SENATE STATE AFFAIRS COMMITTEE March 8, 1997 10:32 a.m. MEMBERS PRESENT Senator Lyda Green, Chairman Senator Jerry Ward, Vice-Chairman Senator Jerry Mackie MEMBERS ABSENT Senator Mike Miller Senator Jim Duncan ALSO IN ATTENDANCE Senator Randy Phillips COMMITTEE CALENDAR SENATE BILL NO. 54 "An Act relating to eligibility for the longevity bonus; and providing for an effective date." - HEARD AND HELD IN COMMITTEE PREVIOUS SENATE COMMITTEE ACTION SB 54 - See State Affairs Committee minutes dated 3/6/97. WITNESS REGISTER Rupert E. Andrews American Association of Retired Persons, AK Chapter 9416 Long Run Drive Juneau, AK 99801 POSITION STATEMENT: Testified in opposition to SB 54 Joe McGill Dillingham Senior Center P.O. Box 1469 Dillingham, AK 99576 POSITION STATEMENT: Testified in opposition to SB 54 Ms. Agnes Ross Juneau, AK POSITION STATEMENT: Testified in opposition to SB 54 Yule Kilcher P.O. Box 353 Homer, AK 99603 POSITION STATEMENT: Suggested reinstatement of state income tax Dale Bondurant HC1 Box 1197 Soldotna, AK 99669 POSITION STATEMENT: Testified in opposition to SB 54 J.B. Woods P.O. Box 1733 Seward, AK 99664 POSITION STATEMENT: Testified in opposition to SB 54 Ms. Mary Halpin Mid Valley Seniors, Houston, AK P.O.Box 518 Palmer, AK POSITION STATEMENT: Testified in opposition to SB 54 Ed Earnhart 1043 W. 74th Ave. Anchorage, AK 99518 POSITION STATEMENT: Testified in support of SB 54 Ms. Terry Burrell 3716 Wesley Lane Anchorage, AK 99508 POSITION STATEMENT: Testified in opposition to SB 54 Robert Schenker 801 Airport HTS., #243 Anchorage, AK 99508 POSITION STATEMENT: Testified in opposition to SB 54 Ms. Dora Giordono Mid Valley Seniors, Houston, AK P.O. Box 518 Palmer, AK 99645 POSITION STATEMENT: Testified in opposition to SB 54 Ms. Lorena Showers 923 W. 11th Ave. Anchorage, AK 99501 POSITION STATEMENT: Testified in opposition to SB 54 Ms. Jean Smith P.O. Box 1928 Anchorage, AK 99510 POSITION STATEMENT: Testified in opposition to SB 54 Tom Marshall 1569 Birchwood Anchorage, AK 99508 POSITION STATEMENT: Testified in opposition to SB 54 Ms. Virginia Carter 2260 Knoll Circle Anchorage, AK 99501 POSITION STATEMENT: Testified in opposition to SB 54 Ms. Frances Swaim 2221 Egan Ave. Fairbanks, AK 99701 POSITION STATEMENT: Testified in opposition to SB 54 ACTION NARRATIVE TAPE 97-9, SIDE A Number 001 SB 54 MAXIMUM INCOME FOR LONGEVITY BONUS CHAIRMAN GREEN called the Senate State Affairs Committee to order at 10:32 a.m. and brought up SB 54 as the only order of business before the committee. She said the meeting would be considered a work session for the purpose of taking public testimony on SB 54. Number 010 RUPE ANDREWS of Juneau, representing the American Association of Retired Persons, Alaska Chapter (AARP), testifying in opposition to SB 54, outlined the Association's two main concerns with the legislation. The AARP believes the data base that the figures were taken from is not a good data base because that data base is based on the 1990 census and there have been a lot of changes since that time. The AARP's second concern relates to the phasing out of the longevity bonus in 1993. At that time, there was a passive agreement between seniors in the state and the Alaska Legislature that this would be the last statement on this subject. There is concern that if changes are made now, there will be more changes made in the future, and AARP feels that this legislation is not needed at this time. Number 065 CHAIRMAN GREEN agreed that when a person is planning their retirement it does make it difficult to suddenly have a change that is not anticipated or where there have been assurances that further changes to the program would not be made. MR. ANDREWS responded that entry into the program ended in 1996, and each year the state should start to show a significant decline in the cost of the program. Number 095 JOE MCGILL, testifying from the Dillingham LIO and representing the Dillingham Senior Center, stated that group has discussed this legislation and they are in opposition to making any changes to the longevity bonus program. He said he doesn't think the longevity program was ever intended to be a welfare type of program based on an individual's income. CHAIRMAN GREEN asked Mr. McGill if the point of view he was expressing is basically representative of those at the Dillingham Senior Center, and MR. MCGILL responded that he doesn't know of anyone who favors making changes to the program or doing away with it. Number 140 AGNES ROSS of Juneau expressed her appreciation for receiving the longevity bonus, which, she said, she depends on along with her social security. She does not want that benefit cut in any way. SENATOR MACKIE clarified that part of the concept of the bill is that if a single individual's income is over $60,000 a year, or, if a couple's income is over $80,000 a year, that maybe they don't need the longevity bonus any more, but everyone else below those income brackets would continue to receive the bonus. He asked Ms. Ross for her thoughts on that concept. MS. ROSS agreed that if individuals do have good retirements and they don't need the longevity bonus, that they should be willing to give it up. Number 186 YULE KILCHER, testifying from the Homer LIO, believes a better alternative would be the reinstatement of a state income tax because then the Legislature would not have to consider limiting seniors' income. However, he suggested that if the Legislature does not want to pursue that alternative, then it should consider lowering the income limit to $40,000. Number 240 DALE BONDURANT, a 50-year Alaska resident testifying from the Kenai LIO, stated he opposes SB 54 on its principle and not as it would affect him personally. He said the proposed limit imposes the principle that this fund is a form of welfare. The growing concern in this state seems to be for increasing the maximum benefits of those who profit from the development of our resources, and this trend includes reducing and eliminating the returns of these resources for the benefit of the people. He pointed out that the permanent fund has been a unique method that has the purpose to assure some return for the benefit of the people, and he questioned if those who support this Act would have the same approach in deciding if their public funded retirement or per diem would be regulated according to each of their personal means. Number 266 SENATOR MACKIE commented that the original purpose of the program was to reward people for their longevity in the state of Alaska, but court decisions have struck down that whole theory, so he questions if it is serving its original purpose. MR. BONDURANT said he thinks the original purpose of the program was to return some of the wealth obtained from the resources, which belong to the people. Number 310 J.B. WOODS, a 45-year resident of Alaska testifying from the Seward LIO, stated he believes SB 54 is a disgrace to constituents, the governor and the legislators. He believes those who have been in the state for many years and have made Alaska what it is today are being hurt by this, both monetarily and otherwise. He thinks that a lot of people that have means and are spending a lot of money in Alaska will no longer remain here and face the cold winters as they have for so many years. Number 342 SENATOR WARD clarified that it is the governor who is proposing this legislation, not the Legislature. He said he agrees with Mr. Woods comments, and he noted he himself was raised to honor and respect the elders, and for them to have to turn around and prove that they should have this benefit is a slap in the face and a disgrace. He also said there are plenty of other places to cut $8 million out of the budget instead of taking it away from our seniors. Number 361 SENATOR RANDY PHILLIPS commented that he has the feeling that the public is not being heard by the administration on this topic and the committee is holding these hearings so that the public can be heard. Number 387 MARY HALPIN, representing the Mid Valley Seniors in Houston, AK and testifying from the Mat-Su LIO, voiced her agreement with the testimony from previous witnesses in opposition to SB 54. She believes the legislation will turn it into a welfare program, and that it is setting a bad precedent. She suggested that with the program being phased about by the previous Legislature, this issue shouldn't even be under discussion. Number 410 ED EARNHART testifying from the Anchorage LIO, said he qualifies as a senior citizen but he firmly supports SB 54. He said this is the state's money and it is the responsibility of the Legislature and the governor to come up with budgets that are proper in keeping with the needs of the state. He believes senior citizens are already favored in Alaska because of the various housing subsidies and other benefits they receive. He also pointed out that many senior citizens have relocated to Alaska so that in many cases this money isn't going to Alaskans. Number 492 MS. TERRY BURRELL, a 38-year Alaska resident who is handicapped with a rare disease, testified from the Anchorage LIO in opposition to SB 54. She pointed out that private nursing home care in Alaska runs from $6,000 to $7,000 a month which adds up to $84,000 a year for one person. She said she doesn't understand how this bill talks about $60,000 ceiling when it can cost up to $84,00 a year for nursing home care. She said she wants to remain independent, but her income, which is below the $60,000 figure now, would have to rise approximately $40,000 in order for her to receive nursing home care if that became necessary. She believes SB 54 is a disgrace to Alaska's senior citizens. Number 535 ROBERT SCHENKER, a 48-year resident of Alaska, testifying from the Anchorage LIO, said he is a working senior who receives a $150 monthly stipend from the longevity bonus program. If this legislation should become law, he will penalized to the extent that he will lose the bonus, which, ironically, was intended for old time Alaskans like himself. At the same time, there will be non working seniors with less than 5 years residency in the state of Alaska, some of whom are foreign nationals, who will continue to receive $250 from the state of Alaska. He suggested stopping the pitting of seniors against seniors on this piecemeal method that is ascribed to in SB 54. Number 579 DORA GIORDONO, a board member of the Mid Valley Seniors in Houston, AK testifying from the Mat-Su LIO, voiced her opposition to SB 54. She related she has been a recipient of the longevity bonus for many years, and pointed out that 90 percent of the state's senior citizens don't have an income of $60,000 to $80,000 a year. She said most seniors are on a fixed income and need the longevity bonus to live in comfort and dignity. TAPE 97-9, SIDE B Number 005 LORENA SHOWERS, a 93-year old senior citizen representing the American Association of Retired Persons, Alaska Chapter and testifying from the Anchorage LIO, stated she believes SB 54 is a crime against all of the seniors. She said Alaska's senior citizens have worked hard and saved their money so that they would be able to live comfortably during their retirement years. They also have many expenses such as medical expenses that are not covered by Medicare, and the longevity bonus helps them meet these types of expenses. Number 040 CHAIRMAN GREEN said one of things that bothers her with some of the legislation and issues before the Legislature this year are these types of issues that cause people concern and fear, although she doesn't think this was the intention of SB 54, but she thinks it is one of the side effects. She also related that she does not plan to move SB 54 out of the State Affairs Committee. Number 060 JEAN SMITH, a 53-year resident of Alaska testifying from the Anchorage LIO, stated she is still working and she thinks the governor's proposal to pass this legislation is misguided and is an insult to all longtime residents. Making the longevity bonus a needs-based program is another giant step down the road towards socialism in this country. The governor and others have forgotten the original purpose of the longevity bonus program, which was to at least partially reimburse the pioneers for the taxes and assessments they paid through the early years to build the infrastructure throughout the state that current residents now enjoy. She questioned that if this legislation were to pass, what the cost of added bureaucracy would be to determine the gross income of the bonus recipients. Number 085 TOM MARSHALL, testifying from the Anchorage LIO, said an article in the Anchorage Daily News said that there would be an $8 million savings if SB 54 were to pass, but he thinks a little bit of arithmetic shows that even if half of the disenfranchised seniors under this bill went outside for a six-month stay in a second rate resort, they would take $12 million with them. He also concluded that some people will manipulate their incomes in order to continue qualifying for the longevity bonus. Number 115 VIRGINIA CARTER, testifying from the Anchorage LIO, said that the senior citizens making over $60,000 a year are the people that go to the $100 ticket fund raisers that benefit the poor and other less fortunate people in the state. She believes that Alaska's seniors should be treated equally, and just because a person happens to be in the upper income bracket, they shouldn't be penalized any more than the person who is in the lower income bracket. Number 135 FRANCES SWAIM, testifying from the Fairbanks LIO in opposition to SB 54, stated she and her husband are residents of the Fairbanks Pioneers' Home, and although they have enough money right now to pay their monthly rent, the rent has been going up every year since they moved into the home. She said it seems the Legislature is in favor of charging the residents more, but not letting them have the perks of the longevity bonus. She pointed out that if she and her husband should end up in the nursing wing of the home by the year 2001, they will be paying $77,376 a year to be there. Number 155 CHAIRMAN GREEN thanked all the people who testified during the meeting, and she encouraged seniors to send in their comments for the committee file so that this information will be available for other legislators. There being no further business to come before the committee, CHAIRMAN GREEN adjourned the meeting at 11:35 a.m.