SB 84 |
| SB 84 Fiscal Note DNR 1.28.2022.pdf |
SRES 1/31/2022 3:30:00 PM |
SB 84 |
| SB 84 Fiscal Note DoR 1.28.2022.pdf |
SRES 1/31/2022 3:30:00 PM |
SB 84 |
| SB 84 Sectional Analysis 1.31.2022.pdf |
SRES 1/31/2022 3:30:00 PM |
SB 84 |
| SB 133 DNR Presentation 1.31.22.pdf |
SRES 1/31/2022 3:30:00 PM |
SB 133 |