Legislature(1997 - 1998)
02/11/1997 03:05 PM House HES
| 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
JOINT SENATE/HOUSE HEALTH, EDUCATION AND SOCIAL
SERVICES STANDING COMMITTEE
February 11, 1997
3:05 p.m.
SENATE MEMBERS PRESENT
Senator Gary Wilken, Chairman
Senator Loren Leman, Vice Chairman
Senator Johnny Ellis
SENATE MEMBERS ABSENT
Senator Lyda Green
Senator Jerry Ward
HOUSE MEMBERS PRESENT
Representative Con Bunde, Chairman
Representative Joe Green, Vice Chairman
Representative Al Vezey
Representative Brian Porter
Representative Fred Dyson
Representative J. Allen Kemplen
HOUSE MEMBERS ABSENT
Representative Tom Brice
COMMITTEE CALENDAR
ALASKAN CHILDREN'S TRUST FUND UPDATE
HOUSE BILL NO. 54
"An Act establishing the Alaska education technology program; and
providing for an effective date."
- HEARD AND HELD
HOUSE BILL NO. 1
"An Act relating to taxes on cigarettes and tobacco products; and
providing for an effective date."
- HEARD AND HELD
PREVIOUS ACTION
(* First Public Hearing)
BILL: HB 54
SHORT TITLE: EDUCATION TECHNOLOGY PROGRAM
SPONSOR(S): REPRESENTATIVE(S) KOTT,Grussendorf,Kemplen
JRN-DATE JRN-DATE ACTION
01/13/97 42 (H) PREFILE RELEASED 1/10/97
01/13/97 42 (H) READ THE FIRST TIME - REFERRAL(S)
01/13/97 42 (H) HEALTH, EDUCATION & SOCIAL SERVICES
01/30/97 (H) HES AT 3:00 PM CAPITOL 106
01/30/97 (H) MINUTE(HES)
01/31/97 206 (H) COSPONSOR(S): KEMPLEN
02/05/97 (H) HES AT 4:00 PM CAPITOL 120
02/07/97 (H) HES AT 4:00 PM CAPITOL 120
02/11/97 (H) HES AT 3:00 PM CAPITOL 106
BILL: HB 1
SHORT TITLE: CIGARETTE AND TOBACCO TAX
SPONSOR(S): REPRESENTATIVE(S) BUNDE,Ivan,Croft,Porter,Hudson
JRN-DATE JRN-DATE ACTION
01/13/97 26 (H) PREFILE RELEASED 1/3/97
01/13/97 26 (H) READ THE FIRST TIME - REFERRAL(S)
01/13/97 27 (H) STATE AFFAIRS, HES, FINANCE
01/21/97 (H) STA AT 8:00 AM CAPITOL 102
01/21/97 (H) MINUTE(STA)
01/28/97 (H) STA AT 8:00 AM CAPITOL 102
01/28/97 (H) MINUTE(STA)
01/30/97 (H) STA AT 8:00 AM CAPITOL 102
01/30/97 (H) MINUTE(STA)
02/04/97 (H) STA AT 8:00 AM CAPITOL 102
02/04/97 (H) MINUTE(STA)
02/05/97 237 (H) STA RPT CS(STA) 4DP 1DNP
02/05/97 237 (H) DP: JAMES, ELTON, BERKOWITZ, IVAN
02/05/97 237 (H) DNP: VEZEY
02/05/97 237 (H) FISCAL NOTE (STA CMTE/REV)
02/05/97 237 (H) REFERRED TO HES
02/07/97 276 (H) COSPONSOR(S): HUDSON
02/11/97 (H) HES AT 3:00 PM CAPITOL 106
WITNESS REGISTER
ARLISS STURGULEWSKI
7957 Sheldon Jackson
Anchorage, Alaska 99508
Telephone: (907) 561-5286
POSITION STATEMENT: Presented update on the Alaska Children's
Trust
MORRIS THOMPSON
2008 Capitol Avenue
Fairbanks, Alaska
Telephone: (907) 452-4955
POSITION STATEMENT: Presented update on the Alaska Children's
Trust
CAROL H. BRICE, President
Family Training Associates
P.O. Box 81016
Fairbanks, Alaska 99708
Telephone: (907) 479-7461
POSITION STATEMENT: Presented update on the Alaska Children's
Trust
KAREN PERDUE, Commissioner
Department of Health and Social Services
P.O. Box 110601
Juneau, Alaska 99811-0601
Telephone: (907) 465-3030
POSITION STATEMENT: Presented update on the Alaska Children's
Trust and testified in support of CSHB 1(STA)
REPRESENTATIVE PETE KOTT
Alaska State Legislature
Capitol Building, Room 204
Juneau, Alaska 99801
Telephone: (907) 465-3777
POSITION STATEMENT: Sponsor of HB 54
PAT CARR, Health Programs Manager
Central Office
Division of Public Health
Department of Health and Social Services
P.O. Box 110610
Juneau, Alaska 99811-0610
Telephone: (907) 465-8618
POSITION STATEMENT: Testified in support of CSHB 1(STA)
LOIS IRVIN
167 West Bayview Avenue
Homer, Alaska 99603
Telephone: (907) 235-7172
POSITION STATEMENT: Testified in support of the concept of
CSHB 1(STA)
KEITH EVANS
Dillingham City Schools
P.O. Box 170
Dillingham, Alaska 99576
Telephone: (907) 842-5223
POSITION STATEMENT: Testified in support of CSHB 1(STA)
VEVA BECKER, Educator
American Cancer Society
4137 Rosebud Lane
Fairbanks, Alaska 99709
Telephone: (907) 479-6968
POSITION STATEMENT: Testified in support of CSHB 1(STA)
ANNE HARRISON, Nurse Practioner
3270 Rosie Creek Road
Fairbanks, Alaska 99709
Telephone: (907) 479-3594
POSITION STATEMENT: Testified in support of CSHB 1(STA)
REX GARVER
P.O. Box 1564
Sitka, Alaska 99835
Telephone: (907) 747-3304
POSITION STATEMENT: Testified in support of CSHB 1(STA)
SHARI SMOLE
2005 Tudor Hills Court
Anchorage, Alaska 99507
Telephone: (907) 561-0517
POSITION STATEMENT: Testified in support of CSHB 1(STA)
DELISA CULPEPPER, President
Alaska Public Health Association
1874 Wickersham Drive
Anchorage, Alaska 99507
Telephone: (907) 563-7425
POSITION STATEMENT: Testified in support of CSHB 1(STA)
ANNE MARIE HOLEN, Member
Alaska Native Health Board
11241 Latta Circle
Anchorage, Alaska 99516
Telephone: (907) 346-2789
POSITION STATEMENT: Testified in support of CSHB 1(STA)
ERIC MEYERS
2834 Knik Avenue
Anchorage, Alaska 99517
Telephone: (907) 248-3366
POSITION STATEMENT: Testified in support of CSHB 1(STA)
PATTI TRUESDELL, Member
Soldotna Middle School Parent Teacher Student Association
P.O. Box 1452
Soldotna, Alaska 99669
Telephone: (907) 262-4404
POSITION STATEMENT: Testified in support of CSHB 1(STA)
JUDY DOWNS
1616 Tanaga
Kenai, Alaska 99611
Telephone: (907) 262-9137
POSITION STATEMENT: Testified in support of CSHB 1(STA)
ELI WAITE, Student
825 A Street
Juneau, Alaska 99801
Telephone: (907) 586-2064
POSITION STATEMENT: Testified in support of CSHB 1(STA)
CRISTIN MARTINEAU
P.O. Box 21685
Juneau, Alaska 99802
Telephone: No telephone number given
POSITION STATEMENT: Testified in support of CSHB 1(STA)
BOB BARTHOLOMEW, Deputy Director
Income and Excise Audit Division
Department of Revenue
P.O. Box 110420
Juneau, Alaska 99811-0420
Telephone: (907) 465-2320
POSITION STATEMENT: Testified on CSHB 1(STA)
ACTION NARRATIVE
TAPE 97-8, SIDE A
Number 0000
CHAIRMAN CON BUNDE called the Joint House and Senate Health,
Education and Social Services Committee meeting to order at 3:05
p.m. Senate members present at the call to order were Senators
Wilken, Ellis and Leman. Representative members present at the call
to order were Representatives Bunde, Green, Vezey, Porter, Kemplen
and Brice. Representative Dyson joined the committee meeting at
3:13 p.m. Senator Ward, Senator Green and Representative Brice
were absent. A quorum was present. This meeting was
teleconferenced to Homer, Dillingham, Sitka, Fairbanks, Anchorage
and Kenai.
CHAIRMAN BUNDE said the Joint committee would receive an update on
the Alaska Children's Trust Fund and afterward the House committee
would address a subcommittee report on HB 54 and then address HB 1.
ALASKAN CHILDREN'S TRUST FUND UPDATE
Number 0108
ARLISS STURGULEWSKI said the members of the Alaska Children's Trust
were here today to ask for the committee's general support for
issues affecting children, not to make a specific request. She
said members of the trust include; Carol H. Brice, Family Training
Associates; Morris Thompson, President and CEO of Doyon Limited;
Mark Williams, Alaska Children's Trust Chair, Vice-Chair of Carr
Gottstein Foods Company; Attorney General Bruce M. Botelho;
Commissioner Shirley Holloway of the Department of Education; and
Commissioner Karen Perdue of the Department of Health and Social
Services. She said Nila Rinehart serves half time as staff for the
Children's Cabinet and half time as staff for the Alaska Children's
Trust and that she was here at today's meeting. She said it is
great to have Ms. Rinehart work in the two sectors because it gives
an inter-relationship between the various programs.
Number 0233
MS. STURGULEWSKI said the Alaska Children's Trust was formed back
in 1988, but it had a quiet life as it had no money. Last year $6
million was made available to the trust and is now being managed by
the Department of Revenue (DOR) with Wilson Condon acting as
treasurer for the Alaska Children's Trust. She said the
legislation mandates, through the retention of capital, that the
fund be inflation-proof. The method DOR is using in investing will
give the Alaska Children's Trust slightly better interest than the
rate of inflation. She said the corpus of the trust will be
available for expenditure.
MS. STURGULEWSKI said the primary purpose is to work in partnership
and collaboration with communities, private business and government
to reduce and prevent child abuse as well as promoting healthy
families and communities. The Alaska Children's Trust will be
looking at collaborative efforts. She said she would not go into
a lot of detail about the goals and how they were achieved, but
mentioned that a lot of thought was spent on what to do. She said
the Alaska Children's Trust will be a year old in April and it has
taken a lot of time to get to this point. The trust members were
careful as to selecting where the Alaska Children's Trust would be
heading and what they would do.
Number 0353
MS. STURGULEWSKI said currently under formation now, working for a
5013 status, is a group called the Friends of the Alaska Children's
Trust. This group will be the major fundraising arm for the trust
and they have already received some private corporate grants;
$50,000 in two year increments from Sohio and BP (Alaska) Inc. She
said there is hope that this group will be able to raise major,
private funds from individuals, corporations and various endowment
trusts throughout the country. This is an area where the
legislature could assist the Alaska Children's Trust if there are
other additional funds that could be made available. She said the
Alaska Children's Trust's budget will be proposed during this
legislative session. They are looking at $250,000 to $290,000
which will be put out in grants, but it will need action of the
legislative body as well as of the operating budget.
Number 0458
MORRIS THOMPSON, President and CEO, Doyon Limited, spoke briefly
about why we need the Alaska Children's Trust and cited some
statistics. He said these numbers were unfortunate, but very real
and need to be addressed by communities, by families, individuals,
by leaders and hopefully by the state. He referred to a handout,
located in the committee file, titled, "Alaska Children's Trust,
Annual Report 1996." He said in the three categories of physical,
sexual abuse and neglect the state of Alaska is so far out in front
that it is horrendous. He read, "In children substantiated
indicated reports of abuse and neglect, Alaska is 36.6 per thousand
children in the population. The median is 14, the low is 2."
MR. THOMPSON said it is clear that this is a problem that needs to
be fixed by families, by communities, by citizens, by
municipalities and by leaders. He said every year 1,400 children
are arrested for offenses including assault, rape, robbery and drug
sales. He said 2,200 children drop out of school and more than
10,000 preschoolers live below the poverty level. Alaska leads the
nation in per capita cases of child sexual abuse and neglect. He
said we must work collectively, hopefully with other agencies, to
reduce those numbers. He said on social indicators, we do not want
to be constantly leading the nation in these areas.
MR. THOMPSON said thanks to the legislature there is $6 million in
the corpus to be managed by the DOR as a trust fund.
Number 0673
MS. STURGULEWSKI mentioned that Robert Storer, the investment
officer for the DOR, was available to provide information on the
management of the trust fund.
Number 0682
CAROL H. BRICE, President, Family Training Associates, said she has
been involved in parenting issues for almost 15 years and added
that it is the toughest job in town with little training available.
She said she is excited about where the Alaska Children's Trust can
go and wanted to tell the committee where they are today and what
they see happening in the next couple of months. By March 1, 1997,
the first proposal, the first request for proposal (RFP), the first
invitation for people to look carefully at what is going on in your
community, what do you see that might be a solution dealing with
issues related to children and whether you want to talk with the
Alaska Children's Trust about them will occur. She said the
proposal is only going to be ten pages long, which is very
different from a lot of RFPs.
MS. BRICE said Alaska Children's Trust hopes to reach out to the
smaller communities, to the people that are right there in the
community, who are able to say what is going on with their kids and
what they think might be able to be done to help. If it is a small
project, the Alaska Children's Trust is willing to give anywhere
from $10,000 to $50,000 to support it. She said the Alaska
Children's Trust will have between $250,000 and $290,000 to award.
She said they expected to have the RFPs back by mid-May, take a
look at them, address the issues, consider them and by July 1,
1997, the trust will give their first awards. She said the Alaska
Children's Trust is not in competition with the state and other
programs. Hopefully the Alaska Children's Trust will be
supplemental by looking at issues that have never been able to be
funded and help people think creatively about what can happen.
Number 0811
MS. BRICE remembered, as an example, a situation that occurred when
she was serving on the Health and Social Services Commission in
Fairbanks a few years ago. A young man came to their office and
said for almost a year he had been teaching school children boxing
in the Northrup Building. He requested $10,000 to send some of
those kids to Juneau to compete in a boxing tournament. It was a
very non-traditional proposal that he made, the paper work was not
adequate at all, but they went into session, considered it and gave
him his $10,000. She said this is an example of somebody dealing,
in a practical way, with youth. Youth that otherwise were on the
streets. She said, today, that is an up and going organization
that has a lot of community support.
Number 0870
MS. BRICE said the Alaska Children's Trust will not fund any
program 100 percent. They will fund it 75 percent the first year.
If they come back to the Alaska Children's Trust for a second year
with another level of their program that they want the trust to
consider, again the trust will fund 75 percent. The third and
fourth year the funding is down to 50 percent and the fifth and
sixth year the funding is down to 25 percent. She said there is
going to have to be collaboration, networking in the programs and
that the Alaska Children's Trust is not a give-away program. She
said there are people out there doing good things and we need to
collaborate and build on services that are already being offered.
Number 0911
MS. BRICE said, in her mind, children are the indicators of the
health of a community. The statistics, Mr. Thompson referred to,
show us that we don't have a very healthy community and said it is
of great concern to her. She hoped that when she came to Juneau in
succeeding years to talk about children's issues that when she
meets people in the hall they also are talking about children's
issues.
Number 0916
MS. STURGULEWSKI said the Alaska Children's Trust is on their way,
but want to keep in frequent communication with the legislature so
that it is known what is being done. She said they don't want the
work of the Alaska Children's Trust duplicated in the
Administration. She said they'd like to see some innovative
programs, people reaching out and finding ways to deal with some of
these issues. She referred to articles in "Time", "U.S. News and
World Report" and said there is an explosion of what happens to
kids in that zero to two years of age. She said these years
determine what they are going to be intellectually for their life.
Number 0962
CHAIRMAN BUNDE thanked the witnesses and said the committee is
often faced with problems and challenges. He said it is nice that
someone has taken the ball and started to run with it. He added
that the committee is pleased that the trust is coming back in just
a year and given the committee some positive results. He said, as
the legislature often does, the trust will be rewarded by being
given even higher expectations.
Number 0989
MS. STURGULEWSKI said in many of the communities, certainly in the
community that she is from, organizations are not seeing as many
federal or state dollars coming through. She said, as a result,
there is a lot more collaboration and working together happening in
the community where the need is, a better utilization of resources.
She said the biggest challenge is how to get people more involved,
whether it is people in schools or getting them to help with other
existing programs.
Number 1027
CHAIRMAN BUNDE thanked all three of the people who made the
presentation for their time and energy because they have hit the
nail on the head when they said you do not solve these problems by
throwing money on them. He said the personal involvement and the
buy-in is going to make progress in these type of problems.
Number 1042
CHAIRMAN GARY WILKEN said he has been briefed on a lot of things
since November 5, 1996, and one of the most exciting ones was when
Ms. Brice came to him and discussed the Alaska Children's Trust.
He said he embraced the trust as an Alaskan and hoped that, through
the legislature, he can help. He hoped that sometime in the future
he would be able to embrace the results as well. He said he would
admonish them and encourage them, as they go through the selection
process for the first couple of years, to make sure that they make
the right choices. He said the way we're going to measure the
results and the worth of their project is by what happens in those
first few years. He said the first decisions will be the most
difficult as you are laying some new foundations for youth. It is
an exciting concept and a lot of good things will come out of it if
it is handled right.
Number 1095
MS. STURGULEWSKI said there is a self-evaluation within the Alaska
Children's Trust. She said the toughest thing will be to prove
that the Alaska Children's Trust works because they are doing
little things, spread broadly which can be more effective.
Number 1115
REPRESENTATIVE FRED DYSON referred to the presentation done by the
Alaska Children's Trust at the Children's Caucus. He wanted to
identify with both chairs' comments.
Number 1137
REPRESENTATIVE BRIAN PORTER also wanted to identify with the
chairs' comments.
Number 1165
REPRESENTATIVE JOE GREEN said he hoped that in the Alaska
Children's Trust presentation to the Children's Caucus the lack of
majority members was not a deterrent and said there was a prior
commitment. He said the legislature takes these issues seriously.
REPRESENTATIVE GREEN said he watched a film by a psychologist which
said if we can change or help a child during their formative years,
we can save tons and tons of money because that child won't get
into a problem lifestyle.
Number 1202
MS. STURGULEWSKI said the chairman of the Children's Caucus was
careful to point out that fact that not all of the legislators
could be there. She said she was impressed by the number that
attended the caucus and added that it is a good way to get into a
number of these issues, not just the issues involving the Alaska
Children's Trust.
Number 1228
CHAIRMAN BUNDE recognized Commissioner Perdue and asked her if she
wanted to make some comments.
Number 1243
KAREN PERDUE, Commissioner, Department of Health and Social
Services, said, because of her position, she appreciates the
members of the Alaska Children's Trust and their efforts. She said
the fact that the money is going to the communities instead of
state entities is doubly important. She wanted to thank them for
all their work and apologized for not being at the Children's
Caucus because there was a bomb scare at the state office building.
Number 1280
CHAIRMAN BUNDE thanked the trust members again and announced a
brief at ease at 3:27 p.m. The committee meeting resumed at 3:28
p.m. He stated that the Senate Health, Education and Social
Services Committee members had left with the exception of Senator
Wilken and reconvened the House Health, Education and Social
Services meeting at 3:28 p.m.
HB 54 - EDUCATION TECHNOLOGY PROGRAM
Number 1280
CHAIRMAN BUNDE said that CSHB 54(HES), "An Act establishing the
Alaska education technology program; and providing for an effective
date.", was put into a subcommittee on Thursday. He said it is the
chair's intention that the committee will hear the subcommittee
report as he is anticipating some amendments to come from this
report. He said the committee will not act upon the bill today.
Number 1381
REPRESENTATIVE GREEN said Representative Kemplen and he met twice
last week in a subcommittee for CSHB 54(HES). He said
Representative Vezey was unable to attend either meeting. At those
meetings representatives from the Department of Education (DOE),
Department of Revenue (DOR) and some non-agency people came to
discuss CSHB 54(HES). He said they discussed many things and
referred to a report titled, "HESS Subcommittee for HB 54 -
Education Technology Program Summary."
REPRESENTATIVE GREEN said one of the questions they looked at was
what if companies, who are currently paying taxes in the state of
Alaska, were to make donations to this fund. He referred to
examples presented by Mr. Bartholomew from the DOR in a chart
located in the committee file. He said the first scenario looked
at was what if all 16 percent of Alaskan corporations, who paid
income tax, were to make contributions in the amount of $3.7
million. He said the result was that it would have a negative
impact on the general fund with a decrease of $220,440 per year.
Another scenario assumed half that much in contributions and said
there is almost a linear association between the two so that if
other people want to make other assumptions as to how much money
might be contributed, the adversity to the general fund could be
measured.
Number 1488
REPRESENTATIVE GREEN said an overall agreement from the
participants in the subcommittee was that if an education
technology fund was generated, any interest associated with the
education technology fund should stay with that fund rather than
going into the general fund. He said there was an indication of
the possibility of local matching grants. He said they checked
with Representative Kott, the sponsor of HB 54, who said this
possibility was agreeable to him.
Number 1516
REPRESENTATIVE GREEN said the other discussions were covered in the
report. He said there were two recommended changes to CSHB
54(HES), listed on page two. He said the subcommittee felt that
libraries should be included in the list of fund recipients and
that there would be investment earnings in the fund that should
stay in the fund.
REPRESENTATIVE AL VEZEY asked for clarification on the table
regarding the effect on the general fund.
Number 1556
REPRESENTATIVE GREEN said the amount of earnings that a company has
was broken down in this litany of four different types of
corporations. He said estimates were made that these companies
would make contributions to the fund. He said there is no way to
know, in advance, how much money might be donated to a fund.
Without this knowledge there was no way to know how the donations
to this fund would affect the general fund. He said Mr.
Bartholomew made two different assumptions and based on them he
determined the loss of taxes to the general fund. He said this
chart indicated a nearly linear relationship so that you could
enter your estimate of what the contribution might be and come up
with the effect on the general fund.
Number 1638
CHAIRMAN BUNDE asked that these questions be addressed to the
subcommittee members after the meeting. He asked Representative
Kott to comment on the two proposed changes.
Number 1648
REPRESENTATIVE PETE KOTT, sponsor of HB 54, said he had been
informed by his staff, who attended the subcommittee meeting, and
said he understands the changes that are being suggested. He said
he has no problem with the changes as the intent of CSHB 54(HES)
remains, even with the suggested amendments. He said the proposed
amendments clarify the intent and that he would go along with them.
Number 1690
REPRESENTATIVE VEZEY asked what can be accomplished with CSHB
54(HES) that can't be accomplished under existing law.
Number 1700
REPRESENTATIVE KOTT said, it was his understanding, that the DOE
needs a vehicle in which monies can be contributed. He said the
whole purpose of CSHB 54(HES) is to provide that vehicle, that
platform, as well as articulating some of the requirements as to
how the money will be distributed or identifying some of the pre-
requisites for acquiring a grant from a library or a school
district's perspective.
Number 1725
CHAIRMAN BUNDE asked if there would be a parallel between CSHB
54(HES) and the Alaska Children's Trust fund. He asked if these
things were similar.
Number 1733
REPRESENTATIVE KOTT said he felt they would be similar to a large
extent, with the exception that there is no certainty that there
would be any money contributed to the education technology fund.
He said, "Although I understand from staff that the Department of
Education has a grant in hand from the federal government. That is
my understanding. I'm not sure how they are going to execute the
grant. I'm not sure the strings that might be associated with it.
I understand it is for technology."
Number 1764
CHAIRMAN BUNDE said he would want someone here from the DOE as it
would influence his opinion about CSHB 54(HES).
Number 1783
REPRESENTATIVE GREEN said there was a question about payment of
staff services by the fund and said he could address this question
later. He said the subcommittee found that they could go both ways
with this. He presented information about a computer company and
said he would be happy to share it with the committee.
Number 1881
CHAIRMAN BUNDE asked the committee to peruse the subcommittee
report and asked them to be prepared to take action on CSHB 54(HES)
on Thursday, February 13, 1997.
HB 1 - CIGARETTE AND TOBACCO TAX
Number 1892
CHAIRMAN BUNDE said he was the sponsor of HB 1 and as such would
turn the chair responsibilities over to Vice-Chair Green in order
to present HB 1. He said HB 1, "An Act relating to taxes on
cigarettes and tobacco products; and providing for an effective
date.", now CSHB 1(STA) has the misfortune of being labeled the
tobacco tax bill. He said CSHB 1(STA) uses the current tobacco tax
as a vehicle. He wished he could call CSHB 1(STA) an economic
barrier user fee bill because this is how he views the bill. He
hesitantly introduced this legislation, more than a year ago at the
request of some constituents, because of concerns over tax and
spend legislation and doubts about whether or not social
engineering works. He said he had the same concerns that probably
many others have shared.
CHAIRMAN BUNDE said he needed to be educated as to the
effectiveness of an increase in cost of nicotine. He said he is
convinced that raising the cost of tobacco does work. He said the
experience in Canada, particularly western Canada, has indicated
that the use goes down 4 percent overall for the every 10 percent
increase in price. He said the use among young people goes down
even more dramatically than that, some say as high as 30 percent.
He said we can argue about decimal points but the use of nicotine
is related to price, it is price sensitive.
Number 2005
CHAIRMAN BUNDE said the other aspect of CSHB 1(STA) is the user
fee. Tobacco products cost the state of Alaska about $200 million
a year. He suggested that those who chose to use nicotine perhaps
have an obligation to help pay their expenses to the state. He
said this is purely a voluntary task. If you do not smoke, you do
not pay the tax. If you do smoke, you do cost the state of Alaska
hundreds of thousands, if not millions of dollars.
Number 2055
CHAIRMAN BUNDE said the evidence behind increasing the cost of
tobacco encouraged him to introduce CSHB 1(STA). He wanted to
address a couple of items that people brought up which are valid
concerns, to share them for the committee's consideration. One of
these concerns is that if we increase the cost on cigarettes
particularly, although all tobacco products will be taxed, we will
be encouraging smuggling. He heard people from Quik Stops suggest
that, when they are subjected to armed robbery, people will be
taking cartons and cartons of cigarettes instead of money. He is
suggesting that if we have such a problem that armed robbery is one
of our concerns in dealing with the problem that the use of
nicotine generates in our society, we have a bigger problem than
just the cigarette tax and maybe that needs to be addressed in
another area.
CHAIRMAN BUNDE referred to concerns about social engineering and
said many of those people would not suggest removing government
prohibition from every drug that is available to us. He said,
admittedly, tobacco is a legal drug and we can debate whether or
not this should be the case. He said removing prohibitions is not
going to decrease the cost of tobacco and its impact on our
society, particularly on our young people. Increasing prohibitions
has a chance of decreasing use.
CHAIRMAN BUNDE said another concern that was addressed is that CSHB
1(STA) would simply increase the amount of mail order access to
nicotine. He said this is a valid concern, particularly with other
tobacco products. People who have small, specialty shops are
concerned that if we increase the price of a $10 cigar to a $14
cigar, then people who are already tempted to buy through mail
order businesses will simply buy through the mail order and the
small business will go out of existence. He said he is sensitive
to this concern and would not want to penalize local businesses.
He said if people can currently buy any tobacco product that they
want via the mail and not even pay our existing, paltry 29 cent
tax, maybe we have some problems with our basic system now. He
said this concern about people flocking to a mail order access
could be addressed in other legislation.
Number 2148
CHAIRMAN BUNDE said there are comments that we need not tax pipe
tobacco or cigars because young people do not use them and it is
not causing the huge health problem. Certainly from the people he
talked to in the dental community that are concerned about oral
cancer and a personal experience he had with people who have had
oral cancer, this is not the case. He said, of the figures that he
has received, there is only 30 percent of the health impact from
cigars and pipe tobacco than there is from cigarettes. He said the
most dramatic figure he had heard, is that people who die
nationwide everyday from the use of all tobacco products is
equivalent to the number of people who would die if two 747 jets
full of people crashed into each other. He said we kill about 800
people a day with tobacco. If we had that type of problem going on
in our society with our aircraft industry we would make huge
changes, immediately. He said we have that type of problem going
on in the nicotine industry, but we don't make huge changes because
the gestation period is so long.
Number 2201
CHAIRMAN BUNDE said his mother started smoking when she was 16 and
was encouraged to smoke because for women it was sophisticated and
calmed their nerves. Almost all the heros in the movies, those
days, smoked. She started smoking when she was 16, but it took
until she was age 50 for nicotine to kill her. He suggested that
if those people who smoked today, died within a month, we probably
would address this problem a little more seriously. He said we
have more time fortunately and that is why he is here. The CSHB
1(STA) is only one way to help address the nicotine addiction
problem in our country. It isn't the only answer, but one of them.
CHAIRMAN BUNDE said a number of people have contacted him from
businesses that sell nicotine and have expressed concern about the
impact on their business by CSHB 1(STA). He said this tells him
that CSHB 1(STA) will work. They are going to lose business
because people will not smoke as much. Every one of those people
who contacted him have said they do not want kids to smoke and said
he believes they are genuine in the wish, they do not want kids to
smoke. He said if that is the case and we know in excess of 90
percent of people, who are addicted to nicotine, began smoking as
kids then people in the nicotine industry better look for a new
job. Because if they, through some magic bullet, can stop kids
from starting to smoke tomorrow they would be out of business.
TAPE 97-8, SIDE B
Number 0000
CHAIRMAN BUNDE said the committee did not have to act on CSHB
1(STA) today and that they could devote the rest of the meeting to
public testimony. On Thursday, February 13, 1997, CSHB 1(STA)
would be brought back up for action.
Number 0010
KAREN PERDUE, Commissioner, Department of Health and Social
Services, said in the interest of time she would defer testimony
but asked the committee to let Ms. Carr talk briefly about some of
the statistics. She said the Knowles Administration supports a $1
a pack tax and is ready to work with the committee in any way they
can.
Number 0102
PAT CARR, Health Programs Manager, Central Office, Division of
Public Health, Department of Health and Social Services, said she
is also supervising the tobacco prevention and control program.
She said tobacco usage is the number one cause of preventable death
and disease in the United States, accounting for over 419,000
deaths each year. Over 23 percent of deaths of Alaskans 35 years
of age and older, in 1991, were attributable to smoking. She
referred to a handout packet titled, "Tobacco Tax Bill Analysis,"
which was located in the committee file.
MS. CARR referred to page 3 of the handout and said it shows the
percentage of deaths in the United States from cigarette use,
accounting for over 400,000 deaths per year. This figure is more
than the combined total of burns, AIDS, suicides and other common
causes of preventable death. In Alaska there are over 1,400 deaths
per year from cigarette smoking which is higher than from many
other preventable cause of death. She clarified that these deaths
were just from cigarette smoking, not other forms of tobacco
products.
MS. CARR said, based on the youth behavior risk survey and the
adult behavior risk factor survey, 83 percent of adult smokers
report that they started smoking before the age of 20. In this way
we see that nicotine addiction is a pediatric disease. She said 21
percent of Alaskan high school students reported that they smoked
regularly in the last month, this means 20 out of the past 30 days.
She said 25 percent of Alaskan middle school age students reported
smoking at least one cigarette in the last month.
Number 0249
MS. CARR said surveys, conducted in 1996 under the supervision of
the Department of Health and Social Services (DHSS), showed 64
percent of our vendors complied with tobacco restriction laws which
meant that 36 percent do not comply. She said the federal
government mandates an 80 percent compliance rate by the year 2000
under the Synar Amendment. The state of Alaska stands to lose a
substantial amount of our substance abuse preventive and treatment
block grant if we do not comply with this amendment. Tobacco
vendors refused to sell to 14 to 15-year-olds 71 percent of the
time, while 16 to 17-year-olds were refused 58 percent of the time.
Number 0293
MS. CARR said DHSS is greatly concerned about the high rate of
tobacco use among Alaskan Natives. Today Alaskan Natives have some
of the highest rates of tobacco use in the world with 47 percent
for men and 39 percent for women. Alaskan Natives account for 23
percent of smoking related deaths while they account for only 17
percent of the state's population. Alaskan Natives have the
highest cancer mortality rate of any Indian Health Service Area in
the country. The lung cancer rate among Alaskan Native women is
three times the national average and tobacco use among Alaskan
Native youth is higher than non-Native youth.
Number 0330
MS. CARR referred to page 9 of the handout and said it shows a
comparison between United States high school students, Alaskan
Native students and Alaskan students as a whole with comparative
use rates. She said this again shows the high rate of youth use in
our state as well as an exorbitantly high rate among Alaskan Native
youth. She said 41 percent of Alaskan Native boys and 32 percent
of Alaskan Native girls were using smokeless tobacco weekly. Among
the boys, 45 percent started using tobacco before the age of 8.
MS. CARR said DHSS is concerned about the health impact as well as
the economic drain. Total direct medical costs for smoking related
illnesses for Alaskans aged 35 years of age and older, in 1993, was
over $96 million. She said $23 million of the direct medical care
costs for smoking related illness was paid by Medicaid in Alaska
which is a 50/50 match of state and federal monies. Meanwhile, the
state collected only $15.6 million in cigarette tax revenues in
1993, this excludes the tax that currently exists on smokeless
tobacco.
MS. CARR said tobacco taxes are not new, the state of Alaska has
taxed tobacco since territorial days when there was a 5 cent per
pack tax levied on cigarettes to help fund school construction.
The current tax level of 29 cents per pack has been in place since
1989. In 1989, Alaska ranked 17th among the 50 states including
the District of Columbia on the amount of tobacco tax levied.
Currently, Alaska is ranked 28th among the states as other states
have increased their tobacco excise taxes.
Number 0427
MS. CARR referred to the chart on page 13 and said it shows the
comparative drop in use when the overall price on a pack of
cigarettes increases. She said the cigarette tax has not kept a
fair share of the total cost of cigarettes. She said there is
currently a 24 cent federal tax on a pack of cigarettes.
MS. CARR said tobacco taxes increase the overall cost of
cigarettes, therefore it impacts consumption. For every 10 percent
increase in cigarette prices, youth consumption will fall by at
least 10 percent. For every 10 percent increase in cigarette
prices, general consumption will fall by 4 percent. At the current
adult smoking rates, approximately 18,000 of Alaskans currently
under the age of 18 will die prematurely of tobacco related
illnesses. All indications show that a $1.00 per pack tax increase
would reduce youth smoking in Alaska by an estimated 32 percent.
The tax would then prevent 5,700 premature deaths among Alaskans
under the age of 18.
Number 0496
MS. CARR referred to the bar chart on page 16 and said it shows the
comparison of the United States current cigarette tax rates with
other industrial nations. The United States having the lowest tax
rate at 57 cents, combined state and federal cigarette tax. She
said the time is right for an increase in the cigarette tax, there
is broad public support, the groundwork is in place and 75 percent
of Alaskans surveyed in 1995 supported the $1.00 per pack tax.
This number reflected 75 percent of "conservatives", 75 percent of
"moderates", 73 percent of "liberals", and 55 percent of smokers.
MS. CARR said this tax has wide national and state support. Such
reputable individuals as C. Everett Koop, the former Surgeon
General, the Alaska Tobacco Control Alliance which is made up of
over 200 individuals and represents over 50 organizations in the
state including membership from the Alaska Native Health Board, the
American Cancer Society and the American Heart Association, as well
as other well-known organizations.
Number 0569
VICE-CHAIR GREEN referred to testimony regarding the percentage of
tax in Canada with the correlating drop in youth smoking and then
referred to the chart that showed the Scandinavian countries having
a tax that is between six and eight times as expensive as the
United States. He asked if those countries showed a significant
reduction in youth smoking.
Number 0600
MS. CARR said she is unfamiliar with those figures, but could get
them for him. She said the chart he was referring to shows the
overall tax rate as compared to the actual cost of the cigarettes.
Number 605
LOIS IRVIN testified next via teleconference from Homer. She said
a number of residents in Homer spoke in favor of HB 1 and HB 52.
She said she strongly supports the concept of CSHB 1(STA) and the
way in which it is presented, although she only found out a few
minutes ago that the bill was amended. She asked what the change
was.
Number 0726
CHAIRMAN BUNDE said the bill number is the same, but CSHB 1(STA) is
a melding of HB 1 and HB 52. The main difference of CSHB 1(STA) is
that it adopts the provisions of HB 52 as far as the dedication of
where the monies would go from the tax money raised.
Number 0751
MS. IRVIN said the group she is involved in is anxious to get to
work to try and decrease access and tie it in to CSHB 1(STA).
Number 0778
KEITH EVANS, Dillingham City Schools, testified next via
teleconference from Dillingham. He said people in the school do
not feel satisfied with the programs designed to help prevent
students from starting to smoke. It is obvious by the statistics
that the programs have not been successful. He felt he could speak
on behalf of all the school administrators that whatever they could
do to prevent the problem would be time and money well spent. In
Dillingham they are trying to focus on educating students on
nicotine hazards and have worked with police to create something
quick and punitive in the way of fines for those who are caught.
Prevention, as far as they are concerned, is the best thing that
can be done. He said the legislature is recognizing this through
their efforts. He said while they encourage the $1.00 a pack
increase, if the correlation is correct that increasing the cost of
tobacco decreases use, then he would strongly encourage the
committee to amending the bill to tax at a higher rate. He said
whatever can be done to prevent smoking should be done. Education
programs can't compete with the glamour of the news media, so maybe
CSHB 1(STA) will be an answer to this problem.
Number 0894
CHAIRMAN BUNDE stated that Representative Green and Representative
Porter are among the co-sponsors of CSHB 1(STA).
Number 0922
VEVA BECKER, Educator, American Cancer Society, Fairbanks Interior
Unit, testified next via teleconference from Fairbanks. She said
she is promoting a $1.00 per pack tax on tobacco. The average age
that smokers first try a cigarette is at age 13, with many of them
becoming daily smokers by 14 or 15 years of age. These kids who
might smoke one pack a day, can save $1,500 and could save twice as
much with the increased tax. She said these young people have
undeveloped lungs and are having clogged arteries and respiratory
problems. She made comparisons with tobacco use and the amount of
time that people are ill.
MS. BECKER said tobacco companies spend $6 billion a year on
advertising campaigns. She mentioned that people with whom she
works with in the NorthStar Borough promote tobacco education,
smoking cessation classes and other attempts to decrease the amount
of smokers.
MS. BECKER said tobacco is the hardest drug to get off of. She
said 80 percent of young people who smoke one pack or more of
cigarettes will become regular smokers and 70 percent of youth who
smoke say that they would not have started if they could have a
choice today. She said we must help parents stop smoking so that
they can help their child get off tobacco. She said she is very
serious about this subject and CSHB 1(STA) will help her job as an
educator.
Number 1093
ANNE HARRISON, nurse practioner, testified next via teleconference
from Fairbanks. She challenged the legislature to pass CSHB 1(STA)
without further ado. She said the research couldn't be clearer,
tobacco companies will continue their unethical politicking and we
are all saturated with the quibbling surrounding this issue. She
mentioned her work and experiences with people suffering from
tobacco related illnesses. She said we must do everything to
prevent our youth from becoming addicted to this dangerous drug.
She asked that the legislature pass a high tobacco tax now in the
hope that it will discourage a few kids from using tobacco.
Number 1139
REX GARVER testified next via teleconference from Sitka. He said
nicotine is the most addictive drug known to our society and if it
was regulated there would be a lot of irritable tobacco users and
financially destitute manufacturers. Although this would be best,
we are not ready for it. He urged the committee to push forward
CSHB 1(STA) and pass the tax. More people die from tobacco related
illness than any other preventable illness. With over 500,000
people each year and tobacco manufacturers counting on 5,000
underage smokers beginning their addiction every day, it is no
wonder that there are individuals wanting to curb tobacco
consumption with the use of the increased tax. With such a cost of
human life and Medicare dollars, it is high time that something be
done to compensate the healthy, who inevitably pay for their
expenses. Popularity, peer groups, power and prestige are all
elements of what the tobacco industry wants young people to
associate with cigarettes. In the shadow of this image, a dollar
a pack seems like a small price to pay. Unfortunately it will be
for some, but for many others it won't be.
Number 1220
SHARI SMOLE, School Nurse, testified next via teleconference from
Anchorage. She cited a personal experience with someone who
suffered from a tobacco related illness. She said the education
programs have not been successful. Students she works with have
smoked for 5, 6, 7, and 8 years. She said smoking cessation
programs are an intervention when the dependence on nicotine is
already developed and it appears that it is too late. She
encouraged the committee to pass CSHB 1(STA) as it is one of the
most effective means to discourage use. A dollar a pack tax
strongly affects youth. Tobacco related illnesses in adults start
with kids becoming addicted to nicotine. She wished Alaska to be
number one in all of the states for this positive step of deterring
students.
Number 1336
DELISA CULPEPPER, President, Alaska Public Health Association,
testified next via teleconference from Anchorage. She said the
public health community wanted to remind the committee that smoking
is the number one public health problem in the nation; it
contributes to more heart disease, more cancer than any other thing
that can be changed by behavior and it contributes to more diseases
than can be attributed to genetic make-up. She said we have a
chance to change these facts with this type of bill, an important
part of a multi-faceted plan. She said CSHB 1(STA) is not the only
answer and the association is working on many other interventions
and prevention strategies. She said CSHB 1(STA) can make a big
impact without spending a lot of money to do it.
MS. CULPEPPER said the public health community across Alaska values
youth and urges the committee to pass a $1.00 a pack this year so
that we can begin our journey towards a healthy future.
Number 1390
ANNE MARIE HOLEN, Member, Alaska Native Health Board and part of
the coalition spearheading this campaign, testified next via
teleconference from Anchorage. She said her parents were smokers
who quit after the surgeon general came out with the effects of
cigarette smoking. Her parents also quit because they wanted to
use the money they saved to buy a camper. She said the United
States is the only developed country which has allowed its
cigarette taxes to fall in real terms since the dangers of smoking
were first revealed more than 30 years ago. In 1966, federal and
state taxes together made up over 50 percent of the retail price of
cigarettes. Today that amount has fallen to about 25 percent. In
Alaska the state tax comprises 24 percent of the retail price of
cigarettes in 1964, today it is only 14 percent. Meanwhile the
tobacco epidemic claims the lives of one out of five people in this
state.
MS. HOLEN said the tobacco industry is currently spending hundreds
of thousands of dollars to defeat the dollar per pack tobacco tax
increase and added that the reasons should be obvious. She asked
the committee to support CSHB 1(STA) and help educate colleagues
about this opportunity to do the right thing for youth and
families.
Number 1482
ERIC MEYERS testified next via teleconference from Anchorage. He
said, "I am testifying today on my own behalf and as a member of
the public. I would first like to comment on smokers' rights and
state that I am not a prohibitionist, nor do I support the ban of
tobacco products as is often alleged by members of the tobacco
industry. I do believe that adults should have the right to smoke
cigarettes or to eat cigarettes for that matter. But with regard
to smokers' rights, it must also be recognized that there are
smoker responsibilities including responsibility for the enormous
economic cost that are not accurately reflected in the current low
price of tobacco products."
MR. MEYERS continued, "Tobacco use costs the Alaskan economy
hundreds of millions of dollars, while the current low level of
taxation only generates a tiny fraction of that. So, when you hear
smokers' rights, you should think smokers' responsibility. A $1.00
per pack tax being proposed is the very least we should insist
upon. Also I would like to comment on the concern that has been
expressed by the tobacco industry, disingenously I would suggest,
about social engineering. They offer that argument like a little
wind-up doll, but this argument doesn't really hold up well when
(indisc.--paper shuffling) consider (indisc.--paper shuffling)
closely. The legislature routinely uses tax policy to modify
behavior. There are any number of tax credits and tax incentive
proposals every year and every tax law has a behavioral effect.
Oil and gas taxes discourage oil and gas development. Property
taxes discourage the buying and selling of real estate. In light
of the fact that the enormous economic costs of tobacco use are not
currently reflected in the present price of tobacco is evident
that, in fact, the state already has in place a social engineering
policy regarding tobacco and that is because tobacco is undertaxed,
the effect is to artificially encourage the consumption by kids.
So, when you look, that when you hear the social engineering
argument, you should look at it a little more closely and realize
that this is not really an argument that stands up well."
MR. MEYERS said, "Finally, I'll simply say that in response to the
question, `Will it work?' Yes, it will work. It is very
unambiguous, but the best testimony of all comes from the tobacco
industry itself. If you look at their efforts and you look how
strongly they are fighting this, the fact that they have hired five
lobbyist who are spending hundreds of thousands of dollars to try
to kill this bill. I would simply quote someone who is a long time
observer who says, who has observed the tobacco industry and its
practice when he states, `Only those measures which cause the
tobacco industry to scream are likely to significantly reduce
tobacco consumption.' I urge you to support the $1.00 per pack tax
increase. It is fair, it is reasonable, it will save thousands of
lives and has the overwhelmingly support of Alaska voters. Thank
you very much."
Number 1597
PATTI TRUESDELL, representing the Soldotna Middle School Parent
Teacher Student Association, testified next via teleconference from
Kenai. She said the vote at the association meeting was that 100
percent supported CSHB 1(STA). She said she sees this problem as
a four prong thing; as a parent she will do her job to educate her
daughter about the dangers of smoking, the schools will do what
they can, the local Tobacco Alliance will work on enforcement and
the legislature will do what they can to pass the tobacco tax. She
said her daughter will have to fight peer pressure and pressure
from the media. She said her daughter needs the adults to say what
they mean and mean what they say about tobacco.
Number 1682
JUDY DOWNS testified next via teleconference from Kenai. She said
she is a parent and works with the safe and drug free school
program as well as the Tobacco Alliance and Big Brothers/Big
Sisters. She said CSHB 1(STA) is only one component of the effort
to stop kids from smoking. The tobacco industry is targeting youth
as replacement smokers. She mentioned the efforts at education in
her community and said we must work together, in collaboration, to
protect children.
Number 1774
ELI WAITE, Student, was next to testify it. He said passage of
CSHB 1(STA) will save lives. He said he talked with other kids
that smoke right now who say they won't quit just because the tax
is raised $1.00 a pack. Those kids do say that, when they were
starting, if there had been a higher price on cigarettes they
wouldn't have continued smoking and wouldn't be addicted to the
tobacco right now.
MR. WAITE referred to the statistics from Canada and said the same
thing can happen here in Alaska. Tobacco is the only drug that
when used correctly will kill you and that is why he encouraged the
committee to pass CSHB 1(STA).
Number 1832
CRISTIN MARTINEAU said her brother is almost 14-years-old, which is
almost the average age of new smokers, and he has so little money
to spend on anything that she knows a dollar increase will
influence his decision to smoke or not smoke. Because when you're
14, a dollar is a lot of money.
Number 1869
BOB BARTHOLOMEW, Deputy Director, Income and Excise Audit Division,
Department of Revenue (DOR), was next to testify. He said he would
comment on the fiscal note from the DOR and the smuggling issue.
He said DOR shows in the first full year, fiscal year 1999, that
$43 million of revenue would be raised. He said there has been a
lot of analysis from the tobacco industry that DOR is overstating
the potential revenue. He reiterated the comments from DHSS that
tobacco usage is really a health issue, and stated that we don't
want to get lost in the numbers. He said DOR has gone back,
reviewed the numbers based on some of the information presented by
the tobacco industry analysis and concluded that the DOR fiscal
note is a reasonable, sound estimate for the amount of revenue the
tax would raise.
MR. BARTHOLOMEW said Washington State has raised their tax a number
of times over the past five or six years and has doubled their
tobacco revenue with an additional $100 million. He said if we
were to apply the theory given out by the tobacco industry and
added that it was a sound theory, then the amount of taxes raised
in Washington State or to what happened in 1989, when the state of
Alaska last raised their tobacco taxes, the amount would be less
than what had been actually received last year. He said the
analysis the tobacco industry provided was that in the year 2000,
there would be 46 percent less packs of cigarettes sold than there
are today. He said if this assumption was true, it would indicate
a big success in the health objective. He said DOR has included,
in their revenue numbers, that there would be an 18 percent drop.
He said DOR rolled in a big drop in consumption.
Number 1983
MR. BARTHOLOMEW said the other issue that was raised was smuggling
and added that this is really two issues; military bases and Indian
reservations. He said a report was handed out in the House State
Affairs Standing Committee by the National Coalition Against Crime
and Tobacco Contraband which states their theory that there will be
mass smuggling off of military reservation. This theory is based
on statements that 45 percent of all the current sales of
cigarettes take place on a military base. He said DOR sent written
letters to the military, who have been very cooperative in
providing their sales figures. He said the military has provided
numbers of who has commissary privileges in the state of Alaska.
Currently 9.7 percent of the entire Alaskan population have
privileges to go on a base and purchase commodities at a commissary
or a PX.
MR. BARTHOLOMEW said the numbers show that military sales account
for just 7 percent of cigarette sales in Alaska. He said, if you
went on just a straight proportional share of the population, they
are selling less. He said the risk that people would use these
places is much smaller based on what is currently happening.
MR. BARTHOLOMEW said DOR has been in touch with the U.S. Pacific
Command, the organization within the military that is responsible
for the operations of Alaska commissary, and they have been more
than willing to work with the state to address compliance issues.
In Hawaii, the command enacted controls to limit the number of
sales if they saw a problem. He said DOR is encouraged that the
military is willing to work with the state and reiterated that the
numbers regarding the risk is small.
Number 2068
MR. BARTHOLOMEW said, regarding the Indian Country issue, there are
quite a few options. It is clear from the Supreme Court that the
state has the authority to tax sales to non-tribal members. The
feedback received from the Native Health Network, who have a huge
benefit in controlling cigarettes and sales, is that they would
work with the DOR. He said several Supreme Court decisions give
the state authority, but the state wants to work cooperatively with
the Native Health organizations if there is the establishment of
tribal organizations to sell cigarettes. Right now this is a
limited thing, it is not a widespread option.
MR. BARTHOLOMEW said Washington does experience some problems with
sales on reservations. It currently has 26 reservations selling
tobacco, 16 of those work cooperatively with Washington by filing
tax returns and paying taxes on a regular basis. Ten of these
establishments are more inconsistent; sometimes they file,
sometimes they pay. He said Washington is continuing to work with
those sites and feel that they are making progress in increasing
the number of establishments who work cooperatively with the state.
TAPE 97-9, SIDE A
Number 0000
VICE-CHAIR GREEN mentioned the fact that the military wanted to
work cooperatively and asked if they would be willing to impose a
lower limit on the numbers of cigarettes an individual might be
able to buy.
MR. BARTHOLOMEW said, at this point, DOR has not gotten into the
specifics. The command did indicate that in Hawaii they initiated
a cap on how much could be purchased. This cap was below what it
was before Hawaii raised the tax. He said the military would
provide DOR with sales information and if a significant change
occurred indicating a change in sales patterns, then it would be
addressed at that time.
Number 0048
CHAIRMAN BUNDE mentioned that he hoped the tobacco industry was
correct when they claimed there would be a 46 percent decrease in
sales. He asked about current taxing problem regarding cigarettes
coming into the state. He said he heard that people can purchase,
via mail order, almost unlimited quantities of cigarettes and not
pay the current state excise tax.
Number 0091
MR. BARTHOLOMEW said discussions have been occurring at the DOR and
said the initial answer now is that the statute, as written,
doesn't state that the DOR fully has the authority to tax those
sales for personal use. He said DOR is looking at what other
states have and they do have statutory language that makes that
subject to the tax. He said our tax structure is a little bit
different than other states. He said DOR does not have a specific
position or recommendation at this time, they don't think its
taxable but reiterated that this is not an official position. He
said DOR is looking at what updates, if any, they'd recommend to
address this.
Number 0152
CHAIRMAN BUNDE encouraged DOR to look at some procedure or stamp to
be able to tell what is contraband. He referred to his testimony
that there are small, specialty shops that deal in tobacco which
are finding it difficult to remain profitable because so many
people are ordering pipe tobacco and expensive, connoisseur kinds
of cigars from mail order businesses. He said this seems like
unfair competition that these people can order via mail and not pay
the same sort of tax that people have to pay locally.
MR. BARTHOLOMEW said DOR would look at this issue.
Number 0215
REPRESENTATIVE PORTER clarified that if someone mail ordered
cigarettes up to Alaska and then resold them, then they would be in
violation of existing law.
MR. BARTHOLOMEW said it is very clear that if someone brought in
and resold cigarettes and didn't pay the tax, they would be in
violation with the current tobacco tax law.
Number 0241
REPRESENTATIVE PORTER asked what percentage of tax the state of
Washington had agreed to with the Indian Reservations.
Number 0260
MR. BARTHOLOMEW said it was his understanding they paid the
Washington tax for sales to non-members, that they are subject to
the same level of tax. It is clear that sales to members are
exempt and they are not paying a tax to the state of Washington on
those sales. There are limits to what they can sell based on the
number of members in an organization.
Number 0291
CHAIRMAN BUNDE said, as he understood, that there are X number of
people on the reservation who are official members of that
reservation and it can be assumed that if they smoked X quantity of
cigarettes that anything sold in excess of what would be the
assumed consumption of the local residents was taxable.
Number 0314
MR. BARTHOLOMEW said the Supreme Court has ruled that states have
the authority to do that as an enforcement mechanism, to establish
a cap based on the number of members of the tribe and what is a
normal consumption. He said he was not sure if Washington had
enacted that measure yet. He said the case evolved in New York.
It is a tool that is available for use, but he could not say which
states are or are not using it.
Number 0350
REPRESENTATIVE PORTER clarified that the only place in the state
where this could occur is Metlakatla.
Number 0362
CHAIRMAN BUNDE said people who suggest that someone would go to
Fort Yukon or Igiugig to purchase cigarettes don't have a real firm
grasp of Alaska geography.
Number 0380
REPRESENTATIVE GREEN asked if there was enough of a deterrent to
prevent people from smuggling in cigarettes from other places with
a smaller tax.
Number 0418
MR. BARTHOLOMEW said he couldn't quote what the penalties are,
there are penalties in statute, but he would have to look those up
in order to answer that question.
Number 0448
ADJOURNMENT
There being no further business to conduct, VICE-CHAIR GREEN
adjourned the meeting of the House Health, Education and Social
Services Standing Committee at 4:43 P.M.
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