Legislature(1995 - 1996)
02/13/1996 03:35 PM STA
* first hearing in first committee of referral
= bill was previously heard/scheduled
= 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 Committee. 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 isn't. 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 gifts. 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 welfare. Number 326 EVA JOHNSON, testifying from Anchorage, stated she would rather see the longevity bonus program phased out than turned into a welfare program. 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 state. 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 bonuses. SENATOR RANDY PHILLIPS asked the status of the lawsuit Ms. Bacus mentioned. 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.