Legislature(2003 - 2004)
02/19/2003 01:39 PM Senate JUD
| Audio | Topic |
|---|
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
SB 58-PFD INELIGIBILITY/MOTOR VEHICLE INSURANCE
SB 59-PERMANENT FUND INELIGIBILITY FOR DUI
SENATOR JOHN COWDERY, sponsor of SB 58 and SB 59, introduced
Crystal Moore and said she would present the bills.
CRYSTAL MOORE, staff to Senator Cowdery, described SB 58 as an
act relating to the Permanent Fund Dividend Program that
involves uninsured motorists. Following is her presentation.
Each year, hundreds of Alaskans fall victim to
uninsured drivers and the state law is clear: drivers
must maintain a minimum amount of liability insurance.
Unfortunately, there is no way to keep track of that
unless an accident occurs. This bill requires that if
you are caught without insurance you have a one-year
suspension of your permanent fund dividend [PFD] for a
first offense. For a second offense it is a five year
suspension of your PFD. It makes you ineligible, which
means you do not have a dividend. You do not qualify
so there is no money coming to you, no money
necessarily that any other department can take either.
Nobody can garnish those wages because they do not
exist. Because the permanent fund dividend is a right,
not a privilege, these penalties fall above and beyond
all other penalties that are currently provided by for
the law.
CHAIR SEEKINS asked whether members had questions for Ms. Moore.
SENATOR HOLLIS FRENCH asked about a statement in the sponsor
statement that reads, "...hundreds of Alaskans fall victim to
uninsured drivers." Although he didn't dispute the statement, he
noted he would be "out of luck" if he didn't carry uninsured
motorist insurance and his car was hit by an uninsured motorist.
As the victim, he would like to be able to sue that uninsured
motorist for all or part of his or her PFD because that is
frequently the only asset a lower income individual has.
MS. MOORE said she understands Senator French's reaction but the
intent of the bill is to make uninsured motorists aware that it
is unacceptable to be uninsured.
SENATOR FRENCH advised the current criminal penalty for driving
while uninsured is up to 90 days in jail, a $500 fine and
revocation of the driver's license. He asked whether more people
couldn't be discouraged from driving without insurance if they
were aware it could result in jail time.
SENATOR COWDERY agreed individuals could be encouraged, but if
people do the math they'd learn that by spending $400 or $500 to
buy liability insurance they wouldn't jeopardize their $1,500
dividend. He thought incentive was built into the bill.
SENATOR SCOTT OGAN said Senator French brought up an interesting
point and is probably correct in that the dividend is the only
asset some individuals have. He wondered whether the state could
stand second in line.
SENATOR COWDERY explained the way the bill is written, the
entitlement is gone and the uninsured motorist doesn't get a
PFD. The victim would have to "go after" any assets the driver
or the owner of the car might have. He asked attorneys present
whether he was correct to say the car owner is ultimately
responsible for the driver.
SENATOR FRENCH replied children could be sued if their parents
have engaged in negligent entrustment. "That is if you give your
car over to someone who isn't licensed," he explained. In the
drug underworld, it's not uncommon for someone to steal a car
then claim to have loaned it to someone else. In this type of
instance, the individual that runs into you has no insurance,
doesn't own the car and has no assets. His concern with the bill
is that individuals with no money don't buy insurance but still
drive for a variety of legitimate reasons, such as getting to
work or taking children to the doctor or going to the grocery
store. If those individuals lose their PFD when busted for
driving without a license, they're less likely to buy insurance
in the future. It's also less likely that the victim who
suffered a modest amount of damage would receive any
restitution.
CHAIR SEEKINS commented he's been in the automobile business for
quite awhile and has frequently been in the situation in which
he or his companies owned a vehicle that was involved in an
accident and were named in lawsuits under vicarious liability,
negligent entrustment and other theories of law.
SENATOR COWDERY said 5,500 Alaskans were convicted of DUI in
1999. When he assumed a dividend of $1,500, and that one-third
of the 5,500 offenders would become second offenders, he
calculated that between $160 and $180 million could be left in
the fund at the end of ten years.
SENATOR FRENCH asked if this was the DUI portion of the bill.
SENATOR COWDERY said that was in SB 59.
CHAIR SEEKINS said the bills are similar but address different
offenses. He asked for verification that the convicted
individual would not be eligible for a PFD, which would mean
that asset [PFD] could not be attached by the state or anyone
because it wouldn't exist. That money would "stay in the pot"
and be split among the people that are eligible to receive a
dividend.
1:50 p.m.
SENATOR COWDERY announced he had "a command call from the
Governor's office" and had to leave the meeting.
CHAIR SEEKINS advised the committee would continue to take
testimony and would take action at another meeting. If there
were many changes, they would prepare a committee substitute
(CS) for consideration.
He then asked Ms. Moore to confirm retroactivity was not
intended; everyone would begin with a "clean slate."
MS. MOORE replied they did not intend the bill to be
retroactive.
CHAIR SEEKINS opined the language might need to be changed to
clarify that point.
SENATOR OGAN asked whether anyone from the Department of Law was
present to testify.
CHAIR SEEKINS asked whether Linda Wilson was available on
teleconference.
LINDA WILSON, Deputy Director, Public Defender Agency, testified
via teleconference and advised she was more prepared to testify
on SB 59, but she had submitted the indeterminate fiscal note
for SB 58 and was available to answer questions on that fiscal
note.
She explained that although the agency doesn't have many cases
in which an individual is charged with one of three identified
misdemeanors in Title 28, the comments made previously by
committee members echo her concerns. The PFD is a primary source
of income for indigent individuals and making them potentially
ineligible for one to five years takes away a pool of money that
is often attached and used for restitution and other financial
obligations, including child support.
SENATOR OGAN asked for clarification that the affected
individuals would be those charged with not having insurance.
MS. MOORE said that is correct.
SENATOR OGAN asked if there would be an additional jury trial
expense to take away the PFD.
MS. MOORE thought all court fees would be combined.
SENATOR OGAN asked for legal concurrence.
CHAIR SEEKINS called Diane Wendlandt to respond.
DIANE WENDLANDT, Assistant Attorney General, Collections and
Support Section, testified via teleconference and asked for the
question to be restated.
SENATOR OGAN asked if a separate trial would be required to
eliminate the dividend.
ASSISTANT ATTORNEY GENERAL WENDLANDT explained her understanding
is a criminal judgment would be entered, which would
automatically disqualify the individual from receiving the PFD;
it would not have to be included in an order. Her office
collects criminal fines, the cost of incarceration and,
restitution on behalf of DUI victims. When the agency receives
criminal judgments, collections are made through a cost
effective, electronic PFD attachment. The judgments are
generally small, ranging from $50 to $2,000, so traditional
collection methods, such as garnishing income, cost more than
the judgment. The exception is the PFD; because the collection
is done electronically, the per-judgment cost is very small.
SENATOR FRENCH commented it might have the unintended
consequence of forcing more cases to trial if the permanent fund
dividend was at stake on top of the criminal penalties.
SENATOR OGAN noted his question was whether elimination of an
individual's PFD would be adjudicated in the same trial as the
criminal proceedings: Would this happen automatically on
conviction?
SENATOR FRENCH interpreted it to mean the criminal conviction
would be transmitted to the permanent fund office and the
individual would become ineligible for a dividend.
CHAIR SEEKINS asked whether anyone from the Department of Law
was on line.
MR. LARRY PERSILY, Deputy Commissioner, Department of Revenue,
informed the committee that the Department of Revenue
administers the Permanent Fund Dividend program. According to
current law, an individual convicted of, or serving time for a
felony, a third misdemeanor or a misdemeanor on a prior felony,
becomes ineligible for the PFD for the following year. Every
year the Departments of Public Safety and Corrections submit an
electronic database of individuals meeting the ineligibility
criteria. The Department of Revenue matches the database against
past dividend application data back to 1988. Although somewhat
arbitrary, the assumption is that individuals who would have
qualified in past years would qualify in the current year if it
weren't for the prohibition in state law that makes them
ineligible. Statute requires PFDs that would have gone to the
individuals deemed ineligible to go to the Council on Domestic
Violence and Sexual Assault, Legislative Office of Victims
Rights, Violent Crimes Compensation Board, and the Department of
Corrections for offender treatment programs. The dividends
replace general fund money in those budget categories.
In October 2002 data matches were found for 8,270 individuals
who met the statutory criteria for ineligibility who had
received past dividends. If each dividend is calculated at
$1,500, $12.74 million will be available to those programs in
the FY04 budget. Each year the money is electronically
transferred from the dividend fund to those programs through the
appropriation process.
In response to Senator Ogan's question he explained that most
individuals who are ineligible for a dividend due to the
statutory prohibition don't apply for one because they know they
won't receive one. If they apply and are denied, they have the
right to a formal hearing. If denied at that level, they may
appeal to superior court. A prioritization list for dividend
garnishment and collection is set in statute: child support is
first, court ordered restitution is second, state student loans
are third, court ordered fines are fourth, judgments against
minors come next, followed by other state debt and then private
debt.
He said he was available for questions and someone from CSED was
on line from Anchorage and available to answer questions as
well.
2:00 p.m.
SENATOR OGAN observed the methods for garnishing dividends that
weren't applied for are creative.
DEPUTY COMMISSIONER PERSILY agreed the state is taking those
dividends as though the individuals had applied, but he didn't
write the law he is simply carrying it out. Money is budgeted to
the programs that are impacted by the crimes the individuals
committed.
SENATOR OGAN said, "The way this bill is written, they don't get
one, period, so you couldn't really take it for anything else.
Yes, no?"
DEPUTY COMMISSIONER PERSILY replied, "This just adds it to the
list." Individuals who are denied eligibility for the next year
because of DUI or driving without insurance would have their
dividends go into the pool and provide more money to pay for
those programs.
CHAIR SEEKINS said statute sets forth specific uses and
directional flow for dividends of statutorily ineligible
applicants.
DEPUTY COMMISSIONER PERSILY agreed.
CHAIR SEEKINS questioned whether the definition of ineligible
"starts it down this course, so if we didn't want it to do that
we'd have to address the other statute?"
DEPUTY COMMISSIONER PERSILY replied that is correct; if the
committee wants the money for those deemed ineligible to stay in
the dividend fund, other statutory changes would need to be
made.
MS. MOORE explained the bill states the money can stay in the
permanent fund unless the Legislature approves that it be put
into the programs mentioned previously.
SENATOR FRENCH asked for confirmation that the bill says the
money in question can stay in the dividend fund and doesn't have
to move with the other ineligible funds.
MS. MOORE said that was correct.
SENATOR FRENCH asked which portion of the bill addresses where
the money can go.
MS. MOORE referred him to page 3, lines 13 through 26 and added:
"The funds that are collected from this, from SB 58 and SB 59,
they stay in the permanent fund dividend division."
SENATOR FRENCH asked for verification they would be treated
differently from all other ineligible PFD recipients and whether
that was spelled out in subsection (C) on page 3 and in
paragraphs (5) (A) and (B) on that page.
MS. MOORE said that was correct.
2:08 p.m.
SENATOR JOHNNY ELLIS asked what happens to creditors who might
otherwise benefit from the PFDs if this becomes law.
MS. MOORE replied this bill says that convicted individuals are
ineligible. She stated they don't have a PFD, "there is no money
there that can be given to any other department, that can be
taken for any reason."
SENATOR ELLIS asked what the social benefit would be.
MS. MOORE replied the intention is to leave the money in the
fund for the rest of Alaska's citizens.
SENATOR ELLIS asked if that is because everyone would receive a
larger dividend.
MS. MOORE replied she could look into that further and get back
to him.
CHAIR SEEKINS thought the intent was to add incentive to
purchase automobile insurance as required by state law by
imposing a penalty of losing eligibility.
MS. MOORE replied that is true.
SENATOR OGAN asked if legislation passed last year that makes it
a misdemeanor for not carrying insurance on vehicles that are
driven.
SENATOR ELLIS asked whether someone from the Child Support
Enforcement Agency was available to answer questions.
CHAIR SEEKINS called Marti Greeson to testify.
MARTI GREESON, Director of the Anchorage chapter of Mothers
Against Drunk Drivers (MADD), testified via teleconference and
expressed gratitude for the work that went into drafting the
bill. She said that MADD works with victims of motor vehicle
accidents and does not see the need to increase each
individual's permanent fund dividend. However, MADD would like
financial assistance to be more readily available to victims of
uninsured motorist and/or alcohol related accidents.
SENATOR OGAN said he wasn't clear on her position on the
legislation.
MS. GREESON replied MADD supports the bill, but would like to
hear continuing discussion about whether the money would go back
into the permanent fund or go with other forfeited money to
support programs, such as one for victims of motor vehicle
crashes.
SENATOR OGAN asked her if she was referring to SB 58.
MS. GREESON replied she was referring to SB 58, the bill that
deals with driving without insurance.
CHAIR SEEKINS asked whether the committee could assume she had a
position on SB 59 as well.
MS. GREESON agreed she did.
CHAIR SEEKINS asked whether there were any additional questions
for Ms. Greeson regarding SB 58.
SENATOR ELLIS asked whether the Chair would take testimony on
both bills.
CHAIR SEEKINS replied that was correct, but testimony was not
all inclusive at that time.
SENATOR ELLIS asked Ms. Greeson for specific written suggestions
relating to the use of the dividends in the battle against drunk
driving and the after effects.
MS. GREESON agreed to do so.
MR. JOHN MAIN, Director of the Child Support Enforcement
Division (CSED), Department of Revenue, testified via
teleconference to advise members his division had submitted a
fiscal note, but did not take a position on the bill at this
time.
SENATOR COWDERY stated, with regard to the fiscal note, no one
can know how many children might be involved. He said he was
sure CSED has attached a number of dividends from individuals
who might become ineligible in the future because of DUI and
driving without insurance convictions. The intent of the bill is
that those individuals lose their dividends.
SENATOR OGAN asked about the fiscal note from CSED, which says
by statute child support takes priority over all other
garnishments against a dividend and noted this bill eliminates
rather than garnishes the dividend. Because of the large number
of delinquent child support cases, he wondered whether Senator
Cowdery would consider language to allow child support to stand
first in line.
SENATOR COWDERY stated the individuals whose dividends are
garnished for child support would receive no dividend.
Therefore, if they were convicted for driving without having
insurance on their vehicle, there would be no dividend to
garnish. He pointed out, "This should give them incentive to get
insurance. You can get insurance for a lot less than at the
present day dividend."
SENATOR OGAN said he understood that, but this bill would
penalize the children because they would no longer receive child
support from the garnished dividend.
SENATOR COWDERY asked Ms. Moore to explain the reasoning for the
bill.
MS. MOORE explained the child would still get his or her own
PFD.
2:17 p.m.
CHAIR SEEKINS restated Senator Ogan's concern that if an
individual's PFD was already garnished for child support, and
that person became ineligible to receive a dividend, the
dependent child would be the one who would lose the support.
SENATOR OGAN agreed that was his concern.
SENATOR COWDERY replied, "But they're eligible now if they live
right."
CHAIR SEEKINS advised care should be taken to ensure that a
third and possibly innocent party isn't diminished because a
parent didn't buy insurance.
SENATOR COWDERY replied he understood the concern and said "I
put some thought into it when I eliminated it."
CHAIR SEEKINS said he appreciated the point.
SENATOR ELLIS commented they could be confusing the Division of
Family and Youth Services and the Child Support Enforcement
Division. He remembered that CSED has always opposed bills that
diminish the ability to recover for dependent children through
child support. He asked Mr. Main to comment on the change in
policy on this bill.
MR. MAIN replied CSED hasn't had a change in policy, but it
might have to live with this change. If the legislation passes,
the children will feel the impact.
CHAIR SEEKINS asked for an estimate of the number of dividends
that are currently garnished for child support.
MR. MAIN replied about 16 percent of CSED's collections came
from garnished dividends.
CHAIR SEEKINS then asked what percentage of those people are
indigent.
MR. MAIN replied CSED doesn't have that information.
CHAIR SEEKINS asked if individuals didn't pay and had their
dividend garnished because they were indigent or because they
were obstinate.
MR. MAIN laughed and said it's because they don't pay or because
they are in arrears. Anytime parents are in arrears, their
dividend is collected.
CHAIR SEEKINS noted that just as the fiscal note is
indeterminate, the impact of this bill is indeterminate as well.
MR. MAIN said last year CSED estimated roughly 36 percent of the
corrections population was affected by dividend collections. He
thought this amounted to about 5,400 individuals.
CHAIR SEEKINS asked if anyone else wanted to testify.
SENATOR COWDERY asked whether convicted felons were entitled to
a PFD because he thought felons lost that right.
CHAIR SEEKINS advised ineligibility follows a felony conviction.
There are formulas by which individuals lose eligibility and
this legislation adds to the formula. He noted information from
the Department of Corrections and the public defenders office
categorizes 80 percent of the people in jail as indigent.
SENATOR OGAN asked Mr. Main whether there is any way to collect
a felon's dividend for child support purposes.
MR. MAIN replied there was no way.
SENATOR COWDERY commented the dividend is likely to be
diminished in the future.
CHAIR SEEKINS asked whether there was further testimony. [There
was none.]
SENATOR COWDERY said the first offense referred to in the bill
carries only a one-year penalty.
CHAIR SEEKINS replied they understand.
He held SB 58 in committee.
| Document Name | Date/Time | Subjects |
|---|