HB 190-PFD ALLOWABLE ABSENCE  9:29:02 AM CHAIR WIELECHOWSKI announced that the next bill before the committee would be HB 190, which amends statutes regarding Permanent Fund Dividend (PFD) allowable absences and removes the 10-year rule that prohibits an Alaskan living outside the state from receiving a dividend under certain circumstances. REPRESENTATIVE ERIC FEIGE, sponsor of HB 190, introduced the bill. He related that last year legislators received an email from an Alaskan in the U.S. Navy who was denied his PFD because of a 1998 law that prevents those in the military from receiving a dividend when otherwise eligible for an allowable absence. Those serving Congress in Washington, DC, continue to receive a dividend. The bill will bring equality to those who serve in the military, while tightening the restrictions on those that qualify for an allowable absence longer than five years. MICHAEL PASCHALL, staff to Representative Eric Feige, explained HB 190 on behalf of the sponsor. He said the purpose of the bill is to provide equity to those residents who are absent while serving the state. He explained the eligibility rules of PFD allowable absences. The PFD Division hears from approximately 1,300 absentees after five years when intent to return to Alaska must be proven. He said that putting that presumption into statute should reduce the number of appeals. At ten years, everyone is denied a PFD except for a small class of individuals. MR. PASCHALL related that Section 1 is conforming regarding the repeal that takes place in Section 3. Section 2 establishes in law the presumption that someone who is absent from the state for more than 180 days in each of the previous five years, does not plan to return to the state and is not eligible to receive a PFD. It also provides a method to appeal a denial. Section 3 repeals AS 43.23.008(C), the ten-year rule. Section 4 allows someone who was previously denied a PFD under the ten-year rule to be eligible to obtain the current year PFD. Section 5 makes the law retroactive to January 1, 2012. Section 6 makes the bill effective immediately. CHAIR WIELECHOWSKI thanked Mr. Paschall for his work on the bill. DEBBIE BITNEY, Director, Permanent Fund Dividend Division, Department of Revenue, offered to answer questions related to HB 190. CHAIR WIELECHOWSKI asked how many Alaskans are declared ineligible for a PFD because of the ten-year rule. MS. BITNEY related that it was in the 100's. CHAIR WIELECHOWSKI asked which situations were causing Alaskans to remain out of state for ten years. MS. BITNEY replied that it was, by far, for military reasons, but also, students and family care-givers. CHAIR WIELECHOWSKI asked for data regarding persons who return to Alaska after being gone for ten years. MS. BITNEY reported that only 80 people returned to the state, which shows a need for the "intent" aspect of the bill. 9:37:18 AM CHAIR WIELECHOWSKI noted support for those who are sincerely coming back to Alaska. He questioned if the 5-year provision in the bill would help weed people out who are not planning to return to Alaska. MS. BITNEY said it makes determining who has intent to return easier for the division and is clearer for the applicant as to how to show intent to return. SENATOR PASKVAN asked for more information about "30 cumulative days over a five-year period." MS. BITNEY noted a rule which states in order to maintain residency, a person must return to the state for 72 hours every two years, with the exception of military families who qualify for hostile fire pay. The "30 cumulative days over a five-year period" is a separate requirement. SENATOR PASKVAN asked about a connection between children and spouses regarding the residency requirements. MS. BITNEY said that residency requirements are individual and each person has to come back. CHAIR WIELECHOWSKI asked how often the 72-hour rule is waived. MS. BITNEY did not have those numbers. 9:41:16 AM CHAIR WIELECHOWSKI requested a ballpark figure. MS. BITNEY guessed it was less than 500 per year. CHAIR WIELECHOWSKI gave an example of a military situation and asked if the 72-hour rule would be waived for whole family. MS. BITNEY said, as the statute is currently written, it would be waived for the family, also. CHAIR WIELECHOWSKI asked if the division supports the bill. MS. BITNEY said the bill would help the division do its work. CHAIR WIELECHOWSKI summarized that the new CS has a 5-year provision, but keeps the 10-year requirement, with an exemption for military members. 9:43:52 AM MICHAEL BARBER, Assistant Attorney General, Commercial/Fair Business Section, Department of Law, answered questions related to HB 190. CHAIR WIELECHOWSKI requested a motion to adopt the new SCS for CSSSHB 190(FIN), version Y. SENATOR PASKVAN moved to adopt the proposed SCS for CSSSHB 190(FIN), labeled 27-LS0564\Y, as the working document. CHAIR WIELECHOWSKI objected for discussion purposes. He restated the contents of the bill and asked if the Department of Law had any concerns. MR. BARBER related that the bill may violate the equal protection law. The main consideration for PFD eligibility is residency or physical presence in the state with the intent to remain indefinitely. The allowable absences provisions are designed to help the department determine who is eligible and are consistent with the intent to return. In 1998 the legislature created a bright line rule that exempted members of Congress and their staff who are not similarly situated. Military members are also not similarly situated and are more likely to return after ten years, which would satisfy the equal protection concern. CHAIR WIELECHOWSKI spoke of unique concerns of congressional members and military members because of their on-going connectedness to the state. He maintained that they should still receive a PFD. 9:48:52 AM SENATOR PASKVAN asked if it were possible to have forfeiture provisions for those who say they are going to return but don't. MR. BARBER thought that would be problematic. He referred to discussions in House Finance providing that the PFD could be deposited as an incentive to return to the state. SENATOR PASKVAN agreed with that concept. He stated that with only 80 people out of thousands returning to Alaska, the bill may be unnecessary. CHAIR WIELECHOWSKI agreed with Senator Paskvan's statement. He recalled his discomfort with the previous version of the bill. He asked Ms. Bitney for suggestions on solutions for the problem of people claiming intent to return to Alaska and collecting PFD's, but then not returning as promised. MS. BITNEY suggested that clearly defining proof of intent to return would achieve that goal. 9:52:38 AM CHAIR WIELECHOWSKI asked if there were legal concerns about using an escrow account after five years. MR. BARBER said he thought it was attractive because it incentivized people, but he requested more time to think about it. CHAIR WIELECHOWSKI requested that Mr. Barber provide more information at a later date. CHAIR WIELECHOWSKI asked for a legal opinion on whether the exception for active duty military would violate the equal protection clause. 9:54:11 AM LISA KIRSCH, Attorney, Legislative Legal, agreed with Mr. Barber's opinion. She added that the legislature would have to show there was a rational basis for the decision, such as the military is a unique situation. She cautioned that one can never predict a court decision. She opined that it would survive equal protection scrutiny. CHAIR WIELECHOWSKI closed public testimony and set HB 190 aside. SENATOR PASKVAN asked the division to provide information about the very few military families who did return to Alaska and how much money was spent on dividends for those who did not return.