Legislature(2001 - 2002)

05/03/2001 08:37 AM House STA

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
SB 193 - STUDY:EFFECTS OF PERMANENT FUND DIVIDEND                                                                             
Number 0080                                                                                                                     
CHAIR  COGHILL announced  that the  committee would  hear CS  FOR                                                               
SENATE BILL NO. 193(FIN), "An  Act making a special appropriation                                                               
to the  Alaska Legislative  Council for a  study of  the economic                                                               
and social effects  of the permanent fund dividend  on the state;                                                               
and providing for an effective date."                                                                                           
Number 0097                                                                                                                     
SENATOR PETE  KELLY, Alaska State Legislature,  sponsor explained                                                               
that  SB  193  proposes  to  study what  is  going  on  with  the                                                               
permanent fund dividend (PFD), specifically  in preparation for a                                                               
possible  gas [pipeline]  boom.   If  Alaska  experiences a  boom                                                               
similar to what  occurred in the '70s during  construction of the                                                               
oil pipeline,  he predicted, there  would be impacts on  the PFD.                                                               
He then  mentioned an  [Alaska Superior]  Court case  [Lindley v.                                                             
Malone] from 1990, which, he  opined, narrowly left open the door                                                             
to examine  the possibility  of instituting  a two-year-residency                                                               
requirement for  the PFD.  He  reported that the court  said that                                                               
the state has to prove that the  PFD has a negative impact on the                                                               
state before  a two-year-residency requirement could  be imposed.                                                               
All  that SB  193  does,  he concluded,  is  begin  to study  the                                                               
socioeconomic impacts of the PFD.                                                                                               
SENATOR KELLY used the example of  a family of five who is trying                                                               
to decide  whether to move  to Alaska from  the Lower 48:   under                                                               
recent  PFD payouts,  this  is close  to  $10,000; therefore,  he                                                               
opined, the  decision to come  to Alaska  could be based  on that                                                               
$10,000.  He  suggested that the question  before the legislature                                                               
is  whether  it  wants  the  PFD drawing  people  to  Alaska,  or                                                               
"opportunity" drawing people.  The  study proposed by SB 193 just                                                               
gives  the  legislature  information;  it  does  not  create  any                                                               
statutory changes.   After  the study, if  it is  then determined                                                               
that the  PFD is  having a  negative effect -  he said  the court                                                               
called it a magnet affect  - then the legislature could implement                                                               
a two-year-residency requirement.                                                                                               
CHAIR COGHILL noted  SB 193 states that the results  of the study                                                               
are to be  presented to the legislature on or  before January 15,                                                               
2002.  He  asked whether this study could be  completed in such a                                                               
short period of time.                                                                                                           
SENATOR KELLY  said that he has  talked with people who  do these                                                               
kinds of studies and they have  indicated to him that it could be                                                               
done in that timeframe.                                                                                                         
Number 0355                                                                                                                     
CHAIR COGHILL asked  Senator Kelly whether he  has "the blessings                                                               
of the  departments" with  regard to  the requirements  placed on                                                               
them by SB 193.  "Are we pushing them, or walking with them?"                                                                   
SENATOR KELLY  responded that rather  than go for a  fiscal note,                                                               
SB  193 just  appropriates the  money [from  the receipts  of the                                                               
Alaska  Permanent Fund  Corporation].   Although the  departments                                                               
are  going to  be  involved, they  will not  be  asked for  their                                                               
active participation other than  to provide information that they                                                               
should be collecting already.  He  explained that it would be the                                                               
Alaska  Legislative Council  that would  contract with  a company                                                               
for the study.                                                                                                                  
REPRESENTATIVE  JAMES  surmised that  a  list  of PFD  applicants                                                               
could be obtained  from the Permanent Fund  Dividend Division and                                                               
then compared  with lists  of people  applying for  welfare, food                                                               
stamps, and unemployment compensation.   She asked if this is how                                                               
Senator Kelly  envisions the  study being done.   She  also noted                                                               
that many people  who advocate keeping the PFD as  it is and even                                                               
making it  bigger are those who  say that there are  probably not                                                               
very many people who come to Alaska just for the PFD.                                                                           
SENATOR KELLY  said that  goal of  the study  is to  provide hard                                                               
evidence - as opposed to anecdotal  evidence - of how many people                                                               
come to Alaska just for the PFD.                                                                                                
REPRESENTATIVE JAMES  mentioned that she heard  testimony several                                                               
years ago from a woman with  a disabled child who moved to Alaska                                                               
specifically  because Alaska  provided  better  programs for  her                                                               
child.   She  also  mentioned  that a  study  done regarding  the                                                               
Longevity  Bonus  Program  indicated   that  when  the  residency                                                               
requirement was lowered to one  year, approximately 40 percent of                                                               
people  who applied  for it  had only  been in  Alaska for  three                                                               
years  or less.    Thus,  she surmised,  there  is evidence  that                                                               
people do come to Alaska just for the programs.                                                                                 
REPRESENTATIVE FATE said he is glad  to see SB 193.  He mentioned                                                               
that a study done several  years ago documented approximately how                                                               
much money  was leaving  the state  each year  as what  he called                                                               
"ghost  money," and  documented approximately  how many  families                                                               
leave  Alaska every  five  years.   He  asked  whether the  study                                                               
proposed by SB 193 would also include this sort of information.                                                                 
SENATOR KELLY said  it would not.  Demographic  changes will only                                                               
be studied in relation to the PFD, he added.                                                                                    
REPRESENTATIVE STEVENS, returning  to the example of  a family of                                                               
five choosing to  move to Alaska for $10,000 in  PFD money, noted                                                               
that Alaska  would also  be paying the  educational costs  of the                                                               
three children.   He also  noted that  since many people  come to                                                               
Alaska  for a  combination of  reasons,  it wouldn't  be easy  to                                                               
determine  that it  is strictly  because of  the PFD.   He  asked                                                               
Senator Kelly what  he intends to do if the  results of the study                                                               
are vague.                                                                                                                      
Number 1029                                                                                                                     
SENATOR  KELLY  admitted that  even  if  the study  is  approved,                                                               
extending the residency requirements to  two years might still be                                                               
prohibited; it is a bit of a gamble.   He added that if the study                                                               
is  authorized,  he  envisions  the  Alaska  Legislative  Council                                                               
working to set  the study's parameters with  whichever company is                                                               
chosen so that the results won't  be vague.  He explained that he                                                               
does not  have any  objection to  people who  move to  Alaska who                                                               
have  something to  offer the  community in  return; he  said his                                                               
fear  is that  people who  have nothing  to contribute  to Alaska                                                               
will  move up  here  solely because  of the  PFD  and then  start                                                               
living off public assistance programs.                                                                                          
REPRESENTATIVE WILSON  said she is  glad to see that  the effects                                                               
of  seasonal employment  will  also be  investigated.   [For  the                                                               
reader's information,  this line  of inquiry is  not specifically                                                               
listed  in  SB  193,  it  is  merely  mentioned  in  the  sponsor                                                               
statement.]    As a  former  Tok  resident, she  recalled  people                                                               
without any  assets to  speak of  moving in  to the  community in                                                               
order to qualify for the PFD as well as Alaska's welfare system.                                                                
REPRESENTATIVE CRAWFORD opined that the  study proposed by SB 193                                                               
will  help determine  what is  actually going  on.   He recounted                                                               
that he came  "up the highway" 25 years ago  with all his worldly                                                               
belongings in  an International Scout,  and that he came  for the                                                               
opportunities that Alaska had to  offer.  He added that receiving                                                               
the PFD over the years has helped him and his family.  He said:                                                                 
     I  don't  know how  we  gauge  what a  negative  effect                                                                    
     really  is; ...  what's  negative  and what's  positive                                                                    
     really is kind  of vague here.  I'm sure  that a lot of                                                                    
     us that came up the highway  to work on the pipeline 25                                                                    
     years  ago  are  the  fathers and  mothers  of  today's                                                                    
     doctors and  lawyers and what  have you.  I  don't know                                                                    
     that having  people come up  the highway ...  [who] are                                                                    
     in  dire  straights,  isn't going  to  have  some  good                                                                    
     effects  as well.    I  know that  in  my  trade as  an                                                                    
     ironworker, we're short of ironworkers.   We don't have                                                                    
     enough ironworkers to build a  gas [pipeline]; we don't                                                                    
     even  have  enough  ironworkers  to  build  a  20-story                                                                    
     building in Anchorage  this year.  We're  going to need                                                                    
     more people, and it seems  to me that we've been losing                                                                    
     a lot of good people over  the last few years; a lot of                                                                    
     anecdotal evidence  coming in  to me  is that  kids are                                                                    
     going  [to school  out of  state] and  they don't  come                                                                    
     back.    So  I  don't  know  where  we  get  tomorrow's                                                                    
     generation  from  unless it  is  people  coming up  the                                                                    
     highway, and if the dividend  helps them to get up here                                                                    
     and  stay up  here  and ...  [become]  new Alaskans,  I                                                                    
     don't know that it's all bad.   So I'm glad that you're                                                                    
     going to do  this study, so we can kind  of decide what                                                                    
     is a good effect and what's a bad effect.                                                                                  
SENATOR KELLY said:  "I think  you've, in some ways, hit the nail                                                               
on the head; this  is going to be a tough  study because what you                                                               
are looking at, really, is  motivation.  If there's an ironworker                                                               
out there that  wants to come to Alaska, and  that dividend helps                                                               
them make the  decision, then I say, 'Come on  up.'"  He remarked                                                               
that  the people  who came  up the  highway in  the '70s  for the                                                               
pipeline came up because they had a  job.  He said it is going to                                                               
be  difficult to  get clear  answers from  the study  because the                                                               
goal will be  to document the number of people  who are motivated                                                               
by the idea of getting a PFD check rather than getting a job.                                                                   
Number 1611                                                                                                                     
REPRESENTATIVE  FATE  moved  to   report  CSSB  193(FIN)  out  of                                                               
committee  with individual  recommendations and  the accompanying                                                               
fiscal  note.    There  being no  objection,  CSSB  193(FIN)  was                                                               
reported from the House State Affairs Standing Committee.                                                                       

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