05/17/2003 10:38 AM House FIN

CS FOR SENATE BILL NO. 117(FIN)                                                                                               
                                                                                                                                
     "An Act relating to the longevity bonus program; and                                                                       
     providing for an effective date."                                                                                          
                                                                                                                                
JOHN VOWELL,  DIRECTOR, LONGEVITY BONUS PROGRAMS,  DEPARTMENT                                                                   
OF   ADMINISTRATION  provided   information   on  the   bill.                                                                   
Beginning in 2004, the bill would  reduce the longevity bonus                                                                   
by 20  percent each year until  2007, until it  is eliminated                                                                   
(2008).                                                                                                                         
                                                                                                                                
MARIE  DARLIN,   AMERICAN  ASSOCIATION  OF   RETIRED  PERSONS                                                                   
(AARP), JUNEAU  TESTIFIED provided information  regarding the                                                                   
legislation.  She  stated  that  she is  a  third  generation                                                                   
Juneau resident  and pointed out the Alaskan  seniors provide                                                                   
support to the state's economy.  She noted that the Pioneer's                                                                   
of Alaska  worked  on the current  version  of the bill.  She                                                                   
stated  that  their  preference   was  to  have  the  program                                                                   
continue, but noted that Section  6 was a proposal arrived at                                                                   
to give  people an opportunity  to plan for the  consequences                                                                   
of an elimination  of the longevity bonus program.  She noted                                                                   
that  the  bill  provides  for  adult  public  assistance  as                                                                   
proposed.  She stated  that if  the bill were  the best  that                                                                   
could  be provided  for  the seniors  of  Alaska, they  would                                                                   
support it. She  stressed the need for "safety  nets" to help                                                                   
seniors meet  their needs. She  emphasized that  most seniors                                                                   
did not  foresee a way to  meet their needs,  particularly in                                                                   
the medical area.  She stated  the $250 per month for seniors                                                                   
85 years  old or  older made  a major  impact. She  concluded                                                                   
that this  was a proposal  at the  request of the  Governor's                                                                   
office, and that they awaited a response.                                                                                       
                                                                                                                                
CHIP  WAGONER,  PIONEERS  OF   ALASKA,  testified  about  the                                                                   
proposed compromise devised by  Pioneers and AARP in response                                                                   
to  the  Governor's original  elimination  of  the  longevity                                                                   
bonus  program.   He  noted  that   the  program   was  being                                                                   
eliminated  24 years  earlier  than projected.  He  commended                                                                   
these  organizations  for  taking  all  state  programs  into                                                                   
account in  crafting a proposal  to provide a  "soft landing"                                                                   
for  seniors. He  stated that  to  immediately eliminate  the                                                                   
program  would  be  cruel  to seniors.  He  stated  that  the                                                                   
average age of  a recipient was 78 years old.  He stated that                                                                   
the  basing the  program on  assets was  not adequate,  since                                                                   
seniors faced  a variety of  medical expenses not  related to                                                                   
their income.  They do not support a needs based program.                                                                       
                                                                                                                                
Co-Chair Harris spoke  to the history and origination  of the                                                                   
program, and its natural phasing  out. He asked what services                                                                   
are not  provided in Alaska that  are provided to  seniors in                                                                   
other  states.  Ms.  Darlin  referred  to  public  assistance                                                                   
programs,  property tax  assistance  provided  to seniors  in                                                                   
other states.                                                                                                                   
                                                                                                                                
Co-Chair Williams  referred to  potential changes  and stated                                                                   
that that  the Administration was  not supportive of  a five-                                                                   
year phase out. He observed that  the Governor might agree to                                                                   
a two-year  phase  out. He  stated that  the Committee  would                                                                   
likely pass [a five year phase  out], with the knowledge that                                                                   
the  Governor may  ultimately  zero the  program  out of  the                                                                   
budget.                                                                                                                         
                                                                                                                                
Co-Chair Williams  clarified that a two-year  phase out would                                                                   
reduce payments by  50 percent ($22 million),  and then cease                                                                   
payments in the following year.   He stated that the payments                                                                   
would  continue  at  some level  for  FY  04  and FY  05.  He                                                                   
reiterated that  the Governor would support a  two-year phase                                                                   
out.                                                                                                                            
                                                                                                                                
LENORE  JONESS,   KENAI,  testified  via   teleconference  in                                                                   
opposition  to the legislation.  She noted  that the  program                                                                   
could  be funded from  the tax  break that  the Governor  has                                                                   
proposed for the  oil industry. She also opposed  changing to                                                                   
a  needs  based program.  She  questioned  the  legislature's                                                                   
concern for seniors  in this regard and also in  terms of the                                                                   
sales  tax.  She   maintained  that  the  State   was  taking                                                                   
advantage  of seniors  since they  did  not generate  income.                                                                   
She noted that senior retirement  income and medical payments                                                                   
had an  impact on  the state's  economy.   She referred  to a                                                                   
study [not  cited], which concluded  that Alaska  seniors are                                                                   
one of the largest  single sources of money  flowing into the                                                                   
state. Senior  retirement income and medical  payments have a                                                                   
significant beneficial effect  on the state's economy. At the                                                                   
same time more than half of Alaskan  seniors live vicariously                                                                   
on the edge  of solvency. For some, financial  considerations                                                                   
may determine whether  they continue to reside  in the state.                                                                   
For  many  others,   a  combination  of   financial  benefits                                                                   
available from state and municipal  government is critical to                                                                   
their  wellbeing.  Seniors  also provide  the  equivalent  of                                                                   
2,400 full time  jobs as volunteers, worth  approximately $60                                                                   
million a  year. Seniors over  60 provide unpaid  care giving                                                                   
services that  are the  equivalent of  6,300 full time  jobs.                                                                   
Seniors over 60 make up 8 percent  of the state's population.                                                                   
Seniors are  estimated to make  up 20 percent of  the state's                                                                   
population by 2025.                                                                                                             
                                                                                                                                
CSSB 117 (FIN) HELD in Committee for further consideration.