Legislature(1999 - 2000)

03/04/1999 08:04 AM CRA

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
        HOUSE COMMUNITY AND REGIONAL AFFAIRS                                                                                    
                 STANDING COMMITTEE                                                                                             
                   March 4, 1999                                                                                                
                     8:04 a.m.                                                                                                  
MEMBERS PRESENT                                                                                                                 
Representative Andrew Halcro, Co-Chairman                                                                                       
Representative John Harris, Co-Chairman                                                                                         
Representative Carl Morgan                                                                                                      
Representative Lisa Murkowski                                                                                                   
Representative Fred Dyson                                                                                                       
Representative Reggie Joule                                                                                                     
Representative Albert Kookesh                                                                                                   
MEMBERS ABSENT                                                                                                                  
All members present.                                                                                                            
COMMITTEE CALENDAR                                                                                                              
*HOUSE BILL NO. 92                                                                                                              
"An Act relating to municipal taxation of alcoholic beverages."                                                                 
     - MOVED OUT OF COMMITTEE                                                                                                   
*HOUSE BILL NO. 43                                                                                                              
"An Act relating to police training surcharges imposed for                                                                      
violations of municipal ordinances."                                                                                            
     - MOVED OUT OF COMMITTEE                                                                                                   
(* First public hearing)                                                                                                        
PREVIOUS ACTION                                                                                                                 
BILL: HB  92                                                                                                                    
SHORT TITLE: MUNICIPAL TAXATION OF ALCOHOL                                                                                      
SPONSOR(S): REPRESENTATIVES(S) DAVIS                                                                                            
Jrn-Date    Jrn-Page           Action                                                                                           
 2/10/99       198     (H)  READ THE FIRST TIME - REFERRAL(S)                                                                   
 2/10/99       198     (H)  CRA, FINANCE                                                                                        
 3/04/99               (H)  CRA AT  8:00 AM CAPITOL 124                                                                         
BILL: HB  43                                                                                                                    
SHORT TITLE: MUNI.ORDINANCES:POLICE TRAINING SURCHARGE                                                                          
SPONSOR(S): REPRESENTATIVES(S) DAVIS                                                                                            
Jrn-Date    Jrn-Page           Action                                                                                           
 1/19/99        29     (H)  PREFILE RELEASED 1/15/99                                                                            
 1/19/99        29     (H)  READ THE FIRST TIME - REFERRAL(S)                                                                   
 1/19/99        29     (H)  CRA, JUDICIARY, FINANCE                                                                             
 3/04/99               (H)  CRA AT  8:00 AM CAPITOL 124                                                                         
WITNESS REGISTER                                                                                                                
REPRESENTATIVE DAVIS                                                                                                            
Alaska State Legislature                                                                                                        
Capitol Building, Room 513                                                                                                      
Juneau, Alaska  99801                                                                                                           
Telephone:  (907) 465-2693                                                                                                      
POSITION STATEMENT:  Testified as Sponsor of HB 92 and HB 43.                                                                   
ALICE JOHNSTONE, Legislative Chair                                                                                              
Advisory Board on Alcoholism & Drug Abuse                                                                                       
213 Shotgun Alley                                                                                                               
Sitka, Alaska 99835                                                                                                             
Telephone:  (907) 747-3931                                                                                                      
POSITION STATEMENT:  Supported HB 92.                                                                                           
MARY ROSENZWEIG                                                                                                                 
Substance Abuse Directors Association                                                                                           
4111 Minnesota Drive                                                                                                            
Anchorage, Alaska 99507                                                                                                         
Telephone:  (907) 258-6021                                                                                                      
POSITION STATEMENT:  Supported HB 92.                                                                                           
BRETT FRIED, Economist                                                                                                          
Income & Excise Audit Division                                                                                                  
Department of Revenue                                                                                                           
PO Box 110420                                                                                                                   
Juneau, Alaska 99811-0420                                                                                                       
Telephone:  (907) 465-3682                                                                                                      
POSITION STATEMENT:  Answered questions.                                                                                        
ANNE SCHULTZ, Acting Director                                                                                                   
Advisory Board on Alcoholism & Drug Abuse                                                                                       
240 Main Street, Suite 101                                                                                                      
Juneau, Alaska                                                                                                                  
Telephone:  (907) 465-8920                                                                                                      
POSITION STATEMENT:  Discussed community coalitions and local                                                                   
JULIE KRAFFT, Director                                                                                                          
Member Services                                                                                                                 
Alaska Municipal League                                                                                                         
217 2nd Street                                                                                                                  
Juneau, Alaska                                                                                                                  
Telephone:  (907) 586-1325                                                                                                      
POSITION STATEMENT:  Discussed HB 92 and alcohol-related costs.                                                                 
VALERIE THERRIEN, Attorney Member                                                                                               
Advisory Board on Alcohol & Drug Abuse                                                                                          
779 8th Avenue                                                                                                                  
Fairbanks, Alaska 99701                                                                                                         
Telephone:  (907) 465-8113                                                                                                      
POSITION STATEMENT:  Expressed the importance of HB 92.                                                                         
LAMAR COTTEN, Deputy Commissioner                                                                                               
Department of Community & Regional Affairs                                                                                      
PO Box 112100                                                                                                                   
Juneau, Alaska 99811-2100                                                                                                       
Telephone:  (907) 465-2948                                                                                                      
POSITION STATEMENT:  Supported HB 92.                                                                                           
DOUG GRIFFIN, Director                                                                                                          
Alcoholic Beverage Control Board                                                                                                
550 West 7th Avenue #350                                                                                                        
Anchorage, Alaska 99501                                                                                                         
Telephone:  (907) 269-0350                                                                                                      
POSITION STATEMENT:  Discussed alcohol tax.                                                                                     
DEB DAVIDSON, Legislative Administrative Assistant                                                                              
     to Representative Davis                                                                                                    
Alaska State Legislature                                                                                                        
Capitol Building, Room 513                                                                                                      
Juneau, Alaska  99801                                                                                                           
Telephone:  (907) 465-2693                                                                                                      
POSITION STATEMENT:  Answered questions regarding HB 43.                                                                        
JERRY LUCKHAUPT, Legislative Counsel                                                                                            
Legislative Legal and Research                                                                                                  
Legislative Affairs Agency                                                                                                      
130 Seward Street                                                                                                               
Goldstein Building, Room 401                                                                                                    
Juneau, Alaska 99801                                                                                                            
Telephone:  (907) 465-2450                                                                                                      
POSITION STATEMENT:  Provided information on HB 43.                                                                             
ACTION NARRATIVE                                                                                                                
TAPE 99-11, SIDE A                                                                                                              
Number 0001                                                                                                                     
CO-CHAIRMAN HALCRO 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 Halcro, Harris, Morgan,                                                               
Murkowski, Dyson, Joule and Kookesh.                                                                                            
HB  92-MUNICIPAL TAXATION OF ALCOHOL                                                                                            
Number 0004                                                                                                                     
CO-CHAIRMAN HALCRO announced that the first order of business                                                                   
before the committee would be HOUSE BILL NO. 92, "An Act relating                                                               
to municipal taxation of alcoholic beverages."                                                                                  
REPRESENTATIVE DAVIS, Sponsor of HB 92, Alaska State Legislature,                                                               
noted that the committee packet includes the sponsor statement and                                                              
other required documents.  Representative Davis explained that                                                                  
currently statute says if a municipality has a sales tax, the                                                                   
municipality can tax alcohol at the rate of that sales tax.  A                                                                  
municipality without a sales tax cannot tax alcohol.  The                                                                       
legislation before the committee would take that statute off the                                                                
books and allow municipalities to tax alcohol at any rate, but a                                                                
sales tax ordinance must be initiated in order to tax alcohol.                                                                  
REPRESENTATIVE DAVIS said that HB 92 came about due to the impacts                                                              
of alcohol-related activity to a community.  Legislation at the                                                                 
state level requires various programs for alcohol abuse and                                                                     
alcohol-related offenses which is costly, not to mention the costs                                                              
incurred at hospitals, court systems, and the police departments.                                                               
Municipalities should have the option to raise revenues to offset                                                               
those costs which is what HB 92 achieves.                                                                                       
Number 0329                                                                                                                     
ALICE JOHNSTONE, Legislative Chair, Advisory Board on Alcoholism &                                                              
Drug Abuse, testified via teleconference from Sitka.  She stated                                                                
that the advisory board supports HB 92.  A substantial amount of                                                                
funds could be generated by allowing municipalities to place an                                                                 
additional tax on alcohol.  During the two years that Sitka had a                                                               
four percent tax on alcohol, in excess of $200,000 was collected.                                                               
"Passage of this bill would allow communities, if they so choose,                                                               
the option to recoup some of the tremendous costs of the numerous                                                               
social, safety and health problems directly attributable to alcohol                                                             
and in addition to participate in prevention and treatment of its                                                               
misuse."  The members of the Advisory Board on Alcoholism & Drug                                                                
Abuse ask the committee to approve HB 92 without amendments.                                                                    
MARY ROSENZWEIG, Substance Abuse Directors Association, testified                                                               
via teleconference from Anchorage.  She informed the committee that                                                             
the association represents approximately 50 substance abuse                                                                     
treatment facilities, including prevention programs, around Alaska.                                                             
The association supports HB 92 and anything reducing alcohol                                                                    
consumption.  Research has found that a 10 percent increase in the                                                              
sales price of alcohol reduces alcohol consumption by approximately                                                             
three to four percent.                                                                                                          
Number 0593                                                                                                                     
BRETT FRIED, Economist, Income & Excise Audit Division, Department                                                              
of Revenue, stated that he was present to answer questions.                                                                     
CO-CHAIRMAN HALCRO pointed out that one of the fiscal notes                                                                     
indicates that HB 92 may cause the state to lose revenue due to a                                                               
decrease in consumption of alcohol.  The loss would be dependent on                                                             
the communities and their adopted.                                                                                              
MR. FRIED agreed with Co-Chairman Halcro's statement.                                                                           
ANNE SCHULTZ, Acting Director, Advisory Board on Alcoholism & Drug                                                              
Abuse, informed the committee that after the completion of the                                                                  
planning process, the board determined the primary strategy to                                                                  
promote positive change was to support community coalitions and                                                                 
local partnerships.  On top of the board's support for HB 92 on the                                                             
basis of taxation and reduced consumption, the board views HB 92 as                                                             
a way for local communities to control the responsibilities they                                                                
need to apply to resolving the abuse of alcoholism in their own                                                                 
Number 0804                                                                                                                     
JULIE KRAFFT, Director, Member Services, Alaska Municipal League,                                                               
informed the committee that HB 92 is and has been important                                                                     
legislation for the Alaska Municipal League and the Alaska                                                                      
Conference of Mayors.  Given the current budget situation, the                                                                  
legislation is more important than ever.  As pressure increases on                                                              
local sales and property taxes, municipalities need additional                                                                  
tools to pay for public services.  Ms. Krafft reiterated that under                                                             
statute there is a special exemption on alcohol sales which                                                                     
prohibits local voters from establishing a higher level sales tax                                                               
on alcohol.  Ms. Krafft emphasized that merely removes that                                                                     
restriction with the approval of local voters; this is not a new                                                                
tax.   Alcohol abuse is the number one health and public safety                                                                 
problem in Alaska and alcohol sales should not receive a special                                                                
MS. KRAFFT stressed that costs to local taxpayers related to                                                                    
alcohol use are stunning.  She cited the following areas where                                                                  
alcohol-related costs are incurred:  police costs for alcohol-                                                                  
related felonies and misdemeanors, police costs to transport public                                                             
inebriates, emergency medical services, hospital emergency care                                                                 
costs, prosecutions, direct treatment and rehabilitation of alcohol                                                             
abusers, increased costs of youth and family services related to                                                                
alcohol use, repaired property damage to public facilities, health                                                              
insurance costs paid by local governments, and school districts to                                                              
treat alcohol-related problems.  Last year, the Anchorage Community                                                             
Health Promotion Program reported the following:  alcohol is                                                                    
involved in 60 percent of motor vehicle crash fatalities, 65                                                                    
percent of suicide attempts, 56 percent of total assaults, 56                                                                   
percent of domestic violence, 53 percent of sexual assaults, 34-50                                                              
percent of homicides, and 83 percent of child abuse.                                                                            
MS. KRAFFT recognized that the state may continue to reduce support                                                             
for services due to revenue shortfalls, therefore as the burden                                                                 
increases on local taxpayers, municipalities must be given the                                                                  
proper tools to deal with those burdens.  Passage of HB 92 will                                                                 
provide an option to the voters in a community who are best able to                                                             
determine how to allocate local taxes to provide critical local                                                                 
Number 1028                                                                                                                     
CO-CHAIRMAN HARRIS requested Ms. Krafft explain the alcohol                                                                     
MS. KRAFFT explained that in 1985, Alaska considered raising the                                                                
wholesale tax on alcohol which the industry did not favor.  The                                                                 
industry agreed with the statute if the statute included language                                                               
that would not allow municipalities to raise the alcohol tax                                                                    
individually in a community higher than the existing sales tax.                                                                 
She could not speak for the industry, but believed that the                                                                     
industry feared multiple tax rates across the state that the                                                                    
industry would have to fight.                                                                                                   
CO-CHAIRMAN HARRIS asked if it is legal to have a differential                                                                  
sales tax on different commodities.                                                                                             
MS. KRAFFT believed that a differential sales tax is already                                                                    
allowed on tobacco and hotel/motel tax.                                                                                         
CO-CHAIRMAN HALCRO noted that in some communities the liquor                                                                    
industry has made an effort to promote alcohol education programs                                                               
such as the designated driver program.  The fact remains that                                                                   
raising the tax does not necessarily impact consumption to those                                                                
people being targeted.  Co-Chairman Halcro asked if Ms. Krafft                                                                  
foresaw municipalities having the ability not only to recoup                                                                    
alcohol-related costs, but also providing the municipality with                                                                 
more leverage to go to the industry for more help.                                                                              
MS. KRAFFT believed that would be the case.  If a local assembly                                                                
put an increase in alcohol sales tax before the voters, the                                                                     
industry may come forward and offer other programs.                                                                             
Number 1284                                                                                                                     
VALERIE THERRIEN, Attorney Member, Advisory Board on Alcohol & Drug                                                             
Abuse, testified via teleconference from Fairbanks.  She informed                                                               
the committee that she was testifying on behalf of the legislative                                                              
committee.  This legislation is one of the most important pieces of                                                             
legislation the board would like passed this year.  A tax on                                                                    
alcohol would provide municipalities a revenue source to pay for                                                                
the costs of alcohol and drug abuse in the community.  Ms. Therrien                                                             
reiterated that Sitka collected over $200,000 over the last two                                                                 
years from alcoholic beverage taxes.  Fairbanks does tax alcohol.                                                               
Ms. Therrien stressed that the board would like the support of the                                                              
legislature on HB 92.                                                                                                           
LAMAR COTTEN, Deputy Commissioner, Department of Community &                                                                    
Regional Affairs, supported HB 92.  Mr. Cotten said that he wanted                                                              
to echo Ms. Krafft's comments.  As an ex-city manager, any                                                                      
additional tool that addresses the revenue issue and indirectly                                                                 
addresses alcohol use in a small community, must be given serious                                                               
Number 1486                                                                                                                     
REPRESENTATIVE JOULE asked if the smaller communities and larger                                                                
hub communities that have a damp status could benefit from this                                                                 
tax.  Representative Joule supported HB 92, but understood the bill                                                             
to only benefit those communities that permit the sale of alcohol.                                                              
MR. COTTEN agreed that those communities that do not allow the                                                                  
event of the sale of alcohol would not benefit from this tax.  Mr.                                                              
Cotten mentioned that in the past, there had been some review of                                                                
how to tax at the point of transfer or the point of delivery to a                                                               
community and share that tax with the designated region.                                                                        
REPRESENTATIVE JOULE interpreted Mr. Cotten to mean that if a                                                                   
community with this tax placed a phone order and had the alcohol                                                                
shipped, the tax could be imposed at the point of ordering.                                                                     
MR. COTTEN replied no.  Mr. Cotten clarified that he was referring                                                              
to one of the creative ways to address the issue to which                                                                       
Representative Joule seems to be speaking.  The alcohol arrives at                                                              
the town where it cannot be taxed, but due to the ability to import                                                             
the alcohol the effects on the community remain; how can the tax be                                                             
captured?  Mr. Cotten reiterated that there has been review of                                                                  
taxing when alcohol enters a community and sharing that tax with                                                                
all the areas in the region because the alcohol effects the entire                                                              
region.  No one has ever introduced such legislation.                                                                           
Number 1646                                                                                                                     
REPRESENTATIVE JOULE asked if the hub communities have the ability                                                              
to create a central station for alcohol beverages coming in, damp                                                               
communities in particular, and impose a tax at that point.  Is that                                                             
tax restricted to the amount of the local tax?                                                                                  
MR. COTTEN did not know, but offered to provide that information.                                                               
CO-CHAIRMAN HARRIS asked if HB 92 passed, would the intent of the                                                               
department be to decrease funding for community jails in                                                                        
communities with high numbers of alcohol-related prisoners.  Would                                                              
there be increased pressure for such communities to increase                                                                    
alcohol taxes in order to pay for jail services?                                                                                
MR. COTTEN believed this would be reviewed on a community by                                                                    
community basis.  The funds cannot be designated and would be                                                                   
placed in the city's general fund.  The use of these funds would be                                                             
left to the discretion of the city.  Some communities will utilize                                                              
the funds to attack the issue of alcohol, while other strapped                                                                  
communities would utilize the funds wherever needed.  On the local                                                              
level, the differential tax rate would be sold by convincing the                                                                
public there is a need in a particular area to justify the                                                                      
differential rate.                                                                                                              
Number 1825                                                                                                                     
DOUG GRIFFIN, Director, Alcoholic Beverage Control Board (ABC),                                                                 
testified via teleconference from Anchorage.  Mr. Griffin believed                                                              
what Representative Joule was referring to is in Title 4 which                                                                  
deals with alcoholic beverages.  Title 4 does allow communities to                                                              
establish a community delivery site which would usually be                                                                      
established in damp communities.  A community delivery site is one                                                              
step removed from a community liquor store which is also an option                                                              
for communities.  The ABC Board promotes the use of community                                                                   
delivery sites as a manner in which to establish more local control                                                             
over the amount of alcohol entering a community.  The community                                                                 
delivery does afford the community the ability to levy existing                                                                 
sales tax on that product.  If HB 92 is enacted, a differential tax                                                             
could be levied and collected at the local level.  Mr. Griffin                                                                  
clarified that the ABC Board does not get involved with the                                                                     
taxation of alcohol, but he did want to note the dove-tailing of HB
92 with the ABC Board's effort to promote community delivery sites.                                                             
Currently, Bethel and Barrow are reviewing establishing a community                                                             
delivery system by local ordinance.                                                                                             
REPRESENTATIVE MURKOWSKI inquired as to the history of the current                                                              
REPRESENTATIVE DAVIS said that he was not sure what prompted the                                                                
legislation as it stands.  In summary, Representative Davis said                                                                
this is a local control issue.  With regard to the impact of HB 92                                                              
on state revenues, legislation related to alcohol issues have been                                                              
around forever and alcohol remains a big seller.  Representative                                                                
Davis believed that alcohol consumption may feel an initial hit,                                                                
but would increase shortly thereafter.  With regard to the question                                                             
of how municipalities may spend the money, Representative Davis                                                                 
informed the committee that prior legislation attempted to mandate                                                              
to the municipalities that any money generated from a tax under                                                                 
such legislation be directed to alcohol activities.  After                                                                      
researching the issue, it was discovered that the legislature                                                                   
should not mandate municipalities to dedicate funds.                                                                            
Representative Davis did not believe the legislature had the legal                                                              
authority to mandate municipalities to dedicate funds.  The                                                                     
concerns about wet and damp communities seems to be another issue.                                                              
CO-CHAIRMAN HALCRO believed that HB 92 provides municipalities the                                                              
opportunity to utilize local control by going before its residents                                                              
to get approval for such a tax.                                                                                                 
REPRESENTATIVE DAVIS explained that the initial impetus for HB 92                                                               
was that there are many reductions in municipal assistance and                                                                  
revenue sharing and the option provided in HB 92 would be another                                                               
tool in the municipality's tool box that could compensate for the                                                               
Number 2244                                                                                                                     
CO-CHAIRMAN HARRIS moved to report HB 92 out of committee with                                                                  
individual recommendations and the three accompanying fiscal notes.                                                             
There being no objection, it was so ordered.                                                                                    
HB  43-MUNI.ORDINANCES:POLICE TRAINING SURCHARGE                                                                                
Number 2270                                                                                                                     
CO-CHAIRMAN HALCRO announced that the next order of business before                                                             
the committee would be HOUSE BILL NO. 43, "An Act relating to                                                                   
police training surcharges imposed for violations of municipal                                                                  
The committee took a brief at-ease from 8:35 a.m. to 8:37 a.m.                                                                  
REPRESENTATIVE DAVIS, Sponsor of HB 43, Alaska State Legislature,                                                               
explained that the need for HB 43 came to his attention after the                                                               
Kenai Borough Attorney saw technical and legal problems with the                                                                
legislation.  Representative Davis read the sponsor statement as                                                                
     The Police Training Fund was established to provide training                                                               
     for the law enforcement and corrections community of the                                                                   
     state.  Appropriations to this fund may be made from income                                                                
     derived from the imposition of surcharges on criminal                                                                      
     Last year, legislation was passed expanding the types of                                                                   
     crimes for which a surcharge is imposed and increasing the                                                                 
     amount of the surcharge applied.  This surcharge is imposed on                                                             
     both state and municipal law violations.                                                                                   
     Recently, concern was raised that the phrasing used in the                                                                 
     legislation could be interpreted as requiring surcharges to be                                                             
     imposed on civil as well as criminal violations of the law.                                                                
     Additionally, it was argued that if a local government did not                                                             
     authorize the imposition of a surcharge, an entire ordinance                                                               
     could be found invalid rather than just the section imposing                                                               
     the fine.                                                                                                                  
     House Bill 43 is a housecleaning measure to address these two                                                              
     concerns.  First, the legislation clarifies that the surcharge                                                             
     will be imposed on a violation of a municipal ordinance that                                                               
     imposes a criminal penalty for its violation.  Second, this                                                                
     legislation specifies that the municipality can not enforce                                                                
     (or collect) a penalty for a violation unless the municipality                                                             
     also authorizes the imposition of a surcharge on a violation.                                                              
DEB DAVIDSON, Legislative Administrative Assistant to                                                                           
Representative Davis, said that she was present to answer                                                                       
REPRESENTATIVE JOULE asked if a surcharge could be dedicated.                                                                   
MS. DAVIDSON stated that the surcharge is not dedicated.  The                                                                   
Police Training Fund has been designated in statute.  Ms. Davidson                                                              
explained that the money collected from the surcharge is collected                                                              
and placed in the general fund where it is accounted for as is the                                                              
case for other designated funds.  The intent is to place the                                                                    
surcharge funds in the designated Police Training Fund, but Ms.                                                                 
Davidson did not believe the legislature could actually mandate                                                                 
REPRESENTATIVE DAVIS informed the committee that legislation in                                                                 
this regard usually uses the following language, "legislation can                                                               
be" rather than "shall be" which circumvents the constitutional                                                                 
prohibition of dedication.                                                                                                      
Number 2537                                                                                                                     
REPRESENTATIVE MURKOWSKI assumed that there have been some problems                                                             
in the application of the surcharge which lead to the concerns                                                                  
resulting in HB 43.                                                                                                             
REPRESENTATIVE DAVIS understood that to date there had not been any                                                             
problems.  He pointed out that the original legislation would not                                                               
allow municipalities to collect the surcharge until the                                                                         
municipality passes an ordinance which was of concern.                                                                          
MS. DAVIDSON was not aware of any problems.  The letter from the                                                                
Kenai Borough expressed concern that the legislation could be                                                                   
interpreted as applying to the criminal and civil penalties.                                                                    
Further concern arose because certain municipal ordinances use                                                                  
language that, under the original legislation, would result in the                                                              
inability to enforce an ordinance unless the surcharge was                                                                      
Number 2644                                                                                                                     
MS. DAVIDSON, upon Representative Davis' request, used the                                                                      
following example:  if a person needing a building permit for an                                                                
addition to a home did not obtain a building permit, there would be                                                             
a $50 fine issued for this civil penalty.  The concern arose from                                                               
the language in                                                                                                                 
HB 43 which does not differentiate between criminal and civil                                                                   
penalties and therefore, the civil penalty would have a surcharge                                                               
imposed upon it.  There was also concern that if a municipality did                                                             
not authorize the imposition of a surcharge, the municipality could                                                             
not impose the fine for the civil penalty nor could the                                                                         
municipality enforce the building permit requirement due to the                                                                 
phrase "cannot enforce an ordinance".  The concern that under the                                                               
previous language, all aspects of an ordinance could be argued                                                                  
invalid rather than only the penalty portion.  The concern lead to                                                              
the changes in Section 2 of HB 43.                                                                                              
CO-CHAIRMAN HALCRO asked if he were to violate an ordinance, would                                                              
he pay that fine in his bail to the municipality or does the state                                                              
send out a bill.                                                                                                                
MS. DAVIDSON said that when a ticket, for example a traffic ticket,                                                             
is issued the ticket lists the surcharge; all charges are included.                                                             
CO-CHAIRMAN HALCRO understood that once the municipality collects                                                               
the fine, the money is transmitted to the state where it is placed                                                              
in the general fund.  According to the language on page 2, lines                                                                
18-19, the municipality would be reimbursed up to 10 percent of the                                                             
fine.  Then the state places that in the general fund to be                                                                     
distributed and goes into a general police training fund.  Is it                                                                
prorated for the municipality's contribution?  He inquired as to                                                                
the destination of the redistribution of the funds.                                                                             
MS. DAVIDSON noted that this was an amendment that Senate Finance                                                               
placed in the legislation last year.  There was discussion whether                                                              
the court system or municipality should keep the 10 percent of the                                                              
collection or the entire surcharge given to the state to be                                                                     
appropriated back to the municipality.  The Senate Finance                                                                      
committee preferred the entire surcharge to come to the state who                                                               
would then decide what percentage up to 10 percent the municipality                                                             
would be reimbursed.                                                                                                            
CO-CHAIRMAN HALCRO inquired as to how the percentage is determined.                                                             
Number 2896                                                                                                                     
MS. DAVIDSON did not know.  With regard to the reimbursement of the                                                             
municipalities, last year's Senate Finance committee determined                                                                 
that the entire surcharge would be collected and then a portion                                                                 
reappropriated back out.  If the funds are placed in the Police                                                                 
Training Fund, that fund may be appropriated to the Department of                                                               
Public Safety to the Police Standards Council for the State Trooper                                                             
Academy in Sitka or to municipal police training academies meeting                                                              
the Alaska Police Standards Council requirements.                                                                               
REPRESENTATIVE JOULE commented that the placement of the funds in                                                               
the state's general fund is a way to increase state jobs rather                                                                 
than have the jobs at the local level.                                                                                          
TAPE 99-11, SIDE B                                                                                                              
MS. DAVIDSON understood that the court system already has an                                                                    
accounting system in place to estimate the money coming in.  She                                                                
informed the committee that last year, Anchorage was not concerned                                                              
with the collection.                                                                                                            
CO-CHAIRMAN HALCRO asked if the funding for the Police Training                                                                 
Fund was dollar for dollar.                                                                                                     
REPRESENTATIVE DAVIS clarified that would be the legislature's                                                                  
decision with the appropriation of dollars to the various funds.                                                                
Last year, the surcharge was estimated to bring in $1.2 million per                                                             
year.  Whether that money is kept in the general fund or rolled                                                                 
into the training fund is up to the legislature.  In further                                                                    
response to Co-Chairman Halcro, Representative Davis was not sure                                                               
of the time taken for the state to reimburse the municipality.  He                                                              
deferred that question to Ms. Shaw.  Representative Davis believed                                                              
that the municipalities would benefit from the Police Training Fund                                                             
whether the municipalities receive money back or not.                                                                           
Representative Davis believed if there was no one else to testify,                                                              
it would be beneficial for Jerry Luckhaupt to testify.                                                                          
Number 2800                                                                                                                     
JERRY LUCKHAUPT, Legislative Counsel, Legislative Legal and                                                                     
Research, Legislative Affairs Agency, said that HB 43 makes minor                                                               
changes to the changes made last year.  Mr. Luckhaupt noted that                                                                
the Alaska Court System had concerns with the legislature's ability                                                             
to require the imposition of a surcharge on a violation of a                                                                    
municipal ordinance which was addressed by requiring the                                                                        
municipality to impose the surcharge otherwise the ordinance could                                                              
not be enforced.  Now there are concerns with that language because                                                             
municipalities enact entire bodies of ordinances of which some may                                                              
not have penalties.  The concern was that the language could                                                                    
prevent the municipality from enforcing the entire ordinance.  Mr.                                                              
Luckhaupt did not entirely agree with that interpretation, but the                                                              
concerns were addressed in HB 43.  He informed the committee that                                                               
there have not been any problems and that no one has lost a case on                                                             
this issue yet.  Only letters between attorneys have raised the                                                                 
possibility of a problem.                                                                                                       
MR. LUCKHAUPT pointed out that the substantive portion of HB 43 is                                                              
Section 2 where the following change is made, "A municipality many                                                              
not enforce a penalty for violation of an ordinance for which a                                                                 
surcharge is required to be imposed ..." which he feels addresses                                                               
the possibility that a municipality could enforce any other portion                                                             
of an ordinance that does not deal with the penalty.  Further, the                                                              
imposition of the penalty was confined to criminal violations or                                                                
violations of municipal ordinances that had a penalty enforced                                                                  
through the criminal courts.                                                                                                    
MR. LUCKHAUPT recognized that there was also concern the                                                                        
legislation would prevent municipalities from enforcing their                                                                   
ordinance through civil means.  He informed the committee that a                                                                
government can utilize two methods of coercion to enforce                                                                       
compliance.  One method is through a criminal or quasi criminal                                                                 
process.  He explained that the process would be criminal if the                                                                
prosecution is for a felony or misdemeanor penalty while the                                                                    
process would be quasi criminal if it's a noncriminal infraction or                                                             
violation.  For example, traffic tickets are infractions and                                                                    
noncriminal by definition and do not have criminal penalties                                                                    
attached, but traffic tickets are still enforced through the                                                                    
criminal courts.  There is also the civil process for enforcing                                                                 
ordinances or statutes and those are enforced through the civil                                                                 
courts and may have a penalty attached, a civil judgment not a                                                                  
MR. LUCKHAUPT addressed the earlier references to dedicated funds                                                               
by emphasizing that the surcharge cannot be dedicated.  The                                                                     
legislature establishes a fund and the money to be placed in the                                                                
fund is accounted for separately and the legislature appropriates                                                               
the money into the fund.  The statute will say, "the legislature                                                                
may appropriate, in this case, the surcharge money to the fund."                                                                
Mr. Luckhaupt pointed out that there is a problem with allowing the                                                             
municipality to keep the 10 percent at the time of collection.  The                                                             
statute says that the reimbursement may not exceed 10 percent which                                                             
leaves the percentage in the hands of the legislature.  Further,                                                                
this is state revenue and must be appropriated.  Last year Senate                                                               
Finance determined that the municipality should not receive more                                                                
than 10 percent of the surcharge because the legislature did not                                                                
want to create a windfall if the municipality's efforts to collect                                                              
the surcharge were fairly minor.  Mr. Luckhaupt reiterated that if                                                              
the legislation allowed the municipality to keep 10 percent of the                                                              
surcharge, it would become a dedicated fund which the legislature                                                               
cannot do.                                                                                                                      
Number 2365                                                                                                                     
REPRESENTATIVE MURKOWSKI asked if the issues regarding civil and                                                                
criminal proceedings were brought up last year.                                                                                 
MR. LUCKHAUPT said there was discussion on those issues from                                                                    
Representative Porter and Senator Donley.  In last year's                                                                       
legislation, there is a cut off in which the fine must be greater                                                               
than $30 in order to assess the surcharge.  That language was in                                                                
response to parking tickets of which many are less than $30 and a                                                               
surcharge was not desired for those violations.  Mr. Luckhaupt                                                                  
noted that at the time the surcharge was addressed in Title 12                                                                  
which deals with criminal procedure and sentencing.  At the time,                                                               
he felt that they were dealing with the criminal enforcement                                                                    
mechanisms.  Some violations of building codes are criminal; the                                                                
municipality chooses to enforce that through a civil or criminal                                                                
process.  Often, municipalities have chosen to enforce violations                                                               
thought of as civil in criminal courts, therefore this surcharge                                                                
would apply to those violations.  That was noted in the committee                                                               
process last year.                                                                                                              
REPRESENTATIVE DAVIS emphasized that the changes in HB 43 address                                                               
the concerns of the municipalities to date.                                                                                     
CO-CHAIRMAN HARRIS asked if Representative Davis believed that the                                                              
money collected from the surcharge is going to police training.                                                                 
REPRESENTATIVE DAVIS replied yes.  Last year's legislation expanded                                                             
the surcharge law, but this year will be the first year the                                                                     
legislature will have the ability to appropriate additional funds.                                                              
Representative Davis believed that in the past, all the surcharge                                                               
funds were allocated to the police training fund.                                                                               
Number 1982                                                                                                                     
CO-CHAIRMAN HARRIS moved to report HB 43 out of committee with                                                                  
individual recommendations and the two accompanying fiscal notes.                                                               
There being no objection, it was so ordered.                                                                                    
There being no further business before the committee, the House                                                                 
Community & Regional Affairs Standing Committee meeting was                                                                     
adjourned at 9:13 a.m.                                                                                                          

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