Legislature(1997 - 1998)
01/29/1998 01:35 PM Senate L&C
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SENATE LABOR AND COMMERCE COMMITTEE
January 29, 1998
1:35 P.M.
MEMBERS PRESENT
Senator Loren Leman, Chairman
MEMBERS ABSENT
Senator Jerry Mackie, Vice Chairman
Senator Tim Kelly
Senator Mike Miller
Senator Lyman Hoffman
COMMITTEE CALENDAR
SENATE BILL NO. 254"An Act relating to levy, execution,
garnishment, attachment, or other remedy for the collection of debt
as applied to a permanent fund dividend."
- HEARD AND HELD
PREVIOUS SENATE COMMITTEE ACTION
SB 254 - No previous action to consider.
WITNESS REGISTER
Mr. Mike Pauley, Staff
Senator Loren Leman
State Capitol Bldg.
Juneau, AK 99811-1182
POSITION STATEMENT: Staff to sponsor of SB 254.
Ms. Nanci Jones, Director
Permanent Fund Dividend Division
Department of Revenue
P.O. Box 110460
Juneau, AK 99811-0460
POSITION STATEMENT: Commented on SB 254.
Mr. John Low
Anchorage, AK
(907) 245-0176
POSITION STATEMENT: Supported SB 254.
Ms. Marlene Slavin, Charge Off Director
National Bank of Alaska
Anchorage, AK
(907) 257-3385
POSITION STATEMENT: Supported SB 254.
Mr. Troy Ferguson, Branch Manager
Northland Credit Corporation
Anchorage, AK
(907) 562-0266
POSITION STATEMENT: Supported SB 254.
Mr. Vince Usera, Assistant Attorney General
Department of Law
P.O. Box 110300
Juneau, AK 99811-0300
POSITION STATEMENT: Commented on SB 254.
ACTION NARRATIVE
TAPE 98-3, SIDE A
Number 001
SB 254 - LEVY ON PERMANENT FUND DIVIDEND
CHAIRMAN LEMAN called the Senate Labor and Commerce Committee
meeting to order at 1:35 p.m. and said there wasn't a quorum, but
that he would take testimony on SB 254.
MR. MIKE PAULEY, Staff to Senator Leman, said that SB 254 will
enhance the ability of the State of Alaska and other private
businesses to collect from other private parties that are in a
state of default from their financial obligations. Existing state
law provides that 45 percent of a person's Permanent Fund dividend
check is exempt from collection for a judgement (from a private
party). There are some exceptions (who can recover 100 percent) to
this rule like child support obligations, defaulted student loans,
and any debt owed to an agency of the State. This implies that the
State has a greater right than private parties to recover a debt
that is lawfully owed.
When businesses are not able to collect funds from those in
default, it increases the cost of doing business. These costs are
passed on to honest consumers in the form of higher costs for goods
and services. So in a very real sense, the majority of Alaskan
consumers are paying for the financial irresponsibility of a small
minority.
SB 254 changes the 45 percent exemption for Permanent Fund Dividend
checks to a "0 percent" exemption. While this levels the playing
field in terms of the percentage that can be garnished, it still
assigns a higher collections priority for certain obligations to
the State, such as child support payments.
MS. NANCI JONES, Director, Permanent Fund Dividend Division,
provided the Committee with a summary of attachments since
inception of the program. In 1982 there were 27 attachments and in
1997 there were 94,386 attachments. She noted that the IRS had a
computer glitch this year and withdrew over $20,000 of its claims.
This meant that the smaller claims were able to be paid, not the
IRS.
MR. JOHN LOW, Anchorage resident, supported SB 254, because of an
unpleasant experience that happened to him in 1995 with a bad
tenant who left him with a cleanup and remodeling bill of more than
$8,000. He found the tenant eventually, but couldn't garnish her
wages because of the generous exemption allowed by State law. His
only hope is to seize her PFD check which he has done twice so far.
He figures it will take more than 13 years to collect this debt,
but it can be paid off in six and a half years, if the legislature
eliminates the exemption on PFD checks.
CHAIRMAN LEMAN said he also had a similar unpleasant experience and
sympathized with him.
MS. MARLENE SLAVIN, Charge Off Collector, National Bank of Alaska,
said she can't express enough about how many unpaid judgements they
have. Receiving only 45 percent of the PFD's is allowing them to
pay interest due on the loans instead of reducing the principle
balance. If they could receive 100 percent of the PFD, they could
reduce the balance on a lot of the loans and possibly pay most of
them off.
She said they would not be taking anything away from people who are
receiving the PFD, since this is free money the State is giving us.
Local businesses should be treated the same way as State agencies.
Number 230
MR. TROY FERGUSON, Branch Manager, Northland Credit Corporation,
said he also represented the Alaska Consumer Finance Services
Group. He supported SB 254, because he thought everyone should be
on a level playing field as far as the PFD check goes. Everyone is
required to pay their obligations and even if they can't get 100
percent of the PFD, he thought the 45 percent needed to be
adjusted.
Number 261
MR. VINCE USERA, Assistant Attorney General, suggested deleting
language on line 9 stating "both before and after payment is made
to the individual," because that language was originally inserted
to protect the 45 percent the individual was allowed to claim as
exempt. If 100 percent is available for collection, it makes no
sense to have that language in there. It would also cause some
confusion when compared with language in AS 938.03.0 (b) which
provides for a liquid assets provision. Monies from the PFD are
not part of the definition of liquid assets for which there is an
exemption. This is terribly abstruse material, although not a
grave legal problem. He questioned whether that language really
served a useful purpose in present law, because there is no
definition of "after."
CHAIRMAN LEMAN agreed that it made sense to clarify the language
and said he couldn't adopt amendments today, but would work on the
bill and bring it up in another meeting. He adjourned the meeting
at 1:56 p.m.
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