Legislature(1993 - 1994)
02/24/1994 03:00 PM L&C
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
HOUSE LABOR AND COMMERCE STANDING COMMITTEE February 24, 1994 3:00 p.m. MEMBERS PRESENT Rep. Bill Hudson, Chairman Rep. Joe Green, Vice Chair Rep. Brian Porter Rep. Bill Williams Rep. Eldon Mulder MEMBERS ABSENT Rep. Joe Sitton Rep. Jerry Mackie COMMITTEE CALENDAR *HB 302: "An Act excluding certain recreational activities sponsored by an employer from coverage provided under workers' compensation, unless participation is required as a condition of employment; and providing for an effective date." PASSED OUT OF COMMITTEE HB 309: "An Act relating to disposals of state land within five miles of the right-of-way of the Dalton Highway to a licensed public utility or a licensed common carrier." HEARD AND HELD IN COMMITTEE *HB 300: "An Act relating to civil liability for commercial recreational activities; and providing for an effective date." PASSED OUT OF COMMITTEE *HB 413: "An Act increasing excise taxes on cigarettes, tobacco products, and alcoholic beverages; and providing for an effective date." HEARD AND HELD IN COMMITTEE (* First public hearing.) WITNESS REGISTER REP. MIKE NAVARRE Alaska State Legislature State Capitol Juneau, Alaska 99801-1182 465-3779 Position Statement: Sponsor of HB 300 REP. GENE THERRIAULT Alaska State Legislature State Capitol Juneau, Alaska 99801-1182 465-4797 Position Statement: Sponsor of HB 309 JERRY GALLAGER, Director Division of Mining Department of Natural Resources P.O. Box 107016 Anchorage, Alaska 99510-7016 762-2165 Position Statement: Supported HB 309 MICHAEL WALLERI Tanana Chiefs Conference Inc. 122 First Ave. Fairbanks, Alaska 99707 452-8251 Position Statement: Opposed CSHB 309 KEITH QUINTAVELL North Slope Borough P.O. Box 69 Barrow, Alaska 99723 852-0320 Position Statement: Opposed HB 309 (Spoke via teleconference) EARL FINKLER City of Barrow P.O. Box 629 Barrow, Alaska 99723 852-5211 Position Statement: Opposed HB 309 (Spoke via teleconference) BART HENDERSON Gastineau Guiding Co./Chilkat Guides Ltd. P.O. Box 170 Haines, Alaska 99827 766-2491 Position Statement: Supported HB 300 KAREN COWART Alaska Visitors Association 3201 C Street, Suite 403 Anchorage, Alaska 99503 561-5733 Position Statement: Supported HB 300 BOB ENGELBRECHT Temsco Helicopters 1650 Mudlesden Way Juneau, Alaska 99801 789-9501 Position Statement: Supported HB 300 NANCY LETHCOE Alaska Wilderness Recreation and Tourism Association P.O. BOX 1353 Valdez, Alaska 99686 835-4300 Position Statement: Supported HB 300 (Spoke via teleconference) PETE BUIST P.O. Box 71561 Fairbanks, Alaska 99707 457-7189 Position Statement: Supported HB 300 (Spoke via teleconference) ERUK WILLIAMSON Alaska Wilderness Society 12720 Lupine Anchorage, Alaska 99516 345-7678 Position Statement: Supported HB 300 (Spoke via teleconference) JACK KREINHEDER 9850 Nine Mile Creek Road Juneau, Alaska 99801 586-2405 Position Statement: Supported HB 300 MICHAEL JOHNSON, Staff Rep. Joe Sitton Alaska State Legislature State Capitol Juneau, Alaska 99801-1182 Position Statement: Supported HB 300 LOREN JONES, Director Division of Alcoholism and Drug Abuse Department of Health and Social Services P.O. Box 110607 Juneau, Alaska 99811-0607 465-2071 Position Statement: Supported HB 413 GLEN RAY, Director Division of Public Health Department of Health and Social Services P.O. Box 110610 Juneau, Alaska 99811-0610 465-3140 Position Statement: Supported HB 413 PAUL DICK Income and Excise Audit Division P.O. Box 110420 Juneau, Alaska 99811-0420 465-3691 Position Statement: Provided information on HB 413 PREVIOUS ACTION BILL: HB 302 SHORT TITLE: WORKERS COMP FOR RECREATIONAL ACTIVITIES SPONSOR(S): REPRESENTATIVE(S) NAVARRE,Mulder JRN-DATE JRN-PG ACTION 05/06/93 1665 (H) READ THE FIRST TIME/REFERRAL(S) 05/06/93 1665 (H) L&C, STATE AFFAIRS, FINANCE 02/24/94 (H) L&C AT 03:00 PM CAPITOL 17 BILL: HB 309 SHORT TITLE: DISPOSAL OF DALTON HWY RIGHT-OF-WAY LAND SPONSOR(S): REPRESENTATIVE(S) THERRIAULT,James JRN-DATE JRN-PG ACTION 01/03/94 2007 (H) PREFILE RELEASED 01/10/94 2007 (H) READ THE FIRST TIME/REFERRAL(S) 01/10/94 2008 (H) L&C, RESOURCES, FINANCE 01/11/94 2034 (H) COSPONSOR(S): JAMES 02/22/94 (H) L&C AT 03:00 PM CAPITOL 17 02/22/94 (H) MINUTE(L&C) 02/24/94 (H) L&C AT 03:00 PM CAPITOL 17 BILL: HB 300 SHORT TITLE: LIABILITY: COMMERCIAL RECREATION ACTIVITY SPONSOR(S): LABOR & COMMERCE JRN-DATE JRN-PG ACTION 05/06/93 1665 (H) READ THE FIRST TIME/REFERRAL(S) 05/06/93 1665 (H) L&C, JUDICIARY, FINANCE 09/10/93 (H) L&C AT 09:00 AM CAPITOL 17 02/24/94 (H) L&C AT 03:00 PM CAPITOL 17 BILL: HB 413 SHORT TITLE: INCREASE TOBACCO & ALCOHOL TAXES SPONSOR(S): RULES BY REQUEST OF THE GOVERNOR JRN-DATE JRN-PG ACTION 01/28/94 2180 (H) READ THE FIRST TIME/REFERRAL(S) 01/28/94 2180 (H) L&C, STATE AFFAIRS, FINANCE 01/28/94 2180 (H) -ZERO FISCAL NOTE (REV) 1/28/94 01/28/94 2180 (H) GOVERNOR'S TRANSMITTAL LETTER 02/24/94 (H) L&C AT 03:00 PM CAPITOL 17 ACTION NARRATIVE TAPE 94-15, SIDE A Number 001 CHAIRMAN HUDSON convened the meeting at 3:14 p.m. HB 302 - WORKERS COMP FOR RECREATIONAL ACTIVITIES Number 005 REPRESENTATIVE MIKE NAVARRE, Prime Sponsor of HB 302, offered the following sponsor statement for HB 302: House Bill 302 offers a solution to recreational sponsorship by saying that as long as the participation is voluntary and not a condition of employment, then no workers' compensation liability extends to the employer/sponsor. Recent interpretations of law have placed generous Alaska employers in jeopardy concerning team sponsorships. Recreational activities funded by an employer, according to court interpretation, implies liability for injury that occur while the employee is participating in an optional recreational activity. For example, an employer supplies uniforms, umpiring fees, field rental fees or other team related items. The courts have treated that involvement as an employer-sanctioned activity. The result has been that many employers are reluctant to increase their risk and legal exposure for a recreational activity and are less likely to support recreational leagues throughout Alaska. Number 059 REP. MULDER moved HB 302 with individual recommendations and zero fiscal notes. No objections were heard; it was so ordered. HB 309 - DISPOSAL OF DALTON HWY RIGHT-OF-WAY LAND Number 076 REPRESENTATIVE GENE THERRIAULT, Prime Sponsor of HB 309, read the following sponsor statement into the record: This legislation seeks to address a problem recently brought to my attention concerning land disposals along the Dalton Highway. State statutes currently prohibit disposing of state land within five miles of the right of way of the Dalton Highway for anything other than oil and gas leases or for oil and gas exploration, development, productions or transportation north of 68 degrees north latitude. Also prohibited are materials sales for anything other than oil and gas related activities or for reconstruction or maintenance of the highway north of 68 degrees north latitude. The prohibition prevents a private telephone company, which is seeking land in order to expand services to Coldfoot, from obtaining the necessary acreage. This legislation would solve the problem and authorize the Department of Natural Resources to dispose of land to a licensed public utility or a licensed common carrier. After proposing legislation to address the communications issue, I was made aware of larger problems concerning leases within the entire Dalton Highway corridor, which affect both the DNR and the Department of Transportation and Public Facilities. Since August, 1992, more than 650,000 acres of land at selected sites along the corridor have been transferred to the state from BLM. The land selections encompass several existing BLM leases. Because DNR does not have the authority to renew these leases taken over from the federal government, the state's ability to manage the land in the future is at jeopardy. DNR is also prohibited from removing or disposing of gravel, which is required for improving the airport at Deadhorse. Also affected is the Department of Transportation and Public Facilities, which recommends that the bill be amended to allow disposal of state land and materials for construction, improvement and maintenance of public facilities. Such an amendment would facilitate work on corridor airports, service roads, access roads and waysides, as well as the entire length of the Dalton Highway. In response, I have respectfully submitted a sponsor substitute that would allow for nonresidential development within "development nodes" such as Coldfoot and Happy Valley. It would also allow for land and materials disposal for reconstruction or maintenance of state highways and construction or maintenance of airports. I urge your favorable vote on this very important legislation. Thank you. REP. THERRIAULT stated that he has worked with the department to define what is a development node and how much land is being discussed. The result was to put into statute specific property descriptions to allay any concerns that this bill was designed to open up the whole Dalton highway. REP. THERRIAULT added that currently, for example, in Coldfoot the Department of Natural Resources can allow the Department of Transportation to take gravel by simply maintaining the section of the road around Coldfoot. REP. PORTER moved adoption of the CS for HB 309. No objections were heard; it was so ordered. REP. THERRIAULT noted that his intent with HB 309 is to address the communications question. He stated that there is a private communication provider that would like to expand services. Number 200 CHAIRMAN HUDSON asked the sponsor to run through the differences between the original bill and the CS. REP. THERRIAULT said that initially HB 309 only dealt with the communications issue and the CS expands to the description of the development nodes, which clearly outlines what property development could take place in. The CS also clarifies the access to materials. Number 212 JERRY GALLAGER, Director, Division of Mines, Department of Natural Resources, testified in support of HB 309. Mr. Gallager stated that the department does not believe the language of HB 309 is not a broad opening of activities on the Haul road; it simply recognizes generally what is currently happening. It will allow the department to provide for the continuation of these activities. MR. GALLAGER said that the BLM has given very limited land along the haul road. They have given certain permits and leases that the state is prohibited from renewing in most cases under AS 19. This bill would allow for renewals or grant new authorizations for maintenance of airports and some other activities. Number 242 MIKE WALLERI, General Council, Tanana Chiefs Conference, testified against CSHB 309. The conference did not oppose the original bill and did not have any problems with the majority of the sponsor's intentions. The conference believes there are needs for telecommunications, a need for the department to manage its existing leases its inherited, a need for gravel on the road, and a strong need for safety. MR. WALLERI stated that the Chiefs' concern is that the CS is overly broad and that it would open up the haul road to a unregulated amount of development. MR. WALLERI stated that the corridor is a critical part of the state of Alaska. The current laws are a product of past legislatures balancing environmental issues, subsistence issues and industrial development of the North Slope. MR. WALLERI explained that the development node concept comes out of a BLM plan that was adopted by the prior federal administration. This invoked litigation against the BLM. The BLM adopted the Resource Management Plan, RMP, which identified the development of development nodes and encouraged them. MR. WALLERI noted that due to the litigation referenced above and its subsequent settlement, the BLM has undertaken a comprehensive review of the RMP. Mr. Walleri believes if the state relies on the prior plan, which may not be valid, the state may find itself in another controversy creating inholdings in federal enclaves. MR. WALLERI stated the major problem with the committee substitute is nonresidential disposals. He added that the history of nonresidential settlement in Alaska has been residential in effect. MR. WALLERI suggested deletion of that section of the committee substitute. He added that everything the department said it wanted to do in that area could be done without this section. Number 353 REP. THERRIAULT asked Mr. Walleri if that would allow the department to renew or renegotiate BLM leases. Number 363 MR. WALLERI said it may be necessary to amend the bill to cover that issue, but he added that the bill is much broader than that. It does not address existing nonresidential uses. He added that the Chiefs do not have any problem with what is going on in the corridor now, but they don't want to see a massive land disposal that would cause additional problems. Number 373 KEITH QUINTAVELL, North Slope Borough, testified via teleconference on HB 309. Mr. Quintavell stated that he understood the committee to be looking at the committee substitute for SB 210. Mr. Quintavell stated that the section of the bill that provided for disposal of land under 38.05.810(e) was supported by the borough. That section clearly states that when public utilities or common carriers demonstrate need for land can obtain land in this manner. This serves the public interest. MR. QUINTAVELL further stated that the section providing for the maintenance and construction of airports and highways is also in the public interest. MR. QUINTAVELL, North Slope Borough, testified against the inclusion of developmental nodes. MR. QUINTAVELL stated that the North Slope Borough has municipal land selections under Title 29 at Deadhorse, Franklin Bluffs and Happy Valley. The North Slope Borough interprets the prohibitions on 19.40.200 to exclude Title 38 types of disposals. Mr. Quintavell said the borough feels that if there is a desire to allow development at these areas, the simplest way to accomplish it would be to convey the land selections noted above to the North Slope Borough. MR. QUINTAVELL noted that the Department of Natural Resources in Fairbanks has told the borough that they cannot convey the land along the haul road that have been selected under Title 29 because of the prohibition in 19.40.200. The department has asked for the borough's support in lifting the prohibitions on all Title 38 types of disposals. In January, the borough asked the commissioner of Natural Resources for clarification on 19.40.200. The borough feels that this provision clearly states that the state is not to dispose of land under Title 38 not Title 29. Therefore, they do not understand why the state does not convey to the borough their land selections. MR. QUINTAVELL said that the State of Alaska has not produced a land use plan required under 38.04.065. The borough supported a plan before and land disposals. Number 433 REP. THERRIAULT asked Mr. Quintavell, if those selections went through, would the North Slope want to sell gravel products from your land? Number 440 MR. QUINTAVELL responded that the North Slope would be interested in selling gravel, as well as providing other facilities; i.e., a truck stop, etc. MR. QUINTAVELL added that the North Slope Borough does not believe that enacting new legislation was necessary for this type of development to take place. This development could take place under existing laws by conveying lands to the North Slope Borough under Title 29 and allowing the development to proceed in that fashion. Number 455 EARL FINKLER, City of Barrow, testified via teleconference against HB 309. Mr. Finkler stated the city supports the borough in opposition to the opening of the road, and stated concerns about the comprehensive planning regarding the road by all parties involved. MR. FINKLER stated that he asked, at the last hearing, if there would be any impacts of this legislation on the original purpose of the restrictions. He stated that his understanding was that those restrictions were put in to preserve maximum opportunity for the efficient transportation and support of oil and gas development. MR. FINKLER added that the City of Barrow has long been concerned about some other state disposals, in particular, the Barrow airport and adjacent construction sites for the airports. The city would like to see the state get back to these issues before they deal with too many other land disposal issues. Number 475 CHAIRMAN HUDSON stated that the whole issue of land disposal currently tied up in the mental health trust litigation is gaining attention by the administration and he is hopeful some of these issues will be settled. CHAIRMAN HUDSON asked if Mr. Quintavell would put together a short position paper with suggestions on how the legislation can accommodate those points not in dispute and satisfy the concerns he brought up. Number 495 CHAIRMAN HUDSON asked the sponsor if the committee should look for an amendment that would accommodate the concerns presented. Number 500 REP. THERRIAULT responded that he did not have a problem with changing the language, as long as the end result is the same. He noted that Mr. Walleri suggested that a section could be deleted and still achieve all the goals, and he would like further information on this. Number 509 MR. GALLAGER disagreed that Mr. Walleri's assessment. Mr. Gallager believed that the language on page, 1, line 13, was needed in order to dispose of gravel; and to issue longer term leases and whatever is necessary for development along the haul road. Number 515 CHAIRMAN HUDSON asked that Rep. Therriault and Mr. Gallager obtain the necessary information from the City of Barrow and the North Slope Borough and put together a revised draft that satisfies the interests and concerns. Number 532 REP. THERRIAULT noted that SB 210 is a similar bill and he thought it had passed the Senate and was being transmitted to the House. He stated it was his intent to use SB 210 as a vehicle and work with the sponsor, Sen. Sharp to seek passage. HB 300 - LIABILITY: COMMERCIAL RECREATION ACTIVITY Number 542 CHAIRMAN HUDSON brought up HB 300, sponsored by the House Labor & Commerce Committee, read the following sponsor statement for the record: The Adventure Travel Society estimates that adventure travel and ecotourism segments of the travel industry are growing at a rate of 20% a year. The economic contributions of Alaska's wilderness based tourism, while undocumented, are undoubtedly important. AWRTA estimates that there are over 2,000 natural resource dependent tourism businesses in Alaska. Although few of these businesses employ upwards of 50 people, many are small, supporting or contributing to the income of only a few families. They are, however, Alaskan- based and vital to local employment. Unlike larger recreational outfits, these businesses keep their dollars in Alaska. They purchase their goods here, employ local residents, remain in-state, and spend the dollars they make here, thus providing both economic diversity and stability to many communities. Many of these small businesses, however, are facing an uncertain future due to the high costs associated with insurance premiums and operation of such businesses. In order to encourage the continuance and survival of increasingly popular outdoor recreational activities, some kind of structure is needed to assure that both operators and participants become knowledgeable of, and assume responsibility for inherent risks. House Bill 300 was introduced to establish the responsibilities of persons who operate and participate in commercial recreational activities. HB 300 in no way relieves recreational businesses/operators from liability. It simply establishes a framework that may help in the litigation process by stating that the state has recognized your responsibilities and sends the message that steps have been taken to educate both the operator and participant as to these responsibilities. While insurance premiums are based on many factors, including one's history of claims, similar legislation in Colorado has had the effect of lowering insurance premiums 15 to 20 percent. HB 300 establishes a balance of responsibility between operators and participants, without diminishing the responsibility of wither party. Number 572 CHAIRMAN HUDSON stated there are three amendments to HB 300 for consideration: 1) Page 2, line 13, adds that participants are responsible for their children who are under the age of 18. This amendment was is in response to concerns that there sometimes the assumption on the part of parents that they are off duty because they are on vacation. It would also clarify that operators responsible for ensuring the safety of all their clients does not absolve parents from their responsibilities as parents. 2) Page 2, line 24, requires employees who are in contact with participants to be trained in CPR as a minimum standard of first aid which operators will be responsible. 3) Page 3, lines 2 to 4, deletes the definition of premises. Number 594 BART HENDERSON, Chilkat Guides of Haines, testified in support of HB 300. Mr. Henderson stated that not only are insurance premiums going up, but the number of carriers is decreasing rapidly. He noted that his business is mostly rafting and there are only two choices in the United States of insurance carriers. MR. HENDERSON added that many of the ecotourism businesses rely on the cruise ships to pre-sell the trips. Many of the frivolous cases brought against his type of business also name as many of the deep pockets they can find, like the cruise lines. When this happens, the cruise line industry becomes hesitant to sell any trips on board that have inherent risk involved. Number 624 REP. GREEN asked Mr. Henderson if HB 300 passed did he have any information that would imply that insurance rates would come down. TAPE 94-15, SIDE B Number 001 KAREN COWART, Alaska Visitors Association (AVA), testified in support of HB 300. Ms. Cowart stated that the association is extremely concerned regarding the rising cost of liability insurance. The AVA believes HB 300 is a win- win situation because it protects both client and business. Number 050 BOB ENGELBRECHT, Temsco Helicopters, testified in support of HB 300. He stated HB 300 basically clarifies what the responsibilities are for participants and operators. Mr. Engelbrecht dittoed Mr. Henderson's testimony regarding the inherent risk in the ecotourism business. MR. ENGELBRECHT noted that sometimes a claim against his company is not high enough for the insurance industry to fight, so they settle and raise premiums. Number 103 NANCY LETHCOE, President, Alaska Wilderness Recreation and Tourism Association (AWRTA), testified via teleconference in support HB 300. She said HB 300 establishes the responsibilities of tour operators and participants. It increases the safety of commercial recreational activities through better preparedness on the part of tour operators to respond to a medical situation and increased awareness by trip participants of the inherent risks. The bill reduces the likelihood of frivolous suits, which are becoming a significant problem in the industry elsewhere. At AWRTA's annual meeting last year, a representative from AWRTA's group insurance company gave several examples of insurance scams that "tourists" are running in other states. MS. LETHCOE said other states, including Wisconsin and Colorado, have passed similar legislation. It has resulted in significant reductions in insurance premiums. Insurance premiums in Alaska are extremely high for small tour operators. Alaska Wilderness Sailing Safaris pays about $10 a day per person in insurance costs for guests to walk in the Chugach National Forest. This is in addition to insurance for the time they spend sailing. For Alaskan commercial recreation businesses to remain competitive price-wise with other states, they must have comparable insurance rates. MS. LETHCOE added that her organization advocates an amendment to the bill on page 3, Section 3, that the definition of recreational activity be expanded to include hunting, dog sledding and long trips. On behalf of their 230 business members, MS. LETHCOE encouraged the committee to pass this bill out of committee as soon as possible. Number 207 CHAIRMAN HUDSON advised that the staff attorney has informed the committee that they should resist the temptation of expanding the definition. He noted that it may be better to not list anyone so as not to preclude anyone. CHAIRMAN HUDSON added that he had received a suggestion that the committee amend the section to read, "a supervised commercial outdoor activity, undertaken for the purpose of exercise, relaxation or pleasure." Number 237 PETE BUIST, professional member of the Big Game Commercial Services Board, representing himself, testified via teleconference in support of HB 300. He thought the new definition suggested above would include hunting. Mr. Buist added that the hunting/guiding business has had relatively few accidents, but the legislature in 1988 required the hunting guides to carry a relatively high and expensive level of liability insurance. Mr. Buist noted that at that time his insurance went from $800 a season to over $2,500 a season while guiding three or four clients and not using an airplane. Number 290 ERUK WILLIAMSON, a registered guide/outfitter, represents hunting and sport fishing on the board of directors of the Alaska Wilderness Recreation and Tourism Association, addressed the committee via teleconference and strongly urged passage of HB 300. MR. WILLIAMSON believed HB 300 would clarify what the responsibilities are between client and operator and would result in insurance companies lowering liability premiums. MR. WILLIAMSON added that he also supports the deletion of specifically naming the types of recreational activities mentioned by the chairman earlier. Number 311 JACK KREINHEDER, representing himself as a consumer, testified in support of HB 300. He noted the amount of insurance the providers of recreational opportunities have to pay ultimately gets passed on to the consumer. He said HB 300 would be beneficial to both consumer and provider. Number 335 CHAIRMAN HUDSON asked the committee to consider adoption of the three amendments he mentioned earlier: Amendment 1: on page 2, line 13, after "person" insert "participants children;" and on page 2, line 31, insert a new paragraph to read, "Children means persons under 18 years of age" and renumber the paragraphs. No objections were heard, it was so ordered. Amendment 2: on page 2, lines 24 and 25, delete "basic first aid" and insert "CPR." REP. PORTER suggested that the committee add the requirement of CPR to the requirement of basic first aid not in lieu of. Number 370 MS. LETHCOE stated that her group would like to keep the basic first aid requirement, but understood the importance of CPR for certain types of activities. Number 390 MR. HENDERSON stated that "basic first aid" should really be called Red Cross Basic First Aid as that was a title that you could be certified in. He said these programs have a required number of hours of study to receive certification. Number 425 REP. PORTER suggested that the committee add CPR to basic first aid or define it further. If the committee does not define it further, then the issue will get litigated. CHAIRMAN HUDSON suggested a modification to the amendment to just add CPR to the requirement of basic first aid. Number 446 REP. PORTER stated that requiring all employees to have this kind of training might be overkill. Number 453 REP. MULDER believed that the language "first aid training" and "CPR" training would give a general background and a specific background that would cover most circumstances. Number 486 REP. PORTER suggested using "basic first aid" as a minimum, because it is definable as a minimum. He expressed concern that by taking the word "basic" out it might be expected that a more advanced level of training is necessary depending on the circumstances. Number 495 MICHAEL JOHNSON, staff to Rep. Sitton, stated that a working group on HB 300 met and had trouble with this issue as well. He stated that one particular standard you set may not be available or appropriate in all areas. Number 500 REP. PORTER suggested that the committee leave the language at "basic first aid" and work it out in the Judiciary Committee. Number 505 REP. MULDER moved Amendment 2 as amended. No objections were heard, it was so ordered. Number 510 REP. PORTER moved Amendment 3, page 3, lines 2 to 4, and delete all the material in between. No objections were heard, it was so ordered. Number 522 CHAIRMAN HUDSON asked the committee to consider Amendment 4: on page 3, line 6, after the word "pleasure" delete language until line 9. The concern is that by listing the activities as it is in the current bill the legislation might inadvertently exclude something. Number 531 REP. PORTER expressed concern that the language in this section might not include hunting and fishing. Number 564 REP. PORTER expressed concern with the term "supervised" that appears on line 5. He felt that if a client is not under immediate observation by the guides and something happens, it could be litigated. CHAIRMAN HUDSON read Amendment 4 as amended - "recreational activities means a commercial outdoor activity undertaken for the purpose of hunting, sport fishing, exercise, relaxation or pleasure." No objections were heard, it was so ordered. Number 590 REP. MULDER moved HB 300 as amended, with fiscal notes and individual recommendations. No objections were heard, it was so ordered. HB 413 - INCREASE TOBACCO & ALCOHOL TAXES Number 619 LOREN JONES, Division of Alcoholism and Drug Abuse, Department of Health and Social Services, testified in support of HB 413. Mr. Jones stated that HB 413 does raise the alcohol tax significantly. The Division of Alcoholism is interested in HB 413 and its potential effect on the consumption of alcohol. Alaska currently ranks currently ranks fourth in the nation in the consumption of alcohol. MR. JONES noted that the last time the tax was raised was 1983 and consumption has gone down from that year until this year when consumption went back up. Mr. Jones stated that the tax increase of 1983 had a significant influence on the decrease of consumption, and that inflation may be coming into play with the increase we are seeing now. MR. JONES told the committee that the increase tax may have some affect on the consumption of alcohol by youth. TAPE 94-16, SIDE A Number 001 MR. JONES concluded by saying it was the Division of Alcohol's belief that HB 413 will decrease consumption and combat some of the impacts of alcohol abuse. Number 010 CHAIRMAN HUDSON asked Mr. Jones what the Division's annual budget was at this time. Number 013 MR. JONES replied 21 million -- 12% general fund money, 85% mental health trust land money, and the rest from the federal government. Number 015 REP. MULDER asked if there was any statistical information that would verify the supposition that increased price would decrease usage. Number 020 MR. JONES showed the committee a graph that tracked usage from 1981 to present. The graph clearly showed a decrease in consumption after the tax increase in 1983. Number 025 CHAIRMAN HUDSON asked how that corresponded to population growth. Number 031 MR. JONES replied that the population has increased. Number 036 REP. MULDER asked if there were other influences around that time that may have affected the consumption of alcohol. Number 050 MR. JONES replied that in the 1980's tougher legislation on drunk driving was passed; there was increased prevention in the schools; drug free school money came from the federal government; and prevention among youth and education for adults were a priority. Mr. Jones added that the increased tax on alcohol in 1983 was not the only factor in the decrease in consumption, but he believed it was an important one. Number 070 REP. MULDER stated that if the point of the legislation was to raise revenue, this was a good way; but if it was to deter alcohol use, he didn't believe it was effective. REP. MULDER added for the record, if this tax was approved, it would make Alaska the highest rate of alcohol tax in the nation. Number 081 GLEN RAY, Division of Public Health, testified in support of HB 413. Mr. Ray stated that the Division supports HB 413 for the purpose of reducing the burden of disease caused by tobacco use. Casual links exist between tobacco use and many chronic diseases. Mr. Ray stated that tobacco is a drug that when used as directed will kill one out of three long term users, and disable many more. He said tobacco is as addictive as heroin and cocaine. MR. RAY provided the committee with a position paper supporting HB 413 that included statistics regarding smoking and its related costs. MR. RAY sated that affordability of tobacco appears to be the most important determinant of the number of children who will start smoking. An increase in the cigarette excise tax may be the most effective approach to reducing tobacco use. He added that teenagers are much more responsive than adults to increases in the price of cigarettes because they have less disposable income and may be three times more sensitive to price increases than adults' consumption. Also, children and teenagers are usually less addicted than many adult smokers and, therefore, more likely to be able to stop smoking when prices increase. MR. RAY concluded by saying that an increased tobacco tax will immediately show a drop in consumption by youth and decrease in the number of youth who begin to use tobacco products. Number 120 PAUL DICK, Department of Revenue, testified regarding the fiscal note to HB 413. MR. DICK stated that HB 413 would increase excise taxes on liquor, wine and beer by 50% and it would double the current excise tax on tobacco. The additional revenues this bill would generate based on this year's consumption level would be just under $15 million. CHAIRMAN HUDSON adjourned the meeting at 5:00 p.m.