Legislature(2019 - 2020)ADAMS 519

03/24/2020 09:00 AM FINANCE

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
-- Recessed to a Call of the Chair --
-- Delayed to 9:30 am--
Heard & Held
Uniform Rule 23(a) Waived
+ Bills Previously Heard/Scheduled TELECONFERENCED
Moved CSSSSB 155(RES) Out of Committee
Moved SB 134 Out of Committee
                  HOUSE FINANCE COMMITTEE                                                                                       
                      March 24, 2020                                                                                            
                         9:32 a.m.                                                                                              
9:32:45 AM                                                                                                                    
CALL TO ORDER                                                                                                                 
Co-Chair Johnston called the House Finance Committee                                                                            
meeting to order at 9:32 a.m.                                                                                                   
MEMBERS PRESENT                                                                                                               
Representative Neal Foster, Co-Chair                                                                                            
Representative Jennifer Johnston, Co-Chair                                                                                      
Representative Andy Josephson                                                                                                   
Representative Gary Knopp                                                                                                       
Representative Bart LeBon                                                                                                       
Representative Kelly Merrick                                                                                                    
Representative Colleen Sullivan-Leonard                                                                                         
Representative Cathy Tilton                                                                                                     
Representative Adam Wool                                                                                                        
MEMBERS ABSENT                                                                                                                
Representative Dan Ortiz, Vice-Chair                                                                                            
Representative Ben Carpenter                                                                                                    
ALSO PRESENT                                                                                                                  
Erin Shine, staff, Representative Johnston; Senator Peter                                                                       
Micciche, Sponsor.                                                                                                              
PRESENT VIA TELECONFERENCE                                                                                                    
Anna Brawley, Title Four Review Coordinator, Agnew Beck,                                                                        
CSSB 52(FIN)am                                                                                                                  
          ALCOHOLIC BEVERAGE CONTROL; ALCOHOL REG                                                                               
          CSSB 52(FIN)am was HEARD and HELD in committee                                                                        
          for further consideration.                                                                                            
SB 134    MEDICAID COVERAGE OF LIC. COUNSELORS                                                                                  
          SB 134  was REPORTED out  of committee with  a "do                                                                    
          pass"  recommendation  and  with  one  new  fiscal                                                                    
          impact  note by  the House  Finance Committee  for                                                                    
          the Department of Health and Social Services.                                                                         
CSSSSB 155(RES)                                                                                                                 
         EXPLORATION & MINING RIGHTS; ANNUAL LABOR                                                                              
          CSSSSB  155(RES)  was  REPORTED out  of  committee                                                                    
          with  a  "do  pass" recommendation  and  with  one                                                                    
          previously    published   fiscal    impact   note:                                                                    
Co-Chair Johnston reviewed the meeting agenda.                                                                                  
CS FOR SPONSOR SUBSTITUTE FOR SENATE BILL NO. 155(RES)                                                                        
     "An  Act relating  to  exploration  and mining  rights;                                                                    
     relating to  annual labor requirements with  respect to                                                                    
     mining   claims  and   related   leases;  relating   to                                                                    
     statements  of  annual  labor;  defining  'labor';  and                                                                    
     providing for an effective date."                                                                                          
9:35:26 AM                                                                                                                    
Co-Chair Johnston asked if the committee wanted a brief                                                                         
introduction or had any further discussion on the bill.                                                                         
Co-Chair Foster MOVED to report CSSSSB 155(RES) out of                                                                          
Committee   with   individual    recommendations   and   the                                                                    
accompanying fiscal note.                                                                                                       
There being NO OBJECTION, it was so ordered.                                                                                    
Co-Chair Johnston reminded members to stay after the                                                                            
meeting to sign bills.                                                                                                          
CSSSSB 155(RES) was REPORTED out of committee with a "do                                                                        
pass" recommendation and with one previously published                                                                          
fiscal impact note: FN1(DNR).                                                                                                   
SENATE BILL NO. 134                                                                                                           
     "An Act relating to medical assistance reimbursement                                                                       
     for the services of licensed professional counselors;                                                                      
     and providing for an effective date."                                                                                      
9:36:58 AM                                                                                                                    
Co-Chair Johnston asked  her staff to review  the new fiscal                                                                    
ERIN  SHINE, STAFF,  REPRESENTATIVE  JOHNSTON, reviewed  the                                                                    
fiscal note written  by the House Finance  Committee. It was                                                                    
brought to the committee's  attention that the mental health                                                                    
appropriation  bill had  already passed  from committee  and                                                                    
contained mental health general fund  funds that were in the                                                                    
previous fiscal note.  She reported a fund  source change to                                                                    
fund source  code 1004 which was  undesignated general funds                                                                    
(UGF). The change  in the amount of $911,200  could be found                                                                    
in the fund source section.  The change could be reversed in                                                                    
a subcommittee  or in  the budget  process in  the following                                                                    
year. Since  the mental health  bill had already  passed, it                                                                    
needed to be switched to general funds for the fiscal note.                                                                     
Representative  Josephson asked  what fund  source was  used                                                                    
previously. Ms.  Shine replied that the  general fund mental                                                                    
health fund source code 1037 was  used. The fund was still a                                                                    
UGF fund  but coded differently  to track UGF  dollars spent                                                                    
on mental health items in the budget.                                                                                           
Representative  Knopp asked  for further  clarification. Ms.                                                                    
Shine responded  that it was  simply a designation  to track                                                                    
the funds  through a fund  source code. The fund  source was                                                                    
not to  be confused with  the fund source for  mental health                                                                    
authority receipts  (MTAR). It was a  designation of general                                                                    
fund dollars used for mental health purposes.                                                                                   
Co-Chair  Foster MOVED  to report  SB 134  out of  Committee                                                                    
with individual recommendations  and the accompanying fiscal                                                                    
There being NO OBJECTION, it was so ordered.                                                                                    
SB  134 was  REPORTED  out  of committee  with  a "do  pass"                                                                    
recommendation and  with one new  fiscal impact note  by the                                                                    
House  Finance Committee  for the  Department of  Health and                                                                    
Social Services.                                                                                                                
CS FOR SENATE BILL NO. 52(FIN) am                                                                                             
     "An Act  relating to  alcoholic beverages;  relating to                                                                    
     the  regulation  of   manufacturers,  wholesalers,  and                                                                    
     retailers   of   alcoholic   beverages;   relating   to                                                                    
     licenses,    endorsements,   and    permits   involving                                                                    
     alcoholic   beverages;  relating   to  common   carrier                                                                    
     approval to  transport or deliver  alcoholic beverages;                                                                    
     relating  to  the  Alcoholic  Beverage  Control  Board;                                                                    
     relating  to  offenses involving  alcoholic  beverages;                                                                    
     amending  Rule 17(h),  Alaska  Rules  of Minor  Offense                                                                    
     Procedure; and providing for an effective date."                                                                           
9:40:21 AM                                                                                                                    
SENATOR PETER MICCICHE, SPONSOR, introduced himself.                                                                            
Senator Micciche indicated  the bill was a  rebalance of the                                                                    
alcohol  industry.  The  bill represented  a  9-year  effort                                                                    
working  with  a  group  of  stakeholders  including  Public                                                                    
Safety,  Public  Health,   legislators,  the  industry,  the                                                                    
Alaska  Alcoholic  Beverage  Control (ABC)  Board,  and  the                                                                    
public.  The  bill  was  about  promoting  a  safe  business                                                                    
climate,  the  protection  of   public  health  and  safety,                                                                    
limiting youth  access to  alcohol, expanding  local control                                                                    
for  municipalities,  promoting   responsible  alcohol  use,                                                                    
reducing  the harms  of  over-consumption, and  implementing                                                                    
change  without negatively  harming existing  businesses and                                                                    
responsible operators. In reviewing  the bill, members would                                                                    
likely want  to change something. He  reiterated the efforts                                                                    
that  had  been  made  to  reach  the  current  version.  He                                                                    
requested that the  committee members keep an  open mind. As                                                                    
a legislator,  he understood  about the  natural inclination                                                                    
of improving things.                                                                                                            
Senator Micciche  reported that many  of the changes  to the                                                                    
bill had taken  many months of deliberation  before a change                                                                    
was approved, such as the  provision regarding local control                                                                    
options for municipalities. He argued  that no one would get                                                                    
everything they wanted in the  bill. However, everyone would                                                                    
get  something.  The  philosophy  was  that  a  rising  tide                                                                    
floated  all   boats.  It  was  not   about  protecting  one                                                                    
individual's  piece, but  about  sharing  an expanding  pie.                                                                    
There  were elements  important  to  the visiting  industry,                                                                    
resorts, bars, municipalities,  breweries, and distilleries.                                                                    
He  deferred   to  Ms.  Brawley  to   provide  a  PowerPoint                                                                    
9:44:02 AM                                                                                                                    
ANNA  BRAWLEY, TITLE  FOUR REVIEW  COORDINATOR, AGNEW  BECK,                                                                    
ANCHORAGE  (via   teleconference),  provided   a  PowerPoint                                                                    
presentation titled "Alcoholic  Beverage Control (ABC) Board                                                                    
Title 4 Review  Project: Overview of Senate  Bill 52," dated                                                                    
March 20, 2020 (copy on file.)                                                                                                  
Ms.  Brawley began  with slide  2  to discuss  the need  for                                                                    
alcohol  control  and  Title  4.  She  reiterated  that  the                                                                    
project  was a  result of  many  years of  work. As  Senator                                                                    
Micciche   alluded   to,   alcohol  was   not   like   other                                                                    
commodities. There  was always a balance  between the social                                                                    
and economic  benefits of alcohol  against the  social harms                                                                    
or costs of its misuse.                                                                                                         
Ms. Brawley  turned to slide  3 and explained that  the bill                                                                    
was   a  product   of  eight   years  of   work,  over   120                                                                    
stakeholders, and significant  discussion about each section                                                                    
of the bill.                                                                                                                    
Ms. Brawley  discussed the diverse stakeholders  of the bill                                                                    
on slide  4. The slide  provided an overview of  the diverse                                                                    
stakeholders that were involved  including public health and                                                                    
safety,  law   enforcement,  each  tier  of   the  industry,                                                                    
community advocates,  and local  governments. The  group was                                                                    
very  diverse bringing  many different  perspectives to  the                                                                    
Ms.  Brawley  spoke of  the  goals  of  the Title  4  review                                                                    
process on  slide 5. The  review was comprehensive  in order                                                                    
to  make Title  4 work  better for  everyone. She  indicated                                                                    
that in  2012, the  ABC Board  identified all  the different                                                                    
issues the many  stakeholders had brought up  to improve the                                                                    
laws.  The goal  was  to promote  a  fair business  climate,                                                                    
protect  public health  and safety,  and to  make Title  4 a                                                                    
clear  and consistent  legal framework  cleaning up  several                                                                    
issues that had been piling up over the years.                                                                                  
Ms. Brawley turned to slide 6.  She relayed that in the bill                                                                    
there were some  key concepts in Title 4  including a 3-tier                                                                    
system and  the difference between  a license and  a permit.                                                                    
She explained that a license  allowed a business to serve or                                                                    
sell alcohol or other privileges  for 2 years which was core                                                                    
to business,  versus a permit  which was usually  a one-time                                                                    
event  or  specific  occasion  done  by  a  licensee  or  an                                                                    
unlicensed entity.  Another concept pertained  to population                                                                    
limits. She  would also  be introducing  the new  concept of                                                                    
Ms. Brawley  continued to  slide 7.  She indicated  that the                                                                    
3-tier  system was  something that  pre-dated statehood.  It                                                                    
was  something   developed  at  the  national   level  after                                                                    
prohibition. She  reported that  every state had  a version.                                                                    
The  3-tier   system  essentially  stated  that   those  who                                                                    
manufactured and  distributed beer  should be  separate from                                                                    
those who  were selling beer  to the public. The  system was                                                                    
designed to prevent monopolies within  the industry. The law                                                                    
had been  in place for  more than  80 years. There  had been                                                                    
several developments  since the  law's inception.  A balance                                                                    
was  being  struck  in  the bill  between  the  system  that                                                                    
already  existed,  the  changes  in the  industry,  and  the                                                                    
changes in consumer demand.                                                                                                     
Ms. Brawley  turned to  slide 8  which showed  the different                                                                    
categories   of   recommendations.  They   corresponded   to                                                                    
subcommittees  that  met  for   multiple  years  to  discuss                                                                    
various issues in Title 4. She read the list:                                                                                   
   Categories of Recommendations                                                                                                
      Alcohol Licenses, Permits and Trade Practices                                                                          
      Role and Functions of the ABC Board and Staff                                                                          
      Underage Drinking and Youth Access to Alcohol                                                                          
      Regulation of Internet Sales of Alcohol                                                                                
      Technical or Administrative Law Changes                                                                                
      Local Option Communities*                                                                                              
     *Note: Local  Option recommendations are  documented in                                                                    
     the   report,  but   not  included   in  SB   52.  More                                                                    
     comprehensive  discussion  of   Local  Option  laws  is                                                                    
     needed in the future.                                                                                                      
Ms.  Brawley relayed  that  there were  a  couple of  target                                                                    
provisions in  the bill on  the topic of local  options, but                                                                    
there were no significant changes to local option laws.                                                                         
9:48:13 AM                                                                                                                    
Ms. Brawley  reported that  slides 9,10,  and 11  provided a                                                                    
general overview of the reorganization  of licenses. Most of                                                                    
them  already  existed  in  law.   They  were  either  being                                                                    
renamed,  renumbered,  or  (in  the  case  of  manufacturing                                                                    
licenses)  being split  into a  manufacturing or  production                                                                    
license  separate from  a retail  license allowing  sales to                                                                    
the public.  Slide 9 also provided  which endorsements would                                                                    
be associated with each license.                                                                                                
Ms. Brawley moved to slide  10 which showed the retail level                                                                    
licenses that  were currently  under population  limits. The                                                                    
bill  proposed keeping  them  under  population limits.  The                                                                    
wholesale and  manufacturing licenses  would be  exempt from                                                                    
population limits, as they were  not serving the public. She                                                                    
explained  that  population  limits limited  the  number  of                                                                    
outlets  selling alcohol  to the  public  to protect  public                                                                    
health  and  safely, as  there  was  an association  between                                                                    
population limits and negative impacts such as crime.                                                                           
Ms.  Brawley   advanced  to  slide   11  which   showed  the                                                                    
additional retail licenses. Most  of them already existed in                                                                    
statute  and primarily  served  tourists.  They were  exempt                                                                    
from population  limits. The slide  also showed  the license                                                                    
types  that were  proposed to  be removed  from statute  and                                                                    
replaced   or  converted   into  other   license  types   to                                                                    
streamline the system.                                                                                                          
Representative Wool  mentioned license  types. He  asked how                                                                    
many types were currently in place  and how many would be in                                                                    
place if the  bill were to pass. Ms.  Brawley responded that                                                                    
currently  there  were  16  license  types.  The  number  of                                                                    
licenses  would not  materially  change but  the bill  would                                                                    
reorganize them.                                                                                                                
Representative Wool thought the number  was closer to 27. He                                                                    
asked  if the  REPL  [Restaurant/Eating  Place License]  was                                                                    
population determined.  He wondered if the  local option was                                                                    
currently in place or being proposed in the legislation.                                                                        
Ms.   Brawley   returned   to  slide   10.   There   was   a                                                                    
Restaurant/Eating  Place License  (REPL) that  was currently                                                                    
under population limits.  On slide 11 there  was a reference                                                                    
to  public convenience.  Currently in  statute, there  was a                                                                    
process  in  place   for  an  applicant  to   apply  for  an                                                                    
additional restaurant  license outside of  population limits                                                                    
as long as  it served "public convenience"  as determined by                                                                    
the  board. The  proposal in  the  bill was  to replace  the                                                                    
public convenience system with  a system that allowed cities                                                                    
to apply  for additional  restaurant licenses that  were not                                                                    
tied  to  an individual  application.  For  example, a  city                                                                    
might want 5  more restaurant licenses that  could be issued                                                                    
in its jurisdiction. The bill  also proposed a seasonal REPL                                                                    
for tourism which would be  outside of population limits and                                                                    
available to  smaller communities  to operate on  a seasonal                                                                    
basis, similar to how some restaurants presently operated.                                                                      
Representative Wool asked if Title  4 was unchanged from the                                                                    
version in place  a couple of years prior. He  wondered if a                                                                    
municipality had to apply for  licenses in advance and could                                                                    
only  do  so  for  a  certain number  of  years.  Once  they                                                                    
exhausted the  supply they would  have to wait for  a period                                                                    
before applying  again. Senator  Micciche responded  that he                                                                    
would be  covering the information  in the  presentation. He                                                                    
reported there  was no  wait period,  application was  on an                                                                    
annual  basis and  a municipality  could apply  for as  many                                                                    
licenses as it wanted. He provided an example.                                                                                  
9:53:30 AM                                                                                                                    
Representative  Knopp  referred  to  population  limits.  He                                                                    
wondered how population limit numbers  were decided upon. He                                                                    
referenced the changes in the  number of breweries from 3000                                                                    
to 12,000.  Ms. Brawley responded  that there was  a formula                                                                    
in  statute that  she  would be  reviewing  in the  upcoming                                                                    
Ms.  Brawley addressed  slide 12  which highlighted  some of                                                                    
the  licensing  recommendations.  Most   of  them  would  be                                                                    
renumbered but  not fundamentally changed. One  proposal was                                                                    
to  split  the  existing  brewery,  winery,  and  distillery                                                                    
licenses.  Currently, a  manufacturing  license allowed  for                                                                    
limited retail  sales through a  tasting room.  She reported                                                                    
that  the manufacturing  licenses  were  not allowed  retail                                                                    
licenses such  as a  bar or a  package store.  The exception                                                                    
was  a brew  pub  license  which she  would  address on  the                                                                    
following slide.  The bill  would split  the license  into 2                                                                    
different  ones. There  would be  a production  license with                                                                    
either  a  limited retail  license  with  limited hours  and                                                                    
limited  sales per  customer or  an existing  retail license                                                                    
with no production or sales limit could be obtained.                                                                            
Ms. Brawley  moved to slide  13. The exception would  be the                                                                    
brewpub.  It  was  an  attachment  to  a  bar  license.  She                                                                    
explained  that  instead  of having  2  different  types  of                                                                    
brewing operations, it would allow  for a production license                                                                    
and a retail license. Entities  that already had full retail                                                                    
licenses  would  be  able  to  continue  operations  without                                                                    
having  a   production  limit  on   what  they   could  make                                                                    
currently.  For  example,  existing  brew  pubs  could  only                                                                    
produce so many gallons per year.                                                                                               
Representative Wool asked about the  diagram on slide 12. He                                                                    
noted that the slide listed brewery  and REPL. He asked if a                                                                    
current manufacturer  who sold  beer could  get an  REPL and                                                                    
sell beer and wine while  having the same stipulations as an                                                                    
REPL. He wondered about an  endorsement for a retail tasting                                                                    
room.  Ms.  Brawley  responded  that  a  brewery  could  not                                                                    
currently  obtain  a retail  license.  If  an entity  had  a                                                                    
brewery  license,  it could  only  do  limited retail  sales                                                                    
because it was part of  the existing license. They would not                                                                    
be able to get a bar  license, a package store license, or a                                                                    
restaurant  license.  It was  part  of  the original  3-tier                                                                    
system  which  prevented  manufacturers from  having  retail                                                                    
licenses. The bill was proposing to change the system.                                                                          
Representative   Wool  suggested   breweries  were   already                                                                    
selling retail. He wondered, under  the proposed Title 4, if                                                                    
breweries  would be  able  to obtain  an  REPL. Ms.  Brawley                                                                    
responded affirmatively provided the  breweries were under a                                                                    
certain  threshold  of size.  They  had  to make  less  than                                                                    
300,000  barrels per  year which  was currently  higher than                                                                    
any of the manufacturers in the state.                                                                                          
Representative Wool asked  if a brewery with  a tasting room                                                                    
could simultaneously have an REPL.  Ms. Brawley replied that                                                                    
the proposal in the bill would not prohibit it.                                                                                 
CSSB 52(FIN)am was  HEARD and HELD in  committee for further                                                                    
Co-Chair Johnston  recessed the meeting  to the call  of the                                                                    
chair. [The meeting never reconvened].                                                                                          
9:58:15 AM                                                                                                                    
The meeting was adjourned at 9:58 a.m.                                                                                          

Document Name Date/Time Subjects
SB 134 Public Testimony Rec'd by 032320.pdf HFIN 3/24/2020 9:00:00 AM
SB 134
SB 52 Title 4 Review Report.pdf HFIN 3/24/2020 9:00:00 AM
SFIN 2/11/2020 9:00:00 AM
SL&C 3/26/2019 1:30:00 PM
SB 52
SB 52 Sectional Analysis v. E.A 03.02.2020.pdf HFIN 3/24/2020 9:00:00 AM
SB 52
SB 52 Public Testimony w Cover rec'd by 031330.pdf HFIN 3/24/2020 9:00:00 AM
SB 52
SB 52 Letters of Support with cover sheet.pdf HFIN 3/24/2020 9:00:00 AM
SB 52
SB 52 Sponsor Statement v. E.A 03.02.2020.pdf HFIN 3/24/2020 9:00:00 AM
SB 52
SB 52 Summary of Goals.pdf HFIN 3/24/2020 9:00:00 AM
SB 52
SB 52 Title 4 Presentation HFIN 03.20.2020.pdf HFIN 3/24/2020 9:00:00 AM
SB 52
SB 52 Letter Support CHARR 031920.pdf HFIN 3/24/2020 9:00:00 AM
SB 52