Legislature(1995 - 1996)

02/13/1996 03:35 PM STA

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
 SSTA - 2/13/96                                                                
           SB 217 INCOME LIMITS FOR LONGEVITY BONUS                          
 TAPE 96-12, SIDE A                                                            
 Number 001                                                                    
 CHAIRMAN SHARP called the Senate State Affairs Committee to order             
 at 3:35 p.m. and brought up SB 217 as the first order of business             
 before the committee.  The chairman noted that the committee did              
 not yet have a quorum, but would start by taking testimony.  He               
 asked Ms. Sipe to repeat information from the overview of SB 217              
 for the benefit of persons listening via teleconference.  That                
 overview was given during the February 1, 1996 Senate State Affairs           
 Committee meeting.                                                            
 Number 015                                                                    
 CONNIE SIPE, Director, Division of Senior Services, Department of             
 Administration, synopsized information from the overview given                
 during the February 1, 1996 meeting of the Senate State Affairs               
 Number 165                                                                    
 SENATOR LEMAN asked if it is easily identifiable on tax forms which           
 income from native corporations is taxable and which isn't.                   
 MS. SIPE responded it is broken down as to what is taxable and what           
 SENATOR LEMAN asked if non-taxable income from native corporations            
 would count toward the income limits specified in SB 217.                     
 MS. SIPE responded she cannot speak for the governor on whether it            
 is intended that income be counted toward the income limits in SB
 217.  She needs to speak to the Governor's Legislative Office                 
 regarding clarification on that question.                                     
 Number 180                                                                    
 ALISON ELGEE, Deputy Commissioner, Department of Administration,              
 added that, as the bill is currently written, the portion of the              
 native dividend distribution that is not taxable for federal tax              
 purposes would not be calculated in the income calculation for                
 purposes of longevity bonus eligibility.                                      
 CHAIRMAN SHARP commented that it would take an amendment to put               
 that item in the same classification as non-taxable interest and              
 MS. ELGEE responded that is correct.                                          
 Number 200                                                                    
 HARRY JENKINS, testifying from Fairbanks, asked how the Division of           
 Senior Services could state in a letter of January 17, 1996 that SB
 217 would only affect 8% of Alaska's seniors, if they do not know             
 seniors' income?  He disagrees with items (lines) 19-31 on page 2,            
 invading the right of privacy.  Also, if this will be administered            
 on the honor system, why not write that in the bill?  Mr. Jenkins             
 stated that there also seem to be two different effective dates in            
 the bill: one in Section 6 and one in Section 7.  He thinks the               
 bill ought to be rewritten and thrown in the wastepaper basket.               
 Number 220                                                                    
 EMMA WARWICK, testifying from Fairbanks, stated that since the                
 State of Alaska has already passed a bill phasing out the longevity           
 bonus program, further restrictions will only add more bureaucracy            
 to the system.  This would negate any planned savings.  The                   
 longevity program was implemented to repay pioneers in some way for           
 their many contributions to the development of Alaska.  Ms. Warwick           
 believes it would be gross discrimination to place an income                  
 restriction on receipt of this recognition.  All should be treated            
 equally, and the trend towards socialism terminated.                          
 Number 240                                                                    
 NANCY MENDENHALL, stated that SB 217 would change the whole idea of           
 the program.  She is bothered a great deal, because she thinks this           
 would reward someone who didn't save money when they were younger.            
 She also has a question about income from native corporations.                
 Some of that income is taxable, and some is not, and she couldn't             
 quite understand all of the statements that were made.  Under SB
 217, the longevity bonus program becomes a needs-based program, and           
 what she considers to be another welfare program.                             
 Number 258                                                                    
 CHAIRMAN SHARP clarified that a 1099 is sent out by native                    
 corporations listing which income is taxable and which is not.  So            
 that could be determined.                                                     
 Number 263                                                                    
 JOE MONTGOMERY, testifying from Anchorage, stated he is unhappy               
 with SB 217.  When the longevity bonus program was implemented, it            
 was truly a longevity bonus.  It is not a welfare program.  We do             
 not feel that receiving a longevity bonus should be based upon                
 one's income.  He thinks implementation problems with SB 217 have             
 been underestimated.  He understands the budget problems, but if              
 cuts have to be made, why not take $25 or 10% or some other percent           
 off per month.  Let the phase-out program run it's course.                    
 Number 285                                                                    
 SENATOR DUNCAN asked Mr. Montgomery how he felt about Section 3 of            
 SB 217, which relates to qualification based on physical presence             
 in the state.                                                                 
 Number 298                                                                    
 MR. MONTGOMERY responded that adjustments could be made to presence           
 requirements.  He thinks 180 days might be excessive.  He would               
 have no objection to that length of time being modified.                      
 Number 310                                                                    
 GORDON GUFFEY, testifying from Anchorage, stated that by placing a            
 cap on eligibility to receive longevity bonus benefits, SB 217 has            
 placed those remaining eligible to receive the bonus in the status            
 of receiving welfare.  This bill strays so far from the original              
 intent of longevity - recognizing the contribution of Alaskan                 
 pioneers in the development of Alaska, that it no longer deserves             
 to be called a longevity bonus.  Rather than passing SB 217 into              
 law, the legislature should abolish the longevity bonus program               
 altogether, transfer the funds from that program to the welfare               
 department, and allow that department to distribute those funds as            
 Number 326                                                                    
 EVA JOHNSON, testifying from Anchorage, stated she would rather see           
 the longevity bonus program phased out than turned into a welfare             
 Number 333                                                                    
 DONALD BARNETT, testifying from Anchorage, stated the longevity               
 bonus program is nothing more than a welfare program now, and he is           
 adamantly opposed to this whole thing the way it is.                          
 Number 344                                                                    
 JOHN GIBBONS, testifying from the Anchorage Pioneer Home, stated he           
 objected to SB 217 for previously stated reasons.  It departs from            
 the original concept of a longevity bonus.  He doesn't see how SB
 217 is different from requiring showing income when applying for a            
 pioneers' home.  If you really want to balance the budget, why                
 don't you work towards reestablishing the personal income tax.  It            
 is a fair tax, and we would be able to recover some of the wages of           
 non-resident workers.  He has no complaint about the 90-day                   
 allowable absence period.  He stated that if SB 217 is passed, you            
 might as well change the name of the Pioneers' Homes to the Old               
 Folks' Homes, because the pioneers will have long since departed.             
 Number 360                                                                    
 SENATOR DUNCAN asked Mr. Gibbons to clarify whether he thought 180            
 days would be a good amount of time for allowable absences from the           
 MR. GIBBONS replied that he thinks 180 days is overstating the                
 case, unless the absence is for a medical reason.                             
 Number 375                                                                    
 JOE LAWLOR, testifying from Homer, stated he strongly supports SB
 217.  The program was originally begun to help people stay in               
 Alaska, for those who needed assistance.  When we had all the oil             
 money, we could kind of live wild on the hog, but that oil money is           
 going.  So both the intent of the bill and also Section 3 he                  
 supports.  We have too many people who don't need the money and are           
 spending their time out of the state.                                         
 LOIS IRVIN, testifying from Homer, stated she supports SB 217.                
 Number 394                                                                    
 ROBERT GORE, testifying from Ketchikan, thinks the longevity bonus            
 program has helped keep an old, married couple out of the pioneer             
 home.  Elimination of the bonus is a very reasonable and                      
 comprehensive phase-out plan.  That plan is very agreeable to the             
 pioneers and the local elderly people in Ketchikan.  We would like            
 to continue on that route, and don't see the need for the income              
 cap, to turn this program into a needs-based program.  Mr. Gore               
 thinks that would set up a lot of unnecessary expense to determine            
 who is eligible and who wouldn't be eligible.  He has heard that SB
 217 would probably require the creation of another division or                
 office to check eligibility.  Mr. Gore stated those are his                   
 complaints against SB 217, and he hopes it is considered with care            
 before it is thrown away.  He thinks SB 217 is very harmful.                  
 ED KNOEBEL, testifying from Glennallen, stated he supports Section            
 3 of SB 217.  He asked if social security would be counted towards            
 the income limits in SB 217.                                                  
 Number 441                                                                    
 MS. SIPE responded social security is counted to the degree it's              
 taxable under federal law.  At this point, I think the limit on               
 social security is $25,000.  Above that would be taxable.                     
 MR. KNOEBEL also suggested passing a school tax.                              
 Number 449                                                                    
 HOLLY HOLLIS, testifying from Matsu, asked if adjusted gross income           
 is income described in a 1040, or if it means gross income period.          
 CHAIRMAN SHARP replied it refers to adjusted gross income as                  
 described in the 1040 form.                                                   
 MS. HOLLIS thinks a total allowable absence of 90 days should be              
 enough, except for medical reasons.  She thinks recognition should            
 be given to the contributions seniors have made to the state.  The            
 longevity bonus, no matter how much it is, is all spent in Alaska.            
 SB 217 departs from the original concept of a longevity bonus by              
 making another classification of our citizens.  She thinks a state            
 income tax should be reestablished - she knows that people from               
 outside who work in Alaska send their money outside, because she              
 used to work in a post office.  She suggested that if reductions to           
 the longevity bonus are made, they be uniform.                                
 Number 480                                                                    
 DORIS BACUS, testifying from Kodiak, asked what happened to the               
 lawsuit.  She stated she's talked to a lot of people in Kodiak, and           
 many of them feel that the longevity bonus should be done away                
 with.  They feel that it's not right that a lot of the Native                 
 Alaskans who've lived here all their lives are denied, when                   
 immigrants who've lived here a year and a day are getting longevity           
 SENATOR RANDY PHILLIPS asked the status of the lawsuit Ms. Bacus              
 CHAIRMAN SHARP replied that the state has filed their briefs.                 
 MS. SIPE added that the judge must make a decision by May.                    
 SENATOR LEMAN asked the name of that case.                                    
 MS. SIPE responded it is Magert v. Sipe.                                      
 SENATOR LEMAN commented Ms. Sipe will become famous.                          
 MS. SIPE stated that they were supposed to sue the commissioner,              
 but it got her.                                                               
 Number 497                                                                    
 GLEN HANNEMAN, testifying from Fairbanks, stated he objects to                
 tampering with the longevity bonus program, particularly since it's           
 already in phase-out mode.  This bill could throw a monkey wrench             
 into the system.  He doesn't like the stigma of means testing.  It            
 sounds like welfare.  He supports the position of the Pioneers'               
 Grand Igloo, which unanimously opposes SB 217.  He also objects               
 because the marriage section seems to contain some discrimination.            
 Letting the administrator establish regulations scares him.  Mr.              
 Hanneman would like to know how much savings are expected from SB
 217, and what the costs will be to implement the legislation.                 
 Overall, he thinks it is a bad bill, and recommends do not pass.              
 Number 516                                                                    
 CHAIRMAN SHARP pointed out that there are fiscal notes on SB 217.             
 The fiscal notes show savings, but the administration claims there            
 will be no additional costs due to SB 217.  There is an estimated             
 $6,000,000 savings in the longevity bonus program and $1,900,000              
 savings in the SSI program.                                                   
 Number 526                                                                    
 BETTY HUFMAN, testifying from Fairbanks, stated she opposes SB 217.           
 Ms. Hufman read a statement from her husband Robert opposing SB
 217.  The statement said the term "longevity bonus" is a misnomer.            
 SB 217 would convert the present program into a bastardized welfare           
 program.  Let the phase-out program run its' course.  In the event            
 SB 217 is passed, they believe a new state mini-IRS department will           
 be instituted just for those people remaining in the program.                 
 Please recommend do not pass on SB 217.  Ms. Hufman recommends that           
 SB 217 be put on hold until the outcome of the lawsuit.  She thinks           
 tracking income of applicants could cost the state much more money            
 than the program would save.  Ms. Hufman thinks allowing 180-day              
 absences from the state is too liberal.                                       
 Number 552                                                                    
 SENATOR DUNCAN clarified that Section 3 is not liberalizing the               
 amount of time people are allowed to stay out of state; it is                 
 actually making it more difficult to be out of the state.  The                
 administration is proposing that instead of being able to come back           
 in to the state once every 90 days and continue to be eligible, if            
 you are absent for a cumulative of 180 days, an applicant would               
 lose their eligibility.  He wanted to make sure that was clear, and           
 that he didn't confuse people.                                                
 CHAIRMAN SHARP added that was also how he understood it.                      
 Number 565                                                                    
 ROBERT THIBIDEAU stated that the total population in the state is             
 615,900.  Of that figure, about 29,000 are senior citizens.  The              
 longevity bonus program has about 25,500 participants.  He has the            
 feeling that the reason why there already appears to be about 3,500           
 people eligible who are not participating in the longevity bonus              
 program, is because they have enough money and they don't want to             
 be bothered with the restrictions.  In respect to turning this                
 program into a welfare program, if there's anything that seniors              
 dislike hearing, it's that they are welfare people.  Seniors are a            
 very proud people.  They think - maybe others don't, but they think           
 they contribute a lot to the state, in the past and presently.  The         
 state is very fortunate in having a very small senior population.             
 If Alaska had the same burden that California, New York, or                   
 Minnesota has, and the programs that they offer their seniors,                
 you'd be scratching your head.                                                
 TAPE 96-12, SIDE B                                                            
 MR. THIBIDEAU continued, stating that the senior population                   
 contributes so much in Alaska, that a dollar amount can't even be             
 put on it.  Our mere presence is a stabilizing influence.  He                 
 doesn't think the State of Alaska would want to go back to a period           
 when only 2-3% of the population was 65 and over.                             
 CHAIRMAN SHARP stated that, since there were no more witnesses to             
 testify and no more comments from committee members, SB 217 would             
 be set aside until interest is shown in hearing it again.                     
 SENATOR RANDY PHILLIPS stated he is not interested in SB 217.                 
 Number 572                                                                    
 SENATOR DUNCAN stated he has no interest in the bill as written,              
 but he thinks the section dealing with absences from the state is             
 worthy of discussion by itself.  That might have some impact on the           
 total cost of the program.  He wondered if the committee would want           
 to consider introducing legislation containing just that portion of           
 SB 217.                                                                       
 CHAIRMAN SHARP agreed with Senator Duncan.                                    

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