SENATE LABOR AND COMMERCE COMMITTEE March 28, 1995 2:10 P.M. MEMBERS PRESENT Senator Tim Kelly, Chairman Senator John Torgerson, Vice Chairman Senator Mike Miller Senator Jim Duncan Senator Judy Salo MEMBERS ABSENT All members present COMMITTEE CALENDAR SENATE BILL NO. 95 "An Act requiring offers of automobile liability insurance to include coverage for uninsured or underinsured motor vehicles with policy limits for that coverage equal to coverage voluntarily purchased for bodily injury or death; and providing for an effective date." SENATE BILL NO. 109 "An Act relating to certain licenses and applications for licenses for persons who are not in substantial compliance with orders, judgments, or payment schedules for child support; and providing for an effective date." PREVIOUS SENATE COMMITTEE ACTION SB 95 - See Labor and Commerce minutes dated 2/28/95 and 3/21/95. SB 109 - No previous action to consider. WITNESS REGISTER Senator Dave Donley State Capitol Juneau, AK 99801-1182 POSITION STATEMENT: Commented on CSSB 95. Senator Johnny Ellis State Capitol Juneau, AK 99801-1182 POSITION STATEMENT: Sponsor of SB 109. Catherine Reardon, Director Division of Occupational Licensing Department of Commerce P.O. Box 110806 Juneau, AK 99811-0806 POSITION STATEMENT: Supported SB 109. Juanita Hensley Department of Motor Vehicles Department of Public Safety P.O. Box 20020 Juneau, AK 99802 POSITION STATEMENT: Commented on SB 109. Jim Nordland, Director Division of Public Assistance Department of Health and Social Services P.O. Box 110640 Juneau, AK 99811-0640 POSITION STATEMENT: Supported SB 109. ACTION NARRATIVE TAPE 95-15, SIDE A Number 001 SL&C 3/28/95 SB 95 INSURANCE AGAINST UNINSURED DRIVERS  CHAIRMAN KELLY called the Senate Labor and Commerce Committee meeting to order at 2:10 p.m. and announced SB 95 to be up for consideration. JOSH FINK, Legislative Aide to Senator Kelly, testified that the proposed committee substitute drops the $1 million/$2 million mandatory coverage to $500,000/$1 million. The Chairman decided that the Tumbleson issue could best be taken care of in the Senate Judiciary Committee. SENATOR DAVE DONLEY said he personally wanted a $1 million/$1 million mandated offer as the Division recommended and as the state of North Carolina, a recognized leader in mandatory auto insurance, requires. The reinsurance is clearly out there for that figure. Alaska would no longer be in a unique position, but consumers would have the option to buy the $1 million worth of coverage. SENATOR TORGERSON moved to adopt the committee substitute, version K, to SB 95. There were no objections and it was so ordered. SENATOR SALO asked if the question of $1 million/$1 million would be taken up in the Judiciary Committee or should that be taken up now. She asked the reason for $500,000/$1 million. SENATOR KELLY said they felt it would encourage more competition and allow more insurance companies to compete in the State of Alaska. He thought it would be debated on the Floor, if not in the Judiciary Committee. Number 92 SENATOR TORGERSON moved to pass CSSB 95 (L&C) from committee with individual recommendations. There were no objections and it was so ordered. SL&C 3/28/95 SB 109 CHILD SUPPORT NONPAYMENT/LICENSING BAN  SENATOR KELLY announced SB 109 to be up for consideration, noting there were many proposed amendments. SENATOR ELLIS, sponsor, said that welfare reform is a hot topic and he considers this bill to be one of the most significant things they could do as policy makers to decrease the welfare roles in the State of Alaska in terms of the number of case loads and expense. Currently about 39,000 Alaskan parents owe over $330 million in uncollected back child support payments. Only 43% of child support orders in place currently received some payment. It is estimated that one third of all welfare cases would be unnecessary if obligor parents would pay the child support they have been ordered to pay. Nineteen other states have enacted legislation similar to this to restrict or revoke professional and/or drivers licenses. When similar legislation was enacted in the state of Maine, 17,400 obligors in arrears were notified they would loose their professional and/or drivers licenses and within 10 months, Maine had collected $12.9 million from 10,000 of those people (the state has a population of approximately 1 million. That is before the first license was taken away. The U.S. House of Representatives just passed, in the Clay Shaw version of welfare reform, a provision requiring states to enact laws to deny professional licenses, drivers licenses, and also recreational licenses to folks who are behind in their child support. He said there seems to be strong bipartisan support for using this as a way to get people's attention to begin paying. This amendment passed 426 to 5. The provisions of SB 109 are modeled after California legislation with some of the provisions from Maine. It provides means to collect debts from self employed obligors or people who have been difficult to reach with the current system, because they are not subject to wage withholding in many cases. The bill prevents issuance of renewal of an occupational license or certificate or drivers license when an applicant is $2,500 or one year behind on a child support order or judgement. Number 197 SENATOR ELLIS said the argument has been made about how can a person pay their child support if their license is taken away and the answer is that they are not paying it with the license and the experience of the other 19 states that have experimented with this is of great success. Almost no one looses a license, because they all call and make arrangements to pay for their kids. Additional revenues collected due to enactment of the provisions of this bill would directly aid families who are currently on public assistance. The program would be self sufficient through interagency receipts and currently the federal government, which already funds 66% of the CSED budget, offers bonuses as incentives for increased collection. He said there are significant ramifications for various executive agencies of government and they have a number of amendments. SENATOR KELLY asked if anyone there opposed the bill. There was no response. CATHERINE REARDON, Director, Division of Occupational Licensing, commented on two amendments. The first was charging a fee for a temporary license, and the second concerns making occupational license fees refundable. She said the temporary license amendment, labeled A4, permits the Division of Occupational Licensing and the other licensing entities within the Department of Commerce to charge a fee for the temporary license issued because someone is not able to get their full license when they are on the default list for child support. Rather than adding a surcharge on to the fees for all licensed entities in the state, they would charge the person who has the child support problem. Number 242 SENATOR SALO moved to adopt amendment A4. There were no objections and it was so ordered. MS. REARDON said the second amendment, labeled A3, allows licensing entities to return the licensing fees to the applicant if they deny their license. They support this, because currently, if someone already paid a licensing fee of perhaps $700 and been denied, then paid their back child support and come back to get their license, they would have to pay another $700 fee. It is preferable to refund their money when their license is rejected, charge them for a temporary license, and if they do become current, they could apply again. SENATOR SALO moved to adopt amendment A3. There were no objections and it was so ordered. SENATOR KELLY asked staff to find out if this would include a license to practice law in the State of Alaska. GLENDA STAUBE, Director, Child Support Enforcement Division (CSED), explained that A1 relates to the fact that they want to make sure that the bill not only address people who are not in substantial compliance with a support order, but also make it clear that they need to be in compliance with a payment schedule negotiated with Child Support Enforcement. They also thought it would be a better bill if they used eight months instead of one month for the $2500 arrearage trigger. This is particularly if someone's amount is only $100 a month, CSED would have to wait two years before they were $2500 behind or the obligor could just pay one month out of the whole year and get away with being "in compliance." SENATOR KELLY said he sympathized with this legislation, but said he could see a case where someone could inadvertently fall behind through losing a job or being a seasonal employee, and then they lose their license, too. He asked where was the reasonable ground here. MS. STAUBE explained that the obligor has the right to administratively apply for a modification based on their income and secondly, this only suspends their license, the premise being that the person will come in and talk to them and make a payment schedule. She stated that people who simply don't have a job and have no money will not be punished by this bill. SENATOR SALO commented that there is some flexibility in the payment schedule. MS. STAUBE agreed with that. SENATOR SALO moved to adopt amendment 1. There were no objections and it was so ordered. Number 306 MS. STAUBE recommended removing all references to commercial fishing licenses for three reasons: one is they already have the right to seize their license. Number two is because they also issue the licenses in rural areas through fee agents and the system basically wouldn't work very well there. Number three is that they are already able to obtain child support from people who fish through their unofficial employers, the processors by sending withhold and deliver orders to them every fishing season. SENATOR KELLY clarified that this, then, was not done for political reasons, but because we already have access to them for the most part. SENATOR SALO moved to adopt amendment 2. There were no objections and it was so ordered. Number 340 JUANITA HENSLEY, Department of Motor Vehicles, said she looked at how much money other states were bringing in and related that to Alaskan statistics and estimated that this would bring in about $4 million per year in AFDC. The state gets to keep half of that. She predicted they could collect $12 million per year for non AFDC cases. JIM NORDLAND, Director, Division of Public Assistance, said that the administration solidly supports this bill and that it is written in the Governor's blue print for welfare reform. He said currently they collect $6 million through Child Support Enforcement (CSED) that comes back into AFDC. He predicted another $2 - $3 million in receipts. SENATOR KELLY asked if there was a new law requiring child support payments to go through CSED. MS. STAUBE replied that not all child support cases have to come through CSED. She clarified for Senator Kelly that SB 190 from last year stated that any case under CSED would automatically fall under the federal mandate of income withholding, but that doesn't include all child support cases in the state, only those that were referred to CSED by the court or that were a part of CSED because of AFDC. Number 392 SENATOR SALO moved to pass CSSB 109 (L&C) with individual recommendations. There were no objections and it was so ordered. SENATOR KELLY adjourned the meeting at 3:37 p.m.