Number 106 HB 364 - PFD PROGRAM/ALLOWABLE ABSENCES REPRESENTATIVE MULDER welcomed Representative Jim Nordlund, Prime Sponsor of HB 364, to the committee and asked him to present the bill. Number 108 REPRESENTATIVE NORDLUND stated that HB 364 adds service in the Public Health Service (PHS) and in the U.S. Merchant Marine to the list of allowable absences for eligibility for permanent fund dividends. He stated that he sponsored this bill at the request of constituents, one of which is a Merchant Mariner and one who is a member of the Public Health Service, because he believes that these people are entitled to the exemptions. Representative Nordlund stated that members of the Public Health Service are commissioned officers, much like military personnel, and are required to leave the state on assignment against their will for duty assignments. He said, due to the nature of their job, Merchant Mariners cannot be physically located in the state because their job requires them to be on their ship. He said that his intention is to ensure that these people who are domiciled in the state are still considered eligible when they are required to be at sea for more that six months. REPRESENTATIVE NORDLUND also added that there was a recent Superior Court decision that stated that PHS commissioned officers should be eligible for statutory allowable absences under the permanent fund dividend program. REPRESENTATIVE NORDLUND stated that even if this bill does not pass, he thought the court would order the payment of these PHS officers. Representative Nordlund then said that he would be happy to answer any questions. REPRESENTATIVE NAVARRE asked what the position of the Department of Revenue was. REPRESENTATIVE MULDER replied that Tom Williams from the Permanent Fund Dividend Division would present the department's position. REPRESENTATIVE MULDER stated that he saw that there would be 532 members of the PHS who would be affected and asked how many Merchant Mariners would be affected. REPRESENTATIVE NAVARRE answered that there were approximately 191. REPRESENTATIVE NORDLUND said that number is hard to determine and the Department of Revenue would probably have a problem with this and stated further that when you count the number that apply and meet the requirements for the dividend program the number would not be that high. He said that there were 14,000 Merchant Mariners nationwide. Number 146 REPRESENTATIVE MULDER asked if there was an active component of Merchant Mariners in Alaska. REPRESENTATIVE NORDLUND answered that there is no chapter of Merchant Mariners in the state and that he thought it was a national service that did not isolate by state. REPRESENTATIVE MULDER asked if the likely scenario would be the following: an Alaskan joins the Merchant Marine and ends up traveling around the world and not like military, who sometimes are assigned here, then become residents and are eligible for the dividend program. REPRESENTATIVE NORDLUND replied that this is the intent, but probably there is nothing to prohibit someone who is in the Merchant Marine from moving to Alaska and then becoming eligible for the dividend program, much like the military. Number 155 REPRESENTATIVE NORDLUND stated that he had an amendment that he would be willing to offer that may have some constitutional questions. He said that it is not his intent to allow someone who just maintains a mailbox address in Alaska and is actually domiciled in San Francisco from benefitting from the program. Representative Nordlund said that his intent is to provide eligibility for people who are domiciled in the state except when they are at sea and that he would be open to any way to clarify that. REPRESENTATIVE MULDER stated that it is very difficult to stipulate what you have to have to establish residency in Alaska. Representative Mulder stated that it was a policy question of whether Merchant Mariners should be considered in the same manner as any other branch of military service. Number 169 TOM WILLIAMS, DIRECTOR OF THE PERMANENT FUND DIVIDEND DIVISION, DEPARTMENT OF REVENUE, stated that the Department of Revenue does not support any expansion of allowable absences. He stated that there is a challenged court decision by Judge Dana Fabe that did not conclude that PHS were military, because they are not classified as such by federal law, but PHS does have a lot of similarities to the uniformed military services. He said that he did not believe that they are transferred out against their will, but there is the opportunity to transfer and there have been agreements by PHS officers where they are guaranteed to come back to Alaska. Mr. Williams stated that the court decision stated that PHS officers should be treated similar to the military and be allowed to remain eligible when they are absent because of their similarities to the military. The court has remanded the specific cases in the suit back to the department to make other determinations. MR. WILLIAMS said that the department originally determined that they were not eligible because their absence was not allowable in statute. Now, they are remanded back to determine eligibility based on all factors, after which they will go back to the court. Mr. Williams stated that the department has spoken with the Attorney General's Office about the appeal of this case once it is finalized. He said that the PHS includes mostly physicians and some engineers that do serve often side-by-side with military personnel, but not in all cases. With respect to Merchant Mariners, MR. WILLIAMS said that his investigation has shown that there is no Merchant Marine corps like the Coast Guard or the Navy. He said that nongovernment owned commercial vessels make up the Merchant Marine of the United States and that the Coast Guard issues cards to qualified Merchant Mariners. Mr. Williams stated that anyone who was issued a Merchant Marine card and was serving at sea under the auspices of that card would qualify for an allowable absence. He said that it is really not affiliated with the military and is a commercial service and raises the question of what basic private employment jobs should be considered an allowable absence. MR. WILLIAMS said that the department proposed some regulations related to working out-of-state. Under the current regulations, if you accept a job out-of-state and it is not for one of the fully allowable absences, you do not retain eligibility for the permanent fund program. MR. WILLIAMS explained that the department had proposed regulations concerning accepting part-time employment out-of-state that stipulated an individual could remain eligible if they maintained a physical home here at all times. He said that these regulations were designed to take care of construction workers or those who had to leave the state during a slow period and most often left their family here. Upon advice of the Department of Law, these regulations would be constitutionally questionable because it faces an economic test, namely, someone may not be able to financially maintain a home here. Consequently, these regulations were not adopted under the advice of the Attorney General. MR. WILLIAMS said that administering the program to PHS officers would not be a problem, because they do have leave and earnings statements from which they would be able to determine eligibility. He said that there would be some problems or questions that would have to be answered for determining eligibility for service in the Merchant Marine. Mr. Williams said that when you look at any allowable absence, you also look at the "piggyback provision" of the spouse and children. Number 233 REPRESENTATIVE KOTT asked Mr. Williams if the department would be neutral or possibly supportive of the inclusion of the PHS officers, but not so amenable to the Merchant Marine. He also asked that if the court decision prevailed, would the commissioner incorporate this into regulation. MR. WILLIAMS replied that the department does not support opening the program to the PHS as opposed to the Merchant Marine. He said that the department does not support adding any additional allowable absences. Mr. Williams said if the Supreme Court ruled that Judge Fabe was correct in his ruling, then the commissioner would go in and add this to PFD regulations. He added that he does not believe that will occur. Number 250 REPRESENTATIVE KOTT asked if the department knew how many Merchant Mariners would be included under this provision. MR. WILLIAMS answered that he had no way to estimate this, but that they had some cases from Ketchikan in the past. Number 257 REPRESENTATIVE NAVARRE asked if the general philosophy of the department was against any opening of the allowable absence provisions and further asked if the department would prefer to have it closed to the military. MR. WILLIAMS asked for clarification. REPRESENTATIVE NAVARRE asked if it was correct that the department did not want any expansion of the current allowable absences. MR. WILLIAMS said the department is not supportive of any expansion, and with respect to PHS, the department does not see any particularly unique argument that would convince them to open it up. He said that members of the PHS have repeatedly asked the commissioner to adopt a regulation and the department concluded that there were not enough similarities to the military that would suggest that it was warranted. Number 272 REPRESENTATIVE MULDER stated that during testimony on a similar bill, the Representative from Kodiak made a suggestion that perhaps the statutes should be amended to say that anyone who is gone from the state for longer than 150 consecutive days is not eligible, and the department liked this idea. REPRESENTATIVE MULDER said that he understood that this would make it easier for the department. MR. WILLIAMS agreed that it would make the program easier and more equitable to administer. Number 278 REPRESENTATIVE NORDLUND stated that he thought that it was appropriate for the department to speak of how a program may be easier to administer, but it is up to the legislature to decide who in eligible for the dividend program. He stated that for whatever the reason, it is up to the legislature to decide this and it has to be based on the merits. REPRESENTATIVE NORDLUND referenced a statement made by Mr. Williams that he was not sure if PHS officers did not have to leave the state against their will. He said that the court stated in its decision that PHS officers, like members of the armed services, serve at the pleasure of their superior officers and do not have control over where they are commissioned. REPRESENTATIVE NORDLUND stated that the question of whether the legislature should allow anybody who is employed outside of the state to be eligible for the dividend is a valid concern, but when your job in on a ship in the middle of the sea where you couldn't possibly be residing in another state. He said that if in fact these people are residents and they just happen to be out at sea for more than six months a year, they should receive the permanent fund out of fairness. Number 302 REPRESENTATIVE KOTT stated that out of fairness, every Alaskan citizen who has an occupation that takes them out-of-state, whether they be a Merchant Mariner or an employee of ARCO or BP, should then be included, otherwise it is discriminating one class of occupations against another. Representative Kott said that this was discussed in the Judiciary Committee and that there are constitutional questions when you start separating classes. He stated that when you are a Merchant Mariner, or ARCO employee, quite often there is no choice of where you are assigned. REPRESENTATIVE KOTT proposed an amendment to include all occupations. REPRESENTATIVE NAVARRE objected. REPRESENTATIVE MULDER asked for a roll call on the amendment Amendment to HB 364 Add to AS 43.23.095 (8) "(J) out-of-state employment." ROLL CALL: Representative Mulder: No Representative Navarre: No Representative Kott: No YEAS: 0 NAYS: 3 ABSENT: 2 The Amendment failed. Number 320 REPRESENTATIVE MULDER asked if there were any further amendments. REPRESENTATIVE KOTT stated that he had an amendment that he would hold at that time Number 323 REPRESENTATIVE NAVARRE moved HB 364 from committee with individual recommendations and accompanying fiscal note. Number 325 REPRESENTATIVE MULDER asked if there was any objection. There being none and HB 364 was moved from committee.