A proposal that temporarily could throw thousands of the state's poor off of welfare drew heated and emotional testimony at a House State Affairs Committee on Saturday.
Public interest groups representing the poor and elderly opposed the bill, calling it "unfair" and "mean-spirited."
But bill author Sen. Randy Phillips, an Eagle River Republican, said the measure aims to cover a $37 million increase in the state's Medicaid budget. Medicaid, which is growing by about 15 to 20 percent a year, represents the biggest increase in this year's state budget, and Phillips said it's a problem that has to be solved.
"Some say this is an attack on the poor, and I can understand why they would view it in that manner, but on the other hand these are the very same people that are dealing with the Medicaid," Phillips said, noting that it would hurt the same people if the Medicaid budget were cut.
Senate Bill 340 would remove a "hold harmless" provision from state law that prevents financial assistance programs from considering permanent fund dividends a form of income. Passage of the measure would make many families temporarily ineligible for food stamps, Alaska Temporary Assistance Program benefits, General Relief Assistance and Native Family Assistance programs when PFD checks are released in October. Aid for the physically and mentally disabled would not be affected.
Jim Nordlund, director of the Division of Public Assistance, said the bill is based on the theory of "robbing Peter to save Paul."
Nordlund noted a family of three receiving ATAP benefits and food stamps for 11 months would be about $100 over the federal poverty level. He added government entities could leave some families without welfare benefits or a PFD.
"That's a good reason to not get any incurred penalties or debts," said House State Affairs Chairman John Coghill, a North Pole Republican.
Ellen Northup, a site manager for the Juneau Senior Center and former director of the Glory Hole homeless shelter and dining hall in Juneau, testified last week on behalf of the elderly.
She warned that seniors living in subsidized housing could get thrown out for having too much income if PFD checks aren't held harmless. Seniors who owe back taxes could have their PFD garnished and would lose their subsidy too, Northup said.
"They would be homeless," Northup said. "St. Vincent's (de Paul shelter) is already crowded and the Glory Hole is already crowded, and there ain't no place left to go."
She said many people are "terrified" about the proposal but won't speak up for themselves. She said those who use the PFD to pay bills and purchase clothing, glasses and other essentials would come up short every year, making it more difficult to get out of poverty.
"I know that everybody thinks that people get their PFD and go to Disneyland, but that's not necessarily so," she said.
The proposal to remove the hold harmless provision would make each PFD check about $11 larger and raise about $5 million to help pay for the Medicaid fiscal gap. But Fairbanks Democratic Rep. Joe Hayes took issue with the possibility that the appropriation might not go toward Medicaid in future Legislatures.
"My fear is that this money comes out and then just goes," Hayes said. "This year it could go into Medicaid ... and next year it goes into a black hole."
The Alaska Constitution prohibits dedication of funds to a particular program for any future fiscal year, but Phillips said the Legislature has a tradition of observing a "white picket fence" for such appropriations to prevent the money from being used for another cause. He acknowledged those provisions are "occasionally violated."
Caren Robinson, a representative for the Alaska Women's Lobby, echoed Hayes' concerns about the future appropriation of the money.
She added women who are victims of violent crime often rely on such state assistance to escape abusive relationships.
"They too would be victims of this hold-harmless legislation," Robinson said.
Coghill said with a looming fiscal gap, making priority choices in budget appropriations is a reality that the state is going to have to face.
"I would not characterize it as punishment," Coghill said. "Certainly it is a priority choice."
The committee will take up the bill again on Tuesday.
Timothy Inklebarger can be reached at email@example.com.