SENATE STATE AFFAIRS COMMITTEE  March 21, 1995 3:35 p.m. MEMBERS PRESENT Senator Bert Sharp, Chairman Senator Randy Phillips, Vice-Chairman Senator Loren Leman Senator Jim Duncan Senator Dave Donley COMMITTEE CALENDAR SENATE BILL NO. 110 "An Act relating to administrative adjudication under the Administrative Procedure Act." SENATE BILL NO. 71 "An Act relating to deep freeze classics; and providing for an effective date." CS FOR HOUSE BILL NO. 4(STA)(title am) "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 vocational, professional, or other specific education for which a comparable program is not reasonably available in the state, for secondary or postsecondary education, for military service, for medical treatment, for service in the Congress or in the Peace Corps, or for other reasons that the commissioner of revenue may establish by regulation; requiring, for the purposes of permanent fund dividend eligibility, an individual who is not physically present in the state to maintain and demonstrate at all times an intent to return to the state to remain permanently; relating to the eligibility for 1992, 1993, and 1994 permanent fund dividends of certain spouses and dependents of eligible applicants; relating to appeal periods for certain 1994 permanent fund dividends; and providing for an effective date." PREVIOUS SENATE COMMITTEE ACTION SB 110 - No previous senate committee action. SB 71 - No previous senate committee action. HB 4 - No previous senate committee action. WITNESS REGISTER Teresa Williams, Assistant Attorney General Commercial Section, Civil Division, Department of Law 1031 W. 4th Ave., Ste. 200, Anchorage, AK 99501-1994¶269-5100 POSITION STATEMENT: prime sponsor of SB 110 Senator Georgianna Lincoln State Capitol, Juneau, Alaska, 99801-1182¶465-3732 POSITION STATEMENT: prime sponsor of SB 71 Cleeta Barger, Delta Chamber of Commerce P.O. Box 888, Delta Junction, AK 99737¶895-4142 POSITION STATEMENT: in favor of SB 71 Carol Stock P.O. Box 1170, Delta Junction, AK 99737¶895-4160 POSITION STATEMENT: in favor of SB 71 Dennis Poshard, Director Charitable Gaming Div., Dept. of Revenue P.O. Box 110440, Juneau, AK 99811-0440¶465-2229 POSITION STATEMENT: testified on SB 71 Rod Mourant, Aide to Representative Pete Kott State Capitol, Juneau, Alaska, 99801-1182¶465-3777 POSITION STATEMENT: prime sponsor of HB 4 Representative Pete Kott State Capitol, Juneau, Alaska, 99801-1182¶465-3777 POSITION STATEMENT: prime sponsor of HB 4 Wendy Hughes, Dividend Appeals Unit Permanent Fund Dividend Div., Dept. of Revenue P.O. Box 110460, Juneau, AK 99811-0460¶465-2038 POSITION STATEMENT: testified on HB 4 ACTION NARRATIVE TAPE 95-12, SIDE A Number 001 SSTA - 3/21/95 SB 110 ADMINISTRATIVE ADJUDICATIONS CHAIRMAN SHARP calls the Senate State Affairs Committee to order at 3:35 p.m. and brings up SB 110 as the first order of business before the committee. SB 110 was sponsored by the Rules Committee by request of the Governor. The chairman calls the first witness. TERESA WILLIAMS, Assistant Attorney General, Commercial Section, Civil Division, Department of Law, testifying from Anchorage, states she is testifying on behalf of the administration. The administration thinks administrative litigation should be faster and less costly for parties and the state. Ms. Williams reads information contained in the Governor's Transmittal Letter for SB 110 to the committee. Number 071 SENATOR RANDY PHILLIPS asks Ms. Williams if, under Section 5 of SB 110, it can't just state "reimbursement of expenses accordant with standard established." Why is the word "subsistence" in there? MS. WILLIAMS thinks the bill could say "food and lodging." SENATOR RANDY PHILLIPS thinks that would be better wording than "subsistence." MS. WILLIAMS thinks the word "subsistence" was taken from the court rule. CHAIRMAN SHARP asks Ms. Williams to continue with her testimony. MS. WILLIAMS continues her review of the Governor's Transmittal Letter for SB 110. Number 115 SENATOR DONLEY asks Ms. Williams to repeat the reference she made to a preponderance of the evidence being the appropriate standard, even when there is a potential for incarceration. MS. WILLIAMS lists several examples: a probation revocation proceeding, where a preponderance of the evidence is the standard of proof that is used, even though the person will be going to jail if they lose in the probation revocation proceeding; and for a juvenile being waived into adult court, the standard is only a preponderance of the evidence, and if they lose, they go into adult court and face incarceration. SENATOR DONLEY asks Ms. Williams to review and explain that section of SB 110 again. MS. WILLIAMS responds there is no standard of proof now set forth in state law. There is a court decision that states the standard is a preponderance of the evidence, unless otherwise stated. That is what we are following in SB 110. Number 138 SENATOR DONLEY asks if that only applies to administrative adjudications. MS. WILLIAMS replies that is correct. SENATOR DONLEY asks if this would mostly apply to the area of appeals for revocation of driver's licenses. MS. WILLIAMS responds no, that is probably a really minor aspect of administrative adjudications. Number 149 SENATOR RANDY PHILLIPS asks Ms. Williams if there are any organizations or groups which support SB 110. MS. WILLIAMS is not aware of any groups supporting or opposing SB 110. SENATOR RANDY PHILLIPS asks Ms. Williams if SB 110 is mostly supported internally by the administration. MS. WILLIAMS states that is correct. Number 165 SENATOR DONLEY comments SB 110 seems to contain reasonable suggestions. But he is also interested in the whole process, and he would like some time to research the issue. He has always been concerned with the process by which notice is given for the adoption of regulations. There is no requirement that the public be shown the final version of proposed regulations. He would like to see more detailed notice of proposals. He would like to get information for the committee by the next meeting, if the committee is interested. SENATOR RANDY PHILLIPS states he would definitely be interested in Senator Donley's proposal. Number 199 MS. WILLIAMS responds the title of SB 110 refers to administrative adjudication, which is a different section than the one dealing with regulations. There are bills pending which deal strictly with regulations. She asks that the committee keep administrative adjudication separate from regulations. Number 206 CHAIRMAN SHARP appreciates what Ms. Williams just said, but to give proper notice before things become effective - to get the job done, sometimes you have to wrap the sweet stuff around the apple. He asks Senator Donley if he can have information for the committee by the next committee meeting. SENATOR DONLEY replies he will try to do that. Number 219 SENATOR RANDY PHILLIPS states the committee will probably have committee substitute for SB 110, and at some point in time he would like, on page 3, line 17, to have the word "subsistence" replaced with "reimbursement of food and lodging expenses, in accordance with the standards established by the Department of Administration under AS 39.20.160." CHAIRMAN SHARP understands from Ms. Williams testimony that there would not be objection to that change from the administration. The chairman asks for Ms. Williams' fax number so that they can work with her on a committee substitute and announces the committee will hold SB 110 and hear it again at the next committee meeting. SSTA - 3/21/95 SB 71 DEEP FREEZE CLASSIC SENATOR SHARP brings up SB 71 as the next order of business before the Senate State Affairs Committee and calls the first witness. SENATOR GEORGIANNA LINCOLN, prime sponsor of SB 71, reads the sponsor statement for SB 71 to the committee. Number 291 CLEETA BARGER, Delta Chamber of Commerce, informs the committee that the idea for a deep-freeze classic was the result of a study done by the chamber, which was looking for ways to improve the economy in the Delta area. Number 308 SENATOR RANDY PHILLIPS asks if Delta has held a deep-freeze classic before. MS. BARGER responds no, the brochure Senator Phillips is looking at is pre-planning for the classic. At the time, the chamber did not know they needed legislative approval to use the word "classic." SENATOR RANDY PHILLIPS suggests Delta hold a rodeo. Number 332 CAROL STOCK, testifying from Delta, states SB 71 would help diversify the economy by benefiting the tourism industry. SENATOR LINCOLN points out that in the back-up information for SB 71, it is estimated that the chamber would get some revenue from the classic and use that revenue to enhance and encourage tourism. Number 358 SENATOR DONLEY asks if there is anything in the legislation stipulating how the money is to be used, or if it would be up to the discretion of the Delta Chamber of Commerce. MS. BARGER replies, "Festival of Lights, and we have cooperated with the federal and state governments, and we are in the process of getting Sullivan Roadhouse, the oldest remaining roadhouse in the interior, replaced from Fort Greely reservation to Delta Junction. The chamber of commerce is taking on that responsibility. If there are more funds available than it takes to run our winter festival, then we will put it into Sullivan Roadhouse." SENATOR LINCOLN does not think the $25,000 will go very far to promote further economic development for the community. Number 375 CHAIRMAN SHARP asks what the state regulations are, as far as cost and licensing requirements, and the amount that is required to be paid to the winner. DENNIS POSHARD, Director, Charitable Gaming Division, Department of Revenue, stated there are no regulations requiring a minimum amount of money be returned to the permittee, which in this case would be the Delta Chamber of Commerce. Number 396 SENATOR LEMAN asks how the classic will be run; he sees two constraints: a time constraint and a temperature constraint. What will take precedence: guessing the right temperature, or guessing the right date? MS. BARGER responds guessing the right temperature will take precedence, with the date and time second. SENATOR RANDY PHILLIPS asks what happens if the temperature is the same for eight straight hours. MS. BARGER replies, "Then they would share the clock." SENATOR DONLEY comments he has voted against everyone of these bills for nine years now. But he does not think it is an unreasonable thing for Delta to ask for; they are going to need some help. He will not oppose moving the bill from committee. SENATOR RANDY PHILLIPS makes a motion to discharge SB 71 from the Senate State Affairs Committee with individual recommendations. SENATOR LEMAN objects for the purposes of commenting on the subject. He objects to gambling, although he supports the causes the classics support. Senator Leman states he will vote against the bill when it reaches the floor, but he removes his objection. Number 393 CHAIRMAN SHARP thinks the legislature might want to go through and delete some of the games of chance from statute that are not currently in operation. The chairman, hearing no further objection, orders SB 71 released from committee with individual recommendations. SSTA - 3/21/95 HB 4 PERMANENT FUND DIVIDEND ELIGIBILITY CHAIRMAN SHARP brings up HB 4 as the next order of business before the Senate State Affairs Committee and calls the first witness. Number 441 ROD MOURANT, Aide to Representative Pete Kott, prime sponsor of HB 4, gives background information on HB 4. Mr. Mourant mentions the court case which disallowed "piggybacking", and states HB 4 would make piggybacking a statutorily allowable absence. Mr. Mourant states allowable absences are for medical reasons, educational reasons, military service, vocational, professional, and special training not available in state, and for service in congress or the peace corps. He knows one woman who is being denied a dividend while she accompanies and cares for her husband who is undergoing cancer treatment out of state. Mr. Mourant also knows a fourth- generation Alaskan who has been denied a dividend while he accompanies his wife, who is out of state attending school. He informed the committee that HB 4 passed the house unanimously. Number 486 SENATOR LEMAN asks Mr. Mourant if this bill is the same as Representative Parnell's bill last year. REPRESENTATIVE PETE KOTT, prime sponsor of HB 4, responds HB 4 is virtually identical. He stated the bill passed both houses last year, but the house was unable to concur with an amendment made in the senate, and so the bill died. Number 492 CHAIRMAN SHARP comments he is caused heartburn by military people who satisfy the residency requirement and become eligible for a dividend, and then come back for one day on a military transport plane just to satisfy the dividend requirement after they are transferred out of state. He has a problem with people who weren't eligible for a dividend when they went in the military continuing eligibility after they leave the state. Chairman Sharp knows the Soldiers & Sailors Relief Act requires that anyone in the military cannot lose a benefit because of military service. But he is not sure, if it is a benefit they did not have when they joined the service, that the benefit would necessarily have to follow them forever. Number 510 REPRESENTATIVE KOTT states he completely agrees with the chairman's comments; there are a number of abuses with the permanent fund dividend program. He spent twenty-two years in the military, and certainly insured that he stayed in the state. But there are a number of other individuals out there who are probably cheating the system, not to cast any negative aspersions on anyone. In addition, there are probably a lot of other individuals who come to the state and collect dividends while here, but do not intend to stay indefinitely. Representative Kott informs the committee that last year there was an attempt to establish a program within the Department of Revenue. This program would have set up an escrow account for people eligible for dividends who were residing out of state, and after these people had returned to the state and maintained residency for one year, they would have received the money owed them. That became a little unmanageable though; there were a couple of snags. But that is one way to address that particular issue. Number 535 SENATOR DONLEY asks what is new in Section 2. MR. MOURANT responds the new structure in Section 2 is at the request of the Permanent Fund Dividend Division. No provisions are being changed, other than paragraph (8) under Section 2. SENATOR DONLEY asks Mr. Mourant to confirm that paragraph (7) is in existing statute. MR. MOURANT replies paragraph (7) is currently in statute. SENATOR DONLEY asks if anyone has raised the possibility of adding a military service exception regarding the home of record of an individual when they entered the military. Number 549 REPRESENTATIVE KOTT is not aware of anyone in the legislature attempting to address that particular matter. SENATOR DONLEY asks Representative Kott how he would feel about that. The military personnel still in state would still be eligible. REPRESENTATIVE KOTT thinks it is something that could be looked into, but it might also get into the issue of equal protection. You have out-of-state military personnel, but you also have students and other categories, and you would have to address that group as a whole, rather than single out one class. He thinks the legality of that would have to be addressed. Number 561 SENATOR DONLEY thinks there is a rational distinction between the classes of the military and students. He thinks the state could meet a federal test. Number 567 REPRESENTATIVE KOTT is not sure; there is also the Soldiers and Sailors Relief Act that has to be taken into consideration as well. MR. MOURANT adds that service in congress is also an allowable absence. It does not state "service to the Alaska delegation in congress." There are individuals who have maintained their residency in Alaska, who work for other states' delegations in congress who are eligible for a dividend. Number 570 SENATOR DONLEY says that those people all established residency in Alaska first, before they began their service in congress. CHAIRMAN SHARP thinks they probably were residents before they became engaged in an exemption. TAPE 95-12, SIDE B SENATOR RANDY PHILLIPS asks Mr. Mourant if Alaska residents who work for other states' delegations in congress are really eligible for a dividend. MR. MOURANT replies he assumed they were eligible, but he sees that a representative from the Permanent Fund Dividend Division is shaking her head "no." He apologizes: they are eligible to vote in this state. SENATOR DONLEY says it appears paragraph (8) affects two classes of people: the spouse who married an eligible recipient in Alaska, and the spouse who married the eligible recipient after the recipient left Alaska. MR. MOURANT responds the spouse, or "piggybacker", must be independently eligible, on their own merits. A spouse cannot be eligible simply because they are married to a recipient with an allowable absence. CHAIRMAN SHARP comments he had a constituent who was a life-long Alaskan who was denied a dividend because she married a military person who wasn't eligible, and they had never even left the state. The chairman asks about the potential cost of the bill. He asks if anyone will be eligible, or if only people who applied for dividends and were denied will be eligible. Number 560 WENDY HUGHES, Dividend Appeals Unit, Permanent Fund Dividend Division, Department of Revenue, replies there were 2,690 people who were denied a dividend. As of December 31, there 1,373 people who had appealed. So it would be just those additional people who had not appealed in a timely manner who would be allowed to appeal before September 1. CHAIRMAN SHARP asks if the bill would include piggybacking children. MS. HUGHES responds the bill does not include piggybacking children, because the court ruling regarding piggybacking only affected spouses; it did not affect piggybacking children. CHAIRMAN SHARP asks Ms. Hughes if most people affected by this bill are military, or if there are students involved too. MS. HUGHES believes about 40% are probably military, and 40%-45% are probably students. CHAIRMAN SHARP asks Ms. Hughes if she knows how many people qualify under the military service allowable absence. MS. HUGHES replies she does not know offhand, but could get that information for the committee. CHAIRMAN SHARP asks if the department keeps track of allowable absences applied for and paid by paragraphs (1)-(6) in HB 4. MS. HUGHES responds the department does keep track of that. CHAIRMAN SHARP asks that the information be provided to the committee. Number 528 SENATOR LEMAN asks if the department keeps track of the military personnel who say they intend to return to Alaska when they retire, and those who actually do return to Alaska when they retire. MS. HUGHES replies the department does not keep track of that. SENATOR LEMAN asks if there is any way that information could be tracked. MS. HUGHES thinks that would be pretty exhaustive to attempt. The other consideration is those who discontinue filing, even though they might keep their residency, simply because they don't meet the two-year physical presence requirement. They might not be dropping simply because they didn't intend to return. So the department really doesn't have any numbers on that. CHAIRMAN SHARP announces HB 4 will be held until Tuesday's meeting so that the committee can review information it has requested from the Department of Revenue. CHAIRMAN SHARP states the next committee meeting will be Tuesday, March 28, 1995. The committee will hear bills held over and the bills scheduled for Thursday's meeting, which was cancelled.