Legislature(2011 - 2012)HOUSE FINANCE 519

04/06/2011 08:30 AM FINANCE


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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ HB 125 ALCOHOLIC BEVERAGE CONTROL BOARD TELECONFERENCED
Heard & Held
*+ HB 206 EXTEND ALCOHOLIC BEVERAGE CONTROL BOARD TELECONFERENCED
Heard & Held
+ Bills Previously Heard/Scheduled TELECONFERENCED
HOUSE BILL NO. 125                                                                                                            
                                                                                                                                
     "An Act moving the  Alcoholic Beverage Control Board to                                                                    
     the  Department of  Commerce,  Community, and  Economic                                                                    
     Development and relating to  duties of that department;                                                                    
     and providing for an effective date."                                                                                      
                                                                                                                                
9:07:24 AM                                                                                                                    
                                                                                                                                
Representative  Wilson MOVED  to  ADPOPT  CSHB 125(L&C)  27-                                                                    
LS)378\B. There being no OBJECTION it was so ordered.                                                                           
                                                                                                                                
REPRESENTATIVE  MIKE  HAWKER, CHAIRMAN,  LEGISLATIVE  BUDGET                                                                    
AND  AUDIT   COMMITTEE,  relayed   that  HB  125   had  been                                                                    
introduced as  a result  of issues  identified in  the audit                                                                    
performed one  year earlier. At  that time,  the legislative                                                                    
Budget and  Audit Committee had  held hearings on  the issue                                                                    
related to the appropriate domicile  for the board. The bill                                                                    
moved  the administrative  domicile  of the  board from  the                                                                    
Department  of  Public Safety  (DPS)  to  the Department  of                                                                    
Commerce,  Community, and  Economic Development  (DCCED). In                                                                    
past  years  the board  had  been  under the  Department  of                                                                    
Revenue  (DOR). He  believed that  any operating  agency had                                                                    
the tendency  to assume the culture  and the characteristics                                                                    
of its umbrella agency. Under  DOR the agency had focused on                                                                    
revenue collection and the administration  of taxes, and not                                                                    
on its  role of policing  alcohol. Under DPS the  agency had                                                                    
presumed  the dominant  characteristics of  a police  agency                                                                    
and had  lost sight of  its broader mission. He  stated that                                                                    
the  industry would  testify that  the domicile  of the  ABC                                                                    
Board  in  DPS  had  inadvertently  created  an  adversarial                                                                    
relationship between the board  and the industry. He pointed                                                                    
out  that Department  of Health  and Social  Services (DHSS)                                                                    
supported the  agency falling under  DPS out of  the concern                                                                    
for alcohol abuse, bootlegging,  and the illegal importation                                                                    
of alcohol  across the state.  He queried whether  the board                                                                    
should  be a  commercial  regulatory agency  in DCCED  along                                                                    
with all other  businesses and professions in  the state, or                                                                    
a police agency under DPS.                                                                                                      
                                                                                                                                
9:13:55 AM                                                                                                                    
                                                                                                                                
Representative Hawker referred to  a one-page summary of the                                                                    
work performed  over the summer  of 2010 by  the Legislative                                                                    
Budget and  Audit Subcommittee (copy  on file.)  He believed                                                                    
that  the  decision offered  in  the  summary was  the  best                                                                    
choice possible. The subcommittee  believed that the agency,                                                                    
along  with all  other commercial  regulatory boards  in the                                                                    
state, should be  relocated under the purview  of DCCED. The                                                                    
subcommittee had  concluded that  the move  would strengthen                                                                    
the  enforcement   abilities  of  the  board,   which  would                                                                    
continue  to  work  closely  with  DPS  to  pursue  criminal                                                                    
violations.   He   thought    that   the   development   and                                                                    
implementation of an overall  plan of enforcement activities                                                                    
to  ensure the  effective allocation  of resources  would be                                                                    
better  accomplished  if the  agency  viewed  itself with  a                                                                    
broader responsibility than being  an ongoing police agency.                                                                    
He  concluded  under  DCCED  the   board  would  engender  a                                                                    
character   and  culture   that  was   more  respectful   of                                                                    
administrative   responsibilities,  as   opposed  to   being                                                                    
singularly focused on criminal investigation.                                                                                   
                                                                                                                                
9:18:43 AM                                                                                                                    
                                                                                                                                
Representative  Doogan requested  clarification  on page  2,                                                                    
line 18:                                                                                                                        
                                                                                                                                
     Unless authorized by a search warrant described in AS                                                                      
     12.35.010 - 12.35.120, nothing in this section                                                                             
     authorizes the use of metal keys, magnetic card keys,                                                                      
     or identification cards to access private clubs.                                                                           
                                                                                                                                
Representative   Hawker  explained   the  amendment   to  AS                                                                    
04.06.110 had  been added  in the  House Labor  and Commerce                                                                    
Committee  and  addressed  the  issue  of  investigation  of                                                                    
private clubs or  "key clubs." The agency  had required that                                                                    
undercover investigators have key  cards to enter the clubs.                                                                    
The  private  clubs  had  felt  that  they  were  adequately                                                                    
policed and  should not be required  to provide unrestricted                                                                    
access, on  demand, to DPS. He  noted that this was  a prime                                                                    
example  of the  board  behaving like  a  police agency.  He                                                                    
summarized "when you  are a hammer, everything  looks like a                                                                    
nail." The provision was  meant provide statutory protection                                                                    
to the private clubs.                                                                                                           
                                                                                                                                
Representative   Guttenberg  pointed   out  that   the  core                                                                    
services  of  the  department  were  to:  regulate  alcohol,                                                                    
license  qualified  persons,  and   enforce  state  law.  He                                                                    
wondered  whether any  of the  core services  of the  agency                                                                    
would change under DCCED.                                                                                                       
                                                                                                                                
9:24:03 AM                                                                                                                    
                                                                                                                                
Representative Hawker  responded that  the agency  had taken                                                                    
on a character that was  focusing exclusively on the role of                                                                    
enforcement and not been  adequately exercising its services                                                                    
as a  commercial regulatory authority.  Fear of  being fined                                                                    
for  a violation  when seeking  guidance  in complying  with                                                                    
state statute  had made members  of industry fearful  to ask                                                                    
questions of the agency. He  stated that the agency had been                                                                    
specifically established  to regulate  and implement  all of                                                                    
the statutes that related to  the regulation of business and                                                                    
professions in the state, which  made it a natural fit under                                                                    
the umbrella of DCCED.                                                                                                          
                                                                                                                                
Vice-chair Fairclough OPENED public testimony.                                                                                  
                                                                                                                                
CHIEF  THOMAS  CLEMENS,  PRESIDENT,  ALASKA  ASSOCIATION  OF                                                                    
CHIEFS OF POLICE (via teleconference)  testified that he had                                                                    
been in  law enforcement since  1972. He recalled  that when                                                                    
the board had been under  DOR that law enforcement officials                                                                    
could not  determine what the  agency did in respect  to law                                                                    
enforcement in  alcoholic beverage control. He  relayed that                                                                    
alcohol   management  was   an   important   issue  to   law                                                                    
enforcement  agencies in  the state.  He  stressed that  the                                                                    
departments that dealt with alcohol  abuse the most were DPS                                                                    
and  DHSS.  He  reported  that  85  to  90  percent  of  law                                                                    
enforcement agency work was alcohol  driven. He thought that                                                                    
it was in the best interest  of the state to keep the agency                                                                    
under  DPS. He  expressed concern  that there  would not  be                                                                    
adequate enforcement were the agency to move.                                                                                   
                                                                                                                                
Representative Gara  understood that  DPS had been  asked by                                                                    
the governor to not testify on the bill.                                                                                        
                                                                                                                                
Vice-chair   Fairclough    challenged   the    accuracy   of                                                                    
Representative Gara's information.                                                                                              
                                                                                                                                
Representative   Gara  hoped   that   the  information   was                                                                    
incorrect. He wondered whether  the law enforcement function                                                                    
of  the agency  would be  compromised by  moving the  agency                                                                    
from   DPS  to   DCCED.   Mr.  Clemens   replied  that   the                                                                    
relationship between  the agency  and law  enforcement would                                                                    
be lost.  The current  relationship between  law enforcement                                                                    
and  the agency  was strong.  He  said that  under DOR  that                                                                    
relationship  had been  less productive.  He reiterated  his                                                                    
anxiety that the relationship would suffer under DCCED.                                                                         
                                                                                                                                
Representative Gara  queried the  communication difficulties                                                                    
experienced  by law  enforcement  when the  agency had  been                                                                    
under a  different department. Mr. Clemens  replied that the                                                                    
difficulty in communication was  in the area of enforcement.                                                                    
When  the agency  had been  under DOR  he had  made numerous                                                                    
attempts to  discipline a  particular bar  that had  been in                                                                    
constant violation. He asserted  that the agency ignored his                                                                    
requests until finally  people were injured and  he took his                                                                    
requests  to another  department. He  said that  the problem                                                                    
had been minimized  since the agency had been  under DPS. He                                                                    
expounded that  the licensing and revenue  generation aspect                                                                    
of the agency  could conceivably fall under  DCCED, but more                                                                    
important was  the issue of  alcohol management  in Alaska's                                                                    
communities.                                                                                                                    
                                                                                                                                
9:33:25 AM                                                                                                                    
                                                                                                                                
Representative  Wilson  wondered whether  the  communication                                                                    
issues had lessened as a result of new board members.                                                                           
                                                                                                                                
Mr. Clemens  replied that he  did not know. He  reminded the                                                                    
committee  that he  worked with  the ABC  staff and  not the                                                                    
board. He stated  that the current agency  staff was working                                                                    
closely  with  law enforcement  in  the  interest of  public                                                                    
safety. He  believed that public  policy should  move toward                                                                    
preventing alcohol related incidences.                                                                                          
                                                                                                                                
Representative   Wilson  spoke   of  constituency   concerns                                                                    
surrounding  law  enforcement  and the  agency  overstepping                                                                    
reasonable boundaries of  in the name of  public safety. Mr.                                                                    
Clemens replied  that he had  not witnessed  overstepping on                                                                    
the part of the agency  or law enforcement. He asserted that                                                                    
the agency was doing a good job.                                                                                                
                                                                                                                                
Representative  Wilson  expressed  concern  that  businesses                                                                    
that  were in  compliance were  being unfairly  scrutinized.                                                                    
Mr. Clemens  replied that  85 percent of  bar owners  in the                                                                    
state  were in  compliance; the  other 15  percent were  the                                                                    
focus of law enforcement and agency scrutiny.                                                                                   
                                                                                                                                
Representative Doogan wondered  which department Mr. Clemens                                                                    
worked for. Mr.  Clemens responded that he was  the Chief of                                                                    
Police for  the Seward  Police Department and  the President                                                                    
of the Alaska Association of Chiefs of Police.                                                                                  
                                                                                                                                
Representative Doogan referred to  language in the bill that                                                                    
related  to the  requirement  for search  warrants to  enter                                                                    
private clubs. Mr. Clemens thought  that the search warrants                                                                    
were appropriate  for private clubs. He  likened the private                                                                    
clubs to a private home.                                                                                                        
                                                                                                                                
9:37:31 AM                                                                                                                    
                                                                                                                                
JAN  WRENTMORE,  OWNER,  RED   ONION  SALOON,  SKAGWAY  (via                                                                    
teleconference)  testified that  she had  served briefly  on                                                                    
the  ABC  Board  during   the  Knowles  Administration.  She                                                                    
thought  that while  under  DPS, the  agency  had failed  to                                                                    
regulate  the licensing  system in  the state.  She believed                                                                    
that  law  enforcement  was  a  large  component  in  liquor                                                                    
management in  Alaska, but felt  that the current  board and                                                                    
staff had neglected the licensing  aspect of the agency. She                                                                    
reported that  licenses had been  granted very  liberally in                                                                    
Skagway. She concluded  that the ABC Board  should be housed                                                                    
within a  department with a  staff that was able  to examine                                                                    
the issues  in order to  develop good policy.  She expressed                                                                    
support for the legislation.                                                                                                    
                                                                                                                                
9:40:29 AM                                                                                                                    
                                                                                                                                
JEFF JESSEE,  CHIEF EXECUTIVE OFFICER, ALASKA  MENTAL HEALTH                                                                    
TRUST AUTHORITY,  DEPARTMENT OF  HEALTH AND  SOCIAL SERVICES                                                                    
encouraged the  committee to  base decisions  moving forward                                                                    
on  data and  not on  anecdotal stories.  He pointed  to the                                                                    
handout  "Alaska  Alcohol  vs.   Tobacco  Sales  to  Minors,                                                                    
SFY2006 - 2011" (copy on  file). He explained that the chart                                                                    
and graph reflected the percentage  of illegal alcohol sales                                                                    
to minors  against the percentage of  illegal tobacco sales.                                                                    
Except for 2009, the percentage  of illegal alcohol sales to                                                                    
minors had  been significantly higher  than that  of illegal                                                                    
tobacco sales.  In 2010  the rate  of illegal  alcohol sales                                                                    
was twice that of tobacco.                                                                                                      
                                                                                                                                
Mr.  Jesse  argued  that alcohol  was  a  devastating  drug,                                                                    
particularly in  the hands  of minors.  He thought  that the                                                                    
industry   and   ABC   Board  should   maintain   respectful                                                                    
partnership  in   order  to  combat   the  issue   of  minor                                                                    
consumption.  He   was  impressed  with  the   agency's  new                                                                    
executive director and her  implementation of policy changes                                                                    
that would lead to concrete data.                                                                                               
                                                                                                                                
9:45:23 AM                                                                                                                    
                                                                                                                                
Mr.  Jesse stated  that the  concrete data  would lay  out a                                                                    
matrix of the  many ways a licensee  could register concerns                                                                    
about how  they were treated  by the board. He  believed the                                                                    
work  currently being  done by  the agency's  director would                                                                    
improve  the   chances  for:  informal   conversations  with                                                                    
supervisors,  investigators and  directors, the  ability get                                                                    
on  the agenda  and to  present concerns  publicly at  board                                                                    
meetings, and the power to meet  with an ombudsman to file a                                                                    
formal  complaint.   He believed  that the  agency would  be                                                                    
able  to  return to  the  legislature  in 2012  with  actual                                                                    
numbers detailing how many licensees  had taken advantage of                                                                    
the opportunities  to have their concerns  addressed and the                                                                    
end results. He addressed  industry concern that retaliation                                                                    
could  occur if  complaints  were lodged.  He  said that  it                                                                    
could be expected that when  a complaint was filed the board                                                                    
would  go   back  and  examine  the   licensee's  compliance                                                                    
history.                                                                                                                        
                                                                                                                                
Mr.  Jesse  furthered  that  it was  not  sufficient  for  a                                                                    
licensee  to  simply allege  that  their  concerns were  not                                                                    
being  addressed.  He  said  that   the  issue  would  exist                                                                    
regardless  of  the department  the  agency  fell under.  He                                                                    
referred  to  a  recent  poll that  had  been  conducted  in                                                                    
Anchorage in  which 67 percent  of the public  had purported                                                                    
that  license  checks  were necessary  in  the  purchase  of                                                                    
alcohol.  He asserted  that the  numbers  indicate that  the                                                                    
public remained concerned with minors procuring alcohol.                                                                        
                                                                                                                                
Representative Joule  wondered who  was responsible  for the                                                                    
illegal sale  at the  point of  purchase. Mr.  Jesse replied                                                                    
that   in  the   case  of   tobacco  sales   the  individual                                                                    
salesperson would be  given a ticket and  the licensee would                                                                    
have their license suspended for up  to 20 days. In the case                                                                    
of alcohol,  the server  of the alcohol  was charged  with a                                                                    
misdemeanor. In  addition, the ABC  Board could  take action                                                                    
to suspend the liquor license.  He contended that the higher                                                                    
penalties for  alcohol violations may not  serve the state's                                                                    
interest.  He  argued that  the  entire  system as  a  whole                                                                    
needed to be examined.                                                                                                          
                                                                                                                                
9:52:55 AM                                                                                                                    
                                                                                                                                
SHIRLEY  GIFFORD, DIRECTOR,  ALASKA BEVERAGE  CONTROL BOARD,                                                                    
DEPARTMENT  OF  PUBLIC SAFETY,  JUNEAU,  added  that if  the                                                                    
licensee was  the person who  served a minor there  would be                                                                    
additional ramifications through the board.                                                                                     
                                                                                                                                
Representative  Costello understood  that  on  any board  or                                                                    
commission, the  executive director carried out  the will of                                                                    
the membership of the board.  She wondered whether the board                                                                    
could focus  on data  and research  regardless of  where the                                                                    
agency resided.                                                                                                                 
                                                                                                                                
Mr. Jesse responded  in the affirmative. He  stated that the                                                                    
board was the  entity that set the direction  and the policy                                                                    
for staff.                                                                                                                      
                                                                                                                                
Representative  Gara  referred  to the  handout  related  to                                                                    
illegal sales. He requested  clarification concerning the 15                                                                    
percent violation rate  in 2010. Mr. Jesse  replied that the                                                                    
15  percent  was  the violation  rate  based  on  compliance                                                                    
checks. They  did not know  what the actual rate  of illegal                                                                    
sales to minors outside of the compliance check.                                                                                
                                                                                                                                
Vice-chair  Fairclough asked  if  the  number reflected  the                                                                    
compliance  check numbers  or  the  overall violations.  She                                                                    
pointed out  that many times  the licensee  will self-report                                                                    
different  violations;   for  example,   if  there   was  an                                                                    
altercation in  the parking lot  they could call  the police                                                                    
for  safety and  it would  be  counted as  a violation.  She                                                                    
asserted  that sometimes  facility  managers  call upon  the                                                                    
police in  for assistance  with violations in  progress. Mr.                                                                    
Jesse believed the alcohol data  on the handout was based on                                                                    
compliance checks.                                                                                                              
                                                                                                                                
Representative   Gara  asked   for   clarification  on   the                                                                    
definition of a  compliance check. He felt that  if the 2010                                                                    
number meant that 15 percent of  the sales made were made to                                                                    
minors  that  the  problem  was  much  bigger  than  thought                                                                    
before.                                                                                                                         
                                                                                                                                
9:59:22 AM                                                                                                                    
                                                                                                                                
Mr.  Jessee replied  that if  no minors  outside of  the ABC                                                                    
compliance  checks tried  to buy  alcohol,  the actual  rate                                                                    
would be zero.  There could still be a  15 percent violation                                                                    
rate  on a  compliance check.  He believed  that the  actual                                                                    
rate would be less than the compliance check rate.                                                                              
                                                                                                                                
Representative  Guttenberg   queried  the  reason   for  the                                                                    
anomaly in the  numbers for 2009.  Mr.  Jesse responded that                                                                    
he did not know. He directed the question to DHSS.                                                                              
                                                                                                                                
Vice-chair Fairclough  believed that the anomaly  could have                                                                    
been  the   result  of  different   amounts  of   money  for                                                                    
compliance checks  for alcohol  and tobacco  licensees being                                                                    
invested at different periods of time.                                                                                          
                                                                                                                                
BOB   WINN,  BLUES   CENTRAL/CHEF'S   INN,  ANCHORAGE   (via                                                                    
teleconference)  testified   in  support   of  HB   125.  He                                                                    
expressed  that  the  board  did  an  outstanding  job  with                                                                    
enforcement. He declared that the  executive director was an                                                                    
ex-chief of police, the head  of enforcement was an ex-chief                                                                    
of  police as  well. The  four enforcement  officers of  the                                                                    
agency were past members of  police departments or agencies.                                                                    
He thought that  the licensing function of  the agency could                                                                    
be further developed,  as well as the  commerce and business                                                                    
aspect.                                                                                                                         
                                                                                                                                
Mr. Winn  furthered that  it was  important to  teach minors                                                                    
about healthy  attitudes towards  alcohol. He  believed that                                                                    
the  numbers   were  skewed  to   make  the  issue   one  of                                                                    
enforcement when  only 7 percent  of the instances  of minor                                                                    
consumption   involved  licensees.   He  supported   Shirley                                                                    
Gifford and her enforcement  efforts but believed that there                                                                    
were administrative portions could be improved under DCCED.                                                                     
                                                                                                                                
Vice-chair Fairclough touched on  the allegation that police                                                                    
may  have  overstepped  their   authority  with  owners  and                                                                    
operators of legal businesses.                                                                                                  
                                                                                                                                
He believed  that in  the past the  agency had  attempted to                                                                    
make  it as  difficult as  possible for  bartenders to  pass                                                                    
tests,  to the  point  of being  underhanded.  He said  that                                                                    
standards for  sting operations  had been  set on  a federal                                                                    
level that  had not  been employed at  the state  level. Mr.                                                                    
Winn  stressed that  Shirley  Gifford  had made  significant                                                                    
changes  for the  better.  He reiterated  that  in the  past                                                                    
licensees  had experienced  difficulty with  the enforcement                                                                    
arm of the agency.                                                                                                              
                                                                                                                                
10:08:11 AM                                                                                                                   
                                                                                                                                
Mr.  Winn shared  that  during a  past  sting operation  the                                                                    
underage  person  had  used military  identification,  which                                                                    
listed four different dates on  the back. The server misread                                                                    
the birthdate and ended up  being in violation. He felt that                                                                    
the enforcement  officers at the  time treated  the employee                                                                    
as if her violation had been imminent.                                                                                          
                                                                                                                                
Representative  Gara suggested  that  rouge state  employees                                                                    
would  exist perpetually  in every  department. He  wondered                                                                    
how moving  the ABC board  from one agency to  another would                                                                    
improve the sting operations.                                                                                                   
                                                                                                                                
Mr. Winn did not believe that  there would be any impact. He                                                                    
thought that the  ABC Board was tasked with  more than sting                                                                    
operations;  responsibilities  he  believed  that  had  been                                                                    
neglected. He  expressed concern  that the taxes  on alcohol                                                                    
in the state  were significant and that the  commerce arm of                                                                    
the agency had been neglected.                                                                                                  
                                                                                                                                
KATE  BURKHART,   EXECUTIVE  DIRECTOR,  ADVISORY   BOARD  ON                                                                    
ALCOHOLISM AND  DRUG ABUSE, DEPARTMENT OF  HEALTH AND SOCIAL                                                                    
SERVICES, JUNEAU,  read from a  prepared statement  (copy on                                                                    
file):                                                                                                                          
                                                                                                                                
     First, the Board expressly  states its appreciation for                                                                    
     the   work  of   all   the  folks   involved  in   this                                                                    
     conversation:  the ABC  Board  members  and staff,  the                                                                    
     members  of  CHARR,   the  law  enforcement  community,                                                                    
     social  services and  community organizations,  and the                                                                    
     legislative committees. It's not  easy work. We want to                                                                    
     reiterate that  this is not  an issue of good  guys and                                                                    
     bad  guys. And  it's  not  an issue  of  the merits  or                                                                    
     demerits of alcohol.                                                                                                       
                                                                                                                                
Ms.  Burkhart agreed  with  Representative  Hawker that  the                                                                    
issue was about balancing the  needs and concerns of all the                                                                    
parties and  stakeholders to the  issue. However,  the board                                                                    
did  not support  moving the  ABC Board  from DPS.  She read                                                                    
from the prepared testimony:                                                                                                    
                                                                                                                                
      The   stated  intent   of  HB   125,   based  on   the                                                                    
     recommendation  of  the  Legislative Budget  and  Audit                                                                    
     Subcommittee,  is  to  create "greater  sensitivity  on                                                                    
     [the ABC Board's) part for  the commercial benefits the                                                                    
     industry generates for the State."                                                                                         
                                                                                                                                
                                                                                                                                
      The Advisory  Board on Alcoholism  and Drug  Abuse has                                                                    
     had  the  chance to  work  together  with the  Cabaret,                                                                    
     Hotel, Restaurant  and Retailer's Association  over the                                                                    
     last two years.  Not only have we  furthered our shared                                                                    
     priority of preventing  fetal alcohol spectrum disorder                                                                    
     through better public awareness  efforts, the board has                                                                    
     had  the  opportunity  to  learn  more  about  how  the                                                                    
     industry and  individual retailers  promote responsible                                                                    
     -and lawful use of alcohol.                                                                                                
                                                                                                                                
                                                                                                                                
      The retailers of alcoholic  beverages in Alaska invest                                                                    
     time,  energy, and  money to  ensure  that only  lawful                                                                    
     sales are  made -whether  to youth  or to  adults. Many                                                                    
     retailers  have strong  histories of  responsible sales                                                                    
     practices and community  efforts to promote responsible                                                                    
     consumption,   and   those   efforts  should   not   be                                                                    
     minimized.                                                                                                                 
                                                                                                                                
Ms. Burkhart stressed that the purpose of her comments was                                                                      
to promote responsible consumption and lawful alcohol                                                                           
sales. She continued with her testimony:                                                                                        
                                                                                                                                
     The  fact that  we have  a 15%  non-compliance rate  is                                                                    
     attributable not just to ABC  Board efforts, but to the                                                                    
     conscientiousness  of retailers  and their  employees -                                                                    
     and  the  training  and  supports  provided  by  CHARR.                                                                    
     However,  even  with  this  improvement,  the  rate  of                                                                    
     illegal  sales  of  alcohol to  minors  remains  nearly                                                                    
     twice the rate of illegal sales of tobacco to minors.                                                                      
                                                                                                                                
     Even with the heightened  compliance rate, Alaska youth                                                                    
     are reporting  unacceptable levels of  underage alcohol                                                                    
     use.  In 2009, 57%  of alternative high school students                                                                    
     and 33.2% of traditional  high school students surveyed                                                                    
     in the Youth Risk  Behavior Survey reported having used                                                                    
     alcohol in the  past 30 days. That same  year, 42.7% of                                                                    
     alternative   high  school   students   and  21.7%   of                                                                    
     traditional   high  school   students  reported   binge                                                                    
     drinking in the  past 30 days. Folks  should not assume                                                                    
     that  youth  get  all  their  alcohol  from  retailers.                                                                    
     While that  is a certainly  a source of  alcohol either                                                                    
     directly or  through improper  purchases for  minors by                                                                    
     adults  with   less  than  great   judgment  (something                                                                    
     shoulder tap  checks are meant  to catch)  -other means                                                                    
     of securing  alcohol account  for at  least 1/3  of the                                                                    
     ways  young  people  report   getting  their  hands  on                                                                    
     alcohol.                                                                                                                   
                                                                                                                                
     Because the  major issue for ABADA  is the consequences                                                                    
     of  the  proposed move  and  how  it could  affect  the                                                                    
     overall issues  of underage drinking and  alcohol abuse                                                                    
     in Alaska -we looked at  the reported youth alcohol use                                                                    
     in states where  the ABC Board is in  a law enforcement                                                                    
     agency  like Public  Safety and  compared it  to states                                                                    
     where the alcoholic beverage  control entity was within                                                                    
     a  non-law  enforcement  agency  (such  as  Revenue  or                                                                    
     Commerce). Here's what we learned:                                                                                         
                                                                                                                                
     Colorado,  Georgia, Kansas,  Mississippi, and  Missouri                                                                    
     all  have the  ABC Board  within a  non-law enforcement                                                                    
     executive  agency.  In  those states,  the  Youth  Risk                                                                    
     Behavior Survey  data for  2009 showed  slightly higher                                                                    
     average rates  for youth reporting  ever having  had an                                                                    
     alcoholic drink  and reporting a  drink before  age 13.                                                                    
     More importantly, all those  states had higher reported                                                                    
     rates of youth alcohol use than Alaska:                                                                                    
                                                                                                                                
     •    1.3-5.8%  higher   reports  of  ever   having  had                                                                    
     alcohol;                                                                                                                   
     •    3.5-9.5%  higher  reports  of having  had  alcohol                                                                    
     before age 13; and                                                                                                         
     •    1.1-7.6% higher  reports of having had  alcohol at                                                                    
     least once in the last month.                                                                                              
                                                                                                                                
     Three of these five states  had rates of binge drinking                                                                    
     3-4% higher than Alaska's. (See Table 1)                                                                                   
     Comparing the rate of  alcohol related underage driving                                                                    
     fatalities in  states with  alcohol control  within law                                                                    
     enforcement  agencies  to  the  rate  in  states  where                                                                    
     alcohol control  is not within law  enforcement shows a                                                                    
     similar difference.  From data reported by  The Century                                                                    
     Council,   a   national   nonprofit   organization   of                                                                    
     distillers formed  "to fight against drunk  driving and                                                                    
     underage   drinking"   and  to   promote   "responsible                                                                    
     decision making  regarding beverage control," we  see a                                                                    
     significant difference between states.                                                                                     
                                                                                                                                
10:16:55 AM                                                                                                                   
                                                                                                                                
Ms. Burkhart continued to read from her testimony:                                                                              
                                                                                                                                
     The national  rate for  underage driving  fatalities in                                                                    
     2009  was  21100,000.  Alaska's  was  1.4/100,000,  the                                                                    
     approximate  mean   of  seven  states   reviewed  where                                                                    
     alcohol control was within a  law enforcement or public                                                                    
     safety  agency. Looking  at Colorado,  Georgia, Kansas,                                                                    
     Mississippi, Missouri,  Montana, South  Carolina, South                                                                    
     Dakota, West  Virginia, and  Wyoming (all  states where                                                                    
     the alcohol control  agency is in an  agency other than                                                                    
     law enforcement),  the average  rate was  3.61100,000 -                                                                    
     two  and a  half times  the rate  of states  that treat                                                                    
    alcohol control as a public safety responsibility.                                                                          
                                                                                                                                
     The  Legislature  can   provide  guidance  and  express                                                                    
     language about expectations to the  ABC Board, in order                                                                    
     to balance  the concerns and  needs of all  the parties                                                                    
     involved.  You  also  have an  existing  mechanism  for                                                                    
     investigating  and resolving  citizen complaints  about                                                                    
     executive agencies: the Ombudsman.                                                                                         
                                                                                                                                
10:19:46 AM                                                                                                                   
                                                                                                                                
Ms. Burkhart concluded:                                                                                                         
                                                                                                                                
     I used  to be  an assistant  ombudsman with  the Alaska                                                                    
     State  Ombudsman,  and  I couldn't  remember  seeing  a                                                                    
     complaint  about the  ABC  Board come  in  while I  was                                                                    
     there.  So  I  reviewed the  matrix  of  investigations                                                                    
     posted  on the  Ombudsman's website,  and I  didn't see                                                                    
     any there either. Just to be sure, I call Linda Lord-                                                                      
     Jenkins, the Ombudsman, and  asked her about complaints                                                                    
     about  the ABC  Board. She  reviewed their  database of                                                                    
     complaints,  which goes  back  to 2000.  She found  one                                                                    
     complaint about the  ABC Board, made in  2010 and still                                                                    
     being investigated. One complaint in a decade.                                                                             
                                                                                                                                
     The testimony  provided to  the Legislative  Budget and                                                                    
     Audit  subcommittee,  and   to  committees  during  the                                                                    
     session,  has   been  passionate.  Clearly   there  are                                                                    
     different positions  that need  to be  resolved. Moving                                                                    
     the  ABC Board  is  a dramatic  solution,  and one  not                                                                    
     without  cost.  Such  a solution  should  be  the  last                                                                    
     resort, and not the first.                                                                                                 
                                                                                                                                
     The  Advisory  Board  on   Alcoholism  and  Drug  Abuse                                                                    
     supports   efforts    to   promote    a   collaborative                                                                    
     relationship between  the ABC Board and  members of the                                                                    
     industry. We can  speak: first hand of  the benefits of                                                                    
     partnership  with  CHARR  and   its  members,  and  see                                                                    
     opportunities  for  working  together to  reach  common                                                                    
     goals  -one of  them  being ensuring  that only  lawful                                                                    
     sales  of  alcohol are  made.  However,  the data  -the                                                                    
     compliance rate,  the availability  and use  of alcohol                                                                    
     by underage  youth, the  disparity in  outcomes between                                                                    
     states  with  the ABC  Board  in  public safety  versus                                                                    
     other agencies, and the lack  of a record of complaints                                                                    
     about   the   board's   actions  -indicate   that   the                                                                    
     unintended  consequences of  HB 125  are too  costly to                                                                    
     Alaskan communities.                                                                                                       
                                                                                                                                
Representative Wilson  thought that  each state had  its own                                                                    
set  of variables  that were  used to  craft the  statistics                                                                    
provided  by Ms.  Burkhart. She  requested more  information                                                                    
regarding the  make-up of  the ABC  boards of  other states.                                                                    
She highlighted that members of  the public safety community                                                                    
held seats  on the ABC  Board for  Alaska, which may  not be                                                                    
the case in  the rest of the country. She  also thought that                                                                    
the  survey pertaining  to alcohol  and teenagers  could not                                                                    
have produced an accurate reflection  of alcohol use because                                                                    
teenagers were inherently unable to answer truthfully.                                                                          
                                                                                                                                
Representative  Joule expressed  interest in  the number  of                                                                    
grant dollars used for the purpose of prevention.                                                                               
                                                                                                                                
Ms. Burkhart said that she  would provide the information to                                                                    
the committee.                                                                                                                  
                                                                                                                                
Representative Costello wondered whether  there had been any                                                                    
public   awareness  campaigns   or   grants  that   targeted                                                                    
controlling  minor consumption  during times  of celebration                                                                    
such as high school graduation.                                                                                                 
                                                                                                                                
Ms. Burkhart  stated that she would  provide the information                                                                    
to the committee.                                                                                                               
                                                                                                                                
Vice-chair  Fairclough wondered  whether Ms.  Burkhart would                                                                    
be  available  then the  legislation  came  back before  the                                                                    
committee.                                                                                                                      
                                                                                                                                
Ms.  Burkhart offered  that  she would  be  in the  building                                                                    
throughout  the  week.  She  would   be  out  of  state  the                                                                    
following week.                                                                                                                 
                                                                                                                                
Representative  Gara wondered  why moving  the agency  would                                                                    
have  a  detrimental  impact  on  the  ABC  Board.  He  also                                                                    
wondered  whether  the  board   was  responsible  for  sting                                                                    
operations.                                                                                                                     
                                                                                                                                
Ms. Burkhart referred to Mr.  Winn's comments related to the                                                                    
three legged  stool. She  believed substantial  progress had                                                                    
been  made  following the  legislative  audit  and would  be                                                                    
disrupted if the board were to move to a different agency.                                                                      
                                                                                                                                
10:27:28 AM                                                                                                                   
                                                                                                                                
Ms. Burkhart  stated that  currently the  ABC staff  and law                                                                    
enforcement were  working jointly. She did  not believe that                                                                    
the quality  of work would  be maintained if the  board were                                                                    
moved to another agency.                                                                                                        
                                                                                                                                
DALE FOX, PRESIDENT,  CHARR, ANCHORAGE (via teleconference),                                                                    
was in  support of HB 125.  He opined that the  industry and                                                                    
the  board were  responsible for  educating and  maintaining                                                                    
communication with 25,000  employees statewide. He expressed                                                                    
that education combined with enforcement  was the answer. He                                                                    
pointed  out  the  "Born On"  stickers  and  calendars  were                                                                    
developed  to  assist workers  to  quickly  do the  math  to                                                                    
determine   whether   a   customer   was   21   years   old.                                                                    
Identification Flip  cards were  developed to help  with the                                                                    
multiple  dates   on  military  I.D.  cards.   The  industry                                                                    
employed many  tools to assist  licensees in  compliance. He                                                                    
believed  that industry  was doing  a great  job. He  shared                                                                    
that  Alaska  was  number  one in  the  nation  at  refusing                                                                    
service  to underage  youths. He  offered that  the industry                                                                    
was  interested  in  working with  the  state  to  encourage                                                                    
improvement.  He   relayed  that   ABC  and   troopers  were                                                                    
primarily  an enforcement  agency  and did  not assist  with                                                                    
education. He believed that DCCED  would do an excellent job                                                                    
at administering the ABC Board,  particularly in the area of                                                                    
education.                                                                                                                      
                                                                                                                                
Vice-chair Fairclough  noted that the committee  had run out                                                                    
of  time before  completing public  testimony. She  said she                                                                    
would  make a  recommendation to  the Co-Chairs  to continue                                                                    
public comment at the 1:30 meeting.                                                                                             
                                                                                                                                
Vice-chair Fairclough discussed housekeeping.                                                                                   
                                                                                                                                
HB  125  was  HEARD  and   HELD  in  committee  for  further                                                                    
consideration.                                                                                                                  
                                                                                                                                
10:33:42 AM                                                                                                                   
                                                                                                                                

Document Name Date/Time Subjects
HB 125 Supporting Documents-Related Statutes.pdf HFIN 4/6/2011 8:30:00 AM
HB 125
HB125 Sponsor Statement.pdf HFIN 4/6/2011 8:30:00 AM
HB 125
HB 125 F.O.E. Letter.pdf HFIN 4/6/2011 8:30:00 AM
HB 125
HB125 Supporting Documents-ABC Sunset Review.pdf HFIN 4/6/2011 8:30:00 AM
HB 125
HB125 Supporting Documents-LB&A Subcom Rcmndtn ABC Board.pdf HFIN 4/6/2011 8:30:00 AM
HB 125
HB125-Summary of Changes.pdf HFIN 4/6/2011 8:30:00 AM
HB 125
HB206 Sponsor Statement.pdf HFIN 4/6/2011 8:30:00 AM
HB 206
HB206 Supporting Documents- ABC Board Audit Summary 8-14-2009.pdf HFIN 4/6/2011 8:30:00 AM
HB 206
HB206 Supporting Documents- ABC Board Audit 8-14-2009.pdf HFIN 4/6/2011 8:30:00 AM
HB 206
HB 125 F.O.E. Letter.pdf HFIN 4/6/2011 8:30:00 AM
HB 125
HB 125 AMHB letter.pdf HFIN 4/6/2011 8:30:00 AM
HB 125
HB125-NEW FN CCED-ASD-03-29 11.pdf HFIN 4/6/2011 8:30:00 AM
HB 125
HB206-DPS-ABCB-04-04-11.pdf HFIN 4/6/2011 8:30:00 AM
HB 206
HB 125 ABCB Complaint Procedure.pdf HFIN 4/6/2011 8:30:00 AM
HB 125
HB 125 DHSS Alccohol Sales Minors.pdf HFIN 4/6/2011 8:30:00 AM
HB 125