Legislature(1997 - 1998)
03/06/1997 03:42 PM Senate STA
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
SB 54 MAXIMUM INCOME FOR LONGEVITY BONUS
ALISON ELGEE , Deputy Commissioner of the Department of
Administration (DOA), gave the following overview. SB 54 is
comparable to legislation introduced by the Governor during the
last legislature and sets an income cap for eligibility for receipt
of the longevity bonus payment: $60,000 for a single individual,
and $80,000 for a married couple living together. While trying to
reduce state expenditures, the Governor is trying to determine
where those reductions will have the least impact and believes
longevity bonus payments for people at those income levels are not
necessary to maintain a livelihood in Alaska. One side benefit of
establishing an income cap to the longevity bonus program is that
federal rules regarding Supplemental Security Income (SSI) require
recipients be held harmless from the impact of receipt of the
longevity bonus payments; therefore the state pays about $2 million
in general funds to the Adult Public Assistance Program as
longevity bonus hold harmless money. If the income cap was
established statutorily, the state would no longer have to pay.
The Administration is estimating SB 54 will impact approximately
six percent of current longevity bonus program recipients, and the
state will save about $6 million annually. In implementing SB 54,
income levels will be based on adjusted gross income as reported
for federal tax purposes, minus longevity bonus payments. For those
exceeding the limits, longevity bonus payments would be suspended
for one year, so they can be reinstated if an applicant's income
fluctuation was circumstantial.
Number 156
SENATOR WARD asked if the proposal is to take the longevity bonus
away from seniors with an income over $60,000. MS. ELGEE repeated
the amount would be $60,000 for a single person, and $80,000 for a
married couple.
SENATOR WARD asked if this proposal changes the intent of the
original program to a needs-based program. MS. ELGEE explained the
longevity bonus program has undergone many changes since its
inception. The original concept behind the program was to reward
those individuals that resided in the State prior to Statehood. In
1984, as the result of a lawsuit, this program was opened up to any
senior citizen with one year of residency. In 1994, legislation
passed which created a phase-out of the program. Payment levels
were reduced and the program was closed to new applicants as of
Dec. 31, 1996.
SENATOR WARD questioned at what point in the program it was decided
certain people would be ineligible based on income. MS. ELGEE said
the Governor is making that proposal with SB 54. She repeated the
Governor is looking at ways to reduce state spending that will have
the least impact on the public, and the primary need for the
longevity bonus is amongst seniors who depend on it to pay living
expenses. People at the income levels established in SB 54 do not
require the longevity bonus payments to continue their residency in
Alaska.
Number 206
SENATOR WARD asked why the Governor would want to take money away
from our pioneers. MS. ELGEE stated she believes that if there was
plenty of money for all of the needs of the State, this proposal
would not be submitted by the Governor, however that is not the
case. Both the Administration and the Legislature have agreed on
the need to control state spending. She repeated the Governor
believes this is one way to achieve that goal with the least impact
on the population affected.
SENATOR WARD thought this proposal attacks those who least deserve
to be attacked, of anyone. MS. ELGEE answered in making this
proposal, the Governor did leave all other senior programs at
current funding levels. The longevity bonus program proposal was
a very conscious choice, in order to protect the other senior
programs that serve more needy individuals.
Number 224
SENATOR MACKEY stated SB 54 is part of the Governor's budget plan.
If SB 54 does not pass, he will have an $8 million hole in his
budget plan. Over the last six or seven years, the Legislature was
confronted with the Court decisions. The program now serves any
senior who has been a resident for one year, and about 20 percent
of the recipients have been residents for less than five years.
The cost of this program has risen about $7 to $11 million per year
because of the number of new applicants. About three years ago the
Legislature passed legislation to phase it out because there was no
way the State could withstand the growth of the program at a time
it was having to down-size.
CHAIRMAN GREEN asked how seniors would prove their income and
whether the amount would be based on income or assets. MS. ELGEE
said income would be the only criteria, so people with assets, but
no income from those assets, would not be penalized.
Number 257
CHAIRMAN GREEN felt there are landowners with the potential for
high earning power and noted she disagrees with that exemption.
SENATOR MACKIE believed the Governor's reasoning is that many
seniors with a limited fixed income critically need the longevity
bonus program to make ends meet, but the policy question is should
seniors making over $80,000 per year continue to receive payments
when we cannot really call it a longevity bonus program any longer.
SENATOR WARD agreed the program is not doing what it was originally
designed to do, but questioned why seniors who have done well
financially should be penalized. He commented there are many areas
to cut the budget without attacking senior citizens, and believed
SB 54 to be bad public policy. He stated he wholeheartedly
disagrees with this policy, and that the Zobel case did not require
seniors to submit tax reports to prove they are poor.
Number 300
SENATOR MACKIE asked how seniors would prove their income and what
fiscal impact that might have on DOA. MS. ELGEE explained there
will be no additional administrative costs. The program has been
operating on an honor system. When seniors leave the State, their
payments are suspended while they are out-of-state; they are asked
to notify DOA of their departure and return. DOA cross checks
against permanent fund dividend eligibility to determine whether
people are maintaining residency in the State. DOA intends to
operate this aspect of the longevity bonus program in a similar
manner. Recipients would be subject to audit, and if fraud was
discovered, they would no longer be eligible for the program.
SENATOR MACKIE asked if that process could be accomplished without
additional employees. MS. ELGEE answered DOA has three employees
who administer the longevity bonus program and works with OMB staff
for auditing services, and plans to continue with that approach.
Number 321
CHAIRMAN GREEN noted she received an inquiry about the message from
the Governor, enclosed with longevity bonus checks, which alludes
to the Governor's proposal for his 1998 capital budget monies for
a senior citizens housing development program. That program will
"...provide grants for buying land, site preparation, building
materials, continuing maintenance of Pioneer Homes across Alaska,
and completion of special care units in the Sitka and Palmer
Pioneer Homes for the care of residents with Alzheimers Disease and
related disorders." She stated her concern about the misuse of
including messages with the payment, and asked about the omission
of any reference to SB 54. She questioned whether seniors would be
notified about SB 54 in the next mailing.
MS. ELGEE commented DOA has done some public information work and
published an article in the Senior Voice in December or January
that outlined the proposal and the necessity for SB 54. She
was unaware of whether the Governor intends to include a message
about SB 54 in longevity bonus checks, but offered to pass the
suggestion on to his staff.
CHAIRMAN GREEN announced the State Affairs Committee would be
holding a teleconference on SB 54 at 10:30 a.m. on Saturday and
adjourned the meeting at 4:08 p.m.
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