Legislature(1993 - 1994)
03/05/1994 08:00 AM House STA
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HB 483 - PERMANENT FUND DIVIDEND FOR ABSENT INDIVIDUALS CHAIRMAN VEZEY opened HB 483 for discussion. Number 497 REPRESENTATIVE PETE KOTT, prime sponsor of HB 483, addressed his bill. He felt HB 483 conforms to the original intent of the permanent fund dividend (PFD) program. He stated HB 483 would provide a dividend check for those who intend to remain in Alaska. This was challenged in the U.S. District Court in 1986, and confirmed. The intent of HB 483 is to place into trust accounts within the dividend, or general fund, dividends for those individuals who remain out of state for more than 181 consecutive days in a permanent fund calendar year. Individuals would not receive their check for that year, instead they would continue to apply and the money would be appropriated into an account by the Permanent Fund Division. This money would be provided to the individuals, once they return to the state and have met the existing requirements. REPRESENTATIVE KOTT felt HB 483 would help prevent potential fraud. He brought version E of the committee substitute, before the committee. Number 528 REPRESENTATIVE OLBERG moved to adopt version E of the committee substitute for HB 483. Number 529 CHAIRMAN VEZEY recognized the motion and asked the committee secretary to call roll. The version E of the committee substitute for HB 483 was adopted. Number 533 REPRESENTATIVE KOTT announced there had been changes from the original bill which are essentially conforming changes to the existing policy. Number 535 JACK PHELPS, REPRESENTATIVE PETE KOTT'S STAFF, outlined the changes made by the CS for HB 483. The changes made were primarily technical, recommended by the Department of Revenue, to make the PFD program easier to operate. They had suggested the language in CSHB 483, relating to the amount of days absent, conform to existing regulations. He referenced paragraph 1, lines 10-11, the allowable absence was increased in the returning year from 30 days to 90 days. Currently, the state allows for an unexplained absence up to 90 days, and if a stricter standard in the requalifying year was applied, an equal protection problem could arise. A stricter standard would also have required additional oversight by the Department of Revenue to review those individuals with a 30 day absence limit separately from individuals with a 90 day absence limit. MR. PHELPS noted the change in paragraph 2 is strictly technical, not changing the intent the HB 483. MR. PHELPS stated subsection (D), lines 8-9 of HB 483 became unnecessary once the other changes had been made; therefore it was deleted. Number 566 CHAIRMAN VEZEY pointed out paragraph C, section 1, dealing with the subject of probate, and asked if REPRESENTATIVE ULMER concurred with the wording. He felt it was the wrong approach to pay part of an estate to an appropriate person, rather than paying the money the estate. Number 574 MR. PHELPS responded subsection C is included in CSHB 483 to cause the bill to be consistent with its purpose. One of the stated purposes of the dividend program, affirmed by court decision, is to encourage people to maintain their residence in Alaska. CSHB 483 provides a mechanism for people to demonstrate their intention to maintain their residency in Alaska. Subsection C is included to account for those individuals who die before they can demonstrate their intent. Number 593 CHAIRMAN VEZEY asked how the PFD Division could determine who the appropriate person would be to distribute money. REPRESENTATIVE ULMER replied she would have drafted CSHB 483 "to the estate of the individual", as opposed to "the person." REPRESENTATIVE G. DAVIS felt, after listening to MR. PHELPS' statement, that it would be up to someone else to show the intent of the deceased person. He did not believe this would be possible. Number 605 CHAIRMAN VEZEY interpreted the statute as to someone who has applied, expressing their intent, however, died in the process. He thought the PFD would automatically be paid. CHAIRMAN VEZEY wanted to know how the funds would be issued. A tremendous responsibility may be lifted from the PFD Division if the funds were paid to the estate, plus the funds would capitalize the estate when capital for the estate may be needed. CHAIRMAN VEZEY mentioned estate litigation can continue for several years. MR. PHELPS clarified CHAIRMAN VEZEY's point was that the funds could be paid to the estate, and not a particular person. Number 620 CHAIRMAN VEZEY stated the legal definition of "person" would include an estate. REPRESENTATIVE OLBERG questioned how many dividends an individual could receive after being out of the state for a period of time. If, for example, an individual has been out of the state for 20 years, and had the dividend denied because of not visiting enough, would CSHB 483 apply. Number 628 REPRESENTATIVE KOTT replied if they were originally going to get the dividend check, they would continue to be allowed to receive the dividend check with CSHB 483. CSHB 483 would place their money into an account. Number 631 REPRESENTATIVE OLBERG clarified the individual had been disallowed in his example. Number 632 REPRESENTATIVE KOTT responded if the individual had been disallowed he/she would have been disallowed under CSHB 483. Number 633 REPRESENTATIVE OLBERG asked the benefit of CSHB 483. REPRESENTATIVE KOTT answered, under current practice, individuals with uncertain intent are receiving dividends. CSHB 483 closes this loophole. An individual has to return for over a year. Number 645 MR. PHELPS pointed out subsection (B) clearly states any time during that period, if a person fails to apply or fails to qualify, they have disallowed themselves for the dividends. A person cannot leave for three years, not qualify for one year, and expect to return and collect those three previous years. Number 654 REPRESENTATIVE OLBERG asked how Congressman Don Young would respond to CSHB 483. REPRESENTATIVE ULMER thought Congressman Don Young would receive a dividend check, anyway. CHAIRMAN VEZEY introduced TOM WILLIAMS as the next to testify. Number 662 TOM WILLIAMS, DIRECTOR, PERMANENT FUND DIVIDEND DIVISION, DEPARTMENT OF REVENUE, answered questions on CSHB 483. The PFD Division did supply zero fiscal notes for both the original HB 483 and CSHB 483. He felt it would be simple to administer the program under CSHB 483. The PFD Division does currently issue dividends to the estate of a deceased individual, if the individual had qualified and applied for the dividend before they died. He did not see a problem with the current language in CSHB 483 regarding this. MR. WILLIAMS stated the changes in CSHB 483 minimize the impact on the PFD Division, whereby additional forms would not have to be created. All those who were eligible would be included in the calculation of the dividend so there would not be an effect on the amount of the dividend. He pointed out the only difference would be, when it came time for payment, those specific individuals would be put in a special pending status, and the PFD Division would not issue their checks until they met the requirements of returning to Alaska and staying for all 90 days. Individuals would be sent a notice when the dividend would normally come up for payment. TAPE 94-22, SIDE B Number 000 MR. WILLIAMS continued, the first year in which the individual, with dividends on account, indicated on the application they had not been absent for more than 90 days would trigger the release of all prior year dividends. The PFD Division did not see any problems in administering the program. Number 020 REPRESENTATIVE ULMER clarified CSHB 483 would include all those individuals out of state on an allowable absence. MR. WILLIAMS confirmed REPRESENTATIVE ULMER. Number 028 REPRESENTATIVE ULMER asked if the money not paid out of the PFD every year the individual is absent would be kept in separate accounts, for example, a separate account for FY 95, FY 96, FY 97 or will it be kept in the one big dividend pool. MR. WILLIAMS answered there is one dividend fund. Every year, the money left over, the PFD Division transfers in earnings from the APFC, deducting administrative costs and prior year dividends. The remaining money is used to calculate the current year dividends. He said there was no need for a separate account and prior year obligations would be reserved in the fund itself. Number 059 REPRESENTATIVE ULMER inquired if CSHB 483 would have any impact on the calculation of the dividend level in the future. She felt if an individual collects their dividends after ten years, and the money has been kept in the fund for all of those years, it may offset the new calculations. MR. WILLIAMS responded the only effect would be if someone who previously claimed a dividend, and had been included in the calculation with a portion of funds set aside to pay their dividend, at some later point did not qualify for a dividend. Those funds would then be released and are included in a subsequent year's calculation. There would be a small incremental increase. There would not be a detrimental effect on the dividend. Number 107 REPRESENTATIVE ULMER clarified the excess money would be put aside so the PFD would always be able to be paid. Number 109 MR. WILLIAMS noted there is no provision in the dividend fund for setting something aside and paying interest on it. Therefore, the money would not accrue interest, because the funds are not set aside separately. Number 119 REPRESENTATIVE G. DAVIS stated he understood CSHB 483 would include college students, also. Students would not receive their dividends until they returned for a year from college. Number 125 MR. WILLIAMS corrected CSHB 483 states "181 consecutive days" and any college student returning in the summer would not have their dividend withheld. The qualifying year would be a calendar year. Most students would not be absent for a straight 181 day consecutive period. Number 147 REPRESENTATIVE G. DAVIS stated most students attend school from September-June and he thought they would be required to come home for Christmas. CHAIRMAN VEZEY clarified the calendar year begins January 1 and ends December 31. Number 165 REPRESENTATIVE OLBERG asked if the committee wanted to amend paragraph C, line 7, deleting the words,"the appropriate person on behalf of," and just pay the dividend to the estate of the individual. CHAIRMAN VEZEY responded MR. WILLIAMS indicated the wording was not a problem. He asked REPRESENTATIVE ULMER if the wording troubled her. Number 176 REPRESENTATIVE ULMER felt the wording was fine, as long as MR. WILLIAMS was comfortable with it. She note saying "to the estate" would be cleaner. REPRESENTATIVE G. DAVIS moved to pass CSHB 483 from committee with attached fiscal notes. Number 200 CHAIRMAN VEZEY recognized the motion and asked the committee secretary to call the roll. CSHB 483 passed from HOuse State Affairs Committee. CHAIRMAN VEZEY called a recess at 8:59 a.m. The meeting resumed at 9:10 a.m.
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