Legislature(2015 - 2016)
04/07/2016 06:41 PM House FIN
| Audio | Topic |
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| Start | |
| SB74 | |
| HB365 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE FINANCE COMMITTEE
April 7, 2016
6:41 p.m.
6:41:38 PM
CALL TO ORDER
Co-Chair Thompson called the House Finance Committee
meeting to order at 6:41 p.m.
MEMBERS PRESENT
Representative Mark Neuman, Co-Chair
Representative Steve Thompson, Co-Chair
Representative Dan Saddler, Vice-Chair
Representative Bryce Edgmon
Representative Les Gara
Representative Lynn Gattis
Representative David Guttenberg
Representative Scott Kawasaki
Representative Cathy Munoz
Representative Lance Pruitt
Representative Tammie Wilson
MEMBERS ABSENT
None
ALSO PRESENT
Jane Pierson, Staff, Representative Steve Thompson;
Representative Paul Seaton, Sponsor.
SUMMARY
HB 365 INCOME TAX; PERMANENT FUND TAX CREDIT
HB 365 was HEARD and HELD in committee for
further consideration.
CSSB 74(FIN) am
MEDICAID REFORM; TELEMEDICINE; DRUG DATABAS
CSSB 74(FIN) am was HEARD and HELD in committee
for further consideration.
Co-Chair Thompson reviewed the agenda for the evening.
CS FOR SENATE BILL NO. 74(FIN) am
"An Act relating to diagnosis, treatment, and
prescription of drugs without a physical examination
by a physician; relating to the delivery of services
by a licensed professional counselor, marriage and
family therapist, psychologist, psychological
associate, and social worker by audio, video, or data
communications; relating to the duties of the State
Medical Board; relating to limitations of actions;
establishing the Alaska Medical Assistance False Claim
and Reporting Act; relating to medical assistance
programs administered by the Department of Health and
Social Services; relating to the controlled substance
prescription database; relating to the duties of the
Board of Pharmacy; relating to the duties of the
Department of Commerce, Community, and Economic
Development; relating to accounting for program
receipts; relating to public record status of records
related to the Alaska Medical Assistance False Claim
and Reporting Act; establishing a telemedicine
business registry; relating to competitive bidding for
medical assistance products and services; relating to
verification of eligibility for public assistance
programs administered by the Department of Health and
Social Services; relating to annual audits of state
medical assistance providers; relating to reporting
overpayments of medical assistance payments;
establishing authority to assess civil penalties for
violations of medical assistance program requirements;
relating to seizure and forfeiture of property for
medical assistance fraud; relating to the duties of
the Department of Health and Social Services;
establishing medical assistance demonstration
projects; relating to Alaska Pioneers' Homes and
Alaska Veterans' Homes; relating to the duties of the
Department of Administration; relating to the Alaska
Mental Health Trust Authority; relating to feasibility
studies for the provision of specified state services;
amending Rules 4, 5, 7, 12, 24, 26, 27, 41, 77, 79,
82, and 89, Alaska Rules of Civil Procedure, and Rule
37, Alaska Rules of Criminal Procedure; and providing
for an effective date."
6:42:50 PM
Vice-Chair Saddler MOVED to ADOPT the proposed committee
substitute for CSSB 74, Work Draft (29-LS0692\T). There
being NO OBJECTION, it was so ordered.
JANE PIERSON, STAFF, REPRESENTATIVE STEVE THOMPSON,
reviewed the changes to the committee substitute from a
prepared statement:
Title Changes: (Pages 1-2, Lines 1-20) Changes to
conform with the changes in the bill
Sec. 1: (Pages 2-3, Lines 19-8) Adds Telehealth for
registered audiologist assistants AS 08.11.080
Sec. 2: (Page 3, Lines 13 - 28) Adds Telehealth for
licensed speech-language pathologist assistants. AS
08.11.083
Sec. 3: (Pages 3-4, Lines 25-9) Adds Telehealth for
licensed speech-language pathologist. AS 08.11.085
Sec. 5: (Page 5, Line 19-21) Requires a licensed
dentist with a federal DEA registration number to
register with the PDMP. AS 08.36.070(a).
Sec. 7: (Pages 6, Lines 27-29) Requires that a
physician with a federal DEA number register with the
controlled substance database. AS 08.64.101
Sec. 10: (Page 9, Lines 6-8) Requires that an Advanced
Nurse Practitioner with a federal DEA number register
with the controlled substance database. AS
08.68.100(a)
Sec. 11: (Page 9, Lines 14-16) Requires that an
Optometrist with a federal DEA number register with
the controlled substance database. As 08.72.060(c)
Sec. 12: (Page 10, Line 19-21) Requires a licensed
pharmacist with a federal DEA number register with the
controlled substance database. AS 08.80.030(b)
Sec. 13: (Page 10-11, Lines 22-5) Adds Telehealth
protections for licensed physical therapists and
occupational therapists. AS 08.84.120.
Sec. 18: (Page 13, Line 15) Conforming language re:
removal of seizure and forfeiture of property.
(Page 13, Lines 20-24) Allows for full reasonable
attorney fees and costs in a fraudulent claim
(Page 13, Lines 28-29) Allows for Rule 82
attorney fees for cases that do not involve fraud.
(Page 14, Line 7) Limits liability to the section
rather than chapter
(Page 14, Lines 11-12) Adds protection to the
principal in a fraud case if their agent acted with
intent to deceive the principal.
(Pages 17-18, Lines 30-3) Allows for full
reasonable attorney fees and costs in a fraudulent
claim. Allows for Rule 82 attorney fees for cases that
do not involve fraud.
(Page 19, Lines 16, 22, 24) Conforming
amendments.
Sec. 21: (Page 22, Lines 1-4) Removes references to
the Department of Commerce, Community, and Economic
Development. AS 17.30.200(a)
Sec. 22: (Page 22-23, Lines 31-2) Adds that if a
person picking up a prescription is not the person to
whom the drug was prescribed, the pharmacist shall
collect their name and date of birth. AS 17.30.200(b)
Sec 23: (Page 23, Lines 17-21) Adds that an agent of a
practitioner who has access to the PDMP must be
licensed or registered or licensed under AS 08.
(Page 23, Lines 23-27) Adds that an agent of a
pharmacist that has access to the PDMP must be
licensed or registered or licensed under AS 08.
(Page 23, Line 30) removes the word subpoena, so
that a search warrant or court order must be obtained
for law enforcement to access the PDMP.
(Page 24, Lines 26-27) Allows a practitioner
employed by the United States Indian Health Services
to access the database. AS 17.30.200(d)
Sec. 26: (Page 25, Lines 21 and 24) Removes
pharmacists from having to check the PDMP before
dispensing.
(Page 25, Lines 21-25) States that the
practitioner only, not a pharmacist has to review the
database before prescribing or dispensing schedule II
or III controlled substance, removing schedule IV.
(Page 26, Lines 4-7) adds to exceptions for
reviewing the database before dispensing:
1. 48 hours immediately before, during, or
after surgery or a medical procedure.
2. In a hospice or nursing home that has an in-
house pharmacy
3. A non-refillable prescription of a
controlled substance in a quantity intended to last
not more than three days. AS 17.30.200(h)
Sec. 27: (Pages 26-27, Lines 8-3) Sets forth that the
Department of Commerce, Community, and Economic
Development shall:
1. Assist the pharmacist board and provide
necessary staff and equipment to implement the PDMP.
· Establish fees for registration with the
database with a pharmacist or practitioner
for operational costs equally among all
required to register.
· Consult with the board to establish fees. AS
17.30.200
·
Sec. 28: (Page 27, Line 5) deletes monetary recoveries
under the Alaska Medical Assistance False Claim and
Reporting Act.
(Page 27, Lines 4-18) States the Commissioner of
DOC shall apply for medical assistance for prisoners
during a period of hospitalization outside of a
correctional facility. Allows DOC to obtain necessary
information to determine whether a prisoner is
eligible for medical assistance and that the
information obtained may only be used to apply for
assistance. AS 33.30.028
Sec. 32: (Page 28, Lines 16-17) adds security
provisions to the computerized eligibility
verification system. AS 47.05.105
Sec. 36: (Page 31) Old Section AS 47.05.260 was
deleted having to do with seizures and forfeitures.
(Page 15, Lines 23-27) Adds subsection (15) to
the reporting requirements the amount of state funds
saved as the result of policy authorizing 100 percent
federal funding provide for America Indian and Alaska
Native individuals eligible for Medicaid, and
estimated savings if the department had fully
implemented the changes in policy. AS 47.05.250
Sec. 38: (Page 37, Lines 2-4) requests that the
Department give continuing cooperation to the grant
funded community mental health clinics and drug and
alcohol treatment centers that have historically
provided care to recipients. AS 47.07.036
Sec. 39: (Page 39, Lines 5-6) Amends the coordinated
care project to include (9) innovative payment
process, including bundled payments or global
payments. AS 47.07.038
(Pages 40-41) Amends the Project Review Committee
membership.
(Page 41, Line 30) Amends third-party actuary
review of demonstration projects from one year to two
years.
Sec. 40: Reports (Pages 41 -42, Lines 27-9) 30) Adds
an additional report to require the Department to
prepare, semi-annually a report to the legislature on
the Medicaid Management Information System.
Sec. 43: (Page 42, Lines 24-30) Amends 47.25.140 which
prohibits the ability to receive public assistance
benefits while in institutions, like nursing homes or
correctional facilities.
Sec. 46: (Page 43, Line 11) Repeals section
47.07.076(c),
Sec. 47: (Pages 44-45, 30-6) Conforming language
regarding attorney fee changes.
Sec. 50: Feasibility studies removes section to study
privatization of the Alaska Pioneer Homes and select
facilities of the division of juvenile justice.
Sec. 51: (Pages 48-49, Lines 28-13) Requires a report
from medical professionals regarding recommended
guidelines for prescribing schedule II controlled
substances.
Co-Chair Thompson communicated that the committee would be
given time to digest the changes, as there were many. He
set the bill aside.
CSSB 74(FIN) am was HEARD and HELD in committee for further
consideration.
HOUSE BILL NO. 365
"An Act relating to the permanent fund dividend
disbursement; relating to the taxation of income of
individuals; relating to tax credit against the
individual income tax in the amount of a permanent
fund disbursement; repealing tax credits applied
against the tax on individuals under the Alaska Net
Income Tax Act; and providing for an effective date."
6:53:54 PM
Co-Chair Neuman MOVED to ADOPT the proposed committee
substitute for HB 365 (FIN), Work Draft (29-LS1422\P).
There being NO OBJECTION, it was so ordered.
REPRESENTATIVE PAUL SEATON, SPONSOR, introduced the
PowerPoint Presentation: "HB365 Individual Income Tax and
Permanent Fund Refundable Tax Payment." He began by reading
a quote by Gunnar Knapp on slide 2:
"Not paying for what we spend this year means that our
children will pay for what we spend this year."
Representative Seaton turned to slide 3: "The Plan." He
explained that the plan had 3 parts: Sensible spending
cuts, new revenue, and the Permanent Fund Dividend (PFD).
Representative Seaton scrolled to slide 4: "The Plan:
Sensible Spending Cuts." He reported that spending cuts
were controlled by the legislature. There were a number of
bills before the legislature.
Representative Seaton advanced to slide 5: "The Plan: PFD."
He explained that most of the other plans that had been put
forward dealt with restructuring the PF. The money used for
state spending would be derived solely from draining money
from the fund or decreasing or eliminating the PFD.
Representative Seaton turned to slide 6: "The plan: PFD and
New Revenue." He elaborated that his plan contained in HB
365 combined new revenues and the PFD. If the PFD was
reduced it would have the most impact on large families
with several kids and low income families. His plan was
balanced with new revenues from an income tax. An income
tax would impact higher income families more. No particular
segment of the population would be paying more on a
percentage basis than another.
Representative Seaton reviewed slide 7: "Income Tax." He
detailed the income tax portion of his plan. It would be at
15 percent of the federal tax liability which would raise
about $500 million. He reported that in 1961 through 1975
when Alaska had a very similar income tax it was 16
percent. His income tax plan also included a 10 percent
long-term capital gains which would raise about $85
million. Many states had a similar capital gains tax. For
example California had a 13.3 percent capital gains tax. He
provided additional examples of capital gains in other
states. The tax also raised about $70 million from non-
residents who made up a little more than 20 percent of the
workforce.
6:58:21 PM
Representative Seaton discussed slide 8: "Changes with the
PFD." He spoke to the benefits of the plan. It left
everyone doing the job that they knew how to do. Currently
the state had a PFD Division and the PF Corporation. The
Permanent Fund Corporation managed a pot of money and the
division handled PFDs. In the plan he was presenting they
stayed exactly the same.
Representative Seaton read from slide 8:
· Distributable Income: currently 50 percent of the
income available for distribution goes to PFDs and 50
percent stays in the Earnings Reserve. HB365: 25
percent goes to PFDs, 25 percent goes to the general
fund, and 50 percent still stays in the Earnings
Reserve.
· A PFD will not exceed $1,200. If the amount calculated
for the PFD is over $1,200, the amount in excess of
$1,200 shall be appropriated to the general fund.
· Residents may apply their PFD to their upcoming state
income tax due as a Refundable Tax Payment. Any amount
left over after paying taxes will be refunded by the
Tax Division.
· 2.3 percent Permanent Fund POMV directed to the
General Fund and delete inflation proofing.
Representative Seaton referred to the bubble chart on slide
9: "Current Permanent Fund System." He noted that on the
top it showed that oil and gas and mineral royalties were
the real supplies of money. Currently, 25 percent to 30
percent were going into the PF royalties. The other 70
percent to 75 percent went into the general fund (GF). In
the past it had been as high as 50 percent by statute. He
pointed out that the PF and all of the money it made flowed
into the earnings reserve. From the earnings reserve a
couple of things happened. First, to the left, there was an
automatic inflation proofing. To the right of the scale the
legislature had 2 options: It could, by simple majority
vote, appropriate earnings and put them into the GF or into
the principle of the PF. He indicated that 21 percent of
the 5 year average of the earnings reserve itself went to
the distributable income account. He noted that 50 percent
of the distributable income went to calculate the PFD and
the PFD was distributed with the option to donate to Pick-
Click-Give and college funds.
7:02:08 PM
Representative Seaton pointed to slide 10: "HB365-Income
Tax & Permanent Fund Refundable Tax Payment Changes to
current." He drew attention to the center of the chart
where it showed an income tax of $655 million which, with
the passage of HB 365, would go directly into the general
fund. Next he pointed to the distributable income, 25
percent of which would be used to calculate the PFD.
Another 25 percent would be deposited into the GF. If the
calculation of the PFD was over $1200, the excess amount
would go into the GF essentially capping the PFD. Like the
current system donations could be given to Pick-Click-Give
and college funds. House Bill 365 also provided another
option which would allow individuals to apply their PFD
against their state income tax. The remainder would be sent
out. The new option was totally up to the individual. The
advantage to his legislation was that the PFD did not have
to be restructured. The thing that changed was the
percentage that came out of the distributable earnings. He
reported that the percentage of market value (POMV) would
be an entirely separate calculation made on the basis of
the entire fund and the earnings reserve combined
(averaging about $1.1 billion). There was no direct impact
on the calculation of the PFD. He relayed that in his plan
the POMV was not created to calculate a dividend, but
rather to figure out how much of a draw was possible for GF
spending without damaging the earnings reserve or the PFD.
Representative Seaton reviewed the figures on slide 11:
"HB365: Total Estimated Revenue to General Fund":
· Income Tax Revenue $655,000,000
· 25 Percent PF Distributable Income $686,542,500
· 2.3 Percent POMV Draw and Delete $1,100,000,000
Inflation Proofing
· Total Revenue to General Fund $2,441,542,500
Representative Seaton noted that $2.44 million was not the
state's total debt. The legislature was doing other work
towards controlling the budget.
Representative Seaton discussed the models on slide 12:
"Alaska Futures - CS HB 365 ver. P." He first looked at the
status quo. Currently, the Constitutional Budget Reserve
(CBR) would be exhausted in 2018. He relayed that the PF
earnings reserve, represented by the red line on the chart
in the lower left-hand corner, would be exhausted by 2021.
In the upper right-hand corner the PF value would continue
to grow a little before declining. In the lower right-hand
corner it showed that there would be three large years of
PFDs over $2000 [represented by the red bars]. The
following year the dividend calculation would be over $2000
but there would be no money to pay for it because money
would have been lost in the CBR and the earnings reserve
would have declined. Under the status quo there would 3
years of large dividends and then no dividends. Under the
plan proposed in HB 365 the blue bars reflected the PFD.
Next he pointed to the upper left-hand chart reflecting the
funds in the CBR. In the proposed plan, without any budget
cuts, the Constitutional Budget Reserve would extend out to
about 2024, represented by the blue line. The plan would
keep the earnings reserve growing a little and the
Permanent Fund (PF) would grow by about $5 billion over the
following 5 years (2 percent per year).
7:07:23 PM
Representative Seaton discussed slide 13: "Alaska Futures -
CS HB 365 ver. P - with additional Budget Reductions &
Revenues." He explained that the slide showed what the
fiscal circumstances might look like if there were
additional cuts to the budget. The slide assumed $450
million in reductions, a motor fuel tax increase of about
$49 million, a fish tax increase of about $18 million, a
tax credit reduction for Cook Inlet of about $300 million,
and a credit reduction of about $100 million for the North
Slope. He reported that the earnings reserve stayed
healthy, the PF stayed healthy, and the CBR would extend to
2034. He thought his proposal, with a combination of
solutions, gave fairness and balance to the citizens of the
state. He suggested that the purpose of putting the plan
together was to have one package that solved the state's
fiscal woes in a fair and balanced way. He was open to any
questions and referred to a hand-out in member packets. He
reviewed the list of available testifiers.
Representative Guttenberg asked if part of the plan was to
turn the PF into a POMV. Representative Seaton stated there
was a POMV element at 2.3 percent which he believed would
not be damaging to the fund.
Representative Guttenberg asked for Representative Seaton
to repeat himself. Representative Seaton indicated it would
not diminish the fund.
Representative Guttenberg commented that the state had
dealt with POMV's in the past. He understood that the 2.5
percent padding was more moderate than the other proposals
the committee had considered. He asked about the
consequences of low earnings and getting locked out of the
principle.
Representative Seaton replied that earnings over time,
based on a 5 year average, would not approach the rate.
There was nothing that could be done in statute that could
affect the principle. The calculation would always be made
by the Permanent Fund Corporation because legally the
legislature could not tap into the principle of the fund.
He thought the plan helped to bring in new revenue to
offset the deficit rather than closing the gap using the
earnings of the PF. He commented that he was also counting
on the legislature to make further cuts to the budget. He
furthered that his plan extended the CBR out to 2024 even
without budget cuts. The legislature was aware that the
fiscal problem needed to be addressed in 3 areas: sensible
spending cuts, the PFD, and new revenues.
7:12:21 PM
Representative Guttenberg suggested that the PFD portion of
the plan had a cap without a floor. Representative Seaton
indicated that Representative Guttenberg was correct. The
reason there was no floor was because if the return was low
for a series of years, money would not be generated. He did
not want to put the state in the position of taking
additional money above the formula to make payouts. The
Permanent Fund was essentially green oil; oil turned into
money. The state was using the investment stream as a
source of the money rather than the pool. However, if the
investment stream was not keeping up there would be
significant problems that would have to be addressed again.
Representative Edgmon asked Representative Seaton to
discuss the difference between his plan and the others
including the governor's plan [Legislation offered in 2016
- HB 245: Short Title: Perm Fund: Deposits; Dividend;
Earnings] and the plan offered by Representative Hawker
[Legislation offered in 2016 - HB 224: Short Title: Perm
Fund: Income; Distribution; PFD] in terms of the impact for
those earning a higher income versus a lower income.
Representative Seaton responded that the other plans used
volatile royalties, values based on price, to pay or be a
contributor to the dividend itself. He indicated that the
problem with attaching the dividend to royalties was that
when prices were low the dividend would be low. He
suggested that it was better to have it out of cycle so
that a dividend was paid out based on investment earnings
over time. He specified that when prices were low the
economy would be aided by having a healthy dividend. In
cycling the 2 together when prices were low the dividend
would be low and problems in the economy would be
accelerated. In terms of the PF, the difference between his
plan and the others was that the other plans totally
restructured the make-up of the fund and were more
complicated. His plan left everyone continuing to do their
same job. The Permanent Fund Corporation would continue to
manage the fund, the Permanent Fund Division would continue
to generate and process PFD applications, and distributing
the PFD. The only difference was that the division would be
distributing 25 percent instead of 50 percent of the
distributable earnings. His plan attempted to keep
everything clean and easy. He did not have the graph on how
the legislation influenced each section of the economy.
However, he had seen graphs that showed that a PFD
reduction hit low income families and large families much
harder affecting a larger percentage of their income.
Hence, that was why the plan was balanced with an income
tax which hit the wealthier population harder.
Representative Edgmon asked about the refundable tax
provision on slide 10. He drew attention to the box at the
bottom of the page labeled "Refundable Tax Payment applied
to state income tax." He thought the refundable tax
provision lent itself to being less regressive for those
that made less money and depended more on their annual PFD.
He commented that it was a distinguishing feature between
Representative Seaton's plan and all of the other plans in
circulation at present. He wanted to hear more about the
progressivity feature of the plan. He opined that the
feature was a highly attractive part of the overall plan.
Co-Chair Thompson thanked Representative Seaton for
presenting his bill. He indicated he would be setting the
bill aside.
HB 365 was HEARD and HELD in committee for further
consideration.
Co-Chair Thompson reviewed the agenda for the following day
and stated that the committee would meet at 10:00 AM.
ADJOURNMENT
7:18:55 PM
The meeting was adjourned at 7:19 p.m.
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