04/07/2011 09:00 AM Senate STATE AFFAIRS

                                                                                                                                
             SB 117-PFD ALLOWABLE ABSENCE: MILITARY                                                                         
                                                                                                                                
9:03:05 AM                                                                                                                    
CHAIR WIELECHOWSKI  announced the  first order of  business would                                                               
be SB 117. This bill would  enable Alaskans who join the military                                                               
and are  deployed out  of state  to continue  receiving Permanent                                                               
Fund  Dividend   checks  while  serving  in   the  armed  forces.                                                               
Currently  long-term   Alaskans  who  have  every   intention  of                                                               
returning to the state are denied their PFDs after ten years.                                                                   
                                                                                                                                
CHAIR  WIELECHOWSKI asked  for a  motion to  adopt the  proposed,                                                               
version M, committee substitute (CS).                                                                                           
                                                                                                                                
SENATOR  PASKVAN moved  to  adopt  the proposed  CS  for SB  117,                                                               
labeled 27-LS0768\M, as the working document.                                                                                   
                                                                                                                                
CHAIR  WIELECHOWSKI objected  for discussion  purposes and  asked                                                               
his staff to provide an overview of the bill.                                                                                   
                                                                                                                                
9:04:13 AM                                                                                                                    
MICHAEL CAULFIELD,  Staff to Senator  Wielechowski, said  that as                                                               
any Alaskan  knows, one of  the great  benefits of living  in the                                                               
state is  the yearly PFD payment.  Most would agree that  the PFD                                                               
should not be withheld from those  with a legitimate reason to be                                                               
gone from the state with  every intention of returning. Thus, the                                                               
state  has  exemptions  for residents  absent  for  reasons  like                                                               
school, medical treatment, or  military service. These exemptions                                                               
have a  sunset date of  ten years, as  most people gone  for that                                                               
long  do not  intend  to  return to  Alaska.  However, some  jobs                                                               
require  people to  be gone  from the  state for  longer than  10                                                               
years.   One  of   them   is   congressional  service.   Alaska's                                                               
congressional delegation has  to live in Washington  D.C. and the                                                               
statutes  allow  for them  to  receive  PFDs past  that  ten-year                                                               
limit.                                                                                                                          
                                                                                                                                
Another job  where Alaskans may  not be  able to return  home for                                                               
long  periods of  time  is  the military.  Members  of the  armed                                                               
forces can't  choose where to  be stationed,  and if they  make a                                                               
career  of the  military they  may be  gone for  over ten  years.                                                               
These brave  men and  women make great  sacrifices to  protect us                                                               
all, and the least  we can do is to make  sure they still receive                                                               
their  PFDs.  Senate  Bill  117 will  provide  an  exemption  for                                                               
Alaskan soldiers who  are gone for over ten years,  just like our                                                               
congressional delegation.                                                                                                       
                                                                                                                                
MR. CAULFIELD  then reviewed the  changes in  the CS. On  page 2,                                                               
lines  1-5  require  that  the  soldier  receiving  the  PFD  was                                                               
actually  in the  state  for  three years  prior  to joining  the                                                               
military,  unless  gone  for  an  allowable  reason.  Lines  6-11                                                               
provide a severability clause.                                                                                                  
                                                                                                                                
9:06:07 AM                                                                                                                    
CHAIR  WIELECHOWSKI  noted  there  is  a  legal  opinion  on  the                                                               
constitutionality of the bill.                                                                                                  
                                                                                                                                
DEBORAH  BITNEY,  Director,  Permanent  Fund  Dividend  Division,                                                               
Department  of   Revenue  (DOR),  said  she   was  available  for                                                               
questions.                                                                                                                      
                                                                                                                                
CHAIR  WIELECHOWSKI said  he has  had several  constituents raise                                                               
this issue with  him. Alaskans who are deployed  for long periods                                                               
of time have problems getting their PFD checks.                                                                                 
                                                                                                                                
9:07:39 AM                                                                                                                    
SENATOR KOOKESH joined the meeting.                                                                                             
                                                                                                                                
CHAIR WIELECHOWSKI asked how many complaints he's heard.                                                                        
                                                                                                                                
MS.  BITNEY  answered  probably  less  than  30,  but  they  were                                                               
extremely loud.                                                                                                                 
                                                                                                                                
SENATOR GIESSEL asked if most were related to military service.                                                                 
                                                                                                                                
MS. BITNEY  answered yes,  all were  from military  members. Most                                                               
people who  are gone from the  state for that length  of time are                                                               
military.                                                                                                                       
                                                                                                                                
SENATOR GIESSEL  asked if  Ms. Bitney  had any  information about                                                               
people within the military who are  absent more than 10 years and                                                               
who do return to become permanent residents.                                                                                    
                                                                                                                                
MS.  BITNEY  answered they  are  researching  this question.  Her                                                               
initial findings were  that 78 people this year  reside in Alaska                                                               
and at  some point since 1990  had 10 years or  more of absences,                                                               
and at  least one of those  years was for military  purposes. She                                                               
said being more specific would require more research.                                                                           
                                                                                                                                
9:10:20 AM                                                                                                                    
CHRIS POAG, Assistant Attorney General,  Department of Law (DOL),                                                               
PFD Division,  said there is  a constitutional concern  with this                                                               
bill.  There's risk  of an  unequal protection  challenge when  a                                                               
class of  residents is  broken into  new residents  and long-term                                                               
residents. In Sands  v. Roe, which involved  welfare benefits for                                                               
California  residents, new  residents  for the  first year  would                                                               
receive benefits from  the state of origin,  not from California.                                                               
The court said  it was unconstitutional to create  two classes of                                                               
residents and distribute benefits unequally.                                                                                    
                                                                                                                                
An argument  could be  made that this  bill does  something along                                                               
those lines.  PFD allowable  absences include up  to 180  days so                                                               
long as the intent to return  is maintained. There are 16 special                                                               
exceptions allowing  for absences  in excess  of 180  days. There                                                               
has to be  some limit, so the legislature imposed  a ten year cap                                                               
on allowable absences.  It also created an  exemption for members                                                               
of Congress, their staff, and spouses.                                                                                          
                                                                                                                                
9:14:12 AM                                                                                                                    
After ten years of service or  longer, they are likely to return.                                                               
This  bill would  create another  exemption  but splits  military                                                               
allowable  absences into  two classes.  This raises  a risk  of a                                                               
challenge  similar to  Zobel. DOL  believes that  the legislature                                                               
sees this  as a category  of people who  are likely to  return to                                                               
the state.  DOL would  support a  lawsuit if the  law were  to be                                                               
challenged. Mr.  Poag warned  that if  there is  a constitutional                                                               
challenge,  the legislature  should  make clear  that it  doesn't                                                               
want the ten-year rule to go away.                                                                                              
                                                                                                                                
CHAIR WIELECHOWSKI opened public testimony.                                                                                     
                                                                                                                                
TIKOT CROFOOT said he originally  left Alaska to attend the Naval                                                               
Academy and  has been an  active duty SEAL  for ten years.  He is                                                               
currently preparing  for another  deployment to  Afghanistan. Two                                                               
years ago he was denied his  PDF, and has been denied ever since.                                                               
He believes that  service members and their families  are no less                                                               
deserving  than  our  congressional   delegation.  The  PFD  does                                                               
penalize Alaska service members.                                                                                                
                                                                                                                                
MR. CROFOOT said he lived in  Alaska since age four, had unbroken                                                               
Alaska residency  for 28  years, has voted  in all  elections and                                                               
has an Alaska  driver's license. Alaska is listed as  his home of                                                               
record, so  the military  will pay  for him  to return  to Alaska                                                               
when he  leaves the service, but  not to another state.  Both his                                                               
parents have been Alaskan residents  since 1974. He owns property                                                               
in Alaska, and  is part owner of a family  business in Alaska. He                                                               
met  all  PFD  requirements  for eligibility  prior  to  military                                                               
service.  He met  the requirements  for  his first  ten years  of                                                               
military service.  Military members deserve the  dividend even if                                                               
they are outside the state.                                                                                                     
                                                                                                                                
9:20:55 AM                                                                                                                    
MR. CROFOOT  said he has  heard people say that  military members                                                               
are trying to  milk the system by trying to  receive the dividend                                                               
when  they  have resided  in  Alaska  for  very little  time.  It                                                               
actually costs  him more to  return to  Alaska each year  than he                                                               
receives  from the  dividend. He  returns because  Alaska is  his                                                               
home. He urged  the committee to support  career military members                                                               
who intend to return to the state.                                                                                              
                                                                                                                                
9:22:04 AM                                                                                                                    
CHAIR  WIELECHOWSKI said  Mr. Crofoot  was a  big reason  why the                                                               
bill was brought forward.                                                                                                       
                                                                                                                                
SENATOR PASKVAN asked when he expected to retire.                                                                               
                                                                                                                                
MR.  CROFOOT  said  he  will  be eligible  after  20  years,  but                                                               
regardless of when he retires, he will return to Alaska.                                                                        
                                                                                                                                
9:23:27 AM                                                                                                                    
TRACY ROSS  said she was  calling on  behalf of her  husband, Lt.                                                               
Colonel  Brian  Ross, who  deployed  to  the Philippines  and  is                                                               
currently stationed in Okinawa.  Alaskan residents who are career                                                               
military deserve  equal protection  under the  law and  should be                                                               
allowed to receive PFDs despite  extended absence. Brian was born                                                               
in Alaska in 1972, and left  in 1990 to attend the Naval Academy.                                                               
For the  last 18  years he  has served around  the world.  He has                                                               
always been registered  to vote in Alaska. All  his vehicles have                                                               
been  titled,   registered,  and  licensed  in   Alaska.  He  has                                                               
significant  physical  ties  to   Alaska;  his  parents  and  two                                                               
brothers live in Alaska. He  owns cabins and land near Glenallen.                                                               
Their family has made dozens of  trips to Alaska totaling over 80                                                               
days in the past five years.                                                                                                    
                                                                                                                                
MS.  ROSS said  her  husband  was first  denied  a  PFD in  2008.                                                               
Nothing  in  his  status  had  changed  other  than  passing  the                                                               
arbitrary ten  year cap. He  has filed a superior  court judicial                                                               
review of his  rejection. If he is not an  Alaskan resident, then                                                               
where  is  his home?  His  home  of  record  and state  of  legal                                                               
residence  is the  state the  federal government  expects him  to                                                               
return home  to. His  home of  record is Alaska.  In 20  years of                                                               
military  service  he  has  never changed  his  home  of  record.                                                               
Despite  living in  six states  and one  foreign country,  he has                                                               
always maintained paper and physical ties to Alaska.                                                                            
                                                                                                                                
MS. ROSS  said that her  husband intends  to return to  Alaska to                                                               
live permanently  once he retires.  Lifetime Alaskans  and career                                                               
military personnel should continue to receive PFDs.                                                                             
                                                                                                                                
9:29:23 AM                                                                                                                    
RIC  DAVIDGE, Anchorage,  said he  holds a  number of  leadership                                                               
positions  in   veteran  organizations  in  Alaska.   The  Alaska                                                               
Veterans  Political Action  Committee  and  the Alaska  Veteran's                                                               
Foundation  have  been asking  for  changes  to the  PFD  status,                                                               
especially the ten year rule and  the 72 hour rule because of the                                                               
cost   of  returning   Alaska   to   maintain  resident   status.                                                               
Indications  of  intent to  return  should  be considered.  These                                                               
people  were Alaskans  prior to  service  and intend  to be  upon                                                               
their return.  The bottom  line is; why  are there  no exemptions                                                               
for military  service as  opposed to  members of  Congress, their                                                               
staff and spouses.  At least, he said, recognize  the service and                                                               
commitment  of service  members  who intend  to  return. His  son                                                               
spent four years active duty in  Iraq as well as 8 years military                                                               
service. A number of times he had  to assist his son to return to                                                               
Alaska for the 78 hour requirement.                                                                                             
                                                                                                                                
9:32:10 AM                                                                                                                    
LISA KIRSCH,  Attorney, Legislative Legal Services,  said she was                                                               
available for questions.                                                                                                        
                                                                                                                                
CHAIR WIELECHOWSKI asked her to  talk about her legal analysis of                                                               
the bill.                                                                                                                       
                                                                                                                                
MS. KIRSCH  said she couldn't  really add  much to what  Mr. Poag                                                               
said.  The  crux of  the  problem  is  the three  year  residency                                                               
requirement within  the bill.  This splits  a class  of residents                                                               
into two groups, which creates an equal protection problem.                                                                     
                                                                                                                                
9:34:16 AM                                                                                                                    
CHAIR  WIELECHOWSKI said  he  did  not intend  to  move the  bill                                                               
today; he wants to work  through the constitutional issues. There                                                               
was some very compelling testimony.  Perhaps home of record could                                                               
be included as an indication of eligibility.                                                                                    
                                                                                                                                
SENATOR  GIESSEL  asked  if this  would  automatically  make  the                                                               
military members' children eligible.                                                                                            
                                                                                                                                
9:35:45 AM                                                                                                                    
MS. BITNEY  said yes, the  children are eligible if  the military                                                               
member is the sponsor.                                                                                                          
                                                                                                                                
CHAIR WIELECHOWSKI asked her to comment  on the issue of "home of                                                               
record."                                                                                                                        
                                                                                                                                
MS.  BITNEY responded  any declaration  of  residency other  than                                                               
Alaska automatically disqualifies the applicant.                                                                                
                                                                                                                                
SENATOR  PASKVAN  asked  if there  has  been  any  constitutional                                                               
analysis of  an exemption  for those out  of state  while working                                                               
for a private company.                                                                                                          
                                                                                                                                
MS.  BITNEY answered  it  would not  be  considered an  allowable                                                               
absence  if  someone was  out  of  state for  private  employment                                                               
purposes.                                                                                                                       
                                                                                                                                
SENATOR KOOKESH  said the distinction is  that military personnel                                                               
are told where to live.                                                                                                         
                                                                                                                                
MS. BITNEY answered that was essentially correct.                                                                               
                                                                                                                                
9:38:17 AM                                                                                                                    
CHAIR  WIELECHOWSKI  closed  public testimony  and  announced  he                                                               
would hold SB 117 in committee.