Legislature(2003 - 2004)
2003-03-05 House Journal
Full Journal pdf2003-03-05 House Journal Page 0442 HB 169 HOUSE BILL NO. 169 by the House Rules Committee by request of the Governor, entitled: "An Act increasing the amount of revenue received by the state from charitable gaming activities; and providing for an effective date." was read the first time and referred to the Labor & Commerce and Finance Committees. The following fiscal note(s) apply: 1. Fiscal, Dept. of Revenue The Governor's transmittal letter dated March 5, 2003, follows: "Dear Speaker Kott: Under the authority of art. III, sec. 18, of the Alaska Constitution, I am transmitting a bill designed to increase the amount of state revenue received from charitable gaming fees and taxes. 2003-03-05 House Journal Page 0443 Large amounts of money are spent on bingo, pull-tabs, and other charitable gaming activities in Alaska. Gross receipts for calendar year 2001 alone exceeded $351 million. Only $2.4 million of this amount was paid to the state in taxes and fees. Charities only received $30.6 million. The rest, over $318 million went for prizes, rent, operator fees, and other expenses of gaming. Because of the large sums involved in charitable gaming, state government must devote significant resources to monitoring gaming activity. Despite the state's best efforts, it is not enough. The state continues to find gaming enterprises where so much of the gaming receipts are used up paying rent and other expenses that charities receive less than the minimum amount required by law. This bill would reduce the strain on the state by increasing revenue. Additionally, the bill would assure the public that its money is going toward its intended purpose, through provisions requiring professional gaming operators and vendors to shoulder the burden of the enhanced tax imposed for their activities. The tax on pull-tab sales has not been raised since 1988. This bill would increase the tax to five percent of the gross receipts of the games. The current rate is only three percent of the ideal net of the games. Ideal net is the amount left over after all prizes are paid, assuming that every pull-tab game is sold. The State of Alaska's current pull-tab tax rate is significantly lower than the rates imposed by many other states. Oklahoma and Massachusetts collect a tax of 10 percent of the gross pull-tab receipts. Michigan collects a tax equal to 40 percent of the net pull-tab profit. The bill would also discourage the professional gaming operators from passing on the cost of the tax increase to charity by reducing the expense cap on costs they can pass along to the charitable gaming permittees for whom they sell pull-tab games. The bill would place similar restrictions on vendors that sell pull-tabs in their liquor establishments for charitable gaming permittees. It is estimated that in fiscal year 2004, the bill would raise an additional $11.5 million in revenue. The bill would raise an additional $12.5 million in each subsequent fiscal year. 2003-03-05 House Journal Page 0444 I urge your prompt and favorable action on this measure. Sincerely, /s/ Frank H. Murkowski Governor"