CS FOR HOUSE BILL NO. 2(FIN) "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." SUSANNE CARTER-BADILLA, of Juneau, spoke on behalf of herself and other spouses who did not receive dividends because of being with their spouse on an allowable absence. She was supportive of the legislation and encouraged its passage. As a resident since 1979, she had received dividends since inception of the program. In 1994, she and her husband moved their family to Washington to enable him to attend university. She was denied dividends for 1994 and 1995 because they were out of the state for more than 180 days, however, her husband and children did receive dividends for those years. She believed this type of situation needed correction to encourage families to stay together. Present statutes penalize the families that choose not to separate and places a financial burden on those who depend on the dividend to make ends meet. Since the court ruling, many have been denied dividends specifically for accompanying a spouse on an allowable absence. She noted legislation to correct this situation has been introduced during three sessions, meanwhile people continue to be affected. Passage of HB 2 would rectify an unfair situation. SENATOR PHILLIPS commented that the bill may be amended to rectify the situation from 1997 forward and asked for Ms. Badilla's comment. She felt it was better than nothing. It was more critical to her in the past, but it was important that others were not in the same unfair position. SENATOR PHILLIPS requested a response from Nanci Jones and the Attorney General's office regarding residency requirements and retroactivity for land credits for vets to use as an example. The following testimony was heard via teleconference. CORA WATKINS, Fairbanks, described her situation. She moved to Alaska in 1984 with her active-duty military husband and they became residents in every way. They left the state for 19 months for his final tour of duty. During this time, he received his dividend, but she was denied because she accompanied him. She felt she had no other choice than to do so because of financial and housing matters. She noted that had her children been minors, they would have continued to receive their dividends, but as a spouse, she had been denied. She maintained her Alaska driver's license, vehicle registration, voted absentee ballots and did everything she could to maintain residency only to find out she was denied because the law had been changed. She believed it was very unfair to the spouses and it needed correction. She did not understand why minor children continue to qualify, while spouses did not. NANCI JONES, Director, Permanent Fund Dividend Division, Department of Revenue, responded to her last statement. She referred to the court ruling which dealt with the adult spouse, but did not address the children at the time. It was decided that as long as children were sponsored by the spouse on the allowable absence, they weren't invalidated from receiving a dividend. JOAN HALE, Eagle River, spoke in support of the unamended bill. She had lived in Alaska since 1977, except for temporary absences during 1982 to 1986, and 1990 to 1994 while her husband was stationed outside for military service. Her family maintained residency and continued to receive dividends. She was denied a dividend in 1994 when the department chose to apply the superior court ruling across the board, which effectively eliminated the piggyback rule. She stated that she and her family followed all the required rules to maintain their residency for the dividends, even as far as paying out-of-state tuition. She felt that the denial was an improper and arbitrary exclusion of the piggyback rule and filed suit in superior court after all attempts through the Permanent Fund process had failed, because it became a matter of principal. She prevailed in superior court, but the department appealed to the supreme court and the case was pending. She noted the department has demanded payment of court costs should they prevail on appeal, not only for the supreme court case but the superior court as well. The department was unwilling to pay any of her costs, citing that the legislature would have to act before that could happen. She believed the department had taken that position to discourage all challenges. LYNN ALLINGHAM, Attorney, Anchorage, testified that she represented Ms. Hale in the appeal of her dividend denial. She gave some background on the dividend eligibility for military wives. She used an example where the husband is in the military and the wife is denied a dividend because it was the most common situation, although it would apply for other reasons such as attending college, serving in congress, or seeking medical treatment. In the late '80's and early '90's, the department had a policy that if an applicant was married to a non-resident, the applicant was disqualified from receiving a dividend. So, if a military man moved to Alaska, married an Alaskan woman, she would not get a dividend if her husband did not change his residency to Alaska, even if she had been a life-long Alaskan, continued living in the state with her new husband, and had received dividends. Because of this, AS 43.23.015 was amended effective January 1992, saying the department could no longer deny a wife's dividend based on the husband's residency as the principal factor for determining the wife's residency. Until the end of 1993, wives who accompanied their husbands on military tours of duty were granted dividends as long as their husband remained eligible, based on the department's regulation 15 AAC 23.163. In September 1993 a suit was filed in superior court stating it wasn't fair to deny dividends to wives who accompanied their husbands out of state. The argument was that the 1992 amendment meant that they should get their dividends. The legislative intent of that amendment was not well explained to the judge, the regulation was ruled a violation of the 1992 amendment, and it became retroactively invalid as of January 1992. MS. ALLINGHAM commented that it was ironic that the purpose of the amendment was to keep the department from denying dividends to otherwise eligible Alaskan women. Then, after originally arguing their regulation was valid, the department adopted the judge's decision and began denying dividends to wives absent from the state more than 180 days accompanying a husband on an allowable absence. It has resulted in many families in which the husband and children received dividends, but the wives and mothers have been denied. She did not believe it was what the legislature intended when passing the 1992 amendment, and it inadvertently created a mess. HB 2 would correct the inequity of husbands and children receiving dividends while the mothers were denied, even while passing all other criteria. LYDIA CLARK, Sitka, described her experience of seeking medical care outside the state for her husband's terminal illness. She and her family kept everything Alaskan while out of state. After her husband died, she kept her children in school to finish out the semester, then moved back to Alaska. She was denied filing for 1994, then filed the next year several times via air express to plead her case, was still denied, and finally came up for review this year. She was absent from the state for only two months of 1994, but could not file timely that year because of the need to make funeral arrangements. She stated she continues to be denied. DONNA HUTTON, Mat-Su, testified that she had filed for a dividend since 1991, but has yet to receive a dividend. She commented that she had not received satisfaction from the Permanent Fund Division, only flippant answers regarding her ineligibility. She commented that she came to Alaska to apply for dual citizenship and her husband had his green card. She sought help in pursuing the matter. MS. JONES inquired about her dual citizenship, noting the requirement to be a U.S. citizen and a resident. There was additional discussion. SENATOR PHILLIPS encouraged Ms. Hutton to contact Ms. Jones at her office to clarify her circumstances. KATHLEEN BEASINGER, Fairbanks, explained that she had been denied a dividend since 1992 because she was married to a military man. She had been a resident since she was twelve. Her husband received dividends basically because he was married to her, yet she was disqualified because she was married to him. She spoke in support of the bill and encouraged passage. LAINA SMITH, Fayetteville, North Carolina, described her situation in which she moved from Alaska to Fort Bragg with her husband when he joined the army. They have resided there for five years and will be moving back to Alaska in July. While there, they kept their Alaska residency by retaining their driver's licenses, car and voter's registration, hunting and fishing licenses. She also paid out-of-state tuition while completing her education. She has not received a dividend since 1992, although her husband and children continue to receive theirs. She became ineligible because she piggybacks on her husband. She was an Alaska resident prior to his joining the army because of lack of work in the state. MS. JONES asked questions about transfer of her schooling from the University of Alaska to a private school in North Carolina. She gave Ms. Smith her phone number and requested she contact her office. MS. SMITH added that she had been informed of her denial based on leaving the state because her husband was in the military and not because of full-time school enrollment. In response to a question from Ms. Jones, she confirmed that she received a written decision to that effect from the department. SENATOR PHILLIPS checked in with all the LIO and outside sites for additional testimony. There being none, he recessed the meeting briefly to attend the Senate session. Recess 6:20 P.M. Reconvene 6:50 P.M. SENATOR PHILLIPS once again queried the LIO and outside sites for further testimony. No additional witnesses had signed up so he adjourned the meeting after announcing a number for interested parties to fax testimony to the committee.