Legislature(2007 - 2008)HOUSE FINANCE 519

07/26/2008 10:00 AM House FINANCE


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10:09:10 AM Start
01:08:37 PM HB4003
03:28:28 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ HB4002 RESOURCE REBATE PROGRAM FOR RESIDENTS TELECONFERENCED
Heard & Held
1:00 pm - Public Testimony
Time limit may apply
+ HB4003 APPROP: ENERGY RELIEF/REBATE/FUEL TAX TELECONFERENCED
Heard & Held
+ Bills Previously Heard/Scheduled TELECONFERENCED
 HOUSE BILL NO. 4002                                                                                                          
                                                                                                                                
     "An Act establishing the Alaska resource rebate program                                                                    
     and relating to the program; and providing for an                                                                          
     effective date."                                                                                                           
                                                                                                                                
 10:11:01 AM                                                                                                                  
                                                                                                                                
 RANDALL RUARO, SPECIAL ASSISTANT, OFFICE OF THE  GOVERNOR,                                                                     
 provided information on the legislation. He observed that                                                                      
 the legislation is based on sharing the resource wealth of                                                                     
 the state among residents through a one-time $1,200 payment.                                                                   
 He emphasized that the principle of sharing resources with                                                                     
 all residents of the  state is fixed in  the Constitution,                                                                     
 Article 8. He thought HB 4002 would build a good foundation                                                                    
 since it benefits all Alaskans and provides an efficient way                                                                   
 to distribute the needed checks. He acknowledged the next                                                                      
 step would be a long term plan. He observed that CSHB 4002                                                                     
 (CRA) made four significant changes.  The payment method was                                                                   
 changed from a separate check to a separate line item on the                                                                   
 permanent fund  dividend (PFD)  check, which  changes the                                                                      
 timing from the first week of August to the first week of                                                                      
 October. The  potential  pool  of  eligible  Alaskans was                                                                      
 narrowed to  those found  eligible  by the  Department of                                                                      
 Revenue for the 2008 PFD.  Overall the changes reduced the                                                                     
 fiscal impact from $800 to $745 million and eliminated most                                                                    
 of the administrative costs. He observed that both versions                                                                    
 allow a significant one-time payment to 620,000 Alaskans to                                                                    
 be made quickly.                                                                                                               
                                                                                                                                
 10:15:34 AM                                                                                                                  
                                                                                                                                
 Co-Chair Meyer asked Mr. Ruaro if he supported the changes                                                                     
 made in the bill. Mr. Ruaro replied that the administration                                                                    
does support the changes while acknowledging additional work                                                                    
that needs to be done.                                                                                                          
                                                                                                                                
Co-Chair Meyer asked Mr.  Ruaro if he  supported the basic                                                                      
premise of  attaching the  payment to  the  permanent fund                                                                      
dividend, instead  of a  separate distribution. Mr.  Ruaro                                                                      
affirmed his support.                                                                                                           
                                                                                                                                
Co-Chair Meyer asked why the governor did not propose those                                                                     
changes initially. Mr. Ruaro replied that the goal  was to                                                                      
get checks  out as soon  as possible, and that  option was                                                                      
available if unattached.                                                                                                        
                                                                                                                                
Co-Chair Meyer specified that it was a valid choice because                                                                     
in order to get the payment out quickly, it would incur some                                                                    
administrative costs. Mr. Ruaro agreed.                                                                                         
                                                                                                                                
10:16:51 AM                                                                                                                   
                                                                                                                                
Representative Thomas asked if  people could apply in  the                                                                      
circumstance that  they  were  philosophically opposed  to                                                                      
receiving  permanent  fund   checks,  but   wanted  energy                                                                      
assistance.                                                                                                                     
                                                                                                                                
Mr. Ruaro  replied that  the administration would like  to                                                                      
broaden the pool of  people who would receive the resource                                                                      
rebate check who do  not receive permanent fund checks. He                                                                      
observed that there are approximately 400 veterans and their                                                                    
spouses that do not apply for their permanent fund dividends                                                                    
since it only offsets their veterans benefits.                                                                                  
                                                                                                                                
Vice-Chair Stoltze had questions regarding the hold harmless                                                                    
provision and  its  impact on  the  possible reduction  of                                                                      
dividends.                                                                                                                      
                                                                                                                                
10:19:10 AM                                                                                                                   
                                                                                                                                
JON SHERWOOD, DIRECTOR, OFFICE OF PROGRAM REVIEW, DEPARTMENT                                                                    
OF  HEALTH   AND  SOCIAL  SERVICES,  provided  information                                                                      
regarding the hold harmless statute. Hold harmless statutes                                                                     
protect people who receive public assistance if they get the                                                                    
permanent fund dividend. He explained that the state makes                                                                      
up the difference in  any federally required reductions in                                                                      
their public assistance benefits.  He  elaborated that any                                                                      
hold harmless benefits the state would pay as  a result of                                                                      
the CRA version would be funded through the permanent fund                                                                      
dividend distribution account. Hold harmless payments under                                                                     
the original legislation would have been  made through the                                                                      
Department of Health and Social Services' general assistance                                                                    
program. He added that the CRA version recalculated the hold                                                                    
harmless costs because the payments will occur when people                                                                      
are  already receiving permanent  fund dividends that  are                                                                      
already  going into  hold harmless  for  public assistance                                                                      
 benefits.  He estimated a current projection at  $400,000,                                                                     
 which is a substantial reduction from the original version.                                                                    
                                                                                                                                
 10:22:25 AM                                                                                                                  
                                                                                                                                
 Vice-Chair Stoltze clarified that the  dividend recipients                                                                     
 pay the hold harmless costs after the state takes out its                                                                      
 administration costs.  He  estimated that  each  Alaskan's                                                                     
 permanent fund dividend would be reduced by 80 cents - 90                                                                      
 cents. Mr. Sherwood acknowledged the assessment to the best                                                                    
 of his knowledge.                                                                                                              
                                                                                                                                
 Representative Gara asked if the hold harmless would come                                                                      
 out of the $1,200 payment as opposed to the permanent fund                                                                     
 dividend.                                                                                                                      
                                                                                                                                
 10:23:58 AM                                                                                                                  
                                                                                                                                
 JERRY  BURNETT,  DIRECTOR,   DIVISION  OF   ADMINISTRATIVE                                                                     
 SERVICES,  DEPARTMENT OF   REVENUE, explained  that  hold                                                                      
 harmless funds reduce the amount from which permanent fund                                                                     
 dividends are paid. In the original bill, the hold harmless                                                                    
 was directed at the resource rebate and there was a general                                                                    
 fund appropriation of approximately $10,600,000. With the                                                                      
 change, he wasn't sure how the difference between the hold                                                                     
 harmless results would be distinguished from the permanent                                                                     
 fund distribution and the resource rebate if they are on the                                                                   
 same check.                                                                                                                    
                                                                                                                                
 Representative Gara  asked  how  the  energy  rebate  was                                                                      
 attached.                                                                                                                      
                                                                                                                                
 Mr. Burnett  answered that  if  calculated from  the hold                                                                      
 harmless it would reduce the permanent fund dividend around                                                                    
 70 cents.  The alternative was  to appropriate  additional                                                                     
 general fund dollars to the hold harmless program, and not                                                                     
 reduce the permanent fund dividend.  He continued that it                                                                      
 was an appropriation choice the committee and  legislature                                                                     
 could make.                                                                                                                    
                                                                                                                                
 10:26:57 AM                                                                                                                  
                                                                                                                                
 Representative Gara reported  that  he had  learned about                                                                      
 seniors at the pioneer's home who get subsidized rent, but                                                                     
 they don't  get their  senior benefits.  One of  the hold                                                                      
 harmless effects would be  that residents of the  pioneers                                                                     
 home would get to keep the $1,200 checks. He stated concerns                                                                   
 about people possibly unable to keep the $1,200 if there was                                                                   
 no hold harmless provision.  He explained further that with                                                                    
 out hold harmless the potential exists for people to be left                                                                   
 out of senior and public housing assistance.                                                                                   
                                                                                                                                
 Mr. Burnett replied that as the bill is written the rebate                                                                     
 is separate from the permanent fund dividend. The resource                                                                     
rebate would not be counted for public housing purposes and                                                                     
probably not for child support calculations since it  is a                                                                      
one-time check.                                                                                                                 
                                                                                                                                
Representative Gara  asked about garnishment. Mr.  Burnett                                                                      
replied  that because  of  the  mechanism being  used  the                                                                      
resource rebate would be garnished the same as the permanent                                                                    
fund dividend.                                                                                                                  
                                                                                                                                
10:30:11 AM                                                                                                                   
                                                                                                                                
Co-Chair Chenault observed that the  resource rebate would                                                                      
not have  been garnished under the  original proposal. Mr.                                                                      
Burnett agreed  that the resource  rebate was  exempt from                                                                      
garnishment in the original proposal.                                                                                           
                                                                                                                                
Representative Hawker asked if the resource rebate would be                                                                     
subject to  garnishment or other  legal attachment if  the                                                                      
checks were administered more quickly.                                                                                          
                                                                                                                                
Mr. Ruaro said his understanding was that garnishment could                                                                     
not  occur at  an  administrative level;  checks would  be                                                                      
subject  to  garnishment  once  they   were  received  and                                                                      
deposited.                                                                                                                      
                                                                                                                                
Representative Hawker furthered there was no exemption for                                                                      
garnishing this payment. Mr. Ruaro agreed.                                                                                      
                                                                                                                                
10:32:01 AM                                                                                                                   
                                                                                                                                
In response to a question by Vice-Chair Stoltze, Mr. Burnett                                                                    
explained that the  equivalent of what incarcerated felons                                                                      
would receive is  now taken out of  the permanent dividend                                                                      
fund and transferred to  corrections and public safety. He                                                                      
clarified that this money would not be part of the permanent                                                                    
fund dividend at any time, so would not increase that pool                                                                      
for those purposes.                                                                                                             
                                                                                                                                
Co-Chair Chenault  thought the  Department  of Health  and                                                                      
Social Services might know what would be lost  if the hold                                                                      
harmless was not funded.                                                                                                        
                                                                                                                                
Mr. Sherwood clarified that under  the permanent fund hold                                                                      
harmless statute, state and local programs are directed to                                                                      
disregard the  permanent fund dividend unless  required by                                                                      
federal law. The programs that require that the dividend be                                                                     
counted are:  Medicaid,  Food Stamp  Program, Supplemental                                                                      
Security Income, and the Adult Public assistance program.                                                                       
                                                                                                                                
10:35:10 AM                                                                                                                   
                                                                                                                                
Co-Chair Chenault asked if there was federal income tax paid                                                                    
on any of  the benefits. Mr. Sherwood answered that public                                                                      
assistance benefits are not taxable.                                                                                            
                                                                                                                                
 Co-Chair Chenault noted that others will pay at least 25% of                                                                   
 their check to the federal government.                                                                                         
                                                                                                                                
 Mr. Sherwood explained that the dividend itself is subject                                                                     
 to taxation, but  typically needs-based  benefits are not                                                                      
 taxable, so the recipients of the hold harmless check are                                                                      
 not taxed.                                                                                                                     
                                                                                                                                
 Co-Chair Meyer asked what is the average taxation rate for                                                                     
 Alaskans.  Mr.  Ruaro  offered   to  find  the   requested                                                                     
 information.                                                                                                                   
                                                                                                                                
 Co-Chair Meyer surmised that the $1,200 payment came out of                                                                    
 the governor's initial proposal for a $100 per month debit                                                                     
 account. Mr. Ruaro agreed.                                                                                                     
                                                                                                                                
 10:37:18 AM                                                                                                                  
                                                                                                                                
 Co-Chair Meyer cited the feedback he had heard about kids                                                                      
 not having  the energy  costs adults  would have  and the                                                                      
 suggestion that the $1,200 should go  to adults only. Mr.                                                                      
 Ruaro agreed that  it could be  done as  a policy  matter,                                                                     
 through the permanent fund dividend process.                                                                                   
                                                                                                                                
 Representative Hawker asked about consequences to people in                                                                    
 prison. Currently,  permanent  fund  dividend  checks for                                                                      
 incarcerated felons are  kept  by the  state and  used to                                                                      
 subsidize the  Department  of Corrections.    Mr.  Burnett                                                                     
 clarified that the resource  rebate would not  be paid to                                                                      
 inmates. The resource rebate does not go into the Permanent                                                                    
 Fund Dividend  Fund from  which the  money comes  for the                                                                      
 Incarcerated Felon Fund. Funds that would have been paid to                                                                    
 felons would remain in the general fund.                                                                                       
                                                                                                                                
 Representative Hawker requested guidance through the legal                                                                     
 argument behind Mr. Burnett's statement.                                                                                       
                                                                                                                                
 Mr. Burnett explained that since this  is not a  permanent                                                                     
 fund dividend check, but instead added to the permanent fund                                                                   
 dividend check as an energy resource rebate, it does not go                                                                    
 into the fund from which the money  comes for incarcerated                                                                     
 felon  funds.    He  stated  that  money was   simply not                                                                      
 appropriated for them.                                                                                                         
                                                                                                                                
 Representative Hawker argued that the wording "the amount of                                                                   
 the permanent fund  dividend shall be increased"  suggests                                                                     
 that it is part of the dividend.                                                                                               
                                                                                                                                
 Mr. Burnett thought some clarifying language would be good.                                                                    
                                                                                                                                
 Representative  Hawker   requested  itemization   of  the                                                                      
 additional work needed for the bill.                                                                                           
                                                                                                                                
10:40:57 AM                                                                                                                   
                                                                                                                                
Mr. Ruaro responded that the  additional work included the                                                                      
scope of the pool to try and capture or allow veterans over                                                                     
65  years of  age, making less  than $13,000  per year  to                                                                      
receive  pension payments.   He  would  also like  to  see                                                                      
disabled veterans in the pool. In addition, he wanted to add                                                                    
language to  allow persons  to choose not  to receive  the                                                                      
rebate if they are philosophically opposed. If there is some                                                                    
federal benefit that the state has not accounted for, that                                                                      
would make them ineligible for those benefits, and he wanted                                                                    
to give them a way out.                                                                                                         
                                                                                                                                
Representative Hawker asked if  there was an  inventory of                                                                      
those programs where there is an anticipated federal benefit                                                                    
loss.                                                                                                                           
                                                                                                                                
Mr. Ruaro had identified some of the possible programs, but                                                                     
wanted to further review them. He elaborated that they were                                                                     
captured in  the  initial drafting of  the  bill, as  hold                                                                      
harmless.                                                                                                                       
                                                                                                                                
10:43:21 AM                                                                                                                   
                                                                                                                                
Representative Hawker asked how to rationalize the issues of                                                                    
energy policy being efficient, equitable and effective.  He                                                                     
asked if he thought this was efficient.                                                                                         
                                                                                                                                
Mr. Ruaro agreed that there was no doubt that the benefits                                                                      
being taxable were a down side. He argued that there were a                                                                     
number of ways that the income could be used that would be                                                                      
beneficial to  recipients, for  example, a  more efficient                                                                      
heating system. He suggested that this is an opportunity for                                                                    
individuals to  make those kinds  of long-term changes  in                                                                      
their homes.                                                                                                                    
                                                                                                                                
Representative Hawker detailed that eligible Alaskans could                                                                     
spend all  but 25% on  those mentioned beneficial changes,                                                                      
because at  least that  amount would  be going to  federal                                                                      
taxes. Mr. Ruaro agreed.                                                                                                        
                                                                                                                                
Representative Hawker asked about mechanisms other than the                                                                     
direct cash handout.  He suggested that this might be done                                                                      
through local  governments or  local  utilities. Regarding                                                                      
property tax, he suggested a revenue sharing approach that                                                                      
would result in direct property tax relief.  He stated "we                                                                      
could get literally 100% value without taxable transaction."                                                                    
He asked if anything like that had been considered.                                                                             
                                                                                                                                
Mr. Ruaro replied that he looked at a number of ways to get                                                                     
benefits to people and avoid tax consequences. The catch was                                                                    
that all Alaskans were not reached with those hypothetical                                                                      
cases.                                                                                                                          
                                                                                                                                
 Representative Hawker remarked that  his understanding is                                                                      
 that because there was no readily identifiable solution, a                                                                     
 compromise, including giving one third of the money to the                                                                     
 federal government, was agreed upon.                                                                                           
                                                                                                                                
 10:47:37 AM                                                                                                                  
                                                                                                                                
 Mr. Ruaro explained that the issue of taxation was not seen                                                                    
 as and either/or  type of situation, as  there were other                                                                      
 components considered such as Power Cost Equalization (PCE)                                                                    
 and Low Income Home Energy Assistance Program (LIHEAP) that                                                                    
 are nontaxable.                                                                                                                
                                                                                                                                
 Co-Chair Meyer added that his approach was that the net $900                                                                   
 could be used toward motor fuel, electric and/or gas heat.                                                                     
 He agreed that it could also be used toward weatherization.                                                                    
                                                                                                                                
 Representative  Joule  asked  about  obligations   towards                                                                     
 children even if a person did not apply.                                                                                       
                                                                                                                                
 Mr. Burnett clarified that  the bill  Representative Joule                                                                     
 referred to was HB 366.  He pointed out that it  concerned                                                                     
 felon funds, the money otherwise paid to incarcerated felons                                                                   
 for children of incarcerated who owed child support. This                                                                      
 bill would not have an effect on that.                                                                                         
                                                                                                                                
 10:50:29 AM                                                                                                                  
                                                                                                                                
 Vice-Chair Stoltze clarified the differentiation is in the                                                                     
 derivation of the money, since it comes from general fund.                                                                     
                                                                                                                                
 Mr.  Burnett  acknowledged  that  could  be  one  of  the                                                                      
 differentiations. He observed that clarifying language to                                                                      
 separately identify resource  rebates and  permanent fund                                                                      
 dividends may be needed.                                                                                                       
                                                                                                                                
 Vice-Chair Stoltze  wished to  clarify that  the  resource                                                                     
 rebate funds have not entered the permanent fund  dividend                                                                     
 stream.                                                                                                                        
                                                                                                                                
 Mr. Burnett explained that the money from the Permanent Fund                                                                   
 is identified. The department then calculates: the number of                                                                   
 people who will not  receive dividends, the appropriations                                                                     
 for hold harmless; the balance from the previous year; and                                                                     
 the number of qualifying individuals to determine the amount                                                                   
 of the permanent fund dividend.   The money allocated for                                                                      
 incarcerated felons is set aside at this time, after which                                                                     
 the additional general fund appropriation for the resource                                                                     
 rebate is added.                                                                                                               
                                                                                                                                
 10:53:25 AM                                                                                                                  
                                                                                                                                
 Representative Nelson asked  about  benefits for  military                                                                     
 families.   She  questioned the  possibility  of  military                                                                     
personnel absent from Alaska, and therefore not in need of                                                                      
energy assistance.                                                                                                              
                                                                                                                                
Mr. Burnett answered that military families and  others on                                                                      
allowable absences would receive the resource rebate just as                                                                    
they receive permanent fund dividends.   He divulged there                                                                      
were approximately 14,000 people living  outside of Alaska                                                                      
who  received  permanent  fund  dividends  last  year  and                                                                      
estimated that this year will likely be similar.                                                                                
                                                                                                                                
Representative Nelson expressed concerns about equality and                                                                     
agreed that it could be defined in different ways. She did                                                                      
not think energy rebates should be given to  those who are                                                                      
not incurring Alaska energy costs. Mr. Ruaro said that could                                                                    
be done through the authority of the legislature                                                                                
                                                                                                                                
Representative Nelson clarified that family members that are                                                                    
here should be eligible, but she did not think the intent of                                                                    
the legislation was to fund those who were away and were not                                                                    
paying energy costs. Co-Chair Meyer acknowledged the point.                                                                     
                                                                                                                                
10:56:03 AM                                                                                                                   
                                                                                                                                
Representative Hawker asked what the intent of the proposal                                                                     
was and questioned if it is to provide energy cost relief to                                                                    
Alaska residents or is it to give away the resource derived                                                                     
surplus.                                                                                                                        
                                                                                                                                
Mr. Ruaro divulged the foundation and basis of the payment                                                                      
is  to share  Alaska  resource wealth  with Alaskans.  The                                                                      
administration acknowledged  that  high energy  costs  are                                                                      
impacting Alaskans, but  the basis of  the payment is  the                                                                      
sharing of Alaska's resource wealth.                                                                                            
                                                                                                                                
Representative Hawker asked if Alaskans can use the rebate                                                                      
to purchase luxury  items. Mr. Ruaro affirmed there is  no                                                                      
restriction on the payment.                                                                                                     
                                                                                                                                
Representative  Hawker  spoke   to  the   motive  of   the                                                                      
administration. Mr.  Ruaro reiterated  the  basis for  the                                                                      
payment was sharing the resource wealth.                                                                                        
                                                                                                                                
10:58:33 AM                                                                                                                   
                                                                                                                                
Representative Gara hoped to achieve the goals and to save                                                                      
money at the same time. He contended that $700 million could                                                                    
fund many needed programs. He thought limiting the checks to                                                                    
adults would save  $200 million, while achieving  the same                                                                      
goals. He wondered how many Alaskans were under 18 and how                                                                      
much was saved if limited.                                                                                                      
                                                                                                                                
Mr. Burnett answered that he did not  have the details for                                                                      
2008, but in 2007 there were 451,022 adult applications and                                                                     
177,873 child  applications. Representative Gara estimated                                                                      
 that would save one third of the cost. Mr.  Burnett agreed                                                                     
 with Representative Gara's estimate.                                                                                           
                                                                                                                                
 Representative Gara suggested the Permanent Fund Corporation                                                                   
 could figure out, by using the qualifying date, who is under                                                                   
 18.                                                                                                                            
                                                                                                                                
 11:02:33 AM                                                                                                                  
                                                                                                                                
 Mr. Ruaro said  that the  technical details regarding the                                                                      
 determination of those citizens  under the age  of 18 are                                                                      
 relatively simple.                                                                                                             
                                                                                                                                
 Representative Gara questioned the determination of minors                                                                     
 who are emancipated and currently running households.                                                                          
                                                                                                                                
 Mr. Ruaro believed that applications from emancipated minors                                                                   
 were already taken into account.                                                                                               
                                                                                                                                
 Co-Chair Meyer noted he had received the same feedback and                                                                     
 information.  He argued that a  family of five or six has                                                                      
 higher costs than a family of one.                                                                                             
                                                                                                                                
 11:04:23 AM                                                                                                                  
                                                                                                                                
 Mr. Burnett reminded the committee that  it is a  resource                                                                     
 rebate, and the concept is similar to the  permanent fund,                                                                     
 where all Alaskans are included regardless of age.                                                                             
                                                                                                                                
 Vice-Chair Stoltze asked if there were a legal definition of                                                                   
 head of  household. Mr.  Rauro thought  that there  was a                                                                      
 definition in  federal statute  and offered  research the                                                                      
 definitions.                                                                                                                   
                                                                                                                                
 Vice-Chair Stoltze  referred  to  same  sex  couples  and                                                                      
 questioned what constitutes a "household". Mr. Ruaro did not                                                                   
 know the answer.                                                                                                               
                                                                                                                                
 11:06:56 AM                                                                                                                  
                                                                                                                                
 Representative Hawker asked if the appropriation is on an                                                                      
 annual basis. Mr. Ruaro answered that the intention is to                                                                      
 limit the appropriation to one time.                                                                                           
                                                                                                                                
 Representative Hawker asked if there is any assurance that                                                                     
 it is a one time program. Mr. Ruaro stated that he was not                                                                     
 aware of any intent to introduce a similar bill next year.                                                                     
                                                                                                                                
 Representative  Hawker   requested  assurance   that  the                                                                      
 administration would not renew this program this year.  Mr.                                                                    
 Ruaro could not provide that assurance.                                                                                        
                                                                                                                                
Representative  Hawker  commented  on  the  difficulty  of                                                                      
removing a program once it is in place.  Mr. Ruaro thought                                                                      
the expectations might exist regardless of the bill.                                                                            
                                                                                                                                
Representative Hawker inquired if it would make a difference                                                                    
if the price of oil was stable next year.                                                                                       
                                                                                                                                
Mr. Ruaro said  that they could possibly add  findings and                                                                      
intent language to the bill supporting a one time program.                                                                      
He was  not comfortable speculating about future language,                                                                      
but he knew  that there was no intent to file a  bill next                                                                      
year .                                                                                                                          
                                                                                                                                
Representative Hawker summarized that there is not a nexus                                                                      
between  the legislation  and increasing  oil costs.    He                                                                      
suggested looking at a more durable program for the future.                                                                     
He wondered  if the administration would be  interested in                                                                      
such a program.  Mr. Ruaro offered to discuss concepts with                                                                     
Representative Hawker.                                                                                                          
                                                                                                                                
11:12:30 AM                                                                                                                   
                                                                                                                                
Representative Hawker asked if the resource rebate is a one                                                                     
year program, or if  it should exist on a  longer basis as                                                                      
part of a long-range plan.                                                                                                      
                                                                                                                                
KAREN REHFELD, DIRECTOR, OFFICE OF  MANAGEMENT AND BUDGET,                                                                      
thought that the goal was to have a long-range plan.  "This                                                                     
particular package is meant to be one time."  She emphasized                                                                    
that the governor welcomed the ideas and discussions brought                                                                    
forward by the legislature.                                                                                                     
                                                                                                                                
Representative Hawker pointed out that the focus is on high                                                                     
oil prices.   He  stressed the need  to also  consider the                                                                      
escalating oil production decline.  He asked  how soon the                                                                      
state would be in a position of budget deficits.                                                                                
                                                                                                                                
Ms. Rehfeld thought that was a critical question.  She noted                                                                    
the  importance of putting  money into  the constitutional                                                                      
budget  reserve.    She   offered  to  provide  additional                                                                      
information.                                                                                                                    
                                                                                                                                
Representative Hawker reiterated the importance of a long-                                                                      
range fiscal  plan. Ms.  Rehfeld opined that  a tremendous                                                                      
amount of work is needed first.                                                                                                 
                                                                                                                                
11:18:32 AM                                                                                                                   
                                                                                                                                
Representative Joule expressed concerns regarding the bill                                                                      
due to the differences in energy costs throughout the state.                                                                    
He hoped to have  a conversation about how best to provide                                                                      
balance across the state.                                                                                                       
                                                                                                                                
11:21:13 AM                                                                                                                   
                                                                                                                                
 Representative Nelson thought that not including children in                                                                   
 the household count could  have legal ramifications.  She                                                                      
 specified that in a case of a family with a single parent or                                                                   
 a parent with poor participation, the money for children was                                                                   
 important.                                                                                                                     
                                                                                                                                
 11:22:21 AM                                                                                                                  
                                                                                                                                
 Representative Gara believed that there would be problems if                                                                   
 specific groups are excluded from the household definition.                                                                    
 He said there is already a  statutory definition: "legally                                                                     
 emancipated".  He  agreed with Representative Nelson that                                                                      
 some families  need  the  money  more  than  others.   He                                                                      
 questioned the expense of $250 million for families based on                                                                   
 their size.  He had problems spending the money on a check                                                                     
 for everyone.                                                                                                                  
                                                                                                                                
 Representative Gara  asked  Ms.  Rehfeld  if  it  was the                                                                      
 administration's policy to spend $800 million on  resource                                                                     
 rebate rather than fund eight years of early education.                                                                        
                                                                                                                                
 Representative Nelson thought the question was inappropriate                                                                   
 under special session and the  topic should be limited to                                                                      
 AGIA and an energy rebate.                                                                                                     
                                                                                                                                
 11:25:59 AM                                                                                                                  
                                                                                                                                
 Co-Chair Meyer pointed out the topics before the committee.                                                                    
 He asked why the administration feels that this is a serious                                                                   
 use of the money.  Representative Gara said he was serious                                                                     
 about his question, but offered to end the discussion.                                                                         
                                                                                                                                
 11:27:10 AM                                                                                                                  
                                                                                                                                
 Co-Chair Chenault  spoke about  the disadvantages  of not                                                                      
 allowing children to qualify.                                                                                                  
                                                                                                                                
 Vice-Chair Stoltze took  issue with Representative  Gara's                                                                     
 restatement of his comment.   He brought up the  situation                                                                     
 where extended family members manage households.                                                                               
                                                                                                                                
 11:29:03 AM                                                                                                                  
                                                                                                                                
 Mr. Burnett explained how dividends are held in trust when                                                                     
 an application process has not occurred for the  mentioned                                                                     
 children.  He stated that the children would then  receive                                                                     
 the dividend money when they turned 18 years of age.                                                                           
                                                                                                                                
 Representative Nelson asked if that should be in writing.                                                                      
                                                                                                                                
 Mr. Burnett thought it would not  be necessary due to the                                                                      
 current language in the bill.                                                                                                  
                                                                                                                                
11:30:06 AM                                                                                                                   
                                                                                                                                
Representative Thomas pointed out  that this  bill touches                                                                      
everyone equally.                                                                                                               
                                                                                                                                
HB  4002  was heard  and  HELD  in  Committee for  further                                                                      
consideration.                                                                                                                  
                                                                                                                                
 HB4002-RESOURCE REBATE PROGRAM FOR RESIDENTS                                                                                 
 HB4003-APPROP: ENERGY RELIEF/REBATE/FUEL TAX                                                                                 
                                                                                                                                
 TIME        SPEAKER        DISCUSSION                                                                                      
 1:08:37 PM JULIE    KITKA, Provided members with written testimony                                                           
             PRESIDENT,     (copy on file). She related that this                                                               
             ALASKA         is a very historic period due to                                                                    
             FEDERATION  OF financial problems in the U.S. economy,                                                             
             NATIVES        as well as to high energy costs.  The                                                               
                            state  has a  responsibility to provide                                                             
                            affordable  energy to  Alaskans and  to                                                             
                            provide  energy to the Lower  48. Every                                                             
                            major   institution   in   the   Native                                                             
                            community is concerned about the energy                                                             
                            problem.   The   Native  community   is                                                             
                            interested  in   having  the  solutions                                                           
                            accountable,      to       incentivize                                                              
                            communities, and  expand  the  private                                                              
                            sector. A new  shift in thinking needs                                                              
                            to take  place.   Energy  relief is  a                                                              
                            first step.  State resources must also                                                              
                            be  invested   for  the   future.  She                                                              
                            cautioned that actions that  are taken                                                              
                            do not create a backlash.  She spoke in                                                             
                            favor of  stabilizing energy  costs, a                                                              
                            cash rebate, and a multi-year approach                                                              
                            to energy  prices.  She  believed high                                                              
                            energy costs  are  here  to stay.  Ms.                                                              
                            Kitka looked  at  restructuring as  an                                                              
                            opportunity and  the  need  for  smart                                                              
                            investing   on    behalf   of    state                                                              
                            government.    She  stressed providing                                                              
                            immediate relief.   Ms.  Kitka pointed                                                              
                            out that all cost-of-living prices have                                                             
                            increased.   She spoke  in  support of                                                              
                            funding  for  Power  Cost Equalization                                                              
                            (PCE).  She   recommended  that  rural                                                              
                            utilities be stabilized.  She spoke in                                                              
                            behalf  of   the  Denali  Commission's                                                              
                            energy needs. She testified in support                                                              
                            of the family fuel subsidy and in favor                                                             
                            of funding alternative energy projects                                                              
                            in   order   to   encourage   economic                                                              
                            development.  She  also stated support                                                              
                            for    funding     higher    education                                                              
                            institutions so that  they can proceed                                                              
                            with research  on  energy  issues. She                                                              
                            thanked the committee for their work.                                                             
1:31:38 PM Co-Chair Meyer  Asked if those opinions were from the                                                              
                            Alaska Federation of Natives.                                                                     
1:32:24 PM Ms. Kitka        Explained where her statements came                                                               
                            from the Alaska  Federation of Natives                                                              
                            (AFN) energy group.                                                                               
1:32:46 PM Vice-Chair       Talked about the need for an early                                                                
            Stoltze         energy relief payment.                                                                            
1:33:49 PM JERRY BURNETT, Explained     the   recommendations  for                                                            
            DIRECTOR,       payment   of  the   rebate   and   the                                                              
            DIVISION    OF possibility for an earlier payment.                                                                
            ADMINISTRATIVE                                                                                                      
            SERVICES,                                                                                                           
            DEPARTMENT OF                                                                                                       
            REVENUE                                                                                                             
                                                                                                                                
1:35:04 PM Vice-Chair       Thought there might be a way to                                                                   
            Stoltze         facilitate an earlier payment.                                                                    
1:35:42 PM Mr. Burnett      Observed that it may be possible to                                                               
                            issue a separate resource rebate check                                                              
                            a few weeks  before the permanent fund                                                              
                            dividend is issued.                                                                               
 1:35:58 PM  Representative Thanked Ms. Kitka for her testimony and                                                           
             Gara           invited her to return often.                                                                      
 1:36:22 PM Ms. Kitka       Complimented the legislators for their                                                            
                            accessibility.                                                                                    
 1:37:05 PM  ROBERT  KEITH, Spoke   to  the   "urban/rural  divide"                                                           
             CHAIR,         comment. He recalled past use of that                                                               
             KAWERAK, INC., term.  He complimented  the legislature                                                             
             NOME           on   their   welcoming   attitude.   He                                                             
                            described  problems related  to  rising                                                             
                            costs in his Native village of Elim. He                                                             
                            noted  a   problem  with  the  economic                                                             
                            impact of  a $1200 rebate. He suggested                                                             
                            using  excess  funds to  mitigate  fuel                                                             
                            costs.  He described energy summits  in                                                             
                            his  area, wind  generators, the  SITCO                                                             
                            program, and federal grant programs. He                                                             
                            suggested  having a  technical clearing                                                             
                            house  for energy  issues. He spoke  in                                                             
                            favor of PCE.                                                                                     
 1:49:18 PM  Representative Inquired about the  use of solar panels                                                           
             Joule          in the region.                                                                                    
 1:49:57 PM Mr. Keith       Reported that Bering Strait Native                                                                
                            Corporation has installed a large solar                                                             
                            panel,    as    have   several    other                                                             
                            corporations.                                                                                     
 1:52:18 PM  BARB  NICKELS, Reported   that   the   Bering   Strait                                                           
             DIRECTOR,      Development Council supports SB 4002                                                                
             BERING  STRAIT and SB  4003.  She spoke of rising fuel                                                             
             DEVELOPMENT    costs in the Bering Strait region and                                                               
             COUNCIL        the    hardships   that   creates   for                                                             
             (ARDOR)        community members. She referred to the                                                              
                            relationship  between  fuel  costs  and                                                             
                            migration  out  of   villages  and  the                                                             
                            resulting  implications on  educational                                                             
                            systems. She spoke in  favor of a state                                                             
                            economic    development    plan.    She                                                             
                            concluded  that rural Alaskans want  to                                                             
                            help  themselves, yet need  the state's                                                             
                            immediate assistance.                                                                             
1:59:48 PM Representative Thanked Ms. Nickels for her testimony.                                                              
             Gara                                                                                                               
 2:00:23 PM  DAVID   PELTO, Testified   against   the   bills,   as                                                           
             PALMER         written.  He maintained that long-term                                                              
                            investments  are needed  and the  state                                                             
                            should  help  only  those in  need.  He                                                             
                            spoke against  the sense of entitlement                                                             
                            many Alaskans have.                                                                                 
                                                                                                                              
 2:03:03 PM JUDITH          Testified against funds for individuals                                                           
             ANDEREGG,      in the form of an energy assistance                                                                 
             PALMER         rebate using PFD qualifications to                                                                  
                            determine residency.                                                                              
 2:07:24 PM  HOWARD DORSEY, Testified  in support  of the  resource                                                           
            KENAI           rebate program for residents. He spoke                                                              
                            of ways that he could benefit from the                                                              
                            rebate   in   home   improvements  and                                                              
                            weatherization.  He suggested that the                                                              
                            money be dispersed  sooner than later,                                                              
                            as the  fuel  barges leave  for remote                                                              
                            villages in near future.                                                                          
2:11:41 PM MARGARET         Discussed documents she submitted on                                                              
            MANOUSOFF,      behalf of Alaska Conservation Solutions                                                             
            ALASKA          (copy on file.) She testified in                                                                    
            CONSERVATION    opposition  to  the   resource  rebate                                                              
            SOLUTIONS,      program    for     several    reasons;                                                              
            ANCHORAGE       entitlement, tax, and equity issues,                                                                
                            and social consequences. She maintained                                                             
                            that common resources ought to be used                                                              
                            for  the  common  good. She  suggested                                                              
                            possible solutions to energy problems.                                                              
                            She  urged  the state  to  make  long-                                                              
                            lasting investments.                                                                              
2:21:50 PM  Representative  Asked for  more information  about Ms.                                                            
            Hawker          Manousoff's organization.                                                                         
2:22:53 PM  Ms. Manousoff   Explained  her  organization's history                                                            
                            and focus on education about causes of                                                              
                            global  warming,   including  possible                                                              
                           solutions.                                                                                         
2:24:02 PM JERRY            Suggested using the energy assistance                                                             
            MCCUTCHEON,     program qualifications (LIHEAP) to                                                                  
            ANCHORAGE       determine   eligibility   for   energy                                                              
                            relief.  He requested that the money be                                                             
                            paid to the individual rather than the                                                              
                            vendor.  He testified against fuel tax                                                              
                           suspension.                                                                                        
2:27:34 PM PAUL         D. Complimented Ms. Kitka's presentation.                                                             
            KENDALL,        Testified against the Resource Rebate                                                               
            ANCHORAGE       program for residents. He emphasized                                                                
                            the need to stay focused on the issues.                                                             
                            He suggested a daily television program                                                             
                            by  the  Alaska  Energy Authority.  He                                                              
                            stressed  the  need   for  clean  air,                                                              
                            alternative methods of electricity, and                                                             
                            transportation.                                                                                   
2:40:19 PM BI       JERREL, Testified in support of the Resource                                                              
            KENAI           Rebate program for residents.                                                                     
2:43:44 PM EUGENE           Testified in support of the Resource                                                              
            BOBLETT,        Rebate program for residents. He                                                                    
            SOLDOTNA        stressed   his    difficult   economic                                                              
                            situation as a  senior with the rising                                                              
                            cost of propane.                                                                                  
2:59:46 PM TOM LOKOSH       Questioned the nexus between the rebate                                                           
                            bill and the Governor's budget and how                                                              
                            funds are  allocated.  He  pointed out                                                              
                            that none of the rebates allow for the                                                              
                            person who rents. He  thought that the                                                            
                            LIHEAP   formula  should  be  used   to                                                             
                            determine qualification for the rebate.                                                             
                            He  suggested  finding  less  expensive                                                             
                            alternative energy sources  rather than                                                             
                            subsidizing in the form of PCE.                                                                   
 3:13:18 PM Representative Clarified a previous conversation with                                                             
             Nelson         Representative   Gara   regarding   the                                                             
                            resource rebate.                                                                                  
 3:14:40 PM Mr. Lakosh      Commented    on   dispersing    natural                                                           
                            resources in the state.                                                                           
 3:15:32 PM Representative Explained the purpose of the special                                                               
             Nelson         session and the allowable topics of                                                                 
                           discussion.                                                                                        
 3:16:28 PM GEORGIA         Shared her personal experience with                                                               
             WESTFALL       high fuel costs "off the grid". She                                                                 
                            testified in favor of the resource                                                                  
                            rebate.                                                                                           
 3:20:58 PM LAURA           Testified in favor of the resource                                                                
             SCHAEVITZ,     rebate. She spoke of the high cost of                                                               
             ANCHORAGE      living. She opposed using the rebate to                                                             
                            garnish wages.                                                                                    
 3:28:28 PM JUDITH MAGNUS, Shared her experiences with higher cost                                                            
             ANCHORAGE      of living expenses. She testified in                                                                
                            favor of the resource rebate.                                                                     
             ADJOURNMENT    The meeting was adjourned at 3:34 PM                                                              
                                                                                                                                

Document Name Date/Time Subjects