Legislature(2003 - 2004)

05/13/2003 09:59 AM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                                                                                                                                
     CS FOR SENATE BILL NO. 102(L&C)                                                                                            
     "An Act increasing the amount of revenue received by the state                                                             
     from charitable gaming activities; relating to taxes on pull-                                                              
     tabs; and providing for an effective date."                                                                                
                                                                                                                                
                                                                                                                                
This was  the second  hearing for  this bill in  the Senate  Finance                                                            
Committee.                                                                                                                      
                                                                                                                                
LARRY  PERSILY,   Deputy   Commissioner,   Department  of   Revenue,                                                            
explained  to  the  Committee  that while  the  Department  has  not                                                            
finalized  its  determination   as  to  whether  charitable   gaming                                                            
operations  should be  exempt from  a proposed  three percent  State                                                            
sales and use tax, he recommended  "the specific exemption" of pull-                                                            
tab operations  as  he opined  that it  would incur  "an unfair  and                                                            
excessive burden" on those operations.                                                                                          
                                                                                                                                
Co-Chair  Wilken noted  that this  issue has  also been  a point  of                                                            
discussion in separate legislation.                                                                                             
                                                                                                                                
Senator  Bunde asked whether  the Committee  should further  discuss                                                            
this legislation's affect on the local sales tax issue.                                                                         
                                                                                                                                
Co-Chair Wilken  voiced that rather  than continuing to discuss  the                                                            
issue  in this  Committee, the  intent is  to report  the bill  from                                                            
Committee  and  allow  the  issue  to  be  addressed  by  subsequent                                                            
committees   once  the   Department   of  Revenue   has  reached   a                                                            
determination regarding  whether charitable gaming operations should                                                            
be exempt from the proposed statewide sales tax.                                                                                
                                                                                                                                
Senator Bunde moved to report the bill from Committee.                                                                          
                                                                                                                                
Senator Olson objected to the motion.                                                                                           
                                                                                                                                
Senator  Bunde   withdrew  the  motion  to  report   the  bill  from                                                            
Committee.                                                                                                                      
                                                                                                                                
There being no objection, the motion was WITHDRAWN.                                                                             
                                                                                                                                
AT EASE 10:04 AM / 10:06 AM                                                                                                     
                                                                                                                                
[NOTE: Due to  technical difficulties, the following  portion of the                                                            
meeting is not recorded.]                                                                                                       
                                                                                                                                
Amendment #1:  This amendment inserts new language  into the bill as                                                            
follows.                                                                                                                        
                                                                                                                                
Page 1, line 1:                                                                                                                 
      Following "Act" insert "relating to charitable gaming;"                                                                   
                                                                                                                                
Page 1, following line 13: Insert a new bill section to read:                                                                   
                                                                                                                                
     Sec.2. AS 05.15.180(g) is amended to read:                                                                                 
     (g)  A municipality  or a  qualified organization  may award  a                                                            
     maximum  of  $1,500,000 [$1,000,000]  in  prizes  each year  in                                                            
     activities  authorized   under  this  chapter;  however,  if  a                                                            
     municipality  or  a qualified  organization  contracts with  an                                                            
     operator  to conduct on its behalf activities  authorized under                                                            
     this chapter,  the municipality  or qualified organization  may                                                            
     award  a maximum of $500,000  in prizes each year. The  holders                                                            
     of  a multiple-beneficiary  permit  under  AS 05.15.100(d)  may                                                            
     award  a maximum in  prizes each year  of $1,000,000 times  the                                                            
     number  of holders  of  the permit  for  activities  authorized                                                            
     under this chapter.  In this subsection, "activities authorized                                                            
     under  this  chapter"  means  all activities  subject  to  this                                                            
     chapter other than bingo."                                                                                                 
                                                                                                                                
Senator Olson moved to adopt Amendment #1.                                                                                      
                                                                                                                                
Co-Chair Green objected.                                                                                                        
                                                                                                                                
Senator Olson  commented that this amendment would  allow charitable                                                            
gaming operators to increase  the maximum level of prize money being                                                            
awarded  from one million  dollars  to $1.5 million.  He noted  that                                                            
this  increase is  supported  by the Iditarod  Trail  Sled Dog  Race                                                            
organization  because the prize payout  limit, which was  adopted in                                                            
1988, has  become a  limiting factor  in the  continuing growth  and                                                            
success of the  Race. He stated that a letter [copy  on file], dated                                                            
May  6, 2003,  from  the  Iditarod  Trail  Sled  Dog Race  has  been                                                            
provided to Committee members.                                                                                                  
                                                                                                                                
Mr. Persily stated  that the downside of the amendment  is that some                                                            
operators offer games on  a rotation basis. Therefore, he continued,                                                            
a game with a  higher payout might delay the play  of the subsequent                                                            
game.                                                                                                                           
                                                                                                                                
Co-Chair Wilken  asked whether the Iditarod Trail  Sled Dog Race has                                                            
reached the million-dollar prize limit.                                                                                         
                                                                                                                                
Senator Olson responded yes, as is specified in the letter.                                                                     
                                                                                                                                
Co-chair  Wilken  clarified  that  the  letter  specifies  that  the                                                            
organization has "come dangerously close."                                                                                      
                                                                                                                                
Senator Olson  noted that the concern that the play  of another game                                                            
might be delay does not apply in the case.                                                                                      
                                                                                                                                
Co-Chair  Green  asked  whether  the  amendment  could specifically                                                             
exempt the Iditarod  Sled Dog Race rather than the  whole "universe"                                                            
of operators from the current prize limitation.                                                                                 
                                                                                                                                
Co-Chair Wilken stated  that he could not support this amendment, as                                                            
further study on its ramifications is necessary.                                                                                
                                                                                                                                
Mr.   Persily   assured   that   the   Department    would   provide                                                            
recommendations  regarding  the  downstream  affect of  raising  the                                                            
prize limit.                                                                                                                    
                                                                                                                                
Senator  Taylor  interjected  that  raising the  prize  limit  would                                                            
generate additional revenue.                                                                                                    
                                                                                                                                
Mr. Persily responded  that this might be correct  for the specified                                                            
entity; however, he continued  that the question is whether it would                                                            
negatively affect other entities' games.                                                                                        
                                                                                                                                
Senator  Taylor  clarified the  intent  of his  comment  to be  that                                                            
raising the  limit would raise more  money for the State  as well as                                                            
for the entity.                                                                                                                 
                                                                                                                                
Co-Chair Wilken  voiced that the issue must be further  developed to                                                            
determine the range of ramifications.                                                                                           
                                                                                                                                
A roll call was taken on the motion.                                                                                            
                                                                                                                                
IN FAVOR: Senator Hoffman, Senator Olson, and Senator Taylor                                                                    
                                                                                                                                
OPPOSED:  Senator Bunde,  Senator  Stevens, Co-chair  Green and  Co-                                                            
chair Wilken                                                                                                                    
                                                                                                                                
The motion FAILED (3-4)                                                                                                         
                                                                                                                                
Amendment #1 FAILED to be adopted.                                                                                              
                                                                                                                                
Senator  Bunde  moved  to  report  the  bill   from  Committee  with                                                            
individual recommendations and accompanying fiscal note.                                                                        
                                                                                                                                
Senator Hoffman objected.                                                                                                       
                                                                                                                                
Senator  Taylor objected.  He  voiced  concern regarding  the  local                                                            
sales tax issue.                                                                                                                
                                                                                                                                
Mr.  Persily affirmed  that  the bill  does not  include  provisions                                                            
addressing local sales taxes.                                                                                                   
                                                                                                                                
Co-Chair  Wilken   reiterated  that  the  issue  would   be  further                                                            
addressed   in  subsequent  committees   upon  the  issuance   of  a                                                            
recommendation  from  the  Department  of  Revenue  regarding  local                                                            
taxation on pull-tab games.                                                                                                     
                                                                                                                                
Senator Taylor  clarified that a pull-tab operation  would be paying                                                            
the equivalent  of a six percent tax were a three  percent local tax                                                            
and a three-percent State tax imposed.                                                                                          
                                                                                                                                
Co-Chair Wilken affirmed that the issue would be addressed.                                                                     
                                                                                                                                
A roll call was taken on the motion.                                                                                            
                                                                                                                                
IN FAVOR:  Senator Ben  Stevens, Senator  Bunde, Co-chair Green  and                                                            
Co-chair Wilken                                                                                                                 
                                                                                                                                
OPPOSED: Senator Taylor, Senator Hoffman and Senator Olson                                                                      
                                                                                                                                
The motion PASSED (4-3)                                                                                                         
                                                                                                                                
CS SB 102(L&C)  was REPORTED from  Committee with fiscal  note #2 in                                                            
the amount of $180,000 from the Department of Revenue.                                                                          
                                                                                                                                
AT EASE 10:18 AM / 10:20 AM                                                                                                     
                                                                                                                                

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