Legislature(1993 - 1994)
02/22/1994 03:00 PM House HES
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
CSHB 362 - "An Act relating to the statute of limitations for actions brought upon a child support judgment; and establishing the crime of aiding the nonpayment of child support." Number 944 REP. TERRY MARTIN, Prime Sponsor of HB 362, shared a brief analysis with the committee. He said the Child Support Enforcement Division (the Division) does not have the tools necessary to do an adequate job. He said federal funding received during the interim provided for 42 new positions, allowing for more efficient enforcement. He said the important element of the bill is the "third-party barrier." He related a scenario of a person who is working for an employer who is not only aware of the employee's obligation to child support, but also is helping the employee to evade child support payments or is fraudulently paying the employee under the table or is paying a relative or friend the employee's wages in order to avoid garnishment. Rep. Martin said under those circumstances it is difficult for enforcement to tap the resources of the individual. REP. MARTIN told the committee that there was a chart in their bill packets that indicates that the total amount owed by the top 100 nonpayors of child support is $16 million. He said the factors range from delays in payments to people actually moving to remote areas to avoid contact with enforcement. REP. MARTIN said the proposal is one of the most important tools developed that is not only necessary for the Division to collect revenues, but also is necessary to prohibit a third party from interfering with enforcement of child support. He then offered a committee substitute (CS) for HB 362 that provides an attachment for ten years as opposed to every year. REP. MARTIN stated that the federal government has completed a report on the state of Alaska that shows the state has not made "reasonable attempts" to try to catch "deadbeat" parents. He asserted that the federal government would not continue to support the state at the current level if the enforcement system fails to make advances in the arrears. He maintained that the Division now has the manpower and technical equipment to carry out the task, but legislation is needed to "knock down" the creative barriers that nonpayors have erected. Number 063 CHAIR BUNDE identified Mary Gay as being on offnet to testify from Anchorage. REP. MARTIN introduced Nancy Manley and indicated that she would be the spokesperson for HB 362 for the remainder of the meeting, as he had to attend another committee meeting, posthaste. CHAIR BUNDE asked if there were any questions for Rep. Martin before he left. Number 076 REP. VEZEY stated that he had considerable problems with the proposal. He felt it was inappropriate to hold family, friends, and employees responsible for a nonpayor's financial obligations. He suggested that in a case where an employee returns to a business five years later, the employer would have been legally obligated to honor the order from enforcement for the five previous years. He said not only would the proposed legislation hold the employer civilly responsible for the nonpayment of child support, it would also make the employer guilty of a Class C felony. He said that he too is an employer and is concerned with the business climate of the state. He said he could not support the legislation. REP. MARTIN stated that he has gone to the defense of friends who are employers that did not know the employee was in arrear for child support. He said in that specific incidence he felt the state went "way overboard trying to make him be the guilty one" when his friend had no idea that his employee was in arrears. REP. MARTIN said the key words within the proposal are, "...one who intentionally..." He also added that it is not only employers but also relatives and friends. He said currently there is no way of preventing this type of evasion. He explained that some fathers are so upset by a divorce that they would go to any lengths to avoid payment. Number 146 REP. VEZEY said that being in receipt of a law enforcement order that has not been obeyed by a subsequent court order does put an employer, in a knowing position, in the position of having to defend against an accusation of intentional failure. He said it could cost at least $20,000 to go to court to prove an employer is innocent, and because of the economics the employer would likely plead guilty. REP. MARTIN said it would allow the people in desperate need of the support payment to defend their need of the owed money. Number 164 CHAIR BUNDE pointed out that Rep. Martin had referred to new computer equipment and other technology that would be needed and then inquired to the zero fiscal note. REP. MARTIN said that within the last year the Division had been upgraded with funds from last year's budget. TAPE 94-25, SIDE B Number 000 REP. TOOHEY said that obviously the chart of nonpayors exhibits many years of nonpayment. She asked, if a person owed $207,000 and was legally working, how would that amount be "broken down?" REP. MARTIN responded that most people don't know that they can appeal for an adjustment that would be relative to that person's financial ability. He said that most people do not go through the appeal process because they are fearful. He also acknowledged that some of the nonpayors on the chart are indeed financially destitute, but the Division needs to know they can be removed from the list. He then said the next problem that must be addressed regarding the chart is when to take people off the list. Number 062 CHAIR BUNDE said he was relieved to find that it does not matter where people live in Alaska, they still owe money. He found it amazing that people can be that far in debt from places where they claim to not have much employment. REP. MARTIN said that the chart indicates how diverse the problem is, and how it shows that the problem is not centered in the large cities. He then related the large expense involved in investigating a case in a distant rural area. Number 096 CHAIR BUNDE asked if Rep. Martin, upon passage of the proposal, was anticipating a bigger budget for continuing enforcement. REP. MARTIN said that the department already knows who the people are and where they live that are participating as a third party in the evasion of payments. Number 113 REP. VEZEY said he found it difficult to conceive of how a person could run up $235,000 of debt. He said that at some time that person, in the eyes of the court, must have had considerable assets and income. REP. MARTIN said that he could not give Rep. Vezey specific case figures, but indicated that a lot of the debts shown on the chart span many years. REP. VEZEY said if some one owed him $245,000 and he had a court order to enforce it, he would go to court to obtain papers to attach the debt to the nonpayor's assets. He felt the $50,000 in the legal fees would be an excellent investment. Number 194 REP. BRICE said he did not agree with the zero fiscal note. He asserted that it would probably be a negative fiscal note, considering the cost of finding a "deadbeat dad" and making them come up with the payments. CHAIR BUNDE interjected that there may be "deadbeat mothers" also. Number 217 REP. TOOHEY said, "Once a father, always a father." She said laws for child support enforcement may have only been written in 1980, and questioned if the debts are retroactive, perhaps dating back to 1971. REP. MARTIN said that in most cases the Division is looking for the parent that has forced the spouse with custody on to the welfare rolls. He said that when the debt starts being repaid, the spouse can then be taken off public assistance. He said the proposal would decrease the number of welfare recipients by finding the deadbeat parent and enforcing payments. REP. TOOHEY said that in most instances, Rep. Martin is assuming that the parent is working. REP. MARTIN he said the Division knows that the nonpayor has income but is fraudulently diverting income, either through employers, friends, or relatives. He said that circumstance is what HB 362 is specifically addressing. Number 269 REP. NICHOLIA, relating to the rural perspective, said that many people worked during the pipeline era where salaries were considerable. She said now pipeline jobs are scarce, people have moved back to their villages where there are no jobs, and they are very financially stressed. She felt that the bill would only add another burden, in that they do not often come out from under that kind of debt. She also said that people in the rural communities would have a difficult time paying for attorneys in regards to adjusting child support payments. She said Rep. Martin's intentions are good, but the bill would have a negative impact on people in rural communities. REP. MARTIN said HB 362 focuses on the third-party barrier. CHAIR BUNDE thanked Rep. Martin and said that Nancy Manley would be available on Rep. Martin's behalf to answer further questions. He then asked Mary Gay to testify via offnet. Number 325 MARY GAY, Director, Child Support Enforcement Division, Department of Revenue, testified via offnet from Alaska. She said that the legislation would assist in the enforcement of payments by deterring individuals from knowingly assisting nonpayors for the purpose of defrauding the state. She said it would also deter the nonpayor from concealing or transferring assets for the purpose of defrauding the state or the child for whom the support is owed. She said the proposed legislation provides penalties for the person who is involved in a third-party situation and also the stipulation that the third-party would assist in the prosecution of the nonpayor. She felt the proposal would prevent these practices in the future, as the individuals would be aware of the penalties for making such arrangements. Number 374 REP. KOTT referred to page 1, lines 9-11, and said that under constitution a family member cannot be forced to testify against another member of the family. He asked if the proposed legislation would go against that current statute. MS. GAY said no. Number 400 REP. TOOHEY said that the person everyone is forgetting is the child that the state is having to feed and clothe. She said all the proposal is doing is asking "these guys to make some restitution, whether they're in a village or they live in downtown Anchorage." She said the parent is being asked to pay their fair share for the child, regardless of their race or gender. She stated they are responsible for the children's well being. REP. G. DAVIS said he was sure everyone felt as Rep. Toohey did, but he felt the bill was extending the long arm of the law, which he thinks is already aware of who these people are and where they reside. He pointed out the subpoena powers of the Child Support Enforcement Division and said he did not see how the legislation would help. He felt HB 362 would not have an impact on those deadbeat parents who already know how to beat the system. He felt if he could be convinced that the legislation would have an impact, he could support it. Number 467 CHAIR BUNDE said HB 362 would be held over for further consideration. REP. VEZEY said that he did not feel the bill had any relation to the top 100 chart provided by Rep. Martin. He said he would like to ask the Child Support Enforcement Division if it is known how many assets are behind the debts on the chart. MS. GAY replied that she could only speculate. She said perhaps some of the nonpayors had considerable earning power at one time. She related situations where an obligor and current spouse have a business, but the obligor would not receive a paycheck, and also is eating, driving a car, and entertaining on the spouse's business expense account. She indicated that friends of obligors also participate in this type of fraud, and these practices are more common than people would like to believe. Number 539 REP. VEZEY maintained that if $245,450 was owed him, he would go to any length to obtain any of the assets. He felt the chart, with such substantial amounts, indicated incompetence somewhere in the system. He asked what good comes from the bill if the nonpayor doesn't have any assets. He also felt that the legislation would make criminals out of civic minded, productive citizens, and questioned the classification of a felony. Number 567 MS. GAY asserted that it is a federal felony to owe more than $5000 in child support payments. REP. VEZEY inquired as to how many people fill that category. He said, "I don't see the federal government running out there to incarcerate these people." MS. GAY said, "...with the federal government ...they didn't fund the legislation." REP. VEZEY said he understood that. He reiterated again his being uncomfortable with the legislation. Number 602 CHAIR BUNDE stated that the bill was not ready to move out of committee and asked Rep. Vezey to chair a subcommittee with Rep. Gary Davis to work with Rep. Martin. He directed them to come back with answers one week from the day the meeting was held, and at that time a decision would be made as to whether the bill would be heard again. Number 627 REP. G. DAVIS asked if it was becoming easier to prove intent to defraud. MS. GAY responded no. Number 637 CHAIR BUNDE closed testimony on HB 362 and brought HB 429 to the table.
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