04/18/2009 08:30 AM House FINANCE

CS FOR SENATE BILL NO. 116(FIN)                                                                                               
                                                                                                                                
     "An Act making a special appropriation for energy                                                                          
     assistance for Alaska residents; and providing for an                                                                      
     effective date."                                                                                                           
                                                                                                                                
8:47:24 AM                                                                                                                    
                                                                                                                                
JAY LIVEY, STAFF, SENATOR LYMAN  HOFFMAN, stated that SB 116                                                                    
required a  one-time appropriation  of $9 million  to assist                                                                    
Alaskans in paying for energy  costs. Although the amount of                                                                    
fuel was abundant,  the cost of fuel has  forced families to                                                                    
make difficult  budgetary choices,  and has  been compounded                                                                    
by lower  than average yearly  incomes. In 1990,  fuel costs                                                                    
in  Bethel  were  45  percent  higher  than  fuel  costs  in                                                                    
Anchorage,  by 2007,  the differential  was 92  percent. The                                                                    
one-time  appropriation would  be  divided  between the  Low                                                                    
Income  Home Energy  Assistance  Program  (LIHEAP), and  the                                                                    
Alaska  Heating Assistance  Program  (AKHAP). Both  programs                                                                    
provide    state-wide    assistance.    Approximately    162                                                                    
communities   are   served.  Communities   with   recipients                                                                    
include; Anchorage,  Palmer, Wasilla, North Pole  and Homer.                                                                    
He  added that  some areas  of  rural Alaska  are served  by                                                                    
tribal programs as well.                                                                                                        
                                                                                                                                
Mr. Livey  detailed the  criteria set  out for  residents to                                                                    
establish enough points to qualify  for assistance under the                                                                    
two programs.  The applicant  must be  a state  resident and                                                                    
must live in the home in  which the heating costs occur. Set                                                                    
income guidelines must also be  met. Each applicant would be                                                                    
assigned  a number  of points  based on  the climate  in the                                                                    
area in which  they live, which would be  assessed by degree                                                                    
days in the area. The number  of disabled and elderly in the                                                                    
household  would   also  be  considered.   The  requirements                                                                    
determine  that the  assistance would  be rewarded  to those                                                                    
with the  highest need. In  addition, the  assistance money,                                                                    
determined by  the application points, would  be distributed                                                                    
directly to the vendor and not the individual applicant.                                                                        
                                                                                                                                
8:52:27 AM                                                                                                                    
                                                                                                                                
Mr. Livey  noted that  The Department  of Health  and Social                                                                    
Services (DHSS)  would initiate a  final check run  in April                                                                    
of 2009. This  would allow enough time  for the appropriated                                                                    
funds to  become available to those  with established vendor                                                                    
accounts,  or who  become eligible  before April  2009. This                                                                    
would assist  families with  fuel debts  from the  winter of                                                                    
2009 in  paying existing debts  and continue to  afford heat                                                                    
through the spring.                                                                                                             
                                                                                                                                
Mr. Livey furthered that based  on the amount of federal and                                                                    
state  funds DHSS  had to  spend on  heating assistance,  he                                                                    
could  calculate that  $220 was  spent per  applicant point.                                                                    
The average number  of points is 15, which  equals $3300 for                                                                    
heating assistance in  2009. If the resident  pays $6.50 per                                                                    
gallon  for  84 gallons  per  month,  or 507  gallons  total                                                                    
during the  winter months, and  uses 150 gallons  per month,                                                                    
the  existing  program  will  only pay  56  percent  of  the                                                                    
heating need. He thought that  the additional assistance was                                                                    
not extravagance for the state.                                                                                                 
                                                                                                                                
8:55:37 AM                                                                                                                    
                                                                                                                                
Representative  Fairclough wondered  if one  household could                                                                    
receive    assistance   from    both   LIHEAP    and   AKHAP                                                                    
simultaneously. Mr.  Livey replied  that it would  depend on                                                                    
the  family's income.  The qualification  would be  based on                                                                    
the federal  poverty level. He  added that AKHAP  was funded                                                                    
through   general  state   funds  and   LIHEAP  was   funded                                                                    
federally.                                                                                                                      
                                                                                                                                
Representative Fairclough requested further clarification.                                                                      
                                                                                                                                
Mr. Livey  explained that the  funding for LIHEAP  cannot be                                                                    
used to fund AKHAP, but the  funds for AKHAP can be used for                                                                    
LIHEAP. If  a family of  four earns under $40,000  per year,                                                                    
funding may  be combined  from both  programs, but  would be                                                                    
distributed  under LIHEAP.  If the  family's income  exceeds                                                                    
$40,000, general funds must be used under AKHAP.                                                                                
                                                                                                                                
Representative  Fairclough  asked  how many  families  under                                                                    
each program receive combined funds.  Mr. Livey guessed that                                                                    
13,000 families  in the state  are served by  both programs;                                                                    
90 percent of the families are under the poverty line.                                                                          
                                                                                                                                
8:58:22 AM                                                                                                                    
                                                                                                                                
Representative Joule  queried what percentage of  a family's                                                                    
available income,  throughout the state, is  spent on energy                                                                    
costs.  Mr. Livey  replied that  he did  not have  the exact                                                                    
percentages.   He  believed   that   the  percentages   were                                                                    
significantly higher in rural Alaska.                                                                                           
                                                                                                                                
Representative Joule  thought that the elderly  and disabled                                                                    
should  be the  first  to qualify  for  assistance. He  told                                                                    
story of  two elderly people  who needed assistance  but did                                                                    
not qualify  for AKHAP. He  worried that the funds  were not                                                                    
going to those  who needed the assistance  most. He wondered                                                                    
if the point system could be negatively manipulated.                                                                            
                                                                                                                                
9:01:36 AM                                                                                                                    
                                                                                                                                
Mr. Livey responded  that the program used  to assign points                                                                    
has a  component that provides  extra points to  the elderly                                                                    
and  disabled. He  added that  income does  factor into  the                                                                    
determination of points.                                                                                                        
                                                                                                                                
Representative Joule asked about  CITGO, which provides fuel                                                                    
assistance to  Alaska Native families. He  wondered how long                                                                    
the program had  been in effect, what was the  cost, and who                                                                    
was eligible.  Mr. Livey understood that  CITGO had provided                                                                    
some fuel to a few communities  in 2008, and was expected to                                                                    
again  in  May  2009. Through  regional  corporations,  some                                                                    
communities had accepted the fuel, some did not.                                                                                
                                                                                                                                
Representative Joule  asked if the  cost of the  program was                                                                    
known. Mr. Livey replied no.                                                                                                    
                                                                                                                                
Representative Crawford  questioned the ratio of  federal to                                                                    
state dollars for the individuals  under the federal poverty                                                                    
level. Mr.  Livey explained that  the money is melded  and a                                                                    
dollar value is  assigned per point. A  family under $40,000                                                                    
would  receive one  dollar, which  would  be combination  of                                                                    
both  federal and  state money,  per point.  A family  above                                                                    
$40,000 per year would receive only state money.                                                                                
                                                                                                                                
9:05:02 AM                                                                                                                    
                                                                                                                                
Representative Crawford  asked for further  clarification on                                                                    
the  ratio of  melded  state and  federal  funds. Mr.  Livey                                                                    
thought  that the  ratio  was 2/3  federal  dollars and  1/3                                                                    
state dollars.                                                                                                                  
                                                                                                                                
Vice-Chair Thomas asked if two  families, living together in                                                                    
one  household,  could  qualify for  assistance.  Mr.  Livey                                                                    
understood that one application was allowed per house.                                                                          
                                                                                                                                
Vice-Chair  Thomas said  that  when AGIA  was  moved out  of                                                                    
committee  in 2007,  intent language  had been  written into                                                                    
the bill  that would  have allocated  $60,000 per  year into                                                                    
LIHEAP.  The Senate  Finance  Committee  removed the  intent                                                                    
language. He felt  that that action may be  connected to the                                                                    
funding problems the programs currently face.                                                                                   
                                                                                                                                
RON  KREHER, CHIEF  OF FIELD  SERVICES,  DIVISION OF  PUBLIC                                                                    
ASSISTANCE,  DEPARTMENT  OF   HEALTH  AND  SOCIAL  SERVICES,                                                                    
explained  that  families  below   150  percent  of  poverty                                                                    
receive  100  percent  federal  funds,  and  families  above                                                                    
receive 100  percent state funds.  The appropriation  of $10                                                                    
million for FY  2008, stipulated that the funds  be used for                                                                    
heating assistance programs. At the  end of the program year                                                                    
the department  examines the number of  households served by                                                                    
the  programs.  Surplus  funds   are  used  as  supplemental                                                                    
payments.  The  $10  million would  be  spread  out  between                                                                    
LIHEAP recipients and AKHAP recipients.  The amount of state                                                                    
versus  federal  funds  distributed would  depend  on  where                                                                    
families fell on the poverty line.                                                                                              
                                                                                                                                
Representative   Joule   proposed    that   the   department                                                                    
manipulate  the point  system to  ensure  assistance to  the                                                                    
elderly and the disabled.                                                                                                       
                                                                                                                                
9:10:14 AM                                                                                                                    
                                                                                                                                
Mr. Kreher felt that manipulation  of the point system would                                                                    
require regulatory changes. With  the creation of AKHAP, and                                                                    
the pushing up  of income limits to 225  percent of poverty,                                                                    
any household that is income  ineligible for the program has                                                                    
an  income  in excess  of  the  limited amount.  The  income                                                                    
qualifications do not currently  take into consideration how                                                                    
the  income   budgeted.  He  thought  that   the  number  of                                                                    
households at  the higher end  of the income bracket  may be                                                                    
dropping  of in  assistance use  because their  gross income                                                                    
exceeds the  limits set  forth by  the program.  The program                                                                    
also requires  seasonal incomes to be  annualized, which can                                                                    
put a family above the income limit.                                                                                            
                                                                                                                                
Representative Joule  stated his support for  the provision,                                                                    
but  reiterated concerns  regarding people  in need  who are                                                                    
denied assistance.  Mr. Kreher  replied that  the department                                                                    
would  work  with the  legislature  to  remedy the  concerns                                                                    
regarding   elderly   and   disabled  persons   with   need.                                                                    
Representative   Joule   expressed    excitement   for   the                                                                    
collaborative effort.                                                                                                           
                                                                                                                                
9:14:37 AM                                                                                                                    
                                                                                                                                
Representative Gara  asked if federal portion  of the LIHEAP                                                                    
program was funded  at $10 million. Mr.  Kreher replied that                                                                    
the  program   received  $22   million  in   federal  funds,                                                                    
including  emergency  contingency  funds, and  an  increased                                                                    
black grant amount.                                                                                                             
                                                                                                                                
Representative Gara  asked if the  federal portion  would be                                                                    
closer to $10 million, in  a year without a federal stimulus                                                                    
package. Mr. Kreher replied yes.                                                                                                
                                                                                                                                
Representative Gara asked how  many LIHEAP applications were                                                                    
filed  each  year. Mr.  Kreher  shared  that 2008  had  been                                                                    
unusual,  with 37  percent more  applications filed  than in                                                                    
previous years.  This was because  of the poor  economy, but                                                                    
also  marketing  efforts by  the  department.  Of the  9,000                                                                    
applications  that have  been  processed,  the majority  are                                                                    
well below poverty level.                                                                                                       
                                                                                                                                
Representative   Gara  asked   how  many   applications  the                                                                    
department  expected to  receive  by the  end  of 2009.  Mr.                                                                    
Kreher thought it could be 16,000.                                                                                              
                                                                                                                                
Representative   Gara  asked   how   much  assistance   each                                                                    
applicant would  receive. Mr. Kreher answered  that in rural                                                                    
Alaska  the average  household received  $4,000. A  very low                                                                    
income household in an urban setting received $900.                                                                             
                                                                                                                                
9:17:53 AM                                                                                                                    
                                                                                                                                
Representative Salmon  commented on the 15  point system. He                                                                    
wondered if 15 points was  the maximum amount of points that                                                                    
could  be received.  Mr. Kreher  answered  that the  maximum                                                                    
number of points that could  be received was 32, the minimum                                                                    
was 2.                                                                                                                          
                                                                                                                                
Representative  Salmon  what  were the  qualifications  that                                                                    
would earn  the applicant 15  points.  Mr. Kreher  said that                                                                    
the  points   were  based   on  community   heating  points,                                                                    
calculated based  on location and  heating degree  days. For                                                                    
example,  heating   points  for  Willow  is   7;  there  are                                                                    
additional points  for children, elderly, and  disabled. The                                                                    
factor is also based on housing  type, such as size. Where a                                                                    
family falls in the  poverty income brackets also determines                                                                    
the percentage of points.                                                                                                       
                                                                                                                                
Representative  Salmon  asked  if there  were  points  given                                                                    
based on distance  from urban centers. Mr.  Kreher said that                                                                    
the points were  based on heating degree days  and where the                                                                    
community is located, including being on the road system.                                                                       
                                                                                                                                
Representative Kelly wondered how  the effective date ending                                                                    
FY 2009 related to FY 2008.                                                                                                     
                                                                                                                                
Mr. Livey understood that the  bill would provide a one-time                                                                    
appropriation to fund the department's  last check run of FY                                                                    
2009. The money would be obligated by June 30, 2009.                                                                            
                                                                                                                                
Representative Kelly  asked how much state  funding had been                                                                    
given  to  the  program  in  2008.  Mr.  Livey  replied  $10                                                                    
million.                                                                                                                        
                                                                                                                                
9:22:21 AM                                                                                                                    
                                                                                                                                
BOB  CHARLES,  ASSOCIATION  OF  VILLAGE  COUNCIL  PRESIDENTS                                                                    
testified  via  teleconference,  spoke  in  support  of  the                                                                    
legislation.                                                                                                                    
                                                                                                                                
Representative  Kelly expressed  frustration with  the bill.                                                                    
He opined  that there had been  significant discussion about                                                                    
the one-time  nature of  past appropriations.  He considered                                                                    
it an entitlement  that would be expected  in perpetuity. He                                                                    
understood  the need,  but was  upset about  provisions that                                                                    
purport to  be one-time.  He thought federal  funding should                                                                    
only be  used to help  the truly needy. He  cited statistics                                                                    
around the state regarding use of state and federal funds.                                                                      
                                                                                                                                
9:28:28 AM                                                                                                                    
                                                                                                                                
Representative  Salmon pointed  out  to  the committee  that                                                                    
state  funds have  been made  available to  urban areas  for                                                                    
energy assistance in the past.  He felt that the rural areas                                                                    
of  the state  had been  treated  unfairly. He  felt that  a                                                                    
long-term solution  had been established in  urban areas and                                                                    
he wanted the same solutions for rural areas.                                                                                   
                                                                                                                                
Representative  Gara recognized  that the  Healy coal  plant                                                                    
had  been heavily  subsidized over  the  years. He  surmised                                                                    
that the reason  there was no road money in  rural areas was                                                                    
because  there   are  no  roads.  He   emphasized  that  the                                                                    
assistance funds that were distributed  in rural Alaska were                                                                    
necessary, not extravagant,  and should not be  limited to a                                                                    
one-time commitment.  He stated that  he did not vote  for a                                                                    
one-time commitment.                                                                                                            
                                                                                                                                
9:32:37 AM                                                                                                                    
                                                                                                                                
Representative Kelly countered that  Fairbanks does not have                                                                    
a   hydro  plant.   He  maintained   his  position   on  the                                                                    
legislation.                                                                                                                    
                                                                                                                                
Co-Chair  Stoltze MOVED  to  report CS  SB  116(FIN) out  of                                                                    
Committee   with   individual    recommendations   and   the                                                                    
accompanying fiscal  note. There being NO  OBJECTION, it was                                                                    
so ordered.                                                                                                                     
                                                                                                                                
CS  SB 116(FIN)  was REPORTED  out of  Committee with  a "do                                                                    
pass" recommendation.                                                                                                           
                                                                                                                                
9:33:39 AM               RECESSED                                                                                             
                                                                                                                                
9:47:15 AM               RECONVENED