SB 40-LONGEVITY BONUS REAPPLICATIONS  10:01:47 AM CHAIR MCGUIRE announced the consideration of SB 40. SENATOR BILL WIELECHOWSKI, Alaska State Legislature, sponsor of SB 40, said the longevity bonus program still exists in statute; however it has not been funded since 2003. SB 40 doesn't reinstate the bonus but it corrects the application process to allow those seniors who were receiving the bonus in 2003 to reapply if the program ever gets funded. The program would fade out as seniors pass away. The current CS is the work of Legislative Legal Services, the Department of Law, and the Department of Health and Social Services. The administration supports the longevity bonus, he noted. The program was enacted in 1972 for Alaska pioneers 65 and older. In 1993, Governor Hickel proposed the phased reduction and eventual elimination. Seniors who were receiving the bonus were assured that they would be allowed to continue benefiting from the program as long as they were living in Alaska. Many have counted on the bonus for their retirement. 10:04:08 AM CHAIR MCGUIRE said she firmly believes a good culture supports its seniors. In Asia it is a sign of disrespect to leave the elderly without a home. She asked about the equal protection constitutional problems in recreating a program that only allows some seniors to get it. She then asked how the program will merge with the senior care program. SENATOR WIELECHOWSKI said there are potential constitutional issues. There was a challenge to the longevity bonus in 1996, and the Superior Court upheld the program. It provides merely an economic interest. Since the money has been phased out there is potential for the court to strike it down now. SB 4 would not allow people who are receiving senior care to receive the bonus. He doesn't know if that exclusion exists today. 10:07:44 AM TAMARA COOK, Director, Legislative Legal and Research Services, said the court found that the stair-stepping phase-out was constitutional even though it grandfathered in some recipients, because on the reliance the recipients had on the bonus. The reliance principle is fairly well developed in case law. The difference now is the four-year gap where the reliance issue has not been protected, so that weakens the argument that the state is protecting a relying interest. A remnant interest could be argued, but it won't be resolved until it is attempted. CHAIR MCGUIRE said the remnant reliance issue would have to be argued; otherwise it is denying some seniors a bonus with a seemingly arbitrary date. MS. COOK said the longevity bonus does not classify recipients based on length of residency. It is not a discrimination against newcomers. CHAIR MCGUIRE asked about senior care. MS. COOK said if the current senior care program and the longevity bonus were on the books and superimposed, an individual could get both, but the value of the bonus will go into the eligibility calculation for the senior care program. Some very poor elders could qualify for both. The senior care program didn't exist when the longevity bonus was enacted. 10:13:43 AM ELLIE FITZJARRALD, Acting Director, Division of Public Assistance, Department of Health and Social Services, said currently the senior care program has not considered longevity bonus income because it has not been there. In SB 4 there is no specific provision about whether the bonus would count in determining eligibility. The fiscal notes assume that seniors must choose to either receive the longevity bonus or participate in the senior care program, but not both. It is not spelled out in the bill, so that decision needs to be made, she concluded. CHAIR MCGUIRE asked if the permanent fund dividend counts towards income for qualifying for the senior care program. 10:15:06 AM MS. FITZJARRALD said it doesn't count. SENATOR BUNDE pointed out that "for those that are aghast about spending any of the earnings of the permanent fund, we spend about $30 million a year on the hold harmless for people who would lose their welfare if they received a dividend." He agreed with the need to provide respect for elders; however, he doubts that not giving the Hickels, Murkowskis, or himself a longevity bonus would show a lack of respect. He asked Ms. Cook if reliance means needs-based. 10:16:36 AM MS. COOK said reliance interest is not defined as needs-based. It is the notion of the government changing something that someone relied on. The judge in the case didn't make any suggestion that the reliance being protected was needs-based, only that a person might make a financial decisions based on the continuation of a program. SENATOR BUNDE said the sponsor noted that Governor Hickel made a promise, but there was no promise from the legislature. "When the sponsor statement said 'we made a promise,' I reject that notion. I was no party to any promise like that." The sponsor statement speaks of Alaska settlers, but most people that were receiving the bonus were not longtime Alaskans. He said he rejects the notion that it is a moral obligation. 10:18:50 AM SENATOR STEVENS noted that he also hears from people that it was a promise given. When he was on the borough assembly, a person could not encumber future assemblies by decisions. "What legal grounds are we on when someone says that it was a promise and you have an obligation to fulfill it?" MS. COOK said every obligation on the books is dependent on an appropriation. Even private contracts, implied or explicit, rely on the continuation of appropriated money. Whenever any citizen does business with the state, there is always the possibility that a program will not continue, especially a benefit program. It is a well-understood legal principle, but it may have nothing to do with how the common person views it. 10:20:47 AM SENATOR FRENCH said beneficiaries are dying. How old will the youngest be if the program is continued? SENATOR BUNDE said the cost will be over $150 million. MS. FITZJARRALD said she believes it is age 75. SENATOR BUNDE pointed out the senior property tax exemption is on the books, but the state has chosen not to fund it. 10:21:57 AM RALPH HUNT, Pioneers of Alaska, Juneau, said he has been in Alaska for 57 years. He said he is 90-years-old and supports the program. There are a lot of seniors that the money meant they could do things they couldn't do otherwise. "It should be reinstated." He once suggested to former Governor Murkowski another way to save money and was told it wasn't feasible. SENATOR BUNDE said there was a proposal from the AARP to make the bonus a needs-based program. That seemed like a good compromise. MR. HUNT said he would support that. It is nice to have, but there are quite a few people who do need it. There have been people who left the state because it was gone. 10:24:34 AM RITA HATCH, Volunteer, Older Persons Action Group, said she volunteers with seniors everyday, many of whom have lost the bonus and want it back. Many have hardly a decent living without it. If funded, "SB 40 will be a technical fix that will re- qualify all of us so that we would be eligible again." 10:25:40 AM PAT LUBY, Director, AARP Alaska, said SB 40 is a technical fix that if the longevity bonus should be restored, previously eligible seniors will again be eligible. This is a good idea. SENATOR BUNDE said he worked with him before senior care was available, and Mr. Luby said AARP would accept a needs-based benefit. MR. LUBY said an AARP principle is that government will never have enough money to do what needs to be done, so money should go to those in need. We definitely support a needs-based program, he stated. 10:27:35 AM CHAIR MCGUIRE closed public testimony on SB 40 and held the bill in committee.