Legislature(2005 - 2006)HOUSE FINANCE 519
05/03/2005 01:30 PM House FINANCE
| Audio | Topic |
|---|---|
| Start | |
| HB186 | |
| SB174 | |
| SB133 | |
| SB139 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | HB 186 | TELECONFERENCED | |
| + | SB 133 | TELECONFERENCED | |
| + | SB 174 | TELECONFERENCED | |
| += | SB 139 | TELECONFERENCED | |
| + | TELECONFERENCED |
HOUSE BILL NO. 186
An Act relating to quarterly payments of a permanent
fund dividend, and to a permanent fund dividend and
eligibility for public assistance; and providing for an
effective date.
1:51:34 PM
REPRESENTATIVE JAY RAMRAS, SPONSOR, explained that the
Permanent Fund Dividend (PFD) has been and continues to be a
boon to the Alaskan economy for the past 22 years. The
program allows Alaskans to enjoy part of the State's oil
revenue. Since the time of inception, many businesses have
profited from running sales near the time the dividend is
distributed. Often, citizens will use their dividends to
make down payments on high-end consumer products and
effectively end up with more debt than they would have
incurred had they not received a PFD in the first place.
He pointed out that HB 186 allows eligible residents to
electronically receive their dividend and the ability to
elect to receive their payments in either in a lump sum or
to divide their dividend income into four equal, quarterly
payments. Under HB 186, the program takes effect January
2006.
Representative Ramras thought that HB 186 would provide
citizens an opportunity to financially help themselves and
their families throughout the year. However, quarterly
payments are not recommended for those receiving public
assistance because payouts, especially for multiple family
members, could interfere with available federal public
assistance.
2:01:30 PM
Vice-Chair Stoltze asked how it would affect "hold harmless"
provisions. Representative Ramras reiterated that the bill
was not designed for a person on public assistance. The
State has exclusions for someone in that program and there
would be a disclaimer on the form for residents on public
assistance. He stated the legislation would be a "good
deal" for most and could bring a "savings-stability". The
program could be voluntary in nature and administrative
costs would include postage.
2:04:21 PM
Vice-Chair Stoltze questioned how much the legislation would
keep in the State's economy. Representative Ramras had not
requested any studies on that; however, felt strongly that
there are many middle-income families that will benefit.
2:06:20 PM
Representative Holm asked about the possibility of receiving
monthly payments. Representative Ramras commented that
monthly payments would affect the cost of the fiscal note.
Also, he did not think it would help as much as a budgeting
tool for those in the middle-income bracket.
2:07:41 PM
Representative Holm asked if the legislation resulted from a
constituent request. Representative Ramras said no. He
pointed out that many seniors used to use their longevity
bonus as a household budgeting tool.
2:08:23 PM
Representative Holm asked Representative Ramras why he
thought that people, who do not handle their money well,
would opt for the proposed program. Representative Ramras
replied that the program was designed for people who would
like to handle their money better. He emphasized it would
be a voluntary program.
2:10:40 PM
Representative Foster thought the legislation was a good
idea, however, questioned if residents in his district could
receive their dividends mailed rather than electronically
deposited. He thought mailing could be cost prohibitive to
the Department of Revenue. Representative Ramras agreed
that mailing would create a significant fiscal note and
would make it cost prohibitive.
2:12:17
Representative Kelly agreed that it would be good for some
folks to receive monthly checks to cover the costs for bill
paying. Representative Ramras attempted to demonstrate that
the legislation could pay for itself. He believed that if
the program did catch on, it could be broadened out to a
monthly base payment, and noted that quarterly dividends
were modeled after the way stocks generate their dividends.
2:14:19 PM
Representative Foster indicated that from the fiscal note,
it appears it would cost the State of Alaska, fifty cents
($.50) for each family member. He mentioned that many
villagers from his area would not qualify for the program
but would still be required to pay. Representative Ramras
advised that the fiscal note indicates the amount needed to
set up the program. He pointed out another note, indicating
the offset income expected. Representative Ramras believed
it could be a positive note in the future. The cost would
be bore by the General Fund not the Permanent Fund.
2:16:46 PM
Representative Hawker addressed Representative Foster's
concern. He pointed out that the funding source would be
Permanent Fund earnings; however, the manner in which the
dividend calculation works, the amount would be taken off
the top. The effect would be on the dividend and in years
forward, the amount would receive earnings lost from the use
of that money.
2:17:39 PM
Vice-Chair Stoltze asked how long it would take to determine
if the program was working. Representative Ramras suggested
five years as an appropriate sunset date.
Vice-Chair Stoltze inquired about Child Support Enforcement
garnishment. Representative Ramras acknowledged that was a
concern for the banks by taking the Department of Revenue to
task.
Vice-Chair Stoltze worried about the child enforcement
dynamics. Representative Ramras understood that if the
person was a "garnishee", the computer system would then
recognize that and reject them.
2:21:59 PM
Co-Chair Chenault asked if it would be mandatory to get four
payments rather than one per year. Representative Ramras
replied that garnishes would not be able to participate in
the program at all. The Department of Revenue determines
the route for the garnishment procedures and that the option
remains for one payment per year.
Co-Chair Chenault referenced the fiscal garnishment costs
and understood the costs would be handled quarterly.
Representative Ramras did not know.
2:23:58 PM
PAUL DICK, OPERATIONS MANAGER, PERMANENT FUND DIVIDEND
DIVISION, DEPARTMENT OF REVENUE, addressed HB 186,
clarifying that the program would be optional. Dividends
would be paid October, January, April, and July. A person
would not qualify if garnished and that any garnishment
would be honored in full.
2:25:44 PM
Mr. Dick addressed an additional garnishment, the Internal
Revenue Service (IRS) withholding. There are situations, in
which someone might qualify for the quarterly dividend and
then subsequently become garnished by the Child Support
Agency. If there were a garnishment on record, the
Department would take whatever remains in that account and
would pay the remainder for the garnishment. Essentially,
it pulls them from the quarterly option.
Mr. Dick stated that the fiscal note was based on 5,000
people using the option, approximately 1% of the applicant
population. Interest earnings were calculated at 2%
interest.
2:27:39 PM
Mr. Dick mentioned the monthly provisions, finding that the
quarterly amount changed from $12 dollars to $40 dollars per
year, per person participating. He offered to answer
questions of the Committee.
2:28:13 PM
Co-Chair Chenault referenced the garnishment pay out. Mr.
Dick reiterated that the garnishment would be paid in the
amount remaining in the person's quarterly account.
2:29:14 PM
Co-Chair Meyer noted that the bill would be held in
Committee for further consideration and discussion regarding
the merit.
Co-Chair Chenault referenced back up regarding the hold
harmless insertion. Representative Ramras said that the
Division of Public Assistance will provide the disclaimer
and that those recipients would be informed that they do not
qualify.
2:30:44 PM
Representative Weyhrauch asked about quarterly liens.
Representative Ramras responded that it would be the
aggregate amount. He added, there is only one time per
year, a person could make the garnishment claim.
2:31:52 PM
Representative Kelly continued questions regarding
garnishment concerns. Representative Ramras explained the
garnishment claim filing system, adding that if person
missed the deadline for filing their application, they would
not be able to collect the remaining quarterly portion.
2:32:52 PM
In response Representative Kelly, Representative Ramras
explained that any creditor would be able to garnish 100% of
what is due them.
2:33:57 PM
Representative Ramras urged that the bill not be placed in
the "back seat" of the Committee. He requested
reconsideration in a timely manner.
2:34:50 PM
HB 186 was HELD in Committee for further consideration.
2:35:14 PM
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