Legislature(2005 - 2006)BELTZ 211
01/26/2006 03:30 PM Senate STATE AFFAIRS
| Audio | Topic |
|---|---|
| Start | |
| SB214 || SB215 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | SB 214 | TELECONFERENCED | |
| *+ | SB 215 | TELECONFERENCED | |
SB 214-APPROP FOR ENERGY DIVIDEND & ASSISTANCE
SB 215-ENERGY DIVIDEND: INCREASE 2005 PFD
3:38:25 PM
CHAIR THERRIAULT announced SB 214 and SB 215, to be up for
consideration and that he and Senator Albert Kookesh were the
sponsors. He intended to introduce the bills and take initial
public comment, but he didn't intend to take any action that
day.
He informed committee members that the idea for the bills came
from two public forums he attended last fall to discus the
potential impact on Alaskans from high energy costs.
3:41:24 PM
He explained that Representative Jay Ramras called the first
meeting after a number of Interior fuel distributors expressed
concern that a growing number of their customers were going to
have difficulty paying their winter fuel bills. Alaska
Industrial Development & Export Authority (AIDEA) and Interior
lending institutions also attended the meeting because the fuel
distributors weren't sure they could extend sufficient credit to
carry their customers through the winter and also pay their own
fuel bills to the refiners.
Discussion regarding which assistance programs were available to
the end users initially focused on the Low Income Energy
Assistance Program (LIHEAP) but distributors stated concern that
many customers wouldn't qualify for the program even though they
would be squeezed financially.
3:42:11 PM
The second forum was a radio talk show. A caller expressed the
opinion that the State of Alaska set the high price of energy in
Interior Alaska. He contended that if the state were to sell oil
to the refiners at half price, the savings would ultimately flow
to the end consumer. A back-and-forth discussion ensued and the
caller ultimately suggested that politicians don't tend to think
outside the box. He charged that more often than not they tell
you what they can't do for you rather than what they can do for
you.
CHAIR THERRIAULT said he decided the caller had a legitimate
point so he talked with his staff about a creative way to help
citizens with the price of energy. He is using the generic term
because of the variability in the types of energy used and
reasons for its use. The constant is that all energy costs have
gone up and no one will get through the Alaskan winter without
paying for the energy they use.
The proposal is for a one-time distribution to help with current
costs and to encourage individuals to step forward and take
conservation measures that will pay cost-saving dividends in
years to come. Consumers should not expect that this is the
beginning of an ongoing program, he warned.
Data from the 2005 Permanent Fund Dividend application was used
to come up with the anticipated distribution of $250 per person.
However, because there are potential problems associated with
that data, updated information from the 2006 dividend
applications may be needed as well. Because of the potential
legal issues associated with the distribution, he stated that he
is open to suggestions.
The bill has two additional components to direct more of the
earnings surplus to the constituency with the greatest need. The
first proposes to put an additional $5.7 million into power cost
equalization to make up the FY06 budgetary shortfall and the
second adds $10 million to the low-income weatherization
program.
He explained that SB 214 sets up the appropriations and SB 215
relates to the mechanism by which the distributions would be
made.
He questioned the $655,000 fiscal note from the Permanent Fund
Dividend Division.
3:51:46 PM
SENATOR CHARLIE HUGGINS aired the view that people are excited
that the money would be distributed directly to the people.
CHAIR THERRIAULT acknowledged that has been a criticism as well,
but it comes down to the fact that you can't go very long in
Alaska without paying your energy bills so whether the bill is
paid with the money distributed by the state or from the
individual's paycheck doesn't matter. Energy bills ultimately
must be paid.
He stated his belief that the spiraling cost of energy caught
people off guard. When the Legislature developed its oil and gas
tax system, it wasn't anticipated that oil would reach $60 or
$70 per barrel. But because prices have risen to that point,
it's now clear that State of Alaska has an unusual situation in
that what is good for the state treasury is harmful for the
individual. To address the situation he contended that using
approximately 10 percent of the anticipated budget surplus for a
onetime program warrants consideration.
3:55:04 PM
SENATOR THOMAS WAGONER cautioned that oil prices aren't likely
to drop in the near future and although everyone likes free
money, there is a real and stated concern that this program
could become an entitlement.
3:56:44 PM
CHAIR THERRIAULT said he could understand his point and that's
one reason he wanted to base the distribution on existing
programs or data. Although nothing prevents a future legislator
or future Legislature from considering a similar distribution,
nothing in the current proposal carries forward.
SENATOR HUGGINS remarked teaming with another legislator to look
for a positive solution is a good thing.
3:57:50 PM
SENATOR KIM ELTON said he had several questions about the
distribution mechanism. First, how much of the money would leave
the state and second, how much would go to families that have no
energy cost associated with their housing. Referencing the
latter, he said he was thinking about military families living
in military housing.
3:58:52 PM
CHAIR THERRIAULT reiterated he is open to suggestions regarding
a different distribution mechanism.
3:59:53 PM
SENATOR ELTON clarified he didn't mean to focus on the military
because college students who live in dorms also have fewer
energy challenges.
4:00:59 PM
JIM DALMAN, Program Officer, Division of Public Assistance,
Department of Health and Social Services (DHSS), explained that
the division administers the state's low-income home energy
assistance block grant. The heating assistance program operates
under the state portion of the block grant and its mission and
purpose is to help low-income Alaskans offset high home-heating
costs.
CHAIR THERRIAULT interjected to explain that the program is
established on the federal level. Federal funds flow through the
state budget and are subsequently administered by the state and
some Native entities.
He asked whether state or federal law establishes eligibility
criterion.
MR. DALMAN replied it's both. The low-income energy assistance
block grant is federally funded on an annual basis and has a
provision for direct funding for Native entities. In Alaska
there are eight Native organizations, four regional non-profits,
and a number of small tribal or community organizations that
receive direct funding. DHSS shares some of its funding so that
all entities are able to offer comparable benefits.
A maximum eligibility provision exists that amounts to 60
percent of median income adjusted by state. In Alaska a lower
standard is used, which is 150 percent of the Alaska poverty
standard or $36,000 per year for a household of four.
Individuals are income-tested against that qualifying guideline
on a monthly income basis. Tribal organizations have the
latitude to deviate to set up their own delivery methods and
eligibility criteria.
Alaska received about $12 million in block grant money this year
and about one-third went to Native organizations. The department
expects to serve about 10,500 households and the Native
organizations might serve between 3,000 and 4,000 households.
Applications are made in the fall and the program's early focus
is on the elderly, the disabled, families with children under
age six, and people living in rural areas. The program operates
September thru May and has never relied on state funding.
Federal guidelines allow 10 percent maximum utilization of the
block grant money for administration, which requires an
efficient operation. The result is that most of the benefit goes
to those who are eligible for the service.
Applicants receive a one-time annual grant the amount of which
is driven by household size, income, and location. Location is
modeled to take into consideration heating degree-days and local
fuel costs. As a result, the grants vary widely. The average
payment this year is just over $800 per qualifying household and
the range is from $200 up to $1,000 in some areas.
About 60 percent of the qualifying households receive no other
form of public assistance, but the application volume has risen
about 18 percent so far this year. Buying power is down and
applicants have expressed increased concern that their fuel
dollar isn't stretching very far.
4:08:22 PM
A provision in the block grant allows states to set aside up to
15 percent of their LIHEAP (Low Income Home Energy Assistance
Program) block grant for low-income home weatherization. Each
year a certain portion of the funds is transferred to AHFC
(Alaska Housing Finance Corporation) to supplement the state's
low-income residential weatherization program. He said they
intend to do that in some measure again this year simply because
it's a good way to defray costs in the long term.
He recapped; the program is income tested and the benefit is
delivered directly. Typically more than 90 percent of the
benefit goes directly to the individual's home energy supplier
with the primary focus on home heating needs. Renters are not
excluded. If heat and electricity is included in the rent an
individual could still qualify for the program.
4:10:52 PM
CHAIR THERRIAULT asked if the $12 million he mentioned for the
LIHEAP funding included tribal payments.
MR. DALMAN turned to an audience member for verification.
UNIDENTIFIED SPEAKER gave an inaudible response.
SENATOR ELTON questioned whether it would work to use the data
from the Permanent Fund Dividend Division then distribute
through the federally funded heating assistance program.
4:13:25 PM
LAURA BAKER, Budget Chief, DHSS, clarified that the needs could
not be met without supplemental state assistance this year. She
informed members that the governor's office has submitted a
supplemental bill that includes an additional $8.8 million in
state funds to supplement the heating assistance program for the
year. About $2.8 million will go to the Native entities and
about $5.9 million will go to the state program.
SENATOR ELTON asked if there is any problem associated with the
supplemental state money being counted as household income and
therefore making some individuals ineligible because of the
increase.
MS. BAKER deferred to Mr. Dalman.
SENATOR THOMAS WAGONER asked how much it costs to administer the
grant.
MR. DALMAN responded administrative costs amount to about 10
percent.
4:15:53 PM
SENATOR BETTYE DAVIS asked Mr. Dalman to comment on the
advisability of earmarking the proposed funds to the established
program so that the money gets to those that really need it
rather than distributing $250 to every Alaskan who qualifies for
a Permanent Fund Dividend.
MR. DALMAN responded whatever the Legislature decides to do
could be accommodated, but he would reserve judgment regarding
the best mechanism. He emphasized that there is need out there
and he welcomes the notions about giving relief to those in
need.
4:18:06 PM
CHAIR THERRIAULT asked how many tribal providers there are.
MR. DALMAN replied there are eight Native entities that receive
direct federal LIHEAP block grant funding. They are: Tanana
Chiefs, Association of Village Council Presidents from Bethel,
Kuskokwim Native Association, Orutsararmuit Native Corporation,
Seldovia, Kenaitze Indian Tribes, Tlingit Haida Central Council,
and the Aleutian/Pribilof Islands Association, Inc.
CHAIR THERRIAULT asked if there are nine different sets of
criteria.
MR. DALMAN replied not all programs deliver payment directly to
the provider.
MARY RIGGEN-VER, former Heating Assistance Program Coordinator,
DHSS, said she thought that most Native grantees provide the
grants directly to energy suppliers.
CHAIR THERRIAULT questioned whether payment always goes to the
vender.
MS. RIGGEN-VER said not always. Over 90 percent of the grant to
the state goes directly to the vendors, but in certain instances
heat and electricity is included in the rent so there is
provision for a cash grant.
CHAIR THERRIAULT asked if there are different income criteria
among the nine different grantees.
MS. RIGGEN-VER explained that the federal maximum is either 60
percent of median or 150 percent of the Alaska poverty level.
The former is a bit higher for lower household sizes and the
latter is higher for larger households.
CHAIR THERRIAULT questioned how the supplemental funds would be
spent.
MS. RIGGEN-VER replied the additional money would primarily
address the increased costs that people are facing that the
current grant doesn't address. The LIHEAP grant hasn't been
increased for three years because the federal funding hasn't
increased.
CHAIR THERRIAULT summarized the same clientele would be served.
MS. RIGENBEAR agreed provisionally because the program has had
more applicants due to increased energy costs.
CHAIR THERRIAULT said that's part of his concern. Fuel
distributors have indicated that some households are struggling
to pay for their energy yet they don't qualify for the
assistance program.
MS. RIGGEN-VER agreed it is a problem.
4:23:48 PM
SENATOR DAVIS questioned whether receiving benefits from the
proposed energy dividend could cause individuals to become
ineligible for the low-income heating assistance program
MR. DALMAN replied there is a hold harmless provision related to
the Permanent Fund Dividend and the proposed energy dividend
could probably be defined in a similar fashion.
4:25:06 PM
SENATOR DAVIS asked about the cost of increasing the hold
harmless provision.
MR. DALMAN surmised it wouldn't be a direct budget issue.
SENATOR ELTON suggested that if most of the money goes directly
to the venders, most applicants would avoid the problems
associated with increased individual income.
MR. DALMAN agreed; the current benefit is excluded from income
calculation.
4:27:04 PM
SENATOR HUGGINS asked about the 15 percent that is set aside for
weatherization.
MR. DALMAN informed him that is the maximum allowable under the
block grant provisions. So far this year $600,000 has been
allocated.
SENATOR HUGGINS asked how long it takes to get weatherization
help after completing an application.
MR. DALMAN deferred response to the AHFC representative.
4:28:31 PM
CHAIR THERRIAULT asked Mr. Butcher to come forward and explain
how the low-income weatherization works and the payment that
comes from LIHEAP funds.
BRIAN BUTCHER, Governmental Relations and Public Affairs
Director, Alaska Housing Finance Corporation (AHFC), outlined
the low-income weatherization program and stated that its
purpose is to provide cost effective energy improvements
primarily to low-income families.
This fiscal year the funding to non-profits across the state is
$1.8 million from the federal government and $3 million in AHFC
dividend. He noted that the Municipality of Anchorage is the
only government entity in the state that operates its own
program. He explained that over 1,900 clients in 615 homes were
served last year.
To demonstrate that the weatherization program is geared to
needy families he made the following points:
ƒOver 50 percent have children under age six.
ƒOver 25 percent have a disabled family member.
ƒOver 25 percent have elderly family member(s).
For every million dollars in funding approximately 150 homes are
weatherized. The program provides an economic boost to the local
community as well as the family because local vendors are hired
by the non-profits to do the weatherization work.
A positive aspect to the program is that the benefits are
enduring. Once a house is weatherized there is a long-term
energy savings benefit to the family and the community, he
concluded.
4:32:47 PM
CHAIR THERRIAULT used the previously cited figures and
calculated that the average home could be weatherized for
between $6,000 and $7,000.
MR. BUTCHER responded the cost varies widely depending on the
home and its location, but the average weatherization cost is
between $4,000 and $4,5000 per home. An additional point is that
as energy costs go up the price of materials increase as well.
The AHFC program manager estimates that materials increased
between 30 and 40 percent since last year. Therefore, a similar
increase in the program is needed to maintain equilibrium.
CHAIR THERRIAULT pointed out that the bill proposal is for $10
million and he was interested in an estimate of the program's
capacity for "getting the money out door."
MR. BUTCHER replied the money wouldn't hit the street the first
year; it would likely take two to three years to get the program
to the point that it could handle the increase. Also, having no
assurance of a follow-up program would create some difficulty.
CHAIR THERRIAULT asked whether complaints are handled locally or
whether they get back to him.
MR. BUTCHER replied AHFC isn't involved in the day-to-day
workings, but hopefully complaints related to unnecessary work
would get back to the corporation.
CHAIR THERRIAULT noted that the funding is a combination of
federal and state funds and he was curious about the latitude
for changing eligibility criteria.
MR. BUTCHER responded there is no latitude with federal money,
but there is considerable flexibility with state funds. One
reason for state latitude is that it benefits the corporation if
people don't lose their homes.
CHAIR THERRIAULT asked him to review the federal eligibility
requirements and to explain the decision making process for
determining whether federal or state money is used for a
particular weatherization project.
MR. BUTCHER explained that federal funds take care of the very
low income and the rest are paid from the AHFC dividend program.
With regard to income criteria, he explained that a family of
four qualifies at $43,000.
4:38:27 PM
CHAIR THERRIAULT opened teleconference testimony.
4:38:42 PM
DEBBIE JOSLIN, Eagle Forum Alaska Representative from Delta
Junction, testified via teleconference in support of SB 214 and
SB 215. She explained that the forum represents families across
Alaska and the bills are definitely family friendly and offer
welcome relief.
4:41:08 PM
TODD HONER, Energy Efficiency Specialist for Golden Valley
Electric Association in Fairbanks, and Chair of the Policy
Advisory Council for the Alaska Weatherization Program,
testified via teleconference to report that energy efficiency
programs have been his forte since the late 1970s when he became
an energy auditor under Governor Hammond's administration. He
described SB 214 and SB 215 as well intended and a fast response
but, in the long run, a short-term solution to a problem that
will plague Alaska far into the future.
He suggested that the state should lead the way in looking for
long-term solutions to the energy problems that face the
residents of Alaska. Previous experience tells him that the
current proposal might not bring the needed relief.
He reviewed calculations he had made to demonstrate that
investing in energy efficient devices such as compact
fluorescent lights result in a substantial return on the initial
investment. He further suggested addressing energy consumption
behavior, addressing building codes, addressing energy
efficiency codes. Instead of addressing cost, let's address
efficiencies, he concluded.
4:55:00 PM
CHAIR THERRIAULT responded he has made changes to increase the
energy efficiency of his home in Fairbanks and he would support
others increasing efficiency. The question is how to get there.
MR. HONER said the way the market runs, consumers would make
efficiency changes faster if the consumer knew that energy
prices weren't going to drop and that neither the state nor the
federal government was going to offer relief.
4:58:35 PM
VIANN NATIONS, Copper River Native Association (CRNA), testified
that CRNA supports the bill.
5:02:56 PM
CHAIR THERRIAULT asked Sharon Barton about the fiscal note.
SHARON BARTON, Director, Permanent Fund Dividend Division,
stated there would be no problem using the dividend division
database. If the energy dividend were combined with an annual
Permanent Fund dividend payment, the fiscal note would be zero.
A problem does arise, however, if there is an extra payment. The
mainframe/server system is old and specifically designed to pay
each individual just one check per year so rebuilding the system
to accommodate a second payment would result in a very large
fiscal note.
The division estimates that a second payment would cost $400,000
for changes to the system and $255,800 in other costs. With
apologies she presented the $655,800 fiscal note for a special
payment.
5:05:57 PM
CHAIR THERRIAULT admitted he didn't anticipate that the system
would require reprogramming so he would likely have additional
questions before taking final action on the bill.
He questioned how quickly the 2006 application data is updated
and how many applications have been verified to date.
MS. BARTON replied approximately 150,000 records have been
updated to the mainframe but they haven't been adjudicated. Over
230,000 online applications and 100,000 paper applications have
come in, but most of the paper applications are still in the
mailroom. The speed with which the information could be made
available depends on how complete you might want it to be, she
said. Typically the file isn't finished until it is locked down
about Sept 1 for direct deposit reconciliation. At that time,
between 98 and 99 percent of the processing is done although
there are always several thousand files that aren't complete
until well into the next application period.
5:09:37 PM
CHAIR THERRIAULT mused 2005 payments are still being made.
MS. BARTON said that's correct.
CHAIR THERRIAULT stated that although some legal issues might
need to be addressed, that particular database is undoubtedly
the best in the state on who qualifies as a resident.
MS. BARTON cautioned that if a special payment were to be made,
the division estimates that it would take three months to do the
work.
SENATOR WAGONER questioned why the energy dividend wouldn't go
to each household rather than to each resident. He asked Ms.
Barton if the permanent fund data could be sorted that way.
MS. BARTON replied the list wouldn't be accurate. Some families
file under a family packet and the payments are made to that
address, but all the family members don't necessarily reside
under one roof.
5:13:19 PM
CHAIR THERRIAULT remarked he gave that idea some thought, but it
could have inequities as well.
5:13:45 PM
MR. DALMAN clarified that the energy dividend for heating
assistance could, through regulation or bill amendment, be
defined as excluded income.
CHAIR THERRIAULT announced he would hold SB 214 and SB 215 in
committee.
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