Legislature(1997 - 1998)
01/28/1997 01:35 PM House FIN
| Audio | Topic |
|---|
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE FINANCE COMMITTEE
JANUARY 28, 1997
1:35 P.M.
TAPE HFC 97 - 14, Side 1, #000 - end.
TAPE HFC 97 - 14, Side 2, #000 - #352.
CALL TO ORDER
Co-Chair Gene Therriault called the House Finance Committee
meeting to order at 1:35 P.M.
PRESENT
Co-Chair Hanley Representative Kelly
Co-Chair Therriault Representative Kohring
Representative J. Davies Representative Martin
Representative G. Davis Representative Moses
Representative Foster Representative Mulder
Representative Grussendorf
ALSO PRESENT
Nicole Poirrier, Representative Pete Kott; George Dozier,
Chief of Staff, Representative Pete Kott; Nanci A. Jones,
Director, Permanent Fund Dividend Division, Department of
Revenue; Sue Badilla, Self, Juneau; Tim Sullivan, Staff,
Representative Eldon Mulder; James Chase, (Testified via
teleconference), Director, Governmental Affairs, Department
of Military and Veterans Affairs, Anchorage; Frank Dillon,
(Testified via teleconference), Anchorage; Jay Dulany,
(Testified via teleconference), Director, Division of Motor
Vehicles, Department of Public Safety, Anchorage; Tim
Rogers, (Testified via teleconference), Legislative Program
Coordinator, Municipality of Anchorage, Anchorage; Ellen
Braden, (Testified via teleconference), Treasurer,
Municipality of Anchorage, Anchorage.
SUMMARY
HB 2 An Act allowing, for the purposes of permanent
fund dividend eligibility, an individual to
accompany, as the spouse or minor or disabled
dependent, another eligible resident who is absent
for any of the following reasons: vocational,
professional, or other specific education for
which a comparable program is not reasonably
available in the state; secondary or postsecondary
education; military service; medical treatment;
service in the Congress or in the peace corps; to
care for the individual's terminally ill parent,
1
spouse, sibling, child, or stepchild; for up to
220 days to settle the estate of the individual's
deceased parent, spouse, sibling, child, or
stepchild; to care for a parent, spouse, sibling,
child, or stepchild with a critical
life-threatening illness whose treatment plan, as
recommended by the attending physician, requires
travel outside of the state for treatment at a
medical specialty complex; or other reasons that
the commissioner of revenue may establish by
regulation; requiring, for the purposes of
permanent fund dividend eligibility, a state
resident to have the intent to remain
indefinitely; relating to the eligibility for
1992, 1993, 1994, 1995, 1996, and 1997 permanent
fund dividends of certain spouses and dependents
of eligible applicants; and providing for an
effective date.
HB 2 was HELD in Committee for further
consideration.
HB 43 An Act relating to registration of rental motor
vehicles, to municipal taxation of rental motor
vehicles, and to emission control inspection fees
for rental motor vehicles; and providing for an
effective date.
CS HB 43 (FIN) was reported out of Committee with
a "do pass" recommendation and with a zero fiscal
note by the Department of Public Safety.
HOUSE BILL 2
"An Act allowing, for the purposes of permanent fund
dividend eligibility, an individual to accompany, as
the spouse or minor or disabled dependent, another
eligible resident who is absent for any of the
following reasons: vocational, professional, or other
specific education for which a comparable program is
not reasonably available in the state; secondary or
postsecondary education; military service; medical
treatment; service in the Congress or in the peace
corps; to care for the individual's terminally ill
parent, spouse, sibling, child, or stepchild; for up to
220 days to settle the estate of the individual's
deceased parent, spouse, sibling, child, or stepchild;
to care for a parent, spouse, sibling, child, or
stepchild with a critical life-threatening illness
whose treatment plan, as recommended by the attending
physician, requires travel outside of the state for
treatment at a medical specialty complex; or other
2
reasons that the commissioner of revenue may establish
by regulation; requiring, for the purposes of permanent
fund dividend eligibility, a state resident to have the
intent to remain indefinitely; relating to the
eligibility for 1992, 1993, 1994, 1995, 1996, and 1997
permanent fund dividends of certain spouses and
dependents of eligible applicants; and providing for an
effective date."
NICOLE POIRRIER, STAFF, REPRESENTATIVE PETE KOTT, provided
an overview of HB 2 which would resolve the damage incurred
by a specific court ruling. The effect of that ruling
excluded spouses from receiving permanent fund dividends in
the event that an individual left the State under an
"allowable absence" and their spouse accompanied them.
Historically, the spouse was allowed to "piggy-back" on the
individual leaving the State under an allowable absence. A
court ruling changed that status, stating that marriage can
not be the reason used to determine a person's residence
eligibility. The effect of the ruling disrupted the
allowable absences traditionally accepted including a spouse
accompanying an individual for purposes of military service,
medical treatment and educational pursuits. Students who
leave Alaska on an allowable absence remain eligible for the
dividend while their spouses who accompany them are
ineligible.
She suggested that the ruling through monetary incentives,
has encouraged families to break apart for lengthy periods
of time. That situation would be remedied through passage
of HB 2.
Ms. Poirrier added that Representative Kott was not in
agreement with the costs associated in the accompanying
fiscal note. A fiscal analysis indicates that 14,000
applicants would be affected, whereas, Representative Kott
believes that number would be closer to 9,000 applicants.
NANCI A. JONES, DIRECTOR, PERMANENT FUND DIVIDEND DIVISION,
DEPARTMENT OF REVENUE, elaborated that the legislation would
add an additional allowable absence for applicants who
accompany another eligible resident out of State as the
spouse, minor dependent, or disable dependent of the
eligible resident. In addition to adding the allowable
absence for spouses, the legislation would retroactively
reopen the filing period from 1997 back to 1992 for
applicants who were previously denied while accompanying
their spouse.
She continued, the bill would also make clerical language
changes by replacing the word "permanently" with
3
"indefinitely" in reference to remaining within the State.
In addition, it would separate the list of allowable
absences from the definition of a State resident.
The applications would fall into three basic categories:
1. Applicants eligible in all other respects;
2. Applicants who must supply additional information
before their eligibility can be determined;
3. Applicants who have other items that need
verification and review in order to determine
eligibility.
Ms. Jones suggested that the addition in Section #4, which
incorporates the retroactivity clause and the provision to
reopen a filing period, would not be good public policy.
Initiating that action, the public would receive the
impression that each time an allowable absence was added, it
would carry a retroactive provision. She emphasized that
throughout the program's history, allowable absences have
never included a retroactive provision.
Ms. Jones continued that the Department of Revenue supports
HB 2 in that the legislation would separate the allowable
absence section from the definition of State residents. She
requested that the Committee provide an amendment which
would delete Section #4, retroactively reopening the filing
period. That action would add an allowable absence for
prospective spouses forward from 1997.
In response to Co-Chair Therriault query, Ms. Jones
explained that a qualifying year for the dividend was the
year before the dividend application.
Representative Grussendorf voiced concern with the wording
"as of" in the retroactive clause. Co-Chair Therriault
replied that on Page 4, Line 29, the bill's language
stipulates that in order to apply for the prior year
dividends, one must be:
(2) Eligible for the 1998 dividend.
Ms. Jones stated that each time this legislation comes
forward, and is defeated, the files of those persons in
abeyance, become inactive. Currently, the 1992 files are
inactive. The Department of Revenue estimates that between
the years of 1992 and 1996, there were approximately 5,860
eligible people, which would cost the State a total of
$5.936 million dollars. These amounts have not been accrued
as a prior year's obligation.
4
Representative Martin noted that within the original ruling,
it was not the Legislature's intent to split the family. He
thought that it was the responsibility of the Department of
Revenue to encourage those families to continue the appeal
process.
Ms. Jones emphasized that the ruling applied not only to
service-people and elected officials but also to private
industry. These people are not allowed in the allowable
absences, nor are those in the teacher exchange program or
Peace Corps. She believed that the entire issue regarding
"allowable absences" was inequitable to all Alaskans
especially when recognizing only a specific class.
Last year, the Legislature was encouraged to investigate the
sum of inequities of the program, ending with the addition
of a sunset provision. She stated that to provide everyone
an opportunity to appeal would not be a prudent way for the
government to operate. Ms. Jones recommended that changes
be made prospectively.
In response to Co-Chair Hanley's question, Ms. Jones
explained the language change to Section #3, deleting
"permanently" and inserting "indefinitely". In the original
legislation, the Department requested that the statute be
changed to match the existing statute referenced. Confusion
would result in administratively trying to clarify that
concern.
Representative Mulder addressed the point of a diminished
dividend. He countered that although the fund would be
diminished this year, dividends in the past had been larger
as a result from those persons previously cut out of the
pool. He believed that the concern was an issue of
"equity".
Representative Gary Davis asked if the Department, knowing
that these funds would eventually be required to be paid,
had been pooling them. Ms. Jones responded that the
retroactive costs had been kept on a year to year basis and
would cover costs associated with those persons in review
and on appeal. A person has sixty days to appeal. She
noted that the Division has never accrued any monies from
the fund in anticipation of the costs of the legislation
passing. Co-Chair Therriault advised that the Division does
not have a mechanism to pull funds out in anticipation of
repayment. If HB 2 were to pass, the amount held from each
resident would be approximately $10 per check.
Representative John Davies agreed that it would be equitable
to cut the current year dividend check amount, reiterating
that in prior years, eligible participants received an
5
increased amount as a result from those who had not received
a check. He explained that over the years, the Division had
encouraged people to apply in anticipation that this would
be remedied. Representative Davies noted his intent to
propose an amendment addressing the language change to
Section #3.
In response to Representative Grussendorf, Ms. Jones
acknowledged that in order to qualify for the refund, those
eligible would need to file and be eligible for the 1998
dividend. The Department would then pay a check for each
individual year, not a lump sum payment. In order to
qualify for an allowable absence, the person must have lived
in Alaska for six months prior to leaving. All those
persons who accompanyied their spouse's have been encouraged
to file with the Division.
SUZANNE BADILLA, SELF, JUNEAU, testified in support of HB 2.
She and her husband lived out of state for two years while
her husband was in school; consequently, because she was not
in school, she was disqualified from receiving the dividend.
She suggested that the current statute penalizes the family
that makes the choice not to be separated. This can place
an unnecessary financial burden on those families who are
dependant on the dividend to make ends meet.
Co-Chair Therriault asked Ms. Badilla if the Department had
encouraged her to apply each year. Ms. Badilla noted that
the Department had indicated the reason for denial and
explained they understood the ruling would be changed and
that there existed reason to continue to file.
JAMES CHASE, (TESTIFIED VIA TELECONFERENCE), DIRECTOR,
GOVERNMENTAL AFFAIRS, DEPARTMENT OF MILITARY AND VETERANS
AFFAIRS, ANCHORAGE, spoke in support of HB 2, noting his
particular reference to military families. He emphasized
that the balance between family and military relationships
must be supported and encouraged.
In response to Co-Chair Hanley's comment, Ms. Poirrier
explained that it was not the sponsors intent to have the
State pay back interest on the unreceived dividends. Co-
Chair Hanley recommended that issue should be addressed to
prevent future lawsuits. He voiced concern that the
Department currently recommends only those persons eligible
for dividends in 1998 be allowed to receive the back checks;
whereas, there are those who were eligible in the past, who
left the State, who legally should also be considered.
Co-Chair Therriault noted that he had prepared an amendment
which would allow those persons to receive their past
dividends for only the years in which they had applied. Co-
Chair Hanley pointed out Section #4 which states that:
6
"An individual is eligible for a prior year dividend
under this subsection regardless of whether the
individual previously applied for the prior year
dividend but only if the individual
(1) would have been otherwise eligible for the
prior year dividend."
He thought this reference could open up the application
process to anyone who lived in the State during that
specified time period. Representative Martin agreed that
was a legitimate concern, and recommended that additional
language be added to clarify that information.
Representative Mulder suggested adding a "time line" in
which a person could make application for past dividends.
Co-Chair Therriault advised that Section #4, Line 30,
specifies a one year window for application.
(Tape Change, HFC 97-14, Side 2).
Ms. Jones explained that those eligible would need to apply
in 1998; the Department of Revenue does not intend to
provide a mailing notification. If those persons had not
been filing, a current address would not be available.
Representative Martin suggested that the Department make a
"one time, honest effort" to send a letter to all those
people who had applied over the years in question.
HB 2 was HELD in Committee and rescheduled on January 30th
for further discussion.
HOUSE BILL 43
"An Act relating to registration of rental motor
vehicles, to municipal taxation of rental motor
vehicles, and to emission control inspection fees for
rental motor vehicles; and providing for an effective
date."
TIM SULLIVAN, STAFF, REPRESENTATIVE ELDON MULDER, explained
that HB 43 was a clean-up bill to solve an inadvertent
problem which resulted from legislation passed last year.
Last year, SB 226 changed vehicle registration from one to
two years. Amendments to SB 226 exempted rental vehicles,
since they were usually in the State for less than one year.
In doing so, the collection of municipal vehicle tax for
rental vehicles on an annual basis was not allowed. HB 43
would allow for the collection of municipal fees on annual
registrations of rental vehicles. It would permit the
collection of municipal fees for any vehicle registered
between January 1, 1997, and the effective date of the
7
legislation.
Mr. Sullivan spoke to the committee substitute (CS) which
would provide for the annual exemption extended to
commercial vehicles. That request was submitted by members
of the trucking industry. Currently, commercial fleets
shoulder incredible burdens in registration. The committee
substitute also removed retroactivity back to January 1,
1997.
Co-Chair Therriault added that a new Section #4 had been
added which included a fee schedule as referenced in the
bill.
Representative Mulder MOVED that CS HB 43 (FIN) be the
version of the bill before the Committee. There being NO
OBJECTION, it was adopted.
Representative Mulder spoke to Amendment 1. [Copy on file].
The amendment would provide the municipality the option to
decide if they wanted to collect past due taxes for air
quality.
FRANK DILLON, (TESTIFIED VIA TELECONFERENCE), ANCHORAGE,
spoke in support of CS HB 43 (FIN). He stated that it would
provide the needed flexibility to the commercial vehicle
operators.
JAY DULANY, (TESTIFIED VIA TELECONFERENCE), DIRECTOR,
DIVISION OF MOTOR VEHICLES, DEPARTMENT OF PUBLIC SAFETY,
ANCHORAGE, noted that the Division had no objections to the
changes proposed in the legislation.
TIM ROGERS, (TESTIFIED VIA TELECONFERENCE), LEGISLATIVE
PROGRAM COORDINATOR, MUNICIPALITY OF ANCHORAGE, stressed
that the municipality supports this legislation and urged
the Committee's approval. He added, without this
legislation, the Municipality of Anchorage could loose $150
million dollars annual revenue.
Co-Chair Therriault asked if the Municipality of Anchorage
intended to retroactively collect taxes.
ELLEN BRADEN, (TESTIFIED VIA TELECONFERENCE), TREASURER,
MUNICIPALITY OF ANCHORAGE, advised that action would depend
on the cooperation with records kept by the Division of
Motor Vehicles (DMV).
Co-Chair Therriault clarified that in the original bill, HB
43, Section #3, made the act retroactive to January 1, 1997,
which would leave DMV the agency responsible for collecting
the taxes. That action could cause a problem for the
8
Department. Amendment #1 would provide each municipality
the authority to initiate that action if they wished. Co-
Chair Hanley inquired how many municipalities had lost tax
revenues. Mr. Sullivan commented that only Anchorage
experienced the loss.
Mr. Dulany elaborated that there are thirteen (13) taxable
locations within the State. Co-Chair Therriault pointed out
that most rental fleets "turn" the cars over on an annual
basis. A "loop hole" could encourage those agencies to
bring the fleets in early.
Representative Mulder MOVED to adopt Amendment #1. There
being NO OBJECTION, Amendment #1 was adopted.
Representative Martin MOVED to report CS HB 43 (FIN) out of
Committee with individual recommendations and with the
accompanying fiscal note. There being NO OBJECTION, it was
so ordered.
CS HB 43 (FIN) was reported out of Committee with a "do
pass" recommendation and with a zero fiscal note by the
Department of Public Safety.
ADJOURNMENT
The meeting adjourned at 2:40 P.M.
9
| Document Name | Date/Time | Subjects |
|---|