Legislature(1995 - 1996)

04/06/1995 09:15 AM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
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       SENATE BILL NO. 87                                                      
       "An Act relating to community local options for control                 
  of          alcoholic beverages; relating to the  control of                 
  alcoholic           beverages; relating to the definition of                 
  'alcoholic beverage';       relating to purchase and sale of                 
  alcoholic  beverages;  relating           to alcohol  server                 
  education  courses; and providing for an           effective                 
  date."                                                                       
                                                                               
  Senator  Taylor  testified  that  last  year  the  Alcoholic                 
  Beverage Control Board, prompted by concerns over a lack  of                 
  clarity in how local  option elections are to be  conducted,                 
  asked for  legislation to simplify  the process.   The board                 
  also asked that  the same  vehicle be used  to address  long                 
  needed technical  and common  sense amendments  to Title  4.                 
  The result was Senate Bill 372,  which passed the Senate and                 
  moved through the  committee process in  the House, only  to                 
  die in the Rules Committee  in the hectic final days of  the                 
  18th State Legislature.  Senate Bill 87 is substantially the                 
  same  as last  year's legislation.   The bill  addresses the                 
  shortcoming in the current statute dealing with local option                 
  elections, for  which no provision  is made for  moving from                 
  one  type  of  option to  another.    Under  current law,  a                 
  community must first vote to remove all restrictions  on the                 
  sale and importation of alcoholic beverages and then conduct                 
  another vote on a  new option.  This burdensome  process can                 
  cause  confusion  for   municipalities  and   unincorporated                 
  villages alike.   SB  87 was  amended in  the Community  and                 
  Regional  Affairs  and   Judiciary  Committees  to   address                 
  specific concerns raised by local option communities.  Those                 
  amendments  have  the  support  of the  ABC  Board  and  the                 
  chairman of the  sponsoring committee.   He also noted  that                 
  except for a potential average annual income, or increase in                 
  revenues of  approximately $5,000  from the  registration of                 
  beverages,  this  legislation  does  not  create  any fiscal                 
  impact on Board operations, or on the Division of Elections.                 
                                                                               
  Pat Sharrock, Director, Alcohol Beverage  and Control Board,                 
  responded to  Senator Rieger's inquiry of Section 1, page 1,                 
  lines 13  and 14.  He stated that  it does not apply because                 
  it is  referring to a package store  that would exist in the                 
  community  as  the  result  of  that community  obtaining  a                 
  package store license under that local option provision.  He                 
                                                                               
                                                                               
  stated that there  are only 3  or 4 community-owned  package                 
  stores in the state.                                                         
                                                                               
  Senator Donley  questioned Mr.  Sharrock as  to the  Board's                 
  ability to  police.   He spoke  of  licensees with  frequent                 
  violations and bad records, and  asked if there was anything                 
  in this legislation to encourage the Board to take action on                 
  such cases, because  he stated  that they are  not doing  it                 
  now.                                                                         
                                                                               
  Mr.  Scharrock  responded  that  there  was nothing  in  the                 
  legislation that would  detract from the Board's  ability to                 
  pursue  enforcement  activity.   He  stated that  he  was in                 
  disagreement because he  is the one  to enforce the law  and                 
  initiating  enforcement  actions  against  licensees.    Mr.                 
  Scharrock  said that the budget is part  of the problem.  In                 
  response to Senator Donley's  inquiry to page 4, line  4, he                 
  stated that 75,000 gallons is what  is needed to establish a                 
  brew pub.                                                                    
                                                                               
  Co-chair Halford requested a section  by section explanation                 
  of the legislation.                                                          
                                                                               
  Mr.  Scharrock  began with  Section  1.   He  stated  that a                 
  current licensee could  not solicit or  have someone in  the                 
  area receive  orders on his or her behalf. He said that this                 
  bill removes the name community  license. Discussion was had                 
  on this section.                                                             
                                                                               
  Section  3,  eliminates  the name  of  the  community liquor                 
  license because that  has been changed  in the local  option                 
  provisions.                                                                  
                                                                               
  Section 4, is a suggestion by the  Board itself.  It is new,                 
  and a result of restaurants holding  a beer and wine license                 
  instituting entertainment  on their premises, where at times                 
  the primary activity  of patrons is  not dining, but  rather                 
  entertainment.  The  law and  the class of  license did  not                 
  intend for  that to  happen.   Even the  regulations by  the                 
  Board, state  that primary  activity  must be  dining.   The                 
  Board tried  to address  it through  regulation saying  that                 
  restaurants could have entertainment between  the hours of 6                 
  and 9 p.m.  That was unsatisfactory to most licensees.  What                 
  this amendment does  is allow  one license for  each 10,  to                 
  come under this exempt provision that  says all they have to                 
  have is  food available.  It addresses  the issue of  either                 
  changing times  or the desire  of licensees to  do different                 
  things.  The  Board has referred to  it at times as  a semi-                 
  tavern license.  It  does not create an additional  class of                 
  license.  The  Board did not want  to do that.   In essence,                 
  for eating or  restaurants offering  beer and/or wine,  they                 
  cannot have more than 50% of gross revenues from the sale of                 
  alcohol removed for the license.                                             
                                                                               
                                                                               
  Joe Ambrose, Legislative Aid  from Senator Taylor's  office.                 
  He pointed out a provision that would make the licenses non-                 
  transferable to another person.   Eventually, there would be                 
  a  reduction in  the number of  licenses, because  as people                 
  went  out of  business, that  license would cease  to exist.                 
  Additionally, it requests the Board to take action, and must                 
  be approved by  the local governing  body who has  authority                 
  and  responsibility  over  the area  in  which  the premises                 
  exists.  Additional discussion regarding the  particulars of                 
  this section continued.                                                      
                                                                               
  Teresa Williams,  Dept. of  Law, Anchorage  interjected that                 
  the semicolon on line 18 means or.                                           
                                                                               
  Section  6 relates  to a  number change  related to  another                 
  section because of the rewrite of the local option.                          
                                                                               
  Section 7 is a technical amendment which says that a package                 
  store licensee, in response to a written order for alcoholic                 
  beverages,  can  only   ship  whatever  he  orders   to  the                 
  purchaser.                                                                   
                                                                               
  Teresa Williams responded to Section 8.   She stated that it                 
  is a technical amendment to conform with the new  law.  Beer                 
  is  sold  in gallons.    The  language has  been  changed to                 
  reflect that measure.                                                        
                                                                               
  Section  9  relates to  primary  source.   It  solidifies or                 
  enhances what  is nationally known  as a three  tier system.                 
  Alcohol  is  produced  by  a  manufacturer, purchased  by  a                 
  wholesaler,  sold to  a retailer, who  sells to  the public.                 
  This requires  a registration  of brands  by wholesalers  in                 
  this  state, identifying  the  suppliers  that they  receive                 
  alcoholic beverages from  and they  pay a fee  to file  that                 
  information with the Alcoholic Control Board.                                
                                                                               
  Section 10 is a continuation  of Section 9.  It  states that                 
  holders  of beverage  dispensary  or  bar licenses,  package                 
  store licenses  or club licenses,  and restaurant  licenses,                 
  must purchase their  alcoholic beverages  for resale from  a                 
  wholesale licensee within the state.                                         
  Section 11 has  been amended to  read that the licensee  may                 
  continue to do business  if he has not renewed  his license,                 
  but the fine  has increased to $500 and the  new deadline is                 
  January 1.                                                                   
                                                                               
  Section 12  adds a  citation difference  and removed  a sub-                 
  section 7  and 8 which are obsolete since the rewrite of the                 
  local option provision.                                                      
                                                                               
  Section 13 is  an amendment that  says the Board can  impose                 
  conditions on licenses. Page 9 line 3.  Senator Donley asked                 
  if  the Board  ever   denied renewal to  a licensee  who was                 
  convicted  of having  illegal gambling  operations on  their                 
                                                                               
                                                                               
  premises?    Mr.  Sharrock  responded  that  the  Board  has                 
  suspended licenses for  that offense.  Senator  Donley would                 
  like to cross-reference the activity  division of gaming and                 
  harness illegal operations.   His interests were  focused on                 
  ABC board revoking licenses.   Ms. Williams interjected that                 
  her office deals  with approving the filing  of non-renewals                 
  and accusations.  Her office has  filed an accusation in all                 
  cases  in  which  the  Division  of  Gaming  has  instituted                 
  proceedings  against the gaming  license.  The  ABC Board is                 
  the one who  often first discovers the problem.  In the past                 
  two years,  there have been 4  or 5 licenses which  have had                 
  action taken against their license,  as a result of  illegal                 
  gaming.    In addition,  a  non-renewal of  license  for the                 
  Lonely Lady in Fairbanks, for  such activities including the                 
  owners participation in  illegal gaming.   That license  was                 
  revoked.                                                                     
  Senator Donley  requested a list  covering the past  5 years                 
  showing the licensees  recommended to  the Board for  action                 
  and what the Board actually did.                                             
                                                                               
  Section 14 and  15 is  a change in  the statutory  citation.                 
  Ms. Williams explained  that subsections  9 and 10  covering                 
  the reference  to  community liquor  license was  completely                 
  removed.  One of the various options is to restrict licenses                 
  to be: only a  package store,   a restaurant, or a  beverage                 
  dispensary.    The  notion  of  a community  liquor  license                 
  operating as the only operation has been deleted and instead                 
  it is that function which is being permitted.                                
                                                                               
  End of Tape 26                                                               
  Begin  Tape 28, Side 1                                                       
                                                                               
  Senator  Rieger   addressed  the  complaints   on  arbitrary                 
  enforcement. Mr. Sharrock responded that he has not heard of                 
  a complaint on  arbitrary enforcement  in a long  time.   He                 
  stated  that  he would  not  bring  a matter  to  review for                 
  prosecution unless he knows he  has a strong case.   He also                 
  mentioned  that  continuously,  notices  of  violations  are                 
  issued to licensees  for perceived or alleged  violations or                 
  possible violations as a result of receiving police reports.                 
                                                                               
                                                                               
  Section 17 puts  in statute, the  Board's ability to  impose                 
  restrictions on licenses.   It may do so under  the force of                 
  statute. He stated  that at a recent Board  meeting, several                 
  applicants had somewhat questionable backgrounds.  Some  had                 
  alcohol problems in the past, convictions from misdemeanors,                 
  etc.  The Board  placed conditions on the granting  of those                 
  applications  on  those licensees  stating,  "if you  have a                 
  problem with substance  abuse, alcohol or anything  else, on                 
  or  off  the premises,  we would  revoke  or not  renew your                 
  license."  The ability to do that is what would  be enhanced                 
  by this particular amendment.                                                
                                                                               
                                                                               
  Section  18   clarifications  of  language  and  changes  to                 
  statutory citations because  of the  rewriting of the  local                 
  option law.                                                                  
                                                                               
  Section 19 fixes a  glitch that occurred when we  moved from                 
  annual  to bi-annual  renewal.   When we  went to  bi-annual                 
  renewal, half of the licensees that  didn't file the renewal                 
  were not  reviewed by an  assembly or  community counsel  or                 
  local government body.   This  allows a municipality  during                 
  the  window  of  January 1  to  31st,  to  review a  license                 
  operation and protest.                                                       
                                                                               
  Senator Sharp questioned the regulations that circumvent the                 
  statutory 30-day period in Section 19 for a local government                 
  protest to be considered?  Mr. Sharrock stated that there is                 
  a  regulation  that  allows them  an  additional  30-days to                 
  protest.  Discussion was had on the transfer of days.                        
                                                                               
  Co-chair Halford the bill  will be brought back at  the next                 
  meeting.                                                                     
                                                                               
  ADJOURNMENT                                                                  
                                                                               
  The meeting was adjourned at approximately 11:00 a.m.                        
                                                                               

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