Legislature(1999 - 2000)
03/25/1999 08:05 AM House STA
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE STATE AFFAIRS STANDING COMMITTEE
March 25, 1999
8:05 a.m.
MEMBERS PRESENT
Representative Jeannette James, Chair
Representative John Coghill
Representative Scott Ogan
Representative Jim Whitaker
Representative Bill Hudson
Representative Beth Kerttula
Representative Harold Smalley
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
HOUSE BILL 55
"An Act relating to eligibility for the longevity bonus; and
providing for an effective date."
- HEARD AND HELD
(* First public hearing)
PREVIOUS ACTION
BILL: HB 55
SHORT TITLE: LONGEVITY BONUS ELIGIBILITY
SPONSOR(S): RULES BY REQUEST OF THE GOVERNOR
Jrn-Date Jrn-Page Action
1/22/99 61 (H) READ THE FIRST TIME - REFERRAL(S)
1/22/99 61 (H) STATE AFFAIRS, HES, FINANCE
1/22/99 61 (H) 2 FNS (ADM, DHSS)
1/22/99 61 (H) ZERO FISCAL NOTE (DHSS)
1/22/99 61 (H) GOVERNOR'S TRANSMITTAL LETTER
3/23/99 (H) STA AT 8:00 AM CAPITOL 102
3/23/99 (H) HEARD AND HELD
3/23/99 (H) MINUTE(STA)
3/25/99 (H) STA AT 8:00 AM CAPITOL 102
WITNESS REGISTER
GENE DAU, Member
Capital City Task Force, AARP
P.O. Box 20995
Juneau, Alaska 99802
Telephone: (907) 586-3816
POSITION STATEMENT: Testified in opposition to HB 55.
RUTH BOHMS
535 Halvorson Road
Fairbanks, Alaska 99709
Telephone: (907) 479-6790
POSITION STATEMENT: Testified in opposition to HB 55.
MARIE DARLIN
National Association for Retired Federal Employees
415 Willoughby Avenue, Number 506
Juneau, Alaska 99801
Telephone: (907) 3637
POSITION STATEMENT: Testified in opposition to HB 55.
ALAN JOHNSTONE, President
AARP
P.O. Box 679
Sitka, Alaska 99835
Telephone: (907) 747-5931
POSITION STATEMENT: Testified in opposition to HB 55.
MARGUERITE STETSON, State President
AARP
3009 Northwood Street
Anchorage, Alaska 99517
Telephone: (907) 245-5259
POSITION STATEMENT: Testified in opposition to HB 55.
DEWITT FIELDS
P.O. Box 25
Kodiak, Alaska 99615
Telephone: (907) 486-3949
POSITION STATEMENT: Testified in opposition to HB 55.
HARRY JENKINS, member
AARP
210 Tenth Avenue
Fairbanks, Alaska 99701
Telephone: (907) 456-4905
POSITION STATEMENT: Testified in opposition to HB 55.
CAROLYN LADWIG, member
AARP
and State Coordinator for Economic Security
5840 Jordan Circle
Anchorage, Alaska 99504
Telephone: (907) 337-7658
POSITION STATEMENT: Testified in opposition to HB 55.
DAN KECK, Chairman
Legislative Committee for AARP
P.O. Box 938
Sitka, Alaska 99835
Telephone: (907) 747-3408
POSITION STATEMENT: Testified in opposition to HB 55.
JERRY BOHMS, member
Pioneers of Alaska
and AARP
535 Halverson Road
Fairbanks, Alaska 99709
Telephone: (907) 479-6970
POSITION STATEMENT: Testified in opposition to HB 55.
BOB HUFMAN, Chairman
Legislative and Government Affairs Committee
Pioneers of Alaska
1018 Galena Street
Fairbanks, Alaska 99709
Telephone: (907) 474-0549
POSITION STATEMENT: Testified in opposition to HB 55.
GLEN FRANKLIN
1213 Coppet Street
Fairbanks, Alaska 99709
Telephone: (907) 474-9475
POSITION STATEMENT: Testified in opposition to HB 55.
ART BUSWELL
102 Maple Drive
Fairbanks, Alaska 99709
Telephone: (907) 474-0637
POSITION STATEMENT: Testified in opposition to HB 55.
JOE STRUNKA
P.O. Box 70550
Fairbanks, Alaska 99707
Telephone: (907) 479-3347
POSITION STATEMENT: Testified in opposition to HB 55.
ALISON ELGEE, Deputy Commissioner
Department of Administration
P.O. Box 110200
Juneau, Alaska 99811
Telephone: (907) 465-2200
POSITION STATEMENT: Provided information on HB 55.
ACTION NARRATIVE
TAPE 99-17, SIDE A
Number 001
CHAIR JEANNETTE JAMES called the House State Affairs Standing
Committee meeting to order at 8:05 a.m. Members present at the
call to order were Representatives James, Coghill, Whitaker,
Kerttula and Smalley. Representatives Ogan and Hudson arrived at
8:07 a.m.
HB 55 - LONGEVITY BONUS ELIGIBILITY
CHAIR JAMES announced that the committee would hear HB 55, "An Act
relating to eligibility for the longevity bonus; and providing for
an effective date." It had been heard previously, on March 23.
Number 017
CHAIR JAMES notified members that Bill Ray, who represents the
pioneers, had a death in the family and had asked Chair James to
put on the record that he is violently opposed to HB 55.
Number 057
GENE DAU, Member, Capital City Task Force, AARP, testified that the
task force would like to see HB 55 die in committee. He urged the
committee to vote it down.
CHAIR JAMES noted that Representatives Ogan and Hudson had arrived.
Number 066
RUTH BOHMS testified via teleconference from Fairbanks in
opposition to HB 55. She read the following testimony:
I arrived in Alaska in 1951 and have lived in Alaska for 48
years. I am here today to speak against HB 55, which proposes
to "means test" the longevity bonus program by requiring
maximum gross income for an unmarried person to be less than
$60,000 and for a married couple to be less than $80,000 for
eligibility to receive a longevity bonus. The longevity bonus
program began in 1973 with $100 payments to persons 65 years
of age and older, and the monthly amount increased to $250
over the next eight years.
For example: from 1973 to 1976 it was $100.
In 1977, it went up to $125.
In 1978, it increased to $150.
In 1980, it increased to $200.
In 1981, it reached $250, the present monthly amount.
In 1994, with HB 81, the longevity bonus program began to be
phased out.
During 1994, persons turning 65 that year could apply for
$200.
During 1995, persons turning 65 could apply for $150.
In 1996, persons turning 65 years could apply for $100.
The program closed out and the last day to apply was
December 31, 1996.
Now, going back 26 years to 1973, when the longevity bonus
program began, Alaskans 65 years of age received a $100
payment. Theoretically, some of those early recipients are
alive today at approximately 91 years of age. Some of the
first recipients were upper-income individuals, and others
were in lower income brackets. But after 26 years of being in
the program, one would have to say that those initial
recipients, some rich and some poor, even today, are
grandfathered in the program. Likewise, even the last of the
recipients who applied just before the program closed in 1996
[inadvertently said 1974] and who have been receiving the
benefits for the past two and one half years, can be
considered to be grandfathered into the current, closed
program.
Number 140
After all these years, to remove participants from this
program based on their income would be indeed inviting a
lawsuit. At the present time, state funding for longevity
payments decreases each month as recipients pass away.
Participants grow fewer in number, and the cost to the state
goes down each and every month, and will continue to do so.
Means testing would not increase state revenues significantly,
and means testing as a principle is not acceptable to seniors
who have helped to build this great state of Alaska. If HB 55
becomes law, then next year a new bill, with lower maximum
income levels, could remove another group of seniors by means
testing. For example, next year a bill might be introduced
requiring that maximum gross income for single persons must be
less than $50,000 to be eligible for the bonus, and for
married couples gross income must be less than $70,000. So,
in increments in the next few years, anyone above the poverty
level may well be removed from the longevity bonus program.
The many seniors I have talked to stand firmly behind the
present longevity bonus program without any changes or
modifications. I urge you to vote against HB 55.
Number 183
MARIE DARLIN, National Association for Retired Federal Employees
(NARFE), appeared before the committee in opposition to HB 55. She
said there are more than 6,000 federal employees in the state who
bring in more than $10 million in annuities every month to the
state, which goes into the economy. Ms. Darlin stated, "We have
been opposed from the very beginning to any means testing of any of
the benefits of the retirees and seniors in Alaska. So, then, we
continue to oppose this bill, also, and for many of the reasons
that others have stated."
Number 207
ALAN JOHNSTONE, President, AARP, testified via teleconference from
Sitka in opposition to HB 55. He said he has resided in Alaska -
mostly in the Panhandle - since 1923; he has paid his dues and
expects his representatives not to reduce benefits, because he
doesn't believe in it. Mr. Johnstone added that the seniors have
earned their livelihoods, they have a long-felt need, and Alaskans
should take care of their elders.
Number 232
MARGUERITE STETSON, State President, AARP, testified in opposition
to HB 55 via teleconference from Anchorage. She said AARP
currently has 50,309 members in Alaska that are 50 years of age or
older, which is a significant part of the population. Currently,
AARP membership is over 51 percent of those that are 50 and older.
She said she believes that the longevity program has urged seniors
to remain in Alaska and spend in Alaska, which aids the Alaskan
economy.
MS. STETSON pointed out that it would cost a lot to determine means
testing, and it would create a lot of ill will among Alaskan senior
citizens. Further, it would only be a one-year solution to the
budget problem. She further stated, "In the past we have looked at
income tax as being the most fair; sales taxes catch tourists but
hit the poor people harder, so we would not be in favor of that
later. Seniors volunteer in their community and contribute greatly
to the state of Alaska, and we would urge that you not change this
Alaska longevity bonus program. It will phase itself out in the
future years."
Number 265
DEWITT FIELDS testified via teleconference from Kodiak in
opposition to HB 55, noting that he has lived in Kodiak for 50
years. He said the longevity bonus program was created to
compensate old-time Alaskans who helped to build this state. He
believes there are other ways for the state to raise revenue; one
of the best ways would be to look at all the government vehicles
that the state not only buys but also helps to support. Before the
bonus, many people went "outside," which they would do again if the
state did away with this bonus. Mr. Fields said he would support
an income tax; he pointed out that he is 83 years old and still
working. He noted that people come to Alaska every summer,
beginning about May; they work all summer, "make their wad," then
return home. He sees no reason why they shouldn't leave a
compensation behind for the privilege of working in Alaska.
Number 319
HARRY JENKINS, member, AARP, testified via teleconference from
Fairbanks in opposition to HB 55. He informed the committee that
HB 55 has brought 23 new members into their local chapter [AARP].
He asked how was it concluded that it would only effect 8 percent
of the people receiving the longevity bonus.
CHAIR JAMES replied that the Administration indicated that it is
just a guess based on the census figures.
MR. JENKINS remarked that the people in Fairbanks don't guess.
Number 342
CAROLYN LADWIG, member, AARP, and State Coordinator for Economic
Security, testified via teleconference from Anchorage in opposition
to HB 55, noting that she will be 55 years old in a couple of days
and has lived in Alaska since 1966, except for one year. She
emphasized that she is opposed to mean testing for senior benefits
and that people who have helped deserve to be able to afford to
remain in the state as long as they choose to and not have benefits
cut that they have qualified for, for over the last 20-plus years.
Number 357
DAN KECK, Chairman, State Legislative Committee for AARP, testified
via teleconference from Sitka in opposition to HB 55, noting that
he researched HB 55 to find out whom this would actually affect.
He said when you try to find out how much money they make is almost
like pulling teeth. He indicated that it hits the people who have
lived in the state the longest because they seem to have generated
the most money, worked the hardest, and saved some of it. They are
actually the people we need to keep in our state because they are
a real resource. Mr. Keck said, for that reason, AARP is opposed
to HB 55. He also noted that the word has gotten out and a lot
more people are talking about it.
CHAIR JAMES agreed with Mr. Keck. She said it appears that those
are the people that this benefit is really for to thank them for
what they've done to build our state.
Number 395
JERRY BOHMS, member, Pioneers of Alaska and AARP, testified via
teleconference from Fairbanks in opposition to HB 55, noting that
he has been in Alaska more than 50 years. He said he read in the
newspaper that businesses want the legislature to jump into the
permanent fund before any new taxes are approved. He said this is
going to affect everyone whether they can afford it or not. Mr.
Bohms stated that the longevity bonus was originally instituted to
urge the "old-timers" to remain in Alaska instead of moving outside
where the cost of living was a little cheaper. He said the money
that the state is going to receive from the means testing is going
to be quite minimal at best. It seems a tax would be a much fairer
and better way to increase state revenues. This would apply to
everyone who works and lives in the state - those who live outside
and work in Alaska would also contribute. He said lower-income
people spend almost every cent they receive in the state which adds
to the economy to quite a great degree, whereas the higher-income
people take vacations and spend money all over the world. For that
reason, he believes HB 55 should not pass.
Number 458
BOB HUFMAN, Chairman, Legislative and Government Affairs Committee,
Pioneers of Alaska, testified via teleconference from Fairbanks in
opposition to HB 55. He noted since the 1996 phase-out of the
longevity bonus program the amount paid to recipients has decreased
to approximately $10 million. It will continue to go down on an
accelerated basis as those older seniors in the $250.00 category
pass on. The program is designed to be of a finite nature. He
said, "I'll wager that if, in fact, such a program as envisioned by
the Administration was instituted another department would be
created to peruse tax forms, institute investigations of income
sources. Who's going to ensure they don't circumvent income
sources set forth in the bill and that exclusions are legitimate?
Perhaps the state could hire some IRS agents with expertise in this
field. I say let it die naturally and not allow it to be
transformed into a needs based supplemental welfare program."
MR. HUFMAN cited an article from the Journal of Commerce, "Right
Target, Wrong Weapon for Possible Cuts," by former Governor
Hammond, which refers to a previous effort to cut the dividends.
Mr. Hufman said, "I like in that statement to Governor Knowles
continuing effort to cut a targeted group of seniors from the
longevity bonus program. I believe the right weapon in this case
would be to reduce welfare benefits so they're closer to par with
other states at the very least. Those new arrivals ... should
receive no more than that paid from the state they came from. As
I understand it, a new arrival is almost instantly eligible for
welfare and they do not even need a one-year residency requirement.
Larger welfare payments, and the prospects of a permanent fund
dividend after one year, no doubt serves as a magnet to innumerable
prospective welfare recipients. So if you must cut, and I agree
that given prevailing circumstances belt-tightening is required,
use the right weapon to obtain your goal and let the longevity
bonus die a natural death which is assured under existing
statutes."
Number 514
GLEN FRANKLIN testified via teleconference from Fairbanks in
opposition to HB 55, noting that he came to Alaska in 1933 to
attend the University of Alaska, at that time the Alaska
Agriculture College. He said he believes that he helped to
maintain and establish the university because anybody who came up
here and became a student helped to develop that part of Alaska.
The other part that he is proud to have helped build is the mining
industry. He stated that, "When I graduated from college, I went
to work for a mining outfit and got bitten by the gold-bug. After
the war I decided to do it myself and we formed a partnership and
at that time we had ground over in the 40-mile boundary area, but
there wasn't any road there. So in 1946 we gathered our 'Cats' and
all of our gear at the 40-Mile Cutoff and made an overland haul
into the boundary area - it took us 17 days. Today it takes you
three and a half hours by the Taylor Highway. So, during the
period that we were in business as miners, we developed that part
of the world and the road came in because we were there, partly,
and it extended itself to Eagle. So it's a very important part of
Alaska's road structure serving the tourist industry which is
putting more money than any of us miners ever did. So I think that
I can qualify to having contributed to my part in getting the
longevity bonus. We didn't ask for it - the legislature decided
that perhaps we deserved it because in today's world, anybody who
works for the state in any capacity, and in any way after five
years I think is vested - automatically gets a pension and there's
no question about whether he gets it or not if he makes a million
dollars. So let's get off this kick about putting a lid on the
longevity bonus. I'm not sure if I would get knocked off or not,
because I'm not going to tell you, it's none of your business. But
I think I've made a contribution to this state in the 60-plus years
that I've been here, so let that thing die in committee where it
belongs, to be dead!"
Number 573
ART BUSWELL testified via teleconference from Fairbanks in
opposition to HB 55, noting that he came to Alaska originally with
the university in 1951 and stayed for 20 years and then left for
personal reasons for 13 years and then came back in 1984 because
it's the best place in the world to live. He said he joins his
friends who have expressed opposition to HB 55 and endorses their
reasons without going through all of them except to say, "I think
it would be costly, I think it's unnecessary since it is being
phased-out, I think it's an invasion of privacy, and I think people
that have been planning for it should be able to continue to expect
it. I find it particularly offensive one part in here that says
that, if some inheritances would be included in the gross income,
so that if a couple were making $76,000 gross income and (indisc.)
less than $5,000 in her will they would be ineligible for the
$6,000 from the bonus and that seems to be a kind of an unfair
stipulation as it would be carried out."
Number 600
JOE STRUNKA testified via teleconference from Fairbanks in
opposition to HB 55, noting that he is approaching age 62 and is
not a recipient of the longevity bonus program. He read excerpts
from a letter which he sent to approximately 12 legislators on
February 23, of which he received three responses and the first
response was from Representative James, Senator Miller and Pearce
were the others who responded.
I do not support HB 55 or SB 40 and primarily the reason for
this is that the present program is unfortunately going to
expire in the near future, and you're going to be missing out
a great deal in terms of stability and wisdom from our
old-timers. Since, as it was mentioned, the legislature was
the one that initiated this particular program, I wish to
quote Robert Service ... "A promise made is a debt unpaid,"
and this is from The Cremation of Sam McGee.
I had the good fortune, when I first came to Alaska in 1962,
to spend my first winter with a "Klondiker" by the name of
Robert Henry Jones, and known as Bobby, he was age 79 at the
time and we lived in a 12 by 14 cabin on Nolan Creek which is
situated approximately six and a half miles northwest of
Wiseman. And I gained a lot from his wisdom. One of the
words that I heard often times during the winter was the term
"fair play," meaning in his terms is it fair to all parties
that are involved. And Governor Knowles' fourth attempt to
attack the senior citizens of our state does not meet the fair
play standard in my estimation.
Many seniors, especially those who have spent a major portion
of their lives in Alaska, have contributed dearly to the
stability and development of this country. Many, using their
hard earned money to foster business ventures, benefited
everyone that touched their enterprises. If by chance the
venture prospered and they eventually sold it for whatever
reason that could be for profit, poor health, old age, et
cetera, why should they be penalized for having a nest-egg in
their old age. Enough said, just leave the seniors alone.
Number 650
MR. STRUNKA mentioned that he had asked one of the legislators for
specific information about the program as far as the demographics
but he has not received anything.
For example, since the moratorium and the Hickel
Administration was placed on the longevity bonus program, how
much has it gone down in payments to seniors as well as, how
much of a reduction in staffing of the respective
administrative office which oversees the program has occurred
- that's a good question. And in terms of the demographics,
I it would be nice to know the number of recipients in the
program, the number of recipients by age and/or age groupings,
number of recipients by gross and net incomes (if you can find
that out) and make that in small increments, number of
recipients by residential groupings - that is village, urban,
isolated, and then finally the number of years of residency in
the territory and the state of Alaska.
The above statistics would be interesting and necessary when
considering any reduction in seniors receiving the benefits.
Ultimately some seniors are eliminated. If you have to do
this, cut out the most recent arrivals to this program and
that would include more of the one-year residents. When I
first came up here in [19]62, there were very few old-timers
and the thing that I have seen over the 30-some years I've
been here is many of the old-timers that used to go south are
now staying here and they certainly provide a great deal of a
foundation for our youth and for the community in general.
Number 679
I prefer seeing the Governor's salary and benefits and perks
reduced before touching the seniors. Just cut the
Administration's funding overall and then see where you go
from there.
MR. KECK suggested Mr. Strunka contact Ruth Bohms for the
statistical information.
RUTH BOHMS noted that she only has the numbers of persons in each
category, she does not have information on the incomes.
CHAIR JAMES said she doesn't think the incomes are available and
she doesn't believe the legislature needs that information.
MR. KECK remarked that getting the senior's income information is
not easy, "that's kind of a secret thing like how many fish they
catch."
CHAIR JAMES said that information is close to everybody's pocket
book, but it's also close to their heart. She said she understands
that concern because she has spent most of her life doing
accounting and taxes for folks. Chair James noted that she is not
looking for a motion to move HB 55 out of committee.
REPRESENTATIVE HUDSON asked Ms. Elgee what happens when an elderly
couple come into the state, who are 70 today, are they eligible to
come into the program.
Number 718
ALISON ELGEE, Deputy Commissioner, Department of Administration,
explained that when the department phased the program out, they
phased it based on the year of eligibility, not the age of the
recipient. So individuals that were in the state for the year
prior to the December 31, closing date, were eligible for that last
$100 bonus level regardless of their age. After that date - again
regardless of their age, no one is eligible.
CHAIR JAMES recalled when it was phased out, it was a very painful
vote. She said, "The statistics of, I believe 1992, when 40
percent of the recipients of the longevity bonus [program] had not
been in the state more than three years was the driving factor of
having to phase it out. And quite frankly, I feel we've done it,
we've been there, we've done that, we don't need to do anything
anymore. I've been very vocal about that and I remember that
painful vote."
REPRESENTATIVE SMALLEY emphasized that he does not support HB 55
because it's not a fair way to treat those who basically made
Alaska what it is. It requires a disclosure of information that
others are not required to disclose in this manner which really is
a penalty as he sees it.
CHAIR JAMES mentioned the members provided their conflict of
interest for the record on Tuesday.
Number 757
REPRESENTATIVE KERTTULA stated, "Maybe on behalf of Representative
Coghill and myself, we were lucky enough to grow up here, that we
benefited greatly from all of you and all of the people who have
testified. And I thought that one of the best comments ... was the
point about, If you're working for the state at five years - now
it's ten, you vest and you get a retirement and there isn't any
question. And, to me, that's what the whole program was about -
with people who were here, who couldn't get Social Security, who
worked hard to build the state into what it is. And as you point
out, with the phase-out and with unfortunately, all of us aging, at
some point the program will be out completely. So I think you're
right, we've done our part, it's going to go out of existence with
a minimal amount of money that this would bring in, I don't think
any of us would support it."
REPRESENTATIVE COGHILL said, "Just to add to that, and I thank you
for those comments Beth [Kerttula]. One of the things that is
going to happen (if this bill goes forward) is it changes something
that we have done to try to honor folks that have built into our
society, and it turns right around and puts a hook in them. That
takes away that honor and I think that would be a crying shame. I
think that that would be very dishonorable and so, to let it die
the natural death like it's been said on so many of the comments,
I think is probably the more appropriate thing to do. Also, it
fuels our bureaucracy for more work - I'm not interested in that
and I think that the cost differential would put more work into our
bureaucracy than necessary. So, just based on those two things, I
would sure hate to see a program meant to honor people, turn around
to dishonor people, so I'm not going to support moving this thing."
Number 786
REPRESENTATIVE OGAN said he wanted to thank the Governor for
showing what his true agenda is.
[HB 55 was heard and held].
ADJOURNMENT
Number 788
There being no further business before the committee, the House
State Affairs Standing Committee meeting was adjourned at 8:47 a.m.
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