Legislature(1993 - 1994)
04/23/1993 01:00 PM JUD
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
HOUSE JUDICIARY STANDING COMMITTEE April 23, 1993 1:00 p.m. MEMBERS PRESENT Rep. Brian Porter, Chairman Rep. Jeannette James, Vice-Chair Rep. Gail Phillips Rep. Pete Kott Rep. Joe Green Rep. Cliff Davidson Rep. Jim Nordlund COMMITTEE CALENDAR SB 173 "An Act relating to health insurance for small employers; and providing for an effective date." SENATE FINANCE COMMITTEE SUBSTITUTE PASSED OUT WITH A DO PASS RECOMMENDATION SB 149 "An Act revising the laws governing financial institutions and relating to trust companies, the Alaska Small Loans Act, and the Premium Financing Act; amending Alaska Rule of Criminal Procedure 17 and Alaska Rule of Civil Procedure 45(b); and providing for an effective date." HOUSE JUDICIARY COMMITTEE SUBSTITUTE PASSED OUT WITH A DO PASS RECOMMENDATION SB 76 "An Act requiring regulations relating to pull-tabs to be consistent with North American Gaming Regulators Association standards on pull-tabs to the extent permitted by charitable gaming laws; allowing permittees to contract with vendors to sell pull-tabs on behalf of the permittee at an establishment holding a package store license and certain establishments holding a beverage dispensary license; allowing municipalities to prohibit vendors from conducting gaming activities within the municipality; restricting the purchase of pull-tabs by permittees, licensees, and vendors and their owners, managers, and employees; requiring receipts before prizes of $50 or more may be awarded in pull-tab games; prohibiting distributors from supplying pull-tabs to vendors; requiring the registration of vendors and regulating activities involving them; requiring the licensing of out-of-state pull-tab manufacturers; requiring the department regulating charitable gaming to approve contracts between permittees and operators before gaming may occur; preventing persons with felony convictions or convictions for crimes involving theft or dishonesty or a violation of gambling laws from being involved in charitable gaming activities as a permittee, licensee, vendor, person responsible for the operation of an activity, fund raiser or consultant of a licensee or vendor, or employee in a managerial or supervisory capacity, and providing exceptions for certain persons whose convictions are at least 10 years old and are not for violation of an unclassified felony described in AS 11, a class A felony, or extortion; relating to multiple-beneficiary charitable gaming permits and door prizes for charitable gaming; requiring operators to pay permittees each quarter at least 30 percent of the adjusted gross income from a pull-tab activity and limiting operators to expenses of not more than 70 percent of the adjusted gross income from that activity; requiring operators to pay permittees each quarter at least 10 percent of the adjusted gross income from a charitable gaming activity other than pull-tabs and limiting operators to expenses of not more than 90 percent of the adjusted gross income from that activity; requiring a permittee who uses a pull-tab vendor to enter into a contract with that vendor; requiring a vendor contracting with a permittee to pay the permittee at least 50 percent of the ideal net for each pull-tab series delivered to the vendor by the permittee; requiring that operators report an adjusted gross income of at least 15 percent of gross income each quarter; allowing the commissioner regulating charitable gaming to issue orders prohibiting violations of state gaming laws; relating to the authority of the commissioner regulating charitable gaming to suspend or revoke a permit, license, or registration; prohibiting the direct contribution of proceeds of a bingo or pull-tab game to a candidate for a public office of the state or a political subdivision of the state or to that candidate's campaign organization; prohibiting the payment of any portion of the net proceeds of a charitable gaming activity to a registered lobbyist; relating to `political uses' and `political organizations' as those terms are used in the charitable gaming statutes; and providing for an effective date." SENATE FINANCE COMMITTEE SUBSTITUTE PASSED OUT WITH NO RECOMMENDATION SCR 4 Relating to the Alaska Supreme Court's interpretation of Alaska Rule of Civil Procedure 82 and requesting that the court modify its interpretation of that rule. NOT HEARD WITNESS REGISTER SEN. STEVE RIEGER Alaska State Legislature Capitol Building, Room 516 Juneau, Alaska 99801 Phone: 465-3879 Position Statement: Prime sponsor of SB 173 JAMIE PARSONS Alaska State Chamber of Commerce 217 Second Street, Suite 201 Juneau, Alaska 99801 Phone: 586-2323 Position Statement: Supported SB 173 JAY FRANK State Farm/Allstate 431 North Franklin Street Juneau, Alaska 99801 Phone: 586-5777 Position Statement: Supported SB 173 GORDON EVANS Health Insurance Association of America 318 Fourth Street Juneau, Alaska 99801 Phone: 586-3210 Position Statement: Discussed SB 173 RESA JERREL National Federation of Independent Businesses 9159 Skywood Juneau, Alaska 99801 Phone: 789-4278 Position Statement: Supported SB 173 PAUL FUHS, Commissioner Department of Commerce and Economic Development P.O. Box 110800 Juneau, Alaska 99811 Phone: 465-2500 Position Statement: Supported SB 173; Discussed SB 76 REP. BETTYE DAVIS Alaska State Legislature Court Building, Room 600 Juneau, Alaska 99801 Phone: 465-3875 Position Statement: Supported SB 173 WILLIS KIRKPATRICK, Director Division of Banking, Securities and Corporations Department of Commerce and Economic Development P.O. Box 110807 Juneau, Alaska 99811 Phone: 465-2521 Position Statement: Supported amendment to SB 149 JACK BARRY 1831 Tongass Avenue Ketchikan, Alaska 99901 Phone: 225-9841 Position Statement: Supported amendment to SB 149 ARNE IVERSEN 1831 Tongass Avenue Ketchikan, Alaska 99901 Phone: 225-9841 Position Statement: Supported amendment to SB 149 JAMES BARRY 1831 Tongass Avenue Ketchikan, Alaska 99901 Phone: 225-9841 Position Statement: Supported amendment to SB 149 JACK DAVIES 100 Main Street Ketchikan, Alaska 99901 Phone: 225-2179 Position Statement: Supported amendment to SB 149 JIM SARVELA Vice President and Chief Financial Officer First Bank P.O. Box 7920 Ketchikan, Alaska 99901 Phone: 225-4219 Position Statement: Deferred to Mr. Bill Moran BILL MORAN President First Bank P.O. Box 7920 Ketchikan, Alaska 99901 Phone: 225-4202 Position Statement: Supported amendment to SB 149 GREG ERKINS Alaska Association of Realtors 3340 Arctic Boulevard Anchorage, Alaska 99503 Phone: 562-3382 Position Statement: Supported amendment to SB 149 GARY ROTH President Denali State Bank 119 North Cushman Fairbanks, Alaska 99701 Phone: 456-1400 Position Statement: Supported amendment to SB 149 GINA MCBRIDE, Executive Director Alaska Independent Insurance Agents and Brokers P. O. Box 203088 Anchorage, Alaska 99520 Phone: 349-2500 Position Statement: Supported amendment to SB 149 JOSH FINK Office of Sen. Tim Kelly Alaska State Legislature Capitol Building, Room 101 Juneau, Alaska 99801 Phone: 465-3822 Position Statement: Discussed SB 149 GAYLE HORETSKI Committee Counsel House Judiciary Committee Capitol Building, Room 120 Juneau, Alaska 99801-1182 Phone: 465-6841 Position Statement: Discussed SB 149 CHIP THOMA Juneau, Alaska 99801 Position Statement: Discussed SB 76 JOHN HANSEN, Gaming Manager Division of Occupational Licensing Department of Commerce and Economic Development P.O. Box 110806 Juneau, Alaska 99811 Phone: 465-2581 Position Statement: Discussed SB 76 MARK HIGGINS Higgins Corporation 3707 Woodland Drive, Suite 2 Anchorage, Alaska 99517 Phone: 243-7908 Position Statement: Discussed SB 76 REP. CARL MOSES Alaska State Legislature Capitol Building, Room 204 Juneau, Alaska 99801 Phone: 465-4451 Position Statement: Discussed SB 76 JERRY LUCKHAUPT Division of Legal Services Legislative Affairs Agency 130 Seward Street, Suite 401 Juneau, Alaska 99801 Phone: 465-2450 Position Statement: Discussed SB 76 PREVIOUS ACTION BILL: SB 173 SHORT TITLE: GROUP HEALTH INS. FOR SMALL EMPLOYERS BILL VERSION: CSSB 173(FIN) SPONSOR(S): SENATOR(S) RIEGER,Pearce,Salo,Kelly,Phillips; REPRESENTATIVE(S)B.Davis,Nordlund,Ulmer,Brice,Toohey JRN-DATE JRN-PG ACTION 03/25/93 946 (S) READ THE FIRST TIME/REFERRAL(S) 03/25/93 946 (S) LABOR & COMMERCE, FINANCE 03/30/93 (S) L&C AT 01:30 PM FAHRENKAMP ROOM 203 03/30/93 (S) MINUTE(L&C) 03/30/93 (S) MINUTE(L&C) 03/31/93 1003 (S) L&C RPT 4DP 1AM 03/31/93 1003 (S) ZERO FISCAL NOTE (DCED) 04/08/93 1269 (S) FIN RPT CS 5DP SAME TITLE 04/08/93 1269 (S) PREVIOUS ZERO FN APPLIES TO CS 04/08/93 (S) FIN AT 09:00 AM SENATE FINANCE ROOM 518 04/12/93 1307 (S) RULES TO CALENDAR 4/12/93 04/12/93 1309 (S) READ THE SECOND TIME 04/12/93 1309 (S) FIN CS ADOPTED UNAN CONSENT 04/12/93 1310 (S) AM NO 1 FAILED Y5 N11 E3 A1 04/12/93 1311 (S) AM NO 2 FAILED Y5 N11 E3 A1 04/12/93 1311 (S) AM NO 3 FAILED Y6 N11 E3 04/12/93 1312 (S) AM NO 4 WITHDRAWN 04/12/93 1313 (S) AM NO 5 FAILED Y5 N11 E3 A1 04/12/93 1313 (S) FAILED TO ADVANCE TO 3RD RDG Y11 N6 E3 04/12/93 1313 (S) THIRD READING 4/13 CALENDAR 04/13/93 1338 (S) READ THE THIRD TIME CSSB 173(FIN) 04/13/93 1338 (S) RET TO SECOND FOR AM 6 FAILED Y10 N10 04/13/93 1339 (S) PASSED Y19 N1 04/13/93 1339 (S) EFFECTIVE DATE CLAUSE VOTE SAME AS PSG 04/13/93 1339 (S) Adams NOTICE OF RECONSIDERATION 04/14/93 1393 (S) RECON TAKEN UP-IN THIRD READING 04/14/93 1394 (S) PASSED ON RECONSIDERATION Y19 N1 04/14/93 1394 (S) EFFECTIVE DATES VOTE SAME AS PASSAGE 04/14/93 1396 (S) TRANSMITTED TO (H) 04/15/93 1249 (H) READ THE FIRST TIME/REFERRAL(S) 04/15/93 1250 (H) JUDICIARY, FINANCE 04/15/93 1272 (H) CROSS SPONSOR(S):B.DAVIS 04/16/93 1303 (H) CROSS SPONSOR(S):NORDLUND,ULMER 04/19/93 1341 (H) CROSS SPONSOR(S):BRICE 04/21/93 (H) JUD AT 01:00 PM CAPITOL 120 04/21/93 (H) MINUTE(JUD) 04/22/93 1450 (H) CROSS SPONSOR(S): TOOHEY 04/23/93 (H) JUD AT 01:30 PM CAPITOL 120 BILL: SB 149 SHORT TITLE: REVISION OF BANKING CODE BILL VERSION: CSSB 149(FIN) SPONSOR(S): LABOR & COMMERCE JRN-DATE JRN-PG ACTION 03/05/93 616 (S) READ THE FIRST TIME/REFERRAL(S) 03/05/93 616 (S) JUDICIARY, FINANCE 03/19/93 (S) JUD AT 01:30 PM BELTZ ROOM 211 03/19/93 (S) MINUTE(JUD) 03/22/93 898 (S) JUD RPT 1DP 2NR 03/22/93 898 (S) ZERO FISCAL NOTE (DCED) 03/22/93 (S) FIN AT 09:00 AM SENATE FINANCE ROOM 518 03/23/93 911 (S) FIN RPT CS 5DP 2NR SAME TITLE 03/23/93 911 (S) PREVIOUS ZERO FN (DCED) 03/23/93 (S) FIN AT 09:00 AM SENATE FINANCE ROOM 518 03/23/93 (S) MINUTE(FIN) 03/24/93 (S) MINUTE(RLS) 03/31/93 1004 (S) RULES 3CAL 1NR 3/31/93 03/31/93 1007 (S) READ THE SECOND TIME 03/31/93 1007 (S) FIN CS ADOPTED UNAN CONSENT 03/31/93 1008 (S) ADVANCE TO 3RD RDG FAILED Y12 N8 03/31/93 1008 (S) THIRD READING 4/1 CALENDAR 04/01/93 1031 (S) READ THE THIRD TIME CSSB 149(FIN) 04/01/93 1032 (S) PASSED Y18 N2 04/01/93 1032 (S) COURT RULE CHANGES VOTE SAME AS PASSAGE 04/01/93 1032 (S) EFFECTIVE DATE VOTE SAME AS PASSAGE 04/01/93 1032 (S) ADAMS NOTICE OF RECONSIDERATION 04/02/93 1079 (S) RECONSIDERATION NOT TAKEN UP 04/02/93 1081 (S) TRANSMITTED TO (H) 04/02/93 955 (H) READ THE FIRST TIME/REFERRAL(S) 04/02/93 955 (H) LABOR & COMMERCE,JUDICIARY 04/13/93 (H) L&C AT 03:00 PM CAPITOL 17 04/13/93 (H) MINUTE(L&C) 04/14/93 1203 (H) L&C RPT HCS(L&C) 2DP 5NR 04/14/93 1204 (H) DP: MULDER, HUDSON 04/14/93 1204 (H) NR: PORTER,SITTON,WILLIAMS, GREEN, MACKIE 04/14/93 1204 (H) -SEN ZERO FN (DCED) 3/22/93 04/19/93 (H) JUD AT 01:00 PM CAPITOL 120 04/19/93 (H) MINUTE(JUD) 04/19/93 (H) MINUTE(JUD) 04/20/93 1353 (H) JUD RPT HCS(L&C) 4DP 04/20/93 1354 (H) DP: KOTT,GREEN,PORTER,PHILLIPS 04/20/93 1354 (H) -SENATE ZERO FN (DCED) 3/22/93 04/21/93 1420 (H) RETURN TO JUD COMMITTEE 04/23/93 (H) JUD AT 01:30 PM CAPITOL 120 BILL: SB 76 SHORT TITLE: CHARITABLE GAMING RESTRICTIONS BILL VERSION: CSSB 76(FIN) SPONSOR(S): SENATOR(S) PEARCE,Kelly,Frank,Sharp,Taylor, Phillips,Halford JRN-DATE JRN-PG ACTION 02/19/30 (S) L&C AT 01:30 PM BELTZ ROOM 211 01/29/93 188 (S) READ THE FIRST TIME/REFERRAL(S) 01/29/93 188 (S) LABOR & COMMERCE, JUDICIARY 02/11/93 (S) L&C AT 01:30 PM BELTZ RM 211 02/11/93 (S) MINUTE(L&C) 02/25/93 (S) L&C AT 01:30 PM FAHRENKAMP ROOM 203 02/25/93 (S) MINUTE(L&C) 03/04/93 (S) L&C AT 01:30 PM FAHRENKAMP ROOM 203 03/04/93 (S) MINUTE(L&C) 03/05/93 612 (S) L&C RPT CS 1DP 2NR 1AM NEW TITLE 03/05/93 612 (S) ZERO FISCAL NOTE TO SB & CS (DCED) 04/01/93 (S) JUD AT 03:30 PM CAPITOL RM 120 04/01/93 (S) MINUTE(JUD) 04/02/93 1073 (S) JUD RPT CS 2DP 2NR 1DNP NEW TITLE 04/02/93 1075 (S) FISCAL NOTE TO CS (DCED) 04/02/93 1075 (S) FINANCE REFERRAL ADDED 04/02/93 1080 (S) FIN WAIVED PUBLIC HEARING NOTICE,RULE 23 04/07/93 (S) FIN AT 09:00 AM SENATE FINANCE ROOM 518 04/07/93 (S) MINUTE(FIN) 04/07/93 (S) FIN AT 06:00 PM SENATE FINANCE ROOM 518 04/08/93 (S) FIN AT 09:00 AM SENATE FINANCE ROOM 518 04/10/93 (S) MINUTE(FIN) 04/12/93 (S) FIN AT 09:00 AM SENATE FINANCE ROOM 518 04/15/93 (S) FIN AT 06:45 PM SENATE FINANCE ROOM 518 04/17/93 (S) FIN AT 09:00 AM SENATE FINANCE ROOM 518 04/17/93 (S) MINUTE(FIN) 04/17/93 (S) FIN AT 09:00 AM SENATE FINANCE ROOM 518 04/18/93 1465 (S) FIN RPT CS 6DP 1AM NEW TITLE 04/18/93 1466 (S) FISCAL NOTE TO CS (DCED/REV) 04/18/93 1466 (S) PREVIOUS ZERO FN APPLIES TO CS (DCED) 04/19/93 1483 (S) RULES 3CAL 1DNP 4/19/93 04/19/93 1485 (S) READ THE SECOND TIME 04/19/93 1486 (S) FIN CS ADOPTED Y14 N6 04/19/93 1496 (S) AM NO 1 MOVED BY KERTTULA 04/19/93 1496 (S) AM NO 1 FAILED Y10 N10 04/19/93 1497 (S) AM NO 2 MOVED BY LITTLE 04/19/93 1497 (S) AM NO 2 FAILED Y9 N11 04/19/93 1498 (S) AM NO 3 MOVED BY LITTLE 04/19/93 1499 (S) AM NO 3 FAILED Y10 N10 04/19/93 1504 (S) AM NO 4 MOVED BY SALO 04/19/93 1504 (S) AM NO 4 FAILED Y9 N11 04/19/93 1505 (S) AM NO 5 MOVED BY DUNCAN 04/19/93 1505 (S) AM NO 5 FAILED Y9 N11 04/19/93 1506 (S) AM NO 6 MOVED BY ZHAROFF 04/19/93 1506 (S) AM NO 6 FAILED Y9 N11 04/19/93 1507 (S) AM NO 7 MOVED BY LINCOLN 04/19/93 1510 (S) AM NO 7 FAILED Y9 N11 04/19/93 1510 (S) AM NO 8 MOVED BY LINCOLN 04/19/93 1513 (S) AM NO 8 FAILED Y9 N11 04/19/93 1516 (S) AM NO 9 MOVED BY ELLIS & WITHDRAWN 04/19/93 1516 (S) AM NO 10 MOVED BY SALO 04/19/93 1517 (S) AM NO 10 FAILED Y9 N11 04/19/93 1517 (S) AM NO 11 MOVED BY DONLEY 04/19/93 1518 (S) AM 1 TO AM 11 FAILED Y8 N12 04/19/93 1518 (S) AM NO 11 FAILED Y9 N11 04/19/93 1519 (S) AM NO 12 MOVED BY DONLEY 04/19/93 1520 (S) AM NO 12 FAILED Y9 N11 04/19/93 1521 (S) AM NO 13 MOVED BY LITTLE & WITHDRAWN 04/19/93 1520 (S) AM NO 14 MOVED BY ELLIS 04/19/93 1523 (S) AM NO 14 FAILED Y9 N11 04/19/93 1523 (S) AM NO 15 MOVED BY LITTLE 04/19/93 1524 (S) AM NO 15 FAILED Y9 N11 04/19/93 1524 (S) AM NO 16 MOVED BY ZHAROFF 04/19/93 1528 (S) AM NO 16 FAILED Y4 N16 04/19/93 1528 (S) AM NO 17 MOVED BY LITTLE 04/19/93 1528 (S) AM NO 17 FAILED Y9 N11 04/19/93 1529 (S) AM NO 18 MOVED BY ELLIS 04/19/93 1530 (S) AM NO 18 FAILED Y9 N11 04/19/93 1530 (S) AM NO 19 MOVED BY DUNCAN 04/19/93 1531 (S) AM NO 19 FAILED Y9 N11 04/19/93 1532 (S) AM NO 20 MOVED BY LITTLE 04/19/93 1532 (S) AM NO 20 FAILED Y10 N10 04/19/93 1533 (S) AM NO 21 MOVED BY ELLIS 04/19/93 1533 (S) AM NO 21 FAILED Y8 N12 04/19/93 1534 (S) AM NO 22 MOVED BY LITTLE 04/19/93 1534 (S) AM NO 22 FAILED Y9 N11 04/19/93 1541 (S) AM NO 23 MOVED BY ZHAROFF 04/19/93 1541 (S) AM NO 23 WITHDRAWN 04/19/93 1542 (S) ADVANCE TO 3RD RDG FLD Y11 N9 04/19/93 1542 (S) THIRD READING 4/20 CALENDAR 04/20/93 1592 (S) READ THE THIRD TIME CSSB 76(FIN) 04/20/93 1593 (S) RET 2ND RESCIND ACTION AM 20 FLD Y9 N11 04/20/93 1594 (S) RET 2ND RESCIND ACTION AM 10 FLD Y10 N10 04/20/93 1594 (S) MOVED TO BOTTOM OF CALENDAR 04/20/93 1597 (S) RET TO 2ND TO RESCIND RULED OUT OF ORDER 04/20/93 1598 (S) COSPONSOR(S):KELLY,FRANK,SHARP, 04/20/93 1598 (S) TAYLOR, PHILLIPS, HALFORD 04/20/93 1600 (S) PASSED Y13 N7 04/20/93 1600 (S) EFFECTIVE DATE PASSED Y16 N4 04/20/93 1600 (S) Adams NOTICE OF RECONSIDERATION 04/21/93 1614 (S) RECON TAKEN UP - IN THIRD READING 04/21/93 1615 (S) TITLE AM NO 24 MOVED BY DUNCAN 04/21/93 1615 (S) AM NO 24 FAILED Y9 N11 04/21/93 1616 (S) RULING OF CHAIR UPHELD Y11 N9 04/21/93 1618 (S) PASSED ON RECONSIDERATION Y15 N5 04/21/93 1618 (S) EFFECTIVE DATES VOTE SAME AS PASSAGE 04/21/93 1642 (S) TRANSMITTED TO (H) 04/22/93 1425 (H) READ THE FIRST TIME/REFERRAL(S) 04/22/93 1426 (H) JUDICIARY, FINANCE 04/22/93 1431 (H) MOTION TO WAIVE PUBLIC NOTICE RULE 23(D) 04/22/93 1431 (H) MOTION WITHDRAWN-WORKSESSION 4/22 04/22/93 (H) JUD AT 01:00 PM CAPITOL 120 04/22/93 (H) MINUTE(JUD) 04/23/93 (H) JUD AT 01:30 PM CAPITOL 120 BILL: SCR 4 SHORT TITLE: REQUEST CHANGE IN RULE 82 FEES BILL VERSION: SPONSOR(S): SENATOR(S) TAYLOR JRN-DATE JRN-PG ACTION 03/29/93 974 (S) READ THE FIRST TIME/REFERRAL(S) 03/29/93 974 (S) JUDICIARY 04/05/93 (S) JUD AT 01:30 PM BELTZ RM 211 04/06/93 (S) JUD AT 01:30 PM BELTZ RM 211 04/12/93 (S) JUD AT 01:30 PM BELTZ RM 211 04/13/93 1331 (S) JUD RPT 3DP 1NR 04/13/93 1331 (S) ZERO FISCAL NOTE (S.JUD) 04/16/93 1440 (S) RULES RPT 3CAL 1NR 4/16/93 04/16/93 1449 (S) READ THE SECOND TIME 04/16/93 1449 (S) PASSED Y11 N9 04/16/93 1449 (S) DUNCAN NOTICE OF RECONSIDERATION 04/18/93 1462 (S) HELD ON RECONSIDERATION TO 4/19/93 04/19/93 1554 (S) RECONSIDERATION TAKEN UP 04/19/93 1554 (S) PASSED ON RECONSIDERATION Y11 N9 04/19/93 1555 (S) TRANSMITTED TO (H) 04/20/93 1346 (H) READ THE FIRST TIME/REFERRAL(S) 04/20/93 1346 (H) JUDICIARY 04/23/93 (H) JUD AT 01:30 PM CAPITOL 120 ACTION NARRATIVE TAPE 93-71, SIDE A Number 000 The House Judiciary Standing Committee meeting was called to order at 1:43 p.m. on April 23, 1993. A quorum was present. Chairman Porter announced that the hearing on SB 173 and SB 149 was being teleconferenced; therefore, those two bills would be before the committee first. Later, he said, the committee would hear SB 76 and SCR 4. SB 173 GROUP HEALTH INSURANCE FOR SMALL EMPLOYERS Number 061 SEN. STEVE RIEGER, PRIME SPONSOR OF SB 173, explained that the bill had passed the Senate by a vote of 19-1. The purpose of the bill, he said, was to increase the availability of health insurance to small employers. Senate Bill 173 would set up a reinsurance mechanism through which small employers' insurance plans would be pooled, thereby taking on characteristics of a single, larger insurance pool. Every insurance company offering small business insurance in Alaska would participate in the reinsurance pool, he added. Number 116 CHAIRMAN PORTER asked, if an employer did not have insurance coverage, could he or she participate as a member of a group of individuals that did have coverage? Number 124 SEN. RIEGER explained that coverage could not be denied to any individual. He stated that a person would work through a private insurance company, which would offer a person the small group health insurance plan. The policy would be underwritten and the person assigned a "risk rating," he said. He noted that the procedure included in SB 173 was similar to the way that insurance now worked, except that the bill included a reinsurance mechanism, in case there were some high-risk individuals. He said that SB 173 would avoid the problem of entire groups of employees being denied insurance coverage because of one high-risk individual within that group. It would also avoid a situation in which the one high-risk person was denied coverage. Number 144 REP. DAVIDSON commented that the sponsor had emphasized the "pro-business" aspects of SB 173. He asked if the bill could also be characterized as "pro-worker." Number 151 SEN. RIEGER replied that SB 173 would be considered a "pro- worker" bill, as it was the individual employees who needed the insurance coverage. Number 166 JAMIE PARSONS, representing the ALASKA STATE CHAMBER OF COMMERCE (ASCC), testified in support of SB 173 because it offered an avenue for small business owners to provide health insurance coverage for their employees. He said that ASCC endorsed the bill because it guaranteed availability of insurance coverage for all employees in a group, regardless of individual health risks. Also, he said, it guaranteed renewability of coverage, regardless of cases of health deterioration and number and size of previously submitted claims. Senate Bill 173 allowed for continuity of coverage, so that individuals who initially satisfied a plan's preexisting conditional restrictions would not be faced with meeting those restrictions again if they changed jobs or the employer changed insurance companies. Mr. Parsons also indicated ASCC's support for SB 173's rate limitations, stability, and predictability. Number 196 JAY FRANK, representing STATE FARM and ALLSTATE insurance companies, testified in support of SB 173. He said that the bill was based on model legislation, as adopted by the National Association of Insurance Commissioners. He stated that the bill would not solve all the problems with health insurance, but attempted to address availability problems that small employers faced. Number 216 REP. GREEN asked if SB 173 was similar to an "assigned risk" system. Number 224 MR. FRANK responded that SB 173 was similar to "assigned risk" in that an insurance company that provided coverage to small employers could not refuse to provide coverage to any group of employees. He said that SB 173 would work because every company in the business of writing insurance policies for small employers would have to play by the same rules. In the past, he said, companies would exclude high-risk individuals, or entire groups which contained one or more high-risk individuals. He noted that SB 173 was also similar to "assigned risk" in that coverage would be made available to everyone. Number 246 REP. GREEN asked if premiums would vary under SB 173's provisions. Number 255 MR. FRANK commented that premiums would be set by the individual insurance companies. He said that SB 173 would set up a state authority which would determine baseline coverages. Once those coverages were determined, he added, companies would set rates for the different types of coverage. Number 269 REP. GREEN asked if insurance companies could charge different premium rates, and then employers could choose with which insurance company to do business. MR. FRANK said that Rep. Green was correct. Number 281 REP. KOTT asked if the state authority would establish a base rate, which could then be adjusted according to preexisting conditions or other criteria. He asked if the rates would be established according to type of business, or if not, according to what criteria. MR. FRANK stated that rates would vary according to the type of business requesting coverage. Number 304 REP. KOTT asked if individuals within the same occupation would be rated differently, or if they would all be assessed the same premium. MR. FRANK replied that individuals working in the same occupation might be rated differently, due to preexisting medical conditions. Similarly, he said, persons with the same preexisting medical conditions, but working in different occupations, would be rated differently. Number 329 GORDON EVANS, representing the HEALTH INSURANCE ASSOCIATION OF AMERICA, said that no base rate would be set. The state authority would establish "basic" and "standard" plans and outline what would be covered under each of those plans. Insurance companies would then set rates for each type of plan, he added. Employers could then choose to do business with any insurance company which offered the coverage. He noted that premiums for all individuals within an employer's group would be the same. MR. EVANS commented that if there was a high-risk individual within a group, the insurance company would decide whether it was going to make use of the reinsurance provisions of SB 173. He said that if a primary insurer, one that wrote policies, felt that it could not insure a high-risk individual using its own reserves, then that individual could be reinsured, after the primary insurer paid the first $5,000 in claims. He noted that SB 173 allowed insurance companies to accept a greater variety of risks. MR. EVANS said that SB 173 would have no fiscal impact on the state budget and would "sunset" after five years, unless the legislature chose to renew the program. He stated that a similar bill had nearly passed the legislature last year. Twenty-four other states had already enacted laws like SB 173, he said. Number 395 RESA JERREL, representing the NATIONAL FEDERATION OF INDEPENDENT BUSINESS (NFIB), testified in support of SB 173 and called the members' attention to a written position paper which was included in their bill packets. Number 406 REP. NORDLUND indicated his support for SB 173. He asked Ms. Jerrel if she thought that the bill would encourage more small businesses to offer health insurance to their employees. Number 415 MS. JERREL commented that two years ago she had put a question on the NFIB ballot regarding whether the state should institute an insurance pooling plan. She stated that 76% of respondents indicated their support for such a program. Of those 76%, she added, 50% said that they would participate in such a program. Number 425 REP. NORDLUND repeated his question regarding whether or not SB 173 would encourage small employers to provide health insurance coverage to their employees. Number 431 MS. JERREL replied that she thought that SB 173 would encourage small employers to provide coverage to their employees. Number 440 COMMISSIONER PAUL FUHS, from the DEPARTMENT OF COMMERCE AND ECONOMIC DEVELOPMENT (DCED), indicated the department's strong support for SB 173, saying that it would help both employees and small business owners. Number 449 REP. KOTT asked Comm. Fuhs how many small businesses in Alaska employed full-time employees, as defined in SB 173. Number 454 COMM. FUHS replied that he did not know the answer to Rep. Kott's question. Number 457 REP. GREEN asked Comm. Fuhs if SB 173 would have any effect on the percentage of the health insurance premium paid by the employer versus the percentage paid by the employee. Number 463 COMM. FUHS responded that the bill would have no effect on who paid the premiums. Number 470 REP. BETTYE DAVIS, SPONSOR OF THE HOUSE COMPANION BILL TO SB 173 (HB 12), was invited to address the committee. She stated that she would be glad to defer the opportunity to testify, so long as the committee was willing to move SB 173 out of committee. CHAIRMAN PORTER declared that Rep. Davis had a deal. Number 498 REP. JAMES made a motion to move CSSB 173(FIN) out of committee with individual recommendations, and a zero fiscal note. Number 503 REP. KOTT indicated his support for SB 173. He said that, after a trial period, the program should be reevaluated and perhaps broadened. Number 513 REP. JAMES stated that, as an accountant and tax preparer for small businesses and a small business owner herself, she supported the bill. There being no objection to moving SB 173 out of committee, it was so ordered. SB 149 REVISION OF BANKING CODE Number 528 CHAIRMAN PORTER announced that the committee would now take up SB 149, which it had already heard and passed out of committee, but which had been returned to the Judiciary Committee for the consideration of one or two amendments. He called the committee members' attention to a proposed amendment (version K.1) dated April 22, 1993, contained in their bill packets. He said that the amendment would insert a new subsection on page 24 following line 27. He read the proposed amendment for the benefit of those on the teleconference network. The effect of the amendment would be to prohibit state banks from purchasing, establishing, or operating a subsidiary that engaged in the business of insurance or real estate brokerage. He said that the committee would also be considering another proposed amendment, which would "grandfather" in state banks with subsidiaries already in the insurance or real estate brokerage business. Number 563 WILLIS KIRKPATRICK, DIRECTOR OF THE DIVISION OF BANKING, SECURITIES, AND CORPORATIONS IN THE DEPARTMENT OF COMMERCE AND ECONOMIC DEVELOPMENT (DCED), indicated his support for the first amendment. He said that when SB 149 was before the House Labor and Commerce Committee, he had stated that federal law would prohibit banks from engaging in insurance activities unless states specifically allowed it. He indicated that he had misspoken. He noted that all of Alaska's banks except for one were owned by bank holding companies, which were subject to federal regulation. He said that these federal regulations prohibited banks from engaging in insurance activities. MR. KIRKPATRICK mentioned a Delaware court case in which the federal government's prohibition against a bank subsidiary engaging in the insurance business had been upheld. He commented that the matter was now before the U.S. Supreme Court. He said that the one Alaska bank which was not part of a bank holding company was a "fed member bank," and thus was also prohibited by the federal government from engaging in insurance activities. MR. KIRKPATRICK noted that there was a bank, owned by a bank holding company, in an Alaskan community of less than 9,000 people, which, through a series of events, that bank had a presently unauthorized title insurance company. He stated that the title insurance company was acquired at a time when it was closing down, which would have been a burden on the community. The bank formed its own bank holding company to purchase the title insurance agency, he added. However, the federal government regulators asserted that the bank holding company could not own a private insurance company. MR. KIRKPATRICK stated that in the five or six years that the bank had run the title insurance company, he had not received a single complaint. He noted that the title insurance company did business on a couple of islands where the community's other title company did not. He expressed support for "grandfathering" this bank's title insurance subsidiary. He urged the committee to amend the bill so as to specifically allow for this one situation. REP. JAMES asked if the bank to which Mr. Kirkpatrick was referring was the only one in Alaska which had a title insurance subsidiary. MR. KIRKPATRICK said that Rep. James was correct. It was the only state-chartered financial institution which had a title insurance subsidiary. Number 652 REP. JAMES asked if the title insurance company made a profit. Number 655 MR. KIRKPATRICK responded that he could not address the profitability of the subsidiary, but said that he was able to attest that the title company was not a financial drain on the bank. Number 662 REP. DAVIDSON asked Mr. Kirkpatrick to clarify his response. Number 665 MR. KIRKPATRICK reiterated his previous comment. Number 669 REP. DAVIDSON asked what was wrong with a bank having a title insurance subsidiary. Number 671 MR. KIRKPATRICK replied that there was concern that one industry might require a type of service from another industry which the first industry controlled. For example, if a bank made a mortgage loan, title insurance would be required before the loan could be sold. He said that it was possible that a bank would refuse someone a loan unless that person agreed to purchase the requisite title insurance from the bank. He stated that regulations needed to be set up to protect customers from this type of situation. He commented that this was not a problem with the bank in question. Number 694 REP. NORDLUND stated that he had not been present when SB 149 was last before the committee. He asked Mr. Kirkpatrick to explain the intent of the amendment. Number 703 CHAIRMAN PORTER stated that the amendment before the committee would preclude insurance and real estate brokerage businesses from being owned by banks. He said that the theory behind this prohibition was that banks would have the appearance of a conflict of interest and the ability to unfairly compete with non-banks which owned those types of businesses. CHAIRMAN PORTER noted that title insurance companies had to send copies of policies to banks issuing loans. If the bank held a title insurance company of its own, then the banks would receive valuable information from their competitors and could take advantage of the situation, he said. Number 727 REP. NORDLUND commented that, on its face, the amendment appeared to discourage competition. But, he said, the Chairman's explanation indicated that it would actually encourage competition. He asked Mr. Kirkpatrick to give his position on the amendment. Number 731 MR. KIRKPATRICK indicated his support for the amendment. Number 739 REP. DAVIDSON asked if Mr. Kirkpatrick could address the issue of the undue concentration of commerce. Number 748 CHAIRMAN PORTER stated that he would accept testimony from the teleconference sites first. Number 751 JACK BARRY testified via teleconference from Ketchikan that he had no problem with Mr. Kirkpatrick's suggested amendment. He indicated his support for separating the banking industry from the insurance industry. Number 762 ARNE IVERSEN, testifying via teleconference from Ketchikan, echoed the comments of Mr. Barry. Number 765 JAMES BARRY, testifying via teleconference from Ketchikan, said that he agreed that the insurance industry and the banking industry should be kept separate. Number 769 CHAIRMAN PORTER asked those testifying from Ketchikan if they had a position on Mr. Kirkpatrick's suggested amendment, which would "grandfather" in the Ketchikan bank which held a title insurance subsidiary. Number 780 JACK DAVIES, testifying via teleconference from Ketchikan, said that he wholeheartedly supported both amendments. Number 787 JIM SARVELA, VICE-PRESIDENT AND CHIEF FINANCIAL OFFICER OF FIRST BANK IN KETCHIKAN, testified via teleconference from Ketchikan and deferred to Bill Moran, president of the bank. Number 789 BILL MORAN, PRESIDENT OF FIRST BANK IN KETCHIKAN, testifying via teleconference from Ketchikan, indicated his support for the amendment and said that he would answer questions about his bank's activities, as well as those of the title insurance company. Number 802 REP. JAMES asked Mr. Moran if there was only one bank in Ketchikan. Number 805 MR. MORAN replied that there were many banks in Ketchikan. Number 808 REP. JAMES asked if the bank had made any effort to sell the title insurance company. Number 811 MR. MORAN responded that the bank had not done so. Number 812 REP. JAMES asked if First Bank ever intended to sell the title insurance company. Number 813 MR. MORAN replied that the bank did not, at present, intend to sell the title insurance company. Number 814 REP. JAMES asked Mr. Moran if the title insurance company was a profitable business. Number 818 MR. MORAN commented that, while the title insurance company was basically profitable, it was not a big contributor to the bank's overall profit picture. He noted that the company's returns were highly volatile, depending on the amount of real estate activity. He said that the bank had been in the title insurance business for nine years, and that the company had been profitable every year. MR. MORAN explained how First Bank had gotten into the title insurance business in the first place. He said that his bank had offices in many small communities in Southeast Alaska. He noted that First Bank used to have a continuing problem with obtaining title insurance for property on Prince of Wales Island, as well as in Petersburg and Wrangell. TAPE 93-71, SIDE B Number 000 MR. MORAN commented that First Bank had presented the idea of acquiring the title insurance company to the Federal Deposit Insurance Corporation (FDIC) and the Division of Banking, Securities and Corporations as a kindred service, closely associated with the extension of credit. He said that the title insurance company was acquired in response to a specific need and for the convenience of the bank's customers. MR. MORAN said that First Bank was sensitive to the concern that the bank might tie loan and title service together. He said that such a practice was illegal. He noted that the title insurance agency was kept separate from the bank. REP. JAMES asked if, at the time that First Bank acquired the title insurance company, there was no other title insurance company operating in Ketchikan. MR. MORAN replied that there was another title insurance agency in Ketchikan at that time, but it did not service Wrangell, Petersburg, or communities on Prince of Wales Island to the necessary extent. REP. JAMES asked if the other title insurance agency now served those areas to a greater extent. MR. MORAN said that he believed that the other title insurance agency served Wrangell; and he was not sure if the agency served Petersburg. He stated that he was almost certain that the agency wrote policies on Prince of Wales Island. Number 101 REP. JAMES asked Mr. Moran what First Bank would do if SB 149 were not amended so as to "grandfather" in its ownership of the title insurance company. Number 106 MR. MORAN commented that First Bank was a state-chartered bank. In the early 1980s, he said, the bank switched from a national charter to a state charter in order to take advantage of certain benefits relating to lending limits and the investment of reserves. Since that time, he added, there had been many changes made to the national banking laws, and the original benefits of a state charter had disappeared to a large extent. MR. MORAN indicated his understanding that one reason behind the state's current recodification was a need to bring the state banks back to parity with the national banks. REP. JAMES repeated her question regarding what First Bank would do if its situation was not "grandfathered" in. MR. MORAN replied that he was not sure what the bank would do. He said that, regarding the entire recodification, the legislature should consider that it was neither difficult nor expensive for a bank to change its charter from state to national, or vice versa. Number 175 GREG ERKINS, testifying via teleconference from Anchorage, spoke on behalf of the ALASKA ASSOCIATION OF REALTORS. He said that he supported the amendment to limit banks' ownership of insurance or real estate businesses, but did not support "grandfathering" in First Bank, as he said that the bank engaged in illegal practices. He noted that a real estate agent in Cordova used a title insurance company in Anchorage, as none existed in Cordova. That did not present much of a problem at all, he said. Number 249 GARY ROTH, PRESIDENT OF DENALI STATE BANK, testified via teleconference from Fairbanks. He urged the committee to pass SB 149, and said that he supported both the amendment prohibiting banks from entering the insurance or real estate brokerage business and the amendment "grandfathering" in First Bank's ownership of its title insurance company. Number 265 GINA MCBRIDE testified via teleconference from Anchorage. She said that she supported the amendment which prohibited banks from engaging in insurance or real estate brokerage activities. She said that the "grandfather" clause was a bad idea. She questioned whether the amendment would affect more banks than just the one bank in Ketchikan. She noted that safeguards that were supposed to prevent industry tie- ins had often not worked in the past. Number 304 CHAIRMAN PORTER clarified that there were two amendments before the committee. Both would prohibit banks from engaging in the real estate brokerage or insurance industries. The second one, however, also included a "grandfather" clause for First Bank. He said that it might be best to address the second amendment first, as if it was adopted, and there would be no need to address the other amendment. Number 310 REP. GREEN offered the second amendment. CHAIRMAN PORTER objected for the purposes of discussion. Number 312 REP. DAVIDSON spoke in favor of the amendment. He noted that, as an island-dweller, he was aware of the problems of doing business in an isolated location. Number 327 REP. PHILLIPS asked the Chairman to address the alleged illegality of First Bank's operation. Number 331 CHAIRMAN PORTER responded that, in his assessment, First Bank's situation was at worst illegal and at best not formally or properly authorized. He said that he did not support the amendment for two reasons: (1) the legislature might be "grandfathering" in an illegal activity; and (2) the amendment might affect more banks than just First Bank in Ketchikan. Number 346 REP. PHILLIPS asked for some background on how First Bank could conduct a potentially illegal operation for nine years, given that banks were periodically reviewed. Number 356 MR. KIRKPATRICK responded that the Alaska Banking Code, as currently written, was not terribly clear. Over the years, he said, examiners had questioned whether First Bank's investment was permissible. He noted that there was some subjectivity involved in the determination of whether title insurance and banks were of a "kindred kind." He added that there was no statute which said that a title insurance business was an illegal business for a bank. Therefore, he said, there were questions about whether or not First Bank's title insurance company was illegal. Senate Bill 149 included a more precise subsidiary provision, he said. He also commented that there was no current Attorney General's opinion on the issue. Number 398 REP. GREEN asked Mr. Kirkpatrick if he knew of any other banks which would be affected by the proposed "grandfather" provision. Number 402 MR. KIRKPATRICK testified that there were no other state- chartered banks, savings and loans, or credit unions that had subsidiaries that were title insurance companies. Number 407 REP. JAMES commented that, since there was another title insurance company operating in Ketchikan, she would probably not support the "grandfather" provision. She said that she understood what it was like to do business on islands and in small communities in Alaska, and was willing to make provisions for the peculiarities of doing so. She expressed her opinion that title insurance companies should not be in the lending business, nor should banks be in the title insurance business. She added that since there was already a title insurance agency in Ketchikan that could be providing the same service that the bank's title insurance company did, she felt that the bank's subsidiary was a conflict of interest. Number 427 REP. DAVIDSON noted that when only one title insurance company was located in an isolated community, the rates were not subject to competition and were often very high. Number 431 REP. JAMES replied that title insurance rates in the state were uniform and set by law. Number 436 REP. PHILLIPS noted that the amendment would only allow for existing situations to continue; it would not allow for other banks to get into the insurance or real estate brokerage business in the future. Number 445 CHAIRMAN PORTER agreed that the amendment would "grandfather" in one existing situation, but would preclude other banks from getting into the insurance or real estate brokerage business. REP. NORDLUND asked what current law said about banks getting into the insurance or real estate brokerage business. CHAIRMAN PORTER commented that, if SB 149 passed, a bank could not enter the insurance business. Under current state law, he added, a bank was not precluded from doing so. However, federal regulations prohibited such activity without specific statutory authority from the state or many "hoops" at the federal level. Number 464 REP. NORDLUND questioned why, if the Division of Banking, Securities, and Corporations supported the proposed amendment, it was not included in SB 149 in the first place. Number 468 MR. KIRKPATRICK stated that the original SB 149 would have allowed banks to enter the insurance or real estate brokerage business. The amendment would remove that authority. He said that his division had seen no specific harm resulting from First Bank's operation; the amendment would clear up a question regarding the legality of First Bank's practices. Number 479 REP. NORDLUND asked if SB 149's sponsor supported the amendment. Number 483 JOSH FINK, LEGISLATIVE AIDE TO SEN. TIM KELLY, PRIME SPONSOR OF SB 149, indicated that the sponsor had no position on the amendment. Number 493 REP. DAVIDSON asked Mr. Kirkpatrick to address where statewide uniform title insurance rates could be found in the Alaska Statutes. Number 498 MR. KIRKPATRICK replied that he did not regulate insurance companies and could not answer Rep. Davidson's question. REP. DAVIDSON asked if there was a state law regarding uniform title insurance rates. MR. KIRKPATRICK responded that he did not know the answer to Rep. Davidson's question. REP. DAVIDSON asked, if title insurance rates were uniform, why the "grandfather" provision created a competition problem. Number 515 CHAIRMAN PORTER stated that the issue was that there was perceived coercion by the bank for its customers to buy the bank's title insurance. REP. PHILLIPS expressed her opinion that it was not right to pass legislation which pertained specifically to one entity. She asked if there were any statutes which prohibited the legislature from doing that. REP. DAVIDSON expressed his opinion that the committee's recent action on SB 178 indicated that the legislature did pass bills which affected only one entity. Number 540 CHAIRMAN PORTER stated that SB 178 would apply to any lawsuit filed by anyone. Number 547 GAYLE HORETSKI, COMMITTEE COUNSEL TO THE HOUSE JUDICIARY COMMITTEE, noted that a provision in the state constitution prohibited special interest legislation, or legislation affecting one party. She said that there clearly had been many bills passed by the legislature over the years which only affected one entity, however. Number 558 REP. DAVIDSON asked what the perceived problem was in "grandfathering" in the First Bank operation in Ketchikan. Number 561 CHAIRMAN PORTER responded that if the committee's philosophy was that tie-ins between the banking industry and the insurance industry were not a good idea due to perceived and real conflicts of interest, then the harm was that (1) there was another title insurance company in Ketchikan that could provide the necessary services to the public; and (2) if another title insurance company wanted to enter and compete in the Ketchikan market, it would face the only city in Alaska where a bank was allowed to own a title company. Number 569 REP. DAVIDSON asked if the other title insurance company in Ketchikan had complained about the bank-owned title insurance company. Number 572 MR. KIRKPATRICK replied that the other title insurance company had not submitted a complaint about the bank-owned title insurance company. Number 577 REP. GREEN asked if it would constitute a "taking" if the legislature were to pass SB 149 without the amendment under consideration, given that First Bank might not have broken any laws. Number 582 CHAIRMAN PORTER stated that it was not clear whether First Bank had broken any laws by acquiring the title insurance company. He said that he could not answer Rep. Green's question. Number 586 REP. JAMES noted that when title insurance companies insured titles, they listed all of the "clouds" and all of the conditions of record pertaining to a piece of property. Some title insurance companies, in competition with other title insurance companies, would insure "around" certain conditions, while other companies would not. REP. JAMES expressed her opinion that there was a definite conflict of interest between title insurance companies and mortgagors. Because First Bank's title insurance company was not the only one in Ketchikan, she said, she would not support the proposed "grandfather" provision. Number 612 REP. PHILLIPS commented that she would abide by the constitution's prohibition against special acts, when a general act could be made applicable. Number 621 REP. NORDLUND noted that if Rep. James' intention was to enhance competition, then her actions ran counter to that intention. CHAIRMAN PORTER indicated that the committee had a motion to adopt what would now be designated as Amendment 1, which included the "grandfather" provision. Objection had been heard. REP. PHILLIPS made a motion to divide the question. CHAIRMAN PORTER stated that if Amendment 1 passed, then the committee was done with the issue. If the amendment did not pass, then the committee would turn to Amendment 2, which included part of Amendment 1. REP. PHILLIPS withdrew her motion. A roll call vote was taken on Amendment 1. Reps. Nordlund, Davidson, Green and Kott voted "yea." Reps. Phillips, James, and Porter voted "nay." And so, Amendment 1 was adopted. CHAIRMAN PORTER announced that, because Amendment 1 had passed, there was no need to consider Amendment 2. REP. PHILLIPS made a motion to move SB 149, as amended, out of committee with individual recommendations. There being no objection, it was so ordered. CHAIRMAN PORTER announced that the teleconference had come to an end. He said that the committee would now take up SB 76. SB 76 CHARITABLE GAMING RESTRICTIONS Number 675 REP. PHILLIPS made a motion to move SB 76 out of committee, with individual recommendations. REP. NORDLUND objected. REP. PHILLIPS withdrew her motion so that testimony could be heard from witnesses. Number 708 MR. CHIP THOMA commented that he had followed the issue of charitable gaming for the past several years, and had testified on SB 76 when it was in the Senate. He spoke in support of an amendment offered by Senator Jay Kerttula, which would eliminate pull-tab gambling in the state. He expressed his opinion that promoting charities through nearly-exclusive use of pull-tabs was not good or prudent state policy. He stated that the concept of and intent behind SB 76 were fatally flawed, because charitable organizations were being forced to rely very heavily on gaming as a revenue source. MR. THOMA said that 80% of the money raised by charitable gaming was from pull-tab sales. He noted that charitable gaming raised a lot of money for charities, but with questionable consequences. He stated that the purpose of SB 76 was supposedly to crack down on questionable activities by those involved in charitable gaming. He expressed his opinion that the amount of money said to go to political candidates was greatly exaggerated. TAPE 93-72, SIDE A Number 000 MR. THOMA asserted that SB 76 was an attempt by Mr. Mitch Gravo, a lobbyist representing the Charitable Gambling Association of Alaska, to quash competition. He said that he resented the use of legislation for such purposes. He commented that an important issue which was not addressed by SB 76 was the sale of pull-tabs in establishments which sold alcohol. He expressed his opinion that linking liquor establishments with charitable gaming was bad state policy. MR. THOMA commented that most charities operating in Alaska served clients who had been affected by alcohol. The state, he said, was forever linking the sale of pull-tabs to alcohol establishments. He noted that he did not consider the relatively small amount of charitable gaming proceeds which went to political candidates to be a problem. He said that he had recently learned that the Alaska Environmental Lobby (AEL) would, under SB 76's provisions, no longer be allowed to use its raffle proceeds to pay the salary of its lobbyist. He called that "outrageous." He expressed his opinion that SB 76 attempted to eliminate a fund raising source for Democrats. He noted that the Democrats did not rely on $1,000 contributors, as did the Republicans. MR. THOMA stated that the bill gave short shrift to the concept of multiple beneficiaries. He said that SB 76 contained many loopholes, and had received little scrutiny from legislative committees. He predicted that SB 76 would expand gambling in the state, and reiterated his concern that linking gambling and alcohol was wrong. Number 137 COMM. FUHS noted that he had distributed to the committee additional information which had been requested by Rep. Davidson at the previous work session on SB 76. He said that charitable gaming was not a partisan issue, as both Republicans and Democrats received proceeds from charitable gaming. He added that some operators ran pull-tab games almost solely for the benefit of political candidates. In response to Mr. Thoma's allegation that SB 76 was a war between two operators, he said that the bill would not affect either operator. He said that, in addition to bringing operations currently in bars under state regulation, SB 76 would give municipalities the option to prohibit vendors from operating in their communities. Number 203 REP. DAVIDSON noted that Kodiak had already outlawed operators. He asked Comm. Fuhs if SB 76 would increase economic opportunities for the liquor industry. He asked if the bill would increase the value of a bar license. Number 225 COMM. FUHS replied that he did not know if the bill would increase the value of a bar license. Number 230 REP. DAVIDSON asked if SB 76's allowance that a bar owner could become a pull-tab vendor would not increase the revenue taken in by the bar. COMM. FUHS responded that it would depend on the bar owner's operating expenses, and whether or not a bar owner chose to sell pull-tabs in the first place. He noted that some bar owners did not feel that pull-tabs fit in with the bar's image. Number 243 REP. DAVIDSON asked if "upscale" bars generally did not sell pull-tabs. COMM. FUHS said, in general, that was true. REP. DAVIDSON asked if DCED had conducted a zip code analysis of where pull-tab revenues came from. COMM. FUHS replied that no such analysis had been done. REP. DAVIDSON asked what result the commissioner would predict from such an analysis. COMM. FUHS expressed his opinion that such an analysis would indicate that gambling revenues were received from areas throughout the state. Number 258 REP. DAVIDSON stated his belief that SB 76 would increase the mixing of alcohol and gambling. He said that if upscale bars, in general, would not sell pull-tabs, that led him to believe that people who could afford to buy pull-tabs would not do so. Therefore, the funding of non-profit organizations would primarily be done by the poor. He said that, despite the commissioner's opinion that SB 76 would not expand gambling, there was a real possibility that the bill would expand the availability of pull-tabs. Number 296 REP. PHILLIPS asked if a bar owner, when selling his or her bar, could sell a pull-tab license along with it. COMM. FUHS replied that the pull-tab permit would not be transferred along with the facility. CHAIRMAN PORTER asked Comm. Fuhs to compare the proliferation of gambling, in the event that SB 76 passed and in the event that the bill failed. Number 331 COMM. FUHS said that it was difficult to speculate. He predicted that passage of SB 76 would result in the "redistribution" of gaming revenues, but not necessarily an expansion of gaming activities. Number 347 REP. PHILLIPS noted that there was nothing in current law that would prohibit the expansion of pull-tab activity in the state. COMM. FUHS stated that Rep. Phillips was correct. He added that any bar in Alaska could sell pull-tabs under current law if it so desired. Number 358 CHAIRMAN PORTER noted that SB 76 would make it more difficult for bar owners to sell pull-tabs, as they would have to give more of the proceeds to the permittee. Number 362 REP. PHILLIPS expressed her opinion that SB 76 did not make the selling of pull-tabs easier or more difficult for bar owners. What the bill did, she said, was to change the percentage of proceeds which the permittees received. COMM. FUHS stated that bar owners would be required to pay 50% of the "ideal net" from each pull-tab game series, up- front, to the permittee. Number 387 REP. PHILLIPS asked Mr. John Hansen to address why some pull-tab sellers gave 30% of proceeds to permittees, while others were required to give 50% of proceeds to the permittees. Number 396 JOHN HANSEN, GAMING MANAGER FROM THE DCED, stated that licensed operators would be required to give permittees 30% of proceeds from pull-tab sales. That person would not be required to pay for the pull-tabs upon delivery, he said, and would perform services for permittees which the permittees did not choose to do themselves. Under SB 76, permittees would still receive monthly checks from operators, but the amount of the checks would double. MR. HANSEN explained that if a permittee chose to do business with a vendor, the permittee would purchase pull- tabs and deliver them to the vendor. Unlike doing business with an operator, permittees contracting with vendors would be required to do their own accounting and financial reporting. Although permittees contracting with vendors received a higher rate of return, he noted, the permittee still bore the burden of doing the paperwork. REP. DAVIDSON commented that he had spoken with the director of a non-profit organization in his district and was told that in the last eight years a state regulator had only come by once to check on the organization's gaming permit. He asked Mr. Hansen how his office would increase oversight of charitable gaming. Number 435 MR. HANSEN noted that the percentages built into SB 76 did not exist in current law. He said that currently organizations which did not choose to use the services of an operator had no expense limitations. Therefore, many groups did millions of dollars worth of gaming, yet ended up with no net proceeds. The fixed percentages in SB 76 would help the state to ensure compliance simply by performing desk audits. He noted that field inspections would still be conducted. He expressed his opinion that, under current law, the state enjoyed substantial compliance with its licensing requirements. REP. DAVIDSON asked Mr. Hansen why he believed this to be true. MR. HANSEN cited the number of inspections conducted. He said that the state lacked auditing powers. He said that SB 76 would enable the state to more easily accomplish audits, due to the built-in percentages. Number 473 MR. HANSEN stated that in 1992, the state issued permits to 1,003 permittees. Some permittees, he noted, held more than one permit. He said 1,320 permits were issued exclusively for pull-tab activity. He noted that the state had only four gaming investigators. Number 491 REP. DAVIDSON asked if, under SB 76, a permittee could still conduct a raffle and donate proceeds from that raffle to a political candidate. Number 498 MR. HANSEN said that Rep. Davidson was correct, as long as the candidate was affiliated with a political organization. REP. DAVIDSON asked if a permittee could hold a raffle and donate proceeds directly to a candidate, instead of to the candidate through his or her political party, under SB 76's provisions. MR. HANSEN stated that the permittee could contribute raffle proceeds either to the party or to the candidate's organization, if that organization was affiliated with a political party. Number 510 REP. DAVIDSON asked if similar contributions to lobbyists would be illegal. MR. HANSEN said that was correct. Number 518 REP. DAVIDSON expressed his opinion that it was ironic that a permittee could contribute to a person who was to be lobbied, but not to a person who did the lobbying. Number 525 MR. HANSEN noted that federal law and SB 76 both made distinctions between different types of gaming activities. He added that the DCED was currently conducting an analysis of gaming revenues by zip code. Number 544 REP. PHILLIPS asked why SB 76 contained such an onerous title. Number 548 COMM. FUHS indicated that the title was written by the Senate. He suggested that Rep. Phillips ask the bill's sponsor what her intentions were in writing such a restrictive title. He stated that he had heard that the reason was not to tie the House's hands, but instead to attempt to "put some kind of sideboards on the thing," to try to keep it from coming apart. Number 564 MARK HIGGINS, representing the ALASKA CHARITABLE GAMES ASSOCIATION, said that SB 76 would undoubtedly expand gambling. He said that Comm. Fuhs' figures regarding how many bars in Alaska already sold pull-tabs were grossly exaggerated. He commented that SB 76 provided a tremendous economic incentive for bars to get into the pull-tab business. He expressed his opinion that the sale of pull- tabs in a bar would increase the value of that bar, if the owner decided to sell. MR. HIGGINS noted that SB 76 would delete an existing bond requirement. He predicted that the bill would expand gaming by at least 100%. He commented that, when the 1988 Gaming Reform Act was enacted, no one involved envisioned that stand-alone pull-tab stores would be established. He noted that when permittees contracted with vendors, it was true that the permittee would receive 50% of the "ideal net" up- front. What was not being stated, he added, was that the permittee had to pay for the cost of the pull-tabs, plus taxes. That meant that the permittee actually only received about 35% of the ideal net. MR. HIGGINS expressed his opinion that bar owners serving as vendors ought to pay permittees more than 50% of the ideal net, as the vendor's expenses were essentially nothing. He distributed a series of graphs to the committee, which he said were based on state figures. He said the DCED contended that, out of the $200 million annually involved in the charitable gaming industry, only about 8% was going to charitable organizations. His graphs demonstrated that charities actually received about 40% of the "bottom-line net." He said that SB 76 would increase, but not double, the amount of money which went to charities. Number 688 REP. JAMES questioned Mr. Higgins' figures. She said that when the state was talking about 15%, that was 15% of the ideal gross, which was after prizes had been taken out. It appeared to her that Mr. Higgins' figures compared total pull-tab sales to proceeds going to the non-profit organizations. Number 695 MR. HIGGINS stated that the state's method of portraying figures created a false impression that there was rampant abuse in the charitable gaming industry. In fact, he said, charitable organizations were currently receiving a return from 30-40%, which was better than most businesses in Alaska could report. Number 701 REP. JAMES indicated that Mr. Higgins had missed her point. She called attention to Mr. Higgins' second graph. MR. HIGGINS stated that the second graph represented all of the money left over after prizes had been awarded. The percentage of that amount that actually went to the charities was approximately 40%, he added. He alleged that the DCED was misinforming legislators. Number 718 CHAIRMAN PORTER asked Mr. Higgins if he believed that SB 76 would provide more money to charities than did existing law. MR. HIGGINS replied that the Chairman was correct. REP. DAVIDSON asked Mr. Higgins to explain what, in the bill, would ensure that charitable organizations received more money. Number 727 MR. HIGGINS replied that that would occur in situations in which operators or self-directed charitable organizations were not currently realizing a 30% return. He mentioned that an operator in Anchorage had recently switched from being an operator to being a multiple-beneficiary operation. That person was now sub-leasing in the same space which he had used as an operator, and was charging $176,000 more per year to permittees in his new role. The state had determined that it had no authority to sanction that activity. He expressed concerns over placing multiple- beneficiary permits in statute. MR. HIGGINS cited another example, Catholic Bingo in Fairbanks, an organization that did not meet the 30% requirement and would therefore be put out of business by SB 76. Number 756 REP. DAVIDSON asked Mr. Higgins what percentage of the gaming abuse he attributed to pull-tab activity. He asked him what the legislature should do to discourage the proliferation of gambling combined with alcohol. MR. HIGGINS responded that pull-tab sales made up about 80% of the charitable gaming revenue in the state. Regarding the combination of gambling and alcohol, he expressed his opinion that it was a judgment call for the legislature. He added that there needed to be protections for the players and the charities. He stated that two years ago bars were willing to accept 25% of the ideal net. In that light, he questioned why SB 76 was offering the bars 50% of the ideal net. MR. HIGGINS stated that control was a key issue. He stated that he had complained several weeks ago that SB 76, as then drafted, would have allowed pull-tab machines to be located virtually anywhere. They could have been owned by anyone, he added, and there would be no human interaction in that situation. That situation cried out for abuse, he said. The bill was eventually changed, he noted. He said that many people would attempt to skirt regulation. He expressed his opinion that the bill as drafted would expand the opportunities for abuse. He predicted that the abuse would be seen immediately. Number 792 REP. DAVIDSON asked how players could be better protected. Number 795 MR. HIGGINS said that there were tracking mechanisms in existing law. He suggested that bars be required to put up a real property bond, or do something else to make the bars accountable -- even requiring them to put their liquor licenses on the line. (Chairman Porter acknowledged the arrival of Rep. Carl Moses.) Number 809 REP. DAVIDSON asked that a representative of the DCED respond to the statements made by Mr. Higgins. TAPE 93-72, SIDE B Number 000 COMM. FUHS responded to Mr. Higgins' comment regarding the number of bars in the state which sold pull-tabs by stating that out of 1,320 permit locations, 527 of those locations sold alcohol. He said the DCED had never claimed that 80- 90% of the state's bars sold pull-tabs. The department had said that an inventory of bars in Juneau showed that 80-90% sold pull-tabs. He defended the DCED's figures. COMM. FUHS said that, regarding figures of overall net return, the DCED had been very careful to review them in detail with the committee during the work session the day before. He said that he had explained that when a permittee ran a game him or herself, the return was 45%, but when a permittee used an operator, the return was 31%. The reason for that, he added, was that some operators voluntarily paid more than 30%. He commented that one Juneau operator voluntarily paid 40%. He also mentioned that SB 76's prohibition against proceeds going toward campaign contributions and lobbyists would result in increased proceeds to true charities. He estimated that SB 76 would result in an additional $10 million per year going to charities. Number 050 REP. NORDLUND mentioned a statement included in Sen. Pearce's written sponsor statement which said, "all non- profits, including political parties and labor organizations, would still be allowed to . . . use raffles and other permitted games to earn money which could then be used for direct contributions to candidates." COMM. FUHS commented that the sponsor's statement was correct. Number 071 CHAIRMAN PORTER said that the name of the sponsoring organization appeared on raffle tickets, so there was no confusion regarding where the contribution went. COMM. FUHS said that was true. Number 076 REP. NORDLUND stated that Rep. Davidson had an amendment which would address the issue. He said that he saw no difference between organizations contributing to candidates and lobbyists. Number 085 REP. PHILLIPS mentioned that political parties had used raffles to raise money long before pull-tabs came on the scene in Alaska. She expressed her opinion that raffles should be treated differently than pull-tabs. Number 094 REP. JAMES agreed that raffles were different than other types of gambling. She said that her understanding of SB 76 was that raffles could still be held, but the proceeds could not be donated to political candidates. Other members of the committee corrected her by saying that the proceeds could not be used for lobbyists. REP. DAVIDSON asked if the Homer Ski Club could hold a raffle and use the proceeds to make a direct contribution to Rep. Phillips. COMM. FUHS said that was correct. REP. DAVIDSON asked Comm. Fuhs to discuss bonding requirements for bar owners who sold pull-tabs, as well as revocation of liquor licenses for gaming abuses. Number 133 MR. HANSEN discussed the sanctions included in SB 76. He said that no bond requirement was necessary, as vendors gave permittees 50% of the ideal net up-front, upon delivery of the pull-tabs. Additionally, he said, SB 76 gave the DCED much greater regulatory authority over charitable gaming. It gave the commissioner the right to issue an emergency order to "cease and desist." It also gave the department the authority to suspend, revoke, or deny permits for up to five years. The sanctions, he added, were linked both to the permittee and to the vendor or operator. REP. DAVIDSON asked who could initiate those sanctions. He asked if a bar patron who felt that he or she had been "had" could initiate those sanctions. Number 164 MR. HANSEN stated that under current law, if a complaint was filed, the department investigated it, and action might be taken. REP. DAVIDSON expressed concern that, because the present gaming investigators were spread so thin, the only investigations would center around complaints. He asked Mr. Hansen to comment on the 50/50 split if the cost of the pull-tabs and the tax were to be paid by the bar owner. Number 182 MR. HANSEN stated that it would be logistically difficult, as the cost of each game varied; thus the ideal net and the taxes owed would vary also. REP. DAVIDSON asked why the permittee could not collect those amounts at the same time that he or she collected the 50% of the ideal net. MR. HANSEN responded that it would be difficult to compute those figures on the spot. COMM. FUHS mentioned that the cost of the game was about 10%. He expressed the department's desire that the permittee be physically involved in the delivery of the pull-tabs and the receipt of the check up-front. He noted that if anyone was paid to "broker" vendor-permittee interactions, that would be an illegal expense under SB 76. Number 212 MR. HANSEN commented that current law alluded to certain prohibitions for persons with criminal records, but did not specifically define them. He said SB 76, in contrast, set out specifically who was prohibited from doing what. Number 228 REP. DAVIDSON noted that that had nothing to do with a person who saw an opportunity to broker a situation. He asked how the brokerage situation could be controlled. Number 243 COMM. FUHS said that when a pull-tab game was delivered to a vendor, the game was registered with the DCED. The vendor and the permittee were required to show the DCED what each did with their 50%. Number 250 MR. HANSEN stated that SB 76 would require that a permittee receive 50% of the ideal net and deposit the check in the permittee's checking account. Once the money was in the checking account, he added, the DCED had a "hook" to monitor compliance. Number 255 COMM. FUHS commented that, although there were some "sensational" aspects of SB 76, the most important parts of it from the regulators' standpoint were the "nuts and bolts" requirements which were being placed on the charitable gaming industry. He said that the bill gave the DCED very clear methods for tracking gaming activity, which would save personnel time. Number 264 REP. PHILLIPS asked why SB 76 did not include a requirement that pull-tabs be manufactured in Alaska. She said that it could spawn a new industry in the state. Number 275 MR. HANSEN replied that there were only ten pull-tab manufacturers in the country. He noted that the manufacture of pull-tabs required a tremendous printing press, and was often done during the daytime by companies which printed newspapers at night. In order for a pull-tab manufacturing operation to be economically feasible, he said, a huge volume was required. He said SB 76 licensed out-of-state manufacturers which were currently not licensed in Alaska. REP. PHILLIPS asked if a licensing fee was charged. MR. HANSEN stated that the fee was $500 per license per year. Number 296 REP. NORDLUND indicated his understanding that the $500 licensing fee was very low, compared to fees charged by other states. Number 300 MR. HANSEN responded that the highest fee he had ever heard of was $2,500. He said that none of the pull-tab manufacturers wanted to pay the $500 fee, but did not object to it. Number 319 COMM. FUHS asked that the committee, if it opted to amend SB 76, submit a resolution allowing the title to be amended so as to specifically pertain to the amendments made. Number 338 REP. JAMES asked if the only way in which to change the title of SB 76 was to have a concurrent resolution passed by both the House and the Senate. Additionally, she asked, if the committee made an amendment, then would that amendment be tied to a concurrent resolution that would have to be passed by both bodies in order to give the committee permission to change the title? COMM. FUHS stated that the committee could either make very specific title amendments or a blanket title amendment. Number 352 REP. JAMES commented that the committee needed to determine whether or not SB 76 should pass this year. CHAIRMAN PORTER stated that he would like to see SB 76 pass this year. Number 368 REP. JAMES agreed with the Chairman, but cautioned that amending the bill might not allow for its passage this year. REP. PHILLIPS echoed Rep. James' comments. Number 372 REP. CARL MOSES, PRIME SPONSOR OF HB 168, CHARITABLE GAMING AMENDMENTS, a companion bill to SB 76, expressed the opinion that any attempt to amend SB 76 was equivalent to an attempt to kill it. Number 378 REP. NORDLUND mentioned that the legislature could choose to ignore the Uniform Rules. If SB 76 passed, there was nothing that the courts could say that would invalidate the bill on legislative procedural grounds. Number 384 CHAIRMAN PORTER stated that the House had elected not to violate the Uniform Rules. Number 387 REP. DAVIDSON said that the legislature was not a unicameral body. As such, he said, it did not behoove the House to follow the lead of the Senate in this matter. He said that the House was not doing its public duty if it did not do what it thought was right in creating a good law. Number 400 CHAIRMAN PORTER commented that he would consider any proposed amendments, and that all committee members should do what they felt was right regarding the amendments. He noted that it was important to consider the political ramifications of amending SB 76. He expressed his opinion that SB 76 contained a number of good provisions, and said that more could probably be added. But, he said, "at some point in time, you have to make a decision to stop." He said that he felt it was time to stop. Number 425 REP. NORDLUND stated that, in terms of the House of Representatives, the review process was starting, not stopping. He noted that this was the first public hearing on SB 76 in the House, and that it was proper for the House to consider amendments to the bill. He said that both he and Rep. Davidson were going to offer amendments, starting with the most expansive amendments and working toward the least expansive amendments. REP. NORDLUND moved Amendment 1, which he said would prohibit the sale of pull-tabs in the state. REP. PHILLIPS objected. REP. NORDLUND expressed his opinion that a lot of gaming activity that occurred in the state had some value. There was social activity involved in bingo and raffles, he noted. But, he said that he could not see any redeeming value in playing pull-tabs. It was a mindless and non-social activity, he stated. Pull-tabs had not existed in Alaska until quite recently, he added, and charities had been able to survive quite well before they appeared on the scene. A roll call vote was taken on Amendment 1. Reps. Davidson and Nordlund voted "yea." Reps. Phillips, Kott, James, and Porter voted "nay." Rep. Green passed. And so, Amendment 1 failed. Number 462 REP. DAVIDSON offered Amendment 2, which would allow local communities to prohibit pull-tabs. He said that the effect of the amendment would be to save what little cash was left in rural areas of the state. He expressed his belief that rural areas supported a disproportionate share of gaming in Alaska. He moved the amendment. REP. PHILLIPS objected. CHAIRMAN PORTER asked Comm. Fuhs to discuss how Amendment 2 related to local option provisions already in the bill. Number 480 COMM. FUHS stated that local option provisions in SB 76 would allow local communities to eliminate operators or vendors. But, he said, permittees would still be able to run pull-tab games on their own. Amendment 2 would allow local communities to also prevent permittees from running their own pull-tab games, he said. Number 489 REP. DAVIDSON asked Comm. Fuhs to offer his opinion of the amendment. Number 503 COMM. FUHS stated that there were potential legal problems with the amendment's definition of "community." He said that the bill's current local option provisions pertained to "municipalities." Number 512 REP. DAVIDSON requested a legal opinion on that issue. Number 517 JERRY LUCKHAUPT, an ATTORNEY from the LEGISLATIVE AFFAIRS AGENCY'S DIVISION OF LEGAL SERVICES, stated that Amendment 2 tracked local option language in the Alcoholic Beverage Control (ABC) statutes, which the Supreme Court had recently found to be constitutional. The amendment, he said, allowed municipalities and unincorporated communities to vote to ban pull-tabs within their boundaries. He said that it did not give IRA Councils or village corporations the authority to make a decision to ban pull-tabs. Number 542 REP. PHILLIPS asked Mr. Luckhaupt if he had drafted the Senate Finance Committee's substitute for SB 76. MR. LUCKHAUPT replied that he had done so. REP. PHILLIPS asked if language on page 7, Section 11, of the bill already accomplished what Amendment 2 was seeking to do. Number 548 MR. LUCKHAUPT responded that the language to which Rep. Phillips was referring was part of what the amendment sought to accomplish. The amendment, he said, went further to include unincorporated communities. Number 554 REP. DAVIDSON urged the members to give serious consideration to the amendment. He noted that the amendment would help to ensure that what little disposable cash was in rural areas remained there to help the residents of the communities. Number 565 CHAIRMAN PORTER indicated that he did not object to the amendment, but expressed concern that adopting it would effectively kill SB 76 for this session. Number 572 REP. DAVIDSON urged the committee to remember that it had plenty of time to do its job right. A roll call vote was taken on Amendment 2. Reps. Davidson and Nordlund voted "yea." Reps. Phillips, James and Porter voted "nay." Reps. Green and Kott passed. And so, Amendment 2 failed. Number 592 REP. GREEN said that he would like to offer an amendment. An "at ease" was taken at 4:31 p.m. The meeting reconvened at 4:49 p.m. REP. GREEN then stated that he had decided not to offer his amendment. Number 614 REP. DAVIDSON offered Amendment 3, which would allow local communities to prohibit all charitable gaming. He expressed his opinion that SB 76 would expand gaming in the state. Amendment 3 would allow local residents to protect themselves to some extent from that expansion. He moved the amendment. CHAIRMAN PORTER objected. He stated that he did not object to the content of the amendment, but merely to making any amendments at all to SB 76 at this point. Number 653 REP. NORDLUND mentioned that the Chairman's desire to make additional reforms to charitable gaming next year might not come to pass, due to a lack of momentum behind reforms. In that light, he recommended that SB 76 be amended now. Number 658 CHAIRMAN PORTER expressed his opinion that if Amendment 3 were introduced as a bill next year, it would enjoy a great deal of support. Number 664 REP. JAMES added that she would support a bill containing Amendment 3's provisions next year. Number 666 REP. DAVIDSON noted that SB 76 would give purveyors of alcohol added income and the ability to put as many jars of pull-tabs on their bar counters as the counters could hold. He said that pull-tab income could pay the expenses of bar owners to come to Juneau to lobby against a bill containing Amendment 3's provisions. He said that the state would never be able to effectively track pull-tab income, which was in fact used for lobbying expenses. He expressed hope that the committee would "see the light" on this important public policy issue. Number 689 CHAIRMAN PORTER noted that pull-tabs could be sold in bars under current law, and that would continue upon enactment of SB 76. He recognized that most of the committee members wished that the issue of charitable gaming would simply go away. He commented that a person might enter a bar with $30 in his or her pocket. If pull-tabs were not there, he said, that person might "drink away" the $30. If pull-tabs were there, they might lead to her or him drinking less and diverting some of that $30 to charities. Number 707 REP. DAVIDSON said that the Chairman had made an excellent point. He stated that the committee had the power to make the issue of charitable gaming go away. Number 712 CHAIRMAN PORTER stated that SB 76 did not preclude gambling. He called for a roll call vote on Amendment 3. Reps. Nordlund and Davidson voted "yea." Reps. Kott, Phillips, James, and Porter voted "nay." Rep. Green passed. And so, Amendment 3 failed. Number 721 REP. DAVIDSON raised a procedural question regarding the vote on Amendment 2. The Chairman, he said, had allowed two members to pass. The amendment failed by a vote of 3 nays and 2 yeas. He noted that when members passed, the vote should come back to them. REP. PHILLIPS called for a re-vote on Amendment 2. TAPE 93-73, SIDE A Number 000 There was a motion to rescind the committee's action on Amendment 2. Hearing no objection, the action was rescinded. REP. DAVIDSON explained that Amendment 2 would allow local communities to prohibit pull-tab activity. A roll call vote was taken on Amendment 2. Reps. Nordlund and Davidson voted "yea." Reps. Kott, Phillips, Green, James, and Porter voted "nay." And so, Amendment 2 failed. REP. NORDLUND offered Amendment 4, which would prohibit gaming activities from taking place in bars and liquor stores. He moved the amendment. REP. PHILLIPS objected. Number 025 REP. NORDLUND noted earlier concerns that charitable gaming proceeds might go toward lobbying or candidates. He said that he could guarantee that proceeds received by bar owners would be used to lobby the legislature on legislation which favored the liquor industry, as well as legislation which allowed the liquor industry to continue to sell pull-tabs. He expressed his opinion that it was bad business to combine gambling and alcohol. Number 049 CHAIRMAN PORTER noted that one advantage of selling pull- tabs in bars was that children would not be exposed to that gambling activity. Number 065 REP. NORDLUND stated that people who purchased pull-tabs in bars could be easily preyed upon by unethical bartenders and bar owners, who could ask customers if, instead of getting cash as change, they wanted pull-tabs. Number 084 REP. PHILLIPS noted that Rep. Nordlund's concern could apply to the sale of anything in bars, including jewelry and ivory. REP. NORDLUND responded that he was not aware that bartenders were licensed by the state to sell ivory and jewelry in bars. REP. PHILLIPS commented that it did occur, however. A roll call vote was taken on Amendment 4. Reps. Davidson and Nordlund voted "yea." Reps. Phillips, Green, Kott, James, and Porter voted "nay." And so, the amendment failed. Number 112 REP. DAVIDSON offered Amendment 5, which would delete SB 76's prohibition against raffle proceeds being used for lobbying purposes. He noted that Comm. Fuhs and others had testified that, under SB 76, raffle proceeds could be used to contribute to those who were lobbied, but not to those doing the lobbying. He expressed his opinion that SB 76 went too far in penalizing those with the least ability to raise money in order to promote their interests in the legislature. He said that Amendment 5 would preserve a right which had been in existence since statehood. He noted his belief that it was not a terrible thing that the Alaska Environmental Lobby, various women's and children's groups, and even chambers of commerce held raffles in order to fund their lobbying efforts. He moved the amendment. REP. PHILLIPS objected. Number 158 CHAIRMAN PORTER said that, although he did not completely agree with SB 76's provision, he felt that Amendment 5 was a step in the wrong direction. Number 166 REP. NORDLUND indicated his understanding that the DCED did not oppose the amendment. He asked Comm. Fuhs to comment. Number 170 COMM. FUHS responded that the DCED had not taken a position on the amendment, but did not oppose it. He expressed concern that if the amendment would necessitate a title change, it could jeopardize the bill's chance to be enacted. A roll call vote was taken on Amendment 5. Reps. Davidson and Nordlund voted "yea." Reps. Phillips, Green, Kott, James, and Porter voted "nay." And so, Amendment 5 failed. Number 193 REP. NORDLUND offered amendment 6, which would limit charitable gaming activities to 501(c)(3) organizations, those recognized as non-profit entities under federal tax codes. He moved the amendment. REP. PHILLIPS objected. A roll call vote was taken on Amendment 6. Reps. Davidson and Nordlund voted "yea." Reps. Green, Kott, Phillips, James, and Porter voted "nay." And so, Amendment 6 failed. Number 230 REP. DAVIDSON offered Amendment 7, which would increase payments to permittees from 30% to 40% for pull-tab games, and from 10% to 15% for bingo, and also limit operator expenses to 60% for pull-tabs and to 85% for bingo. He said that the effect of the amendment would be to increase the amount of money going to the permittees. He moved the amendment. REP. PHILLIPS objected. Number 277 CHAIRMAN PORTER stated that he would support Amendment 7, but for the fear that its adoption would effectively kill SB 76. He suggested that it be brought back before the legislature after the DCED had determined how SB 76's percentages worked. REP. DAVIDSON noted that instead of raising the percentages in the future, they could be raised now and adjusted downward in the future if need be. CHAIRMAN PORTER responded that, either way, the legislature was attempting to strike a balance between maximizing profits to charities while still allowing vendors and operators to meet their expenses. Number 309 REP. DAVIDSON expressed his opinion that it was sad that worthwhile charities were being given to the "gambling lion" to fund. He commented that it was a sad commentary on our state and our society. CHAIRMAN PORTER said that he would like to identify himself with those remarks. Number 322 REP. JAMES noted that Rep. Davidson was "preaching to the choir" and said that charities were the ones that supported gaming activities. A roll call vote was taken on Amendment 7. Reps. Nordlund and Davidson voted "yea." Reps. Kott, Green, Phillips, James, and Porter voted "nay." And so, Amendment 7 failed. Number 338 REP. NORDLUND offered Amendment 8, which would increase the percentage of the ideal net paid to the permittee at the time when pull-tabs were delivered to the vendor, from 50% to 75%. He noted that, under SB 76's provisions, the permittee's 50% had to pay for the cost of the pull-tabs as well as taxes. He moved the amendment. REP. PHILLIPS objected. Number 376 CHAIRMAN PORTER noted that Amendment 8 would be worthy of consideration in the future, after the DCED had had an opportunity to review the effect of the 50/50 split contained in SB 76. A roll call vote was taken on Amendment 8. Reps. Nordlund and Davidson voted "yea." Reps. Green, Kott, Phillips, James, and Porter voted "nay." And so, Amendment 8 failed. Number 402 REP. NORDLUND commented that he had no more amendments to offer. Number 409 REP. PHILLIPS made a motion to move the Senate Finance Committee substitute for SB 76 out of committee, with individual recommendations. REP. NORDLUND objected. Number 416 REP. DAVIDSON said that he had grave misgivings about how the bill was sent over to the House. The Alaska Legislature was not a unicameral body, he stated, and the Senate had effectively tied the House's hands by sending over a bill with such a restrictive title. He asserted that the House majority had assisted the Senate in that regard. He noted that there was sometimes a need for hurried legislation, but expressed his opinion that there was still plenty of time remaining in the 1993 session. He commented that many of the committee members were obviously uncomfortable with the "forced vote" on the amendments. He expressed his opinion that SB 76 was harming the wrong people. Number 441 REP. KOTT noted that he agreed to some extent with Rep. Davidson. But, he said, SB 76 represented a great improvement over current law. He commented that the bill could be made even better, but tampering with it too much might mean that the legislature would end up with nothing. He said SB 76 brought about some reforms, which could be built upon in future years. He stated that he would support moving the bill out of committee. Number 456 REP. JAMES said that if she had the opportunity, she would vote against all gambling, all bars, and gambling in bars. But, she said, those were not options at this time. And, she said, she could not impose her beliefs on others to that extent. She stated that there were currently grave concerns over charitable gaming activity. She expressed her opinion that it was imperative that reforms happen this year. She noted her distress over SB 76's restrictive title, but said that the Senate had visited every area and every concern that the Judiciary Committee had just considered, and had produced the version of SB 76 now before them. She indicated her support for the bill. Number 480 REP. DAVIDSON stated that all legislators were individuals, hopefully with their democratic faculties intact. The House did not have to dance to the Senate drum, he added, nor to the drum beats of the lobbyists. He said that the members of the House danced to the tune of their constituents. He expressed his disappointment that, on the issue of charitable gaming, the system of checks and balances of the bicameral legislature had been undermined. He said that there was nothing in the constitution which said that the House had to or should permit the Senate's activity. He expressed his hope that, in the future, when the legislature was in a hurry not to do the public's business well, it at least took the time to do it as well as it possibly could. A roll call vote was taken on moving SB 76 out of committee. Reps. Nordlund and Davidson voted "nay." Reps. Green, Kott, Phillips, James, and Porter voted "yea." And so, the Senate Finance Committee substitute for SB 76 passed out of committee. Number 512 CHAIRMAN PORTER noted that this would likely be the Judiciary Committee's last meeting of the year. He expressed his pleasure in working with each member on the committee, and said that he looked forward to the following year. ADJOURNMENT CHAIRMAN PORTER adjourned the meeting at 5:25 p.m. BILLS NOT HEARD The committee did not hear SCR 4 today.