Legislature(1995 - 1996)
04/20/1995 01:40 PM House FIN
| Audio | Topic |
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE FINANCE COMMITTEE
APRIL 20, 1995
1:40 P.M.
TAPE HFC 95 - 88, Side 1, #000 - end.
TAPE HFC 95 - 88, Side 2, #000 - end.
TAPE HFC 95 - 89, Side 1, #000 - end.
TAPE HFC 95 - 89, Side 2, #000 - #273.
CALL TO ORDER
Co-Chair Mark Hanley called the House Finance Committee
meeting to order at 1:40 P.M.
PRESENT
Co-Chair Hanley Representative Kohring
Co-Chair Foster Representative Martin
Representative Kelly Representative Grussendorf
Representative Brown Representative Therriault
Representatives Mulder, Parnell and Navarre were not present
for the meeting.
ALSO PRESENT
Representative Bill Williams; Tom Dow, Vice President,
Princess Tours; Kirsten Martin, Self, Anchorage; Sherrie
Goll, Alaska Women's Lobby/KIDPAC, Juneau; Susan Burke,
Attorney, Gross & Burke, Representing Princess Tours,
Juneau; Dennis Poshard, Director, Division of Charitable
Gaming, Department of Revenue; Jerry Luckhaupt, Attorney,
Legal Counsel, Division of Legal Services; Curtis Lomas,
Welfare Reform Program, Division of Public Assistance,
Department of Health and Social Services; Jim Nordlund,
Director, Division of Public Assistance, Department of
Health and Social Services.
SUMMARY
HB 78 An Act relating to the maximum amount of
assistance that may be granted under the adult
public assistance program and the program of aid
to families with dependent children; proposing a
special demonstration project within the program
of aid to families with dependent children and
directing the Department of Health and Social
Services to seek waivers from the federal
government to implement the project.
1
HB 78 was HELD in Committee for further
consideration.
HB 286 An Act providing an exemption from gambling and
certain alcoholic beverage laws for gambling
conducted by cruise ships for their ticketed
passengers in the offshore water of the state;
relating to promotions on board cruise ships;
defining 'cruise ship'; providing for exemption
procedures for certain cruise ships before they
can conduct gambling in the offshore water of the
state; providing an exemption from the
coin-operated device tax for cruise ships exempted
from the gambling laws; and providing for an
effective date.
CS HB 286 (FIN) was reported out of Committee with
"no recommendation" and with a fiscal note by the
Department of Revenue dated 4/6/95.
HOUSE BILL 286
"An Act providing an exemption from gambling and
certain alcoholic beverage laws for gambling conducted
by cruise ships for their ticketed passengers in the
offshore water of the state; relating to promotions on
board cruise ships; defining 'cruise ship'; providing
for exemption procedures for certain cruise ships
before they can conduct gambling in the offshore water
of the state; providing an exemption from the
coin-operated device tax for cruise ships exempted from
the gambling laws; and providing for an effective
date."
REPRESENTATIVE WILLIAM WILLIAMS testified in support of HB
286. He stated that HB 286 would give the State
authorization to offer an exemption from gambling statutes
to cruise ships. The exemption would allow cruise ships to
operate their casinos in Alaskan waters.
He added that casino gambling aboard cruise ships is an
amenity needed to keep Alaska on par with other cruise
destinations. While gambling is not the main attraction of
cruises, it is an accepted and expected part of the
experience.
Representative Williams added that the communities of Alaska
would not be negatively affected by the legislation. Casino
operations would be prohibited within three miles of a
vessel's port of call. While in port the casino would
remain closed, therefore removing the opportunity for non-
ticketed people to participate in the activities.
2
Representative Williams concluded that the legislation would
support the tourism industry and would raise State revenues.
He urged Committee members' support the legislation.
TOM DOW, VICE PRESIDENT, PRINCESS TOURS, testified in
support of HB 286. The legislation would allow gambling
aboard cruise ships within Alaskan waters for ticketed
cruise passengers. Cruise ships would be required to pay a
fee to the State for an exemption prior to conducting
gambling under the legislation.
Mr. Dow added that his company believes that there are no
public policy reasons to prohibit the activity. There is
public support to allow it to continue and with the
provision of an exemption fee, there would be a simple
method for the State to thus secure revenues from cruise
lines who wish to continue to offer the entertainment option
to their passengers. He added, there is little
administrative expense or burden placed on the State for the
collection of the revenues.
Representative Brown asked if the fees recommended in this
year's legislation were the same as those in the original
legislation last year. Mr. Dow replied that the fees
reflect what was passed last year from Committee and that
those fees should generate $600 thousand dollars this year
and more in the following year.
Representative Brown referenced Section #6 and asked why the
exception was necessary: This prohibition does not apply to
on-shore excursions that are sold on board a cruise ship.
Mr. Dow commented, last year an amendment was offered to the
legislation. The legislation was directed at prohibiting or
restricting promotions to gift shops. The language in the
bill specifically excluded the sale of shore excursion
products on board. Therefore, more narrowly defined the
disclosure requirement to the area of gift shop promotional
lectures.
He pointed out, that practice has been applied frequently in
the Caribbean areas although not a common practice in
Alaska. Operators have attempted to do this over the years,
although the Princess Line has never supported it. He
understood the practice was not legal as informed by the
Attorney General's office. Because the last year's
legislation that was vetoed contained the exemption for
shore excursion activities, that area was then readdressed.
He added that it is common practice for cruise ship lines to
offer shore excursion activities to passengers. The
practice is a convenience for the passengers and to the
vendors providing the service. Mr. Dow suggested that the
3
information could be disclosed on the shore excursion
brochures.
Representative Brown referenced correspondence from a local
vendor who felt that the inclusion of the sentence in
Section #6 would be detrimental to small and local vendors.
Mr. Dow responded that the cruise lines has a responsible
role to guarantee that activities that involve equipment and
transportation are safe. He emphasized that the current
system works for the greater benefit of most of the
customers, passengers and vendors who are operating.
Representative Martin voiced concern with "opening the door"
to gambling in the State of Alaska. Mr. Dow responded that
gambling would be available only to the passengers on the
cruise ships. Representative Martin emphasized that the
State of Alaska prohibits gambling. He asked if the
legislation could proliferate gambling in the State.
Mr. Dow explained that this precedence has been established
in other states who share a gambling prohibition. The
unique quality of Alaska as opposed to other coastal states,
is that in Alaska, the cruise pattern tends to "hug" the
inside passage. By some definitions, the cruise ship would
be within the state territorial waters at all times.
Representative Martin reemphasized that the cruise lines
would be opening gambling for profit purposes as opposed to
charitable donations. He asked the type of gambling
available aboard the ships.
Mr. Dow explained the various forms available to the cruise
line passengers. Representative Martin voiced resistance to
video gambling and credit card gambling. He felt that once
the legislation moves through the Legislature, it would open
up gambling possibilities throughout the State.
Representative Brown referenced a memo from the Department
of Revenue addressing the legalization of slot machines in
the proposed legislation. Mr. Dow stated that current
information from the Department indicates that there may be
another section of State law that prohibits other coin
operated devices. He stated that it could require an
amendment.
Mr. Dow added that it would be possible to pass the
exemptive legislation and narrowly define what is involved
without opening the State of Alaska to gambling.
Representative Martin asked if Mr. Dow would object to an
amendment indicating that proceeds from the gambling would
not be allowed for political campaigning. Mr. Dow stated
that there was no intention that the cruise operators would
be using the proceeds to fund any outside activities.
4
SUSAN BURKE, ATTORNEY, GROSS & BURKE, REPRESENTING PRINCESS
TOURS, JUNEAU, spoke to the need for a technical amendment.
The Department of Law indicated that a problem existed from
the drafting, which inadvertently excluded slot machines.
Ms. Burke believed that the bill as passed last year
adequately covers that concern. Although, having gone
through the past two years legislative work, she recommended
including the amendment.
Ms. Burke noted that Amendment #1 [Attachment #1] would
provide clear intent that slot machines would not be
included in the exemption for cruise ships.
Mr. Burke responded to Representative Martin's concern that
under the equal protection doctrine, by passing the bill
providing an exemption from casino gambling for cruise ships
would not allow anyone in the State the authority to go to
court and appeal for the same rights. She stated this was
not a concern. Under the equal protection analysis, to
treat one class of person different from another, would
require good reason for doing so. Ms. Burke added, when
speaking about commercial regulations to conduct the
gambling activity, there would be no chance that a court
would come to the conclusion that an equal protection
problem existed.
(Tape Change, HFC 95-88, Side 2).
Ms. Burke noted that Amendment #1 would clarify existing
law, adding new language AS 05.15.250. The effect would
establish the fact of cruise ship exemption, and that any
prohibitions resulting from lack of authorization listed
would not apply to the cruise ships.
Representative Martin voiced concern that the legislation
would bring gambling to the State in order to generate more
revenues. Ms. Burke noted that there would be a difference
between having a gambling operation located on land in which
everyone had access to gambling on board a cruise ship. The
activity of gambling on the cruise ship would be an activity
which in actuality would not take place in Alaska, although
it would in a technical sense.
Representative Therriault MOVED to adopt Amendment #1.
Representative Martin OBJECTED for purposes of discussion.
DENNIS POSHARD, DIRECTOR, DIVISION OF CHARITABLE GAMING,
DEPARTMENT OF REVENUE, noted that the position paper
distributed to Committee members resulted from a discussion
with the Department of Law. However, he felt that the
amendment was not needed because of Section 2(d) which would
5
address the concern.
The area of a potential problem results from the regulations
which were adopted in accordance with Title 43, the taxing
provisions for coin operated devices. The basis for the
particular regulation which makes Class 2 and Class 3 coin
operated devices illegal, was the criminal and civil
statutes which prohibit slot machines and coin operated
devices. Mr. Poshard added, from discussions with
Legislative Legal Counsel, the Department of Revenue's
concern with the proposed legislation has been alleviated.
Mr. Poshard commented that the main intent of the position
paper was to address the relationship between the cruise
ship gambling bill and the negotiations which are taking
place with Klawock Native group involving a contract to
conduct Class 3 gaming activities.
Representative Martin asked for further information
regarding the Native American court cases and the gambling
concern. Mr. Poshard stated that there are several cases
existing although he could not speculate on the relationship
between those cases and the proposed legislation. Federal
law requires entering into negotiations in good faith with
any recognized Indian tribes as lands that could conduct
gaming.
Representative Martin asked if the State could prohibit a
group of people from gambling. Mr. Poshard explained that
the only basis for allowing the gaming to take place on
Indian lands is through the Indian Gaming Regulatory Act
which is federal law. No other states which have gambling
prohibitions, have also permitted other types of gambling
following the agreement with an Indian tribe on reservation
land.
A roll call was taken on the MOTION to adopt Amendment #1.
IN FAVOR: Grussendorf, Kelly, Kohring, Therriault,
Brown, Foster, Hanley
OPPOSED: Martin
Representatives Mulder, Navarre and Parnell were not present
for the vote.
The MOTION PASSED (7-1).
Representative Grussendorf why the number 300 passengers
qualified a boat as a "cruise" ship thus permitting
gambling. Ms. Burke stated that it was the intent of the
legislation to limit the gambling to the larger vessels
which offer a big range of entertainment services.
6
Establishing that number would eliminate a small boat
claiming status in order to offer gambling. She remarked
that the language would close any possible loop holes.
JERRY LUCKHAUPT, ATTORNEY, LEGAL COUNSEL, DIVISION OF LEGAL
SERVICES, stated that the operator of the cruise ship would
have to apply for the exemption as specified in Section 2 of
the legislation. The definition would exclude anyone who is
not eligible to obtain an exemption. Each ship would have
to apply for an exemption separately and each ship could
loose their exemption separately.
Representative Therriault MOVED to report CS HB 286 (FIN)
out of Committee with individual recommendations and with
the accompanying fiscal note. There being NO OBJECTION, it
was so ordered.
CS HB 286 (FIN) was reported out of Committee with "no
recommendations" and with a fiscal note by the Department of
Revenue dated 4/06/95.
HOUSE BILL 78
"An Act relating to the maximum amount of assistance
that may be granted under the adult public assistance
program and the program of aid to families with
dependent children; proposing a special demonstration
project within the program of aid to families with
dependent children and directing the Department of
Health and Social Services to seek waivers from the
federal government to implement the project."
Co-Chair Hanley provided an overview of HB 78. He pointed
out that the intent of welfare reform is to get people off
welfare. According to a recent survey by the State
Department of Health and Social Services, 88% of Aid to
Families with Dependent Children (AFDC) clients in Alaska
have indicated that they would rather work than be on
welfare.
Co-Chair Hanley stated that HB 78 would provide for the
Department of Health and Social Services to apply for a
series of waivers from the usual provisions governing AFDC
programs. A "workfare" project would be established and
would require able-bodied recipients who were not working at
least 15 hours a week to perform community service or have
their benefits reduced.
Co-Chair Hanley concluded that the legislation would provide
positive incentives to work in the form of higher income
allowance and higher vehicle allowance. The costs of child
care and transportation necessary for participation in the
7
program would be covered by the Department. He added that
HB 78 would be an initial step towards breaking the cycle of
dependence on welfare by rewarding hard work.
Co-Chair Hanley provided a sectional analysis of the
legislation. HB 78 amends existing statutes for the AFDC
program. The legislation would authorize the Department to
seek federal approval to operate four experimental AFDC
demonstration projects under the authority of Section
1115(a) of the Social Security Act, which would authorize
imposition of certain modified AFDC eligibility criteria and
requirements for participation in a mandatory work program
for project participants. The project would establish a
ratable reduction in benefit payments for the AFDC program
statewide.
Co-Chair Hanley added, under the waiver, a person would be
allowed to receive up to $200 hundred dollars for the first
amount of money made and that, they would be able to keep
1/3 of the remainder made. This would provide an incentive
for people while also allowing them to improve their status
by working and at the same time would help the State by
reducing the amount of money spent.
(Tape Change, HFC 95-89, Side 1).
Co-Chair Hanley continued explaining each section of the
bill. He reiterated that the Department would be
responsible for paying the child care costs as well as
transportation costs. One of the fiscal notes included
would cover those expenses.
JIM NORDLUND, DIRECTOR, DIVISION OF PUBLIC ASSISTANCE,
DEPARTMENT OF HEALTH AND SOCIAL SERVICES, stated that
Section #7 would establish an AFDC unemployed parent
demonstration project, to assist two-parent families
establish self-sufficiency within three years.
He added that Section #8 would establish a self-employment
demonstration project to assist AFDC recipients in reducing
their need for benefits by allowing them to establish and
operate a microenterprise. Co-Chair Hanley commented that
the current system prohibits participants from saving money
as it would place them over the asset limit.
Representative Grussendorf spoke in favor of the proposed
programs, although expressed hesitation on the proposed
program funding. He communicated that the money to fund
the program would be taken from those already poor and
making them more poor for making the experiment work. Mr.
Nordlund added, a rateable reduction of 1.7% amounting to
8
$13 dollars per month per one adult and child unit would be
added. He stressed that the current system would operate
the same, although there would be demonstration projects for
certain selected persons receiving AFDC. The auto exemption
would not apply for all AFDC participants in the State.
Co-Chair Hanley commented on Section #9, the "diversion"
demonstration project, which would offer short term
financial assistance to job-ready AFDC applicants in order
to avoid long-term financial support.
Representative Martin asked the intent of the language on
Page 8, Line 18, "(2) disregard up to $500 each month in
nonbusiness income set aside for the development or
operation of the microenterprise;".
CURTIS LOMAS, WELFARE REFORM PROGRAM, DIVISION OF PUBLIC
ASSISTANCE, DEPARTMENT OF HEALTH AND SOCIAL SERVICES,
explained that language provided a provision to allow an
individual to set aside income from some source other than a
business as a way to capitalize. The provision would allow
the AFDC individual to accrue up to $500 dollars per month
and place into a business capital account with a maximum
limit of $10 thousand dollars. That amount would not be
considered as income.
Representative Martin questioned how the Permanent Fund
Dividend checks and share holding reimbursements would
affect a persons qualifications to receiving welfare
subsidies. Mr. Nordlund stated that the bill would have no
effect on any AFDC recipients dividend check resulting from
the "hold harmless" provision in current law. Mr. Lomas
added, in terms of the PFD checks, the "hold harmless" would
allow a four month investment limit. Currently, a person
could set aside the check into a savings account and
continue to have their eligibility protected for up to four
months. If that person chose to place that saved amount
into a microenterprise account, a limit would no longer
exist.
Mr. Nordlund added that there would be administrative costs
associated with the new demonstration projects. In order to
move forward with welfare reform, to move people from
welfare to work, new ideas must be tried. He applauded all
demonstration projects found in the bill stating that they
are good ideas and worthy of testing.
Representative Martin criticized encouraging any further
exemptions to the welfare program. Mr. Lomas clarified
information regarding dividend payments received from Native
corporations. He stated that as a part of the 1988 Native
Claim Settlement Act, a $2 thousand dollar limit was
9
established in federal law; this was not a state policy. He
added that this was not an exclusive Alaskan policy as
referenced by Representative Martin.
KIRSTEN MARTIN, SELF, PRISONERS OF WELFARE WORKING ON
WINNING, ANCHORAGE, provided the Committee with a handout of
the monthly expenditures for the average AFDC recipient.
[Attachment #2].
She asked for further consideration of the portion of the
legislation requiring the under eighteen welfare recipient
to live with the parent which would require that parent's
income to be the determinant in deciding the medical
expenses of the AFDC recipient. She directed her concern to
"breaking" the grandparent's "pocket book". Ms. Martin
requested that language be changed to exempt that
responsibility.
Mr. Lomas instructed that federal law computes the income of
a parent when the child is living with them. He added that
the bill could change that policy, however, the way the
legislation is structured, there is a federal option to
require teens to live at home. To change that language
would depend on the State of Alaska adopting that option.
He added, that section of the bill was not a demonstration
project, but was a portion of the bill which was an exercise
as an option of federal law. To change that "treatment"
would require a waiver of that portion of the bill.
Representative Martin interjected that supporting that
waiver would encourage more teenage parents to leave home.
Representative Martin cited the responsibility of the
biological father. Ms. Martin discussed the lengthy time it
takes for the Child Support Enforcement Agency to enforce
child support. She personally has waited for five years
without any child support compensation. Co-Chair Hanley
advised that there is not much flexibility within current
laws.
Representative Brown asked what a cut to the benefits would
mean to someone receiving AFDC. Ms. Martin affirmed that
she was fortunate in that she currently received rental
assistance. Without rental assistance, she stated that she
would most likely lose her housing. Ms. Martin stressed
that a ($15) fifteen dollar cut would be dramatic for
someone on such a "tight" budget. Ms. Martin emphasized
that all shelters and most churches are full; food banks
have reached their limit. She stated that many people will
loose their homes and the end product will be that many more
children will be taken by Division of Family and Youth
Services (DFYS) because the parents will no longer be
adequately able to support the child's needs. She added,
10
currently there are not enough foster parents for the
children needing home placements.
Ms. Martin remarked that she was involved in creating a self
sufficiency group with other AFDC recipients through local
networking. Some of the items targeted through the
networking are child care and transportation needs. She
agreed that there are failures in the present system,
although there are many AFDC recipients who are trying to
find ways to better themselves.
SHERRIE GOLL, ALASKA WOMEN'S LOBBY/KIDPAC, JUNEAU, stated
that HB 78 was clearly the most rational approach considered
by the Legislature, pointing out that it was full of things
which removed disincentives for families to become employed
and stay employed.
Ms. Goll focused on specific areas of concern with the
proposed legislation. The first concern of the Women's
Lobby is the teen parent project. Ms. Goll pointed out that
Alaska has a high teen birth rate. In 1993, 1189 teenagers
had babies. The total case load of teen parents on AFDC is
141. She noted that the vast majority of teenagers who are
having children, are living at home with their parents and
being supported.
Ms. Goll applauded the exemptions for those with no parental
support, or if the home of the teenager was an abusive
situation and the teen could not live there. She pointed
out that 70 recipients would be affected by the project. In
determining each case, investigation would be required.
Ms. Goll emphasized that her main concern would be with the
health care needs of a pregnant teenager. Pregnant
teenagers have poor health outcomes which often mean poor
health outcomes for their children. Premature births are
much more common in teens, and most of the low birth weight
babies born prematurely will have health problems throughout
their life. Ms. Goll emphasized that prenatal care is
important as is good nutrition as well as the delivery of
the child.
In considering the parents income, the minor will be
required to live at home as a condition of eligibility.
Unless the parent of the minor is also on welfare, the teen
would not be eligible for any assistance. The concept of
holding the parents income harmless in some way so that the
teen could be eligible for assistance necessary for her to
have a healthy baby needs to be reconsidered if that section
remains in the bill.
Ms. Goll continued addressing other issues regarding the
personal responsibility of the "other" parent of the new
11
baby. In 60% of the cases where a teenage girl is pregnant,
the father of that child is an adult. Ms. Goll recommended
that the State provide active child support collection. The
other 40% of the fathers are teen age boys. The family of
the teenage girl is required to take personal and financial
responsibility for the teenager and new baby, although the
same responsibility is not required of the teen dad's
family. Ms. Goll emphasized that consideration of that
section of the bill be given deeper scrutiny or that section
of the bill be dropped. Ms. Goll requested that one other
exemption be considered.
(Tape Change, HFC 95-89, Side 2).
Ms. Goll stated that if a student is enrolled in a four year
education program, they should not be required to work 20
hours a week as well.
Ms. Goll spoke to the "unemployed" parent project. Until a
few years ago, AFDC was only available to single parents who
had dependent children. In 1988, there was a change in
federal law, which indicated that law broke-up families.
The federal law mandated on states that two parent families
should be included in welfare eligibility when one of the
parents was unemployed. She pointed out that at that time
case loads grew significantly. She noted that by October,
that mandate could be terminated.
Much of the JOBS training money currently is distributed for
the two parent families. Those are the persons who will be
greatly affected by the hundred hour rule. That group could
most benefit from the limit and could live within that
restraint.
Ms. Goll opposed the rateable reductions. Without
subsidized housing, of which only 20% percent of the AFDC
recipients qualify, an AFDC recipient could not make it with
a $15 dollar monthly reduction. She emphasized that the
costs of welfare changes should be offset with increased
child support collections.
Ms. Goll noted that major changes on the federal level would
be occurring by October. She added that these changes will
probably block grant the funds and will most likely come
with less restrictions, rather than new and different
restrictions. However, the welfare system will be
redesigned. She requested that the Committee consider
putting off changes to the welfare system until the federal
changes have been made. Ms. Goll suggested changing the
effective dates for applying for the "waivers" until
January, 1996.
12
Ms. Goll urged the Committee to consider off-setting the
cost of the programs other than on the "backs of the poor".
She pointed out that action would hurt 14,000 children in
Alaska.
HB 78 was HELD in Committee for further consideration.
ADJOURNMENT
The meeting adjourned at 3:55 P.M.
HOUSE FINANCE COMMITTEE
APRIL 20, 1995
1:40 P.M.
TAPE HFC 95 - 88, Side 1, #000 - end.
TAPE HFC 95 - 88, Side 2, #000 - end.
TAPE HFC 95 - 89, Side 1, #000 - end.
TAPE HFC 95 - 89, Side 2, #000 - #273.
CALL TO ORDER
Co-Chair Mark Hanley called the House Finance Committee
meeting to order at 1:40 P.M.
PRESENT
Co-Chair Hanley Representative Kohring
Co-Chair Foster Representative Martin
Representative Kelly Representative Grussendorf
Representative Brown Representative Therriault
Representatives Mulder, Parnell and Navarre were not present
for the meeting.
ALSO PRESENT
Representative Bill Williams; Tom Dow, Vice President,
Princess Tours; Kirsten Martin, Self, Anchorage; Sherrie
Goll, Alaska Women's Lobby/KIDPAC, Juneau; Susan Burke,
Attorney, Gross & Burke, Representing Princess Tours,
Juneau; Dennis Poshard, Director, Division of Charitable
Gaming, Department of Revenue; Jerry Luckhaupt, Attorney,
Legal Counsel, Division of Legal Services; Curtis Lomas,
Welfare Reform Program, Division of Public Assistance,
Department of Health and Social Services; Jim Nordlund,
Director, Division of Public Assistance, Department of
Health and Social Services.
SUMMARY
13
HB 78 An Act relating to the maximum amount of
assistance that may be granted under the adult
public assistance program and the program of aid
to families with dependent children; proposing a
special demonstration project within the program
of aid to families with dependent children and
directing the Department of Health and Social
Services to seek waivers from the federal
government to implement the project.
HB 78 was HELD in Committee for further
consideration.
HB 286 An Act providing an exemption from gambling and
certain alcoholic beverage laws for gambling
conducted by cruise ships for their ticketed
passengers in the offshore water of the state;
relating to promotions on board cruise ships;
defining 'cruise ship'; providing for exemption
procedures for certain cruise ships before they
can conduct gambling in the offshore water of the
state; providing an exemption from the
coin-operated device tax for cruise ships exempted
from the gambling laws; and providing for an
effective date.
CS HB 286 (FIN) was reported out of Committee with
"no recommendation" and with a fiscal note by the
Department of Revenue dated 4/6/95.
HOUSE BILL 286
"An Act providing an exemption from gambling and
certain alcoholic beverage laws for gambling conducted
by cruise ships for their ticketed passengers in the
offshore water of the state; relating to promotions on
board cruise ships; defining 'cruise ship'; providing
for exemption procedures for certain cruise ships
before they can conduct gambling in the offshore water
of the state; providing an exemption from the
coin-operated device tax for cruise ships exempted from
the gambling laws; and providing for an effective
date."
REPRESENTATIVE WILLIAM WILLIAMS testified in support of HB
286. He stated that HB 286 would give the State
authorization to offer an exemption from gambling statutes
to cruise ships. The exemption would allow cruise ships to
operate their casinos in Alaskan waters.
He added that casino gambling aboard cruise ships is an
amenity needed to keep Alaska on par with other cruise
14
destinations. While gambling is not the main attraction of
cruises, it is an accepted and expected part of the
experience.
Representative Williams added that the communities of Alaska
would not be negatively affected by the legislation. Casino
operations would be prohibited within three miles of a
vessel's port of call. While in port the casino would
remain closed, therefore removing the opportunity for non-
ticketed people to participate in the activities.
Representative Williams concluded that the legislation would
support the tourism industry and would raise State revenues.
He urged Committee members' support the legislation.
TOM DOW, VICE PRESIDENT, PRINCESS TOURS, testified in
support of HB 286. The legislation would allow gambling
aboard cruise ships within Alaskan waters for ticketed
cruise passengers. Cruise ships would be required to pay a
fee to the State for an exemption prior to conducting
gambling under the legislation.
Mr. Dow added that his company believes that there are no
public policy reasons to prohibit the activity. There is
public support to allow it to continue and with the
provision of an exemption fee, there would be a simple
method for the State to thus secure revenues from cruise
lines who wish to continue to offer the entertainment option
to their passengers. He added, there is little
administrative expense or burden placed on the State for the
collection of the revenues.
Representative Brown asked if the fees recommended in this
year's legislation were the same as those in the original
legislation last year. Mr. Dow replied that the fees
reflect what was passed last year from Committee and that
those fees should generate $600 thousand dollars this year
and more in the following year.
Representative Brown referenced Section #6 and asked why the
exception was necessary: This prohibition does not apply to
on-shore excursions that are sold on board a cruise ship.
Mr. Dow commented, last year an amendment was offered to the
legislation. The legislation was directed at prohibiting or
restricting promotions to gift shops. The language in the
bill specifically excluded the sale of shore excursion
products on board. Therefore, more narrowly defined the
disclosure requirement to the area of gift shop promotional
lectures.
He pointed out, that practice has been applied frequently in
the Caribbean areas although not a common practice in
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Alaska. Operators have attempted to do this over the years,
although the Princess Line has never supported it. He
understood the practice was not legal as informed by the
Attorney General's office. Because the last year's
legislation that was vetoed contained the exemption for
shore excursion activities, that area was then readdressed.
He added that it is common practice for cruise ship lines to
offer shore excursion activities to passengers. The
practice is a convenience for the passengers and to the
vendors providing the service. Mr. Dow suggested that the
information could be disclosed on the shore excursion
brochures.
Representative Brown referenced correspondence from a local
vendor who felt that the inclusion of the sentence in
Section #6 would be detrimental to small and local vendors.
Mr. Dow responded that the cruise lines has a responsible
role to guarantee that activities that involve equipment and
transportation are safe. He emphasized that the current
system works for the greater benefit of most of the
customers, passengers and vendors who are operating.
Representative Martin voiced concern with "opening the door"
to gambling in the State of Alaska. Mr. Dow responded that
gambling would be available only to the passengers on the
cruise ships. Representative Martin emphasized that the
State of Alaska prohibits gambling. He asked if the
legislation could proliferate gambling in the State.
Mr. Dow explained that this precedence has been established
in other states who share a gambling prohibition. The
unique quality of Alaska as opposed to other coastal states,
is that in Alaska, the cruise pattern tends to "hug" the
inside passage. By some definitions, the cruise ship would
be within the state territorial waters at all times.
Representative Martin reemphasized that the cruise lines
would be opening gambling for profit purposes as opposed to
charitable donations. He asked the type of gambling
available aboard the ships.
Mr. Dow explained the various forms available to the cruise
line passengers. Representative Martin voiced resistance to
video gambling and credit card gambling. He felt that once
the legislation moves through the Legislature, it would open
up gambling possibilities throughout the State.
Representative Brown referenced a memo from the Department
of Revenue addressing the legalization of slot machines in
the proposed legislation. Mr. Dow stated that current
information from the Department indicates that there may be
another section of State law that prohibits other coin
operated devices. He stated that it could require an
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amendment.
Mr. Dow added that it would be possible to pass the
exemptive legislation and narrowly define what is involved
without opening the State of Alaska to gambling.
Representative Martin asked if Mr. Dow would object to an
amendment indicating that proceeds from the gambling would
not be allowed for political campaigning. Mr. Dow stated
that there was no intention that the cruise operators would
be using the proceeds to fund any outside activities.
SUSAN BURKE, ATTORNEY, GROSS & BURKE, REPRESENTING PRINCESS
TOURS, JUNEAU, spoke to the need for a technical amendment.
The Department of Law indicated that a problem existed from
the drafting, which inadvertently excluded slot machines.
Ms. Burke believed that the bill as passed last year
adequately covers that concern. Although, having gone
through the past two years legislative work, she recommended
including the amendment.
Ms. Burke noted that Amendment #1 [Attachment #1] would
provide clear intent that slot machines would not be
included in the exemption for cruise ships.
Mr. Burke responded to Representative Martin's concern that
under the equal protection doctrine, by passing the bill
providing an exemption from casino gambling for cruise ships
would not allow anyone in the State the authority to go to
court and appeal for the same rights. She stated this was
not a concern. Under the equal protection analysis, to
treat one class of person different from another, would
require good reason for doing so. Ms. Burke added, when
speaking about commercial regulations to conduct the
gambling activity, there would be no chance that a court
would come to the conclusion that an equal protection
problem existed.
(Tape Change, HFC 95-88, Side 2).
Ms. Burke noted that Amendment #1 would clarify existing
law, adding new language AS 05.15.250. The effect would
establish the fact of cruise ship exemption, and that any
prohibitions resulting from lack of authorization listed
would not apply to the cruise ships.
Representative Martin voiced concern that the legislation
would bring gambling to the State in order to generate more
revenues. Ms. Burke noted that there would be a difference
between having a gambling operation located on land in which
everyone had access to gambling on board a cruise ship. The
activity of gambling on the cruise ship would be an activity
which in actuality would not take place in Alaska, although
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it would in a technical sense.
Representative Therriault MOVED to adopt Amendment #1.
Representative Martin OBJECTED for purposes of discussion.
DENNIS POSHARD, DIRECTOR, DIVISION OF CHARITABLE GAMING,
DEPARTMENT OF REVENUE, noted that the position paper
distributed to Committee members resulted from a discussion
with the Department of Law. However, he felt that the
amendment was not needed because of Section 2(d) which would
address the concern.
The area of a potential problem results from the regulations
which were adopted in accordance with Title 43, the taxing
provisions for coin operated devices. The basis for the
particular regulation which makes Class 2 and Class 3 coin
operated devices illegal, was the criminal and civil
statutes which prohibit slot machines and coin operated
devices. Mr. Poshard added, from discussions with
Legislative Legal Counsel, the Department of Revenue's
concern with the proposed legislation has been alleviated.
Mr. Poshard commented that the main intent of the position
paper was to address the relationship between the cruise
ship gambling bill and the negotiations which are taking
place with Klawock Native group involving a contract to
conduct Class 3 gaming activities.
Representative Martin asked for further information
regarding the Native American court cases and the gambling
concern. Mr. Poshard stated that there are several cases
existing although he could not speculate on the relationship
between those cases and the proposed legislation. Federal
law requires entering into negotiations in good faith with
any recognized Indian tribes as lands that could conduct
gaming.
Representative Martin asked if the State could prohibit a
group of people from gambling. Mr. Poshard explained that
the only basis for allowing the gaming to take place on
Indian lands is through the Indian Gaming Regulatory Act
which is federal law. No other states which have gambling
prohibitions, have also permitted other types of gambling
following the agreement with an Indian tribe on reservation
land.
A roll call was taken on the MOTION to adopt Amendment #1.
IN FAVOR: Grussendorf, Kelly, Kohring, Therriault,
Brown, Foster, Hanley
OPPOSED: Martin
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Representatives Mulder, Navarre and Parnell were not present
for the vote.
The MOTION PASSED (7-1).
Representative Grussendorf why the number 300 passengers
qualified a boat as a "cruise" ship thus permitting
gambling. Ms. Burke stated that it was the intent of the
legislation to limit the gambling to the larger vessels
which offer a big range of entertainment services.
Establishing that number would eliminate a small boat
claiming status in order to offer gambling. She remarked
that the language would close any possible loop holes.
JERRY LUCKHAUPT, ATTORNEY, LEGAL COUNSEL, DIVISION OF LEGAL
SERVICES, stated that the operator of the cruise ship would
have to apply for the exemption as specified in Section 2 of
the legislation. The definition would exclude anyone who is
not eligible to obtain an exemption. Each ship would have
to apply for an exemption separately and each ship could
loose their exemption separately.
Representative Therriault MOVED to report CS HB 286 (FIN)
out of Committee with individual recommendations and with
the accompanying fiscal note. There being NO OBJECTION, it
was so ordered.
CS HB 286 (FIN) was reported out of Committee with "no
recommendations" and with a fiscal note by the Department of
Revenue dated 4/06/95.
HOUSE BILL 78
"An Act relating to the maximum amount of assistance
that may be granted under the adult public assistance
program and the program of aid to families with
dependent children; proposing a special demonstration
project within the program of aid to families with
dependent children and directing the Department of
Health and Social Services to seek waivers from the
federal government to implement the project."
Co-Chair Hanley provided an overview of HB 78. He pointed
out that the intent of welfare reform is to get people off
welfare. According to a recent survey by the State
Department of Health and Social Services, 88% of Aid to
Families with Dependent Children (AFDC) clients in Alaska
have indicated that they would rather work than be on
welfare.
Co-Chair Hanley stated that HB 78 would provide for the
Department of Health and Social Services to apply for a
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series of waivers from the usual provisions governing AFDC
programs. A "workfare" project would be established and
would require able-bodied recipients who were not working at
least 15 hours a week to perform community service or have
their benefits reduced.
Co-Chair Hanley concluded that the legislation would provide
positive incentives to work in the form of higher income
allowance and higher vehicle allowance. The costs of child
care and transportation necessary for participation in the
program would be covered by the Department. He added that
HB 78 would be an initial step towards breaking the cycle of
dependence on welfare by rewarding hard work.
Co-Chair Hanley provided a sectional analysis of the
legislation. HB 78 amends existing statutes for the AFDC
program. The legislation would authorize the Department to
seek federal approval to operate four experimental AFDC
demonstration projects under the authority of Section
1115(a) of the Social Security Act, which would authorize
imposition of certain modified AFDC eligibility criteria and
requirements for participation in a mandatory work program
for project participants. The project would establish a
ratable reduction in benefit payments for the AFDC program
statewide.
Co-Chair Hanley added, under the waiver, a person would be
allowed to receive up to $200 hundred dollars for the first
amount of money made and that, they would be able to keep
1/3 of the remainder made. This would provide an incentive
for people while also allowing them to improve their status
by working and at the same time would help the State by
reducing the amount of money spent.
(Tape Change, HFC 95-89, Side 1).
Co-Chair Hanley continued explaining each section of the
bill. He reiterated that the Department would be
responsible for paying the child care costs as well as
transportation costs. One of the fiscal notes included
would cover those expenses.
JIM NORDLUND, DIRECTOR, DIVISION OF PUBLIC ASSISTANCE,
DEPARTMENT OF HEALTH AND SOCIAL SERVICES, stated that
Section #7 would establish an AFDC unemployed parent
demonstration project, to assist two-parent families
establish self-sufficiency within three years.
He added that Section #8 would establish a self-employment
demonstration project to assist AFDC recipients in reducing
their need for benefits by allowing them to establish and
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operate a microenterprise. Co-Chair Hanley commented that
the current system prohibits participants from saving money
as it would place them over the asset limit.
Representative Grussendorf spoke in favor of the proposed
programs, although expressed hesitation on the proposed
program funding. He communicated that the money to fund
the program would be taken from those already poor and
making them more poor for making the experiment work. Mr.
Nordlund added, a rateable reduction of 1.7% amounting to
$13 dollars per month per one adult and child unit would be
added. He stressed that the current system would operate
the same, although there would be demonstration projects for
certain selected persons receiving AFDC. The auto exemption
would not apply for all AFDC participants in the State.
Co-Chair Hanley commented on Section #9, the "diversion"
demonstration project, which would offer short term
financial assistance to job-ready AFDC applicants in order
to avoid long-term financial support.
Representative Martin asked the intent of the language on
Page 8, Line 18, "(2) disregard up to $500 each month in
nonbusiness income set aside for the development or
operation of the microenterprise;".
CURTIS LOMAS, WELFARE REFORM PROGRAM, DIVISION OF PUBLIC
ASSISTANCE, DEPARTMENT OF HEALTH AND SOCIAL SERVICES,
explained that language provided a provision to allow an
individual to set aside income from some source other than a
business as a way to capitalize. The provision would allow
the AFDC individual to accrue up to $500 dollars per month
and place into a business capital account with a maximum
limit of $10 thousand dollars. That amount would not be
considered as income.
Representative Martin questioned how the Permanent Fund
Dividend checks and share holding reimbursements would
affect a persons qualifications to receiving welfare
subsidies. Mr. Nordlund stated that the bill would have no
effect on any AFDC recipients dividend check resulting from
the "hold harmless" provision in current law. Mr. Lomas
added, in terms of the PFD checks, the "hold harmless" would
allow a four month investment limit. Currently, a person
could set aside the check into a savings account and
continue to have their eligibility protected for up to four
months. If that person chose to place that saved amount
into a microenterprise account, a limit would no longer
exist.
Mr. Nordlund added that there would be administrative costs
associated with the new demonstration projects. In order to
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move forward with welfare reform, to move people from
welfare to work, new ideas must be tried. He applauded all
demonstration projects found in the bill stating that they
are good ideas and worthy of testing.
Representative Martin criticized encouraging any further
exemptions to the welfare program. Mr. Lomas clarified
information regarding dividend payments received from Native
corporations. He stated that as a part of the 1988 Native
Claim Settlement Act, a $2 thousand dollar limit was
established in federal law; this was not a state policy. He
added that this was not an exclusive Alaskan policy as
referenced by Representative Martin.
KIRSTEN MARTIN, SELF, PRISONERS OF WELFARE WORKING ON
WINNING, ANCHORAGE, provided the Committee with a handout of
the monthly expenditures for the average AFDC recipient.
[Attachment #2].
She asked for further consideration of the portion of the
legislation requiring the under eighteen welfare recipient
to live with the parent which would require that parent's
income to be the determinant in deciding the medical
expenses of the AFDC recipient. She directed her concern to
"breaking" the grandparent's "pocket book". Ms. Martin
requested that language be changed to exempt that
responsibility.
Mr. Lomas instructed that federal law computes the income of
a parent when the child is living with them. He added that
the bill could change that policy, however, the way the
legislation is structured, there is a federal option to
require teens to live at home. To change that language
would depend on the State of Alaska adopting that option.
He added, that section of the bill was not a demonstration
project, but was a portion of the bill which was an exercise
as an option of federal law. To change that "treatment"
would require a waiver of that portion of the bill.
Representative Martin interjected that supporting that
waiver would encourage more teenage parents to leave home.
Representative Martin cited the responsibility of the
biological father. Ms. Martin discussed the lengthy time it
takes for the Child Support Enforcement Agency to enforce
child support. She personally has waited for five years
without any child support compensation. Co-Chair Hanley
advised that there is not much flexibility within current
laws.
Representative Brown asked what a cut to the benefits would
mean to someone receiving AFDC. Ms. Martin affirmed that
she was fortunate in that she currently received rental
22
assistance. Without rental assistance, she stated that she
would most likely lose her housing. Ms. Martin stressed
that a ($15) fifteen dollar cut would be dramatic for
someone on such a "tight" budget. Ms. Martin emphasized
that all shelters and most churches are full; food banks
have reached their limit. She stated that many people will
loose their homes and the end product will be that many more
children will be taken by Division of Family and Youth
Services (DFYS) because the parents will no longer be
adequately able to support the child's needs. She added,
currently there are not enough foster parents for the
children needing home placements.
Ms. Martin remarked that she was involved in creating a self
sufficiency group with other AFDC recipients through local
networking. Some of the items targeted through the
networking are child care and transportation needs. She
agreed that there are failures in the present system,
although there are many AFDC recipients who are trying to
find ways to better themselves.
SHERRIE GOLL, ALASKA WOMEN'S LOBBY/KIDPAC, JUNEAU, stated
that HB 78 was clearly the most rational approach considered
by the Legislature, pointing out that it was full of things
which removed disincentives for families to become employed
and stay employed.
Ms. Goll focused on specific areas of concern with the
proposed legislation. The first concern of the Women's
Lobby is the teen parent project. Ms. Goll pointed out that
Alaska has a high teen birth rate. In 1993, 1189 teenagers
had babies. The total case load of teen parents on AFDC is
141. She noted that the vast majority of teenagers who are
having children, are living at home with their parents and
being supported.
Ms. Goll applauded the exemptions for those with no parental
support, or if the home of the teenager was an abusive
situation and the teen could not live there. She pointed
out that 70 recipients would be affected by the project. In
determining each case, investigation would be required.
Ms. Goll emphasized that her main concern would be with the
health care needs of a pregnant teenager. Pregnant
teenagers have poor health outcomes which often mean poor
health outcomes for their children. Premature births are
much more common in teens, and most of the low birth weight
babies born prematurely will have health problems throughout
their life. Ms. Goll emphasized that prenatal care is
important as is good nutrition as well as the delivery of
the child.
In considering the parents income, the minor will be
23
required to live at home as a condition of eligibility.
Unless the parent of the minor is also on welfare, the teen
would not be eligible for any assistance. The concept of
holding the parents income harmless in some way so that the
teen could be eligible for assistance necessary for her to
have a healthy baby needs to be reconsidered if that section
remains in the bill.
Ms. Goll continued addressing other issues regarding the
personal responsibility of the "other" parent of the new
baby. In 60% of the cases where a teenage girl is pregnant,
the father of that child is an adult. Ms. Goll recommended
that the State provide active child support collection. The
other 40% of the fathers are teen age boys. The family of
the teenage girl is required to take personal and financial
responsibility for the teenager and new baby, although the
same responsibility is not required of the teen dad's
family. Ms. Goll emphasized that consideration of that
section of the bill be given deeper scrutiny or that section
of the bill be dropped. Ms. Goll requested that one other
exemption be considered.
(Tape Change, HFC 95-89, Side 2).
Ms. Goll stated that if a student is enrolled in a four year
education program, they should not be required to work 20
hours a week as well.
Ms. Goll spoke to the "unemployed" parent project. Until a
few years ago, AFDC was only available to single parents who
had dependent children. In 1988, there was a change in
federal law, which indicated that law broke-up families.
The federal law mandated on states that two parent families
should be included in welfare eligibility when one of the
parents was unemployed. She pointed out that at that time
case loads grew significantly. She noted that by October,
that mandate could be terminated.
Much of the JOBS training money currently is distributed for
the two parent families. Those are the persons who will be
greatly affected by the hundred hour rule. That group could
most benefit from the limit and could live within that
restraint.
Ms. Goll opposed the rateable reductions. Without
subsidized housing, of which only 20% percent of the AFDC
recipients qualify, an AFDC recipient could not make it with
a $15 dollar monthly reduction. She emphasized that the
costs of welfare changes should be offset with increased
child support collections.
Ms. Goll noted that major changes on the federal level would
24
be occurring by October. She added that these changes will
probably block grant the funds and will most likely come
with less restrictions, rather than new and different
restrictions. However, the welfare system will be
redesigned. She requested that the Committee consider
putting off changes to the welfare system until the federal
changes have been made. Ms. Goll suggested changing the
effective dates for applying for the "waivers" until
January, 1996.
Ms. Goll urged the Committee to consider off-setting the
cost of the programs other than on the "backs of the poor".
She pointed out that action would hurt 14,000 children in
Alaska.
HB 78 was HELD in Committee for further consideration.
ADJOURNMENT
The meeting adjourned at 3:55 P.M.
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