Legislature(1995 - 1996)
01/24/1995 08:05 AM STA
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
HOUSE STATE AFFAIRS STANDING COMMITTEE January 24, 1995 8:05 a.m. MEMBERS PRESENT Representative Jeannette James, Chair Representative Scott Ogan, Vice Chair Representative Joe Green Representative Ivan Ivan Representative Brian Porter Representative Caren Robinson Representative Ed Willis MEMBERS ABSENT None COMMITTEE CALENDAR * HB 4: "An Act relating to absences from the state for purposes of determining residency under the permanent fund dividend program; and providing for an effective date." HEARD AND HELD * HJR 3: Proposing an amendment to the Constitution of the State of Alaska prohibiting the imposition of state personal income taxation, state ad valorem taxation on real property, or state retail sales taxation without the approval of the voters of the state. HEARD AND HELD * HB 42: "An Act relating to absentee voting, to electronic transmission of absentee ballot applications, and to delivery of ballots to absentee ballot applicants by electronic transmission, and enacting a definition of the term `state election' for purposes of absentee voting." PASSED OUT OF COMMITTEE * HB 70: "An Act relating to treatment of permanent fund dividends for purposes of determining eligibility for certain benefits; and providing for an effective date." HEARD AND HELD * HB 81:"An Act relating to the preservation of public facilities and to appropriations for annual maintenance and repair, periodic renewal and replacement, and construction of public facilities." SCHEDULED BUT NOT HEARD (* First public hearing) WITNESS REGISTER REPRESENTATIVE PETE KOTT Alaska State Legislature Capitol Building, Room 432 Juneau, AK 99801 Telephone: 465-3777 POSITION STATEMENT: Sponsor of HB 4 TOM WILLIAMS, Director Permanent Fund Dividend Division Department of Revenue PO Box 110460 Juneau, AK 99811 Telephone: 465-2096 POSITION STATEMENT: Provided information JUDY ERICKSON 319 Seward Street, #4 Juneau AK 99801 Telephone: 586-3118 POSITION STATEMENT: Supported HB 4 REPRESENTATIVE JOHN DAVIES Alaska State Legislature Capitol Building, Room 422 Juneau, AK 99801 Telephone: 465-4457 POSITION STATEMENT: Supported HB 4 and suggested amendments REPRESENTATIVE TERRY MARTIN Alaska State Legislature Capitol Building, Room 502 Juneau, AK 99801 Telephone: 465-3783 POSITION STATEMENT: Sponsored HJR 3 and HB 42 JACK CHENOWETH, Attorney Legislative Legal Services 130 Seward Street, Suite 409 Juneau, AK 99801 Telephone: 465-2450 POSITION STATEMENT: Provided information DAVID KOIVUNIEMI, Acting Director Division of Elections 240 Main Street, 4th Floor Juneau, AK 99801 Telephone: 465-4611 POSITION STATEMENT: Provided information STAN RINGMAN, Legislative Aide Representative Scott Ogan Capitol Building, Room 409 Juneau, AK 99801 Telephone: 465-3878 POSITION STATEMENT: Commented on HB 42 PREVIOUS ACTION BILL: HB 4 SHORT TITLE: PERMANENT FUND DIVIDEND SPONSOR(S): REPRESENTATIVE(S) KOTT JRN-DATE JRN-PG ACTION 01/06/95 21 (H) PREFILE RELEASED 01/16/95 21 (H) READ THE FIRST TIME - REFERRAL(S) 01/16/95 21 (H) STA, JUD, FIN 01/24/95 (H) STA AT 08:00 AM CAPITOL 102 BILL: HJR 3 SHORT TITLE: VOTER APPROVAL FOR NEW TAXES SPONSOR(S): REPRESENTATIVE(S) MARTIN, Rokeberg, Bunde JRN-DATE JRN-PG ACTION 01/06/95 16 (H) PREFILE RELEASED 01/16/95 16 (H) READ THE FIRST TIME - REFERRAL(S) 01/16/95 16 (H) STA, JUD, FIN 01/19/95 86 (H) COSPONSOR(S): BUNDE 01/24/95 (H) STA AT 08:00 AM CAPITOL 102 BILL: HB 42 SHORT TITLE: ABSENTEE VOTING & USE OF FAX SPONSOR(S): REPRESENTATIVE(S) MARTIN JRN-DATE JRN-PG ACTION 01/06/95 31 (H) PREFILE RELEASED 01/16/95 31 (H) READ THE FIRST TIME - REFERRAL(S) 01/16/95 31 (H) STA, JUD, FIN 01/24/95 (H) STA AT 08:00 AM CAPITOL 102 BILL: HB 70 SHORT TITLE: END PERMANENT FUND DIVIDEND HOLD HARMLESS SPONSOR(S): REPRESENTATIVE(S) KOTT, Green JRN-DATE JRN-PG ACTION 01/06/95 39 (H) PREFILE RELEASED 01/16/95 39 (H) READ THE FIRST TIME - REFERRAL(S) 01/16/95 39 (H) STA, JUD, FIN 01/24/95 (H) STA AT 08:00 AM CAPITOL 102 BILL: HB 81 SHORT TITLE: PRESERVATION OF PUBLIC FACILITIES SPONSOR(S): REPRESENTATIVE(S) JAMES JRN-DATE JRN-PG ACTION 01/13/95 42 (H) PREFILE RELEASED 01/16/95 42 (H) READ THE FIRST TIME - REFERRAL(S) 01/16/95 42 (H) STA, TRA, FIN 01/24/95 (H) STA AT 08:00 AM CAPITOL 102 ACTION NARRATIVE TAPE 95-1, SIDE A Number 000 The House State Affairs Committee was called to order by CHAIR JEANNETTE JAMES at 8:05 a.m. Members present at the call to order were Representatives James, Green, Ivan, Porter, Robinson and Willis. Chair James stated there was a quorum present and introduced Representatives John Davies, Terry Martin and Pete Kott. CHAIR JAMES introduced her staff and described their duties: Walt Wilcox, Committee Aide; Sam Griswold, Committee Secretary; Barbara Cotting, Legislative Aide, and Myrna McGhie, Legislative Assistant. She announced to the committee that meetings will be held Tuesdays and Thursdays from 8:00 a.m. to 10:00 a.m. or longer, if necessary, and Saturday 10:00 a.m. until noon, as necessary, to allow public testimony for the working public who can only testify on Saturdays. Number 070 CHAIR JAMES outlined guidelines and procedures for committee members, as well as the requirements for hearing bills. She stated committee substitutes will be ordered from Legislative Legal Services through the Chair only, to avoid confusion. Substitute amendments will require an additional public hearing after a committee substitute is done. If there is a very substantive amendment, within the committee, an additional hearing will have to be noticed. Major amendments must be submitted to the Chair at least 24 hours before they are to be heard. She added that normally bills will be heard in the order listed on the committee calendar to make it expedient for people wanting to testify. She noted subcommittees on individual bills, assigned as needed by the Chair, will not be chaired by the bill sponsor. CHAIR JAMES noted for the record the arrival of Representatives Ogan and Willis. HSTA - 01/24/95 Number 205 HB 4 - PERMANENT FUND DIVIDEND ELIGIBILITY REPRESENTATIVE PETE KOTT, SPONSOR OF HB 4, noted that a similar bill to HB 4 almost passed last year, but died awaiting concurrence the final night of session. This legislation would remedy a problem resulting from a court ruling. That ruling suggests that wives of those eligible to receive the permanent fund, living out of state, are no longer eligible. It is the piggyback rule. The wives cannot piggyback on their husband's travel and be considered eligible. This measure is trying to correct that, and is retroactive to January 1, 1994, to allow all those last year into the program. From early indications, the fiscal note will be approximately $600. He said a representative from the Department of Revenue was present at the meeting to suggest some changes that he is in agreement with. Representative Kott said some of the changes were a result of the new 1995 permanent fund application. REPRESENTATIVE JOE GREEN questioned the amount in the fiscal note. REPRESENTATIVE KOTT said the early fiscal note indications, and this still has to come down from the Governor, is $600. It is an unofficial version awaiting arrival from the Governor's Office. CHAIR JAMES noted that the Governor's Office is having a problem getting geared up to provide fiscal notes. They are behind, therefore, she recommended lenience on getting these bills passed. This bill has additional referrals to Judiciary and Finance, so it will not be passing without a fiscal note. It will be at the will of committee about what we do. REPRESENTATIVE KOTT said it was unofficial, but, by June 30, 1995, the division will mail out 1,300 notices to those who were denied in 1994, and that is the $600 mailing and processing cost. Number 265 REPRESENTATIVE GREEN remarked that the $600 is for mailing, but what about the amount of the money that the permanent fund then is actually giving to how ever many spouses, dependent children and other eligible people. REPRESENTATIVE KOTT estimated the cost for implementing this bill would be about a $2 per person reduction in the dividend check that each individual would receive, and this was not coming from general fund money. Military spouses and other members who accompanied their husbands out of state were on an eligible absence and were receiving the permanent fund dividend (PFD) check for about eight or nine years before the judge ruled on this. The original intent of the legislature was not to prohibit those eligible wives or spouses from receiving the dividend check when they were accompanying their eligible spouse. Currently, the eligible spouse and eligible children can receive it, but the wife or husband cannot receive it. This bill corrects a deficiency in a court ruling that was somewhat inaccurate. CHAIR JAMES asked if there were any further questions. She introduced Tom Williams, Director, Permanent Fund Dividend Division, Department of Revenue. Number 290 TOM WILLIAMS, DIRECTOR, PERMANENT FUND DIVIDEND DIVISION, DEPARTMENT OF REVENUE, referred the committee to a handout for his testimony. He summarized the lengthy document, saying there was court action, which on December 16, 1993, invalidated a regulation allowing spouses to piggyback onto their eligible Alaska resident's absence. As a result of a change in the law that occurred, effective January 1992, there was a conflict between a statute and a regulation. With such a regulation, the regulation falls. The department asked the legislature to fix that problem last year, and in HB 392 there was language to do that. HB 392 did not pass in the final minutes of session. The effect was to make the piggyback absence invalid since January 1, 1992. It affected 1992, 1993 and 1994 applicants. Virtually all of the 1992 and 1993 applicants had been paid. Some were remaining in appeals. When the department got ready to pay those remaining in appeals, if they were denied for another reason and that denial was subsequently overturned, they could not do it they discovered, because the applicants no longer had an allowable absence. After consulting with the Attorney General's Office, the division determined they would not go back and assess the 1992 and 1993 applicants that had already been paid. So, the only people that have been affected from 1992 and 1993, were those that had an appeal pending. That denial had been overturned and they're just waiting to be paid. They pended those - they did not take any action on them; they held them awaiting a legislative solution. MR. WILLIAMS said 1994 was different. He explained none of the 1994 applications have been paid. The division had no basis for making that allowable absence since it had been struck down. The division ended up denying all those that had been absent more than 180 days. Mr. Williams said they looked at those who had been gone less than 180 days and tried to fit them into the general 180-day discretionary absence where they could. Unfortunately, not many of those people met that requirement. The total they were required to deny was 2,690 spouses. There were also some children that were sponsored by those spouses. These spouses were given the opportunity to change the sponsorship of those children over to the other Alaska resident. Some took advantage of that, but not everybody did. Consequently, if they did not have an eligible sponsor, the department had to deny them payment. The intent of the legislation is to retroactively reinstate the piggyback rule to where it was prior to the court ruling. After discussing the bill with the Department of Law, there is some question as to whether the initial draft actually does that. There is a conflict between two statutes. The conflict arises because absences are a component of a definition of state residency. This legislation takes what was once described as an allowable absence by regulation and moves it into statute. They drafted a committee substitute that will do what the sponsor has, except it removes all doubt regarding the technical problem. It removes the allowable absences from the definition of state resident, moves it to a separate section, and defines allowable absence as an eligibility criteria. That eliminates the conflict with the provision that says you cannot consider the residency of your spouse as not the principal factor. It still retains the allowable absence provision, and it allows it to reinstate the historically allowable absences that has been on the books since the beginning of the program. Another difference is that in Section IV of the proposed version, it would ensure that the 1992, 1993 and 1994 applicants are made whole again. He said that would allow the division to pay those 1992 and 1993 piggybacking spouses that are currently pending. In Section V, it takes a different approach to an extension of an application period. In the original bill there is a provision saying that 1994 and 1995 applicants have until September 1 to resubmit an application if they were affected by this legislation. The division believes that piggybacking spouses who applied in the past have already applied for the 1994 dividend, and those applications are on file. So this is an extension of the appeal deadline up to September 1, as opposed to the reapplication period. While the division had denied 2,690 applicants, they only received appeals from 1,373 applicants. Those have been pended. The other 1,300 that have not appealed would benefit by having an extended appeal period. With regard to 1995, the proposed substitute doesn't have anything to do with them as far as an extended filing period. The reason for that is contained in the last two pages of the information before the committee. He indicated that the division has put an important notice in the 1995 dividend application to spouses absent from Alaska, which is that they should go ahead and apply for the 1995 dividend by the application deadline. Number 435 MR. WILLIAMS said the fiscal note covers preparing and doing a mailout to those people we want to target, letting them know the law has changed and they can appeal or reapply, whichever the legislature chooses. He also referred to a question asked by Representative Green about the fiscal note, saying they have not included any fiscal impact related to the total amount of the dividend because, by formula, there is a certain amount that will be distributed. It doesn't change the amount of dividend payments, it will change who it goes to. Assuming there were 2,690 people paid, it would calculate to a little over $2.6 million. Number 465 REPRESENTATIVE GREEN asked if eligibility is automatic for persons from another state who are married to someone in the military, who is an Alaskan resident because of their military service and is then shipped out. MR. WILLIAMS said the piggybacking spouse rule only applies to individuals who accompany an eligible Alaska resident. It doesn't apply to individuals accompanying a resident from another state. Both spouses have to be Alaska residents and they have to take the steps to initiate their own Alaska residency prior to the qualifying year. So for them to get the 1994 dividend, both spouses would have had to establish Alaska residency through normal means, declaring that they are an Alaska resident registering to vote, prior to the beginning of the qualifying year that would have been prior to January 1, 1993. Number 494 REPRESENTATIVE BRIAN PORTER asked how many more eligible people this version of the bill would incorporate in the past and in the future. There are some applications pending for 1992 and 1993, that the new wording would provide the division a better way of providing money. He wondered if they could do it anyway with Representative Kott's version. MR. WILLIAMS answered no. Under Representative Kott's version there is no relief for 1992 and 1993. That is why they suggested that they make sure it goes back to...effective for 1992 and 1993. He did not how many there are, he did not have a number, but probably fewer than 100. REPRESENTATIVE PORTER wondered if there were any other categories of individuals who would be eligible under his version, besides the 100, as opposed to the original bill. MR. WILLIAMS answered "No. They are not opening it up beyond the piggybacking spouse. Another important issue is that they included in the committee substitute, a modifier that you must accompany an `eligible Alaskan resident' as opposed to just an `Alaska resident.'" Number 520 REPRESENTATIVE SCOTT OGAN asked if moneys have been set aside on the pending applications, and where the revenues will come from if it is not set aside. MR. WILLIAMS said moneys were not originally calculated in to cover that. It was originally estimated there would be 535,000 payable as of December 31, 1994. Our actual payables were 531,000. There should be money there to pay those. The worse case scenario is that the pending applicants would have to wait until July 1, because there is a provision under AS 43.23.025 which has the calculation of the dividend. Every year you put all the money that is left in one pot, slice off what is necessary to pay prior year dividends, including these, then you calculate the remaining dividends. There is a method by which people can be paid, if they can be paid now, because there are sufficient funds in the pot. He said they would do that just as soon as the legislation passed. If there was not, they would wait until July 1, at which time there would be, assuming the dividend program continues. REPRESENTATIVE OGAN asked if people's PFD checks will not be reduced next year, if these pending applications are paid. MR. WILLIAMS said there is a possibility that will occur. It will depend on the number of other appeals that are overturned and whether we come up to that actual 535,000. It is possible there will be virtually no effect. Number 550 REPRESENTATIVE IVAN IVAN had questions about the committee substitute. On page 3 of the proposed committee substitute, the new language inserted reads, "Maintains and demonstrates at all times an intent to return to the state." He questioned what the division uses as the criteria to show that intent when determining eligibility. MR. WILLIAMS said first they basically assume that the applicant is honest in telling them they have the intent to return to the state. They will believe them. They look for indicators that would be inconsistent with that intent. In fact, they adopted by regulation a series of steps or actions that clearly are inconsistent with the individual's intent. As long as an individual does not take an action inconsistent with maintaining that intent they will tend to believe them. They look for indications, such as the individual routinely coming back to the state after an absence, and if they maintain any ties here, or show some sort of connection to the state. They look for hard evidence to prove out their intent, but they start with the premise that their intent is valid. REPRESENTATIVE IVAN asked if the language appears in other statutes relating to the permanent fund. MR. WILLIAMS assured Representative Ivan that it is consistent with Title I, AS 01.10.055, which generally is the general residency description for the permanent fund. REPRESENTATIVE IVAN asked about the appeal period that is in place in retroactive payments to persons who are found eligible for the program. He asked about constituents who have missed a year, due to the inability to read languages. Representative Ivan asked if they would still be eligible to get the dividend check they missed the prior year if they failed to submit an application, or it was lost enroute. He asked how they handle that. MR. WILLIAMS said there is no provision for adult individuals who have missed or failed to file an application. There is a provision in law for children for whom an adult did not file an application to come back within one year of their eighteenth birthday or within one year of emancipation, to file for missed dividends. If an application was lost in the mail individuals can resubmit an application by a particular deadline. They have to provide a variety of proofs that they did submit a timely application. REPRESENTATIVE CAREN ROBINSON referred to two of her constituents, whose spouses have gone out to further their education, and they own property in Juneau. Also, one of the constituents returns to do business. She wanted to reaffirm that these are the types of people we are trying to get to who are deserving of the PFD. They clearly show long term residency, own property, and clearly have intent of coming back and only went temporarily to get further education or other kinds of military reasons. MR. WILLIAMS agreed. He said the piggybacking absence applies to any spouse that is piggybacking onto any legitimate absence. It is not just military. There are students, our congressional delegation, and service on the staff. Military and students are probably the highest category where piggybacking would apply. Number 615 CHAIR JAMES determined there were no further questions from the committee and no one waiting on the teleconference, so she called Judy Erickson to testify. Number 618 JUDY ERICKSON, BUSINESS OWNER, CAPITAL INFORMATION GROUP, and Juneau resident. She gave testimony in support of the bill. She testified that a personal experience made her aware of this issue when her ex-husband required long-term medical treatment outside of Alaska. Ms. Erickson explained that her ex-husband and his wife have lived in Alaska for 20 years, they maintain a home in Juneau. They have children whom they try to get down to see him as often as possible, for emotional support. The financial burden is great and it is important for them to have the dividend. She wanted to encourage the committee to change the law on this issue to allow people in this situation to receive the PFD. Number 640 CHAIR JAMES asked if there was anyone else from the floor who wanted to give testimony. REPRESENTATIVE JOHN DAVIES wished to add his voice in support for this particular bill stating that PFD problems are common among his constituents. He thinks the bill is long overdue and ought to be passed. He suggested adding two other categories that they might want to consider. They are included in HB 5 and fit in the structure of HB 4. The categories are: (1) Services of Volunteers of the Red Cross; and (2) Services of Volunteer of the International Executive Service Corps. It is slightly different in that it is a private nonprofit organization and does things essentially the same as the Peace Corps, which is an allowable absence. The Executive Service Corps matches up predominately retired executives in the U.S. with a business in a developing country or foreign country, where our business techniques can help advance the operation of a similar business in another country. It is by invitation of the other governments. It functions as the Peace Corps does in principle, but it is directed at making businesses more productive. It benefits all of us, because it is international trade and a good thing to do morally. Number 685 CHAIR JAMES rolled HB 4 over to the next calendar meeting, asking the sponsor for a committee substitute with changes in the original bill. Representatives Porter and Robinson agreed the bill could not be passed as it was, that changes were necessary. TAPE 94-1, SIDE B Number 022 CHAIR JAMES stated they should pass bills in the best condition they think they ought to be. She suggested the bill be brought back with amendments to the original bill so they could see the changes they are proposing, including the suggestions made by Representative Davies. The committee would try to get back to it Thursday and pass it. Number 065 CHAIR JAMES brought the meeting back to order after a five minute break and asked the record to reflect that Representative Ivan Ivan was still out. HSTA - 01/24/95 Number 104 HJR 3 - VOTER APPROVAL OF NEW TAXES CHAIR JAMES went to the next bill on the agenda, which was HJR 3, and called REPRESENTATIVE TERRY MARTIN who is sponsoring the bill to the table to make his presentation. REPRESENTATIVE TERRY MARTIN, SPONSOR OF HJR 3, gave a history of taxation in the U.S. and stated the importance of allowing voters to decide on taxation. His sponsor summary for HRJ 3 is as follows, for the record: Proposing an amendment to the Alaska Constitution to require the approval by the state's voters for the imposition of state income tax, state ad valorem tax on real property, or state retail sales taxation. "HJR 3 is intended to prevent exorbitant and disproportionate taxes from harming Alaskan residents. Taxation, whether income, property, or retail merchandise is not the answer to increasing state revenues. Need for Legislation "The State of Alaska currently ranks first in state tax revenue per $100 of personal income, and ranks third for local tax revenue per $100 of personal income. Although oil and gas taxes contribute to a large portion of the state tax ranking, the local burden clearly depicts the high level of taxes Alaskans suffer. States such as Florida and Nevada prohibit their legislature from enacting a personal income tax, while the Colorado Legislature passed a 1992 law requiring voter approval for any permanent tax increase. Five states have constitutional mandates preventing specific taxes, while 10 states require a `super majority' of their legislature to pass various taxes. "These advances in the elimination of unwarranted taxation are indicative of the national trend. In Alaska, voters are extremely apprehensive about new and elevated taxes. The general viewpoint has been to work in conjunction with the legislature, rather than to grant them full autonomy over taxation. HJR 3 would transfer the final authority of statewide taxation from the legislature to the citizenry." Number 195 CHAIR JAMES reported for the record that Representative Ivan Ivan returned shortly after Representative Martin began speaking. She then asked if there were any questions. REPRESENTATIVE GREEN testified in support of the bill. He said he supported the bill strongly from a fiscally conservative point of view. His concern is about how the action of the various bodies delegate their responsibility as taxing authorities. The legislature is the one empowered to do taxing and they, in turn, give this back to the people. He asked how this works in other states, if there have been problems, and if the people have empowered or instigated a tax again through popular vote. REPRESENTATIVE MARTIN explained that other states have reinstated a tax through popular vote. Legislators are elected as their representatives, but it is a sharing of responsibilities that is happening now. We need to go back to the people for certain things, and give the people a voice to change the constitution or to speak to the legislators through the petition process. People are becoming concerned, nationwide as well as citywide and statewide, that the government has too much money. We have to put restraints on it and listen to the people. REPRESENTATIVE GREEN asked if people in other states that have enacted legislation like this, where the state requires public approval of taxes, have increased taxes or imposed a tax by popular vote. REPRESENTATIVE MARTIN referred to the tax revolt under the Jarvis Amendment in California, which had been very effective in controlling California's wild spending. There were other taxes accepted in San Diego when people decided to tax themselves for more education. The state of Colorado recently followed the revolution of the Jarvis Act in California and put heavy restrictions on their state legislators on the capping of tax. People will vote to reinstate taxes when it becomes necessary. REPRESENTATIVE GREEN said his concern is that we in Alaska will have to impose a tax at some future time, once spending is brought under control. He wondered if we move this legislation, if the people would vote to reinstate a tax. Number 308 REPRESENTATIVE ROBINSON had two concerns. From what she has seen is that in Alaska it has been just the opposite. We not only have imposed an income tax, we have also come back and repealed an income tax. It was an act of the legislature. Historically, the legislature has acted responsibly regarding this issue, which is our constitutional duty, so she asked why Representative Martin perceived a problem and why he thought we need to move on this one. Her second question was about another fear she has. The fear is being caught in a crisis and just being on hold about whether the public would agree that we were in a crisis and would vote to tax themselves. For example, if oil dropped to $8 a barrel, it would be the legislature's responsibility to keep the state functioning and to keep a responsible budget while just hoping for voters' approval and they would tax themselves. REPRESENTATIVE MARTIN commented that fear is the driving force of the legislature, one way or the other. Legislators fear the public voice every two years when running for election. If it came to a revenue crisis he felt there were other options available to the legislature before taxing. Taxing may take a year or two years to get started; by then, government is stopped. He said, "Do we have guts enough to cap the dividends for one year or two years?" If we capped it this year at $1,000 per person, you would have $227 million for the 1996 budget available to you. Representative Martin felt that, when we talk about fear, we need to ask in what way are we fearful of the public. To make his point, he said, "Will they cut my head off because I capped the dividends or would they cut my head off because I allowed them to vote on taxes?" Number 371 REPRESENTATIVE PORTER said that his concern is timing. One of the major chores of this legislature is to attempt to set up a long- range fiscal plan, which will require a vote of the public because of the Constitutional Budget Reserve issue and the spending limitation, and to try to get something for a five-year period rather than something changeable every two years. He wondered if that process would be somewhat frustrated if this and that process were going on simultaneously. REPRESENTATIVE MARTIN said that when talking about a five-year plan this could be part of it. We could have it on the ballot for the next election to show the people are willing to talk about taxing. If asked about tax for education, they may pass it with ease. If the legislature taxes the people on income tax without giving them a voice they rebel, but give them a voice and they will cooperate. Part of the plan for future funding is to allow the voice of the people to be heard. Number 415 REPRESENTATIVE PORTER said he would be more comfortable if there were limitations put on interest groups being able to lobby one way or another on the public. It often comes down as money for advertising, in that kind of situation, not with the real will of the people. Number 419 REPRESENTATIVE IVAN presented a question to Representative Martin about his bill where it compares Alaska to other states in the Lower 48. It states that Alaska ranks first in state revenue for $100 for personal income and third for local tax revenue. Representative Ivan asked how much of these figures are paid by oil companies and other resource users, and how much is paid by individuals for local or state taxes. When looking at the situation as it is today, and trying to see our future, and what we have to deal with in order to come up with a fiscal plan, these are facts that he felt he needed to know to go with Representative Martin in this process. REPRESENTATIVE MARTIN said it is good to find out what is happening in other states of democracy and republican form of government. He explained that is why the National Council of State Legislators (NCSL) was able to give them this important information. The information shows that on the state level we are number one, and on the local level we are number one. On the state level everyone is equal: $12.80 per $100 tax that someone is paying for us now, mostly the oil companies. That is between 80 percent and 85 percent. It is down now to about 80 percent because of productions decrease and so on. When we come to property tax, the overall is $6 per $100 that the average Alaskan pays; but it varies from community to community, for some have a sales tax but low property tax. Some have high property tax and no sales tax. Other communities like the North Slope Borough from Valdez and Fairbanks that can have a high mill rate on the pipeline, which takes the money directly out of state revenues and gives it to local government that other areas don't have the access to, but that property tax decreased to what might be a local property tax. The average is $6.00 by the national foundation: It is strictly an average. If people were asked to pay a tax because of a decrease in oil production, a new 3 percent or 4 percent of this total cost of government, he thinks the people will pay the tax if they know it is going for a specific purpose. REPRESENTATIVE ROBINSON asked Representative Martin if this bill passes the House and Senate, if another bill would have to be passed to say it must go to the vote of the people with a plan. REPRESENTATIVE MARTIN said yes, this could be part of the future plan. Once the people have been given the right to have a voice in the future financing of the state, then we can go to them with our total package for the next five or ten years. REPRESENTATIVE ROBINSON reaffirmed that there would have to be another bill passed by the legislature before we could pursue any taxation. She also pointed out that there is no fiscal note, and this bill would clearly need a fiscal note. REPRESENTATIVE MARTIN said the Administration is having difficulty catching up with everything, and asked if he could introduce through the committee to accept a typical $2,200 fiscal note for any ballot question. It wouldn't be any more than that. Number 506 CHAIR JAMES asserted that it would be a two-part process. This bill is a request for a constitutional amendment. For this bill to pass it needs to pass with a two-thirds (2/3) vote in both houses. Then it would go to the public for them to vote as to whether or not they wanted to have this authority to decide on these issues. That is the first issue, and that is the issue before this committee. This does not have anything to do with whether or not we want to tax. Pending the decision by the people on this bill that would be what we would do when we want to impose a tax. CHAIR JAMES agreed with Representative Porter that the Senate, the House and the Governor, support the formation of a long-range planning commission to establish goals for a five year period, and that is going to take a constitutional amendment. It is very specific in the constitution that you cannot commit another legislature, and legislatures only last two years. This committee or this legislature cannot put anything into any specific form, which says they must do something. If the public tells us this is what they want us to do, and the five-year plan should be put out for the vote of the people, then it would behoove the legislature to do it whether or not they are compelled by the constitution to do it. They would be responding to the people's needs. Further, CHAIR JAMES said she trusts the people too, and it is never a mistake to ask the people what to do. It is difficult to have the thumb on the pulse of the people without asking them specifically to vote for a specific issue. She said, if they are wrong, or they as legislators do not think they understand something, it behooves them to make the public understand. It is important that everyone is on the same plane. REPRESENTATIVE ROBINSON asked if they could still go to the people and ask their opinion, as an advisory vote, without this bill. REPRESENTATIVE JAMES explained that whenever they go to the people for a vote when it is not a constitutional mandate, what they are asking is an advisory vote. They can go forward and do what the people said or not. It is just an advisory vote. REPRESENTATIVE MARTIN said the experience with the advisory vote is that the legislators do not listen to the people. It is a gimmick in the history of this state to kill an issue. The legislature does not follow through on the advice of the people. CHAIR JAMES commented on the language of the bill. Her concern was that it is brief. Even though constitutional amendments are intended to be brief, they are not intended to put law in the constitution, but rather philosophy. Yet for establishing a state tax on personal income, the question is very basic; there is not anything said in this bill that would indicate that we would need to ask about any gross increases in that tax. If the people voted on it, and it becomes part of our constitution that says if we want to establish a state tax on personal income, we must first ask the people. So if we ask the people, then if the legislature puts a 1 percent tax on our income and they say yes, then the following year decide to increase it, this amendment does not preclude the legislature from raising taxes. She wondered if the bill is sufficient to do what they intend it to do. REPRESENTATIVE MARTIN hopes it is. The intent is that any increases in personal taxes would go to the people for a vote. If we put on a 2 percent sales tax for the state, and say it would bring in $200 million, then if two years down the line the legislature decided it needs another $100 million for something, then the people would have the chance to vote on that increase. This is personal taxes. We don't interfere with business taxes, commercial taxes, oil taxes or severances. CHAIR JAMES brought up the legislature's ability to authorize agencies to put on fees. This legislation is turning the decision on whether or not to have income tax over to the people and taking it out of our courts. She asked Representative Martin to comment on that. REPRESENTATIVE MARTIN commented that we should stay out of that, because the people would show very clearly that they might not want to pay more fees. CHAIR JAMES said we as a legislature, an authorizing body, authorize fees and now we have no control over what happens to the fees. The language of this bill does not preclude the legislature from raising the taxes. REPRESENTATIVE MARTIN said we do have the right to control fees in this state, in all agencies, whether it be for motor vehicle plates or for all kinds of services. The legislature, on behalf of the citizens, has that control. REPRESENTATIVE PORTER said that, for the record, the wording: "prohibiting any imposition of state income tax, ad valorem taxation on real property, or retail sales tax without approval of the voters." He wanted to make clear that we are not by-passing this, by prohibiting boroughs or municipalities. Number 621 REPRESENTATIVE MARTIN said that is a whole other issue. This is strictly to the state. Number 638 JACK CHENOWETH, LEGISLATIVE LEGAL SERVICES, testified that the changes in the rate after the tax is in place is not clear. If you want the voters to be able to say yes or no to a change of rate in any of these taxes, this has to be in the bill. It should be stated, and increases and decreases must be stated also, or the courts will get on it. REPRESENTATIVE MARTIN said because he feels the people should have that right he would go by his suggestion. Number 670 CHAIR JAMES asked if anyone wished to make any amendments. She was not comfortable moving the bill without the changes to make it clearer. Constitutional amendments must be clear enough to understand. She did not feel comfortable moving it out of committee in this condition. REPRESENTATIVE MARTIN agreed to do a committee substitute. CHAIR JAMES said the committee will carry it over until February 2, 1995. HSTA - 01/24/95 Number 693 HB 42 - ABSENTEE VOTING BY FAX REPRESENTATIVE MARTIN presented HB 42, regarding absentee voting by fax. He said it is important for Alaska to get up to date with the concept of encouraging more people and making it possible for them to vote in the process of elections. We have more people per capita in any given day and any given week, having to travel within the state, much less outside. We learned through the Gulf War how easy it would be for Alaska citizens to vote by fax. TAPE 95-2, SIDE A Number 000 REPRESENTATIVE MARTIN said they had to change the word even though it is called the "Fax Bill" and we are now talking about electronic media, because there are other ways of getting the message through to request information. So, the latest bill, over the last two years, has changed the word "fax" to use the word "electronic transmission." It will allow the division of elections to use whatever is modern and available. The whole purpose of this bill is to encourage more participation in the voting process. It is estimated that maybe 20 percent of the people decide to vote in the last week, because they had to leave their district. By faxing, they can request an absentee ballot. Number 110 REPRESENTATIVE PORTER commented that the amendment seems to eliminate on page 2, section C, "promptly after receiving absentee ballot that has been complete and returned under this section, the director shall acknowledge receipt of the completed ballot by electronic transmission to the voter." This would say the division does not have to notify the voter that his fax was received. He wondered if that was the intent. REPRESENTATIVE MARTIN said that it eliminates the voting. REPRESENTATIVE GREEN commented that it only eliminates the fact that it has been received. Basically, what the division needs, but he just hoped to open it up and use electronic means for voting. Number 135 DAVID KOIVUNIEMI, ACTING DIRECTOR OF ELECTIONS, stated first that they have taken a neutral stand on this bill. They are leaving it up to the legislature. Regarding Representative Porter's question regarding the request to remove the notification of a received fax, it was simply economic. He did not have a fiscal note, but he has been in contact with Representative Martin's office to determine the costs. What the fiscal note is will be dictated by what is included or excluded in this bill. The cost of faxing to Japan is $2.04; to Saudi Arabia, $3.66; to Germany, $1.04. If they receive an application by mail soon enough, they send a postcard to acknowledge receipt of an absentee application. In 1992, they sent 10,212 absentee ballots for the primary and 36,588 for the general election. If they sent them priority mail it would have come to $140,000. First class mail is $14,976. He said that priority mail, at the present rate, is ten times more and there isn't much better service. CHAIR JAMES said she received a number of complaints from her district about the length of time it took for them to get their ballots back. Mail may have been the problem. Faxes could be a solution. There was a problem about how to inform the voters if their ballot was counted. MR. KOIVUNIEMI said the Administration procedures will account for all ballots by number. CHAIR JAMES said to put the onus on the voter to mail the ballot after faxing. More people will be able to vote, so there will be an increase in postage. Number 311 REPRESENTATIVE GREEN asked how to safeguard against fraud. MR. KOIVUNIEMI said there is no method of guaranteeing anything, but the Administration will require voters to fill out a ballot and require information on the envelope, just like they do now. There will still be a witnessing requirement on a separate form. If there is a challenge, they can go back to check signatures and compare the registration and sworn statement. There are some things they cannot control. Mr. Koivuniemi said he would provide a fiscal note. Number 375 STAN RINGMAN, LEGISLATIVE AIDE, REPRESENTATIVE OGAN, wished to add a comment about mailing. He said that priority mail is a postal service marketing gimmick. What you are buying is two pounds of first class mail service. It receives no different handling than first Class mail service. You are only buying more than you need, generally, if you are under two pounds. It would be a good way to save the state some money. There would be no difference in service to the absentee voters. Number 399 MR. CHENOWETH, testified that this bill does not apply to municipal elections or to Rural Education Administrative Area (REAA) elections. This bill does not apply to things committed from this list. If there is a need for this kind of faxing in conjunction with those elections, it needs to be built into the bill. Special federal elections are not embraced in this bill either. Another thing, for the record, is based on a Montana rule. In judiciary the right of privacy came up. Article 5, Section 3 deals with right of secrecy, picked up from the Hawaii constitution. Language draws from there. Number 493 REPRESENTATIVE MARTIN said that during the Gulf War, the Department of Defense was also concerned about confidentiality. Since then the Supreme Court and U.S. Justice Department have ruled that the confidentiality should not be of concern when a person may be denied the right to vote. Number 520 CHAIR JAMES asked if anyone would be interested in submitting this amendment to this bill. REPRESENTATIVE ROBINSON moved to accept the amendment brought forward, which is: Page 2, lines 14 through 16, that we delete all materials. Second would be page 3, line 11, that we delete "priority mail" and insert "the most expeditious mail service." On page 3, line 15 through 16, delete the "most expeditious mail service" and insert "the." CHAIR JAMES asked if there was any objection. There being no objection, the amendment to HB 42 was passed. REPRESENTATIVE PORTER asked a question regarding Section III, page 2, about the days for receiving absentee ballots. If they are mailed they must be received seven days before; if they're faxed they must be received four days before. If they're mailed they must provide for the allowance of simultaneous registration. MR. KOIVUNIEMI said this bill does not tinker with the thirty-day registration requirement. Number 608 REPRESENTATIVE GREEN moved and asked unanimous consent that HB 42 move out of committee. There being no objection, the bill was moved. CHAIR JAMES said they will do a committee substitute. HSTA - 01/24/95 Number 620 HB 70 - END PERMANENT FUND DIVIDEND HOLD HARMLESS CHAIR JAMES said she would like to go on to HB 70 briefly and get the sponsor statement so she could carry it over to the next meeting date. REPRESENTATIVE PETE KOTT, SPONSOR OF HB 70, testified that this measure would add a few dollars to the permanent fund dividend check. At the present time, a recipient of welfare who receives a Permanent fund dividend (PFD), fails to qualify for continued welfare benefits and depending on the circumstance, the disqualification could last up to four months. Generally, it is one month. Welfare benefits are then made to the individual, under what is known as the hold-harmless program. That program is funded by deducting that amount necessary for the welfare benefits from everyone else's PFD check. This year it was in the excess of $41. The amount has grown of the years - it started off at a little over $6. Over the course of time, the entire program has cost every other Alaskan about $240. The Department of Health and Social Services has eight full-time employees that administer this particular program. HB 70 would eliminate this hold-harmless program. It would mean that PFD checks would be treated as ordinary income for purposes of determining welfare eligibility, and this is the same way that income is treated by the Internal Revenue Service. It also means that PFD recipients would not continue to fund a program that allows individuals to receive that money while they are still on welfare. Representative Kott's belief is that it is a step self-sufficiency, and accomplishing welfare reform. There is no fiscal note associated with it. They do not know what the fiscal ramifications would be. All they know is that there are about eight individuals who work toward this particular end in the Department of Health & Social Services. CHAIR JAMES asked for questions, and the committee agreed to reserve questions for a later period. She said the bill will be held over to Thursday, January 31, 1995. ADJOURNMENT CHAIR JAMES adjourned the meeting at 10:25 a.m.