HB 52-PFD ALLOWABLE ABSENCE    9:32:13 AM CHAIR DYSON resumed the meeting and announced the consideration of HB 52. [HB 52 AM was before the committee.] 9:32:21 AM REPRESENTATIVE ERIC FEIGE, sponsor, introduced HB 52. He said the bill deals with how to address allowable absences relating to the Permanent Fund Dividend (PFD). It provides that after a person has been gone from the state for more than five years, it sets up a presumption that they do not intend to return to the state. It is the applicant's responsibility to prove to the state that they do intend to return. Everyone is treated equally. He stated that it is a great improvement to take principles that have been in regulations and put them into statute. This strengthens the Permanent Fund Division's ability to adjudicate appeals. 9:33:56 AM CHAIR DYSON asked, under the present law if someone does not return after five years, how they establish that they are going to return. REPRESENTATIVE FEIGE said there were a number of criteria established in HB 52 that were already in regulation, such as proof of voting, owning property, repeated trips back to Alaska, returning for a cumulative total of 30 days over the previous five years, and other metrics. CHAIR DYSON asked if the process is clumsy or not. REPRESENTATIVE FEIGE said the process is the same as the existing process to apply for a PFD. The person must satisfy PFD eligibility requirements and it is incumbent upon the applicant to appeal if they are denied. CHAIR DYSON asked if HB 52 takes out the five-year limit and makes it indefinite. REPRESENTATIVE FEIGE clarified that the bill does not remove the five-year limit, but instead it makes a presumption that up until five years, a person does intend to return to the state. In the sixth year, the state presumes the person does not intend to return. 9:36:29 AM CHAIR DYSON asked if the bill takes existing PFD regulations and puts them in statute. REPRESENTATIVE FEIGE said not all of the regulations, but some of them. 9:36:53 AM MICHAEL PASCHALL, staff, Representative Eric Feige, explained the bill. He shared the history of the changes in the statute. He explained the definition of a state resident in 1982, for the purposes of obtaining a PFD. Four additional allowable absences were included in 1997, as was a generic definition of "state resident." He discussed the allowable absences as found in 1998. He noted that a person must be a resident for 60 days before they can leave the state for an allowable absence. He explained a provision for Congress family members and staff. MR. PASCHALL related minor changes since 2012 for military members, and those serving on a foreign vessel. There are currently 16 different reasons for allowable absences from the state. The bill adds definitions as to what a "family member" is. 9:41:45 AM MR. PASCHALL addressed allowable absences after HB 52 is in place. Most of the current provisions are left in place, as it the section that deals with absences for multiple purposes and the definition. A new subsection is added that creates a presumption that someone who has been on allowable absence for five consecutive years, does not intend to return to the state. The presumption has been in regulation, but has been challenged. Putting the provision in statute would make it easier for the division to deny applications that might not be valid and have that decision upheld through the administrative appeals process. CHAIR DYSON asked if the department can recapture funds from someone who has been "gaming the system." MR. PASCHALL deferred to the department to answer. He continued to explain that a provision was added in the bill that a person must be physically present in the state for at least 30 cumulative days during the past five years and be a state resident as defined in AS 43.23.095(7). He explained what is used to determine if a person intends to return, such as the length of time a person is absent from the state, compared to the length of time the individual was physically present in the state. The division can now develop an objective scoring scale to determine eligibility. He said ties the individual has established with the state is another relevant factor, as is employment assignments, such as military careers. 9:47:06 AM He noted that HB 52 takes out the ten-year rule, except for members of Congress. This provision would have an impact on military members. He concluded that the bill is getting rid of a class and treating everyone equally. He highlighted a graph that shows groups of individuals eligible to receive the PFD after 10 years of absences; a very small group is being excluded by the existing rule. He said the last slide shows data from the division regarding absences since 1999. The number drops in recent years. 9:48:58 AM DAN DEBARTOLO, Director, Permanent Fund Dividend Division, Department of Revenue, explained that the bill eliminates the ten-year rule, reducing the workload for the division. The people who were denied dividends due to the ten-year rule never exceeded 107 individuals. There will not be a large impact if the rule goes away. The number of people reaching 10 years of 180-day absences is declining. He explained that the bill also moves language regarding five- year absences from regulation into statute and clears up "soft" language. Now the rule says if a person does not return to the state, cumulatively, for 30 days over a five-year period, that person will have to go through the process to show strong ties to the state. He added that the zero fiscal note means there is not an increase in work for the division. The impact on the PFD Fund is indeterminate. He predicted there should be a change in the number of dividends paid out. 9:52:50 AM SENATOR WIELECHOWSKI moved to adopt Amendment 1: AMENDMENT 1 Page 3, following line 12: Insert a new bill section to read:  "* Sec. 2. AS 43.23.008(c) is amended to read: (c) An otherwise eligible individual who has been eligible for the immediately preceding 10 dividends despite being absent from the state for more than 180 days in each of the related 10 qualifying years is only eligible for the current year dividend if the individual was absent 180 days or less during the qualifying year. This subsection does not apply to an absence under (a)(9) or (10) of this section or to an absence under (a)(13) of this section if the absence is to accompany an individual who is absent under (a)(9) or (10) of this section. This subsection  does not apply to an absence under (a)(3) of this  section." Renumber the following bill sections accordingly. Page 4, line 10: Delete all material. Renumber the following bill sections accordingly. Page 4, lines 15 - 16: Delete "former AS 43.23.008(c), repealed by sec. 3 of this Act," Insert "AS 43.23.008(c), as it read on the day before the effective date of this Act," Page 4, lines 19 - 20: Delete "The repeal of AS 43.23.008(c) by sec. 3 of this Act and the enactment of AS 43.23.008(e) by sec. 2 of this Act" Insert "AS 43.23.008(e), enacted by sec. 3 of this Act," CHAIR DYSON objected for discussion. SENATOR WIELECHOWSKI stated that he supports HB 52 and has sponsored it in the past. He added that he has also worked with the sponsor on the bill. He explained that HB 52 applies a statutory criteria after a person has been absent for five years, and he said he supports that provision. He stated that Amendment 1 would keep the 10-year rule intact. If a person has been gone for 10 years, they should not receive a PFD, except for members of Congress and their families and staffers. Amendment 1 would also allow active duty overseas members to receive a PFD, even if they've been gone for ten years. 9:56:15 AM SENATOR COGHILL asked what the sponsor says. MR. PASCHALL related that the sponsor has looked at a variety of options over the past three years when working on the bill. He said, in the process, he learned about Equal Protection Clause requirements, and in working with the division and legislative legal, the bill contains the least amount of possible equal protection qualifications. Last fall, changes were made to the bill to incorporate suggestions about equal protection as it applies to the PFD. He said the sponsor does not want to raise the possible question regarding equal protection. He recalled the Zobel v. Williams decision where the Alaska Supreme Court ruled in favor of the state and the U.S. Supreme Court overturned that decision. The way the bill is written currently does not raise such risks. SENATOR WIELECHOWSKI agreed it was a concern a year ago, but noted that since then there has been a U.S. Supreme Court decision based on the Ross v. Alaska case. He read a legal opinion that stated, "Based on the Ross case, it seems likely that a court would uphold an exception to the 10-year rule for active duty military members against an equal protection challenge." He agreed with that analysis and explained that a court would look to see if there is a rational basis for treating military as an exception. He maintained the basis is that military members can be residents of this state and can be assigned to go overseas; therefore there is a rational basis for treating them differently. He gave examples of military members in that situation. He concluded that Amendment 1 "balances Alaskan's desire to protect our permanent fund against our desire to provide benefits for active duty military." 9:59:54 AM MR. BARTOLO explained, from an administrative perspective, the provisions in Amendment 1 would be achievable. The division would leave the ten-year rule in place and create a new mechanism for exempting military. It would require programmatic changes and an amended fiscal note. CHAIR DYSON maintained his objection to adopting Amendment 1. 10:00:37 AM A roll call vote was taken. Senator Wielechowski voted in favor of Amendment 1 and Senator Coghill and Chair Dyson voted against it. Therefore, Amendment 1 failed by a 1:2 vote. 10:01:25 AM SENATOR COGHILL moved to report HB 52 [AM] out of committee with individual recommendations and attached zero fiscal note. There being no objection, HB 52 AM was reported from the Senate State Affairs Standing Committee.