SENATE BILL NO. 135 "An Act relating to permanent fund dividend program notice requirements, to the ineligibility for dividends of individuals convicted of felonies or incarcerated for misdemeanors, and to the determination of the number and identity of certain ineligible individuals; and providing for an effective date." Co-chair Frank explained that this is the same bill as last year expanding the list of people to be denied eligibility to include felons not serving jail time and third time misdemeanant. The concept is to recoup State monies. Last year the bill passed the Senate, but was not considered by the House. There has been incorporated into the bill $2.7 million of expected savings in the FY 96 year, built into the budget process. This bill is part of the Senate's overall spending plan. Co-chair Frank explained that there is no retroactive feature to the bill. This bill will capture the dollars and put it into the budget opposed to distributing them out to the dividend recipients. Debra Vogt, Deputy Commissioner for the Dept. of Revenue introduced Nancy Jones, Director, Permanent Fund Dividend Division. Ms. Vogt spoke to the charts handed out at the meeting (attached to the minutes). SB 135 changes, as the sponsor has indicated, both the way the substantive provisions of the legislation and the timing of the legislation. The bill adds to the list of applicants who are denied dividends for criminal activity. The list adds misdemeanant, third time misdemeanant who are incarcerated, and any felon. The purpose is to reimburse the state for some of the costs associated with criminal activity. The bill also adds to the list of agencies that receive funds from the dividends denied the criminals. Currently, those agencies that are permitted to receive funds include the Crime Victim Compensation Fund, the Council on Domestic Violence, and the Department of Corrections. The legislation adds the Dept. of Revenue for child support, the Dept. of Public Safety and the Dept. of Law. The reason for the addition of the Dept. of Revenue for child support, is that many of those being denied dividends are garnished by the Child Support Enforcement Division for the support of the criminal's children. By appropriating a portion of the funds to the Dept. of Revenue for child support, it does not give the money to the children, who would otherwise receive it if the Child Support Enforcement Division were to distribute to the children. The Department opposes changing the eligibility requirements for dividends. There is opposition to adding to the list of ineligible people and adding to the list of eligible people. The timing and fiscal issues are more important issues. Ms. Vogt referred to her timeline under current law vs under SB 135. The Department believes this is an appropriation to fund state agencies out of the dividend fund. In the legislation, it is prohibited from informing the dividend recipients that this money has been taken out of their check. Section 7 of the legislation says, "notwithstanding the amendments made by the legislation, the notice requirements for 43.23.028 do not apply to appropriations from the dividend fund made for FY 96. The Department recognizes the sponsors desire to close the gap between the criminal activity in one year and the appropriation several years later. A felon in jail for one year can only have one dividend taken away. This legislation appropriates 2 dividends to state government, which is why the Department is opposed to it. Senator Phillips said that the legislation can be viewed as a user fee. Ms. Vogt stated that the Department is not opposed to the idea of denying criminals dividends. The double-dipping aspect of this legislation takes two dividends away, when there is really only one available. Therefore the second dividend is coming from the rest of the people of the state who are not criminals. Loren Jones, Director, Division of Alcoholism and Drug Abuse spoke to two issues in SB 135 that the department wanted to bring to the committee's attention. Under this bill extending it to third time misdemeanant offenders, the majority of those offenders we believe will be referred to the court system into the Alcohol Safety Action Program and thus into alcohol treatment. Unlike felony probationers, misdemeanant probationers, are not supervised by the Department of Corrections. In most cases, if they are alcohol related offenses, they are supervised through the Alcohol Safety Action Program in the Dept. of Health & Social Services. There are substantial costs that the offender pays. Usually, access to, or receipt of the dividend, provides those persons with money to pay for the service. In the Alcohol Treatment System, it is estimated that $300,000 of third party payments, or first party payments from the clients, actually come from the their dividends. There is concern that it would take away from the local non-profit agencies, revenue available to them to charge for their services. Senator Donley asked what else the Dept. of Health & Social Services is doing to collect funds from the criminals? Mr. Jones responded there are several avenues. Providers can go off medicaid. Providers can go after private insurance if the individuals have private insurance. There is a requirement to collect fees through small claims court. Most of the programs have a sliding fee scale. The Department estimates that beyond the dividends there is double that amount of money that is collected from other fees. Many of the clients are also coming out of a homeless situation, and more than 65% report an income of less than $10,000 a year. Mr. Robert Cole, Administrative Director for the Dept. of Corrections, stated there is concern that the Administration does not support the bill. Our most immediate concern is that the FY 96 budget is contingent on this $2.7 million revenue source. A second concern is that the $2.7 million which would be realized if the funds are collected, is still a one time shot and there is a concern of what position that puts the Department in for the succeeding FY 97. Will the Department then be $2.7 million out of the base in succeeding years? There can be no assurances of revenue from collection of permanent fund dividend checks from third time misdemeanant. The Department of Corrections works with the Department of Revenue and Public Safety to try to correlate the information system with public safety's information system and calculate the likely number of future third time misdemeanant who would appear in the Department of Correction's rolls, two and three years out, and in the future. He stated that the payments are used to pay child support payments, cost to treatment programs, debts owed and other costs, fines, etc. He stated there would be a effect on distribution in the future from those purposes to an appropriation purpose. He stated that the Dept. of Corrections does not know where they stand, and that it is up to the appropriations process to decide, and not to be locked in law. Co-chair Frank MOVED to pass out of committee SB 137 with individual recommendations and accompanying fiscal notes. No objection having been heard SB 137 was REPORTED OUT of committee with the following fiscal notes: Department of Revenue $2.4; Department of Corrections, zero; Department of Public Safety, $5.0; Department of Education, zero; Department of Law, zero. Co-chairs Halford, Frank along with Senators Rieger, Phillips, and Sharp recommended "do pass". Senator Donley signed "no recommendations".