Legislature(2003 - 2004)
05/16/2003 08:00 AM House STA
* first hearing in first committee of referral
= bill was previously heard/scheduled
= 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 in. 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] requirement. 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 legislature]. 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 landing." 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 note]. 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. 2469 REPRESENTATIVE SEATON said he wanted to clarify that the committee will be voting on the original bill [requested by] the governor. 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.