Legislature(1997 - 1998)
04/11/1997 01:13 PM House JUD
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE JUDICIARY STANDING COMMITTEE
April 11, 1997
1:13 p.m.
MEMBERS PRESENT
Representative Joe Green, Chairman
Representative Con Bunde, Vice Chairman
Representative Brian Porter
Representative Norman Rokeberg
Representative Jeannette James
Representative Eric Croft
Representative Ethan Berkowitz
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
CONFIRMATION HEARINGS:
Commission on Judicial Conduct
Dianne I. Brown
- CONFIRMATION ADVANCED
Board of Governors, Alaska Bar Association
Debra Call
- CONFIRMATION ADVANCED
Alaska Public Utilities Commission
James M. Posey
- CONFIRMATION ADVANCED
Commission on Judicial Conduct
Ethel Stanton
- CONFIRMATION ADVANCED
HOUSE BILL NO. 207
"An Act relating to employer drug and alcohol testing programs."
- MOVED CSHB 207(JUD) OUT OF COMMITTEE
HOUSE JOINT RESOLUTION NO. 18
Proposing an amendment to the Constitution of the State of Alaska
relating to changing the rate of a tax or license that supports a
dedication of its proceeds.
- MOVED CSHJR 18(STA) OUT OF COMMITTEE
SPONSOR SUBSTITUTE FOR HOUSE BILL NO. 132
"An Act relating to municipal taxation of alcoholic beverages."
- MOVED SSHB 132 OUT OF COMMITTEE
(* First public hearing)
PREVIOUS ACTION
BILL: HB 207
SHORT TITLE: EMPLOYER DRUG TESTING PROGRAM
SPONSOR(S): REPRESENTATIVE(S) GREEN, Rokeberg
JRN-DATE JRN-PG ACTION
03/21/97 785 (H) READ THE FIRST TIME - REFERRAL(S)
03/21/97 785 (H) LABOR & COMMERCE, JUDICIARY
04/04/97 (H) L&C AT 3:15 PM CAPITOL 17
04/09/97 (H) JUD AT 1:00 PM CAPITOL 120
04/09/97 1039 (H) L&C RPT CS(L&C) 2DP 3NR 1AM
04/09/97 1039 (H) DP: RYAN, ROKEBERG
04/09/97 1039 (H) NR: HUDSON, BRICE, COWDERY
04/09/97 1039 (H) AM: KUBINA
04/09/97 1039 (H) ZERO FISCAL NOTE (LABOR)
04/11/97 (H) JUD AT 1:00 PM CAPITOL 120
BILL: HJR 18
SHORT TITLE: DEDICATED FUNDS: RATE MAY BE CHANGED
SPONSOR(S): REPRESENTATIVE(S) IVAN
JRN-DATE JRN-PG ACTION
01/29/97 164 (H) READ THE FIRST TIME - REFERRAL(S)
01/29/97 164 (H) STA, HES, JUD, FINANCE
02/04/97 (H) STA AT 8:00 AM CAPITOL 102
02/04/97 (H) MINUTE(STA)
02/06/97 (H) STA AT 8:00 AM CAPITOL 102
02/06/97 (H) MINUTE(STA)
02/11/97 (H) STA AT 8:00 AM CAPITOL 102
02/11/97 (H) MINUTE(STA)
02/12/97 305 (H) STA RPT CS(STA) NT 4DP 1DNP 1NR
02/12/97 305 (H) DP: JAMES, HODGINS, DYSON, IVAN
02/12/97 305 (H) DNP: VEZEY
02/12/97 305 (H) NR: BERKOWITZ
02/12/97 305 (H) FISCAL NOTE (GOV)
02/20/97 (H) HES AT 3:00 PM CAPITOL 106
02/20/97 (H) MINUTE(HES)
02/25/97 (H) HES AT 3:00 PM CAPITOL 106
02/25/97 (H) MINUTE(HES)
02/26/97 480 (H) HES RPT CS(STA) 4DP 2DNP
02/26/97 480 (H) DP: DYSON, GREEN, BUNDE, PORTER
02/26/97 480 (H) DNP: VEZEY, KEMPLEN
02/26/97 480 (H) FISCAL NOTE (GOV) 2/12/97
04/11/97 (H) JUD AT 1:00 PM CAPITOL 120
BILL: HB 132
SHORT TITLE: MUNICIPAL TAXATION OF ALCOHOL
SPONSOR(S): REPRESENTATIVE(S) DAVIS, Ivan
JRN-DATE JRN-PG ACTION
02/13/97 333 (H) READ THE FIRST TIME - REFERRAL(S)
02/13/97 333 (H) CRA, JUDICIARY, FINANCE
02/21/97 424 (H) SPONSOR SUBSTITUTE INTRODUCED-
REFERRALS
02/21/97 424 (H) READ THE FIRST TIME - REFERRAL(S)
02/21/97 424 (H) CRA, JUDICIARY, FINANCE
03/07/97 (H) CRA AT 8:00 AM CAPITOL 124
03/07/97 (H) MINUTE(CRA)
03/07/97 582 (H) CRA RPT 5DP 1AM
03/07/97 582 (H) DP: JOULE, DYSON, RYAN, KOOKESH, IVAN
03/07/97 582 (H) AM: OGAN
03/07/97 583 (H) FISCAL NOTE (REV)
03/07/97 583 (H) ZERO FISCAL NOTE (DCRA)
03/07/97 594 (H) COSPONSOR(S): IVAN
04/02/97 (H) JUD AT 1:00 PM CAPITOL 120
04/02/97 (H) MINUTE(JUD)
04/04/97 (H) JUD AT 1:00 PM CAPITOL 120
04/04/97 (H) MINUTE(JUD)
04/07/97 (H) JUD AT 1:00 PM CAPITOL 120
04/07/97 (H) MINUTE(JUD)
04/11/97 (H) JUD AT 1:00 PM CAPITOL 120
WITNESS REGISTER
DIANNE I. BROWN
11484 Discovery Heights Circle
Anchorage, Alaska 99515
Telephone: (907) 269-5694
POSITION STATEMENT: Provided comments on her appointment to the
Commission on Judicial Conduct
JAMES M. POSEY
2311 Canary Court
Anchorage, Alaska 99515
(907) 243-6973
POSITION STATEMENT: Provided comments on his appointment to the
Alaska Public Utilities Commission
ETHEL STANTON
P.O. Box 829
Sitka, Alaska 99835
Telephone: (907) 747-8136
POSITION STATEMENT: Provided comments on her appointment to the
Commission on Judicial Conduct
JEFF LOGAN, Legislative Assistant
to Representative Joe Green
Capitol Building, Room 118
Juneau, Alaska 99811
Telephone: (907) 465-4931
POSITION STATEMENT: Prime Sponsor HB 207
REPRESENTATIVE IVAN IVAN
Alaska State Legislature
Capitol Building, Room 418
Juneau, Alaska 99811
Telephone: (907) 465-4942
POSITION STATEMENT: Prime Sponsor HJR 18
JIM BALDWIN, Assistant Attorney General,
Civil Division, Office of the Attorney General
Department of Law
P.O. Box 110300
Juneau, Alaska 99811
Telephone: (907) 465-3600
POSITION STATEMENT: Provided testimony on HJR 18
JIM ELKINS
312 Front Street
Ketchikan, Alaska 99901
Telephone: (907) 247-4830
POSITION STATEMENT: Testified in opposition to HJR 18
REPRESENTATIVE GARY DAVIS
Alaska State Legislature
Capitol Building, Room 513
Juneau, Alaska 99811
Telephone: (907) 465-2593
POSITION STATEMENT: Prime Sponsor SSHB 132
DON GRASSE, Executive Vice President
& General Manager
K & L Distributors
4771 South Park Bluff
Anchorage, Alaska 99516
Telephone: (907) 345-0124
POSITION STATEMENT: Testified in opposition to SSHB 132
PAT POLAND, Director
Division of Municipal & Regional Assistance
Department of Community & Regional Affairs
333 West 4th Avenue, Suite 220
Anchorage, Alaska 99501
Telephone: (907) 269-4500
POSITION STATEMENT: Testified in support of SSHB 132
DON DAPCEVICH, Executive Director
State Advisory Board for Alcoholism and Drug Abuse
1880 Wickersham Avenue
Juneau, Alaska 99801
Telephone: (907) 586-2173
POSITION STATEMENT: Testified in support of SSHB 132
GARRY PESKA
Alaska State Hospital & Nursing
Home Association
P.O. Box 240185
Douglas, Alaska 99824
Telephone: (907) 364-2244
POSITION STATEMENT: Testified on SSHB 132
LOREN JONES, Director
Division of Alcoholism & Drug Abuse
Department of Health & Social Services
P.O. Box 110607
Juneau, Alaska 99811
Telephone: (907) 465-2071
POSITION STATEMENT: Testified in support of SSHB 132
KEVIN RITCHIE
Alaska Municipal League
& Alaska Conference of Mayors
217 Second Street, Number 200
Juneau, Alaska 99801
Telephone: (907) 586-1325
POSITION STATEMENT: Testified in support of SSHB 132
ACTION NARRATIVE
TAPE 97-54, SIDE A
Number 001
CHAIRMAN JOE GREEN called the House Judiciary Standing Committee to
order at 1:13 p.m. Members present at the call to order were
Representatives Con Bunde, Brian Porter, Ethan Berkowitz and
Chairman Joe Green. Representative Norman Rokeberg arrived at 1:27
p.m., Representative Jeannette James arrived at 1:28 p.m., and
Representative Eric Croft arrived at 1:30 p.m.
CONFIRMATION HEARINGS
CHAIRMAN GREEN announced that members would first consider
confirmation of the Governor's appointees to various positions, and
would begin with Dianne Brown who had been appointed as a member of
the Commission on Judicial Conduct. Ms. Brown would provide
comments via teleconference.
DIANNE I. BROWN, Alaska State Trooper, advised members she had been
in law enforcement for approximately 19-1/2 years. She expressed
that she had been appointed to the Commission as a public member.
Ms. Brown stated that she knew a lot of the judges around the state
and had worked in various communities in the state. Ms. Brown
advised members that she was interested in being a part of the
Commission on Judicial Conduct.
CHAIRMAN GREEN noted that Ms. Brown had been appointed by Governor
Cowper in 1990.
MS. BROWN agreed, although she served for only a short period of
time then.
Number 174
REPRESENTATIVE BRIAN PORTER advised members he appreciated the
willingness of Ms. Brown to serve on the Commission on Judicial
Conduct, and believed that the perspective she would bring to that
commission would be outstanding.
CHAIRMAN GREEN agreed with the statement of Representative Porter.
REPRESENTATIVE CON BUNDE moved to advance Ms. Brown's appointment
to the Commission on Judicial Conduct with individual
recommendations. There being no objection, appointment of Dianne
I. Brown would be forwarded to the full body for confirmation
purposes.
CHAIRMAN GREEN advised members they would next consider the
appointment of James M. Posey to the Alaska Public Utilities
Commission.
JAMES M. POSEY provided comments via teleconference from Anchorage,
Alaska. He advised members he considered his appointment to the
Alaska Public Utilities Commission as a graduation from community
council business with many years of representing the community, as
well as the consumers, on the kinds of issues that sometimes come
before the APUC. Mr. Posey advised members he had been appointed
to a consumer seat of the commission, and being a consumer of
utilities and his travels across the state, he felt he had a good
view of what Alaska had in the way of utility services and what
might transpire into the next century.
Number 350
CHAIRMAN GREEN advised members that he had worked with Mr. Posey
for approximately 15 to 20 years, and found him to be a very
reputable, law abiding, and a family oriented individual.
REPRESENTATIVE BUNDE moved to advance the appointment of James
Posey to the Alaska Public Utilities Commission to the full body
with individual recommendations. There being no objection,
appointment of James Posey to the Alaska Public Utilities
Commission would be advanced to the full body for confirmation
purposes.
CHAIRMAN GREEN advised members they would next hear a statement
from Ethel Stanton who had been appointed as a member of the
Commission on Judicial Conduct.
ETHEL STANTON advised members that she was Alaska Native and had
been in business in the state for 51 years. She pointed out that
she was a board member of the Shee Atika Board, and was serving her
second term on the Board of Trustees for the Sheldon Jackson
College. Ms. Stanton advised members she also served on the Sitka
Community Advisory Board for Holland America Line and West Tours.
MS. STANTON expressed that she had served six years on the Board of
Governors for the Alaska Bar Association, and considered her
appointment to the Commission on Judicial Conduct as an
advancement.
REPRESENTATIVE BUNDE moved to advance the appointment of Ethel
Stanton to the Commission on Judicial Conduct to the full body for
confirmation purposes. There being no objection, it was so
ordered.
Number 608
CHAIRMAN GREEN was advised by the teleconference moderator in
Anchorage that Debra Call had not yet arrived.
REPRESENTATIVE PORTER advised members that he knew Ms. Call
personally and would certainly support her appointment to the Board
of Governors, Alaska Bar Association. He pointed out that he had
worked with Ms. Call when she was staff to the Community Economic
Development Corporation, and expressed that she very energetic,
straight forward and an honest person.
CHAIRMAN GREEN stated that her dossier was certainly impressive and
if members did not have questions or concerns with advancing Ms.
Call's appointment on, he would entertain a motion to do so.
REPRESENTATIVE BUNDE moved to advance the appointment of Debra Call
to the Board of Governors, Alaska Bar Association, to the full body
for confirmation purposes. There being no objection, it was so
ordered.
CHAIRMAN GREEN called a brief at-ease at 1:23 p.m., and he
reconvened the House Judiciary Committee meeting at 1:26 p.m.
HB 207 - EMPLOYER DRUG TESTING PROGRAM
Number 707
CHAIRMAN GREEN advised members they would next consider HB 207, "An
Act relating to employer drug and alcohol testing programs." He
reminded members the bill had previously been discussed by the
committee and several members had additional concerns; therefore,
the bill had been held over.
REPRESENTATIVE BERKOWITZ noted that Chairman Green would be
offering an amendment, and he advised members that would answer one
of the questions he had on the proposed legislation. He referred
to pages 5 and 6, which addressed the collection of samples and
testing procedures, and wanted to be certain that there was an
understanding that collection and testing be done according to
prescribed standards with people who were qualified to take the
samples and maintain them. He asked if the bill language had been
used in other instances and proven satisfactory.
JEFF LOGAN, Legislative Assistant to Representative Joe Green,
responded to Representative Berkowitz's question and stated that
the language in Sections .630 and .640 that spoke to the collection
of samples and testing procedures was used in other states, and
stated that it was based on federal language. Mr. Logan pointed
out that similar legislation had been in effect in the state of
Utah since 1988 and had not been challenged there.
MR. LOGAN explained that under Section .640, subsection (c), which
talked about the certification of laboratories, that the Substance
Abuse and Mental Health Services Administration (SAMSHA) was the
highest level of certification in the United States. He stated
that he had been assured by a couple of different institutes in
Washington D.C., that it was the highest certification in the world
for drug testing. Mr. Logan advised members that the College of
American Pathologists, American Association of Clinical Chemists
was the second highest certification in the United States.
MR. LOGAN stated that there were 71 SAMSHA certified labs, and they
were the labs that were used for testing purposes in the Department
of Transportation. The chain of control of the sample, prior to it
reaching the laboratory, had been spelled out as clearly as
possible, and he was very comfortable that once the sample was at
the lab it would be handled as properly as possible.
REPRESENTATIVE BERKOWITZ advised members that his concern was based
on his experience representing people who had subjected to drug
testing, and the chain of custody was absolutely essential, as well
as proper maintenance of the specimen.
CHAIRMAN GREEN agreed that that was a very good point, and realized
that in some cases there had been a break down.
REPRESENTATIVE BERKOWITZ stated with respect to Section 23.10.660,
page 7, line 20, that immunity would be waived if there was a
breach of confidentiality, and asked for clarity on that.
MR. LOGAN advised members that he had spoken with the drafter of
the bill on that topic and it was the intent and understanding that
immunity would be given if the employer complied with the
provisions of the bill. One of the provisions of the bill was that
the test results would be a confidential and privileged
communication, and could not be disclosed. He advised members that
if an employer released or disclosed that information, they would
have violated a provision in the bill and would, therefore, not be
subject to immunity.
Number 1027
REPRESENTATIVE JEANNETTE JAMES asked if that would include any
employee of the employer who was involved in the drug testing
process.
CHAIRMAN GREEN agreed that would be the case.
REPRESENTATIVE ERIC CROFT advised members that was his concern, and
hoped that would be addressed in the forthcoming proposed
amendment.
CHAIRMAN GREEN offered Amendment 1.
REPRESENTATIVE PORTER moved to adopt Amendment 1, page 2, line 23,
following "23.10.699", insert; if the action is based on drug or
alcohol testing. There being no objection, Amendment 1, CSHB 207
(JUD) was adopted.
REPRESENTATIVE PORTER moved to report CSHB 207(JUD) out of
committee, as amended, with individual recommendations and attached
zero fiscal note. There being no objection, CSHB 207(JUD) was
reported out of committee.
HJR 18 - DEDICATED FUNDS: RATE MAY BE CHANGED
Number 1143
CHAIRMAN GREEN advised members that because the prime sponsor of HB
132 was not available, they would next consider HJR 18, proposing
an amendment to the Constitution of the State of Alaska relating to
changing the rate of a tax or license that supports a dedication of
its proceeds.
CHAIRMAN GREEN called a brief at-ease at 1:35 p.m., and he
reconvened the meeting at 1:38 p.m.
REPRESENTATIVE IVAN IVAN, Prime Sponsor, HJR 18, advised members
that HJR 18 proposed an amendment to Article IX, Section 7 of the
State Constitution. He pointed out that the current article
allowed for the dedication of funds for a specific purpose, as long
as it existed by April 24, 1956. Representative Ivan explained
that the proposed resolution would allow a changing of a rate of a
tax or license of which the proceeds were dedicated to a special
purpose. He advised members that the proposed amendment would be
placed before the voters at the next general election if approved
by the Legislature.
REPRESENTATIVE IVAN advised members that he introduced the
legislation because of the difference in opinions presented by the
Attorney General's office and Legislative Legal Services regarding
the dedication of a tax to a specific purpose. He stated that in
order to avoid litigation, especially if the proceeds of a tobacco
tax were to be placed into the school fund, or if the legislature
changed any other tax rate, or license fee, into which proceeds
were to be placed into a dedicated fund, the resolution could be a
solution that would resolve that problem.
REPRESENTATIVE IVAN pointed out that an amendment had been adopted
by the House State Affairs Committee that would make the amendment
retroactive to October 1, 1997. He expressed that the retroactive
date coincided with the effective date of the tobacco tax as
proposed in CSHB 1(STA).
REPRESENTATIVE IVAN noted that he realized what was being proposed
was a very debatable issue with various opinions expressed;
however, he was considering it as being established prior to the
framing of the State Constitution of dedicating funds to the school
fund, which at that time was needed for school construction and
maintenance. He felt Alaska was back in that position and funds
were needed in the area of capital construction and maintenance
projects.
Number 1368
REPRESENTATIVE ROKEBERG asked if the prohibition against dedicated
funds was still consistent with the Constitution under the change
that would result from the resolution.
REPRESENTATIVE IVAN advised members that would be his
understanding, but reiterated that the Attorney General's office
and Legislative Legal Services had each provided different opinions
that there could be a potential problem.
REPRESENTATIVE ROKEBERG asked if they could change the use of the
proceeds.
REPRESENTATIVE IVAN advised members he was not proposing to change
the proceeds, but to increase the dedicated tax.
Number 1434
JIM BALDWIN, Assistant Attorney General, Civil Division, Office of
the Attorney General, Department of Law, advised members the
department testified in the House State Affairs Committee because
they had some concerns about the timing of the amendment as it
applied to the tax bills that were moving through the legislature.
He pointed out that if HJR 18 was going to be considered a part of
that package, the department felt there should be some thought
given to timing. Mr. Baldwin pointed out that was the reason for
the effective date and retroactive effect date in Section 2 of the
resolution.
MR. BALDWIN advised members he would not characterize the
Department of Law as being a supporter of HJR 18, although they saw
the wisdom of it. He stated that the department did anticipate
litigation with the increase in the tobacco tax, if it became law.
CHAIRMAN GREEN asked if the department anticipated litigation from
a particular group, or the fact that it appeared too high from the
general public.
MR. BALDWIN clarified that the department anticipated litigation
would result because a tax payer might protest the increase in the
tax. He explained that the department would handle that case
through the normal process of a tax protest, which would then be
elevated to the courts, and ultimately to the appellate courts.
MR. BALDWIN pointed out that, in the minds of the legislature, the
preferred interpretation in the tobacco tax bill was that the rate
of a tax could be changed and it was valid under present reading of
the constitution. He stated that it had a fall-back provision that
said, just in case, to make sure the tax remained imposed, and to
take other measures there would be a fall-back tax to the general
fund. Mr. Baldwin advised members that the measure before them
could, perhaps, cast some doubt as to whether the legislature
really believed in its primary construction of the constitution.
Mr. Baldwin stated that by advancing HJR 18, they could create an
argument on the side of those who wanted to attack the tobacco tax.
MR. BALDWIN advised members that the administration's perspective,
and that of the Attorney General's office, felt that there could be
another legal interpretation that would carry the day, and one that
had been consistently applied since 1956, that the rate of a tax
could not be changed. He stated that in weighing it out, perhaps
HJR 18 was the better approach and expressed that the sponsor was
being very courageous to come forward and suggest a change to the
constitution which would eliminate all debate. Mr. Baldwin advised
members it was a hard decision, and he was attempting to react to
the point where he might have to defend the tax. He stated that if
he had to defend the issue in a court of law, and HJR 18 was not
adopted by the legislature, it would be used as evidence that the
legislature did not really believe that it could dedicate the
proceeds of a tax, adding that they were talking specifically about
a tobacco tax in this case.
MR. BALDWIN advised members that he was both in favor of the
resolution, but somewhat nervous at the same time.
Number 1645
CHAIRMAN GREEN asked if there was concern about either the ability
to raise taxes, or to dedicate taxes.
MR. BALDWIN advised members that immediately after statehood the
question arose which was presented to the Attorney General and
resulted in a formal opinion. The question was if the rate of a
tax could be changed which was what all the tobacco bills were
doing. The attorney general looked at the minutes of the
Convention, and at that time they were not in writing, but on reel
to reel tapes that were retrieved from archives. They listened to
the tapes and attempted to piece together what happened. Mr.
Baldwin noted that it had been suggested that he made a mistake
when he did that, and it was concluded, from listening to one part
of the debate that you could not change the rate of the tax. After
the minutes were redeemed it appeared there was some discussion on
the issue and during debate there were some assurances given by the
chairman of the committee that they thought they could do that.
MR. BALDWIN advised members that what happened during the interim
was that the legislature, and the various administrations, acted
consistent with the original advice; they believed that they could
not change the rate of a tax and in fact enacted several bills, and
particularly one in the area of tobacco tax. He stated that they
took the device of creating a whole new section and assessing the
tax under that section to make sure it was completely divorced from
the original dedication. Mr. Baldwin advised members that there
were 30 years of conduct where the state had been under the
impression, and acted under that impression, that the rate of a tax
could not be changed. He pointed out that there was a method of
statutory construction called a long standing contemporaneous
construction where you could make something so by just acting
consistent with it. That was why the Attorney General's office was
concerned about going back and picking out what was said in the
Constitutional Convention and resting the eggs in that particular
basket, because there had been a long standing, consistent conduct
that the rate of tax could not be changed.
MR. BALDWIN advised members that the corollary to that was if it
clearly was wrong, the courts would not adopt it.
Number 1794
CHAIRMAN GREEN stated then that there was a bias because of the 30
years of acting in a consistent manner, even though the intent may
have been interpreted wrong.
MR. BALDWIN advised members that was correct, and there was also
the question of how much weight the Supreme Court would place on
the debates. He advised members that they knew, from a lot of
decisions over the course of the years, that the courts had looked
to the debates and had cited to them when they support the
conclusion that they reach.
MR. BALDWIN expressed that on other occasions, the court had said
those were just two citizens discussing something, and our
intelligence exceeds that, and the court would go with what they
thought was right. He pointed out that it was the same as the
Attorney General's office cite to debates in the legislature all
the time. Mr. Baldwin stated that it was certainly strong evidence
that a tax rate could not be changed, and particularly because it
came from the committee chairman, stronger than what would normally
be found when sitting to just general debate and the courts have
said they give more weight to what a committee chairman says.
CHAIRMAN GREEN asked if it was the opinion of Mr. Baldwin that
passing HJR 18 would correct those two real, or perceived ills.
MR. BALDWIN felt it would certainly remove any doubt in whether the
legislature could change the rate of a tax or not. He noted that
it was up to the legislature to determine if that was good public
policy or not.
Number 1885
REPRESENTATIVE PORTER stated that for the record that may sometime
in the future be looked at in the same way that the legislature and
administration were reviewing the Constitutional Convention, he
thought it was the general feeling of this legislature that the
continuing interpretations of the legislatures were in error
because of the recently discovered information about what appeared
to be the clear intent of the constitutional framers, which was not
available at the time the other interpretations were made.
Representative Porter stated with that in mind, it was the position
of the legislature that it was not necessary to pass HJR 18.
Having said that, recognizing the Department of Law did that all
the time, if a court should fail to adopt that interpretation, the
legislature asserted HJR 18 as the solution to a problem that the
legislature did not believe existed.
REPRESENTATIVE JAMES advised members that in discussing the issue
with the sponsor, it was determined that going to the people for a
vote was cheaper than going to court. And if the legislature
passed HJR 18 and it was put before the people and they voted yes,
that by that time, if the tobacco tax passed, there would be an
interim period where the decision would have to be made.
Representative James stated that if a tobacco passed on October 1,
1997, what would happen between then and November 1998, if and when
HJR 18 went to the people for a vote. She asked if anyone filed
suit, would the Department of Law be able to put that suit on hold
until the vote was taken in November, or would it likely be settled
before November 1998, pointing out that the timing was her
question. Representative James advised members that she saw that
as a cheaper means to determine the answer to the dilemma they
found themselves in.
MR. BALDWIN advised members that he first thought the people would
jump out right away and get the state into litigation as quickly as
they could; however, the department had become very adept over the
years of channeling people through the right process. The right
process, in this case, would be to make them file for their tax and
then protest it, and then take it through the administrative
process. Once through the administrative process, it would be
appealed to the superior court, so they could be looking at a
period of time in excess of possibly two years before the first
court would rule on the questions of law. Mr. Baldwin stated that
the time between October 1997, and the November election, and then
the 90, or 45 days after that when the constitutional amendment
took effect, he could see that the litigation could be moving along
but not resolved by the time a vote was had on the matter.
REPRESENTATIVE JAMES expressed that she was assuming that the case
Mr. Baldwin was talking about would be a case against the tax,
period.
MR. BALDWIN agreed.
REPRESENTATIVE JAMES stated that if the case was on the dedication,
would not the fact that the legislature was asking for a vote of
the people have some bearing on that case.
MR. BALDWIN felt that what the court would allege was that the
legislature was totally without power to enact a tobacco tax with
the increase being dedicated. The courts would say that the
legislature lacked power to do that because the Constitution
prohibited it and, therefore, they would get to the tax in that
fashion. Mr. Baldwin stated that then, he would assume the
department could come in and say, look, there was going to be a
vote on the issue and the whole thing could be mooted out within a
reasonable time, and let's wait and see whether the case is mooted
out. Mr. Baldwin advised members that a court might buy that. He
pointed out that the courts were reluctant to give what were known
as advisory opinions, and if they thought that the people might
moot the thing out by a vote on a constitutional amendment, they
might regard anything they do as being an advisory opinion, and
they would escape having to decide the question.
REPRESENTATIVE JAMES stated that in the tobacco tax bill, HB 1,
that was currently in the House Rules Committee, there was the
backup provision that if it was determined to be unconstitutional,
it would just go into the general fund. She asked if that would
not be an answer for anyone who should sue under the dedication.
It seemed to her that it was a situation of the "cart before the
horse", and she thought the state was protected in the bill itself.
MR. BALDWIN advised members that he thought that the bill, itself,
acted as a disincentive to sue, at least on the dedicated fund
issue, in that it did not get them very far unless they were
thinking of a larger strategy of returning to the legislature with
some other approach, and using the bill as a device to do that. He
advised members that the state also had public interest litigant
legal fees, where a law firm could bring a law suit against the
state, and if it was perceived to be a public interest litigation,
they could get full fees, so all incentives had not been removed to
litigate the issue. Mr. Baldwin pointed out that he had considered
that and did not feel they were home free with the backup. He
advised members that the department had been following the bill and
those were the sections they had been zeroing in on because that
was where the department thought it would ultimately end up, that
the state would be in the backup situation. Mr. Baldwin expressed
that they could be wrong; legislative legal could be right, and the
Department of Law might be wrong.
Number 2190
CHAIRMAN GREEN stated that if both bills passed muster, and the tax
was in progress while HJR 18 would have to wait a year, would that
have and adverse effect, or at least an impact on the decision.
MR. BALDWIN advised members that it may be that a court would say
the legislature had gone forward to amend the Constitution and they
did not really believe, but it was hard to figure out how all that
would come to play. He stated that the department kept saying that
you could not draw any evidentiary value out of the fact that the
legislature did not pass something; however, he had been in many
cases where people on the other side had tried to, so there were
pluses and minuses to HJR 18.
REPRESENTATIVE BUNDE stated that it was his understanding the
legislative legal opinion was correct, that the legislature did
have the right to change the amount of a tax, and that the past
legislatures had made their decisions on incorrect information.
Representative Bunde felt this legislature had better information
and they were making decisions based on that.
REPRESENTATIVE BUNDE stated that he did not want to confuse the
process and cause more litigation, and pointed out that Mr. Baldwin
stated that the fact that the legislature even looked at the issue
might be brought into play in a suit, and asked at what point a
bill represented the will of the legislature; after it passed one
committee, two committees, one house?
Number 2307
MR. BALDWIN stated that generally, the fact that the legislature
did not pass something, was not supposed to be considered as
evidence of anything. However, often times legislation is viewed
as a package, a whole area that was being considered by the
legislature at any given time, and people could look for intent, or
what ever happened where ever they could find it. He stated that
one would look to anything that had to do with tobacco, for
example, and this legislature tried to understand the meaning of
whatever it was that was passed. Mr. Baldwin advised members that
the court had said that it would not be inflexible in its manner of
interpreting statutes, that the court rejected what was known as
the "plain meaning rule." He explained that the courts look to the
history of bills to understand what the legislature's meaning and
intention was, and had said it would look anywhere that had
credible history of what the legislature meant. Mr. Baldwin did
not feel the court would feel restricted to just looking to the
hearings on HB 1, or SB 13. He pointed out that the court might
feel it could look to what the House Judiciary Committee had said
about HJR 18.
MR. BALDWIN stated that as to what the law meant, the court would
not look much beyond itself, because its held unto itself the
ability to interpret and understand what the law meant and what the
constitution meant. He noted that during a couple legislatures
ago, they had tried to interpret the constitution for the court,
and the court served that back very quickly saying, "We'll tell you
what the constitution means", and that dealt with the
Constitutional Budget Reserve Fund case. Mr. Baldwin expressed
that at the end of the day, the court would rely on its own device;
would not take the opinion of the Attorney General's office or
Legislative Legal.
Number 2400
REPRESENTATIVE CROFT stated that it was hard enough to figure out
what the legislature meant when they did something, and he would
say it would be virtually impossible to figure out what they meant
by not doing something. He joined Representative Porter's
comments, and stated that it seemed to him that the newly found
notes of the Constitutional Convention could not be clearer. He
advised members he had never seen a better "smoking gun" on an
issue of legislative or constitutional intent. However, it was his
feeling, as with Representative Porter, that this legislature
thought that was the proper interpretation, and did not mean, by
HJR 18, to cast doubt on it, or if the resolution got hung up
somewhere along the complicated process, that that would change
anyway. He pointed out that things get hung up for a myriad of
reasons rarely related to their merits.
REPRESENTATIVE BERKOWITZ stated that so future people who would be
interpreting what was going on that he also wanted to join with the
comments of Representative Porter, clearly, without equivocation.
CHAIRMAN GREEN expressed his support of those comments also.
Number 2469
CHAIRMAN GREEN invited Jim Elkins of Ketchikan to address the
committee via teleconference.
TAPE 97-54, SIDE B
Number 0000
JIM ELKINS advised members that he was surprised that a republican
legislature would come forward and consider levying any kind of
consumer tax on the citizens of Alaska. He felt that legislators
were elected to make decisions, some of them tough and some of them
easy. Mr. Elkins stated that he did not believe legislators were
elected to make the voters in the state make tough decisions, which
was his personal opinion.
MR. ELKINS stated that on April 4, 1997, the Ketchikan Gateway
Borough passed Resolution No. 1331, which basically opposed any
taxation enactment that was not applied equally to all tax payers
in the state of Alaska, and that had been forwarded to the
Municipal League and the Ketchikan state representatives.
Number 054
REPRESENTATIVE JAMES referred to the resolution mentioned by Mr.
Elkins that talked to not applying any taxes that were not equal
across the state and asked if he was saying that a tax had to be
equal, or the money spent equally across the state through an
increase of a tax.
MR. ELKINS advised members they were talking about taxing all
things equal.
REPRESENTATIVE ROKEBERG, for the purpose of clarification, asked if
Mr. Elkins was talking about HB 132, or HJR 18.
MR. ELKINS stated that he was speaking to the resolution before
members which dealt with the tobacco tax and whether it should be
put before the voters with regard to the dedication of those funds.
He added that he might be wrong about what the resolution stood
for; however, he felt it was the responsibility of the legislature
to make the decision, up or down, but, personally opposed any kind
of a consumer tax.
REPRESENTATIVE BUNDE noted that Mr. Elkins had stated that taxes
should be applied equally, and asked if that meant that people who
did not drive should be required to pay a motor fuel tax.
REPRESENTATIVE BUNDE asked if Mr. Elkins was in any way employed by
the tobacco industry.
MR. ELKINS advised members he was not, and pointed out that he was
a non-smoker.
REPRESENTATIVE JAMES asked if the only dedicated fund currently in
place was the Fish and Game fund.
MR. BALDWIN stated that there was a Fisherman's Fund.
REPRESENTATIVE JAMES asked if the Public School Trust Fund was a
dedicated fund.
REPRESENTATIVE BUNDE said it was Fish and Game, and Mr. Baldwin
agreed.
REPRESENTATIVE JAMES asked what the source of revenue was for those
funds.
MR. BALDWIN advised members that the Fish and Game fund was a
percentage of licenses, and he believed the Fishermen's Fund
involved a percentage of crew member licenses. He pointed out that
there was kind of a difficulty in definition there, but the school
land trust was switched to a fund in 1978, which was a dedicated
fund that received half of 1 percent of revenues generated from
state lands. Mr. Baldwin advised members that the Second Injury
Fund was created by statute that he believed was required by
federal law and had to do with workers compensation, and was funded
by part of the tax from workers compensation.
MR. BALDWIN advised members that there were a lot of funds that
could be considered as being dedicated, but were not dedicated in
the sense that the constitution was concerned, although there were
only one or two pre-statehood dedicated funds.
REPRESENTATIVE JAMES asked how many other funds would be affected
by HJR 18.
MR. BALDWIN believed the Fish and Game Fund was either required by
federal law, or pre-statehood and qualified under both criteria.
The Fishermen's Fund was a pre-statehood fund, and after that it
got pretty few and far between. He advised members that the Public
School Trust Fund, which was created in 1978, was land prior to
that date, and the department considered that to be one required by
federal law. Mr. Baldwin thought there were only two, three at the
most, that were pre 1956.
REPRESENTATIVE JAMES stated that if HJR 18 passed and the ballot
reflected voter approval, it was her understanding that they could
change the revenue percentage of the licenses that go into the
Fishermen's Fund without destroying the fund.
MR. BALDWIN advised members that had been debated over the years
and there were opinions regarding that on the books. He stated
that the legislature, in the past, had decided not to change the
rate of that dedication by relying on the 1959 opinion that
believed that could not be done.
REPRESENTATIVE JAMES asked Mr. Baldwin if he recalled when the
state lost the highway tax, which she assumed was because the state
had raised the tax.
MR. BALDWIN thought that was what the 1959 opinion was directed
towards and the legislature changed that tax in response to that
opinion, and decided they would go another route and it all, then,
went to the general fund. He believed that was the history of
where that 1959 opinion got started and the ultimate result.
Number 288
CHAIRMAN GREEN asked if a permit fee or a use fee, for all
practical purposes, was a tax, and asked Mr. Baldwin to explain the
difference.
MR. BALDWIN advised members that the term used in the State
Constitution was "state tax or license", but stated that the real
answer to Chairman Green's question was that he did not know.
REPRESENTATIVE PORTER stated that in light of the new information,
why was a new attorney general's opinion not issued that would
override the previous one so it would not be an issue.
MR. BALDWIN advised members that the department was asked to review
the question they were asked, and in preface to his answer, stated
that he would have to say that he thought the position taken by the
legislature and their attorneys was a good faith legal position,
and he would not have any difficulty defending it in court. But
the Attorney General's office looked at it, and considering the
factors he had mentioned earlier today in his testimony, he felt
that the better legal position was that 30 years of consistent
conduct on the part of the legislature was pretty strong evidence.
Mr. Baldwin stated that it would be hard to stand up in court and
say that everything had changed now, that statements made by people
during the Constitution Convention had been found that changed
everything somehow. Mr. Baldwin expressed that things in the law
did not switch around that fast, in the view of the Department of
Law, so the Attorney General's office decided to stick with the
1959 decision, and pointed out that stare decisis meant a lot. He
expressed to members that the Attorney General's office had advised
the governor that the safest course would be for him to create a
Sonneman v. Knight vehicle-type fund, which the Senate had
described in their hearings recently as "the white picket fence"
approach.
REPRESENTATIVE PORTER asked if there had never been an inconsistent
attorney general's opinion.
MR. BALDWIN advised members that he had been around for more than
one administration and had found in subsequent administrations that
he had sometimes had to digest opinions that he had written in
earlier administrations, and asked if that was what Representative
Porter was getting at.
REPRESENTATIVE PORTER stated that he recognized that stare decisis
meant something, but it should not mean something in the face of
clear evidence to the contrary; that stare decisis falls just
because social mores have fallen over the history of time.
Representative Porter stated that what was being debated was a
clear mistake of fact.
MR. BALDWIN stated that he was not there to get into a debate about
who was right, or who was wrong. He reiterated that the position
taken by the legislature was one he felt could be defended in good
faith and that he thought it had some merit. Mr. Baldwin expressed
that he did not want to get into a position where he would say that
"you're wrong and we're right", because the court would make that
decision and the Department of Law would definitely be involved
with defending the case and would be using the best of its
abilities to defend the case.
CHAIRMAN GREEN stated that when the Department of Law finds
evidence contrary to a long standing practice and stay silent, if
that was fulfilling the obligation of the office to not bring that
evidence forward.
MR. BALDWIN advised members he believed the Attorney General's
office had to provide the best opinion as to how they thought the
law should be interpreted. He expressed to members that to say the
information had "just" been discovered was not truly accurate
because members could find history included in Attorney General
opinions going back a number of years that they had been aware that
the history existed in the minutes. Mr. Baldwin pointed out that
the writers of those opinions said they felt the original
interpretation still had merit, and he stated that he felt it had
been with eyes open that the department adhered to the earlier
opinion. Mr. Baldwin stated that he did not believe they had
breached any ethical obligations to the legislature or the
governor, but just called it the way they had seen it.
CHAIRMAN GREEN asked if the prior opinions had acknowledged the new
information of the Constitutional Convention.
MR. BALDWIN advised members he would provide the opinion; however,
basically, it just acknowledged that there was discussion to the
contrary during the convention. He felt members were well aware
that discussion at the State Constitutional Convention was a lot
like what occurs in the legislature; i.e, debate on the floor where
any number of opinions were expressed by people who may, or may not
have a good understanding. Mr. Baldwin stated that now, to seize
upon some evidence that you find favorable was one of the factors
to consider when interpreting a statute, or the constitution, and
the Attorney General's office was saying that all the other things
needed to be considered as well, like the long standing
contemporaneous construction, the words of the constitution, and
what the people thought. He advised members there were several
things that a person has to look at when you construe the
Constitution, and he thought it was a little dangerous to say;
"Well, in the minutes of the Constitution this was said and we
liked what was said, and that should carry the day", was not the
case. Mr. Baldwin explained that when the court looks at it, they
would look at the wording of the Constitution, the dictionary to
see how people would understand those words, and look at what the
people were told at the time the Constitution was construed, and
then they apply common sense to all of those things and arrive at
an interpretation of it. Mr. Baldwin stated that to look at just
the minutes of the Constitutional Convention was not looking at the
whole picture for how to construe it.
MR. BALDWIN stated that taking all that together, the construction
could be the other way and he did not want to sit there and create
evidence against the state's case. He stated that if the tax was
enacted, he wanted to point out to the committee all the legal
considerations that were there and that they understood them fully,
and hoped members did not have bad feelings about the Attorney
General's office, because he was there to defend what they had done
and he believed they had done it right. Mr. Baldwin expressed that
they just wanted to bring another objective view point about how
the constitution might well be interpreted.
Number 655
REPRESENTATIVE BERKOWITZ wanted to make sure that the committee
would not ascribe too much importance to attorney general opinions
because, with all deference to the Attorney General's office, they
did not carry much precedential weight in the courts. He stated
that in essence, they were maybe one small notch above the legal
conclusions reached by a private law firm in its own brief, and
while they might help guide the state's conduct, the judiciary did
not spend much time viewing them for their merits.
REPRESENTATIVE PORTER stated that the only difference was, which he
was sure that Representative Berkowitz was aware, that,
unfortunately, an A.G.'s opinion was law until it was overturned by
a court and was looked at as law until that happened, so what they
were debating could be fixed quicker.
Number 693
REPRESENTATIVE ROKEBERG brought to the committee's attention the
fact that during his study of the bill relating to the statehood
compact, that there was an Attorney General's Opinion Number Six
that the attorney general denied even existed, so there were some
strange permutations that revolve around attorney general opinions.
REPRESENTATIVE CROFT pointed out that included in members bill
files was a list of seven dedicated funds that had been submitted
by Representative Ivan. He stated that whatever happened with HJR
18, there was some possibility that those funds would be in the
same boat, either because the lands, in some cases, or subject was
pre-statehood or the enactment of the fund was pre-statehood.
MR. BALDWIN had the list in front of him and stated that the list
that was provided to the House State Affairs Committee was a little
bit longer, and he felt the list had been pared down some. Mr.
Baldwin advised members that the U of A Trust Fund was the
university's land and came from the management of the lands, was
required by federal law and was also pre-statehood. Mr. Baldwin
advised members that he was not familiar with the FICA
Administration Fund and had not considered it to be a dedicated
fund, although had thought of it as a trust fund where revenues
were earmarked that come into it. The Fish and Game Fund was pre-
statehood and required by federal law. Mr. Baldwin advised members
that the School Fund was funded by tobacco tax revenues and the
Sick and Disabled Fishermen's Fund was a pre-statehood fund. Mr.
Baldwin advised members that he was a little uncertain about the
Second Injury Fund as it may be just statutory, but if it was good
at all, it was probably required by federal law. Mr. Baldwin
advised members that the Public School Trust Fund was a strange
fund that was changed in 1978 that was land before and now a
dedicated trust fund.
MR. BALDWIN stated that of all of those, he thought the Sick and
Disabled Fishermen's Fund was probably the one pre-statehood that
would be like HJR 18, with 60 percent of crew licenses funding it.
Mr. Baldwin reiterated that the FICA Administration Fund was the
only one he could not be sure on; however, the rest of them did not
seem to fit the category.
Number 818
REPRESENTATIVE CROFT stated that those were either dedicated or
not, appropriately, as a grandfather from pre-statehood, and to the
extent that the list represented a good list of grandfathered
dedicated funds, that the same logic of changing the rate would
apply to the 60 percent of crew licenses, to half of 1 percent of
state land management, and asked if his summation was correct.
MR. BALDWIN stated that Representative Croft was correct, except
that the half of 1 percent to the Public School Land Trust was
established after statehood, reiterating that it was a strange one.
He believed that the funds preceding statehood would be the
Fishermen's Fund and maybe the Second Injury Fund.
REPRESENTATIVE ROKEBERG thought the Second Injury Fund was a
pooling of monies from workers comp, like a re-insurance funded
pool; however, it did exist before statehood.
REPRESENTATIVE PORTER moved to report CS HJR 18(STA) out of
committee with individual recommendations and attached fiscal
notes. There being no objection, CS HJR 18(STA) was reported out
of committee.
SSHB 132 - MUNICIPAL TAXATION OF ALCOHOL
Number 922
CHAIRMAN GREEN advised members they would next consider SSHB 132,
"An Act relating to municipal taxation of alcoholic beverages."
REPRESENTATIVE GARY DAVIS, Prime Sponsor, SSHB 132, advised members
the bill would eliminate the restriction on municipalities as to
what degree they could tax alcohol. He pointed out that the
rationale for the proposed legislation was to allow municipalities
to generate additional new revenues, if they saw fit, for the
purpose to address mandates that had been created either by state
law or federal law, as well as problems created by society.
REPRESENTATIVE DAVIS expressed that the last time he addressed the
committee on the bill he made a commitment to certain members that
he would address the concern over what exactly the revenues would
be used for. He advised members that it was the intent that any
revenues derived from additional alcohol taxes be utilized for
alcohol related services. Representative Davis stated that to the
degree that was able to be accomplished, he felt went to some
degree, to the debate members just addressed; how do dedicated
funds relate to municipalities and their ordinances, statutes,
bylaws, articles of incorporation, charters, or however
municipalities were established.
REPRESENTATIVE DAVIS advised members that some of the information
in members bill packets was not definitive in how it addressed the
question, noting that apparently there had been opinions on either
side of the issue that the Constitution of Alaska could be
interpreted that the restriction on dedicated funds to the state
would also relate to municipalities.
REPRESENTATIVE DAVIS advised members that he had provided an
amendment for the committee's consideration that related to the
question, the concern and the intent regarding whether
municipalities should increase their alcohol tax, reduce the tax,
or utilize their existing alcohol tax for alcohol related services.
He stated that the amendment strengthened the intent of the bill,
that it did not mandate that it be done, although it mandated that
the ballot reflect the intent of the bill.
REPRESENTATIVE DAVIS believed that the content of the bill was
fairly straight forward and that the amendment might complicate
things, but he would certainly accept the committee's
recommendation.
Number 1206
CHAIRMAN GREEN stated that if the bill should be enacted and a
municipality were to invoke an increase in tax on alcohol and it
was subsequently held that funds could not be dedicated if that
would negate the vote of the municipality.
REPRESENTATIVE DAVIS advised members he could not answer that
question explicitly; however, felt that HB 132 would not address
that, that it would have to be completely within the municipality's
hands. He thought that through some discussion, and information
that had been provided by Mr. Kevin Ritchie addressed a situation
whereby that happened in Juneau. Representative Davis noted that
it was up to the municipality to craft the wording on a ballot so
that, hopefully, the voters would know what they were voting on.
REPRESENTATIVE PORTER declared a point of order and asked what was
before the committee.
CHAIRMAN GREEN stated that members were considering SSHB 132 and
that Representative Davis had explained a proposed amendment that
addressed members concerns from a previous hearing.
REPRESENTATIVE CROFT moved to adopt SSHB 132. There being no
objection, SSHB 132 was adopted.
REPRESENTATIVE JAMES moved to adopt Amendment 1, titled E.2 Ford,
3/28/97, page 1, following line 15, insert a new bill section to
read; *Sec. 2. AS 04.21.010 is amended by adding a new subsection
to read:
(e) If a municipality imposes a tax on alcoholic beverages
under (c) of this section and the tax imposed on alcoholic
beverages is higher than the tax imposed on other sales, the
municipality shall comply with the provisions of this subsection.
A municipality, when holding an election to impose a tax on
alcoholic beverage as described under this subsection, shall
include a statement on the election ballot indicating that it is
the intent of the governing body that revenues, if any, will be
appropriated by the municipality for alcohol related services
provided by the municipality. Renumber the following bill sections
accordingly. Representatives Porter and Rokeberg objected.
REPRESENTATIVE DAVIS advised members that he had spoken to
Representative Porter and understood his objection to the proposed
amendment. He thought there had been concern about the
constitutionality of the amendment; however, he felt it was crafted
in a manner that it addressed the problem of wanting to see
stronger intent within the bill language. The intent was that any
additional taxes would be spent on alcohol related services.
REPRESENTATIVE PORTER pointed out that there were two or three
levels of consideration within the bill, and often times what
occurs was interpreted as how a member thought about the tax. He
asked that members not interpret what he was about to say about how
he personally felt about the tax. Representative Porter advised
members that his objection to the amendment was purely on the
philosophical position that he had stated to the committee before,
that one could look at the statute as somewhat protectionist in the
first place, and now, with the amendment, it was saying if you want
to violate a protectionist statute, the legislature was going to
direct how the money would be spent. He did not believe it was the
job of the legislature to tell cities what to do with a resource of
theirs. Representative Porter advised members he would hope the
cities would spend those funds as intended by the bill, but
philosophically he did not want to sit there and say, "thou shalt
do this".
Number 1502
REPRESENTATIVE ROKEBERG stated that he had provided two sample
ballots to the committee aide to distribute to the members, which
were in the municipality of Anchorage election in 1994 and 1995.
He directed members attention to the language of the ballot in the
1994 sample, that stated: "The intent of this section is to levy
a special alcohol sales tax on alcoholic beverages and, to the
maximum extent allowed by law, to use the revenues derived to
expand health, education, recreation and public safety within the
Municipality of Anchorage." Representative Rokeberg felt there
were some legal actions taken on that language.
REPRESENTATIVE ROKEBERG stated that the following year, the same
ballot was again before the voters; however, did not speak to that
type of dedication. He pointed out that he supported the view
expressed by Representative Porter, and that he was very much
opposed to dedicated funds, philosophically. Representative
Rokeberg felt that amendment 1 was another subterfuge that the
legislature endeavored to use time after time to do that. He
advised members he was concerned with and would not support the
amendment. Representative Rokeberg also believed there was some
case law that would shoot it down.
Number 1584
REPRESENTATIVE CROFT advised members that it seemed to him that the
amendment was constitutional and there was nothing wrong with the
legislature making its intent clear, although there might be
something philosophically improper with the amendment. He
appreciated that example ballot distributed by Representative
Rokeberg as to how the ballot might look. Representative Croft
advised members that he did not know whether the statement on a
proposition, "to be used for alcohol related services", was binding
on a municipal government, or not. He believed that was a
constitutional dedicated fund complicated by the difference of a
municipality and a state.
REPRESENTATIVE CROFT pointed out that placing language on a ballot
had some political, if not constitutional or legal affect. He
advised members that if the legislature stated that alcohol tax
rates would be increased 1 percent above the normal sales tax rate
and those funds would be used for alcohol services, and it got used
for trips to Washington, D.C., he thought he would know what was
going to happen. If there was no outcry about it, he thought that
was the business of the municipality, its elected officials and the
next re-election. Representative Croft was not as concerned about
the pure constitutionality end of it. He reiterated that the
amendment was constitutional; however, whether it was binding after
the proposition was done he did not know, but he was comfortable
leaving that up to the public process at the municipal level.
REPRESENTATIVE JAMES expressed her agreement with both
Representatives Porter and Rokeberg on the issue. She stated that
hearing a request from the municipalities who wished to increase
the tax on alcohol was something they wanted to do that existing
laws did not allow for. Representative James advised members that
there was a case in the Fairbanks area where they were only able to
increase the rate on alcohol because the bed tax had been
increased. She did not believe a municipality would be bound to
expend the funds for alcohol related services, and if the
legislation included intent language and the municipality did not
spend those funds as indicated in the bill, would it result in the
legislature having to amend the law to state that they could not
increase the tax on alcohol unless they used the funds as specified
in a new bill. Representative James pointed out that it was only
intent language, not a mandate, and believed it was the same intent
of the municipalities to spend the funds as intended by the bill.
Representative James advised members that although she did not have
a problem with dedicated funds, she did have a problem with
designated funds because they did not go to the people for a vote.
Representative James pointed out that the committee would be
considering another bill, which she would not mention, that was on
the same issue which she was violently opposed to. She advised
members that she would support SSHB 132 because she knew the
municipalities wanted it, and they could not do anything without
the help of the legislature.
Number 1862
REPRESENTATIVE DAVIS expressed that he could appreciate the policy
concern and explained that the amendment proposed to address a
concern brought forward by a committee member, and was not
necessary for the intent of the bill, the intent of the makers or
the intent of the sponsor.
CHAIRMAN GREEN asked if the objections were maintained.
Representative Porter maintained his objection, so a roll call vote
was taken: In favor: Representative Croft. Opposed:
Representatives Bunde, Porter, Rokeberg, James, Berkowitz and
Chairman Green. Amendment 1, SSHB 132, failed adoption by a vote
of 6 to 1.
CHAIRMAN GREEN now accepted testimony via teleconference from
Anchorage, and invited Don Grasse to address the committee.
Number 2003
DON GRASSE, Executive Vice President, & General Manager of K & L
Distributors, advised members they were a distributor of wine, beer
and spirits. He noted that he was also the president of the Alaska
Wine and Spirits Wholesalers Association. Mr. Grasse advised
members that the association he represented opposed SSHB 132
because they felt that beverage alcohol products were already
highly taxed, at both the federal and state level, and the proposed
legislation would open up a third level of taxation for those
products. Mr. Grasse pointed out that they felt that Alaskans were
already taxed higher on alcohol than most other states, being the
fifth highest state in the country taxed on spirits, and the 10th
highest state in the country with the taxation on beer and the 15th
highest state in the country with taxation on wine.
MR. GRASSE advised members that the high cost of freight charges to
Alaska, combined with the higher alcohol taxes, required Alaskans
to pay more for alcoholic beverages than most other states in the
country. He stated that the residents of Anchorage had been faced
with an 8 percent alcohol tax increase in 1994 and 1995, and
Alaskans voted that proposition down twice in a row in back to back
elections.
MR. GRASSE explained that sales of alcoholic beverages had not been
healthy in the state since the 1990 federal excise tax increase.
Beer sales and spirit sales had decreased over the past 4 to 6 year
period, and they felt that the increase in taxes would further the
sales decline, which would have an impact on businesses such as K
& L, Alaska Distributors, as well as small bars, restaurants and
stores that sell alcohol. He pointed out that passage of SSHB 132
would impact people's employment status. Mr. Grasse noted that
while those jobs were not high profile like oil industry jobs, they
were service positions that were the backbone of many of the
communities in the state.
MR. GRASSE advised members K & L also believed the bill singled out
an industry and discriminated against it by putting the alcohol
industry at a competitive disadvantage to other service and
beverage industries.
TAPE 97-55, SIDE A
Number 000
REPRESENTATIVE ROKEBERG noted the mention of municipality elections
by Mr. Grasse, and asked if he was speaking to the 1994 - 1995
elections.
MR. GRASSE stated that was correct.
REPRESENTATIVE ROKEBERG pointed out that the voters of the
municipality of Anchorage turned down any increase in taxes at that
time, and asked if that was correct.
MR. GRASSE responded in the affirmative.
REPRESENTATIVE ROKEBERG asked if Mr. Grasse recalled if any
litigation had resulted, or if he knew anything else that he could
pass on to the committee.
MR. GRASSE advised members that he believed with the first election
there was some potential litigation on whether those taxes could be
dedicated or not. He did not believe the judge made a ruling
because of the impending results of the vote, and when the issue
failed, it killed the decision.
REPRESENTATIVE ROKEBERG stated that that was why the ballot
proposition did not include a provision as to where, or how the
money was to be spent.
MR. GRASSE stated that was correct.
REPRESENTATIVE ROKEBERG asked Mr. Grasse if he had any idea how
many people were employed in the beverage dispensary and restaurant
business in the state of Alaska.
MR. GRASSE stated that for Anchorage, alone, approximately 5000
people were employed in that area, so he would estimate statewide,
it would be closer to 7500 to 10,000 positions.
REPRESENTATIVE ROKEBERG stated that the fact that there would be an
increase in taxation on any type of alcohol, spirits or wine, could
have a major impact on the commerce and economy in the state of
Alaska.
MR. GRASSE advised members that was the opinion of K & L
Distributors.
REPRESENTATIVE ROKEBERG stated that notwithstanding the fact that
people may have different opinions on the issue, there would be a
definite economic impact of any increased taxation on alcoholic
beverages.
MR. GRASSE response was, "absolutely."
CHAIRMAN GREEN invited Pat Poland to provide comments on SSHB 132.
Number 189
PAT POLAND, Director, Municipal and Regional Assistance Division,
Department of Community and Regional Affairs, advised members that
the department was in support of the proposed legislation. He
stated that they believed that it would provide municipalities an
additional tool to deal with the issue of raising revenues for the
purpose of delivering local services, and the fact that voter
approval is required for any sales tax, that the bill contained
adequate safeguards to preclude the abuse of taxation power.
REPRESENTATIVE BUNDE asked if Mr. Poland felt the proposed
legislation would mandate the municipality to raise alcohol taxes
if the bill were enacted.
MR. POLAND advised members that it would not, that it was the
opinion of the department that it clearly gave the municipality the
option of increasing the tax.
REPRESENTATIVE BUNDE pointed out that the municipality of Anchorage
had attempted to raise their alcohol tax many times and had failed
each time, and asked Mr. Poland if he would agree with that.
MR. POLAND advised members that would be a correct statement.
JIM ELKINS, representing the Ketchikan Charr [Ph], advised members
that over approximately 25 years while he had represented the
Ketchikan Charr and State Charr as a lobbyist, and personally in
Juneau, to his recollection it was never the intent of anyone in
the original drafters of Title 4 to segregate the right to levy
taxes on liquor to anybody, other than the state of Alaska except
through a general sales tax. Mr. Elkins pointed out that he had
been active in the re-write committee that re-wrote the bill back
in the 1980s, and the provision was dropped and excluded
municipalities. Mr. Elkins advised members that when Senator
Eliason realized that provision had been dropped, it was again
brought up the following year and put back in. Mr. Elkins stated
that there were four communities in the state who had jumped on the
band wagon, and they provided a six month window for other
municipalities to come on board, which none did.
MR. ELKINS stated that if the legislature began to subrogate their
right to levy an excise tax on alcohol on the citizens of the
state, as well as a tobacco tax, they would be giving up a power
that should be exclusively a power of the legislature. He urged
that members consider keeping that power where it belonged.
MR. ELKINS reiterated that the Ketchikan Gateway Borough passed a
resolution that stated that all taxes ought to be levied equally
across the board, and not just on any special industry or to any
group of people.
REPRESENTATIVE CROFT advised members that Juneau had grandfathered
in, and asked what other three communities had grandfathered in.
MR. ELKINS stated that it was Craig, Juneau, and he could not
remember the other two right off hand, but was fairly sure four
communities had grandfathered in.
Number 515
REPRESENTATIVE JAMES stated that if the bill did not pass,
municipalities presently had the ability to tax alcohol providing
they taxed everyone.
MR. ELKINS stated that any municipality could levy a general sales
tax on everything solely within the municipality.
REPRESENTATIVE JAMES stated that the only reason they would want
the legislation was because they wanted to tax alcohol only, or
they wanted the alcohol tax to be higher than the other taxes.
MR. ELKINS stated that would be true.
REPRESENTATIVE ROKEBERG asked that Mr. Elkins revert to the period
he was talking about when the statute was re-written and the
grandfathering occurred. He noted that Mr. Elkins had indicated
that he thought one of the main rationales was the preservation of
the power of the state of Alaska to tax alcoholic beverages, and
asked if he might expand on that.
MR. ELKINS advised members that he was asked to travel to Juneau
during the Hammond Administration to represent the industry and the
re-write of Title 4. In the old Title, it had been pointed out
more than once, that the state of Alaska reserve the right to tax
certain things exclusive to the state, of which one was oil and one
was alcohol. Mr. Elkins advised members they went through the
whole process and when it came out of the print shop it passed the
House and Senate and then realized it was not included, so Senator
Eliason from Sitka was the first to notice that. He then brought
it back before the body the next session and brought the amendment
forward that restated that language.
Number 665
REPRESENTATIVE BUNDE asked if Mr. Elkins was opposed to the
legislation because he felt it would impact the alcohol dispensing
industry and reduce the use of alcohol.
MR. ELKINS advised members that he believed the state should hold
the power to tax, and municipalities should not have the ability to
levy any kind of special excise tax on liquor or any other
substance. He pointed out that on behalf the Alaska Charr, during
the last legislative session, they came forward and attempted to
get the state to consider raising some sort of alcohol tax and were
not able to get much support by the legislature.
REPRESENTATIVE BUNDE expressed that the committee had just received
testimony from a gentleman in Anchorage who stated that there were
thousands of people employed in the Charr industry, and to allow a
municipality to raise a tax would probably reduce the volume of
business and negatively impact people employed in the industry. He
asked if Mr. Elkins would agree with that.
MR. ELKINS stated that he believed that would be the case, and
referred to how sales had decreased since the federal excise tax
was raised. He pointed out that he had less employees now than he
did prior to that tax, and advised members that he was second
generation in the business and could not believe the difference
between today's consumption and the consumption during his father's
day.
REPRESENTATIVE BUNDE agreed that raising taxes did reduce use.
MR. ELKINS advised members he had lobbied in Juneau for the two
drink limit, for additional training courses for bartenders and
also for lobbied in support of eliminating happy hours, as well as
lobbied in support of DWI's. He believed that taxes had something
to do with less consumption; however, individual responsibility had
the most to do with it.
REPRESENTATIVE BUNDE agreed with that statement.
REPRESENTATIVE ROKEBERG asked if Mr. Elkins felt a 10 cent tax
would have only a marginal affect on a person's decision to drink
or not.
MR. ELKINS advised members that alcoholics would drink regardless
of the price, and where they drink and how they drink, if
additional taxes were imposed. He felt bar sales might decrease
and liquor store sales increase, and added that people who abuse
alcohol were generally liquor store customers.
CHAIRMAN GREEN noted that the meeting was running late, and there
were yet four people to testify in Juneau.
REPRESENTATIVE ROKEBERG advised members it was necessary for him to
leave, and expressed that he had additional concerns with the bill.
CHAIRMAN GREEN advised members he would hold the bill over for
further comments.
DON DAPCEVICH, Executive Director, State Advisory Board on
Alcoholism and Drug Abuse, advised members the Board favored
passage of the proposed legislation. He pointed out that it had
the potential to help municipalities deal with the costs associated
with the administration of their criminal justice system, hospitals
and treatment facilities, and also would provide the opportunity to
make their own self determinants on how much they want to put into
that effort, and how much they want to spend.
MR. DAPCEVICH reminded members that the treatment and prevention
efforts had been quite successful if the amount of drinking in the
state had reduced, as indicated by the testimony of the previous
speaker.
REPRESENTATIVE ROKEBERG asked Mr. Dapcevich what he felt the
proposed legislation would accomplish; if it would provide for more
revenues for the municipalities or was it more of a focus in the
diminishment of consumption because of a higher cost. He believed
it was a relatively marginal cost increase to a consumer.
MR. DAPCEVICH did not think the cost issue would have a great
affect, because the marginal increase was very small. He stated
that if the cost were substantially increased, it would have some
affect on the use of alcohol. Mr. Dapcevich stated, however, that
every time the cost of alcohol was raised, even marginally, there
had been some affect in consumption. He believed the last large
increase in alcohol taxes occurred in 1980 which resulted in a
significant drop in use of alcohol for a period of years after the
increase. Mr. Dapcevich thought the affect was directly
proportional to the margin or percentage of increase.
GARRY PESKA, Alaska State Hospital and Nursing Home Association,
advised members they were in support of the proposed legislation.
He stated that while members had concerns about the health care
aspect of the bill and the impact that alcohol abuse had on the
health of Alaskans, their specific focus was on uncompensated costs
that hospitals incur when public inebriates are picked up by the
local police department and taken to the hospital. Mr. Peska
advised members that state law require that those people receive a
medical screening, and if they were incapacitated, they also need
to receive additional medical treatment and no one pays for those
costs. Mr. Peska advised members that most hospitals in the state
of Alaska were owned by the municipalities, and the Association
believed SSHB 132 would give a municipality the opportunity to help
fund some of those costs for the facilities.
LOREN JONES, Director, Division of Alcoholism and Drug Abuse,
Department of Health and Social Services, advised members the
department was in support of SSHB 132. He pointed out that it did
provide a tool to municipalities for many reasons, of which most
had already been testified to. Mr. Jones advised members he was
also around when the law was changed, and reiterated that if
passed, the legislation would restore something that was in statute
previously, where municipalities could, separately and
differentially tax alcohol. Mr. Jones pointed out that when that
changed, the state had always left sales tax up to local
communities, and SSHB 132 would allow the municipality to tax
alcohol differentially. He believed that by doing so, it would
provide the municipalities the opportunity to use those revenues as
they chose.
Number 1253
REPRESENTATIVE ROKEBERG asked Mr. Jones what was more important to
his department, the reduction in consumption of alcohol, or the
amount of revenues that might be generated through an additional
tax on alcohol.
MR. JONES advised members the department's interest was to decrease
consumption of alcoholic beverages because they felt it did improve
a person's health and would also assist in reducing the number of
alcohol related problems as the population was consuming less. Mr.
Jones pointed out that it was a known fact that it would never get
to the point of zero consumption, and that there would always be
problems, and the potential revenues available to a community that
would vote to raise the tax would be beneficial even absent the
change in consumption.
MR. JONES stated that if taxes were raised on a particular product
by three cents, no one would want to pay $3.33, so the drink may
sell for $3.50, and there could be additional revenues for the
business person as well.
Number 1336
KEVIN RITCHIE, Alaska Municipal League (AML), and the Alaska
Conference of Mayors advised members that SSHB 132 was considered
a legislative priority for both the AML and Alaska Conference of
Mayors. He pointed out that they consisted of 135 members and it
was a unanimous decision to approve the objective.
MR. RITCHIE stated with the question, "are you approving a tax",
that that was obviously not the case. He noted that the bill spoke
to an additional tax being imposed only with the approval of the
majority of the voters of a community. Mr. Ritchie stated that the
bill did provide a tool to create revenue. He stated that the
employment impacts that had been discussed were only in the alcohol
industry, and he pointed out that there was a whole lot of other
employment built around the alcohol industry such as treating the
effects of alcohol. Mr. Ritchie expressed that all of those jobs
were in local and state government, and the problem presently was
that they were not being compensated except from general funds and
general taxes.
MR. RITCHIE advised members that it was a significant local issue,
and as property taxes increased in general, municipalities and
municipal voters needed more tools to allocate that cost burden.
Number 1430
CHAIRMAN GREEN advised members that would close public testimony on
SSHB 132, and would now be before the committee for deliberations.
REPRESENTATIVE PORTER asked if it was the Chairman's intent to move
the bill.
CHAIRMAN GREEN noted that Representative Rokeberg had requested the
bill be held over for the purpose of additional comments.
REPRESENTATIVE JAMES advised members that she had mixed feelings on
the proposed legislation. She saw the legislation as an
opportunity for a municipality to tax, if they so chose, and it
also allowed the people of a municipality to vote for or against an
increase. Representative James stated the smaller communities may
receive more revenues from the source provided in the bill than
they did from other sources, which might be to their advantage.
She pointed out that she did not favor imposing more taxes on the
people of the state; however, she felt if other people were, they
should have the opportunity to vote on it.
REPRESENTATIVE PORTER agreed with the remarks of Representative
James, and asked that the committee move on the bill.
CHAIRMAN GREEN felt it was only fair to express that Representative
Rokeberg was very opposed to the bill. Having said that, if it was
the will of the committee, Chairman Green would accept a motion to
report SSHB 132 out of committee.
REPRESENTATIVE BUNDE pointed out that he would not vote for the
bill if it was mandatory, but because it was permissive, and as he
attempted to point out through testimony received from Anchorage,
the tax increase would only occur by a majority vote of the people.
He did express that he was not excited about municipal revenue
sharing. Representative Bunde advised members that the sooner the
cost of government was at the local level, the quicker people would
be able to decide what were appropriate levels of services. With
that, Representative Bunde stated that he would vote for SSHB 132
to offer an option to the municipalities for additional revenue
sources.
REPRESENTATIVE BERKOWITZ moved to report SSHB 132 out of committee
with individual recommendations and attached fiscal notes. There
being no objection, SSHB 132 was reported out of committee.
ADJOURNMENT
Number 1615
There being nothing further to come before the House Judiciary
Committee, Chairman Green adjourned the meeting at 3:20 p.m.
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