Legislature(2007 - 2008)HOUSE FINANCE 519

07/25/2008 09:00 AM House FINANCE


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09:12:18 AM Start
09:12:56 AM HB4006
11:23:08 AM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
*+ HB4006 RESOURCE REBATE FOR HOME HEATING TELECONFERENCED
Heard & Held
<Rescheduled from 7/24/08>
+ Bills Previously Heard/Scheduled TELECONFERENCED
HOUSE BILL NO. 4006                                                                                                           
                                                                                                                                
     An Act authorizing, as a temporary rebate of state                                                                         
     resources to certain state residents, payments to                                                                          
     assist in meeting heating costs under the federal and                                                                      
     state heating assistance programs; and providing for an                                                                    
     effective date.                                                                                                            
                                                                                                                                
9:12:56 AM                                                                                                                    
                                                                                                                                
JAY LIVEY, STAFF, SENATOR HOFFMAN,  testified on HB 4006.  He                                                                   
explained that the bill would  provide relief to Alaskans for                                                                   
their home heating costs.                                                                                                       
                                                                                                                                
He provided a sectional overview of the legislation.                                                                            
                                                                                                                                
   ·    Section 2 proposes to raise the amount of assistance                                                                    
        relief for home heating  costs.  It does  not specify                                                                   
        amounts.   The department determines  a mechanism  to                                                                   
        determine the relief  using the federally-funded  Low                                                                   
        Income  Heating   and   Energy   Assistance   Program                                                                   
        (LIHEAP) formula.                                                                                                       
                                                                                                                                
   ·    Section 3 proposes to increase the benefit from up                                                                      
        to 225% to 350% of poverty for  eligible individuals.                                                                   
        The legislation  uses the LIHEAP  formula to  tie the                                                                   
        benefit  to income:  the  more  money  an  individual                                                                   
        earns the less benefit they receive.                                                                                    
                                                                                                                                
9:18:34 AM                                                                                                                    
                                                                                                                                
Mr. Livey explained  that the formula takes  into account the                                                                   
cost of the fuel the family is  using, as well as the type of                                                                   
dwelling and  income level  of the individual  family.    The                                                                   
formula will provide  a fair and equitable way  to distribute                                                                   
the  relief.   The  LIHEAP  formula  was chosen  because  the                                                                   
LIHEAP Administration  is already  in place  and can  be used                                                                   
and  expanded for  the intended  purpose. He  added that  the                                                                   
formula is not specific to an  area of the state.  He pointed                                                                   
out that  LIHEAP is a statewide  effort to get the  money out                                                                   
for heating costs.                                                                                                              
                                                                                                                                
9:20:05 AM                                                                                                                    
                                                                                                                                
Mr.  Livey  provided  members   with  data  provided  by  the                                                                   
Department  of  Health and  Social  Services  on the  Heating                                                                   
Assistance   Program:  "Participation   and  Expenditure   by                                                                   
Community"  (copy on file).  He observed  that there  is good                                                                   
data on fuel costs and how people  heat their homes; however,                                                                   
there is  not good data on  how much each individual  uses in                                                                   
the winter  expenditure.  The  state knows that in  the rural                                                                   
area, heating  oil is used  predominately.  He  observed that                                                                   
70%  of those  living  in  Fairbanks  use heating  oil  while                                                                   
Anchorage  residents predominately  use natural  gas and  the                                                                   
other areas use a mixture.                                                                                                      
                                                                                                                                
According  to a 2007  study by  the Institute  of Social  and                                                                   
Economic Research (ISER) of individuals  at the bottom 20% of                                                                   
income  (earning approximately  $30 thousand  per year)  paid                                                                   
about  $6,300  per year  in  remote  rural areas,  for  their                                                                   
heating fuel  and electricity  costs as compared  to $1300.88                                                                   
in  Anchorage;  $3,000 in  Kenai  and  Matsu; and  $2,600  in                                                                   
Juneau and  Fairbanks.   There is disparity  in the  areas of                                                                   
the state.                                                                                                                      
                                                                                                                                
9:22:32 AM                                                                                                                    
                                                                                                                                
Mr. Livey  observed  that LIHEAP  is used as  a mechanism  to                                                                   
distribute  funds and  was originally  designed as a  poverty                                                                   
program,  but emphasized  that  the legislation  extends  the                                                                   
poverty  eligibility  to 350%  ($80  thousand  a year).    He                                                                   
acknowledged that "under virtually  any circumstances that it                                                                   
doesn't mean they still don't  need some relief from the high                                                                   
cost  of energy."  The bill  was  designed to  give the  most                                                                   
money to  those with  lower incomes.   He maintained  that HB
4006 is not a poverty bill.                                                                                                     
                                                                                                                                
9:23:43 AM                                                                                                                    
                                                                                                                                
Representative    Hawker    mentioned   PCE    (power    cost                                                                   
equalization)  and  the  state  subsidy  for  electric  power                                                                   
generation with  a weighted average in  Anchorage, Fairbanks,                                                                   
and  Juneau.   He  observed that  HB  4006  addresses a  home                                                                   
heating  fuel  rebate.    He  asked  how  the  bills  overlap                                                                   
providing a dual subsidy.                                                                                                       
                                                                                                                                
Mr. Livey responded that there  are two separate populations.                                                                   
He  pointed out  that PCE  only subsidizes  power above  15.4                                                                   
cents   per  kWh.     Bush  inhabitants   still  pay   higher                                                                   
electricity  costs than other  areas of  the state.   Heating                                                                   
for homes  is limited to  oil or natural  gas, with  very few                                                                   
exceptions,  in the  state of  Alaska.  In  the rural  areas,                                                                   
there  is  not  much overlap,  between  the  two  sources  of                                                                   
energy.   He  observed that  LIHEAP does  not pay  all of  an                                                                   
individual's heating  costs; they  will still be  required to                                                                   
buy a considerable amount of heating oil.                                                                                       
                                                                                                                                
9:27:21 AM9:27:21 AM                                                                                                          
                                                                                                                                
Representative  Hawker  requested empirical  data  supporting                                                                   
Mr.  Livey's  statement.    Mr. Livey  referred  to  an  ISER                                                                   
document (written in 2007 or 2008)  that indicated that there                                                                   
is little evidence  that electricity is used  to heat Alaskan                                                                   
homes.    He  maintained  that  the  electrical  and  heating                                                                   
situations are  different. Representative Hawker  requested a                                                                   
copy of the study.                                                                                                              
                                                                                                                                
9:28:23 AM                                                                                                                    
                                                                                                                                
Representative  Hawker  noted  concern with  inflated  energy                                                                   
costs in  the state.   He thought that  the bills  before the                                                                   
committee largely benefit rural  Alaska, but inflating energy                                                                   
costs  have  affected   all  Alaskans.    He   suspected  the                                                                   
increases  have been  greatest  in small  villages  and as  a                                                                   
percentage  in  Fairbanks.       He  pointed  out  that  cost                                                                   
inflation   to  the   Railbelt  communities   has  not   been                                                                   
addressed.  The cost of inflation  in these communities is in                                                                   
the form of  motor vehicle fuel costs.  Motor  fuel increases                                                                   
have been  substantial for  individuals in these  communities                                                                   
that need to  commute in order to support their  families. He                                                                   
questioned  if   his  constituents,  individuals   living  in                                                                   
Railbelt  communities,  are  any   less  deserving  of  state                                                                   
subsidies.                                                                                                                      
                                                                                                                                
Mr.  Livey  acknowledged   that  part  of  the   question  is                                                                   
philosophical.   He did  not agree  that the legislation  was                                                                   
primarily  aimed at  rural residents  even  though they  will                                                                   
receive the  higher amount of the  reward.  The two  areas of                                                                   
the  state that  have the  highest percentage  of those  that                                                                   
will receive a benefit from the  program are in Anchorage and                                                                   
Fairbanks.  The differential is  determined by how much money                                                                   
a person makes.  "It is true, philosophically,  we are making                                                                   
a decision,  and saying,  that if  you make  a lot of  money,                                                                   
then  use  need less  relief,  then  someone who  makes  less                                                                   
money."                                                                                                                         
                                                                                                                                
Mr. Livey  continued that the  question remains: What  is the                                                                   
state's role in  relieving a person of a higher  cost if they                                                                   
chose  to live  in a rural  area.   The state  has taken  the                                                                   
position    that   there    are    cultural   and    heritage                                                                   
characteristics related to living in rural areas.                                                                               
                                                                                                                                
Mr. Livey observed  that in 1983 PCE was based  on a tradeoff                                                                   
for Four  Damn Pool and  the interties. This  relationship is                                                                   
broken  by  the  legislation.  The bill  only  determines  if                                                                   
individuals are  paying more than  120% no matter  where they                                                                   
live  or how  the energy  is provided.  The program  includes                                                                   
everyone and  is based  on income.   The program  expands the                                                                   
number of Alaskans receiving relief.                                                                                            
                                                                                                                                
9:34:41 AM                                                                                                                    
                                                                                                                                
Representative  Hawker pointed out  that urban dwellers  have                                                                   
hundreds of  years of cultural  heritage, living  in communal                                                                   
organizations.    The concern is that urban  dwellers receive                                                                   
equal  benefits.   He  worried  about discrimination  in  the                                                                   
process.                                                                                                                        
                                                                                                                                
Co-Chair Meyer asked to see how  many qualify for the program                                                                   
in Anchorage.  Mr. Livey offered to provide the list.                                                                           
                                                                                                                                
9:36:19 AM                                                                                                                    
                                                                                                                                
Vice-Chair   Stoltze   applauded   the   comments   made   by                                                                   
Representative  Hawker  regarding motor  fuel  expenses.   He                                                                   
mentioned the  high cost of fixed  expenses in his area.   He                                                                   
stated  that,   demographically,  his  community   costs  are                                                                   
continually  rising.  He  asked about  home heating  fuel and                                                                   
the legislation  requesting the  State to place  dollars into                                                                   
those costs.   He  thought that the  State should  freeze the                                                                   
sales taxes on  home heating charges.  He hoped  to amend the                                                                   
Governor's  call to put  a moratorium  on local  government's                                                                   
charging taxation on a vital commodity.                                                                                         
                                                                                                                                
9:40:21 AM                                                                                                                    
                                                                                                                                
Mr. Livey responded  that regardless of where  the population                                                                   
lives in  the State, the rise  of oil costs has  impacted all                                                                   
Alaskans.  The costs are rising, but so are revenues.                                                                           
                                                                                                                                
Vice-Chair Stoltze addressed the  sales tax issue.  Mr. Livey                                                                   
requested  additional testifiers  to address  the query.   He                                                                   
wasn't sure  what the impact might  be through LIHEAP  if you                                                                   
take  away  the  taxation  on  the  federal  program  or  the                                                                   
administration of it.                                                                                                           
                                                                                                                                
Vice-Chair Stoltze  stated that  one effect would  be cheaper                                                                   
barrel price.  Co-Chair Meyer agreed.                                                                                           
                                                                                                                                
9:43:01 AM                                                                                                                    
                                                                                                                                
Representative   Joule   questioned   the   impact   of   the                                                                   
appropriation to  the recipients.   He warned about  the need                                                                   
to point out the shortfalls of  the legislation.  He asserted                                                                   
that Alaska's  problem with  high energy  costs is  really an                                                                   
opportunity of  potential for Alaska.    He pointed  out that                                                                   
PCE  issues will  not  help rural  Alaska.   State  resources                                                                   
should benefit  all people of  the State.  He  referenced the                                                                   
handout provided by  Mr. Livey.  He asked for  an overview of                                                                   
the handout elaborating percentages.                                                                                            
                                                                                                                                
9:48:55 AM                                                                                                                    
                                                                                                                                
Mr. Livey  stated that he  had received the information  from                                                                   
the Department of Health and Social  Services.  He asked that                                                                   
they   address   the   handout    regarding   the   requested                                                                   
percentages.                                                                                                                    
                                                                                                                                
9:49:51 AM                                                                                                                    
                                                                                                                                
RON  KREHER, CHIEF  OF FIELD  OPERATIONS, PUBLIC  ASSISTANCE,                                                                   
DEPARTMENT  OF  HEALTH  AND  SOCIAL  SERVICES,  responded  to                                                                   
questions. He explained that the  department's data (provided                                                                   
by  Mr. Livey)  shows  the  number  of households  served  in                                                                   
total, excluding data from tribal organizations.                                                                                
                                                                                                                                
Representative Joule inquired  about the distribution between                                                                   
urban  and rural areas.   He  asked that  the percentages  be                                                                   
attached.                                                                                                                       
                                                                                                                                
Mr.  Kreher  agreed   to  break  the  data   down  by  census                                                                   
districts.                                                                                                                      
                                                                                                                                
9:51:49 AM                                                                                                                    
                                                                                                                                
Co-Chair Chenault  referred to tribal entities  and the block                                                                   
grant distribution.  He pointed  out that Bethel had not been                                                                   
included.   He wanted to know  the amount of  federal dollars                                                                   
going to tribal entities.                                                                                                       
                                                                                                                                
Mr. Kreher  offered to  provide that  information.   He noted                                                                   
that  the  data from  the  tribes  lags  until October.    He                                                                   
offered  to provide  the 2007  data  and their  share of  the                                                                   
federal block grant.                                                                                                            
                                                                                                                                
9:53:02 AM                                                                                                                    
                                                                                                                                
In  response to  a  question  by Representative  Hawker,  Mr.                                                                   
Kreher  explained  that the  state  receives  a block  grant,                                                                   
which determines  the  base amount. The  state also  receives                                                                   
periodic emergency  contingency funds that are  calculated at                                                                   
the  end  of   the  application  process  to   determine  the                                                                   
supplemental amount eligible households  receive.  The offset                                                                   
[between the  amount in  the regular  cases category  and the                                                                   
total   cases  category]   is   the  result   of   additional                                                                   
supplemental  payments  made  to eligible  households.    For                                                                   
example, Akhiok received a base  block grant amount of $3,400                                                                   
that was increased  to $4,998 with the addition  of emergency                                                                   
contingency funds.                                                                                                              
                                                                                                                                
9:54:53 AM                                                                                                                    
                                                                                                                                
Representative  Hawker  pointed  out  that  the  supplemental                                                                   
amount column was  missing, which explained why  the total is                                                                   
greater  than  the  sum  of  the two.    He  noted  that  the                                                                   
Anchorage area indicates  a total of $45 thousand.   He asked                                                                   
if  that  had  been redistributed.    Mr.  Livey  offered  to                                                                   
research  that  information.   He  added that  households  in                                                                   
Anchorage should have received a supplemental payment.                                                                          
                                                                                                                                
9:56:19 AM                                                                                                                    
                                                                                                                                
Representative  Joule  requested  information on  the  amount                                                                   
each area receives  and how much oil or gas  that money would                                                                   
purchase including the obvious differences in those areas.                                                                      
                                                                                                                                
Mr. Kreher  stated that  he could  access information  on the                                                                   
price of  fuel.  The point  system of benefit  for households                                                                   
uses a  program from the  Alaska Housing Finance  Corporation                                                                   
that  uses variances  between  the  fuel costs  in  different                                                                   
communities.  However, the price  of fuel is so volatile that                                                                   
it is difficult to do so on an on-going base.                                                                                   
                                                                                                                                
9:59:42 AM                                                                                                                    
                                                                                                                                
Representative  Hawker  referenced  the  LIHEAP  program  and                                                                   
asked  if  it   creates  a  taxable  event  to   any  of  the                                                                   
beneficiaries  from the  standpoint  of  federal income  tax.                                                                   
Mr. Kreher replied that it does not.                                                                                            
                                                                                                                                
Representative   Hawker  wondered   if  the  proposal   being                                                                   
contemplated  in the legislation  would  result in a  taxable                                                                   
event.   Mr. Kreher could not  answer, but observed  that the                                                                   
Department  of  Law requested  the  exploration  of the  same                                                                   
inquiry.                                                                                                                        
                                                                                                                                
Representative  Hawker  asked  if LIHEAP  receipts  would  be                                                                   
counted  against the beneficiaries  in  the receipt  of other                                                                   
federal or state human service  benefits.  Mr. Kreher said it                                                                   
does not.                                                                                                                       
                                                                                                                                
Representative  Hawker asked if  the expansion of  the LIHEAP                                                                   
program  would  have  an  effect  on  the  receipt  of  those                                                                   
benefits.   Mr. Kreher  stated that they  did not  believe it                                                                   
would because  these are  direct vendor  payments.   He added                                                                   
that beyond  225% of  poverty, most  households would  not be                                                                   
eligible for needs based or tested programs.                                                                                    
                                                                                                                                
10:02:11 AM                                                                                                                   
                                                                                                                                
Representative Kelly  wanted an overview of  all aid programs                                                                   
(existing and  proposed) to see how they  are interconnected.                                                                   
He acknowledged the  need to mitigate the impact  of the high                                                                   
fuel costs, but  warned that these [proposed  programs] could                                                                   
place  more  "harm"  on  Alaska's   future  in  the  area  of                                                                   
individual responsibility and self reliance.                                                                                    
                                                                                                                                
10:06:00 AM                                                                                                                   
                                                                                                                                
Representative Gara  asked for income qualifications  for the                                                                   
percent of poverty  in the current LIHEAP program.   Co-Chair                                                                   
Meyer  referred to  a  chart provided  by  Mr. Kreher:  "2008                                                                   
Poverty   Guidelines  for   Alaska,   Income  Guidelines   as                                                                   
Published"  (copy on  file). Mr.  Kreher  clarified that  the                                                                   
income  limit  for  the current  low  income  heating  energy                                                                   
assistance   program   is  150%   of  the   federal   poverty                                                                   
guidelines; the  legislation would  increase the limit  of up                                                                   
to 350%.   Co-Chair  Meyer pointed  out that the  legislature                                                                   
added $10 million to the state  portion in the previous year.                                                                   
Mr.  Kreher  stated  that  the  legislation  from  last  year                                                                   
created a state  funded program.  Any balance  left over from                                                                   
that program would be used to  supplement all households that                                                                   
received heating assistance.                                                                                                    
                                                                                                                                
10:08:33 AM                                                                                                                   
                                                                                                                                
Representative  Gara clarified  that the provision  increases                                                                   
the  state limit  to  350%.   Mr.  Kreher observed  that  the                                                                   
federal law caps income limits at 150% of poverty.                                                                              
                                                                                                                                
Representative  Gara commented  on campaigning  process.   He                                                                   
acknowledged that  the program does not treat  people equally                                                                   
and people recognize  that there are some that  are suffering                                                                   
more  than others.    Most  are particularly  sympathetic  to                                                                   
rural Alaska.  He admitted to recently learning  that heating                                                                   
a house in Dillingham costs $2,000  per month.  He referenced                                                                   
the  chart  distributed  by  Mr. Livey  with  regard  to  the                                                                   
$45,418  in  LIHEAP  money  designated   to  Anchorage.    He                                                                   
questioned  the possibility  of  the data  presented being  a                                                                   
mistake, or possibly deserving a bigger explanation.                                                                            
                                                                                                                                
Mr.  Kreher   replied  that  the  presented   data  regarding                                                                   
Anchorage was an anomaly.  He  will look into it and get back                                                                   
to  the  committee  on  what the  correct  amounts  of  total                                                                   
payments were for Anchorage.   Representative Gara noted that                                                                   
while the  data was inaccurate,  the number remains  striking                                                                   
to him,  because   most  of his low income  constituents live                                                                   
in  public  housing where  the  heat  is  paid for,  so  they                                                                   
wouldn't be getting LIHEAP money.                                                                                               
                                                                                                                                
10:12:19 AM                                                                                                                   
                                                                                                                                
Representative   Thomas  requested   the   number  of   other                                                                   
administrated programs  that are below 350% of  poverty.  His                                                                   
concern  was   that  if  the   level  was  raised   then  the                                                                   
expectation of other programs would increase as well.                                                                           
                                                                                                                                
Mr. Kreher responded that he was  not qualified to answer the                                                                   
question.                                                                                                                       
                                                                                                                                
Representative Gara agreed that  it does not need to go up as                                                                   
high 350%.  He asked the  total dollars associated  with that                                                                   
percentage.                                                                                                                     
                                                                                                                                
Mr. Kreher  observed that  the fiscal  note would be  $75.162                                                                   
million  additional   money.    Mr.  Livey   added  that  the                                                                   
department intends  to prepare a fiscal note  with the dollar                                                                   
amount based on the assumption  that the current energy costs                                                                   
for the program would triple.                                                                                                   
                                                                                                                                
Mr. Livey  explained that the  LIHEAP payments would go  to a                                                                   
vendor on  behalf of the individual  and not directly  to the                                                                   
individual.                                                                                                                     
                                                                                                                                
Co-Chair Meyer  asked if the  payout was retroactive  to July                                                                   
 st                                                                                                                             
1.   Mr.  Livey did not think  the intention was to  make the                                                                   
appropriation retroactive.                                                                                                      
                                                                                                                                
10:16:55 AM                                                                                                                   
                                                                                                                                
Mr. Kreher explained  that the purpose of the  LIHEAP program                                                                   
is to provide home heating assistance.   The state receives a                                                                   
block   grant   that  is   shared   out  with   nine   tribal                                                                   
organizations.  In  FY2008, the state of Alaska  served about                                                                   
15,000 households;  tribal organizations served  an estimated                                                                   
6,400.   The  9,353 households  served by  the state  reached                                                                   
27,000 individuals.   Two-thirds of the households  that were                                                                   
under   150%  of  poverty   were  below   100%  of   poverty.                                                                   
Generally, for  eligibility criteria an individual  must be a                                                                   
resident  of the  state, must  reside in  the household  that                                                                   
incurred heating  costs and  have unsubsidized heating  costs                                                                   
above  $200.  Payments  must be  used for  heating fuel.  The                                                                   
vast majority of these are vendor  payments.  The methodology                                                                   
used to calculate  awards is based on community  heating cost                                                                   
points.    The  points are  calculated  taking  into  account                                                                   
geographic location, heating fuel  type, climatic conditions,                                                                   
and the  type of  dwelling with  an additional point  awarded                                                                   
for an elderly or disabled resident  or a child under the age                                                                   
of five. He continued that an  individual's income bracket is                                                                   
also a factor in point allocation.                                                                                              
                                                                                                                                
Based  on  block  grant amounts  received  from  the  federal                                                                   
government, the  number of households served  is anticipated,                                                                   
giving  a dollar  point that  is  used to  apply against  the                                                                   
points  that  are available  to  the  household.   Mr.  Livey                                                                   
concluded his overview of how  the LIHEAP program works.  The                                                                   
                                             stth                                                                               
application period  for LIHEAP is September 1   to April 30,                                                                    
                                             st                                                                                 
with  initial benefits  issued on  November 1.    The  Alaska                                                                   
Heating  Assistance Program  mirrors  LIHEAP  except that  it                                                                   
looks at a population of 150%-225%  of poverty and allows for                                                                   
tribal programs.                                                                                                                
                                                                                                                                
Mr. Livey continued that pushing  the eligibility level to up                                                                   
to  350% places  the department  outside the  realm that  was                                                                   
intended  to   serve  the  most  economically   disadvantaged                                                                   
households.  He   indicated  difficultly  arriving   at  hard                                                                   
numbers for the  potential service population.   The estimate                                                                   
is  conservative.     There  could  be  as   many  as  22,000                                                                   
households served.                                                                                                              
                                                                                                                                
10:23:12 AM                                                                                                                   
                                                                                                                                
Representative Kelly requested  information on how the LIHEAP                                                                   
program affects residents.  He  asked for further explanation                                                                   
of the mechanics of the proposal.                                                                                               
                                                                                                                                
Mr. Kreher  observed that the  state program has  always been                                                                   
able  to provide  some  level of  benefit  to households.  He                                                                   
explained that they look at the  federal block grant and past                                                                   
caseloads  to make their  best estimate  of the dollar  value                                                                   
per point per household.                                                                                                        
                                                                                                                                
Representative   Kelly  wanted   to  see   the  formula   for                                                                   
clarification.   Mr. Kreher  stated that  he could  provide a                                                                   
mock-up of household scenarios.  Representative Kelly pointed                                                                   
out  that  a person  at  80% of  poverty  receives  different                                                                   
treatment  than  someone that  is  at  200% of  poverty.  Mr.                                                                   
Kreher  explained that  households receive  a percentage  for                                                                   
every  25%   change  in  income   level  after   the  initial                                                                   
eligibility determination.   For example,  households between                                                                   
0 and 25 percent of poverty would  receive 100% of the points                                                                   
or  10 points.  The ten  points  would be  multiplied by  the                                                                   
dollar  factor  calculated  based   on  the  funding  stream.                                                                   
Households between  25 - 50 percent of poverty  would receive                                                                   
90% of  the points.  He observed that  no benefits  have been                                                                   
issued for the $10 million passed by the legislature.                                                                           
                                                                                                                                
Co-Chair Meyer  commented on retroactivity  of HB  152, which                                                                   
                                  st                                                                                            
added $10  million, to November  1  2007.  Mr.  Kreher stated                                                                   
that HB 152  left the retroactivity clause to  the discretion                                                                   
of the  department. He believed  the strategy  used satisfied                                                                   
the  intent  of the  retroactivity,  and  at this  point  the                                                                   
retroactive provision is not activated.                                                                                         
                                                                                                                                
10:28:42 AM                                                                                                                   
                                                                                                                                
Representative Thomas inquired  about those on fixed incomes:                                                                   
state and federal  retirees, and the disabled.   He wanted to                                                                   
see those persons addressed.                                                                                                    
                                                                                                                                
10:30:26 AM                                                                                                                   
                                                                                                                                
JON SHERWOOD, DIRECTOR, OFFICE  OF PROGRAM REVIEW, DEPARTMENT                                                                   
OF HEALTH  AND SOCIAL  SERVICES (DHSS), provided  information                                                                   
on the LIHEAP program. He agreed  that a line has to be drawn                                                                   
somewhere.   He emphasized that  under the LIHEAP  program as                                                                   
incomes increase the percentages  of eligibility decrease, so                                                                   
that the  difference of falling on  one side or other  on the                                                                   
line is less significant.                                                                                                       
                                                                                                                                
Representative  Thomas  commented  that expenses  are  rising                                                                   
along  with  incomes  and  that   even  among  higher  income                                                                   
brackets  such  as his;  the  financial struggle  is  present                                                                   
without the luxury of a subsidy.                                                                                                
                                                                                                                                
10:31:55 AM                                                                                                                   
                                                                                                                                
Representative  Hawker mentioned  the Senior Benefit  Program                                                                   
as  a factor  of  the  equation.   He  referenced  the FY  07                                                                   
[appropriation]  for LIHEAP  and expressed  concern with  the                                                                   
difference   in   amounts   that   have   historically   been                                                                   
appropriated   to  the  program   and  the  amount   actually                                                                   
delivered  to the  intended beneficiaries.   In  FY 07,  $9.7                                                                   
million  were  budgeted  for that  program,  but  the  actual                                                                   
expenditure of  money in  FY 07 was  under $7.5 million.   He                                                                   
questioned the discrepancy.                                                                                                     
                                                                                                                                
Mr. Kreher  responded that the  nature of the  funding stream                                                                   
allowed  them  to  carry-over   a  certain  amount  of  funds                                                                   
designated to heating  assistance for the upcoming  year.  He                                                                   
offered to research the subject further.                                                                                        
                                                                                                                                
Representative  Hawker cautioned the  expansion of  a program                                                                   
that historically  has had discrepancies.  He  wanted to make                                                                   
sure  it would  be  used  to benefit  the  recipients,  under                                                                   
expenditure of authorized funds.                                                                                                
                                                                                                                                
10:34:45 AM                                                                                                                   
                                                                                                                                
Mr. Sherwood addressed  the fiscal note and  explained that a                                                                   
target number was chosen of three  times the value of current                                                                   
points used for the LIHEAP program.   In addition to tripling                                                                   
the value of  those points, the slope was flattened  at which                                                                   
points  diminished  as  income decreased.  He  estimated  the                                                                   
amount of claims  paid for both supplementing  LIHEAP and the                                                                   
Alaska  heating assistance  program  would be  just over  $74                                                                   
million.  Administrative   expenses  are  just   over  $850.0                                                                   
thousand.   Currently they have  fourteen staff  members that                                                                   
accomplish  11,000 applications  per  year.   He  anticipated                                                                   
25,000  applications.   Higher income  applications are  more                                                                   
complicated  to evaluate.   He  requested an  increase of  16                                                                   
temporary  staff   members.    Regarding   retroactivity,  he                                                                   
continued  that an  increase for  this year,  would meet  the                                                                   
intent of providing a retroactive  benefit as expressed in HB
152.                                                                                                                            
                                                                                                                                
Co-Chair  Meyer  asked for  further  clarification  regarding                                                                   
retroactivity.                                                                                                                  
                                                                                                                                
Mr.  Sherwood  responded  that   a  retroactive  payment  was                                                                   
discretionary  to the  department.  The  fiscal note  triples                                                                   
the  amount of  the benefit  and would  effectively meet  the                                                                   
intent of the new population of HB 152.                                                                                         
                                                                                                                                
10:38:05 AM                                                                                                                   
                                                                                                                                
Vice-Chair  Stoltze  questioned  if the  proposed  number  of                                                                   
employees would  be adequate.    Mr.  Kreher replied  that it                                                                   
will be a seasonal  benefit program.  Having  more staff will                                                                   
not address  the problem  due to  the recruitment,  training,                                                                   
and hiring processes.  If the  tribal organizations come into                                                                   
the program,  some of  the work effort  will go out:  pushing                                                                   
administrative  funds to  the tribes.   He expressed  concern                                                                   
about the volume of applications anticipated.                                                                                   
                                                                                                                                
Vice-Chair Stoltze  added that weatherization was  a seasonal                                                                   
matter as well,  yet was successfully expedited.   Mr. Kreher                                                                   
replied that  it is  a seasonable  program and the  positions                                                                   
are temporary.                                                                                                                  
                                                                                                                                
Co-Chair Meyer wanted  to see a sunset or review  on the bill                                                                   
if it is  passed.  He commented  that oil prices  are falling                                                                   
and if they continue to fall,  assistance should not be given                                                                   
to a family of four making $92,000.                                                                                             
                                                                                                                                
Mr. Sherwood  explained  that the bill  applies to  September                                                                   
   1st   tst                                                                                                                    
1st2008    to  August 1  2009.   The goal  is to  process all                                                                   
eligible  applications  by  the   end  of  the  fiscal  year,                                                                   
                                                            st                                                                  
although there  is no  authority to  extend beyond  August 1                                                                    
2009.  He declared  that it is factored into  the assumptions                                                                   
when asking for temporary positions.                                                                                            
                                                                                                                                
10:43:49 AM                                                                                                                   
                                                                                                                                
Co-Chair  Meyer asked  how many  additional households  would                                                                   
qualify.  Mr. Kreher estimated 22,250.                                                                                          
                                                                                                                                
Co-Chair  Meyer  asked  how  the  public  would  be  informed                                                                   
regarding  the  availability   of  the  funds.    Mr.  Kreher                                                                   
explained  that the  department's  Public Information  Office                                                                   
and  the   Heating  Assistance   Program  have  developed   a                                                                   
communication  plan   using  websites,  and   public  service                                                                   
announcements,  as  well  as  a  number  of  different  media                                                                   
outlets.                                                                                                                        
                                                                                                                                
10:45:08 AM                                                                                                                   
                                                                                                                                
Representative  Kelly   asked  about  the   before  mentioned                                                                   
qualifications to identify the  unsubsidized piece.  He asked                                                                   
if a  person had  a 1,000  square foot  home, and used  1,000                                                                   
gallons per year; would the $1,200 plan be recognized.                                                                          
                                                                                                                                
Mr. Kreher  replied that would  depend on whether  the $1,200                                                                   
plan would be considered a fuel subsidy.                                                                                        
                                                                                                                                
10:47:05 AM                                                                                                                   
                                                                                                                                
Representative  Hawker  stated  that  if  program  money  was                                                                   
rolled  into the permanent  fund dividend  and identified  as                                                                   
such, state regulations would  exempt it as income, but if it                                                                   
came  through  some  other  vehicle,  it  would  have  to  be                                                                   
reexamined.                                                                                                                     
                                                                                                                                
Mr.   Kreher   pointed   out   that  HB   152   could,   upon                                                                   
appropriation,  still   provide  a  program   for  households                                                                   
between 150% and 225% of poverty.                                                                                               
                                                                                                                                
Representative  Hawker  cautioned   that  public  expectation                                                                   
would be created once the program  started. He cautioned that                                                                   
the  need  would continue,  but  the  resources will  not  be                                                                   
there, and  the state  would see  itself back in  challenging                                                                   
deficits.                                                                                                                       
                                                                                                                                
Representative Gara  asked about the fiscal  impact of paring                                                                   
back  to  250%  of poverty.    He  requested  various  levels                                                                   
including  275%,  300%, and  350%  to determine  the  various                                                                   
costs.                                                                                                                          
                                                                                                                                
Mr. Kreher agreed to provide the requested data.                                                                                
                                                                                                                                
10:50:44 AM                                                                                                                   
                                                                                                                                
Representative  Gara  commented  on  the  difficulty  of  the                                                                   
issues. He stated  concerns about expense and  commented that                                                                   
lowering the percentage  would allow the state  to administer                                                                   
benefits for a considerable time.                                                                                               
                                                                                                                                
Co-Chair  Chenault requested  an explanation  of what  payoff                                                                   
would be  under guidelines for a  family of one and  a family                                                                   
of five at 350% of poverty.                                                                                                     
                                                                                                                                
Mr. Kreher agreed  to provide the information.  He offered to                                                                   
provide data for two communities: Anchorage and Dillingham.                                                                     
                                                                                                                                
Representative Kelly added that  he would like to see numbers                                                                   
comparing  the  proposed  program  with  the  current  LIHEAP                                                                   
program.                                                                                                                        
                                                                                                                                
10:54:27 AM                                                                                                                   
                                                                                                                                
Representative  Thomas   asked  if  a  recipient   was  using                                                                   
electric heat primarily, would  the bill paid to the electric                                                                   
company,  because  he  knew  of   several  communities  where                                                                   
electric heat is less expensive than heating oil.                                                                               
                                                                                                                                
Mr. Kreher  affirmed that  if the primary  source of  heat is                                                                   
electric,  then  a  vendor  payment  would  be  made  to  the                                                                   
electric company.  He reported  that it  is not uncommon  for                                                                   
people  living  in  poverty  during   the  winter  months  to                                                                   
postpone paying their bill.  He  reported that there was then                                                                   
negotiation with  the vendor for  electricity to  be provided                                                                   
to make sure there is some assistance overlap.                                                                                  
                                                                                                                                
Co-Chair Meyer asked if the administration  had a position on                                                                   
the bill.                                                                                                                       
                                                                                                                                
Mr. Sherwood  observed that  the administration  is currently                                                                   
reviewing  the bill and  did not  currently have a  position.                                                                   
The  governor  said that  she  would consider  ideas  brought                                                                   
forth by the legislature.                                                                                                       
                                                                                                                                
Co-Chair  Meyer asked  the  average income  in  the state  of                                                                   
Alaska.                                                                                                                         
                                                                                                                                
Mr. Kreher answered  that the data regarding  mean incomes is                                                                   
readily  available through  the Department  of Labor,  broken                                                                   
down by census areas.                                                                                                           
                                                                                                                                
Co-Chair  Meyer   described  a  hypothetical   situation  and                                                                   
thought the total  subsidy would be informative,  for both an                                                                   
urban and rural area.                                                                                                           
                                                                                                                                
10:58:45 AM                                                                                                                   
                                                                                                                                
Representative  Kelly asked  about  joint custody  situations                                                                   
with children  in  two homes and  how to  prevent the  double                                                                   
count.                                                                                                                          
                                                                                                                                
Mr. Kreher observed  that most programs try  to determine who                                                                   
has true physical custody over 50% of the time.                                                                                 
                                                                                                                                
Co-Chair Chenault referred to  a call dealing with power cost                                                                   
equalization  (PCE) for  a  $9.0 million  fiscal  note as  an                                                                   
increase to PCE.                                                                                                                
                                                                                                                                
Representative  Joule commented  on child  custody issues  in                                                                   
the area of garnishments in a two-family situation.                                                                             
                                                                                                                                
11:01:31 AM                                                                                                                   
                                                                                                                                
Mr.  Kreher replied  that he  was not  sure how  garnishments                                                                   
were  treated,   when  determining  income  for   the  LIHEAP                                                                   
program.                                                                                                                        
                                                                                                                                
Representative Joule  observed that if the intent  is to help                                                                   
people during  difficult times,  a garnishment might  prevent                                                                   
the person from receiving the help.                                                                                             
                                                                                                                                
Mr. Sherwood  asked for  clarification regarding  whether the                                                                   
concern was that the assistance  payment was being garnished,                                                                   
or is the concern about the counting  of income that may have                                                                   
been garnished.                                                                                                                 
                                                                                                                                
Representative  Joule realized  that he  was talking  about a                                                                   
bill he hadn't heard yet.                                                                                                       
                                                                                                                                
Representative   Hawker  commented   on  the  energy   policy                                                                   
direction  for the  state. He  stressed the  need to see  the                                                                   
proposals  as components  of a  whole and  not as  individual                                                                   
bills.   He listed  benchmarks as  efficient, equitable,  and                                                                   
effective solutions. He asked  that the desired objectives be                                                                   
determined  as either  long  term  evolutionary/revolutionary                                                                   
change, or short term crisis relief.                                                                                            
                                                                                                                                
11:06:56 AM                                                                                                                   
                                                                                                                                
Representative  Hawker stated grave  concerns about  the risk                                                                   
of  ripping  the  urban  rural divide  wide  open.  He  urged                                                                   
sensitivity and  maintaining unity.  He asserted the  need to                                                                   
keep the discussion rational.                                                                                                   
                                                                                                                                
Co-Chair  Meyer  agreed that  the  challenge  was to  find  a                                                                   
solution that benefits  all Alaskans. He thought  it would be                                                                   
a package deal;  one that takes into account  PCE, LIHEAP and                                                                   
maybe the  $1,200; although  he agreed  that he doesn't  like                                                                   
giving  30% to  the federal  government. He  asked for  ideas                                                                   
from the committee regarding a possible package.                                                                                
                                                                                                                                
11:10:34 AM                                                                                                                   
                                                                                                                                
Representative  Joule  acknowledged   the  need  for  balance                                                                   
between  short-term  and  long-term  needs in  a  variety  of                                                                   
communities.  He stressed that  some of  the services  are in                                                                   
jeopardy.  He suggested  that  these issues  be addressed  in                                                                   
each community prior to the next meeting.                                                                                       
                                                                                                                                
11:13:08 AM                                                                                                                   
                                                                                                                                
Representative   Kelly  urged  a   broad  perspective.     He                                                                   
maintained that while Fairbanks  had been hit hard because of                                                                   
increased  fuel costs,  many  smaller rural  communities  are                                                                   
also suffering.                                                                                                                 
                                                                                                                                
Co-Chair   Chenault  spoke   to   rural   issues.  He   urged                                                                   
consideration, not  only of particular constituents,  but all                                                                   
Alaskans.                                                                                                                       
                                                                                                                                
11:16:30 AM                                                                                                                   
                                                                                                                                
Vice-Chair  Stoltze spoke  to regional  divides. Each  region                                                                   
has unique challenges.                                                                                                          
                                                                                                                                
Representative Gara  described the evolution of  his thinking                                                                   
regarding  flat  payments.  He  noted that  the  flat  $1,200                                                                   
payment includes more money than  PCE and LIHEAP (combined at                                                                   
$75 million.)  He compared the  flat payment at $700 million.                                                                   
He revealed  that he would like  to see a combination  of all                                                                   
three  presented as  a compromise.   He  thought the  special                                                                   
session could address  some of the longer term  challenges of                                                                   
leveling out  the cost of energy.   He advised that  money be                                                                   
added to the Renewable Energy Fund.                                                                                             
                                                                                                                                
Representative   Gara  warned   of  weatherization   programs                                                                   
without state-wide  building codes.  He maintained  that AHFC                                                                   
rules and construction  codes are questionable.   He surmised                                                                   
that the public  wants some sort of long term  relief plan to                                                                   
come out of the special session.                                                                                                
                                                                                                                                
11:20:59 AM                                                                                                                   
                                                                                                                                
Co-Chair Meyer felt that the long-term  solution was with the                                                                   
passing  of AGIA  (Alaska Gas  Inducement Act),  which is  at                                                                   
least  ten  years down  the  line.  He  thought the  idea  of                                                                   
putting  more money into  an alternative  energy fund  needed                                                                   
further discussion.                                                                                                             
                                                                                                                                
Co-Chair  Meyer  addressed  the  handout:  "State  of  Alaska                                                                   
Heating  Assistance Program,  Division  of Public  Assistance                                                                   
Department of  Health and Social  Services."  He  advised the                                                                   
review of the handout.                                                                                                          
                                                                                                                                
Mr. Kreher clarified that the handout was the proposal and                                                                      
plan for the federal government last year and would perhaps                                                                     
not be helpful in the current situation.                                                                                        
                                                                                                                                
11:23:08 AM                                                                                                                   
                                                                                                                                

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