Legislature(1997 - 1998)

03/07/1997 08:04 AM House CRA

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
              HOUSE COMMUNITY AND REGIONAL AFFAIRS                             
                       STANDING COMMITTEE                                      
                         March 7, 1997                                         
                           8:04 a.m.                                           
                                                                               
 MEMBERS PRESENT                                                               
                                                                               
 Representative Ivan Ivan, Chairman                                            
 Representative Fred Dyson                                                     
 Representative Scott Ogan                                                     
 Representative Joe Ryan                                                       
 Representative Al Kookesh                                                     
 Representative Reggie Joule                                                   
                                                                               
 MEMBERS ABSENT                                                                
                                                                               
 Representative Jerry Sanders                                                  
                                                                               
 COMMITTEE CALENDAR                                                            
                                                                               
 SPONSOR SUBSTITUTE FOR HOUSE BILL NO. 132                                     
 "An Act relating to municipal taxation of alcoholic beverages."               
                                                                               
       - SSHB 132 PASSED OUT OF COMMITTEE                                      
                                                                               
 (* First public hearing)                                                      
                                                                               
 PREVIOUS ACTION                                                               
                                                                               
 BILL: HB 132                                                                
 SHORT TITLE: MUNICIPAL TAXATION OF ALCOHOL                                    
 SPONSOR(S): REPRESENTATIVE(S) DAVIS,Ivan                                      
                                                                               
 JRN-DATE      JRN-PG         ACTION                                           
 02/13/97       333    (H)   READ THE FIRST TIME - REFERRAL(S)                 
 02/13/97       333    (H)   CRA, JUDICIARY, FINANCE                           
 02/21/97       424    (H)   SPONSOR SUBSTITUTE INTRODUCED-REFERRALS           
 02/21/97       424    (H)   READ THE FIRST TIME - REFERRAL(S)                 
 02/21/97       424    (H)   CRA, JUDICIARY, FINANCE                           
 03/07/97              (H)   CRA AT  8:00 AM CAPITOL 124                       
                                                                               
 WITNESS REGISTER                                                              
                                                                               
 REPRESENTATIVE GARY DAVIS                                                     
 Alaska State Legislature                                                      
 State Capitol, Room 513                                                       
 Juneau, Alaska  99801                                                         
 Telephone:  (907) 465-2693                                                    
 POSITION STATEMENT:  Sponsor of HB 132                                        
                                                                               
 PAUL SHERRY, Deputy Director                                                  
 Alaska Native Health Board                                                    
 4201 Tudor Center, Number 105                                                 
 Anchorage, Alaska  99508                                                      
 Telephone:  (907) 562-6006                                                    
 POSITION STATEMENT:  Testified on HB 132                                      
                                                                               
 GARY GRANDE, Administrator                                                    
 Petersburg Medical Center                                                     
 P.O. Box 589                                                                  
 Petersburg, Alaska  99833                                                     
 Telephone:  (907) 772-4291                                                    
 POSITION STATEMENT:  Testified on HB 132                                      
                                                                               
 JAMES CULLEY, CEO & Administrator                                             
 Valdez Hospital                                                               
 P.O. Box 694                                                                  
 Valdez, Alaska  99686                                                         
 Telephone:  (907) 835-2249                                                    
 POSITION STATEMENT:  Testified on HB 132                                      
                                                                               
 VALERIE THERRIEN                                                              
 Advisory Board for Alcohol and                                                
   Drug Abuse                                                                  
 779 8th Avenue                                                                
 Fairbanks, Alaska  99701                                                      
 Telephone:  (907) 456-8113                                                    
 POSITION STATEMENT:  Testified on HB 132                                      
                                                                               
 GARREY PESKA                                                                  
 Alaska State Hospital and                                                     
   Nursing Home Association                                                    
 319 Seward Street                                                             
 Juneau, Alaska  99801                                                         
 Telephone:  (907) 586-1790                                                    
 POSITION STATEMENT:  Testified on HB 132                                      
                                                                               
 LAMAR COTTEN, Deputy Director                                                 
 Department of Community and                                                   
   Regional Affairs                                                            
 P.O. Box 112100                                                               
 Juneau, Alaska  99811-2100                                                    
 Telephone:  (907) 465-4700                                                    
 POSITION STATEMENT:  Testified on HB 132                                      
                                                                               
 KEVIN RITCHIE, Executive Director                                             
 Alaska Municipal League                                                       
 217 Second Street                                                             
 Juneau, Alaska  99801                                                         
 Telephone:  (907) 586-1325                                                    
 POSITION STATEMENT:  Testified on HB 132                                      
                                                                               
 TOM WRIGHT, Staff                                                             
 Community and Regional                                                        
   Affairs Committee                                                           
 Representative Ivan Ivan                                                      
 Alaska State Legislature                                                      
 State Capitol, Room 418                                                       
 Juneau, Alaska  99801                                                         
 Telephone:  (907) 465-4942                                                    
 POSITION STATEMENT:  Testified on HB 132                                      
                                                                               
 BOB BARTHOLOMEW, Deputy Director                                              
 Income & Excise Audit Division                                                
 Department of Revenue                                                         
 P.O. Box 110420                                                               
 Juneau, Alaska  99811-0420                                                    
 Telephone:  (907) 465-2320                                                    
 POSITION STATEMENT:  Testified on HB 132                                      
                                                                               
 ACTION NARRATIVE                                                              
                                                                               
 TAPE 97-12, SIDE A                                                            
                                                                               
 CHAIRMAN IVAN IVAN called the House Community and Regional Affairs            
 Standing Committee meeting to order at 8:04 a.m.   Members present            
 at the call to order were Representatives Dyson, Ryan and Kookesh.            
 Representatives Joule and Ogan arrived at their respective times:             
 8:05 a.m. and 8:14 a.m.  Representative Sanders was absent.                   
                                                                               
 HB 132 - MUNICIPAL TAXATION OF ALCOHOL                                      
                                                                               
 Number 072                                                                    
                                                                               
 REPRESENTATIVE GARY DAVIS came forward to testify as sponsor of               
 SSHB 132, "An Act relating to municipal taxation of alcoholic                 
 beverages."  Representative Davis stated that in statute, there is            
 a restriction on how much municipalities can tax alcohol as a stand           
 alone substance.  The statutes in place hold the amount that can be           
 taxed for alcohol at the general rate of the sales tax.  HB 132               
 removes this restriction.  It allows municipalities to tax alcohol            
 at whatever rate they feel is appropriate.  He noted how alcohol              
 problems affect services such as hospitals, police forces, the                
 courts and other services the municipalities provide.                         
                                                                               
 REPRESENTATIVE DAVIS said this legislation would free up                      
 municipalities and give them the opportunity to address their                 
 problems in a manner they feel appropriate.  If alcohol is causing            
 problems, with this restriction eliminated, they can feel free to             
 adjust their tax base and their revenue projections to deal with              
 the problems created by alcohol.                                              
                                                                               
 Number 311                                                                    
                                                                               
 REPRESENTATIVE FRED DYSON asked what the response of the liquor               
 industry to this legislation has been.  He also wondered if                   
 Representative Davis' office had put the industry on notice about             
 this legislation.                                                             
                                                                               
 REPRESENTATIVE DAVIS stated that the alcohol industry hadn't                  
 contacted his office presently.  In response to the latter, he                
 stated that, no, he hadn't initiated contact either.                          
                                                                               
 Number 360                                                                    
                                                                               
 REPRESENTATIVE JOE RYAN asked if there was a cap on the amount of             
 taxes the local municipality is allowed to charge.                            
                                                                               
 REPRESENTATIVE DAVIS responded that this was not included in the              
 bill and he wasn't sure if there were any caps in state law.  He              
 noted that any municipality has the opportunity to address by                 
 ordinance or resolution any caps of their own.  He stated that                
 there were no caps in the bill, not in state statute or in                    
 municipal ordinances that he was aware of.                                    
                                                                               
 Number 408                                                                    
                                                                               
 REPRESENTATIVE AL KOOKESH stated that he appreciated this                     
 legislation and he planned to support it.  One of the problems he             
 ran into during his campaign was unfunded mandates and this                   
 legislation may take care of one of those.                                    
                                                                               
 Number 460                                                                    
                                                                               
 PAUL SHERRY, Deputy Director, Alaska Native Health Board, testified           
 via teleconference from Anchorage on HB 132.  This organization               
 consists of 20 health organizations around the state which are                
 owned and operated by native organizations.  Some of their members            
 include Bristol Bay Area Health Corporation, the Norton Sound                 
 Health Corporation, Yukon-Kuskokwim Health Corporation, etc.                  
                                                                               
 MR. SHERRY added that their board several weeks ago in Juneau was             
 briefed on this legislation by Representative Davis.  They endorse            
 this legislation.  It provides a solution to a need that they                 
 identified in a priorities booklet delivered to all the                       
 legislators.  Uncompensated care provided by many rural hospitals             
 for intoxicated persons in custody is a problem.  Fundamentally the           
 cost burden falls on the hospitals and health center institutions             
 within municipalities.                                                        
                                                                               
 MR. SHERRY continued that in order to deal with this problem of               
 Title 47 requirements, police departments make sure that                      
 intoxicated persons are not at risk of a medical problem while in             
 custody.  The inebriate must be taken for a medical exam.  In many            
 communities police drive to the hospital door, un-cuff the prisoner           
 and send them in.  A requirement of the hospital is to provide                
 service to those in need and since this person is incarcerated and            
 might be referred to a treatment center at a later time, the                  
 municipality can avoid the obligation to pay the hospital for this            
 service.                                                                      
                                                                               
 MR. SHERRY stated that their members basically advise them that               
 these types of losses can exceed $100,000 in some of these                    
 communities.  Their concern is to find a way to recover these                 
 costs.  Their membership basically feels that this bill provides an           
 option for communities to increase the alcohol sales tax above and            
 beyond the general sales tax in order to meet these costs related             
 to alcohol abusers.                                                           
                                                                               
 Number 734                                                                    
                                                                               
 GARY GRANDE, Administrator, Petersburg Medical Center, testified              
 via teleconference from Petersburg on HB 132.  He stated that up              
 until last October he served as a member of the Petersburg City               
 Council.  He also served for a time as the member of the Petersburg           
 Council on Alcohol and Drug Abuse.  He noted that he looks at this            
 legislation from three different perspectives.                                
                                                                               
 MR. GRANDE spoke first to the city perspective.  The city faces a             
 $600,000 shortfall to try to balance their budget due to declining            
 timber receipt revenues, fish tax revenues and pass through monies            
 from the state.  He stated for these reasons it makes it difficult            
 for the city to fund such programs as the Petersburg Council on               
 Alcohol and Other Drug Abuse.  In the past, the city has funded               
 $40,000 into this program to help those who can't afford these                
 services to get counseling and help.                                          
                                                                               
 MR. GRANDE stated that these programs are still needed.  This bill            
 would be a tool for communities to fund these on-going problems.              
 He didn't look at it as a tax but a tool to fund necessary                    
 services.  In addition, the police department is required to bring            
 many of these public inebriates to the hospital.  Their back debts            
 related to this requirement range from $5,000 to $30,000 a year.              
                                                                               
 MR. GRANDE noted that the hospital has a $4 million budget and                
 because of cuts they're seeing in medicare and medicaid, their                
 contractual allowances and their bad debt have gone from $200,000             
 a year to $400,000 a year.  This is ten percent of their budget.              
 In the past few years they have averaged about a $40,000 a year               
 loss on the bottom line.  Last year they had a $30,000 profit.                
 Now, this year, they have an over $400,000 loss and their budget              
 projections for next year are a $450,000 loss.  They need to find             
 whatever means possible to reduce these losses.  When they give               
 away their services to care for public inebriates, he believed that           
 something should be put in place to reverse this trend.                       
                                                                               
 MR. GRANDE stated that the police department has added costs                  
 related to caring for the public inebriates as well.  He said this            
 legislation would set in place needed funds to be split between a             
 hospital's bad debts, counseling services, and the police                     
 department for their extra work.  He encouraged passage of this               
 legislation.                                                                  
                                                                               
 Number 989                                                                    
                                                                               
 JAMES CULLEY, CEO & Administrator, Valdez Hospital, testified via             
 teleconference from Valdez on HB 132.  The cost of public                     
 inebriation in un-reimbursed expenses to the Valdez Community                 
 Hospital comes in several forms.  The first and easiest to quantify           
 is the un-reimbursed costs of direct care.  This is the supplies              
 and services provided in treating the individual.  In 1996 this               
 came to a total of almost $12,000.  While this might not sound like           
 much money when accustomed to tossing around millions, to a small             
 facility like Valdez this is a significant cost.  This also                   
 represents over ten percent of their total write-offs for this past           
 year.  In all of the accounts written off, over 50 percent are                
 related to alcohol or substance abuse.                                        
                                                                               
 MR. CULLEY noted that the second cost was the indirect cost of                
 damaged equipment, linen, furniture, etc., which they've                      
 experienced as a result of some of these individuals who tried to             
 get into or out of the hospital.  Depending on their disposition at           
 any given moment, they are either fighting to get into a bed or               
 they want out.  Although they don't try to prevent anyone from                
 leaving, when the police "drop" them at the back door, they don't             
 always remember this.  There is also the increased cleaning costs             
 because of vomiting in their rooms, the emergency room and wherever           
 else they might happen to be at the time.                                     
                                                                               
 MR. CULLEY stated that the third cost was for security, including             
 both tangible and intangible costs.  The first is the actual dollar           
 cost of increased staffing for security.  In Valdez their normal              
 coverage is two nursing staff per shift, one to cover the floor and           
 the other to respond to the emergency room.  Of the 18 full or                
 part-time RNs, LPNs or Nursing Assistants they have only three male           
 staff.  At the same time they currently have three so-called swing            
 bed patients.  These are patients which don't require full time               
 hospitalization but require such extensive part-time regular                  
 nursing care that they live full-time on a ward.  These three                 
 individuals are elderly.                                                      
                                                                               
 MR. CULLEY offered that, "When you have a drunk who at best wants             
 to use the hospital as a flop house, I can't leave the staffing at            
 two females and provide emergency room and nursing coverage, as               
 well as patient security."  The second security related cost or the           
 intangibles is the psychological cost to staff, the patients and              
 their families.  In a small, fifteen bed facility it is emotionally           
 disturbing and physically threatening to have a "loud, obnoxious              
 drunk with other patients."  He noted one case where they had a               
 drunk who was cursing and yelling on one side of the ward while on            
 the other a first time mother was in labor.                                   
 MR. CULLEY noted that ironically the hospital can't take the                  
 financial risk of not admitting these individuals as patients.                
 With the federal enactment of the Emergency Medical Treatment and             
 Active Labor Act, known as EMTALA, the potential claims against the           
 Valdez Community Hospital make it a financially unacceptable risk             
 to do anything but to admit all substance abuse patients brought to           
 the facility.  According to EMTALA, "like the physiatric patient,             
 substance abusers must be medically screened to rule out organic              
 causes for their condition.  When a substance abuser is subject to            
 possible withdrawals or delirium tremors that person has an                   
 emergency medical condition and is unstable according to the                  
 (indisc.) comments associated with the regulation for as long as              
 seven days."                                                                  
                                                                               
 MR. CULLEY continued that each violation of EMTALA, regardless of             
 the outcome to the patient, is subject to a $25,000 fine.  At                 
 Valdez Community Hospital they have no choice medically, ethically            
 or financially to do anything but take "all comers."  He strongly             
 urged the committee to pass this legislation.  It doesn't fix the             
 problem, but it offers an opportunity to have part of the problem             
 pay its own way.                                                              
                                                                               
 Number 1236                                                                   
                                                                               
 REPRESENTATIVE SCOTT OGAN asked what assurances did they have that            
 the money collected for this tax would go to the hospital.                    
                                                                               
 MR. CULLEY responded that there would be none up front other than             
 what they are able to do when they talk to the City Council about             
 it.                                                                           
                                                                               
 REPRESENTATIVE DAVIS responded to this same question by noting that           
 they've questioned the legality of municipalities dedicating taxes.           
 Their information is that this opportunity is available.                      
                                                                               
 Number 1280                                                                   
                                                                               
 VALERIE THERRIEN, Advisory Board for Alcohol and Drug Abuse,                  
 testified via teleconference from Fairbanks on HB 132.  The board             
 supports this bill.  They urge the committee to pass this out and             
 for the legislature to do the same.  They believe that the local              
 municipalities can make a decision on their own level as to what              
 level the self-tax should be on alcoholic beverages.  She gave a              
 personal perspective on this issue.                                           
                                                                               
 MS. THERRIEN stated that when she was a local elected official in             
 Fairbanks, she served on both the City Council and on the Fairbanks           
 North Star Borough Assembly.  She said there was always a question            
 of what they were allowed to do when taxing alcohol.  This                    
 legislation would resolve this issue.  She said it would be very              
 supported in Fairbanks.                                                       
                                                                               
 Number 1397                                                                   
                                                                               
 GARREY PESKA, Alaska State Hospital and Nursing Home Association,             
 came forward to testify on HB 132.  He stated that he would not               
 reiterate the same information already outlined concerning this               
 issue, but he did say that the members of the Alaska State Hospital           
 and Nursing Home Association have unanimously endorsed this bill.             
 He asked to call their attention to the bill packet and a                     
 discussion paper enclosed there dated March 19, 1995, written by Ed           
 Myers who is the former administrator at the Kodiak Island                    
 Hospital.  This paper discusses, in the field, stories concerning             
 this problem in facilities.  With this, he yielded to others                  
 wishing to testify.                                                           
                                                                               
 Number 1445                                                                   
                                                                               
 LAMAR COTTEN, Deputy Commissioner, Department of Community and                
 Regional Affairs, came forward to testify on HB 132.  The                     
 department supports this legislation.  It adds another tool to                
 communities.  It's clear that as the state and federal government             
 readjust their own budgets that often it means less transfer funds            
 directly or indirectly to communities.  It's the responsibility of            
 the state to give communities more tools to raise needed revenues             
 at the local level.  In the last six years they've seen creative              
 ways local governments have raised funds and noted a few examples             
 such as tax on coal, raw fish taxes, etc.  This is not an abuse of            
 the system and these programs have been supported by local                    
 citizens.                                                                     
                                                                               
 Number 1537                                                                   
                                                                               
 REPRESENTATIVE OGAN asked how much money the state spends on                  
 alcohol related rehabilitation, including federal funds.                      
                                                                               
 DEPUTY COMMISSIONER COTTEN said he didn't have these figures and              
 thought that the Department of Health and Social Services (HESS)              
 would be the agency to tap for this information.  He noted that               
 these costs additionally go beyond this department, with public               
 safety considerations, etc.  He said he would talk to someone in              
 HESS about this information.  He added that there were quite a few            
 state programs that are sister funded by the federal government as            
 well as programs that regional non-profits receive from the federal           
 government in part too.                                                       
                                                                               
 Number 1659                                                                   
                                                                               
 REPRESENTATIVE OGAN stated that he saw this legislation as being a            
 new state tax.  He said, "Let's call a tax, a tax here."                      
                                                                               
 Number 1690                                                                   
                                                                               
 KEVIN RITCHIE, Executive Director, Alaska Municipal League, came              
 forward to testify on HB 132.  He noted that municipalities run a             
 business which is called government.  They try to provide services            
 to the public that are reasonable at a cost that doesn't overburden           
 their tax payers.  Over the past ten years the curve of local                 
 property taxation to replace under-funding of schools, cutbacks in            
 municipal assistance revenue sharing, etc., and the higher demand             
 of services in communities has caused property taxes to take an               
 upward turn.  What municipalities are asking for are more tools               
 that local voters can decide upon as to whether or not to establish           
 a structure of collecting revenues to pay for the services they               
 want.                                                                         
                                                                               
 MR. RITCHIE noted that this legislation was not a new tax because             
 a new tax can only be put on by local voters in their own                     
 communities, the question might be, is this a new discrimination              
 against alcohol.  No, as a matter of fact it's currently a                    
 discrimination for alcohol.  In essence, it's a state mandate that            
 only applies to alcohol, no other commodity.  Local voters may not            
 decide to tax alcohol at a higher rate than other commodities if              
 they choose to.  Currently, alcohol is the only item under state              
 law that has this restriction.  Again, local voters are the only              
 ones who can place this tax on the books.  They would suggest that            
 when the related statute was passed ten years ago that this was the           
 discrimination for alcohol.  This proposed change simply levels the           
 playing field.                                                                
                                                                               
 MR. RITCHIE noted the state and municipal costs of alcohol use and            
 abuse.  These costs are staggering, both on a municipal and state             
 level while considering the affects on the court system, police               
 activity, youth and family services and the issues that schools are           
 forced to deal with.  Many of these revolve around alcohol use and            
 abuse.                                                                        
                                                                               
 Number 1834                                                                   
                                                                               
 REPRESENTATIVE DYSON asked about the membership of the Municipal              
 League discussing the syndication of impact on regional health                
 facilities, for example, he noted that Bethel probably ends up                
 having a disproportionate impact there from a health cost                     
 perspective.  He asked if there was any discussions about how to              
 recoup some of these costs.                                                   
                                                                               
 MR. RITCHIE responded that they had not discussed it directly, but            
 he noted that this was a serious issue.  One significant discussion           
 the Municipal League has had concerning especially Bethel and                 
 Kotzebue, both of these communities are "damp communities," which             
 means that they can't get revenue from sales taxes on alcohol in              
 these communities.  Currently, under Title 29, the Municipal                  
 Statute allow communities to levy use taxes.  This means that if              
 somebody brings in alcohol they can be taxed on the value of the              
 alcohol brought in even though it's not sold in the community.                
 This is kind of a different issue, but another issue they would               
 address in the future is how to assist in the collection of those             
 use taxes.  The law clarifies now if there is a local sales tax and           
 a commodity is purchased in another community and brought in,                 
 essentially, the latter community could exact the difference                  
 between these two communities sales tax if there was a discrepancy            
 between the two tax rates.  They are exploring how to make this               
 system work better than it does presently.                                    
                                                                               
 Number 1937                                                                   
                                                                               
 REPRESENTATIVE DYSON said he was thinking more specifically about             
 the medical costs.  He asked if they have explored the possibility            
 of the community that has the hospital and is required by law to              
 deal with the inebriate, recapturing that cost of this service from           
 the community where the patient resides.                                      
                                                                               
 MR. RITCHIE responded that the Municipal League has not done so.              
                                                                               
 Number 1989                                                                   
                                                                               
 REPRESENTATIVE OGAN referred to a dedicated fund issue and noted              
 that from previous testimony there's nothing to prevent this, for             
 example, to funnel money directly to hospitals to off-set these               
 costs.  He asked if there were any cities that had dedicated funds.           
 He also asked if there are currently alcohol taxes collected by               
 cities.                                                                       
                                                                               
 MR. RITCHIE responded, yes, to the latter question.  To the                   
 previous question he noted that the only community that he knows of           
 that has an alcohol tax is Juneau.  In the current law there's a              
 grandfather clause related to alcohol taxes.  He believed Juneau              
 was the only community that had this on the books.  He understood             
 that there was not a dedicated fund.  In Juneau they cannot                   
 dedicate funds for specific uses, but in the case of sales tax,               
 when they are re-authorized the intent of the use of those funds is           
 clearly stated to the public, even though they are not technically            
 dedicated.  So far, the City and Borough of Juneau has never                  
 reneged on an intent to the public.                                           
                                                                               
 REPRESENTATIVE OGAN noted that part of the problem he was having              
 with this legislation is that he didn't trust the cities to                   
 dedicate money that they collect for this problem even though the             
 efforts of this legislation is laudable.  He said he would have               
 difficulty supporting this legislation without language that allows           
 for a dedicated fund.                                                         
                                                                               
 Number 2143                                                                   
                                                                               
 REPRESENTATIVE DAVIS stated that he thought this dedication would             
 be a good idea.  Their information to date indicates there is                 
 nothing to bar a municipality from dedicating funds.  He said he'd            
 like to check on this first to make sure that it is in fact legal             
 for them to do, however, in this case even if it isn't dedicated,             
 there are other ways for municipalities to gain revenue to take               
 care of the inebriate problem.  In this way they could draw the               
 money from those who are creating the problem.  He believed it                
 would be easy enough to amend this legislation to allow for any tax           
 on alcohol above the general sales tax to be dedicated to alcohol             
 related problems if they find this is constitutionally possible.              
                                                                               
 REPRESENTATIVE RYAN asked if it would be possible to incorporate a            
 system to show the tax payers how this tax money would be spent.              
                                                                               
 Number 2236                                                                   
                                                                               
 REPRESENTATIVE RYAN said he wasn't so sure.  He said he didn't want           
 to clutter up the bill with anything that would be not real                   
 specific.  He said he'd have to check on this.                                
                                                                               
 CHAIRMAN IVAN stated that the problem of inebriate services was               
 brought to his attention by the community of Dillingham about three           
 years ago.  He spoke to how this problem is ringing up costs to               
 different state agencies as well.  This problem not only touches              
 municipalities but also the Department of Public Safety,                      
 Corrections, HESS, the Administration, the Court system, etc.  In             
 their efforts to repay the state's expenditures for this problem              
 they need to pass this responsibility onto municipalities and give            
 them tools to do so.  This legislation allows more local control.             
 He said amendments and other possible questions could be worked out           
 in the Judiciary Committee which is the next committee of referral.           
                                                                               
 Number 2377                                                                   
                                                                               
 REPRESENTATIVE DYSON stated that he would want the liquor industry            
 to have a chance to comment on this bill before it goes to the                
 floor.  He stated that he is in favor of this legislation, but he             
 said he couldn't vote to pass this out of committee unless he was             
 assured that the liquor industry would be notified.                           
                                                                               
 REPRESENTATIVE DAVIS said that, absolutely, he would notify them.             
                                                                               
 Number 2421                                                                   
                                                                               
 TOM WRIGHT, Staff, Community and Regional Affairs Committee,                  
 testified on HB 132.  He stated that the liquor industry had                  
 contacted their offices, but they hadn't said anything pro or con             
 regarding this legislation.                                                   
                                                                               
 REPRESENTATIVE DAVIS noted that there was one fiscal note from the            
 Department of Revenue which indicates that, due to the phenomenon             
 of elasticity in economics where the possibility of the price of              
 alcohol going up could affect the amount of purchases, they                   
 anticipate a reduction should an alcohol tax be imposed in the                
 future.                                                                       
 TAPE 97-12, SIDE B                                                            
 Number 006                                                                    
                                                                               
 BOB BARTHOLOMEW, Deputy Director, Income & Excise Audit Division,             
 Department of Revenue, came forward to testify on HB 132.  The                
 Administration supports the concept of this bill.  The Department             
 of Revenue wanted to point out that there is a potential small                
 affect to state revenue which is hard to predict.  The fiscal note            
 is a means to provide information to the committee in order to help           
 them make their decision.  It's not a certainty that there would be           
 a loss in revenue.  If there is, they estimate that it would be a             
 small amount.                                                                 
                                                                               
 Number 063                                                                    
                                                                               
 REPRESENTATIVE JOULE made the point that this legislation might               
 cause a loss to the state, but in the long run it might be a gain             
 to the communities who choose to exercise this tax.                           
                                                                               
 MR. BARTHOLOMEW stated that in effect, for the loss of revenue to             
 the state to happen, this would be the assumption.  The local                 
 government could raise the tax for whatever small amount needed.              
 The amount of revenue that would go into the local communities                
 would exceed the loss to the state.                                           
                                                                               
 Number 129                                                                    
                                                                               
 REPRESENTATIVE RYAN asked what the current state tax was on                   
 alcoholic beverages.  He wondered if this tax was a uniform                   
 percentage or whether or not it varied.                                       
                                                                               
 MR. BARTHOLOMEW stated that it varies.  They tax alcohol in three             
 separate ways.  There is a rate based on wine, beer and hard                  
 liquor.  He had the rates available for the committee's                       
 information.  The Department raises approximately $13 million from            
 all these three sources.                                                      
                                                                               
 Number 129                                                                    
                                                                               
 REPRESENTATIVE DYSON asked if state law allows a local political              
 subdivision to discriminate in the taxes between the type of                  
 business that disseminates the liquor.  He used the example of                
 specific businesses who serve meals along with liquor that generate           
 less problems with alcohol than others, such as bars or walk up               
 liquor stores.                                                                
                                                                               
 MR. BARTHOLOMEW stated that he was not familiar enough to know how            
 the taxing schemes work on the local level, whether or not they               
 could do this.  He said he would look into this issue.                        
                                                                               
 Number 200                                                                    
                                                                               
 REPRESENTATIVE DAVIS stated that he appreciated the issues raised             
 for possible amendments and the concern about contacting the liquor           
 industry.  He noted the Judiciary referral and said he'd like to              
 see this bill move out of the present committee.  The issues raised           
 could be addressed during the Judiciary hearings.  He said he would           
 contact the liquor industry.                                                  
                                                                               
 Number 303                                                                    
                                                                               
 REPRESENTATIVE RYAN moved and asked unanimous consent to move  HB
 132 out of committee with individual recommendations and                      
 accompanying fiscal note.  Hearing no objection, SSHB 132 was moved           
 out of the House Community and Regional Affairs Committee.                    
 Number 345                                                                    
                                                                               
 CHAIRMAN IVAN called a brief at ease at 9:01 a.m. and came back on            
 the record at 9:06 a.m.                                                       
                                                                               
 Number 458                                                                    
                                                                               
 REPRESENTATIVE DYSON stated that long before the issues about                 
 sovereignty were raised it seemed very clear that the state is ill-           
 prepared to deal with the native community.  Relatively few                   
 communities in Alaska have chosen the option to organize themselves           
 in spite of the state's encouragement to facilitate this.  He                 
 believed they should revisit Title 29 and see if there are ways to            
 make it easier for local communities to organize themselves in ways           
 which are culturally appropriate.                                             
                                                                               
 REPRESENTATIVE DYSON said that if they could find ways to                     
 facilitate communities to organize themselves through self-                   
 determination, he would like to at least present the option of                
 doing so under state law rather than federal.                                 
                                                                               
 Number 570                                                                    
                                                                               
 REPRESENTATIVE RYAN mentioned village council entities and didn't             
 know how they would react to this proposal.  He spoke about layers            
 of government and the power to tax.                                           
                                                                               
 Number 644                                                                    
                                                                               
 REPRESENTATIVE AL KOOKESH stated that this proposal would find out            
 exactly whether or not this effort to organize is even necessary.             
 He said they could find this out from the people directly.                    
                                                                               
 REPRESENTATIVE DYSON asked Deputy Commissioner Cotten if his                  
 department could research this issue for the committee.  He                   
 wondered what has been done in other states and if a line of                  
 council could be drafted by the department for the committee to               
 explore.  He asked if this would be difficult or impossible.                  
 Number 698                                                                    
                                                                               
 DEPUTY COMMISSIONER COTTEN stated that this would not be                      
 impossible.  It's an extremely complex issue with no easy answers.            
 They've done similar investigations about every four or five years.           
 He said they'd prefer to come back with an outline initially.                 
 Ninety-eight percent of Alaskans live in a city or borough or both.           
 Ninety-one percent live in a city or a borough that pays for                  
 education.  The eight and a half percent that do live in the                  
 unorganized borough, but outside of a first class or home rule city           
 is roughly 55,000 people who are generally of isolated, low income,           
 high unemployment communities.                                                
                                                                               
 DEPUTY COMMISSIONER COTTEN noted that there is a continuing trend             
 of communities revisiting or taking a second look at what is the              
 most appropriate government for them and outlined the options.  In            
 some cases the tribal entity of communities has been a more                   
 effective body for the state to work with.  He noted that these               
 same communities through tribal rule have established sewer and               
 water systems, garbage services, etc.  He noted the few instances             
 where the state has refused a community to organize as a city and             
 went into detail about the various ways some regions have                     
 organized.                                                                    
                                                                               
 Number 882                                                                    
                                                                               
 REPRESENTATIVE DYSON stated that he would like to get a significant           
 basis on this issue before the legislative session ends.  He wanted           
 to make it clear what they would do, what's possible, what's                  
 advisable, etc.  He asked for a preliminary briefing on the                   
 proposed outline by next week.                                                
                                                                               
 Number 939                                                                    
                                                                               
 REPRESENTATIVE KOOKESH noted that they needed to allow for public             
 testimony.  It was agreed by the committee that these preliminary             
 efforts would be more organizational.                                         
                                                                               
 REPRESENTATIVE JOULE thought that this concept was long overdue.              
 He noted that he's been sworn to uphold the constitution.  He spoke           
 about the limited native representation at the original                       
 constitutional convention in light of discussing these issues.  He            
 stated this effort would address people's frustrations.                       
                                                                               
 Number 1037                                                                   
                                                                               
 ADJOURNMENT                                                                   
                                                                               
 CHAIRMAN IVAN adjourned the House Community and Regional Affairs              
 Committee meeting at 9:20 a.m.                                                
                                                                               

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