HOUSE BILL NO. 52 am "An Act relating to allowable absences from the state for purposes of eligibility for permanent fund dividends; and providing for an effective date." 9:51:43 AM MICHAEL PASCHALL, STAFF, REPRESENTATIVE ERIC FEIGE, stated that the bill was introduced as an outfall of a provision in the allowable absences pertaining to the Permanent Fund Dividend (PFD). The provision created a situation where members of congress and their staff were allowed to keep their PFD on an allowable absence for longer than ten years. He mentioned that military members were sometimes denied their PFD because of the 10-year rule. The individuals working in Washington DC and those in the military were representing the state while serving their country. Mr. Paschall commented that the bill removed the 10-year rule from statute, which opened the eligibility to approximately 100 people. He mentioned that the existing regulations used by the division were sometimes bypassed with a justifiable excuse, but when in statute, the division was bound. The bill created a provision allowing an individual to be absent for less than five years with documentation of an allowable absence. Examples of allowable absences were accredited educational institution, military, staff or staff of congress and Peace Corps. During the period of time the individual must return to the state for a consecutive 72 hours every two years. Following the fifth year, a person must prove they were in the state for 30 cumulative days over the previous five years and provide proof of residency for purposes of a PFD. 9:56:41 AM Mr. Paschall shared that there was an outline of criteria in the bill used to evaluate the intent to return. The criteria included a measurement of the length of time away from the state versus the length of time that the individual was present in the state along with the frequency and duration of voluntary return trips to the state during the past five years. Always in the preceding five years, the individual must be in the state for a cumulative of 30 days. He added the criteria of owning a home in Alaska, payment of resident taxes, registration of a vehicle, voter registration and history, driver's license, business license or professional license and receipt of benefits under a claim of residency in the state or other jurisdiction. The hope was for an objective scoring system based upon the length of absence to help make the determination. The final criterion was the priority given by the individual to the state on an employment assignment preference list. He provided an example in military service when a member requested a location for service. 10:00:24 AM Mr. Paschall explained the zero fiscal note. He shared that the allotment of the dividend was based upon the performance of the fund. The dividend amount was calculated as a total number based upon the fund's performance. The number of eligible individuals did not have impact on the how much the state dispersed as part of the PFD. The division would not alter their staff because the same investigative staff would continue to inspect applications. 10:01:50 AM Co-Chair Meyer opined that more division time would be spent in the investigation process. He remarked that multiple exceptions could result in a significant financial impact to the PFD and further changes would continue to add-up. He agreed that the military personnel were valuable and should be held harmless. 10:02:22 AM Senator Bishop surmised that the division must develop the objective scoring system. Mr. Paschall replied that guidelines within the division provided the opportunity to develop new regulations to implement the legislature's requests. The opportunity was available to create a more objective scoring system than the one currently in place. He provided an example of an applicant and noted that an individual who had lived in Alaska during their youth would score higher than an individual who had lived in Alaska for a brief time. 10:04:15 AM Senator Bishop asked if section 2 identified the scoring system needs. Mr. Paschall deferred the question to the division director. He knew that many discussions regarding the scoring system had occurred, but he was unsure about the amount of time that the division spent on the process. 10:04:51 AM Senator Olson stressed that he had great respect for military service. He wondered how to ensure that the exceptions would not take time or resources from the state. Mr. Paschall explained that there was no change in the definition of an "allowable absence." The justification would be mandatory for those who were not returning to the state after the five years. The provision changed in the legislation addressed the tenth year. The current guidelines would be tightened up after the sixth year with the legislation. 10:07:30 AM Senator Olson stressed that the division would spend additional time investigating the applications and allowable absences. He questioned the zero fiscal note. Mr. Paschall deferred the question to the division director. 10:08:41 AM Co-Chair Meyer CLOSED public testimony. 10:08:53 AM DAN DEBARTOLO, DIVISION DIRECTOR, PERMANENT FUND DIVISION, DEPARTMENT OF NATURAL RESOURCES testified that both the ten and the five year rules were in place. He stated that the average technician spent an average of eight to ten hours on the discussed cases. If the ten-year rule was eliminated the technicians no longer had that responsibility. He noted that the five year rule was in regulation with "soft" language. The division opined that moving the regulation into statute provided a more powerful statement. If a person did not return to the state for a cumulative of 30 days over the five years, the action demonstrated that they did not intend to return. 10:11:30 AM Senator Olson expressed satisfaction with the answer. Co-Chair Meyer noted that there was a proposed amendment. 10:12:10 AM AT EASE 10:13:47 AM RECONVENED Vice-Chair Fairclough stated that she had reviewed the Alaska State Statutes. She related that the amendment proposed another exemption by inserting "or a United States national team for an Olympic sport." She pointed out that exemption 15 in AS 43.23.08 stated that "because of training or competing as a member of the United States Olympic team," which covered her concerns. Mr. Debartolo responded that that the division's interpretation was that the individual was a selected Olympic team member, but not one selected for the national team. 10:15:38 AM Vice-Chair Fairclough observed that the department had inappropriately interpreted the intent of the legislature. She proposed review of her amendment. 10:16:02 AM Co-Chair Kelly requested an explanation of the department's interpretation. Mr. DeBartolo replied that the division's interpretation of the legislation was that a "member of the United States Olympic team" had been selected for the team and was on the team while the games were in play. The division did not consider a person who was part of the United States National team a member of the Olympic team. 10:17:02 AM Vice-Chair Fairclough wished to investigate the matter further. She understood the division's distinction, but wondered if the amendment would be considered "friendly" by the sponsor. 10:17:34 AM Co-Chair Meyer asked if the sponsor agreed with the amendment. Mr. Paschall replied in the affirmative. 10:17:45 AM Senator Hoffman cited section 2, "an individual may rebut this presumption by providing clear and convincing evidence to the department." He pointed out line 29 number 4, "additional items that can be used for rebuttal." He called into question registration of a vehicle, voting history, and driver's license. He asked if a person who could prove that they had a registered vehicle outside of the state or was registered to vote or licensed to drive outside of the state would be ineligible for the PFD under the proposed legislation. Mr. Debartolo noted that taking steps to register to vote outside of the state was typically considered a "severing action," which could affect one's eligibility determination. College students were encouraged to vote absentee for that purpose. 10:19:56 AM Senator Hoffman inquired what circumstances would allow someone to get a dividend when they had a registered vehicle or voter registration or driver's license from another state. Mr. Debartolo replied that there were few circumstances where a person could receive a dividend under the stated circumstances. 10:20:46 AM Vice-Chair Fairclough inquired when the state might expect to hit a tipping point. She observed 17 different exceptions to the original residency requirements and Alaskan's were losing money in their dividends as a result. Mr. Paschall replied that many different options were available. The sponsor chose to address only the issue of treating individuals differently at ten years. The state Supreme Court stated that economic protection under the equal protection clause placed the change at the least scrutiny. He did not feel that the state was close to a tipping point. While he did not object to the amendment, it did add another opening that fell outside of the bill's intentions. 10:23:39 AM Vice-Chair Fairclough stated that she would like to hear from the legislative legal department. She wondered where the hurdle was for those who would not testify and who expand in their generosity to share with others being disenfranchised by access to that resource. She wondered if a higher hurdle for access to the PFD would be a wise decision. 10:25:05 AM Co-Chair Meyer noted that Vice-Chair Fairclough brought up a good point and that permanent fund had been around since 1981 with 17 exceptions made. He opined that the military personnel were important as members of Congress and their staff, but felt that Vice-Chair Fairclough's concerns warranted attention. 10:26:07 AM Senator Hoffman related a hypothetical scenario. He inquired if a minor could reapply for a dividend in cases where a parent neglected to submit their application. He noted that minors were at the mercy of their parents regarding filing for a PFD. Mr. DeBartolo responded that a provision existed for a child that did not receive a dividend. Filing for prior dividends could occur between their 18th and 20th birthday. Eligibility was then reviewed by the division staff. 10:28:39 AM Co-Chair Meyer appreciated the questions brought forth by the committee. Senator Hoffman inquired how many minors fell into the category described. Mr. DeBartolo offered to provide the data to Senator Hoffman. 10:29:42 AM Vice-Chair Fairclough inquired if the example that Senator Hoffman had defined was in regulation or statute. Mr. DeBartolo responded that the provision for an 18 year old to reapply for their missed dividends was in statute. 10:30:47 AM HB 52 was HEARD and HELD in committee for further consideration. 10:31:04 AM