Legislature(1995 - 1996)
04/06/1995 09:15 AM FIN
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
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.