HOUSE BILL NO. 157 "An Act relating to absences from the state while serving on oceangoing vessels of the United States merchant marine for purposes of eligibility for permanent fund dividends; and providing for an effective date." REPRESENTATIVE JERRY SANDERS, SPONSOR spoke in support of HB 157. He noted that there are several merchant mariners in Alaska who do not receive the permanent fund dividend even though they live and maintain a residence in Alaska. He gave examples of mariners who live in Alaska. He noted that the number of people that the bill would affect is small. Representative J. Davies questioned why Peace Corps volunteers were not included. Representative Sanders responded that the intent was to keep the legislation narrow to increase its chances of passage. Representative Austerman expressed support for the legislation but questioned the number of permanent fund dividend exceptions. He asked if a merchant marine serves on a vessel that does not dock in Alaska if they would receive the permanent fund dividend. HAROLD HOLTON, REPRESENTATIVE, SEAFARERS INTERNATIONAL UNION, ANCHORAGE stated that if a merchant marine sailed off and did not return for two or three years they would not be considered a resident. He stressed that the Alaskan merchant marine jobs are very unique. The important issue is where mariners reside when they are off the ship. Co-Chair Therriault observed that the exception states: "serving under foreign or coastal articles of employment aboard an oceangoing vessel of the United States merchant marine." He observed that the individual that has a home in Valdez might or may not come home when he is off the ship. Mr. Holton stated that it is the intent to allow Alaskans to accept jobs. He showed members a video overview of their training program in Piney Point, Maryland. Mr. Holton provided members with written testimony: I was born in Ketchikan, raised in Ketchikan, Petersburg, and Juneau, upon my completion of 6 years in the Marine Corps, I came back to Alaska and became a state trooper for a short period of time. I was a Salmon tender captain for 15 years, before becoming a union rep. The Seafarers opened an office in Anchorage, almost 2 years ago to the day. Our objective is to recruit Alaskans to go to our unlicensed apprenticeship program in Piney Point, Maryland, and give them an opportunity to obtain good paying jobs with good benefits when they complete the program. I first became alerted to the fact that Merchant Seamen were being denied their permanent fund, by a Merchant Seaman from a different union. His name is Ross Perrine from Palmer, and he owns a home, has an Alaska driver's license, voter registration card, etc. he has been denied the fund since the inception. I went to one of our ships, and found that a boatswain on the Tote ship Northern Lights has also experienced the same problems. His name is John Glenn and he will be testifying this afternoon. My recruiting effort has taken me around a lot of the state, and in my interviews with young people, I seem to have their interest in the program until the question of the Permanent Fund dividend comes up, then I am told they are no longer interested. I thought to myself and have shared this view, that these people seemed awfully shortsighted, until I really thought about it, this is probably the only steady money. They have ever seen, and are reluctant to let it go under any circumstance. One of our recent graduates (Jessie Sharp) who will testify this afternoon, that already this year he has been denied the Permanent Fund dividend These merchant seaman being denied, does not have a choice when they sail, as to whether they can sail in Alaska or not. Sailing is based on a seniority system, and believe it or not, our Alaska routes, are in high demand. The ones that have the Alaska routes Ross and John are denied because they are not physically in state a minimum of 180 days. All of our Alaskans have been accepted to Piney Point because they are Alaska residents. I would hate to discourage good young people, (short sighted as they may be) from enjoying such a career opportunity. Right now we have 18 Alaskans who have graduated from Piney Point, and we presently have 2 in school. Besides the 18 graduates, we have created a Riding Maintenance gang. These merchant seaman go on oil tankers and do preventative maintenance. We hired 10 Riding gang a year ago, and all have done an outstanding job. When they have a year of sea time, they will be sent back to Piney Point and upgraded to Able-bodied seaman. We will start training and working a new crew. This crew averages $3,200.00 per month, with full benefits. Two of these Merchant Seaman have recently put money down on homes in the Wasilla area. They also will be denied their Permanent Fund dividend. An article in the Anchorage news recently the 12th did an article on our first native Alaskan. This has generated such a positive response it is hard for me to keep up with it. The first day generated about 20 phone calls, and yesterday I received 71 inquires. This has resulted in 6 tests being given Monday, and 6 more done on Friday. Plus 2 in Soldotna, 1 in Anchor Point, 2 in Kodiak, 2 in Ketchikan, and several from Willow. These numbers are candidates that are qualified. In my estimation, we are not talking about any more than 200 Merchant Seaman over a ten-year Period. Representative J. Davies summarized that mariners working in other seas would still have to maintain an Alaskan residency. Co-Chair Therriault asked if consideration was given to restricting the legislation to individuals sailing from Alaskan ports. (Tape Change, HFC 99 - 114, Side 2) Mr. Holton stated that there are individuals that do sail out of Anchorage. He pointed out that they would ship out of Alaska regardless of where they sail. Representative Sanders stressed that they have to fulfill the other resident requirements. Representative Austerman noted that they could be gone for up to two years. He observed that the intent is to cover individuals that are residents and are dispatched out of Alaska to do a job for four months to be eligible for their permanent fund dividend. Mr. Holton clarified that there are not enough Alaskans to ship out of Alaska. He observed that graduates ship out of Piney Point when their training is finished. He anticipates that there will eventually be an Alaskan dispatch hall. Representative Austerman expressed surprise that the legislation did not reference shipping out of Alaska. Mr. Holton stated that he would not be adverse to an amendment to tighten the language. Representative J. Davies questioned if "dispatched" out of Alaska would be an appropriate qualifier. Mr. Holton stated that it would be an appropriate qualifier. JOHN GLENN, SEAMAN, ANCHORAGE testified via teleconference in support of the legislation. He stated that he has been denied the permanent fund dividend. He observed that many ferry workers receive permanent fund dividends. He stated that he feels like a second class citizen, while everything he does is in Alaska. EDEN LATTA, MERCHANT MARINE, ANCHORAGE testified via teleconference in support of the legislation. He noted that he is a graduate from the Piney Point program. He was also denied his permanent fund dividend. He stressed that he lives in Alaska when he is off of the ship and meets other residency requirements. In response to a question by Representative Austerman, Mr. Latta stated that he has been a merchant marine since 1997. He has left Alaska twice as a merchant marine. JOY TUCKER, ANCHORAGE testified via teleconference in support of the legislation. He noted that her husband works as a merchant marine. She stressed that they live in Alaska and he returns home when he is off of the ship. DEBORAH VOGT, DEPUTY COMMISSIONER, DEPARTMENT OF REVENUE provided information on the legislation. She emphasized that the list of allowable absences does not include all Alaskans. She observed that the legislature has identified Alaskans that qualify. She noted that there are inequities. The commissioner has been allowed to include individuals that demonstrated their intent to return. The provision was difficult to administer. The department adopted the 180-day absence provision as an alternative. She noted that the commissioner's discretion was removed during the prior session. She stated that the proposed exemption is clear and would not be difficult to administer. She noted that the intent would be to support individuals that do remain in Alaska and whose families remain in Alaska. Representative J. Davies questioned if the department would support "dispatched out of Alaska". She stated that the department would not object to the addition. Mr. Vogt explained that the two-year return rule requires that Alaskans return to the state within two years for a minimum of 72 hours. She added that if an individual is gone for over five years there would be a presumption that there is not an intention to remain in the state. Individuals can demonstrate to the contrary. Another provision that will go into effect in the current year would prevent a continuous absence for more than 10 years for any reason. Representative Austerman noted that military personal who come to Alaska register as an Alaskan resident and continue to get the permanent fund dividend after they transfer, as long as they return within two years for a minimum of 72 hours. After five years they would be ineligible. Ms. Vogt clarified that they would be presumed ineligible unless they affirmatively prove that they have substantial ties to the state. Military spouses are also eligible. In response to a question by Representative J. Davies, Ms. Vogt noted that the definition of "state resident" in AS 43.23.005 is modified by AS 43.23.095: "state resident" means an individual who is physically present in the state with the intent to remain indefinitely in the state under the requirements of AS 01.10.055 or, if the individual is not physically present in the state, intends to return to the state and remain indefinitely in the state under the requirements of AS 01.10.055: (a) A person establishes residency in the state by being physically present in the state with the intent to remain in the state indefinitely and to make a home in the state. (b) A person demonstrates the intent required under (a) of this section (1) by maintaining a principal place of abode in the state for at least 30 days or for a longer period if a longer period is required by law or regulation; and (2) by providing other proof of intent as may be required by law or regulation, which may include proof that the person is not claiming residency outside the state or obtaining benefits under a claim of residency outside the state. (c) A person who establishes residency in the state remains a resident during an absence from the state unless during the absence the person establishes or claims residency in another state, territory or country, or performs other acts or is absent under circumstances that are inconsistent with the intent required under (a) of this section to remain a resident of this state. Ms. Vogt noted that the department looks at extenuating circumstances to determine if they are retaining ties to the state. She noted that the department looks to see if a person has friends or family present when the five-year presumption arises. She clarified that the qualifying year is the prior calendar year. Representative J. Davies observed that the applicant must be physically present during the qualifying year or if absent was absent only as allowed in the exceptions. NANCI JONES, DIRECTOR, ALASKA PERMANENT DIVIDEND DIVISION, DEPARTMENT OF REVENUE pointed out that the trainees were not denied because they were away at training. Training is an allowable absence. They were denied because the did not return after the training. In response to a question by Representative Moses, Ms. Vogt noted that on the 1998 permanent fund dividend there were 4,419 armed forces absent from the state. There were also 2,100 spouses and 4,600 children accompanying an Alaskan resident who was eligible for a permanent fund dividend. Representative J. Davies MOVED to insert on page 2, line 2 "dispatched out of Alaska and." Representative G. Davis OBJECTED for the purpose of discussion. He questioned if the definition of "dispatched" would be problematic. Representative Sanders stated that he did not oppose the amendment but did not think it was necessary. Ms. Vogt stated that the department would work with the union to define "dispatch" through regulation. She did not think there would be a difficulty. Representative Moses pointed out that a person could be dispatched out of the state without being present in the state. Ms. Vogt emphasized that the department would look at where the applicant spent their time. Representative G. Davis did not think the amendment was necessary. Representative J. Davies stated that the intent is to encourage opportunities for Alaskans. He stressed that it would provide an incentive for an Alaskan office. Representative Sanders pointed out that some merchant mariners do not belong to the union. He questioned if there would be a problem for non-union mariners. Representative J. Davies WITHDREW his amendment. Co-Chair Therriault recalled a situation with one of his constituents. In response to comments by Co-Chair Therriault, Ms. Vogt stated that the merchant marine list is a definite list. She observed that there are other people that are not on the merchant marine list that work outside of Alaska for employment. She noted that other legislation was offered to pay Alaskans that work outside of the state. The department had trouble with that legislation because it is hard to tell if an employee is required by their employer to leave the state. It would be hard to administer because the lines are "fuzzy". Co-Chair Therriault observed that congressional staff receives permanent fund dividends if they work in the congressional legislator's office but not if they work for the committee chaired by the Alaskan member. Representative Moses noted that there are a significant number of people living out of the state and collecting the permanent fund dividend. Representative Austerman stressed that individuals make lifestyle choices. He expressed concern with the number of exceptions. Co-Chair Therriault echoed his concerns. Representative J. Davies stressed that there are equity issues. He pointed out that there has to be a good public interest reason for treating Alaskans differently. He maintained that people should qualify if they meet the resident requirements. Representative G. Davis MOVED to report HB 157 out of Committee with the accompanying fiscal note. There being NO OBJECTION, it was so ordered. HB 157 was REPORTED out of Committee with a "do pass" recommendation and with a zero fiscal note by the Department of Revenue dated 4/16/99.