Legislature(2003 - 2004)

05/16/2003 08:00 AM House STA

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
HB 158-ELIMINATING LONGEVITY BONUS PROGRAM                                                                                    
Number 2042                                                                                                                     
CHAIR WEYHRAUCH  announced that  the next  order of  business was                                                               
HOUSE  BILL NO.  158,  "An Act  eliminating  the longevity  bonus                                                               
program and making related conforming  changes; and providing for                                                               
an  effective date."   He  stated  his intent  was to  ask for  a                                                               
motion to move  the bill to the House  Finance Standing Committee                                                               
for  public comment  there.   He  noted that  there is  a lot  of                                                               
passion involved regarding HB 158.                                                                                              
Number 1970                                                                                                                     
CHIP WAGONER, Lobbyist  for Pioneers of Alaska,  stated that that                                                               
group has  looked at the  issue surrounding  HB 158, is  aware of                                                               
the  fiscal realities  of Alaska,  and  has joined  with AARP  to                                                               
propose a compromise  position that is fair to  seniors, "to give                                                               
them time to have a softer  landing."  He told the committee that                                                               
[the compromise] would  provide a "4-year phase-out"  - four more                                                               
years of [longevity bonus] payments,  with a 20 percent reduction                                                               
each year.                                                                                                                      
MR. WAGONER opined  that [the compromise] is a gutsy  move by the                                                               
leadership of AARP  and by the Pioneers of  Alaska, because "they                                                               
will be  taking over a  $9 million hit in  FY 04," followed  by a                                                               
decrease [of  funds] over  the next four  years.   Conversely, he                                                               
stated, [the  compromise] would protect  the seniors that  are in                                                               
the  program currently  who have  planned  their financial  lives                                                               
around the  [longevity bonus]  payments, and  it would  give them                                                               
time to "readjust with some dignity."                                                                                           
MR. WAGONER conveyed  the belief that [the  compromise] is fairer                                                               
than "a cutting off" of the  entire program in one year, which he                                                               
said is cruel.  He also  offered the belief that [the compromise]                                                               
is   fairer  than   the   current   needs-based  proposal   being                                                               
circulated.   That  proposal, he  explained,  would eliminate  75                                                               
percent of the people in the program with one fell swoop.                                                                       
MR.  WAGONER said  that [the  Pioneers of  Alaska] hope  that the                                                               
legislature adopts  [the compromise],  that the  governor accepts                                                               
it, and that "life goes on for our seniors."                                                                                    
Number 1879                                                                                                                     
REPRESENTATIVE LYNN asked if any  thought has been given to going                                                               
to a needs based [program] after the four years.                                                                                
MR. WAGONER prefaced  that he cannot speak  for the organization.                                                               
However,  he stated  that he  has given  that some  thought.   He                                                               
noted that  one issue with  trying to turn the  current longevity                                                               
program  into a  needs  based  one is  that  it  only takes  into                                                               
account half  of the senior  population.  He clarified  that only                                                               
half  of  the senior  population  is  in  the  program now.    He                                                               
mentioned seniors, women, and children  [who may be in need], and                                                               
"the working poor,"  and said, "Whatever program  is developed by                                                               
the  legislature  should  incorporate  those people,  too."    He                                                               
reiterated that  [the Pioneers of  Alaska] think that  the phase-                                                               
out is  fair.  He added  that he hopes that  the legislature will                                                               
"step  up  to  the  plate,"  with  regard  to  drug  prescription                                                               
programs," for example.                                                                                                         
MR.   WAGONER,   in  response   to   a   follow-up  question   by                                                               
Representative Lynn, said that he  has not had communication with                                                               
the administration  on this particular proposal  and has received                                                               
no assurances from [the governor] one way or the other.                                                                         
Number 1699                                                                                                                     
MARIE  DARLIN,  Coordinator,  Capital   City  Task  Force,  AARP,                                                               
testified that AARP  has previously given testimony on  HB 158 to                                                               
state  that  its first  priority  is  that [the  longevity  bonus                                                               
program]  remain as  is.    She emphasized  that  there are  many                                                               
seniors who "really depend on this."                                                                                            
MS.  DARLIN said  that AARP  was asked  by some  of the  staff to                                                               
either find  $47 million or come  up with an option.   Therefore,                                                               
AARP  began looking  at possible  options.   In working  with the                                                               
Pioneers  of Alaska,  AARP jointly  agreed that  [the compromise]                                                               
seemed  like something  that  would be  workable  if the  current                                                               
longevity bonus could not be maintained as it currently is.                                                                     
MS. DARLIN, addressing the issue  of people going on adult public                                                               
assistance,  stated   that  AARP   feels  that  "the   rates  for                                                               
eligibility for  that are  very low."   She  said there  are many                                                               
seniors who  are "on the  borderline," and would not  qualify for                                                               
[public assistance], yet  still need some [financial]  help.  She                                                               
continued as follows:                                                                                                           
MS. DARLIN said  that if the end result is  either a continuation                                                               
of the  current program or an  acceptance of an optional  type of                                                               
program  over a  period of  a few  years, then  AARP can  work on                                                               
making a "fairly  level playing field for seniors,"  in order for                                                               
seniors  to  be  able  to  remain  in  their  homes  and  out  of                                                               
"facilities," and  remain as independent  as she  emphasized they                                                               
want to  be.  Ms. Darlin  reiterated that AARP was  asked to come                                                               
up with options,  which it did.  She stated  that AARP felt lucky                                                               
to be able  to work with the  Pioneers of Alaska to  come up with                                                               
something that both groups thought was at least feasible.                                                                       
MS. DARLIN said  that AARP knows that there  are some legislators                                                               
who still want to "hang tough on  'a promise is a promise.'"  She                                                               
said that AARP really feels the  same, yet remarked, "In order to                                                               
be able  to work with the  legislature, and all, if  you're asked                                                               
for  options, that's  what you  try to  do."   She said  that the                                                               
longevity bonus still needs to  be considered, and she stated the                                                               
fact  that seniors  bring in  a great  deal into  the economy  of                                                               
Alaska, and  are an important  part of the state;  therefore AARP                                                               
wants to see  that seniors are taken care of  as much as possible                                                               
and allowed to remain independent for as long as possible.                                                                      
Number 1530                                                                                                                     
PAT  LUBIE,   Legislative  Representative  for  AARP,   told  the                                                               
committee that  he works  in the Anchorage  office on  both state                                                               
and  federal issues.   He  mirrored Ms.  Darlin's testimony  that                                                               
AARP  would prefer  that the  longevity bonus  [program] run  its                                                               
course and eventually  end as people die or leave  the state.  He                                                               
said that  AARP doesn't think  that that  option will exist.   He                                                               
mentioned  the collaboration  between  AARP and  the Pioneers  of                                                               
Alaska.    He  referred  to Mr.  Wagoner's  description  of  [the                                                               
compromise] as  "a softer landing."   He stated, "People  have to                                                               
be able to prepare for this;  you can't just take all this income                                                               
away from people and then expect them to survive."                                                                              
Number 1481                                                                                                                     
MR. LUBIE said that  a "means test" has a lot of  logic to it and                                                               
will  help "the  people  who  need it  the  most."   However,  he                                                               
pointed out that the problem with  the means test is that it only                                                               
looks at  income.   He related  that a  woman in  Anchorage who's                                                               
[annual income]  is between $17,000  and $18,000  "probably could                                                               
make it."  He  said that she would not be  eligible for the means                                                               
test.   He noted that she  also has $750 a  month in prescription                                                               
drug bills.   He stated that  one third of "older  Alaskans" have                                                               
no coverage  for prescription  drugs and  the means  test doesn't                                                               
take any of  that into consideration.  He said  that AARP will be                                                               
looking  for some  way -  either through  [U.S. Congress]  or the                                                               
state legislature -  to also deal with  the enormous prescription                                                               
drug problem  that older people  face.   He said, "The  older you                                                               
are, the  more prescriptions  you take."   He stated  that Alaska                                                               
has the highest  prescription drug increase rate  in the country;                                                               
the   Keyser   Family   Foundation   reported   that   [Alaska's]                                                               
prescriptions  increased 25  percent,  with the  average for  the                                                               
country being 17 percent.                                                                                                       
MR.  LUBIE  remarked  that  when  the  governor  said  that  [the                                                               
longevity bonus  program] doesn't  work and would  be eliminated,                                                               
older  people  began calling  AARP  every  day, unable  to  sleep                                                               
because they  are worried about the  issue.  He stressed  that it                                                               
is important  to come  up with  a plan,  so that  on July  1, the                                                               
older people  don't get a note  saying, "By the way,  the program                                                               
ends completely.   You better make some other plans."   He added,                                                               
"It's a little tough when you're 85."                                                                                           
Number 1343                                                                                                                     
REPRESENTATIVE  GRUENBERG stated  that this  is a  very difficult                                                               
situation.  He  told all three testifiers that  he applauds their                                                               
efforts to  find a  solution.   He asked them  if they  had truly                                                               
obtained   resolutions  from   their   board   of  directors   or                                                               
memberships  to back  up what  they  are doing  [in proposing  HB
158].  He said that he  can foresee what will happen politically:                                                               
People will write  saying, "The groups may have said  we want the                                                               
compromise,  but  I can't  live  with  this."   He  stated  that,                                                               
politically, he has to follow the wishes of his constituents.                                                                   
Number 1270                                                                                                                     
MR.  WAGONER  responded  that  the  Pioneers  of  Alaska  have  a                                                               
governmental affairs committee which  is charged with legislative                                                               
advocacy.  Members throughout the  state serve on that committee.                                                               
He said  that he  has a  letter from  the grand-president  of the                                                               
Pioneers  of  Alaska,  giving  authority  to  that  committee  to                                                               
represent the  membership.   He told  the committee  that letters                                                               
will  be arriving  from each  igloo  - the  Pioneers of  Alaska's                                                               
subsidiary  organizations.     He  also  noted,   "The  committee                                                               
chairman representing  the committee  has authorized us  to speak                                                               
on this compromise."                                                                                                            
Number 1213                                                                                                                     
MR.  LUBIE informed  the  committee that  AARP  has an  executive                                                               
council that sets  the legislative policy for  the association in                                                               
each state.   In addition, he said that [AARP]  asked many of its                                                               
current and  former leaders  at the local  level what  they found                                                               
out about the issue, how they  reacted [to the proposed cut], and                                                               
how they thought people in their local chapters would react.                                                                    
MR. LUBIE  admitted that  there would  undoubtedly be  people who                                                               
would "take shots  at" [AARP's] organizations for caving  in.  He                                                               
stated it is imperative that  [AARP] be concerned about what will                                                               
happen on  July 1,  and he  said that  the organization  wants to                                                               
throw [the  compromise] on  the table.   He recognized  that many                                                               
legislators would  like to  let the  longevity bonus  program run                                                               
its course  and let it phase  out, while others would  like to do                                                               
some type  of a means  test.  He added  that, no matter  what the                                                               
legislature might  do, what  needs to  be done  is to  figure out                                                               
what is best  for older people.  For example,  he said, "What are                                                               
they  going to  be  able  to handle,  in  terms  of paying  their                                                               
bills."   He also talked about  relieving some of the  stress and                                                               
anxiety that this issue has raised with older people.                                                                           
MR. LUBIE said that [AARP] knows  that it has a responsibility to                                                               
educate  its folks.   He  stated that  the organization  realizes                                                               
also that its  people have paid taxes before  and understand that                                                               
the government  is not  free and  Alaska is  in a  fiscal crisis.                                                               
They are  not naïve  and know  that they will  have to  pay their                                                               
fair share.  Many of  those people question whether the longevity                                                               
bonus program  should have been  established in the  first place,                                                               
he said.   He added that the  program did not end up  the way the                                                               
legislature had intended, and he mentioned a court case.                                                                        
Number 1100                                                                                                                     
MR.  LUBIE noted  that the  average  age of  the longevity  bonus                                                               
recipient is 77,  and [the recipient base]  is composed primarily                                                               
of older  women.  He  stated that the most  significant financial                                                               
event in  an older  woman's life  is when her  husband dies.   He                                                               
explained that an older woman usually  spends much of her and her                                                               
husband's assets  to pay for  his health care  at the end  of his                                                               
life, and that's when women become poor.                                                                                        
MR.  LUBIE   stated  that  [AARP]   will  be  working   with  the                                                               
administration, as  well as with  the legislature, to  attempt to                                                               
figure  out  what  needs  to   be  done  regarding  adult  public                                                               
assistance and housing,  for example.  He said that  one woman he                                                               
spoke  to  who  had  received  "the  letter"  from  the  governor                                                               
indicating which safety-net programs  were available to her, told                                                               
him that  she is number 1,170  on the eligibility list  and would                                                               
be dead before being eligible  for federal housing.  He clarified                                                               
that her  point was that she  is indeed eligible, but  cannot get                                                               
Number 1015                                                                                                                     
REPRESENTATIVE GRUENBERG said  that, at the request  of a senior,                                                               
he had  offered an  amendment in the  House Special  Committee on                                                               
Ways and  Means to provide an  exemption for people over  the age                                                               
of 65.  He stated that, if  Alaska adopts a sales tax, that would                                                               
be "an additional  hit for the seniors."  He  stated that he does                                                               
not know that  he will support [HB  158].  He said  that he would                                                               
like to  see if there's  a way  that [the legislature]  can solve                                                               
this problem.                                                                                                                   
Number 0965                                                                                                                     
REPRESENTATIVE  CRAWFORD  stated  that   he  does  not  like  the                                                               
position that  [the legislature] is in.   He stated that  his big                                                               
concern is  that [the legislature]  would adopt  [the compromise]                                                               
only  to have  [the administration]  veto it.   He  said that  he                                                               
doesn't see a  good solution.  He said that  he would much prefer                                                               
that if  a phase-out  is adopted,  it be more  like 10  percent a                                                               
year for 10 years,  not 5 years.  He stated, "I  don't want to be                                                               
put in a position  to vote for a cut in  the longevity bonus, but                                                               
if that's what  y'all want, I'll do it without  objection.  But I                                                               
don't like it."                                                                                                                 
Number 0873                                                                                                                     
REPRESENTATIVE LYNN stated, "There's  already a phase-out program                                                               
in effect:  It's called death."                                                                                                 
Number 0856                                                                                                                     
REPRESENTATIVE  SEATON  asked  [the   testifiers]  if  they  have                                                               
received  indications  from  [the administration]  that  if  [the                                                               
compromise]  is adopted  it will  satisfy [the  administration's]                                                               
Number 0831                                                                                                                     
MS. DARLIN responded that a letter  was sent to the governor, but                                                               
no reply  was received.   She mentioned  further meetings  on the                                                               
issue like the one present and  said that "we" were asked to give                                                               
an option.   She stated that "we've run the  figures" to see what                                                               
could be done to  save money over time.  She  noted that the cost                                                               
of the program already would go  down $3 million every year under                                                               
the current phase-out, because of  the death rate.  She continued                                                               
as follows:                                                                                                                     
     There's going to be a lot  of them that are going to be                                                                    
     gone in  five years.   That's for  sure.   As everybody                                                                    
     says, "Look  at the obituaries."   And, as some  of the                                                                    
     other legislators  have said,  "We're dying as  fast as                                                                    
     we can."  Well, what more  can we do than to say [that]                                                                    
     we're trying  to look at some  options.  We do  want to                                                                    
     protect our people.                                                                                                        
MS. DARLIN reiterated  that [AARP'S] preference would  be to keep                                                               
the program  as it  currently is, with  the original  schedule of                                                               
phase-out, but  if that can't  happen then other options  need to                                                               
be looked at.  She stated, "Most  of our people are willing to do                                                               
that."  In  fact, she said, most of the  testimony that was given                                                               
during hearings  on this issue  showed that "we're willing  to go                                                               
back to paying an income tax."   She added, "Nobody said anything                                                               
about sales  tax."  She said  that those people on  the lower end                                                               
of the scale  would not be paying that much  [income tax] anyway;                                                               
therefore an income tax wouldn't hit  people as [hard] as some of                                                               
the other  options.  She  noted that the governor  has "line-item                                                               
veto" [power].                                                                                                                  
Number 0621                                                                                                                     
REPRESENTATIVE  CRAWFORD  said,  "It  seems  to  me  that  you're                                                               
negotiating against yourself ....   Until you hear from the third                                                               
floor, I don't see how you can negotiate."                                                                                      
MS. DARLIN  responded that  that may  be true,  and she  said she                                                               
supposes the  only place that  [AARP] can negotiate is  with [the                                                               
REPRESENTATIVE CRAWFORD said, "We don't have the power."                                                                        
MS. DARLIN replied, "I don't know where that leads us."                                                                         
Number 0565                                                                                                                     
MR. WAGONER,  in regard to  a previous comment  by Representative                                                               
Crawford,  stated  that the  governor  has  already said  in  his                                                               
budget that he  wants to eliminate the  [longevity bonus] program                                                               
in its entirety.   He opined that the governor  has already taken                                                               
a political  hit and does  not have  anything to lose  by staying                                                               
the course.   He said that he  thinks it would be  harder for the                                                               
governor to redline  the compromise proposal of  the seniors than                                                               
it  would  to  redline  the   whole  program,  because  it  is  a                                                               
compromise  that is  both fair  and  takes into  the account  the                                                               
fiscal realities  of the  state.  He  said that  [the compromise]                                                               
shows responsibility by  the seniors to step up to  the plate and                                                               
respond to  the governor's public  declaration in  the newspapers                                                               
asking  [seniors] for  a proposal.   He  read [that  declaration]                                                               
from an unidentified news article as follows:                                                                                   
     In the  tradition of Alaska's pioneers,  I am confident                                                                    
     that pre-1996  seniors who are receiving  the longevity                                                                    
     bonus would want  to lead the effort  to right Alaska's                                                                    
     fiscal  problems.   They would  be among  the first  to                                                                    
     agree to share the load in down times.                                                                                     
MR. WAGONER  said, "Well, we took  him up on his  challenge."  He                                                               
stated that  he doesn't  know any  other organization  other than                                                               
AARP  and the  Pioneers of  Alaska  that has  showed some  fiscal                                                               
responsibility by being willing to take  the hit in order to help                                                               
the  fiscal  situation.    He  posited  that  it  would  be  more                                                               
difficult  for the  governor  to veto  [the  compromise] than  it                                                               
would be for him to eliminate the entire program.                                                                               
MR. WAGONER said  he knows that many legislators  want to support                                                               
"the entire  program."   He said,  "If you've  got the  votes, go                                                               
ahead  and do  it.   But if  you don't  have the  votes, then  we                                                               
believe  our  compromise  puts  us  in  the  strongest  political                                                               
position to  go forward and to  allow our seniors to  have a soft                                                               
Number 0368                                                                                                                     
REPRESENTATIVE SEATON asked  if the $9 million  decrease per year                                                               
includes the  $3 million  reduction from death  rate, or  is just                                                               
"20 percent off of the number of checks that are written."                                                                      
MR. WAGONER answered that he  believes that it takes into account                                                               
"the death  also," based  upon looking at  the average  number of                                                               
monthly payments.  He said that,  if the program stays as is, the                                                               
projected FY 04  cost is $44,776,000.  Under  [the compromise] it                                                               
would be $35,821,000.  He continued as follows:                                                                                 
In the  succeeding years where you  have the big savings,  for FY                                                               
05 it would go from $41.5 million  down to $24.9 million.  For FY                                                               
06 it would go from $38.3 million  down to $15.3 million.  For FY                                                               
07 it would go  from $35.2 million down to $7  million.  In other                                                               
words, if  the legislature and the  third floor can get  over the                                                               
hump  of FY  04, then  from  a physical  point of  view from  the                                                               
state, it's much, much easier.                                                                                                  
Number 0235                                                                                                                     
CHAIR  WEYHRAUCH asked  Mr. Wagoner  to provide  those statistics                                                               
[in writing] to the committee.                                                                                                  
[The  hearing on  HB 158  was temporarily  suspended in  order to                                                               
address the next bill.]                                                                                                         
HB 158-ELIMINATING LONGEVITY BONUS PROGRAM                                                                                    
Number 2718                                                                                                                     
CHAIR  WEYHRAUCH announced  that  the committee  would return  to                                                               
HOUSE  BILL NO.  158,  "An Act  eliminating  the longevity  bonus                                                               
program and making related conforming  changes; and providing for                                                               
an effective date."                                                                                                             
CHAIR WEYHRAUCH  summarized the previous testimony  heard earlier                                                               
the  same day  for the  benefit of  Representative Holm,  who had                                                               
recently arrived.                                                                                                               
Number 2669                                                                                                                     
REPRESENTATIVE SEATON  moved [to report  HB 158 out  of committee                                                               
with  individual  recommendations  and  the  accompanying  fiscal                                                               
CHAIR WEYHRAUCH noted an objection from Representative Lynn.                                                                    
Number 2652                                                                                                                     
REPRESENTATIVE  CRAWFORD  said  that  [the  decision  before  the                                                               
committee] is  a tough  one on  him and  everybody involved.   He                                                               
said that he  knows it is not  a choice that the  seniors want to                                                               
[make].   He stated his  understanding that "something  is better                                                               
than nothing," but told [the  testifiers], "I don't believe we're                                                               
negotiating  with the  governor  here."   He  stated  that he  is                                                               
opposed to  a 5-year  phase-out and believes  that "the  deal has                                                               
already been struck."  He said  that he doesn't know how he could                                                               
vote to  phase [the longevity  bonus program] out in  any manner.                                                               
He concluded, "I don't  like it.  And I don't know  how to say it                                                               
any better than that."                                                                                                          
Number 2598                                                                                                                     
REPRESENTATIVE DAHLSTROM stated for  the record that although she                                                               
thinks that this  is a tough situation, she cannot  vote to agree                                                               
to a 4-  to 5-year phase-out.  She said  that she doesn't believe                                                               
that "that  would allow  us to  fix our  problem in  a reasonable                                                               
amount  of time."   She  said she  believes that  no matter  what                                                               
changes are worked  out among groups, the governor will  do as he                                                               
said and remove the program.   Representative Dahlstrom said, "If                                                               
there were to  be a phase-out, and  it was a six-month  to a year                                                               
phase-out, that  might be a different  story.  But I  can't agree                                                               
to a 4- to 5-year [phase-out]."                                                                                                 
Number 2552                                                                                                                     
REPRESENTATIVE LYNN  stated that he  thinks "we" have a  de facto                                                               
contract  with  the  seniors  of   Alaska.    He  reiterated  his                                                               
disclosure that  he is  not a recipient  of the  longevity bonus.                                                               
He  said  that  he  knows  the  governor  is  attempting  to  cut                                                               
spending.  He  said that that is a laudable  goal, but he doesn't                                                               
think it "should  be cut on the  backs of the seniors."   He said                                                               
that he  doesn't have a clue  what the governor will  do when [HB
158] or any other bill arrives on his desk.                                                                                     
REPRESENTATIVE   LYNN  reiterated   that   the  longevity   bonus                                                               
[program] is, in  fact, being phased out by death.   He said that                                                               
he totally agrees that phasing out  the program in a 4- or 5-year                                                               
plan  is  better  than  [ending]  it all  at  once.    He  added,                                                               
"Nonetheless, you dress  a pig in a tuxedo and  it's still a pig.                                                               
And we shouldn't get rid of it."                                                                                                
Number 2503                                                                                                                     
CHAIR  WEYHRAUCH, in  response to  a  question by  Representative                                                               
Seaton, confirmed  that there is  no amendment  to the bill.   He                                                               
explained  that [the  intent] is  to move  [HB 158]  to the  next                                                               
committee of referral for any amendments.                                                                                       
REPRESENTATIVE  SEATON  said  he   wanted  to  clarify  that  the                                                               
committee will be voting on  the original bill [requested by] the                                                               
Number 2410                                                                                                                     
REPRESENTATIVE DAHLSTROM renewed the motion  to report HB 158 out                                                               
of committee.                                                                                                                   
CHAIR WEYHRAUCH reminded the committee that an objection had                                                                    
been previously stated.                                                                                                         
A roll call  vote was taken.   Representatives Seaton, Dahlstrom,                                                               
Holm, and  Weyhrauch voted in  favor of HB 158.   Representatives                                                               
Lynn, Crawford,  and Gruenberg voted  against it.   Therefore, HB
158  was  reported  out  of  the  House  State  Affairs  Standing                                                               
Committee by a vote of 4-3.                                                                                                     

Document Name Date/Time Subjects