Legislature(2003 - 2004)

03/30/2004 08:03 AM STA

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
HB 547-PFD: DELAY PAYMENT FOR ALLOWABLE ABSENCES                                                                              
Number 1748                                                                                                                     
CHAIR WEYHRAUCH  announced that  the next  order of  business was                                                               
HOUSE  BILL  NO.  547,  "An  Act relating  to  the  dividends  of                                                               
individuals  claiming allowable  absences; and  providing for  an                                                               
effective date."                                                                                                                
Number 1723                                                                                                                     
REPRESENTATIVE  GRUENBERG  stated his  support  of  HB 547.    He                                                               
stated for  the record  that his  recollection from  his previous                                                               
term as  legislator was that  a bill  had to be  noticed [through                                                               
the Chief  Clerk's office]  by the  bill name  and number.   That                                                               
notice had  to be made on  the Thursday before the  week in which                                                               
the  bill would  be  heard.   He said  he  understands that's  no                                                               
longer  the requirement  and that,  currently,  only the  subject                                                               
matter has  to be noticed.   He said,  "I'm just calling  that to                                                               
the  committee's   attention,  because   in  the  final   days  -                                                               
particularly  in the  second session  - it's  important that  the                                                               
public be fully aware of what we're dealing with.                                                                               
CHAIR WEYHRAUCH concurred.                                                                                                      
Number 1680                                                                                                                     
CHRIS KNIGHT,  Staff to Representative Paul  Seaton, Alaska State                                                               
Legislature,  introduced  HB  547  on  behalf  of  Representative                                                               
Seaton, sponsor.   He indicated that most people know  a story of                                                               
someone who has  committed fraud when applying  for the permanent                                                               
fund dividend  (PFD).   He revealed  that in  2000, approximately                                                               
$30  million left  the State  of Alaska  in PFDs  paid to  people                                                               
living outside of  the state.  He noted that  the legislature has                                                               
set up  a guideline for allowable  absences from the state  and a                                                               
detailed list  of those  allowable absences  is in  the committee                                                               
MR. KNIGHT  said the  proposed legislation  would not  change the                                                               
current  system of  allowable absences.   He  indicated that  the                                                               
intention of  the bill is  to get people  to come back  to Alaska                                                               
and to "remove this ... thought  that there might be fraud of the                                                               
PFD  application  or   the  distribution  of  [the]   PFD."    He                                                               
explained,  "The thought  was that  if  we created  some sort  of                                                               
structural change,  in the  sense that if  you have  an allowable                                                               
absence and  you return to the  state and actually spend  time in                                                               
the  state,  then  you  could  receive your  PFD."    Mr.  Knight                                                               
indicated that HB  547 may reduce that amount of  claims that the                                                               
Permanent  Fund Dividend  Division has,  which would  potentially                                                               
result in putting money back into the state's economy.                                                                          
Number 1574                                                                                                                     
REPRESENTATIVE  SEATON   clarified  that  the  bill   takes  most                                                               
allowable absences and "has the  person return to the state [and]                                                               
reestablish residency  after that allowable absence,  before they                                                               
receive  the past  dividend ...  that  they qualified  for."   He                                                               
asked Mr.  Knight to  indicate which  allowable absences  are not                                                               
included in HB 547.                                                                                                             
MR. KNIGHT  noted that  members of Congress  are not  included in                                                               
the  bill as  those who  qualify for  an allowable  absence.   He                                                               
said,  "Mainly, the  absences we  were trying  to capture  within                                                               
this bill are people that leave  for college."  He related having                                                               
been one of eight or nine  men who attended college out of state.                                                               
He  noted that  he and  one other  man returned  to Alaska  after                                                               
school,  while the  rest  did  not.   He  predicted  that if  the                                                               
dividends  [had been  held until  their return],  those who  took                                                               
jobs in  the Lower 48 would  probably have returned to  Alaska to                                                               
REPRESENTATIVE SEATON  said, "This  doesn't apply to  the 180-day                                                               
absence  that anybody  is entitled  to, so  it doesn't  interfere                                                               
Number 1472                                                                                                                     
REPRESENTATIVE  LYNN  asked how  [HB  547]  would relate  to  the                                                               
MR.  KNIGHT answered  that,  currently,  military personnel  [who                                                               
claim Alaska  residency and file  for a  PFD] must return  to the                                                               
state  for   72  hours,  every   two  years.    He   offered  his                                                               
understanding that a military person  who lives in Alaska for two                                                               
years  and is  then transferred  to, for  instance, Oklahoma  can                                                               
receive  his/her dividend  for 10  more  years, as  long as  that                                                               
person's intent  is to move  back to  Alaska, and if  that person                                                               
meets the  requirement of  returning to the  state for  72 hours,                                                               
every two  years.   He concluded,  "So, realistically,  we're not                                                               
changing  the  eligibility  requirements whatsoever;  we're  just                                                               
making it clear  that if you are  going to live in  the state and                                                               
you're going to continue to claim  to be a resident of the state,                                                               
then you'll receive your dividend."                                                                                             
Number 1413                                                                                                                     
REPRESENTATIVE  LYNN pointed  out that  no one  knows how  long a                                                               
military assignment might be.  A  person may be assigned for four                                                               
years and may  not be able to  afford to come back  for 72 hours.                                                               
He  noted that  that's particularly  true for  the lower  ranking                                                               
individuals.  He said it's an area that concerns him.                                                                           
MR. KNIGHT  revealed that he  had previously worked in  an office                                                               
that  sent out  a quarterly  publication detailing  how a  person                                                               
could continue  to be eligible for  the PFD while serving  in the                                                               
military.   For example, he  noted, when not involved  in combat,                                                               
most people  have access to cargo  planes back to the  states, in                                                               
order to  meet the  72-hour requirement.   He  noted that  HB 547                                                               
would not  change that process.   He added, "The only  thing that                                                               
changes is  that if  you have  no intention  of returning  to the                                                               
state within 10  years, you're going to lose  all your dividends,                                                               
which is  also current statute,  except that you're not  going to                                                               
be  paid your  dividends  until  you actually  come  back to  the                                                               
Number 1270                                                                                                                     
REPRESENTATIVE  SEATON revealed  that the  idea for  HB 547  came                                                               
from a  military person  who is  in the U.S.  Coast Guard  and is                                                               
disturbed  that  many  members  that   he  served  with  have  no                                                               
intention  of coming  back.   He said  the man  would think  that                                                               
receiving six or  eight held back PFDs upon his  return to Alaska                                                               
would serve  as a great  nest egg.  He  stated that the  point of                                                               
the  proposed legislation  is to  make people  who say  they will                                                               
come back  to the state  actually do  so before they  can receive                                                               
their held dividends.                                                                                                           
Number 1181                                                                                                                     
REPRESENTATIVE HOLM  said people  have related  to him  that they                                                               
know  a lot  of  people  [in the  military]  who  never have  any                                                               
intention of  staying in Alaska,  but still  accept the PFD.   He                                                               
noted that  he was also  told that  Alaska is the  most asked-for                                                               
place to  go, by military people,  because of the PFD.   He noted                                                               
that  military  people  with large  families  can  augment  their                                                               
incomes in this manner.                                                                                                         
Number 1080                                                                                                                     
REPRESENTATIVE SEATON mentioned the  "brain drain" [Alaska losing                                                               
people to  other states].  He  suggested that the nest  egg [PFDs                                                               
held  back  while people  are  out  of  state]  would be  a  good                                                               
incentive to  people to return  to the state.   He added  that he                                                               
hasn't seen anything else that has the potential for doing that.                                                                
Number 1040                                                                                                                     
PAUL DICK, Chief, PFD Operations,  Central Office, Permanent Fund                                                               
Dividend Division,  Department of  Revenue, testifying  on behalf                                                               
of the  division, noted that the  largest group of people  on the                                                               
180-day   allowable  absence   are  the   spouses  and   children                                                               
accompanying   either  military   personnel,  predominately,   or                                                               
students.   He  said there  have been  comments made  about these                                                               
people  reestablishing residency  upon  their  return to  Alaska;                                                               
however,  Mr.   Dick  clarified   that  they  never   lost  their                                                               
residency, and it's just a matter  of them coming back to live in                                                               
Alaska.   They are  eligible for the  dividend because  they have                                                               
maintained their  residency during the  period of time  [in which                                                               
they were out of the state].                                                                                                    
Number 0973                                                                                                                     
CHAIR WEYHRAUCH  referred to  a handout  in the  committee packet                                                               
entitled, "Why Applicants Were Absent  From the State."  He noted                                                               
that the  total for students enrolled  full-time in postsecondary                                                               
education is 5,365.  He asked  if that number has grown over time                                                               
or remains  stable, and how  much the  bulk payout would  be when                                                               
those students return.                                                                                                          
Number 0950                                                                                                                     
MR. DICK  answered that there is  not a dramatic growth  in those                                                               
numbers.  He stated that the  amount they would get when they get                                                               
back would  obviously be dependent  on how much the  dividend was                                                               
for each  year.  In response  to a follow-up question  from Chair                                                               
Weyhrauch,  he said  [the  division] has  not  analyzed how  many                                                               
years students  are out of the  state; however, he said  he would                                                               
assume that students would be out for four years.                                                                               
Number 0905                                                                                                                     
REPRESENTATIVE HOLM  asked what  percent of  the PFDs  are mailed                                                               
out of the state each year.                                                                                                     
MR. DICK said  he doesn't know the percentage, but  18,000 is the                                                               
total  number of  PFDs  mailed  [out of  state]  out the  620,000                                                               
applicants.   He noted  that approximately  $20 million  was sent                                                               
out of state last year.                                                                                                         
Number 0863                                                                                                                     
REPRESENTATIVE GRUENBERG opined, "If  you have these figures, you                                                               
ought to be able  to break down the raw data  for us."  Referring                                                               
to  the  most recently  mentioned  handout,  he noted  that  "the                                                               
largest  category  are  people who  have  accompanied  an  Alaska                                                               
resident who's eligible  for a PFD."  He asked  if [the division]                                                               
can break  down who  the Alaska residents  are that  these people                                                               
are accompanying to show whether  they are students, or military,                                                               
or other.                                                                                                                       
MR. DICK  said that it would  be possible to conduct  a study for                                                               
that information.  In response  to a question from Representative                                                               
Gruenberg,  he  said he  believes  "the  numbers would  come  out                                                               
showing  that they  are mostly  military,  particularly with  the                                                               
children."      In   response   to   follow-up   questions   from                                                               
Representative Gruenberg, he said  the full-time student category                                                               
would be  adults in a  post-secondary education.  He  stated that                                                               
adults have  to have their  own eligibility.   Full-time students                                                               
enrolled in  grades 7-12, he  confirmed, would  predominately not                                                               
be accompanying their parents.                                                                                                  
REPRESENTATIVE GRUENBERG  asked how  long the  various categories                                                               
remained out of state and how many people eventually returned.                                                                  
MR. DICK said he believes those numbers could be found.                                                                         
REPRESENTATIVE GRUENBERG said he  thinks this is information that                                                               
he would  like.  He  offered to work with  Mr. Dick to  arrive at                                                               
the best questions to ask.                                                                                                      
MR.  DICK,   in  response  to  a   question  from  Representative                                                               
Gruenberg, said  he could not pin  down a time in  which he would                                                               
have  that information,  but he  said [the  division] would  work                                                               
diligently to get it.                                                                                                           
Number 0660                                                                                                                     
REPRESENTATIVE HOLM  asked what the  tax implication might  be of                                                               
extending payments for  years.  He said he would  assume that the                                                               
tax would be  greater on the individual payments,  rather than on                                                               
a grouping of payments.                                                                                                         
REPRESENTATIVE  HOLM  noted  that Alaska  loves  having  military                                                               
here.   Notwithstanding  that, he  observed that  it is  somewhat                                                               
curious that Alaska,  as a state, has chosen  to participate [in]                                                               
greater  payment of  the military  than the  other 49  states, by                                                               
virtue of  the PFD.   He  said he  thinks the  legislature should                                                               
think about those things.                                                                                                       
Number 0562                                                                                                                     
REPRESENTATIVE  SEATON offered  his understanding  that there  is                                                               
currently a  program where if someone  dies, the PFD is  in trust                                                               
in his or her estate for a certain  amount of time.  He said, "We                                                               
have ..., basically, the same kind  of a program of holding those                                                               
checks.  Do we have that for any other categories, as well?"                                                                    
MR. DICK  answered, "We  would just hold  that dividend  for that                                                               
one  year  only,  and  once  we're  notified  that  the  person's                                                               
deceased, we  would ... put  the check 'to  the estate of'."   He                                                               
clarified that in that circumstance,  PFD checks are not held for                                                               
REPRESENTATIVE  SEATON  asked if  there  is  any circumstance  of                                                               
disputed checks, for example, where  the [PFD] checks are held in                                                               
abeyance until administrative processes go forward.                                                                             
MR. DICK replied that there is  a denial and appeal process where                                                               
a dividend would  be pended until it's  adjudicated and resolved.                                                               
He stated  that [the division]  has those resolved within  a year                                                               
of the application deadline.                                                                                                    
Number 0471                                                                                                                     
CHAIR WEYHRAUCH indicated that in  some cases, the Alaska Supreme                                                               
Court has been  involved in those disputes.  He  said, "You still                                                               
hold the check during the pendency of those litigations."                                                                       
MR. DICK concurred.                                                                                                             
Number 0445                                                                                                                     
SHARON BARTON, Director, Central  Office, Permanent Fund Dividend                                                               
Division, Department of Revenue, added  that when a child reaches                                                               
the age  of 18,  if the  parents or guardian  have not  filed for                                                               
him/her over the  years, they can, at that point,  file for prior                                                               
year dividends.  She said  [the division] reserves an estimate of                                                               
that amount of money each year for that purpose.                                                                                
REPRESENTATIVE GRUENBERG  suggested a work group  or subcommittee                                                               
be  formed  to  get  the  information  from  [the  aforementioned                                                               
testifiers] as efficiently as possible.                                                                                         
CHAIR WEYHRAUCH said Mr. Knight would arrange that.                                                                             
[HB 547 was heard and held.]                                                                                                    

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