Legislature(2007 - 2008)CAPITOL 17
03/28/2007 03:00 PM House LABOR & COMMERCE
| Audio | Topic |
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| Start | |
| HB155 | |
| HB65 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 155 | TELECONFERENCED | |
| += | HB 65 | TELECONFERENCED | |
| + | TELECONFERENCED |
HB 155-EXTEND ALCOHOLIC BEVERAGE CONTROL BOARD 3:06:14 PM CHAIR OLSON announced that the first order of business would be HOUSE BILL NO. 155, "An Act extending the termination date of the Alcoholic Beverage Control Board; and providing for an effective date." 3:06:38 PM DOUGLAS "DOUG" B. GRIFFIN, Director, Alcoholic Beverage Control Board ("ABC Board"), Department of Public Safety (DPS), began by expressing appreciation for the committee's willingness to sponsor the board extension legislation. He requested that the bill be "kept clean" as it moves through the legislative process. He then gave a brief history of the ABC Board, which regulates the sale and manufacture of alcoholic beverages in the state. He said that there are close to 1,830 licenses, and around 1,200 licensees. The ABC Board is responsible for licensing and enforcement. He explained that in 2003, the ABC Board was moved from the Department of Revenue (DOR) to the DPS by an executive order from the Governor, noting that while the legislature may override such an order, it chose not to do so. He stated that the ABC Board is comprised of five members, two of which are from the industry, and meets approximately six times per year to discuss license issues, as well as other issues regarding alcoholic beverage law. He noted that a recent report by the Division of Legislative Audit ("the Division") titled "Alaska Division of Legislative Audit, Summary Of: A Sunset Review of the Department of Public Safety, Alcoholic Beverage Control Board, August 31, 2006" shows that improvements are needed, adding that the ABC Board is currently working on these. He then detailed several areas that the ABC Board is currently focusing on, which include an improved database, as well as improved minutes and product procedures. 3:10:04 PM REPRESENTATIVE GARDNER asked for more detail regarding the concerns raised by the Division. MR. GRIFFIN replied that the most recent report by the Division shows that the ABC Board has substantially complied with all recommendations from the prior audit. The first recommendation was for the ABC Board to strengthen its controls, such as its record keeping process and database security. He explained that the database system will be very secure, and may be moved to the DPS, so that the system administrator is not a part of the ABC Board staff. He then detailed the recommendations regarding the permitting functions. He explained that currently, single investigators in Juneau and Fairbanks complete each step involved in issuing catering permits. The Division feels that that this should be changed. He stated that the ABC Board refunds municipal license fees to local governments that enforce state, federal, and local liquor laws. The Division noted errors in refunds, and suggested a more in-depth application process and criteria, in order to better judge whether local police departments are enforcing liquor laws. The ABC Board is working with the administration in order to come up with a more involved process. MR. GRIFFIN then discussed the second recommendation made by the Division, which involves the development and implementation of an overall plan for enforcement activities. He stated that the ABC Board has instituted a plan which will provide a more systematic approach to scheduling inspections and compliance checks. The third recommendation, he said, suggests that the ABC Board be more precise with public notice requirements for meetings, along with statutory and regulatory changes. Additionally, procedures should be established to ensure that the meeting records are complete and accurate. The fourth recommendation would remove the voting ability of the director. He explained that under certain circumstances, the director may be required to vote, which raises some concerns with the Division, and said "I understand where the [Division of Legislative Audit] was coming from. It is a philosophical question. I don't fault their reasoning. They make some very legitimate points regarding that." 3:16:42 PM REPRESENTATIVE GARDNER, referring to the Division's report conclusions, asked whether Mr. Griffin agrees that the current wholesale license fee structure "has a regressive effect and puts low-volume wholesalers at a competitive disadvantage." MR. GRIFFIN replied that this is a policy issue, adding that this "may be worthwhile" for the legislature or the ABC Board to review. The aforementioned fee structure is based on statute. He commented that legislative audits may bring issues to the surface that should be reviewed. He agreed that this is a legitimate point. 3:18:04 PM REPRESENTATIVE GATTO asked what kind of problem the ABC Board is having in regard to fee collection. MR. GRIFFIN replied that part of the problem was a clerical error, which was remedied. The other part of the problem is due to the fee structure. He explained that because of the current fee structure, the increased volume is not necessarily reflected in an increased collection of fees. REPRESENTATIVE GATTO questioned the increase in alcohol sales. MR. GRIFFIN surmised that this is due to an increase in the number of visitors to Alaska, in addition to population increases. He stated that the biggest concern is that much of the alcohol is sold illegally, to underage individuals, or to individuals who have an alcohol dependency problem. He pointed out that an estimated 20 percent of alcohol sold nationwide is consumed by individuals who are underage. He stated that his response is based partly on statistics, although some is personal speculation. 3:21:54 PM REPRESENTATIVE BUCH in regard to the aforementioned wholesaler license fee structure, inquired as to whether Mr. Griffin has any suggestions on how to address these concerns. MR. GRIFFIN replied that the ABC Board has not addressed this issue. He shared his belief that the concerns regarding the wholesale fee structure are legitimate, and that individuals in the alcohol industry feel the previous alcohol tax increase was adequate. However, he stated that considering an increase in the wholesale fees "is certainly not out-of-bounds," and would be a legitimate consideration, based on the auditors' comments. REPRESENTATIVE BUCH shared his hope that the ABC Board would have a plan, or would consider this and report back to the legislature. MR. GRIFFIN replied that the ABC Board does not currently have a plan for this. He pointed out that the fees have not been increased since 1983, and reiterated that this is a legitimate consideration. He stated that while he does not currently have a plan, he would work on developing one if this was requested. REPRESENTATIVE BUCH said that he would work with Chair Olson regarding this issue. 3:24:54 PM REPRESENTATIVE NEUMAN shared a concern regarding a golf course in his district. He explained that the owners of the golf course are unable to sell alcohol on the golf course during special events, although federal agencies are allowed to do so. The owners of the golf course feel this is an unfair labor practice. He inquired as to Mr. Griffin's opinion of this situation. MR. GRIFFIN replied that when the golf course license was revised in 1998, the legislature made a conscious decision to limit alcohol sales to beer and wine. He stated that military golf courses are not regulated by the ABC Board, and do sell alcohol other than beer and wine. A change in statute would be required to allow the sale of alcohol on a golf course. He commented that there are many ways this might be done, including allowing a "special events" permit. He expressed concern that if alcohol was sold on the golf course, it would then become a licensed premise, and underage individuals may be present. He shared his understanding that this was taken into consideration when the golf course license was revised to allow beer and wine to be served. He agreed that the state regulated golf courses are "at a disadvantage" due to what is allowed on military base golf courses. 3:28:43 PM REPRESENTATIVE NEUMAN then offered his understanding that the sale of beer and wine is allowed on the golf course, and asked if this is correct. MR. GRIFFIN replied yes, adding that food must also be available. The food may be available on a roving cart, or at a food stand. In response to additional questions, he explained that this is allowed with a golf course license, although there are other requirements, such as the length of the course. He reiterated that the sale of alcohol is limited to beer and wine, and stated that a catering license may be obtained for sale of other types of alcohol during a special event, such as a wedding or a golf tournament. However, the sale of additional types of alcohol would be confined to an "alcoholic beverage tent," and would not be allowed on the course, thus creating a more controlled environment. 3:33:10 PM GARY SUPERMAN, President, Kenai Peninsula CHARR, expressed concern that the ABC Board is currently located within the DPS, while all other licenses are regulated in the Department of Commerce, Community, & Economic Development (DCCED). He stated that the alcoholic beverage industry is a "pretty substantial part" of the travel industry in Alaska, and agreed that much of the industry growth has been due to growth in the travel industry. He opined that DCCED is pro-business, while DPS is not. He stated that CHARR feels that the ABC Board should be returned to DCCED, or to the Department of Revenue (DOR), where it was previously located. CHAIR OLSON shared his understanding that a separate bill may come before the committee to address this issue. MR. SUPERMAN said that he is not aware of such a bill. CHAIR OLSON stated that while the location of the board is an issue, it is not the issue currently before the committee. He pointed out that the issue currently being considered is the extension of the ABC Board, and requested that testimony be limited to this subject. 3:38:02 PM ANDY LUNDQUIST, Owner, Tony's Bar & Liquor Store, stated that he is in support of extending the ABC Board. He also expressed his hope that the concerns regarding the department under which the ABC Board is regulated will be addressed. REPRESENTATIVE LEDOUX thanked Mr. Lundquist for his testimony. 3:39:21 PM LOUISE STUTES, President, Kodiak CHARR, stated that she is in support of extending the ABC Board. She also expressed concern with the current location of the ABC Board. REPRESENTATIVE LEDOUX inquired as to whether Ms. Stutes would be in support of extending the ABC Board, regardless of whether the departmental issue is addressed. MS. STUTES replied yes, adding that the ABC Board provides a service that the industry "can't afford to be without." 3:40:57 PM DARWIN A. BIWER, JR., Owner, Darwin's Theory, stated that he is in support of extending the ABC Board. He also agrees with the previous speakers regarding the location of the ABC Board, and offered details relating to this. 3:42:56 PM BOB KLEIN, Chairman, Government Affairs Committee, Alaska CHARR, said that he spent 12 years on the ABC Board. He stated that he is in support of the extension, and agreed with previous testimony regarding the location of the ABC Board. 3:44:46 PM DALE FOX, President and Chief Executive Officer (CEO), Alaska CHARR, stated that in general, the industry is in support of extending the ABC Board. However, there is "huge frustration" with the move to DPS. He said "At the appropriate time, we'd love to share with you some of the horror stories of an agency that looks for ways to bust people, rather than looks for ways to work with an industry." He stated that the food and beverage industry is important, and is responsible for a significant amount of visitor revenue to the state. In regard to taxes, he said that Alaska has "some of the highest excise taxes in the nation." 3:46:26 PM REPRESENTATIVE RAMRAS noted that he is a member of CHARR. He commented that CHARR was not present during discussions on HB 75, which relates to driver's licenses and alcohol and drug awareness and safety testing, and expressed frustration with CHARR's attempts to move the ABC Board from DPS to DOR. He stated that he is in support of extending the ABC Board, and said "The idea is for CHARR to get behind more stringent compliance, and to do a better job within the guidelines that government sets out, and not just to look for an easier agency to be the steward under." He expressed disappointment with CHARR. 3:48:14 PM REPRESENTATIVE GATTO, in regard to underage drinking, questioned whether CHARR has been involved in any activities that are directed towards reducing underage drinking. MR. FOX replied that CHARR is a leader in alcohol awareness and education in Alaska. In regard to underage drinking, he stated that 65 percent of alcohol consumed by underage individuals is taken from home, while only 7 percent comes from bars, restaurants, or liquor stores. He stated that 7 percent is too high, and CHARR does everything it can to ensure that alcohol is "enjoyed by those who legally and responsibly use it." He said that CHARR has taken a proactive stance on this issue for many years. REPRESENTATIVE GATTO asked whether CHARR has any school programs to educate youth on the effects of alcohol. He opined that CHARR would be instrumental in leading the effort to educate youth on the harmful effects of alcohol. MR. FOX replied that CHARR has a number of programs working to address these issues, such as "Teen Talk," which assists parents in discussing alcohol with children. Some programs are taken into the schools, however, schools are not always interested in the alcohol industry coming to the school. He said "Where we're welcome, we've brought programs." 3:54:50 PM TED ANDERSON, JR., Owner, Mug Shot Saloon and Tailgaters Sports Bar and Grill, stated that he has been in the industry for approximately 27 years. He expressed support for extending the ABC Board. 3:55:44 PM JIM FLATLEY stated that he is in support of extending the ABC Board, adding that he is pleased to see the board working out its problems. He would also like the concerns regarding where the ABC Board is regulated to be addressed. 3:56:35 PM BILL BUBBEL, Owner, The Pump House Restaurant and Saloon, stated that he has been in the food and beverage industry for 30 years. He is in support of extending the ABC Board. He commented that the ABC Board has enforcement powers similar to Department of Environmental Conservation (DEC), although these two entities are completely different. He stated that Fairbanks has one ABC Board officer that is in the same office as the state troopers. He explained that in order to meet with this individual, an appointment must be made. He opined that the ABC Board has forgotten that it is an administrative board, and is now "basically a police inquisition." He would like to see this change. He expressed concern with the intimidation and method associated with inspections, which was not an issue previously. 4:00:01 PM MR. BUBBEL, in response to comments from Representative Ramras, stated that food service operations in Fairbanks work hard to protect licenses. REPRESENTATIVE RAMRAS stated that in Anchorage, the ABC Board office is located on the DPS campus. He described the ABC Board's Fairbanks office, and recommended that the Director consider finding a more accessible location. He also expressed frustration with "stings" done by the ABC Board. 4:04:12 PM REPRESENTATIVE NEUMAN inquired as to how Mr. Griffin intends to address the concerns raised by Mr. Bubbel. MR. GRIFFIN shared his understanding that the Fairbanks office was previously moved to a more accessible location. He agreed that it can be difficult to meet with Mr. Richard Finney, who is the only field investigator there. The ABC Board is a small organization, and does its best with the resources available. He said that the concerns regarding accessibility will be addressed, adding that this is an ongoing challenge. REPRESENTATIVE NEUMAN asked if this is the first time this concern has been raised. MR. GRIFFIN replied no. He stated that the office was moved in response to a prior complaint. He agreed that it can be difficult to meet with Mr. Finney when he is out in the field, adding that the ABC Board has attempted to be responsive to this issue. REPRESENTATIVE NEUMAN commented that the legislature often hears of problems with various boards, to which the board response is that it "will fix the problem." However, when the board extension is before the legislature again, the same concerns remain. He stated that this seems to be a recurring theme, and expressed hope that the accessibility concern would be addressed. 4:08:25 PM REPRESENTATIVE RAMRAS expressed respect for Mr. Griffin and shared his belief that overall, the ABC Board is an extraordinary agency. He stated that at one time, the ABC Board functioned in a "very complimentary fashion" with the licensees across the state. While he feels the ABC Board should stay under DPS, he stated that the mission of the board should be to work with licensees, and to recognize that the majority of licensees across the state are law-abiding operators with well- trained staff. He shared his belief that the predator in underage drinking is the minor, not the licensee. He encouraged the ABC Board to recommend changes to the legislature to modify the penalties in "sting" operations. He also encouraged the ABC Board to review its mission, and said "You have strayed far, far away from the relationship that I [previously] enjoyed as a licensee." He opined that this is the reason behind CHARR's request that the ABC Board be returned to DOR or DCCED, adding that he feels DPS is the appropriate department for the ABC Board. He commented that the director has shown "exemplary" leadership, and shared his hope that the necessary changes will be made in order to maintain a constructive and positive relationship with licensees while still accomplishing the broader mission, as it relates to underage drinking. 4:15:11 PM REPRESENTATIVE NEUMAN moved to report HB 155 out of committee with individual recommendations and the accompanying fiscal notes. There being no objection, HB 155 was reported from the House Labor and Commerce Standing Committee. The committee took an at-ease from 4:15 PM to 4:17 PM.
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