Legislature(2021 - 2022)ADAMS 519
03/09/2022 01:30 PM House FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| HB110 | |
| HB104 | |
| SB33 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 110 | TELECONFERENCED | |
| += | HB 104 | TELECONFERENCED | |
| + | SB 33 | TELECONFERENCED | |
| + | TELECONFERENCED |
HOUSE FINANCE COMMITTEE
March 9, 2022
1:34 p.m.
1:34:30 PM
CALL TO ORDER
Co-Chair Merrick called the House Finance Committee meeting
to order at 1:34 p.m.
MEMBERS PRESENT
Representative Neal Foster, Co-Chair
Representative Kelly Merrick, Co-Chair
Representative Dan Ortiz, Vice-Chair
Representative Bryce Edgmon
Representative DeLena Johnson
Representative Andy Josephson
Representative Bart LeBon
Representative Sara Rasmussen
Representative Steve Thompson via teleconference
Representative Adam Wool
MEMBERS ABSENT
Representative Ben Carpenter
ALSO PRESENT
Representative Sara Hannan, Sponsor; Stephanie Andrew,
Staff, Representative Sara Hannan; Tom Wright, Staff,
Representative Steve Thompson; Nancy Meade, General
Counsel, Alaska Court System; Lacy Wilcox, President,
Alaska Marijuana Industry Association; Sorcha Hazelton,
Staff, Representative Kelly Merrick; Senator Gary Stevens,
Sponsor; Tim Lamkin, Staff, Senator Gary Stevens.
PRESENT VIA TELECONFERENCE
Emily Nauman, Deputy Director, Legislative Legal Services,
Alaska State Legislature; Joe Darnell, Investigator,
Tobacco Enforcement and Youth Education Program, Behavioral
Health, Department of Health and Social Services;
Christopher Barrows, President, Pacific Seafood Processing
Association; Jeremy Woodrow, Director, Alaska Seafood
Marketing Institute (ASMI); Nicole Reynolds, Deputy
Director, Tax Division, Department of Revenue; Julianne
Curry, Public Affairs Manager, Icicle Seafoods; Tracy
Welch, Executive Director, United Fishermen of Alaska.
SUMMARY
HB 104 MOTOR FUEL TAX; VEHICLE REG. FEE
CSHB 104(FIN) was REPORTED out of committee with
three "do pass" recommendations and with 5 "no
recommendation" recommendations and with one new
zero fiscal note by the Department of
Environmental Conservation, one new zero fiscal
note by the Department of Transportation and
Public Facilities, one new fiscal impact note by
the Department of Administration, one new fiscal
impact note by the Department of Revenue, and one
new fiscal impact note by the Department of
Environmental Conservation/Fund Transfer.
HB 110 AGE FOR NICOTINE/E-CIG; TAX E-CIG.
HB 110 was HEARD and HELD in committee for
further consideration.
SB 33 SEAFOOD PRODUCT DEVELOPMENT TAX CREDIT
CSSB 33(FIN) was HEARD and HELD in committee for
further consideration.
Co-Chair Merrick reviewed the agenda for the day.
HOUSE BILL NO. 110
"An Act raising the minimum age to purchase, sell,
exchange, or possess tobacco, a product containing
nicotine, or an electronic smoking product; relating
to transporting tobacco, a product containing
nicotine, or an electronic smoking product; relating
to the taxation of electronic smoking products; and
providing for an effective date."
1:35:41 PM
REPRESENTATIVE SARA HANNAN, SPONSOR, HB 110 would add e-
cigarettes into the current tobacco tax structure.
Representative Wool supported the efforts, but disagreed
with some aspects of the current version of the bill.
Representative Josephson indicated that the other body
included taxing the delivery instrument, and queried the
position on that policy.
Representative Hannan replied that this version did not
include all of the device options. The other body was using
a broader definition in order to capture a wider net. She
stated that the bill included products that were integrated
with other products.
1:40:18 PM
Representative Thompson MOVED to ADOPT Amendment 1 (copy on
file).
Co-Chair Merrick OBJECTED for discussion.
Representative Thompson reviewed the amendment. He stated
that the amendment would change the purchase age from 21 to
18. He shared that Alaskans were considered adults at age
18. He felt that it was overstepping the right of a person
to decide for themselves.
Representative Rasmussen commented that it appeared the
state would be at risk of losing funding at the end of
December 2022, and she queried the amount of lost funding.
Representative Thompson was not aware of the amount or
whether the federal government would actually institute
that requirement.
1:43:04 PM
STEPHANIE ANDREW, STAFF, REPRESENTATIVE SARA HANNAN,
indicated that the state would be at risk of losing $30
million.
Representative Rasmussen would be supporting the amendment
in that people at the age of 18 were recognized as adults.
Representative Wool agreed with the age of 18. He noted
several things people could do at the age of 18.
1:45:42 PM
Representative Josephson wished the legislature had a gun
bill before the committee, but did not prescribe to dual
federalism or the supremacy law. He stressed that he did
not want to guard the right to buy or sell tobacco and the
age associated thus.
Representative LeBon supported the bill but wanted to ask a
question of the bill sponsor. He wondered if the military
had a policy about smoking under age 21.
Representative Hannan responded that military personnel
could not smoke under the age of 21.
Representative Wool asked about military personnel smoking
overseas.
Representative Hannan shared that the federal age level of
21 was instituted at all military locations. She clarified
that the proposed amendment changed the age to 19.
Representative Rasmussen asked the sponsor to speak to the
rational of the age of 18 rather than 19.
Representative Thompson indicated the age of 19 had been
accepted, because the age had been accepted previously, but
felt that age 18 was a fine age to change the age. The
federal government moved the age to 21. He did not know if
Alaska lost any money letting people drink through the
period.
Representative Rasmussen clarified that the amendment
brought the age back to 19.
1:50:21 PM
Representative Josephson cited a legal case regarding the
spending clause of the United States Constitution, and
remarked Alaska would lose $3 million if there was a change
to the age to purchase tobacco products.
Co-Chair Merrick WITHDREW her OBJECTION.
Representative Josephson OBJECTED.
A roll call vote was taken on the motion.
IN FAVOR: Rasmussen, Thompson, Wool, LeBon
OPPOSED: Edgmon, Josephson, Ortiz, Foster, Merrick
The MOTION FAILED (4/5). Amendment 1 FAILED to be adopted.
1:52:34 PM
Representative Thompson MOVED to ADOPT Amendment 2 (copy on
file).
Representative Wool OBJECTED for discussion.
Representative Thompson reviewed the amendment. He thought
the age restriction was too restrictive on those wanting to
enter into the labor force and work at convenient stores or
gas stations.
Representative Rasmussen commented that the committee had
heard significant labor shortages. She supported the
amendment.
Representative Wool commented that in restaurants could
have someone who was the correct age sell the product. He
shared the concerns with the amendment sponsor.
Representative Thompson appreciated the question. It could
create a new problem that was noted by Representative
Rasmussen. There was currently a labor shortage. He did not
like restricting the workforce.
1:56:45 PM
EMILY NAUMAN, DEPUTY DIRECTOR, LEGISLATIVE LEGAL SERVICES,
ALASKA STATE LEGISLATURE (via teleconference), responded
that current state law prevented a person under the age of
19 to sell tobacco products, and the bill raised that age
to 21.
1:57:31 PM
Representative Wool asked if meant they could not work in
any business or were not able to physically sell the
product.
Ms. Nauman replied the text of the law stated that it was a
violation for a person under the age of 19 to sell tobacco
product, but did not address the premises.
Representative Wool still sympathized with the maker of the
amendment. He noted the law in New Zealand had instituted
tobacco laws, but the laws were graduated to ensure that
people did not lose their jobs in the process of enacting
the law.
Representative Josephson asked if there was any reason to
think federal statute would conflict with the amendment.
Representative Hannan deferred to Mr. Darnell.
1:59:59 PM
JOE DARNELL, INVESTIGATOR, TOBACCO ENFORCEMENT AND YOUTH
EDUCATION PROGRAM, BEHAVIORAL HEALTH, DEPARTMENT OF HEALTH
AND SOCIAL SERVICES (via teleconference), asked for the
question to be repeated.
Representative Josephson asked if there was any reason to
think federal statute would conflict with the amendment.
Mr. Darnell responded that it would comply with federal
statute.
Representative Wool surmised that a person working in a
tobacco store who was under 21-years-old and not
participating in the sale of tobacco would be able to
retain their employment. able to retain their employment.
Representative Josephson clarified that it was a section of
law referred to T-21.
Representative Rasmussen asked if the liability to enforce
non-use of employees would fall on employers.
Ms. Nauman replied that the current law stated that the
person who holds the business license would be liable for
the underage person selling the tobacco product.
Representative Rasmussen was trying to figure out if the
person using the nicotine products from the location -
employee or employer.
Ms. Nauman noted it was a crime to provide tobacco under
current law for a person to give to the employee.
Representative Rasmussen asked if an employer would be held
liable if an employee had possession of a nicotine product.
Ms. Nauman did not know.
2:06:21 PM
Representative Hannan thought Mr. Darnell could best answer
the question.
Mr. Darnell indicated the scenario touched on a couple of
laws. If the tobacco was sold to the employee by the
employer, then the employer would be liable.
Representative Josephson read that from the effective date,
one must 19 and 20 year olds could sell tobacco legally and
remain employed to legally sell tobacco.
Representative Thompson indicated that it was the
impression that he was given from testimony, and stressed
that he did not want to see employees taken from the labor
market.
Co-Chair Merrick asked if the representative if the
employees were currently 19 and 20, or if that was the age
going forward.
Representative Thompson replied that some employees would
be grandfathered in similar to the serving of alcohol.
2:09:24 PM
TOM WRIGHT, STAFF, REPRESENTATIVE STEVE THOMPSON, indicated
that when the bill went into effect anyone who was 19 or 20
at the time.
Representative Wool WITHDREW the OBJECTION.
Co-Chair Merrick OBJECTED for another question.
Representative Wool felt that a 19-year-old person could
sell the tobacco product.
2:11:37 PM
AT EASE
2:12:18 PM
RECONVENED
Co-Chair Merrick indicated Amendment 2 would be rolled to
the bottom of the list of amendments to be considered.
Representative Wool MOVED to ADOPT Amendment 3 (copy on
file).
Co-Chair Merrick OBJECTED for discussion.
Representative Wool reviewed the amendment. He argued that
tobacco did not alter peoples' minds like alcohol. He did
not think it was worthy to pull a person over for driving a
car while smoking under age. He did not feel that it should
be made as an actual crime. He wanted to know how many
arrests or violations were made with this law.
Ms. Andrew thought Nancy Meade from the Alaska Court System
could better answer the question.
2:15:09 PM
NANCY MEADE, GENERAL COUNSEL, ALASKA COURT SYSTEM, reported
that there were approximately 10 convictions of tobacco use
by a minor per year.
Representative Wool asked if the charges were stand-alone
charges or combined with other charges.
Ms. Meade replied that she did not have that data.
Representative Wool asked that if someone was driving in a
car with a pack of cigarettes in the car, then the driver
would be charged with possession.
Ms. Meade responded, "That's correct."
Representative Josephson thought the amendment would
legalize 10 year olds smoking tobacco. They would need a
reasonable suspicion of an offence.
Co-Chair Merrick asked Ms. Nauman concurred with
Representative Josephson's assumption.
Ms. Meade responded that if the amendment passed it, would
not be a violation for youth to possession of tobacco.
Representative Wool asked if kids could buy tobacco, he
stressed that it was not an approved activity but it was
not a crime.
2:20:08 PM
Co-Chair Merrick WITHDREW the OBJECTION.
Representative Josephson OBJECTED.
A roll call vote was taken on the motion.
IN FAVOR: Thompson, Wool Edgmon, Johnson, LeBon, Rasmussen,
Merrick
OPPOSED: Josephson, Ortiz, Foster
The MOTION PASSED (7/3). Amendment 3 was ADOPTED.
2:21:27 PM
Representative Josephson MOVED to ADOPT Amendment 4 (copy
on file).
Co-Chair Merrick OBJECTED for discussion.
Representative Josephson reviewed the amendment. He stated
that the amendment expanded the definition of electronic
smoking products subject to the tax to include the device.
Representative Wool wondered whether the other tobacco
delivery items were also taxed, like rolling papers.
Representative Josephson responded that it would not
replace an existing tax, and stated that it would act as a
deterrent for tobacco use.
Representative Wool asked for clarification about whether
rolling papers and marijuana vape pens were also taxed
similarly.
Ms. Nauman indicated that the amendment would not apply to
rolling papers, because those were not used in electronic
smoking. She did not know about the marijuana vape pens.
2:26:43 PM
Co-Chair Merrick asked if Mr. Darnell could comment.
Mr. Darnell could provide a broad answer, and stated that
the marijuana products were taxed similarly.
Representative Wool had not fully understood the prior two
responses. He asked if vaping products were taxed as a
marijuana products.
Ms. Andrew replied that the bill clearly stated that the
tax did not apply to a smoking product that was currently
taxed under the marijuana statutes.
2:29:00 PM
Representative Wool suggested that in the current bill,
only the liquid was taxed.
Ms. Andrew clarified that the refillable or integrated
device would be subject to the tax.
Representative Wool asked if more things would be taxed
than in the bill.
Ms. Andrew replied in the affirmative.
Representative Josephson used the example of a Keurig and
coffee pods.
Representative Hannan stated that the definition in
amendment 4 broadened the definition of integrated devices,
due to the changing technology that may occur in the
future.
Representative Wool stated that he would be opposing the
amendment.
Co-Chair Merrick indicated Lacey Wilcox could speak to the
difference.
2:32:52 PM
LACY WILCOX, PRESIDENT, ALASKA MARIJUANA INDUSTRY
ASSOCIATION, stressed that the marijuana industry wanted to
make it abundantly clear that the machines were sometimes
interchangeable.
Representative Rasmussen asked if Ms. Wilcox thought
Amendment 4 accomplishes the clarification that the
industry was seeking.
Ms. Wilcox did not think the amendment accomplished the
industrys desire.
Representative Josephson recalled a similar amendment had
passed in the Senate, and wondered whether she had
testified in the other body.
Ms. Wilcox responded that she had not.
Representative Rasmussen asked that the amendment be rolled
to the bottom.
Amendment 4 was rolled to the bottom of the list.
2:36:27 PM
Representative Josephson MOVED to ADOPT Amendment 5 (copy
on file).
Co-Chair Merrick OBJECTED for discussion.
Representative Josephson reviewed the amendment, and stated
that the bill seemed to give a pass on taxation if the
product was a harm-reduction product. He felt that it was
a term used by the industry to increase the use of the
electronic cigarette.
Co-Chair Merrick OBJECTED for discussion.
Vice-Chair Ortiz asked the maker of the amendment to
explain the change in punctuation.
Representative Josephson responded that it deleted the
words.
Vice-Chair Ortiz asked why the maker did not just delete
harm reduction.
Representative Josephson had asked his aide the same
question to his aide, and stated that it was a stylistic
choice in the drafting manual.
Representative Rasmussen understood that the product was
new and the FDA was behind. She mentioned a study in
England that the product was used in cessation. She did not
think the amendment was very accurate.
2:40:47 PM
Ms. Andrew responded that it was not something the FDA had
approved for electronic tobacco products.
Representative Rasmussen thought it was more appropriate to
remove the explanation, because people in the state were
using the devices to quit smoking.
Representative Hannan relayed that the current statute
prevents taxing items used for cessation purposes.
Representative Josephson reported that the Alaska Chapter
supported the amendment. They did not think they were harm
reduction products.
Co-Chair Merrick WITHDREW her OBJECTION.
Representative Rasmussen OBJECTED.
A roll call vote was taken on the motion.
IN FAVOR: Wool, Edgmon, Johnson, Josephson, Ortiz, Foster,
Merrick
OPPOSED: LeBon, Rasmussen
The MOTION PASSED (7/2). Amendment 5 was ADOPTED.
Representative Thompson and Representative Carpenter were
absent from the vote.
2:44:13 PM
AT EASE
2:54:27 PM
RECONVENED
Co-Chair Merrick would postpone hearing the remaining
amendments. Members would be given more time to submit
amendments to HB 110.
HB 110 was HEARD and HELD in committee for further
consideration.
2:54:52 PM
AT EASE
3:02:26 PM
RECONVENED
HOUSE BILL NO. 104
"An Act relating to vehicle registration and
registration fees; relating to the motor fuel tax; and
providing for an effective date."
3:02:33 PM
Co-Chair Merrick indicated the committee last herd HB 104.
Co-Chair Foster MOVED to ADOPT proposed committee
substitute for HB 104(FIN), Work Draft 32-LS0444\I(Nauman,
3/4/22).
Co-Chair Merrick OBJECTED for discussion.
3:03:21 PM
SORCHA HAZELTON, STAFF, REPRESENTATIVE KELLY MERRICK,
relayed that HB 104 primarily did three things: doubled the
motor fuel tax, altered electric vehicle registration and
fees, and increased the surcharge paid to the Department of
Environmental Conservation (DEC) Spill Prevention and
Response Division. The committee substitute removed the
first two components and left only sections 5 and 11 of the
original bill.
Co-Chair Merrick WITHDREW the OBJECTION.
Co-Chair Foster MOVED to report CSHB 104 (FIN) out of
Committee with individual recommendations and the
accompanying fiscal note.
There being NO OBJECTION, it was so ordered.
CSHB 104(FIN) was REPORTED out of committee with three "do
pass" recommendations and with 5 "no recommendation"
recommendations and with one new zero fiscal note by the
Department of Environmental Conservation, one new zero
fiscal note by the Department of Transportation and Public
Facilities, one new fiscal impact note by the Department of
Administration, one new fiscal impact note by the
Department of Revenue, and one new fiscal impact note by
the Department of Environmental Conservation/Fund Transfer.
3:04:52 PM
AT EASE
3:07:32 PM
RECONVENED
CS FOR SENATE BILL NO. 33(FIN)
"An Act relating to a fisheries product development
tax credit; and providing for an effective date."
3:07:51 PM
SENATOR GARY STEVENS, SPONSOR, provided a brief description
of the bill. He stated that it was a value added tax for
the fishing industry.
Representative Rasmussen noted having visited some of the
salmon processing facilities in Kodiak. She asked about
some of the federal regulatory burdens on the industry.
3:10:12 PM
TIM LAMKIN, STAFF, SENATOR GARY STEVENS, indicated here
were folks online that could provide further details.
3:11:00 PM
AT EASE
3:12:58 PM
RECONVENED
3:13:23 PM
CHRISTOPHER BARROWS, PRESIDENT, PACIFIC SEAFOOD PROCESSING
ASSOCIATION (via teleconference), asked if Representative
Rasmussen could restate her question.
Representative Rasmussen asked about some of the federal
regulatory burdens on the industry.
Mr. Barrows responded that there were a number of federal
regulations on the industry.
3:16:39 PM
Senator Stevens stressed that the bill dealt with value
added products.
Representative Rasmussen appreciated the comments. She was
trying to highlight that the industry already was well
invested in the state.
Senator Stevens saw an area for water quality and remarked
that companies were using the waste for fertilizers.
Co-Chair Merrick asked Mr. Barrows to provide his
testimony.
3:19:26 PM
Mr. Barrows spoke in support of the legislation. He gave
some history of his organization. He stated that the bill
would reestablish the tax credit program, and expand the
list of eligible species.
3:23:23 PM
Vice-Chair Ortiz would be supportive of extending the tax
credit. He asked how long the tax credit had been in place.
Mr. Lamkin indicated it had been on the books since 2004.
Vice-Chair Ortiz asked what percentage of the annual
harvest went overseas for processing.
Mr. Lamkin was aware that currently none of it went to
Russia. However, some of it went overseas. He deferred to
Mr. Barrows.
Mr. Barrows deferred to ASMI.
3:25:17 PM
JEREMY WOODROW, DIRECTOR, ALASKA SEAFOOD MARKETING
INSTITUTE (ASMI) (via teleconference), replied that
annually 70 to 75 percent of value of the product was sent
overseas.
Vice-Chair Ortiz asked if the percentages reflected
overseas for processing.
Mr. Woodrow responded, both.
Vice-Chair Ortiz asked if Alaska had been able to cut into
the value added percentage.
Mr. Woodrow indicated his question was difficult to answer
because, thought it would be difficult to say that the
state had kept more seafood in the state. He thought it had
increased the value for the products.
Representative Wool asked for the weight shipped overseas.
Mr. Woodrow could provide it to the committee in written
form.
3:28:51 PM
Representative Wool visited some of the processors in
Kodiak, and stressed that bit of processing added value. He
wondered how to value the degree of processing. //. He
asked Mr. Woodrow to elaborate.
Mr. Woodrow indicated that anytime a fish was taken from
the water flavors added to the package which added value to
a product.
Co-Chair Merrick invited Mr. Woodrow to provide his public
testimony.
3:32:07 PM
Mr. Woodrow relayed that the Alaska Seafood Marketing
Institute (ASMI) was in support of the bill.
NICOLE REYNOLDS, DEPUTY DIRECTOR, TAX DIVISION, DEPARTMENT
OF REVENUE (via teleconference), answered that the credit
applied to the fisheries business tax and was taken against
the state share of the tax.
3:38:40 PM
Co-Chair Merrick asked Ms. Reynolds to review the fiscal
note.
Ms. Reynolds reported that the revenue ranged between $3
million FY 24 and $3.4 million in FY 25, and would be
deposited into the general fund.
Representative Wool asked for the total tax amount received
by the state.
Ms. Reynolds replied that the total tax collections for FY
18 through FY 21 ranged from $46.2 million to $34.6
million.
Co-Chair Merrick invited Ms. Curry to begin her testimony.
3:43:51 PM
JULIANNE CURRY, PUBLIC AFFAIRS MANAGER, ICICLE SEAFOODS
(via teleconference), spoke in support of the bill. She
stated that the bill would allow for the purchase of
equipment that would vastly improve the financial outcome
of the business.
3:46:36 PM
TRACY WELCH, EXECUTIVE DIRECTOR, UNITED FISHERMEN OF ALASKA
(via teleconference), strongly supported SB 33. The program
incentivized value added products.
Representative LeBon wondered whether the tax credits could
be spread out over a number of years at the pleasure of the
taxpayer, or whether there was a formula to define the
credit.
Ms. Reynolds reported that the credit was limited to 50
percent of the value of the equipment.
Co-Chair Merrick set an amendment deadline.
Senator Stevens indicated that the equipment could only be
used in Alaska.
Co-Chair Merrick indicated Speaker Stutes had the companion
bill to SB 33. She reviewed the agenda for the following
meeting.
CSSB 33(FIN) was HEARD and HELD in committee for further
consideration.
ADJOURNMENT
3:52:38 PM
The meeting was adjourned at 3:52 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| SB 33 Seafood-Tax-Credit Sectional Version N.pdf |
HFIN 3/9/2022 1:30:00 PM |
SB 33 |
| SB 33 SFIN DOR-TAX Hearing Questions Reponses 02.02.2022.pdf |
HFIN 3/9/2022 1:30:00 PM |
SB 33 |
| SB 33 SFIN-Hearing-Questions-Responses 2.3.2022.pdf |
HFIN 3/9/2022 1:30:00 PM |
SB 33 |
| SB 33 Support Letters_bundled as of 2.7.2022.pdf |
HFIN 3/9/2022 1:30:00 PM |
SB 33 |
| SB033_Seafood-Product-Development_SponsorStatement.pdf |
HFIN 3/9/2022 1:30:00 PM |
SB 33 |
| HB 110 Public Testimony Rec'd by 030722.pdf |
HFIN 3/9/2022 1:30:00 PM |
HB 110 |
| HB 110 Public Testimony Rec'd by 030822.pdf |
HFIN 3/9/2022 1:30:00 PM |
HB 110 |
| HB 110 Amendments 1 - 11 030822.pdf |
HFIN 3/9/2022 1:30:00 PM |
HB 110 |
| HB 110 Public Testimony Rec'd by 030622.pdf |
HFIN 3/9/2022 1:30:00 PM |
HB 110 |