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 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 Pete Kott, sponsor of the bill was invited to join the committee. He read his sponsor statement into the record. It was noted that eligibility should not be determined through marriage. Representative Kott said they were trying to restore the bill to its' original intent. The state has filed an appeal with the Supreme Court. Approximately 7,500 applicants would be affected by the bill at present. Senator Adams asked for an explanation of the Superior Court ruling. Representative Kott noted there was a copy of the December 1976 Superior Court ruling (Joan Hale vs. State of Alaska, Department of Revenue, Permanent Fund Division) enclosed as back-up material in committee members' files. Senator Phillips asked about page 3, line 17. Representative Kott said this referred to current status. Co-chair Sharp asked about those applicants who were denied and now out of state. He had a hard time accepting those out of state could apply for the dividend but some of his elderly constituents were unable to apply retroactively. He wanted to know how intent to remain in Alaska was established. Representative Kott said it was always difficult to establish intent. However, each applicant must satisfy eligibility for the dividend. Senator Adams voiced concern giving the dividend to those with intent and in the process denying real Alaskans. Representative Kott further advised that those not applying before 1998 would not be allowed to file. One could always submit supplemental documents and then wait for a determination of eligibility. Senator Donley asked about a penalty for falsely applying for the dividend. Representative Kott explained that it was a criminal offense. Senator Donley again asked about the penalty. Representative Kott said the dividends must be paid back and there was a fine of $5,000. Witnesses on the application were also subject to the same penalty. Senator Donley felt it was hard for the state to collect the $5,000 fine and in addition it should be increased. Due to the abuse situation of the dividend if this bill is to pass there should be a stiffer penalty and there should be additional tools available to law enforcement officials. Representative Kott concurred. Senator Adams referred to page 4, section 4. Representative Kott said those in the military must return once every two years for thirty days in order to remain eligible for the dividend. Co-chair Sharp, at this point, advised there was to be a statewide teleconference regarding this bill tomorrow evening at 5:00 p.m. Any interested individual could also fax their comments to the Senate Finance Committee Secretary's office. He asked Senator Torgerson to hold his amendment pending the statewide teleconference. Senator Donley offered his further comments stating that he would be willing to work with the department over the next year in order to alleviate some standards. He referred specifically to page 3, line 10. Nanci A. Jones, Director, Division of Permanent Fund Dividend, Department of Revenue was invited to join the committee. She said the division did not support retroactivity of the bill. She opposed section 4 (retroactive payments to spouses) and piecemeal absences. She said reopening the filing date of applications was not a good policy procedure. However, basically, she had always encouraged the filing of this bill. Senator Phillips asked if any benefits given out by the State since statehood had been made retroactive. Ms. Jones said she could not think of any. Deborah Vogt, Deputy Commissioner, Department of Revenue, was invited to join the committee. She said as far as she could recall and had researched there was no precedence of retroactivity. She felt this bill would set a very bad precedence regarding retroactivity. Senator Phillips recalled retroactivity regarding the veterans' discount for land. Senator Adams said that bill passed because the money had already been collected from the veterans so therefore was a different matter. He further commented on eligibility status and the intent of Alaskans to retain their residency. He recommended that money could be held in escrow pending proof of residency. Ms. Jones advised that this had been looked into. Ms. Vogt further advised the committee that all pending applications per HB 4 of last year had been denied. Co- chair Sharp indicated that failure of the legislature to pass a bill meant "no". Senator Phillips further commented on the topic stating that just because the legislature did not pass the bill did not mean they did not take action on the bill in committee. Hearings were scheduled and testimony was taken. Senator Parnell felt that the department could not deviate from a specific deadline regarding filings and agreed that any retroactivity or delay would set a bad precedence. Co-chair Sharp said the title was too tight and nothing could be changed. It would required a title change to get out of committee that would need a 2/3 vote and that would be very difficult. Senator Donley requested Ms. Jones provide an executive summary and she said one would be provided the committee. She referred to an Anchorage case where a sister had continued to file on behalf of a deceased sister. In this case the defendant was allowed to pay back the monies by working in community service. Co-chair Sharp asked Ms. Jones to include in her executive summary the total dollars for retroactivity and the number of fraud connected with out-of-state filings. Senator Donley also asked that penalties, how the cases were prosecuted, fines, etc. be included. Co-chair Sharp also offered his concern about the filing deadline and said he opposed those out of state being able to file; but not those in state. In response to a question by Co-chair Sharp, Ms. Vogt said that the division had always paid legal resident aliens. Co-chair Sharp asked the requested information be submitted as soon as possible. He set aside HB 2. After a brief at ease, Co-chair Sharp called HB 63.