Legislature(2003 - 2004)

2003-03-06 Senate Journal

Full Journal pdf

2003-03-06                     Senate Journal                      Page 0385
SB 102                                                                                            
SENATE BILL NO. 102 BY THE SENATE 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 and Commerce and                                  
Finance Committees.                                                                                 
The following fiscal information was published today:                                               
 Fiscal Note No. 1, Department of Revenue                                                           
Governor's transmittal letter dated March 5:                                                        
Dear President Therriault:                                                                          
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.                                                     

2003-03-06                     Senate Journal                      Page 0386
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.                                                       

2003-03-06                     Senate Journal                      Page 0387
I urge your prompt and favorable action on this measure.                                            
Frank H. Murkowski