HOUSE BILL NO. 2 "An Act allowing, for the purposes of permanent fund dividend eligibility, an individual to accompany, as the spouse or minor or disabled dependent, another eligible resident who is absent for any of the following reasons: vocational, professional, or other specific education for which a comparable program is not reasonably available in the state; secondary or postsecondary education; military service; medical treatment; service in the Congress or in the peace corps; to care for the individual's terminally ill parent, spouse, sibling, child, or stepchild; for up to 220 days to settle the estate of the individual's deceased parent, spouse, sibling, child, or stepchild; to care for a parent, spouse, sibling, child, or 2 stepchild with a critical life-threatening illness whose treatment plan, as recommended by the attending physician, requires travel outside of the state for treatment at a medical specialty complex; or other reasons that the commissioner of revenue may establish by regulation; requiring, for the purposes of permanent fund dividend eligibility, a state resident to have the intent to remain indefinitely; relating to the eligibility for 1992, 1993, 1994, 1995, 1996, and 1997 permanent fund dividends of certain spouses and dependents of eligible applicants; and providing for an effective date." Representative Davies MOVED to adopt Amendment 1 (copy on file). He explained that the amendment would change "indefinitely" to "permanently". He observed that "permanently" is in current statutes. He maintained that the meaning of "indefinite" as defined by Black's Law Dictionary, has the connotation of temporary. He stressed that "permanent" has the connotation of lasting for a long time. He pointed out that the original legislative intent was to provide dividends based on an individual's longevity in the State of Alaska. Representative Martin spoke against the amendment. He maintained that "permanent" is too limiting. He alleged that it is almost unconstitutional to require that, because the State of Alaska is going to give a person a gift, residents must guarantee that they want to remain permanently in Alaska. He pointed out that circumstances change. Job opportunity, marriage or military service can cause a change in residency. Representative Mulder spoke in opposition to the amendment. He acknowledged the emotional appeal of using "permanent". He stated that he would like to say that the dividend is only going to be paid to "real Alaskans," that are going to be here forever. He emphasized that times and conditions change and unforeseen things can happen in the future. He maintained that the Division has been very stringent about who should and should not receive the dividend. Representative Kott maintained that "indefinitely" has the connotation of not having the intention of leaving. He pointed out that the Division requested the use of "indefinitely". NANCI JONES, DIRECTOR, PERMANENT FUND DIVIDEND DIVISION stated that the change to "indefinitely" is consistent with the Division's philosophy that a person cannot be held in Alaska forever. She noted that at the time a person signs their dividend they pledge their intent to remain in Alaska 3 between January and March 31st of the year. She questioned if a person decides to change residency or seek a change of residency after March 31st, should they recall their application. She maintained that "permanently" does not exist. She pointed out that guidelines still apply for the year and a day of required residency. Co-Chair Hanley quoted from Black's Law Dictionary, "indefinite contemplates that condition will end at an unpredictable time, whereas permanent does not contemplate that condition will cease to exist." He asked how many appeals the Division would deny or accept based on the change. Ms. Jones stated that the Division would allow more people under the change to "indefinitely". She stressed that there would be less appeals. She maintained that "permanently" is more restrictive than the actual statute that governs the definition of a state resident. Representative Grussendorf spoke in support of the amendment. He stressed that a seasonal worker is here indefinitely, based on the length of the season or job. Co-Chair Therriault asked if there is a compelling reason for the use of "indefinitely". Ms. Jones stressed that guidelines require that a person have residency ties such as checking accounts, voter's registration, or children in school. She pointed out that the area of dispute comes after the individual has met residency obligations for a period of time and things beyond their control result in a change in residency. The Division then reassess their application based on their intent to stay at the time the application was filed. She spoke in support of "indefinitely". She maintained that there is a difference in substance versus form. Representative Martin observed that statutes require a person to establish residency by being physically present in the State with the intent to make a home. In response to a question by Co-Chair Therriault, Ms. Jones noted that the Division receives calls regarding applicants that have moved or intend to move out of state. If a person leaves the State after their application is filed, but before the distribution of the dividend, their dividend will be denied. These cases are appealed based on the argument that at the time of the application the applicant had no intention of leaving the State and met the residency requirements. 4 Co-Chair Hanley summarized that the individual that has met the residency requirements during the previous year but moves after the application period would be denied under the definition of "permanently" but not under "indefinitely". Representative Davies noted that "intend" is used in statutes referring to the Permanent Fund Dividend and basic residency requirements. He argued that the key question hinges on, at the time the application was filed, did the applicant intend to remain a resident of the State of Alaska. He pointed out that the applicant must be a resident at the time of the application and that being a resident includes the intent to make a home in the State. He maintained that it is appropriate for the Permanent Fund Dividend Statute to have additional or different tests for residency. He maintained that the question is whether the applicant's actions were consistent with a genuine intent to remain in Alaska. Representative Martin reiterated that "permanent" is too restrictive. He stressed that citizens are free to participate in the nation. Representative Davis spoke in support of the amendment. He pointed out that the Permanent Fund Dividend Application questions if applicants "intend to remain an Alaska resident permanently". Representative Martin questioned if long term residents that may want to return to their birth place in their later years should be required to refund dividends received during their residency. Representative Kott stressed that "permanently" is used in the application because it is part of the law. He noted that "indefinitely" was used on applications from 1992 - 1995. "Indefinitely" was changed in 1996 to "permanently". Representative Davies emphasized that an applicant's activities during the period they certify that they intend to remain determine eligibility. He maintained that if their actions, at that time, are inconsistent with the certification they should be denied. A roll call vote was taken on the MOTION to adopt Amendment 1. IN FAVOR: Davies, Davis, Grussendorf, Hanley, Therriault OPPOSED: Foster, Kelly, Kohring, Martin, Moses, Mulder The MOTION FAILED (5-6). 5 Co-Chair Therriault MOVED to adopt Amendment 2 (copy on file). He noted that the Committee discussed narrowing the scope of persons that can make applications for past dividends, to those that actually filled out applications on a yearly basis. Amendment 2 would limit eligibility to applicants that applied for the prior year dividend. He pointed out that applicants, who were absent while accompanying an eligible Alaska resident, were notified that they should apply for a dividend. In response to a question by Representative Davies, Ms. Jones noted that applicants were allowed absences while accompanying an eligible spouse from 1992 - 1995. In 1995, applicants were denied for absences while accompanying their eligible spouse. A separate letter was sent to these applicants which encouraged them to file. The were also directed to file on the 1996 and 1997 applications. She added that another letter was sent after HB 4 was defeated encouraging them to keep applying. The court case that disallowed the absence was December 16, 1993. Applicants whose applications were under review or appeal for other reasons were affected by the court case. Only 25 applicants were not paid their 1992 dividend due to the court case. In 1993, while the actual court case was pending, the majority of those that applied were paid. The first year that all of these applicants were denied was 1994. She noted that there has always been an indicator on the application for applicants that were absent while accompanying an eligible Alaska resident. Representative Kott reiterated that 25 applicants were not paid their 1992 dividend while absent accompanying an eligible spouse. Their applications were under appeal for reasons other than their absence while accompanying an eligible Alaska resident. The Department of Law determined that they would not try to collect from those that received dividends in 1992 while accompanying an eligible Alaskan resident. He added that there were 1,052 applicants affected by the court decision in 1993, 1,900 in 1994 and 1,400 in 1995. Representative Davies provided members with a memorandum from Tamara Cook, Director, Legislative Legal Services (copy on file). She concluded that allowing eligibility of a resident for a prior year dividend, that they did not previously apply for, may result in an equal protection challenge. Representative Davies pointed out that the number of persons affected is relatively small. He pointed out that the State could be open to an expensive court challenge on behalf of a small number of people. (Tape Change, HFC 97-15, Side 2) 6 Co-Chair Therriault WITHDREW Amendment 1. Co-Chair Hanley referred to subsection (2) on page 4, line 29. He noted that applicants that are retroactively eligible for a 1992 -1997 dividend would be disallowed if they are not eligible for the 1998 dividend. Co-Chair Therriault noted that Ms. Cook could not recall a time when past eligibility was based on present eligibility. Representative Davies spoke in support of the deletion of subsection (2) on page 4, line 29. Co-Chair Hanley MOVED to delete subsection (2) on line 29, page 4, and renumber accordingly. Co-Chair Therriault pointed out that subsection (3) is needed to provide a stop date. There being NO OBJECTION, it was so ordered. Representative Davies noted the intent that no interest be paid on the accrual. NICOLE POIRRIER, STAFF, REPRESENTATIVE KOTT noted that according to Ms. Cook, the Permanent Fund Dividend Division has no statutory authority to pay interest on dividends. She noted that interest was not paid on dividends retroactively paid to 18 year olds for years that their parents did not file on their behalf. In addition, the State takes the position that this is not a valid debt. A new right is being created for these individuals. Representative Mulder MOVED to report CSHB 2 (FIN) out of Committee with individual recommendations and with the accompanying fiscal note. There being NO OBJECTION, it was so ordered. CSHB 2 (FIN) was reported out of Committee with a "do pass" recommendation and with a fiscal impact note by the Department of Revenue.