Legislature(2001 - 2002)

04/10/2001 03:34 PM L&C

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                    ALASKA STATE LEGISLATURE                                                                                  
          HOUSE LABOR AND COMMERCE STANDING COMMITTEE                                                                         
                         April 10, 2001                                                                                         
                           3:34 p.m.                                                                                            
MEMBERS PRESENT                                                                                                               
Representative Lisa Murkowski, Chair                                                                                            
Representative Andrew Halcro, Vice Chair                                                                                        
Representative Kevin Meyer                                                                                                      
Representative Pete Kott                                                                                                        
Representative Norman Rokeberg                                                                                                  
Representative Harry Crawford                                                                                                   
Representative Joe Hayes                                                                                                        
MEMBERS ABSENT                                                                                                                
All members present                                                                                                             
COMMITTEE CALENDAR                                                                                                            
HOUSE BILL NO. 214                                                                                                              
"An Act relating to a civil action against a person under 21                                                                    
years of age who enters premises where alcohol is sold or                                                                       
     - MOVED CSHB 214(L&C) OUT OF COMMITTEE                                                                                     
HOUSE BILL NO. 225                                                                                                              
"An Act relating to municipal taxation of alcoholic beverages                                                                   
and increasing the alcoholic beverage tax rates."                                                                               
     - HEARD AND HELD                                                                                                           
PREVIOUS ACTION                                                                                                               
BILL: HB 214                                                                                                                  
SHORT TITLE:CIVIL ACTION AGAINST MINORS IN BARS                                                                                 
SPONSOR(S): REPRESENTATIVE(S)MEYER                                                                                              
Jrn-Date   Jrn-Page                     Action                                                                                  
03/26/01     0729       (H)        READ THE FIRST TIME -                                                                        
03/26/01     0729       (H)        L&C, JUD                                                                                     
04/03/01     0830       (H)        COSPONSOR(S): DYSON                                                                          
04/10/01                (H)        L&C AT 3:00 PM CAPITOL 120                                                                   
BILL: HB 225                                                                                                                  
SHORT TITLE:ALCOHOLIC BEVERAGE TAX                                                                                              
SPONSOR(S): REPRESENTATIVE(S)MURKOWSKI                                                                                          
Jrn-Date   Jrn-Page                     Action                                                                                  
03/30/01     0789       (H)        READ THE FIRST TIME -                                                                        
03/30/01     0789       (H)        L&C, FIN                                                                                     
03/30/01     0789       (H)        REFERRED TO LABOR & COMMERCE                                                                 
04/03/01     0830       (H)        COSPONSOR(S): HUDSON                                                                         
04/09/01                (H)        L&C AT 3:15 PM CAPITOL 17                                                                    
04/09/01                (H)        Heard & Held                                                                                 
04/10/01                (H)        L&C AT 3:00 PM CAPITOL 120                                                                   
WITNESS REGISTER                                                                                                              
MIKE GORDON, Owner                                                                                                              
Chilkoot Charlie's                                                                                                              
2207 Sorbus Way                                                                                                                 
Anchorage, Alaska  99508                                                                                                        
POSITION STATEMENT:  Testified on HB 214.                                                                                       
O.C. MADDEN, Personnel Loss & Prevention Manager                                                                                
Brown Jug, Inc.                                                                                                                 
4140 Old Steese Highway                                                                                                         
Anchorage, Alaska  99503                                                                                                        
POSITION STATEMENT:  Testified on HB 214.                                                                                       
CINDY CASHEN                                                                                                                    
Mothers Against Drunk Drivers                                                                                                   
211 4th Street                                                                                                                  
Juneau, Alaska  99801                                                                                                           
POSITION STATEMENT:  Testified in support of HB 214.                                                                            
KACE McDOWELL, Executive Director                                                                                               
Anchorage Cabaret Hotel Restaurant & Retailer Association                                                                       
(No address provided)                                                                                                           
POSITION STATEMENT:  Testified to CHARR's support of HB 214;                                                                    
testified on HB 225.                                                                                                            
JERI LANIER                                                                                                                     
Family Centered Services of Alaska                                                                                              
620 5th Avenue                                                                                                                  
Fairbanks, Alaska  99701                                                                                                        
POSITION STATEMENT:  Testified in support of HB 225.                                                                            
ANDY HARRINGTON                                                                                                                 
Arctic Alliance                                                                                                                 
4624 Stanford Drive                                                                                                             
Fairbanks, Alaska  99709                                                                                                        
POSITION STATEMENT:  Testified in support of HB 225.                                                                            
GLEN BRADY, President                                                                                                           
Silver Gulch Brewing and Bottling Company                                                                                       
PO Box 82125                                                                                                                    
Fairbanks, Alaska  99708                                                                                                        
POSITION STATEMENT:  Testified in opposition to HB 225.                                                                         
NICHOLAS STONE, Director                                                                                                        
"Inroads to Healing" Program                                                                                                    
Fairbanks Native Association                                                                                                    
5240 Beechcraft Avenue                                                                                                          
Fairbanks, Alaska  99701                                                                                                        
POSITION STATEMENT:  Testified in support of HB 225.                                                                            
ANNETTE FREIBURGER, Executive Director                                                                                          
Fairbanks Native Association                                                                                                    
616 Slater Drive                                                                                                                
Fairbanks, Alaska  99701                                                                                                        
POSITION STATEMENT:  Testified in support of HB 225.                                                                            
WAYNE WOODGATE, Bartender                                                                                                       
PO Box 82974                                                                                                                    
Fairbanks, Alaska  99708                                                                                                        
POSITION STATEMENT:  Testified in opposition to HB 225.                                                                         
JIM ELKINS, Owner                                                                                                               
Elkins and Elkins                                                                                                               
177 Cranberry Road                                                                                                              
Ketchikan, Alaska  99901                                                                                                        
POSITION STATEMENT:  Testified in opposition to HB 225.                                                                         
JAMES ELKINS                                                                                                                    
301 Bawden                                                                                                                      
Ketchikan, Alaska  99901                                                                                                        
POSITION STATEMENT:  Testified on behalf of himself in                                                                          
opposition to HB 225.                                                                                                           
DONNA LUTHER                                                                                                                    
Ketchikan Cabaret Hotel Restaurant & Retailer Association                                                                       
917 Freeman Street                                                                                                              
Ketchikan, Alaska  99901                                                                                                        
POSITION STATEMENT:  Testified on HB 225.                                                                                       
GEORGE TIPTON                                                                                                                   
Ketchikan Entertainment Center                                                                                                  
PO Box 5762                                                                                                                     
Ketchikan, Alaska  99901                                                                                                        
POSITION STATEMENT:  Testified in opposition to HB 225.                                                                         
FRANCINE WHEELER                                                                                                                
125 Main Street                                                                                                                 
Ketchikan, Alaska  99901                                                                                                        
POSITION STATEMENT:  Testified as a citizen, as a daughter of an                                                                
alcoholic, and on behalf of Arctic Bar on HB 225.                                                                               
ROSALIE NADEAU                                                                                                                  
Akeela, Inc.                                                                                                                    
4111 Minnesota Drive                                                                                                            
Anchorage, Alaska  99518                                                                                                        
POSITION STATEMENT:  Testified in support of HB 225.                                                                            
ALAN BAILEY                                                                                                                     
Coalition of Alcohol Abuse and Public Safety;                                                                                   
Anchorage Chapter                                                                                                               
Mothers Against Drunk Driving                                                                                                   
310 K Street                                                                                                                    
Anchorage, Alaska  99503                                                                                                        
POSITION STATEMENT:  Testified in support of HB 225.                                                                            
TOM ANDERSON, Acting Executive Director                                                                                         
Anchorage Cabaret Hotel Restaurant & Retailer Association                                                                       
8215 East 2nd                                                                                                                   
Anchorage, Alaska  99501                                                                                                        
POSITION STATEMENT:  Testified on HB 225.                                                                                       
JEANETTE JOHNSON, Owner                                                                                                         
Crazy Horse Bar                                                                                                                 
741 West 76TH                                                                                                                   
Anchorage, Alaska  99518                                                                                                        
POSITION STATEMENT:  Testified on HB 225.                                                                                       
JOHN PATTEE                                                                                                                     
721 West 4th Avenue                                                                                                             
Anchorage, Alaska  99501                                                                                                        
POSITION STATEMENT:  Testified in opposition to HB 225.                                                                         
DON GRASSE, General Manager                                                                                                     
K & L Distributors                                                                                                              
6307 Arctic Spur Road                                                                                                           
Anchorage, Alaska  99516                                                                                                        
POSITION STATEMENT:  Testified in opposition to HB 225.                                                                         
CAROL JACKSON, Credit Manager                                                                                                   
K & L Distributors                                                                                                              
1700 Woo Boulevard                                                                                                              
Anchorage, Alaska  99515                                                                                                        
POSITION STATEMENT:  Testified on HB 225.                                                                                       
CHRIS ANDERSON, Owner                                                                                                           
Glacier Brewhouse and Restorante Orso                                                                                           
737 West 5th Avenue                                                                                                             
Anchorage, Alaska  99501                                                                                                        
POSITION STATEMENT:  Testified on HB 225.                                                                                       
ANNE SCHULTZ, Research Analyst                                                                                                  
Advisory Board on Alcoholism & Drug Abuse                                                                                       
Department of Health & Social Services                                                                                          
PO Box 110608                                                                                                                   
Juneau, Alaska  99801                                                                                                           
POSITION  STATEMENT:   Explained the  $250 million  figure in  HB
ACTION NARRATIVE                                                                                                              
TAPE 01-54, SIDE A                                                                                                              
Number 0001                                                                                                                     
CHAIR  LISA  MURKOWSKI  called   the  House  Labor  and  Commerce                                                               
Standing  Committee  meeting  to  order at  3:34  p.m.    Members                                                               
present  at the  call  to order  were Representatives  Murkowski,                                                               
Halcro, and  Meyer.   Representatives Rokeberg,  Crawford, Hayes,                                                               
and Kott [who joined the  evening portion of the meeting] arrived                                                               
as the meeting was in progress.                                                                                                 
HB 214-CIVIL ACTION AGAINST MINORS IN BARS                                                                                    
Number 0022                                                                                                                     
CHAIR  MURKOWSKI   announced  that  the  committee   first  would                                                               
consider HOUSE BILL  NO. 214, "An Act relating to  a civil action                                                               
against a person under 21 years  of age who enters premises where                                                               
alcohol is sold or consumed."                                                                                                   
REPRESENTATIVE MEYER,  speaking as  the sponsor  of HB  214, said                                                               
this bill allows bar and liquor  store owners to be proactive and                                                               
to  prosecute  underage kids  who  try  to  get into  an  alcohol                                                               
establishment by using  fake identification (ID).   Many bars and                                                               
package stores have  used this program effectively,  and the word                                                               
is getting out to the kids.                                                                                                     
Number 0155                                                                                                                     
REPRESENTATIVE  MEYER  relayed  that   this  program  allows  the                                                               
alcohol licensee to  offer cash incentives to  employees who turn                                                               
in those trying to  use a fake ID.  Usually  [owners] are able to                                                               
take the kids  to civil court and  be awarded up to  $1,000.  The                                                               
programs at Chilkoot Charlie's and  the Brown Jug split the money                                                               
with the  employee, thus giving  an incentive for an  employee to                                                               
look for fake IDs.                                                                                                              
REPRESENTATIVE  MEYER explained  that this  program is  optional.                                                               
The only requirement  is that [the owner] put a  sign on the door                                                               
that says a person  must be 21 years of age to  enter.  Many bars                                                               
in Anchorage have  been using the program for  several years; the                                                               
program was  started by ordinance,  at the request of  the liquor                                                               
industry, because kids  were being caught with fake  IDs and were                                                               
not being  prosecuted.   The alcohol industry  wanted to  be more                                                               
proactive keeping underage kids out  of their establishments.  He                                                               
said this would hopefully deter underage drinking.                                                                              
REPRESENTATIVE MEYER pointed  out in the committee  file a letter                                                               
from the  Brown Jug,  which uses  the program,  and one  from the                                                               
Anchorage  Restaurant and  Beverage Association  (ARBA); he  said                                                               
ARBA quoted  Mike Gordon  from Chilkoot  Charlie's, who  has also                                                               
used the  program effectively.  There  is no fiscal note  for the                                                               
bill, he informed members.                                                                                                      
CHAIR  MURKOWSKI surmised  that  if [an  owner]  brings a  small-                                                               
claims action against an individual,  it would go quickly through                                                               
the system.  [There was  affirmative confirmation on the record.]                                                               
She read from  the bill that the court shall  award civil damages                                                               
in the amount  of $1,000 and reasonable attorney's  fees.  Noting                                                               
that it  doesn't provide  for costs, however,  she asked  if this                                                               
was an  omission, because typically  one would recover  [from the                                                               
defendant]  the  costs of  the  filing  fee,  which is  $35,  and                                                               
[service  of process].   She  asked  if the  sponsor intended  to                                                               
cover it [in the bill].                                                                                                         
Number 0399                                                                                                                     
REPRESENTATIVE MEYER  deferred the  question to [O.C.  Madden] at                                                               
the Brown Jug.   He also offered his belief that  the half of the                                                               
$1,000 which the house  keeps is used to pay for  the cost of the                                                               
[legal] action.                                                                                                                 
CHAIR MURKOWSKI  asked whether  an underage  person who  enters a                                                               
liquor establishment  to use  the phone because  of a  flat tire,                                                               
for example, would be prosecuted.                                                                                               
Number 0470                                                                                                                     
REPRESENTATIVE MEYER answered that  [the person wouldn't] because                                                               
the  person isn't  trying to  get into  the establishment  with a                                                               
fake ID  and under a  false pretense.   He said he  thought there                                                               
was some flexibility there with the various establishments.                                                                     
Number 0526                                                                                                                     
MIKE   GORDON,   Owner,   Chilkoot   Charlie's,   testified   via                                                               
teleconference.   He  explained how  he uses  the program  at his                                                               
establishment  by enforcing  the  law  as it  is  written in  the                                                               
Municipality [of Anchorage].   He noted that  funds received from                                                               
this  are distributed  as  follows:   a  third  is  given to  the                                                               
security  people  who  make  the  arrest,  a  third  goes  toward                                                               
collection, and a third goes to the club.                                                                                       
MR. GORDON explained  that he likes the law because  it creates a                                                               
consequence for  the minor; in the  past, there was none.   These                                                               
actions jeopardize  people's jobs and  businesses, and can  go on                                                               
for years  without consequences.   Today, the parent  is notified                                                               
that $1,000 is  owed.  Mr. Gordon  said he would like  to see the                                                               
program go statewide because he believes  it is doing the job and                                                               
that the word gets around.                                                                                                      
Number 0684                                                                                                                     
REPRESENTATIVE MEYER remarked that  one reason the industry asked                                                               
for this ordinance in Anchorage  was that when [a liquor] license                                                               
comes   up   for  renewal   before   the   governing  body,   the                                                               
establishment  gets  "dinged"  if  an underage  person  has  been                                                               
caught.  This  was an effort to  get the word out to  kids to not                                                               
even try to come into other alcohol places if not of age.                                                                       
MR.  GORDON responded  that [Chilkoot  Charlie's] not  only wants                                                               
kids  to   know  that  they   aren't  likely  to  get   into  the                                                               
establishment -  no matter what type  of false ID is  presented -                                                               
but also want them to know  that there are consequences, and that                                                               
[Chilkoot Charlie's]  will pursue  it to the  full extent  of the                                                               
Number 0716                                                                                                                     
MR. GORDON, responding to the  question of the number of underage                                                               
kids prosecuted  by his establishments,  said he didn't  have the                                                               
REPRESENTATIVE MEYER remarked that he  had spoken to Doug Griffin                                                               
at  the  Alcoholic Beverage  Control  (ABC)  Board, who  said  95                                                               
percent  of fake  IDs  turned over  to the  ABC  Board come  from                                                               
either Chilkoot Charlie's or the Brown Jug.                                                                                     
MR.  GORDON  said [Chilkoot  Charlie's]  prosecutes  all of  them                                                               
unless  there are  extenuating circumstances;  he estimated  that                                                               
his business [does a citizen's arrest]  four to six times a week.                                                               
He  said the  program gives  [staff]  an incentive  for being  on                                                               
their toes.   In response to a question about  whom the action is                                                               
taken against when a kid is under  18 years of age, he said it is                                                               
filed against  the [minor].   As for  whether the  permanent fund                                                               
[dividend]  is garnished  if  the  minor isn't  able  to pay,  he                                                               
answered affirmatively.                                                                                                         
MR. GORDON,  in response to  a question by Chair  Murkowski, said                                                               
if an underage person comes in  because of a flat tire, [Chilkoot                                                               
Charlie's] has  doormen in  the entryway at  all times  who would                                                               
accommodate that  person; the  minor wouldn't  need to  come into                                                               
the club.   He then emphasized that  [Chilkoot Charlie's] doesn't                                                               
try  to entrap  anyone; there  are big  signs posted,  and minors                                                               
know what they are doing when coming in.                                                                                        
CHAIR MURKOWSKI  brought attention to  language in the  bill that                                                               
refers  to  "if"  the  person  enters the  premises.    She  said                                                               
regardless of  whether the  excuse is  a blown  tire, it  is [the                                                               
establishment's] obligation  to ensure that minors  aren't on the                                                               
Number 0955                                                                                                                     
MR. GORDON agreed  and added that 99 percent of  these people are                                                               
caught at  the door.   Sometimes it is  hard to tell  whether [an                                                               
ID]  is  fake;   if  there  is  question   about  age,  [Chilkoot                                                               
Charlie's]  has the  person fill  out an  affidavit and  sign it.                                                               
When a kid is caught and there is  a photo of him or her - a fake                                                               
ID or  photo of  the ID  that was presented  - and  an affidavit,                                                               
[the minor] doesn't have much legal standing at this point.                                                                     
REPRESENTATIVE ROKEBERG asked if fake  IDs are turned over to the                                                               
ABC Board,  and whether  there is follow-up  about the  status of                                                               
criminal charges.                                                                                                               
MR.  GORDON deferred  the  question  to the  director.   He  said                                                               
[Chilkoot  Charlie's]  has  handed  them  over  on  a  number  of                                                               
occasions;  however, he  couldn't say  what the  board does  with                                                               
them.  In response to a  question, he clarified that when a minor                                                               
is on the  premise, a citizen's arrest is made,  a police officer                                                               
is called,  and the  minor is  arrested; then  a civil  action is                                                               
filed against the minor.                                                                                                        
Number 1070                                                                                                                   
REPRESENTATIVE ROKEBERG referred to  language in the bill stating                                                               
"the damages in the amount of  $1,000" and asked Mr. Gordon if he                                                               
thought this was an appropriate amount.                                                                                         
MR. GORDON  said in his experience,  $1,000 is adequate and  is a                                                               
lot of money  to anybody under 21  years of age.   If raised more                                                               
than that, it would be too punitive.                                                                                            
REPRESENTATIVE ROKEBERG  remarked that [an establishment]  or its                                                               
employees can be  fined up to $50,000 for serving  someone who is                                                               
MR. GORDON said  that is a good point, but  he didn't think there                                                               
was any sense in making it so high [for minors].                                                                                
Number 1183                                                                                                                     
CHAIR MURKOWSKI  asked Mr. Gordon whether  word is out that  if a                                                               
minor goes  to [Chilkoot  Charlie's], the  minor would  be caught                                                               
and would  have to  pay a $1,000  fine.  She  asked if  there has                                                               
been a decrease in attempts by minors to get in.                                                                                
MR.  GORDON responded  that  he  is sure  word  is out;  however,                                                               
[minors]  are still  trying to  get  in.   His establishment  has                                                               
actually caught a couple of people more than once.                                                                              
CHAIR MURKOWSKI  suggested that if it  were enforced consistently                                                               
in all establishments, minors would really pay attention.                                                                       
MR. GORDON replied  that if more people pursued it  to the degree                                                               
that  [Chilkoot Charlie's]  and the  Brown  Jug do,  it would  be                                                               
helpful in getting the word out.   He suggested that these minors                                                               
look for places that are easier to enter.                                                                                       
CHAIR MURKOWSKI  asked whether  Mr. Gordon  has someone  on staff                                                               
who actually deals with these  small claims, follow-throughs, and                                                               
MR. GORDON  answered that a  local attorney  did for a  couple of                                                               
years.   That attorney  did wonderfully the  first year,  but did                                                               
nothing the  next year; his  partner's wife ultimately  took that                                                               
over and continues to do so now.                                                                                                
Number 1340                                                                                                                     
CHAIR  MURKOWSKI  remarked  that  she would  like  to  think  the                                                               
legislature makes it as easy  as possible to pursue the complaint                                                               
through to  judgment so  [the establishment]  can execute  on the                                                               
permanent  dividend fund.    She didn't  want  businesses to  not                                                               
pursue this as  an option due to the expense  associated with the                                                               
judgment.   Therefore,  she expressed  the  need for  this to  be                                                               
something that a nonattorney could perform.                                                                                     
MR. GORDON  affirmed that  this is  something that  a nonattorney                                                               
could  perform.   He added  that it  is working  quite well.   He                                                               
offered  to keep  the  committee informed  of  his progress  with                                                               
CHAIR MURKOWSKI mentioned that she  was interested in whether the                                                               
Brown Jug pursues  the collection costs as well,  because that is                                                               
not included  in the  language of  the bill.   However,  she felt                                                               
that  the  establishment  should  be entitled  to  civil  damages                                                               
amounts  as well  as the  recovery  of costs  and any  reasonable                                                               
attorney's fees.                                                                                                                
MR. GORDON agreed and pointed  out that currently he is absorbing                                                               
that cost.                                                                                                                      
REPRESENTATIVE  HALCRO  asked  whether   Mr.  Gordon  shares  the                                                               
confiscated  IDs  or  other  information  that  he  collects  and                                                               
whether  there   any  correspondence   between  ARBA   and  CHARR                                                               
regarding keeping  a file  on these minors  who attempt  to enter                                                               
MR. GORDON  replied no and remarked  that administering something                                                               
like that would be quite a  job.  The only cooperative measure he                                                               
is aware of is in regard to  "bad checks."  Mr. Gordon added that                                                               
he wasn't  sure how  practical setting  up such  a correspondence                                                               
would be.                                                                                                                       
Number 1515                                                                                                                     
O.C.  MADDEN, Personnel  Loss &  Prevention  Manager, Brown  Jug,                                                               
Inc., testified  via teleconference.   He informed  the committee                                                               
that [the Brown  Jug] was part of the group  that helped get this                                                               
passed in  1998.   He noted  the Brown  Jug's success  with this:                                                               
since  July 1998  the Brown  Jug has  confiscated almost  500 IDs                                                               
from minors.   He  echoed Mr. Gordon's  testimony that  the great                                                               
thing about this  is there is now a consequence  for this action.                                                               
He likened the  process to zero-cost law  enforcement because the                                                               
state and  the municipality don't  have to spend  any prosecution                                                               
dollars.   The only person  who bears  any cost is  the offender.                                                               
Furthermore, one  great result of this  law is that kids  have to                                                               
tell their parents.                                                                                                             
MR.  MADDEN  explained that  the  clerk  would  seize an  ID  and                                                               
complete  a   detailed  form  describing  the   event,  including                                                               
witnesses.   The original ID and  detailed form are given  to the                                                               
ABC  Board, and  Mr. Madden  retains a  copy.   Then a  certified                                                               
letter is  sent to the  last known address  of the person,  if it                                                               
can be  determined who  the individual is.   Often,  these minors                                                               
are using fake names.  If  the individual is identified, then the                                                               
individual receives  a certified letter demanding  payment within                                                               
15 days.   After the  15 days  has passed, the  establishment can                                                               
file   a   small-claims  action.      In   further  response   to                                                               
Representative  Murkowski, Mr.  Madden  said the  Brown Jug  does                                                               
this in-house.                                                                                                                  
CHAIR MURKOWSKI asked  whether Mr. Madden is able  to recover the                                                               
MR.  MADDEN  recalled  that the  ordinance  in  Anchorage  allows                                                               
establishments  to recover  reasonable  attorney's  fees and  any                                                               
court  costs, in  addition  to  the $1,000.    In  response to  a                                                               
question by Representative Meyer, he  agreed that [the Brown Jug]                                                               
reviews each  case and does not  always go for the  $1,000.  [The                                                               
Brown Jug] seizes IDs from all  minors, and if the belief is that                                                               
the  minor  wasn't there  to  purchase  alcohol, then  a  reduced                                                               
amount is sought.                                                                                                               
Number 1768                                                                                                                     
CINDY  CASHEN, Mothers  Against Drunk  Drivers (MADD),  noted her                                                               
support of HB 214.                                                                                                              
KACE McDOWELL,  Cabaret Hotel  Restaurant &  Retailer Association                                                               
(CHARR), noted CHARR's support of HB 214.                                                                                       
REPRESENTATIVE CRAWFORD  asked Mr.  Madden whether, if  [a minor]                                                               
comes into his store to buy a Coke, that individual is carded.                                                                  
MR. MADDEN replied  yes.  He pointed out that  an individual must                                                               
be 21 years of age to enter the premises [of the Brown Jug].                                                                    
REPRESENTATIVE  CRAWFORD  asked  what  would occur  if  a  person                                                               
entered the premises in order to use the telephone.                                                                             
MR. MADDEN noted  that there have been cases in  which [the Brown                                                               
Jug] has not  pursued action.  If it is  felt that the individual                                                               
is  not attempting  to purchase  alcohol, then  a reduced  amount                                                               
would be sought to cover costs.   Mr. Madden specified that it is                                                               
a class A  misdemeanor for a minor to enter  the premises without                                                               
a parent, adult, spouse, or court-appointed legal guardian.                                                                     
Number 1829                                                                                                                     
REPRESENTATIVE   ROKEBERG   moved   that  the   committee   adopt                                                               
conceptual Amendment 1,  to add language on page 1,  line 9, that                                                               
would  allow the  recovery of  costs associated  with filing  the                                                               
collection.   There  being no  objection, conceptual  Amendment 1                                                               
was adopted.                                                                                                                    
[A motion to  move the amended bill from committee  was made, but                                                               
was withdrawn in order to take up another amendment.]                                                                           
Number 1937                                                                                                                     
REPRESENTATIVE   CRAWFORD   moved   that  the   committee   adopt                                                               
conceptual Amendment 2,  to insert language that in  order for [a                                                               
civil action to  be pursued], there must have been  an attempt to                                                               
purchase alcohol.                                                                                                               
REPRESENTATIVE ROKEBERG objected.                                                                                               
REPRESENTATIVE  CRAWFORD related  his belief  that [an  underage]                                                               
person who enters the premises  to use the telephone shouldn't be                                                               
charged.  He indicated there could be an emergency.                                                                             
REPRESENTATIVE ROKEBERG  pointed out  that strict  limitations in                                                               
Alaska's liquor  laws require the establishment  to delineate the                                                               
floor plan  of the licensed  premise.   Representative Crawford's                                                               
amendment would destroy  Alaska's liquor law system.   He related                                                               
his  belief  that good  judgment  should  prevail [in  situations                                                               
described by Representative Crawford].                                                                                          
CHAIR MURKOWSKI emphasized  that this is an  option available for                                                               
the licensee to pursue this action.                                                                                             
REPRESENTATIVE HALCRO  mentioned that this  is why some  of these                                                               
stores have large  signs posted that say people under  21 are not                                                               
permitted  entrance without  an adult  or a  legal guardian.   He                                                               
directed attention  to page 1, line  5, of the bill,  which says,                                                               
"A licensee may bring a civil action".                                                                                          
REPRESENTATIVE CRAWFORD  withdrew his motion to  adopt conceptual                                                               
Amendment 2.                                                                                                                    
Number 2064                                                                                                                     
REPRESENTATIVE ROKEBERG moved  to report HB 214,  as amended, out                                                               
of   committee   with    individual   recommendations   and   the                                                               
accompanying zero  fiscal note.   There being no  objection, CSHB
214(L&C) was reported from the  House Labor and Commerce Standing                                                               
Number 2080                                                                                                                     
CHAIR MURKOWSKI announced  that the meeting would  be recessed to                                                               
a call of the chair.  [There  is no recording on Tape 01-54, Side                                                               
B because a new tape was inserted.]                                                                                             
TAPE 01-55, SIDE A                                                                                                              
CHAIR MURKOWSKI reconvened the House  Labor and Commerce Standing                                                               
Committee meeting at 5:42 p.m.   Members present at the call back                                                               
to order were Representatives  Murkowski, Crawford, Rokeberg, and                                                               
Halcro.  Representatives Hayes and  Kott joined the meeting as it                                                               
was in progress.                                                                                                                
HB 225-ALCOHOLIC BEVERAGE TAX                                                                                                 
CHAIR MURKOWSKI announced that the  final order of business would                                                               
be HOUSE BILL NO. 225, "An  Act relating to municipal taxation of                                                               
alcoholic  beverages and  increasing the  alcoholic beverage  tax                                                               
rates."   [Before  the  committee,  adopted as  a  work draft  on                                                               
4/9/01, was version 22-LS0806\L, Cook, 4/9/01.]                                                                                 
Number 0073                                                                                                                     
JERI LANIER, Family Centered Services of Alaska (FCSA),                                                                         
testified via teleconference.  She stated:                                                                                      
     I am very  much for the alcohol tax in  the interest of                                                                    
     the fact that  [there are] a rising  number of agencies                                                                    
     and  departments competing  for  the  very few  dollars                                                                    
     that there  are to spend.   I think ... the  best thing                                                                    
     to  do is  to  add the  tax so  that  the funding  gets                                                                    
     spread out just a little bit further.                                                                                      
ANDY HARRINGTON, Arctic Alliance, testified via teleconference.                                                                 
He addressed some points discussed at the previous hearing:                                                                     
     Point one:   moderate  drinkers shouldn't have  to bear                                                                    
     this burden.   My response is:  no  Alaskan consumer is                                                                    
     going to have  to bear this burden.  We  each are going                                                                    
     to choose how much of it  to bear, whether it's zero or                                                                    
     paying  a  small  amount  or  paying  a  large  amount.                                                                    
     That's one of the bill's strong points, in my view.                                                                        
     Point two:   businesses may  have to lay  off employees                                                                    
     or close  down.  Well,  this is a legitimate  point and                                                                    
     it  shouldn't   be  ignored,  but  at   the  same  time                                                                    
     everybody seems to  agree that there is  just too large                                                                    
     a volume  of alcohol  flowing through our  families and                                                                    
     our communities.  Decreasing  that volume will probably                                                                    
     mean that each seller will  be selling less and/or some                                                                    
     businesses may close  down.  I hope they  can put their                                                                    
     [business] skills  into branching  out or  figuring out                                                                    
     how to  maintain a reasonable  profit level at  a lower                                                                    
     volume.    And  I  wish  more power  to  them  in  that                                                                    
     endeavor,  but we  just  need to  have  less volume  of                                                                    
     Point  three:    it's  unjust   to  leave  alcohol  tax                                                                    
     decisions up to municipalities.   I don't think that is                                                                    
     a  valid   point.    Local  governments   are  no  less                                                                    
     represented  than  state  governments.   The  statement                                                                    
     that the  Fairbanks North Star  Borough does  not spend                                                                    
     money  cleaning  up  alcohol problems  is  just  simply                                                                    
     wrong, as any  member of the borough  Health and Social                                                                    
     Services Commission could attest.                                                                                          
     Point  four:    this  bill  won't  solve  the  problem.                                                                    
     Granted, it  won't solve the  whole problem  by itself,                                                                    
     but its  supporters aren't claiming  that.  We  do need                                                                    
     other things.   We  need the  lower DWI  [driving while                                                                    
     intoxicated] blood  alcohol limit; we need  better laws                                                                    
     on minor consumption; we  need more treatment programs.                                                                    
     But  those  don't diminish  the  needs  for this  bill,                                                                    
     which is as important a component as those others. ...                                                                     
     Point  five  is [it  will]  lead  to more  bootlegging.                                                                    
     Perhaps, but we  have laws that deal with  that, and if                                                                    
     they  aren't being  enforced, that's  a dollars  issue,                                                                    
     and  this tax  will  generate more  revenue to  enhance                                                                    
     that effort.                                                                                                               
     Point six:   we can't be sure that all  this money will                                                                    
     be spent on alcohol problems.   That's true because our                                                                    
     constitution  prohibits dedicated  funds.   We have  to                                                                    
     turn  to our  legislative  judgment to  decide for  any                                                                    
     spending  priorities from  year to  year, as  [for] all                                                                    
     Alaska since  its statehood.   That's  not a  reason to                                                                    
     not enact this bill.                                                                                                       
     [Point]  seven  is the  300  percent  increase.   Well,                                                                    
     percentage is dependent  on where you start  as well as                                                                    
     where you finish.   If you need this  increase to bring                                                                    
     us up  from a very low  starting point to a  merely low                                                                    
     end  point,  we shouldn't  be  afraid  of it  for  that                                                                    
Number 0132                                                                                                                     
GLEN  BRADY,   President,  Silver  Gulch  Brewing   and  Bottling                                                               
Company, testified  via teleconference  in opposition to  HB 225.                                                               
He informed members  that he is on the board  of directors of the                                                               
state CHARR  (Cabaret Hotel  Restaurant &  Retailer Association).                                                               
He  also  has   a  bachelor  of  science   degree  in  mechanical                                                               
engineering and understands the use  and abuse of statistics.  He                                                               
     With  that   in  mind,  I'd   like  to  go   over  some                                                                    
     interesting  studies  I've  come  across  that  may  be                                                                    
     enlightening  to the  committee.   First, according  to                                                                    
     the  State of  Alaska  Advisory Board  on Alcoholism  &                                                                    
     Drug  Abuse,  there are  strategy  points  laid out  to                                                                    
     reduce the  negative consequences of alcohol  and other                                                                    
     substance abuse.  Now, bear  that in mind; I'm going to                                                                    
     go through some facts. ...                                                                                                 
     One, according to the Office  for National Drug Control                                                                    
     Policy, the total expenditures on  illicit drugs in the                                                                    
     United  States  were  $65.8 billion  dollars  in  1998.                                                                    
     Two, during  the same year,  the total  national output                                                                    
     of  money  on  alcoholic   beverages  was  $84  billion                                                                    
     dollars. ...                                                                                                               
     Three,  according  to  numerous  studies  done  on  the                                                                    
     effects of  moderate consumption  - that's one  drink a                                                                    
     day for  women, two drinks a  day for men -  there is a                                                                    
     clear benefit in terms of  the reduction in the risk of                                                                    
     heart disease.   There are also  studies that indicate,                                                                    
     however, that  moderate alcohol consumption  [in women]                                                                    
     increases the risk of breast cancer.                                                                                       
     Now,  here is  where  I am  going to  step  in with  an                                                                    
     opinion.    If  we  set aside  statistics  and  try  to                                                                    
     examine some facts, we cannot  safely say that moderate                                                                    
     alcohol consumption is evil, nor  can we say that it is                                                                    
     a magic bullet.   We can, however, say that  there is a                                                                    
     growing   body   of   research  that   indicates   that                                                                    
     responsible use can have positive effects. ...                                                                             
     Next, there  are no tax  revenues collected  on illicit                                                                    
     drugs; this is a fact.   According to the data from the                                                                    
     Substance    Abuse   and    Mental   Health    Services                                                                    
     administration, there were  1.5 million people admitted                                                                    
     into treatment  programs in  the country  in 1998.   Of                                                                    
     those,  26.1  percent  were  alcohol   only.    Of  the                                                                    
     addition 20.3 percent, they  were classified as alcohol                                                                    
     with secondary  drug abuse.   What  this means  is that                                                                    
     about half  of the  people admitted into  treatment had                                                                    
     had problems with alcohol.                                                                                                 
     Now, while  I don't know  exactly how much  the alcohol                                                                    
     history  contributes to  the economy  with jobs  ... in                                                                    
     production, distribution,  and service  industries, ...                                                                    
     I  do  know  that  the  illicit  drug  trade  does  not                                                                    
     contribute to  the economy  in any  of these  ways. ...                                                                    
     All these national  numbers don't necessarily translate                                                                    
     to a  state level;  however, we  could safely  say that                                                                    
     they probably have  some bearing on what's  going on in                                                                    
     I'd urge  you to not  support this bill in  its current                                                                    
     wording,  because  this  will  affect  me  as  a  small                                                                    
     producer by virtue of our already high price point on                                                                      
     the shelves.                                                                                                               
CHAIR  MURKOWSKI, sponsor  of HB  225, asked  Mr. Brady  how much                                                               
Silver Gulch produces on an annual basis.                                                                                       
MR.  BRADY responded  that last  year  he produced  approximately                                                               
under 1,700 barrels, which is about 60,000 gallons.                                                                             
Number 0198                                                                                                                     
REPRESENTATIVE HALCRO  stated that he appreciates  the statistics                                                               
that Mr.  Brady put  forward, but thinks  the one  statistic that                                                               
"trumps"  all is  the amount  of money  [the legislature]  has to                                                               
appropriate every year  from the state budget to  cover the costs                                                               
associated with alcohol.                                                                                                        
MR. BRADY  said that's a  good point,  and explained that  he had                                                               
brought  up the  national  statistics because  they are  probably                                                               
somewhat close to  what is occurring in Alaska.   Basically, they                                                               
show that well over half of the  cost is a result of illegal drug                                                               
abuse, not just alcohol.                                                                                                        
REPRESENTATIVE  HAYES  asked  Mr.  Brady what  he  thinks  is  an                                                               
appropriate alcohol tax.                                                                                                        
MR.  BRADY  answered  that  as  a  CHARR  board  member,  he  has                                                               
discussed  this a  lot;  in principle,  he is  not  adverse to  a                                                               
reasonable tax increase.  However,  any tax increase borne by the                                                               
industry should go  toward addressing the problems.   He remarked                                                               
that  [CHARR] looked  at wellness  courts and  educating children                                                               
about the  possible ill effects of  alcohol and drug abuse.   The                                                               
fiscal note on those, he said,  is $1.9 million plus another half                                                               
a million [dollars]  for elementary students.  He  said he thinks                                                               
that would seem reasonable.                                                                                                     
Number 0242                                                                                                                     
NICHOLAS   STONE,  Director,   "Inroads   to  Healing"   Program,                                                               
Fairbanks  Native Association,  testified  via teleconference  in                                                               
support  of HB  225.   He  noted that  the  "Inroads to  Healing"                                                               
Program  is  an  outpatient  treatment service  for  people  with                                                               
addiction issues.  He said:                                                                                                     
     I've been  in this field  for over ten years,  all here                                                                    
     in Fairbanks. ...  I'm in favor of this  bill, and what                                                                    
     I like  most about  it is  this:   One, it  doesn't put                                                                    
     people in jail  for using alcohol; and  two, it doesn't                                                                    
     prevent nor  stop anyone from  using alcohol.   What it                                                                    
     does do  is tax those  who use,  and those who  use the                                                                    
     most get taxed the most.                                                                                                   
     Furthermore,  given the  nature of  my business,  I see                                                                    
     those who  use the most,  and those tax dollars  have a                                                                    
     great chance of better serving them.   As we know - and                                                                    
     it's well documented  - those who use the  most cost us                                                                    
     the most, not just in  treatment costs but in all other                                                                    
     costs in our society.   It took Congress years to learn                                                                    
     that tobacco  was addictive, so  let me be  perhaps one                                                                    
     of  the  first  to  say   right  now  alcohol  is  also                                                                    
     Currently, we  pay over $500  per capita  for substance                                                                    
     abuse.  The  majority of the states pay  closer to $200                                                                    
     per capita -  and even those with  populations close to                                                                    
     our size.   I  don't have  any misconceptions  that the                                                                    
     user tax  will stop drunk  drivers, or that it  will go                                                                    
     to  treatment programs  - although  I think  it should.                                                                    
     Nor will  it put  down bar  owners or  put them  out of                                                                    
     business.    Frankly,  all taxes  discriminate,  and  I                                                                    
     think this one aims to the correct audience.                                                                               
Number 0269                                                                                                                     
ANNETTE FREIBURGER, Executive Director, Fairbanks Native                                                                        
Association (FNA), testified via teleconference in favor of HB
225.   She stated:                                                                                                              
     FNA  administers formal  residential  alcohol and  drug                                                                    
     treatment centers as well  as [a] long-term residential                                                                    
     unit for  chronic inebriates.   We have the  only detox                                                                    
     unit serving  a 250,000 square-mile area,  plus we have                                                                    
     instituted  an   outpatient  treatment  center.     Our                                                                    
     treatment  programs  have  been  struggling  with  flat                                                                    
     funding  for more  than a  decade.   It's getting  more                                                                    
     difficult  all  the  time   to  maintain  the  expected                                                                    
     outcomes  with no  increases in  the budget's  covering                                                                    
     expenses, like cost-of-living increases.   Our staff is                                                                    
     burning out at an alarming  rate due to overtime and no                                                                    
     break in service.   We cannot afford  to be competitive                                                                    
     with private  organizations that use  medical personnel                                                                    
     like we require at our  detox units, as well as trained                                                                    
     certified treatment staff.  Staff  turnover is our most                                                                    
     critical difficulty.                                                                                                       
     FNA is in  support of House Bill 225.   We believe that                                                                    
     the excise  tax on alcohol  paid by the people  who use                                                                    
     alcohol will  relieve some of  the budget  burdens that                                                                    
     the legislature  has to  deal with  every session.   If                                                                    
     this  tax  is  collected   and  redistributed  to  help                                                                    
     support  the   programs  that  the  abuse   of  alcohol                                                                    
     creates, it would be of  great benefit to the people of                                                                    
     the state of  Alaska.  It would ... only  be users that                                                                    
     would  be affected.    A full  10  percent of  Alaska's                                                                    
     population  suffer from  alcohol dependency,  more than                                                                    
     twice the national average.   Alcohol abuse is Alaska's                                                                    
     number-one  social  and  public health  concern.    The                                                                    
     increase is  not staggering to anyone  except the heavy                                                                    
     user.   As heard  in prior  testimony, the  majority of                                                                    
     alcohol users  are not  abusers; therefore,  most users                                                                    
     will not  be heavily  impacted.   This small  amount of                                                                    
     money on each  drink will have [a]  very large economic                                                                    
     impact on struggling programs.                                                                                             
Number 0298                                                                                                                     
WAYNE WOODGATE, Bartender, testified via teleconference in                                                                      
opposition to HB 225.  He stated:                                                                                               
     The  [Legislative  Information  Office  teleconference]                                                                    
     room  yesterday was  completely  filled;  the room  was                                                                    
     standing room  only, as you  can see by the  people who                                                                    
     signed [up] on  the roster. ... Most of  the people who                                                                    
     were against this proposed bill,  as I am, are not here                                                                    
     right now.   Unfortunately, that's probably  due to the                                                                    
     fact that they have to work.                                                                                               
     I myself am a full-time  student; I've been a bartender                                                                    
     for  11 years.   I  had to  leave yesterday  early. ...                                                                    
     From my  own personal experience,  I was going  to pick                                                                    
     up my  year-and-a-half-old son from his  mother who was                                                                    
     also  going  to  work;  she   also  works  in  the  bar                                                                    
     industry.   ...  If anybody  says this  isn't going  to                                                                    
     affect actual real people with  real jobs, I think this                                                                    
     is  a  very good  representation  of  what's going  on.                                                                    
     Unfortunately,  the testimony  from the  people on  the                                                                    
     opposing side can't be here  to really speak their mind                                                                    
     today, ... so I would like  to speak for them all, that                                                                    
     we  work  really  hard  for  our  money,  and  this  is                                                                    
     something we do for a living.                                                                                              
Number 0328                                                                                                                     
JIM   ELKINS,   Owner,   Elkins   and   Elkins,   testified   via                                                               
teleconference in opposition to HB 225.  He stated:                                                                             
     Yesterday was an  interesting day for me.   I spent two                                                                    
     hours of my time waiting to  try to speak on this issue                                                                    
     ... that I believe will cost  jobs in Ketchikan.  And I                                                                    
     spent the later  part of the evening,  for three hours,                                                                    
     with  [U.S.]  Senator  Murkowski,  [Chair  Murkowski's]                                                                    
     father, who was  in town trying to tell us  how to save                                                                    
     jobs and service down here in Ketchikan. ...                                                                               
     All  that aside,  I would  just like  to make  a couple                                                                    
     comments.   In  the last  few years  in Anchorage,  the                                                                    
     voters  have unanimously  turned down  two attempts  to                                                                    
     put  an excise  tax on  liquor, and  then in  the third                                                                    
     election ...  they passed an ordinance  at a referendum                                                                    
     vote  that  ... three-fifths  of  the  majority had  to                                                                    
     approve any tax in Anchorage.   So that's 60 percent of                                                                    
     the  voters [who]  have to  go  to the  polls and  say,                                                                    
     "Yes,   we   want   a  tax   in   Anchorage,   in   the                                                                    
     municipality."   And I  find it  ironic that  you would                                                                    
     put forth  a bill that would  say that the rest  of the                                                                    
     municipalities  in the  state had  (indisc.) an  excise                                                                    
     tax, and  not protect them  the same way  the Anchorage                                                                    
     voters protected themselves. ...                                                                                           
     If you  want to  pass it,  put in there  that to  add a                                                                    
     municipal election,  it has to  pass by  three-fifths -                                                                    
     60 percent of  the voters.  Then, statewide,  we have a                                                                    
     level playing  field.   You know there  is not  a level                                                                    
     playing  field  now  [in] most  places  in  the  state,                                                                    
     because most of  us pay sales tax in  the state, except                                                                    
     they do not in Anchorage. ...                                                                                              
     It bothers  me that  some people  think that  there's a                                                                    
     lot of  money in this  business. ... There's  less than                                                                    
     400 people per liquor license  in Ketchikan.  Come down                                                                    
     here  and walk  in our  shoes  before you  take to  the                                                                    
     opinion that  there's money flowing out  of our pockets                                                                    
     for  other  things. ...  We're  already  down from  ten                                                                    
     employees  to  six,  and  most of  the  people  in  our                                                                    
     industry are single parents. ...                                                                                           
     Speaking on  behalf of ...  state CHARR, of  which I've                                                                    
     been on  the board since  it started 30 years  ago, ...                                                                    
     it helped create  a lot of the good  legislation in the                                                                    
     state that  has helped bring  down alcohol abuse.   And                                                                    
     if  you look  at your  own figures,  from 1984  to '99,                                                                    
     consumption is  down because tax  revenue is  down. ...                                                                    
     Obviously, ... if tax revenue  is down, the consumption                                                                    
     cannot be  up.  But I  would say that -  as responsible                                                                    
     people in  the industry  that state CHARR  represents -                                                                    
     we don't  mind stepping up  to the plate and  coming up                                                                    
     with  a reasonable  tax to  help pay  down the  deficit                                                                    
     that  the state's  going  to have.    But where's  oil?                                                                    
     Where's fish?  ... We  don't want to  be the  only ones                                                                    
     stepping up  to the plate.  ... I get the  feeling that                                                                    
     some of  the members on  this committee almost  look at                                                                    
     us like  second-class citizens, and don't  care what we                                                                    
     say or what we do.  It really bothers me.                                                                                  
CHAIR MURKOWSKI responded:                                                                                                      
     Truly, if I didn't care  what you and others within the                                                                    
     industry thought about this,  I certainly wouldn't take                                                                    
     the  time  that  I'm  taking to  hear  all  the  public                                                                    
     testimony.   It  is  important to  hear  not only  your                                                                    
     perspective, but  the perspective of other  people that                                                                    
     are affected by this alcohol tax.                                                                                          
Number 0399                                                                                                                     
REPRESENTATIVE  HALCRO  added  that   [the  committee]  needs  to                                                               
understand the  reason for  even discussing this.   The  fact is,                                                               
there  is  a  real  cost  to  society,  and  legislators  have  a                                                               
responsibility to not only the  hospitality industry but to every                                                               
Alaskan.  He  clarified that in 1995 there was  an alcohol tax on                                                               
the ballot  in Anchorage; it passed  by less than 2  percent, [in                                                               
part because of] a fear of taxation, period.                                                                                    
MR. ELKINS responded that he thinks  to implement a tax like that                                                               
and not make it the same for everybody in the state is criminal.                                                                
REPRESENTATIVE  HALCRO remarked  that  he understands  that.   He                                                               
said the municipal  contribution has been taken out  of the bill;                                                               
more  important, even  if  it were  in the  bill,  the people  of                                                               
Anchorage  would  still  have  to approve  any  increase  in  the                                                               
alcohol tax by a supermajority.                                                                                                 
REPRESENTATIVE HAYES  asked Mr.  Elkin what the  reasonable offer                                                               
was the industry had come up with.                                                                                              
MR.   ELKINS   responded  that   [the   industry]   gave  it   to                                                               
Representative Kott  some time ago,  but he thinks it  was thrown                                                               
out.   He stated that  the bottom line  is that the  Alaska state                                                               
CHARR has no  problem stepping up to the plate  to raise taxes to                                                               
bring down the deficit in the state.                                                                                            
REPRESENTATIVE  CRAWFORD   asked  Mr.  Elkins  whether   the  tax                                                               
increase in 1983 affected his industry.                                                                                         
MR. ELKINS  responded that  it was  a long  time ago,  and things                                                               
were a  lot different  in the state  then:  there  were a  lot of                                                               
jobs.  He said the question is not relevant to today in Alaska.                                                                 
REPRESENTATIVE KOTT remarked  that he would ask  somebody in some                                                               
part of the state where [the economy] is not depressed.                                                                         
Number 0453                                                                                                                     
JAMES ELKINS  testified via teleconference  on behalf  of himself                                                               
in opposition to HB 225.  He  stated the he would like to address                                                               
the $249  million number  that the  Governor's Advisory  Board on                                                               
Alcoholism &  Drug Abuse put out  in its annual report.   He said                                                               
[the  board]  admits  that  its numbers  are  based  on  national                                                               
studies; therefore, he  said he looked at those studies.   In the                                                               
tenth annual  report to  congress from  the Institute  on Alcohol                                                               
Abuse and  Alcoholism it states  that the amount  lost nationally                                                               
was roughly $682 per man, woman,  and child.  However, states and                                                               
local governments only  have to pay for 18 percent  of that cost,                                                               
which in Alaska would only be  $77 million.  The number, he said,                                                               
also  includes  lost  income  revenue.     He  remarked  that  he                                                               
disagrees  with  anybody who  says  this  isn't going  to  affect                                                               
consumption, because in  that tenth annual report  to congress it                                                               
says a  1 percent increase in  price will effectively create  a 1                                                               
percent decrease in demand.                                                                                                     
DONNA  LUTHER,  Ketchikan  Cabaret Hotel  Restaurant  &  Retailer                                                               
Association [CHARR], testified via teleconference.  She stated:                                                                 
     In Southeast here,  with the decline of  the timber and                                                                    
     the fishing  industry, tourism  has become  our number-                                                                    
     one  industry.  ... And  if  this  excise tax  that  is                                                                    
     referred  to as  the 10-cents-a-drink  tax -  which, by                                                                    
     the way,  I think is  very misleading - is  passed, the                                                                    
     hospitality  industry  is  the  next  to  fall  by  the                                                                    
     wayside  of government.   There's  a lot  of people  in                                                                    
     this community and  people that work with  me that will                                                                    
     be affected by this, and I think adversely so.                                                                             
     There [are]  jobs at stake  here.  Let's  be reasonable                                                                    
     and realistic:   a tax  of this magnitude will  give an                                                                    
     employer no  choice but to  cut back his workforce.   I                                                                    
     can't think of  any industry - or  individual, for that                                                                    
     matter  - who  would not  be opposed  to a  300 percent                                                                    
     increase,  the state  taxes, as  well as  the potential                                                                    
     for  an  addition  300 percent  increase  in  municipal                                                                    
     taxes.  ...   I'm  not  opposed  to   a  tax  increase.                                                                    
     Clearly, it's been  a long time coming.  But  what I am                                                                    
     opposed to is  the 300 percent increase  disguised as a                                                                    
Number 0495                                                                                                                     
GEORGE TIPTON, Ketchikan Entertainment Center, testified via                                                                    
teleconference in opposition to HB 225.  He stated:                                                                             
     I   believe  the   proposed   legislation   to  be   an                                                                    
     unreasonable increase  in its current form.   It's been                                                                    
     stated  that more  money is  needed to  pay for  social                                                                    
     programs,  and supposedly  we  spend  $250 million  but                                                                    
     only take in $12 million.   I would really like to know                                                                    
     where this $250 million number comes from.                                                                                 
     I  also  believe that  not  enough  money gets  to  the                                                                    
     education,  treatment, or  prevention programs  because                                                                    
     of the small (indisc.)  and administrative overhead.  I                                                                    
     see  this everywhere,  as being  politically active  in                                                                    
     the community  and sitting  in local  government bodies                                                                    
     in the  past; I  know exactly how  that occurs.   There                                                                    
     are a number of varying  agencies - federal, state, and                                                                    
     local - that duplicate efforts,  and it seems to reason                                                                    
     that these need to be  brought under one umbrella [for]                                                                    
     it  to be  more cost-effective.   Let's  get the  money                                                                    
     where it needs to be.                                                                                                      
     I  also kept  hearing yesterday  from professionals  on                                                                    
     treatment  and  program  [sites] about  all  the  study                                                                    
     data.  Another  question comes to mind:   Just how much                                                                    
     money goes into these studies  and away from the actual                                                                    
     programs?  Also,  can anyone tell me  how effective the                                                                    
     treatment and  education and preventive programs  are -                                                                    
     if  they are  being  duplicated and  not consistent  in                                                                    
     their  factions?     It  seems  we   have  many  repeat                                                                    
     offenders who  probably take the biggest  percentage of                                                                    
     these dollars.                                                                                                             
     This bill's  a tax  - or call  it a user  fee -  on one                                                                    
     industry,  but   is  it  not   all  of   the  citizens'                                                                    
     responsibility?   I  have never  had kids  in a  public                                                                    
     school system in  the state of Alaska, yet  I have paid                                                                    
     a property  tax ... for  30-plus years so kids  can get                                                                    
     an education -  just as I got in the  state, in Juneau.                                                                    
     There  is  no  difference  in my  responsibility  as  a                                                                    
     citizen of  the state in  that endeavor, as it  is here                                                                    
     for everybody else.                                                                                                        
     There  were  some  questions that  were  asked  by  the                                                                    
     committee  members that  I would  like  to respond  to.                                                                    
     Yes, we have drink menus  at all of our establishments.                                                                    
     I  believe  this question  has  been  asked because  it                                                                    
     could be  pointed out that  the change to  the customer                                                                    
     wouldn't make  any difference if the  customer does not                                                                    
     physically see it on the menu.                                                                                             
     Another  question:   Who  is  the  tax  unfair to?    A                                                                    
     majority  of   the  people  who  are   the  responsible                                                                    
     drinkers.   It would benefit  on behalf of  the abuser,                                                                    
     that we would have to pay for it.                                                                                          
     In the  sponsor statement are some  charts that reflect                                                                    
     the alcohol  beverage's tax revenue with  and without a                                                                    
     CPI [consumer  price index] adjustment  as well  as the                                                                    
     current  tax per  drink.   If  we  would have  followed                                                                    
     these scenarios,  and (indisc.)  there had not  been an                                                                    
     increase since  1983, the increase [brought]  up on the                                                                    
     CPI report  ... would  be approximately 44  percent for                                                                    
     .0145 on beer and wine, and  .0192 on spirits.  This is                                                                    
     a far cry from what's being proposed.                                                                                      
Number 0526                                                                                                                     
MR. TIPTON continued:                                                                                                           
     I totally  oppose a tax  on just the one  industry, and                                                                    
     not on  all of the  state citizens.   But if  this bill                                                                    
     were  to be  changed  [by] this  rate,  I think  that's                                                                    
     probably pretty  close to  what the  offer was  made by                                                                    
     the   industry  itself,   as  reflected   with  a   CPI                                                                    
     adjustment in  the sponsor statement.   I would suggest                                                                    
     that we  spread it out  over the next couple  of years,                                                                    
     as  an  increase  of  this magnitude  in  one  year  in                                                                    
     unrealistic.   Imagine  the cost  to my  business if  a                                                                    
     bottle went  from $10 to  $14.40.  Many of  us struggle                                                                    
     to survive, but  we do our jobs very  responsibly, as I                                                                    
     have never had  a liquor violation.  And we  go far out                                                                    
     of our way to make patrons be responsible as well.                                                                         
     Since  we have  heard  many varying  proposals for  and                                                                    
     against,  consider another  [possibility]:   You  could                                                                    
     fund the  whole program  for $250  million -  if that's                                                                    
     the real number  - with a state income  tax, because it                                                                    
     will supposedly generate  exactly that amount annually,                                                                    
     thus  bringing  up  other   general  fund  dollars  for                                                                    
     infrastructure,  which  creates   jobs  throughout  the                                                                    
     state.    How  unrealistic  is  this?    Only  you  can                                                                    
     determine in the legislature.   It basically boils down                                                                    
     to the  fact that the  state must produce  a long-range                                                                    
     fiscal pact, just as we'll do in business. ...                                                                             
     This  is  an  industry that  has  approximately  17,000                                                                    
     employees, and  an economic impact  of $1.4  billion in                                                                    
     the state.   We are responsible as an  industry, and we                                                                    
     should   not  be   forced  to   cover,  by   ourselves,                                                                    
     irresponsible  acts  of  others  and  all  of  the  ...                                                                    
     liberal  social  programs.   Alaska  could  become  the                                                                    
     highest alcohol-taxed state in the nation.                                                                                 
CHAIR  MURKOWSKI  remarked  that  she  appreciated  Mr.  Tipton's                                                               
testimony.  She stated that there  has been a lot of conversation                                                               
about agreeing to something reasonable,  and yet there has been a                                                               
hesitancy to  say what that might  be; she noted that  Mr. Tipton                                                               
has tied that  to a specific increase.  In  regard to his concern                                                               
about where  the $250  million goes, she  said treatment  is just                                                               
one component  of that expense, which  is made up of  the cost to                                                               
the Department of Corrections, to  the courts, to [the Department                                                               
of]  Public Safety,  and to  all aspects  of the  state that  are                                                               
Number 0555                                                                                                                     
FRANCINE WHEELER testified via teleconference  as a citizen, as a                                                               
daughter  of an  alcoholic, and  on behalf  of Arctic  Bar.   She                                                               
informed members  that she has  12 siblings  and she is  the only                                                               
one who drinks.   She added that she has worked  in every bar [in                                                               
Ketchikan] but seven, and has never had a liquor violation.                                                                     
MS. WHEELER  told members she would  like to see the  overall tax                                                               
as an  alcohol preventative tax  or as an  income tax.   She said                                                               
this  is  a  social  issue  that needs  to  be  [dealt  with]  by                                                               
everyone.   She is not  opposed to  a raising the  alcohol excise                                                               
tax by a  reasonable increase.  She had talked  to 200 people and                                                               
asked them  what they  thought of the  tax, she  reported; they'd                                                               
replied that  they didn't  have enough  information, but  that if                                                               
they were going [to respond]  based on the information sent, they                                                               
would say "absolutely  not" or would have to quit  drinking.  She                                                               
said if they quit drinking, she would  have to quit her job.  Ms.                                                               
Wheeler continued:                                                                                                              
     We're certainly  able to understand that  alcohol, like                                                                    
     any  mind-altering  substance,  when  used  by  certain                                                                    
     people  among   our  society,  causes  pain   and  many                                                                    
     negative  consequences.   We  also  understand that  in                                                                    
     many cases  it does not.   It provides  relaxation, and                                                                    
     many,  many  good  memories  come out  of  a  night  of                                                                    
     I  would  like to  paraphrase  a  man from  Kenai:  ...                                                                    
     "House Bill 225  is being put forth as a  user tax.  If                                                                    
     you  don't  use it,  you  don't  pay; heavy  users  pay                                                                    
     heavy."   His  idea was,  if we  solve problems  in our                                                                    
     society this way,  ... we should carry the  idea of the                                                                    
     user tax all the way down the line. ...                                                                                    
     Spins are put on numbers  in every political arena that                                                                    
     there is.  None of ours  are any different.  10 cents a                                                                    
     beer or  a drink  doesn't sound like  much, but  if you                                                                    
     know economics,  you know  that that  10 cents  goes to                                                                    
     the  manufacturer, which  goes  to  the bottler,  which                                                                    
     goes to  the wholesaler,  which goes to  the deliverer,                                                                    
     which  goes to  the  retailer, and  somewhere down  the                                                                    
     line that 10 cents gets to  the customer.  Now, [if] we                                                                    
     take that  10 cents  from the state  and 10  cents from                                                                    
     the  city and  10 cents  from the  borough, we  have 30                                                                    
     cents.   You take that  30 cents  all the way  down the                                                                    
     line and  that drink that costs  $3.50 is realistically                                                                    
     going to cost $5.00 or $5.50.                                                                                              
TAPE 01-55, SIDE B                                                                                                              
Number 0588                                                                                                                     
MS. WHEELER continued:                                                                                                          
     ... If you are representing  the people, then put it to                                                                    
     them so  they can understand  it. ... When  they raised                                                                    
     the taxes  in 1983, ...  I think that before  that they                                                                    
     were collecting, ... $15 million  a year in revenue and                                                                    
     taxes,  and it  went  down to  $12  million this  year.                                                                    
     Before that, it was a  voluntary system; they put their                                                                    
     tax  money  up there.    Then  we introduced  this  tax                                                                    
     increase [and] we've lost jobs. ...                                                                                        
     There's no earmarking on this  bill.  There's no cap to                                                                    
     this bill.  There's no  anything.  The way it's worded,                                                                    
     I  don't understand.  ... We're  going to  let it  [go]                                                                    
     right into  the general fund,  and then we're  going to                                                                    
     hope that  some of it gets  down to the people  who you                                                                    
     say we are supposed to be paying for.                                                                                      
     I think this  is a society problem, and  all of society                                                                    
     needs to split this. ... A  lot of this starts with our                                                                    
     children. ...  As far as  public schools go, we  need a                                                                    
     lot of  help in the area  of our children.   We need to                                                                    
     teach them to  love and not hate; we need  to stop them                                                                    
     from  feeling separation.   Love,  to me,  equals self-                                                                    
     responsibility.   This is not teaching  any child self-                                                                    
     responsibility.   CHARR does so much  in the community;                                                                    
     we  really, really  have a  lot of  people that  we are                                                                    
     representing here.                                                                                                         
REPRESENTATIVE  HALCRO stated  that Ms.  Wheeler's testimony  was                                                               
similar to  what [the committee]  heard yesterday  from different                                                               
communities:  people  talked about the local  economy being down,                                                               
and raising  the tax will cause  a devastating effect.   He asked                                                               
Ms.  Wheeler,  if  the  economy  is so  poor  in  some  of  these                                                               
communities and  money is  tight, whether  these folks  should be                                                               
spending their money drinking in bars.                                                                                          
MS. WHEELER  responded that there  is no way  [liquor businesses]                                                               
should bear  the brunt of  paying this whole  tax.  Her  point is                                                               
that it is a societal problem.                                                                                                  
REPRESENTATIVE  HALCRO said  he has  seen  about a  half a  dozen                                                               
surveys  in which  75 percent  would support  an increase  in the                                                               
alcohol tax.   He asked Ms.  Wheeler, if a nondrinker  is driving                                                               
down the road and someone who  has been drinking runs a red light                                                               
and hits the  car, whether the victim should have  been paying to                                                               
address this  problem all  along or whether  it should  have been                                                               
placed on those who contribute to the problem.                                                                                  
MS. WHEELER  responded, "The people  in the  automobile industry,                                                               
should they be paying taxes for  having created cars in the first                                                               
REPRESENTATIVE HALCRO replied that it is not the same.  The car,                                                                
doesn't cause the accident; the people cause the accident.                                                                      
MS. WHEELER agreed and stated that [the legislature] is not                                                                     
asking the people to pay a tax for negligent drivers.                                                                           
Number 0520                                                                                                                     
ROSALIE NADEAU, Akeela, Inc., testified via teleconference in                                                                   
support of HB 225.  She stated:                                                                                                 
     We put this a tax on  the user, not the industry.  Now,                                                                    
     I  understand the  industry people  don't  see it  that                                                                    
     way, but  that is how  we see  it.  We  understand that                                                                    
     this is not  a tax that is going to  be a dedicated tax                                                                    
     to address treatment and prevention needs. ...                                                                             
     I represent one  of the larger prevention-and-treatment                                                                    
     organizations  in  this  state,   and  alcohol  is  the                                                                    
     number-one substance  abuse problem in this  state. ...                                                                    
     14  percent of  the  births in  Alaska  are FAS  [Fetal                                                                    
     Alcohol  Syndrome] children,  and  that  puts our  rate                                                                    
     twice  the national  [rate], and  a lot  higher in  the                                                                    
     world  of  FAS  births.   That  isn't  drugs  -  that's                                                                    
     alcohol.   It's the one  area I think that  ... perhaps                                                                    
     has worse impacts  than any drug one can  think of, and                                                                    
     that is on the life or  the potential life of an unborn                                                                    
     Very little  of the  ... $250 million  ... is  spent on                                                                    
     treatment  and  prevention  programs.    In  fact,  the                                                                    
     budget  that was  set aside  for  the various  programs                                                                    
     impacted by alcohol ... in  1998 were $324 million. ...                                                                    
     Of  that,  .5  percent   ...  went  to  prevention  and                                                                    
     treatment.   It is, of  course, our hope that  with the                                                                    
     infusion  of  some  more   dollars  generated  by  this                                                                    
     particular measure,  more money will find  its way into                                                                    
     treatment and prevention.                                                                                                  
     I  think what  I hear  from  the industry  is that  the                                                                    
     assumption  those  of  us who  work  in  treatment-and-                                                                    
     prevention  programs   make  is  true,  and   that  is,                                                                    
     increasing the  cost will decrease the  consumption.  I                                                                    
     know that  if I were  a waitress  or a bartender  ... I                                                                    
     would probably be concerned about  that. ... But I look                                                                    
     at it from  the point of view of what  is the impact on                                                                    
     this  state of  the abuse  of alcohol,  and I  think it                                                                    
     makes  this  measure  not  only   needed,  but  a  very                                                                    
     sensible approach,  especially if  some of  those funds                                                                    
     are funneled into some of  the treatment and prevention                                                                    
Number 0486                                                                                                                     
ALAN  BAILEY,  Coalition  of Alcohol  Abuse  and  Public  Safety;                                                               
Anchorage   Chapter,  Mothers   Against  Drunk   Driving  (MADD),                                                               
testified  via teleconference.     He noted  that he  was also  a                                                               
member of [Governor]  Knowles' 1984 DWI taskforce.   He said even                                                               
17  years ago,  some members  of  that taskforce  urged that  the                                                               
taskforce  recommend a  significant increase  in beverage  taxes;                                                               
however, it was not done.                                                                                                       
MR.  BAILEY   informed  the  committee  that   as  the  Anchorage                                                               
municipal  prosecutor for  ten  and a  half  years, he'd  learned                                                               
through  his daily  work that  the vast  majority of  crimes were                                                               
alcohol-related.    A family-law  attorney  in  Anchorage for  16                                                               
years, Mr. Bailey said the  biggest problem he sees involves drug                                                               
and alcohol abuse; for example,  that afternoon he had to explain                                                               
to a  young woman  how her husband's  alcohol abuse  affected his                                                               
parenting.   Alcohol abuse  exacerbates domestic  violence, child                                                               
abuse, child neglect, health problems,  the modeling of addictive                                                               
behaviors   by  parents   for  children,   and  other   kinds  of                                                               
dysfunction in families and society.                                                                                            
MR.  BAILEY  suggested  that  this  bill  would  work  to  reduce                                                               
alcohol-related  problems  in  society, regardless  of  what  the                                                               
legislature does with  the revenues.  Research  shows that higher                                                               
taxes  lower  alcohol  abuse  and   the  related  problems;  that                                                               
research  also  shows  that  even DWIs  have  been  reduced  when                                                               
societies have significantly increased alcohol taxes.                                                                           
Number 0456                                                                                                                     
TOM  ANDERSON,  Acting  Executive  Directory,  Anchorage  Cabaret                                                               
Hotel Restaurant  & Retailer  Association (CHARR),  testified via                                                               
teleconference.  He stated:                                                                                                     
     Our  association has  recently  started its  recruiting                                                                    
     process for  members, and I  am pleased to  report that                                                                    
     nearly  every  business   I've  contacted  has  joined.                                                                    
     These   businesses   include  food   distributors   and                                                                    
     tourism-and-marketing  companies and  even a  furniture                                                                    
     sales [company]. ...                                                                                                       
     The  connection  to  restaurants and  hotels  and  bars                                                                    
     these  ...  businesses  have  is  really  a  collective                                                                    
     concern  about freedom  to operate  a business  without                                                                    
     [being]  under   restraint  in  conjunction   with  the                                                                    
     promotion of a responsible  hospitality industry. ... I                                                                    
     think the  bottom line  is everybody's  concerned about                                                                    
     health  and safety  and welfare.    Certainly, I  would                                                                    
     say, unequivocally, the hospitality industry is. ...                                                                       
     Interestingly,  groups like  Anchorage  CHARR ...  have                                                                    
     the  same vision  of reducing  DWIs and  alcohol abuse.                                                                    
     We  are being  proactive in  our community  by our  own                                                                    
     memberships and activity. ...  Anchorage CHARR has been                                                                    
     in contact with Kevin Tubbs.   You've probably read the                                                                    
     article  he was  featured  in  yesterday regarding  the                                                                    
     drug   Naltrexone,   which  is   an   alcohol-addiction                                                                    
     suppressant.    And  we've  expressed  an  interest  in                                                                    
     administering  the ...  program that  he and  Brown Jug                                                                    
     started to assist those addicted to alcohol. ...                                                                           
     We're  also looking  into  Anchorage CHARR  researching                                                                    
     the potential for  a grant to the  University of Alaska                                                                    
     Department  of  Justice  ... in  conjunction  with  the                                                                    
     Department  of Geomatics  to study  -- basically,  they                                                                    
     can  do  math  and  pinpoint through  data  just  about                                                                    
     anything.    And  we  are  looking  at  alcohol-related                                                                    
     incidents  and DWIs  in the  city, and  trying to  work                                                                    
     with APD [Anchorage Police Department].                                                                                    
     ...   I give you these  examples simply to say  that we                                                                    
     are  proactive.   The "demonization"  is unfair,  [and]                                                                    
     Anchorage CHARR has members  throughout the city active                                                                    
     and willing  to try to  counter these problems.   These                                                                    
     ongoing  endeavors,   to  name  a  few,   I  think  are                                                                    
     illustrative  of the  fact that  we  want to  recognize                                                                    
     [that]  health  and  public  safety  issues  should  be                                                                    
     number one. ...                                                                                                            
     I don't  think anyone faults  the attempt to  close the                                                                    
     fiscal  gap,  and  I  think  you've  been  stellar  and                                                                    
     staunch  in  supporting a  reduction  of  waste in  the                                                                    
     budget  and finding  alternatives  to  the opposite  of                                                                    
     that.  And yet I think  we have to be cautious; I mean,                                                                    
     I've worked  in legislative budget and  audit. ... With                                                                    
     this  comment  about  alcohol abuse  costing  taxpayers                                                                    
     $249  million, I  would  love to  see  the research  on                                                                    
     ...  I think  you  must... take  into  account loss  of                                                                    
     jobs, wages,  and lack  of clarity  on where  the funds                                                                    
     will be  dedicated, in addition to  the unfair increase                                                                    
     as  a whole.    So,  I think  these  negatives and  the                                                                    
     disabling effect  on the industry outweigh  the benefit                                                                    
     at this time. ...                                                                                                          
     I think an audit would be  prudent, and I think at this                                                                    
     time it  would be better  to continue the  analysis and                                                                    
     couple it  with verification of these  alleged costs to                                                                    
     taxpayers, and  hold off at  least until  next session,                                                                    
     and -  if anything -  reduce the current amount  of the                                                                    
Number 0392                                                                                                                     
CHAIR  MURKOWSKI  stated  that  she  appreciated  Mr.  Anderson's                                                               
testimony.  She said she did  read the article about Kevin Tubbs,                                                               
and she had talked with Judge  Wanamaker a couple years ago about                                                               
his  program  and  how  he applies  Naltrexone.    She  mentioned                                                               
Speaker  Porter's therapeutic  courts bill  and several  alcohol-                                                               
related bills that  were moving through the House.   She observed                                                               
that  the industry  is  not  blind to  the  problem,  and is  not                                                               
unwilling  or   uncooperative  in  attempting  to   address  some                                                               
systemic  problems.     However,  many  legislators   believe  an                                                               
increase  to the  existing  excise  tax is  a  component of  that                                                               
alcohol package.                                                                                                                
REPRESENTATIVE HALCRO concurred.  He  said he doesn't think it is                                                               
the intent to  "demonize" anybody who has testified.   Noting the                                                               
lively  debate, he  remarked that  [the  committee] is  grappling                                                               
with  the difference  between what  alcohol costs  the state  and                                                               
what is taken in, in trying to find ways to fund these programs.                                                                
Number 0352                                                                                                                     
JEANETTE  JOHNSON,   Owner,  Crazy   Horse  Bar,   testified  via                                                               
     Every  bar  around   Anchorage  and  throughout  Alaska                                                                    
     usually   donates   money   to   different   charitable                                                                    
     organizations.  Just  in the month of  February my bar,                                                                    
     which  is the  Crazy Horse,  ... sold  $4,667 worth  of                                                                    
     Shamrock.   I  guess in  '89 through  the year  of '97,                                                                    
     just  in  the  (indisc.)   alone,  the  bar  turned  in                                                                    
     $500,000.     Every  bar  around  Anchorage   has  some                                                                    
     charitable   organization;   they're  donating   money,                                                                    
     they're  raising  money.   And  usually  we have  three                                                                    
     different  liquor distributors,  which  always give  us                                                                    
     different things  we can sell  or auction off  to raise                                                                    
     this money.   So whether it's one  disease [or] another                                                                    
     disease,  the bars  are  doing  something besides  just                                                                    
     selling a drink.                                                                                                           
JOHN PATTEE testified via teleconference in opposition to HB
225.  He stated:                                                                                                                
     First of  all, the hospitality industry  is very large,                                                                    
     not only in  this state but across the  country and the                                                                    
     world.    In  this   state  it  supports  thousands  of                                                                    
     businesses,  their employees,  and their  families, not                                                                    
     all of which sell alcohol.                                                                                                 
     Many  of these  businesses are  support-type companies.                                                                    
     Hospitality-industry  members are  people who  live and                                                                    
     work  hard for  their money  to support  themselves and                                                                    
     their families.   They also support  their communities.                                                                    
     Our   industry  members   attend,   support,  and   are                                                                    
     personally involved  in every  aspect of  our community                                                                    
     such  as   churches,  schools,  PTAs   [Parent  Teacher                                                                    
     Associations],    community    councils,    nonprofits,                                                                    
     charities,    business     organizations,    government                                                                    
     agencies, and  many, many other organizations  that are                                                                    
     good  for our  communities.   Our pull-tab  sales alone                                                                    
     support  thousands  of  charities and  nonprofits  that                                                                    
     would not exist without our help.                                                                                          
     We  work  with the  community  councils  to help  solve                                                                    
     problems  at  the  grassroots  level.    We  train  our                                                                    
     employees to be responsible  servers of alcohol.  We've                                                                    
     implemented,  or  are  working  on  implementing,  many                                                                    
     programs  that address  alcohol  abuse, drunk  driving,                                                                    
     and even  sexual assault.   We understand  the problems                                                                    
     related  with alcohol  as well  or better  than anyone,                                                                    
     and  have and  will  continue to  work towards  solving                                                                    
     I  do not  believe the  hospitality industry  should be                                                                    
     punished by this  very large tax.  I  don't believe the                                                                    
     money generated  would or can  be dedicated  to alcohol                                                                    
     issues.    The  cigarette   tax  and  tobacco  industry                                                                    
     settlement money is a good example of that.                                                                                
     Ms. Murkowski stated that we  are number one per capita                                                                    
     in alcohol  abuse.  This may  be true.  Because  [of] a                                                                    
     small population  of our  state, we  are number  one in                                                                    
     almost any category you choose.                                                                                            
     Ms. Murkowski  also mentioned the $250  million cost to                                                                    
     the state.  I don't  have any scientific numbers, but I                                                                    
     do  believe our  industry pays  for much  more of  that                                                                    
     than has  been proclaimed.   We pay  it by our  taxes -                                                                    
     personal, property,  sales, corporate, and  other taxes                                                                    
     including alcohol  taxes.   We pay it  by our  time and                                                                    
     efforts involved within our communities  to make them a                                                                    
     better place to  live and work.  We pay  it by the tens                                                                    
     of  millions in  charitable donations  and sponsorships                                                                    
     given to  our communities directly or  by selling pull-                                                                    
     tabs.    And we  pay  it  by  the local  economics  the                                                                    
     hospitality industry helps fuel.                                                                                           
     Finally, let's  not just throw  money at  our problems.                                                                    
     Let's come  up with  some real  solutions to  solve the                                                                    
     problems a  small minority  of population  is creating,                                                                    
     without punishing  the rest of  us or blaming us  for a                                                                    
     problem  our   whole  society   helped  create.     The                                                                    
     hospitality industry members  and their families, along                                                                    
     with government  and other  concerned agencies,  can do                                                                    
     it if we work together.   Please do not pass this bill;                                                                    
     it  will harm  many of  the people  that make  Alaska a                                                                    
     great state.                                                                                                               
Number 0281                                                                                                                     
DON GRASSE, General Manager, K & L Distributors, testified via                                                                  
teleconference in opposition to HB 225.  He stated:                                                                             
     We  employ  over  125 Alaskans  in  this  state,  which                                                                    
     includes   Teamsters,  administrative   support,  sales                                                                    
     professionals,   merchandisers,   et    cetera.      We                                                                    
     distribute our  products to over 1,200  license holders                                                                    
     in the  state of  Alaska.  I'm  against House  Bill 225                                                                    
     with tax  increases of 300  percent. ...  I've listened                                                                    
     to  quite  a  bit  of  testimony  on  this  bill,  both                                                                    
     yesterday  and today,  and I'm  against  a bill  that's                                                                    
     designed  to  penalize  an industry  -  what  has  been                                                                    
     characterized by a  lot of people on  the opposing side                                                                    
     as an irresponsible industry.                                                                                              
     I wanted to  read some facts to the  committee. ... The                                                                    
     percentage of teens  ages 12 to 17  who reported having                                                                    
     a drink in  the past month is 43 percent  lower in 1999                                                                    
     than in  1990, and 47  [percent] since 1982.   The 1999                                                                    
     teen drinking  rate is the lowest  level since tracking                                                                    
     began  since 1979.    By the  way,  these are  national                                                                    
     statistics.  The percentage of  high school seniors who                                                                    
     reported  having a  drink in  the  last 30  days is  12                                                                    
     percent  lower in  2000 than  in 1990,  and 28  percent                                                                    
     since 1982.  The percentage  of high school seniors who                                                                    
     reported having  five or  more drinks in  a row  in the                                                                    
     last two weeks  is 7 percent lower ... in  2000 than in                                                                    
     1990, and was down 26  percent in 1982.  The percentage                                                                    
     of college freshman who say  they drink beer frequently                                                                    
     or  occasionally is  at its  lowest level  since record                                                                    
     keeping began  in 1966.  The  record low in 2000  is 15                                                                    
     percent  [lower] than  in 1990,  and  34 percent  since                                                                    
Number 0244                                                                                                                     
MR. GRASSE continued:                                                                                                           
     Signs  of progress  on drunk  driving:   The number  of                                                                    
     people kill  in drunk  driving crashes has  declined 32                                                                    
     percent  since 1990  and 41  percent  since 1982;  from                                                                    
     18,444  in 1982  to  10,867  in 1999.    The number  of                                                                    
     people  killed  in  teenage drunk-driving  crashes  has                                                                    
     declined 40  percent since 1990,  and 64  percent since                                                                    
     1982 - going from 3,500 in 1982 to 1,293 in 1999.                                                                          
     Today there  are 2.2 million  fewer teen  drinkers than                                                                    
     there  were  in  1990,  and   3.2  million  fewer  teen                                                                    
     drinkers than  there were in  1982.  There  were 13,000                                                                    
     fewer high  school seniors who reported  drinking today                                                                    
     than did in 1990, and  nearly 600,000 fewer high school                                                                    
     seniors  reported drinking  than  did in  1982.   There                                                                    
     were 5,000 fewer drunk-driving  fatalities in 1999 than                                                                    
      there were in 1990, and there were 7,500 fewer drunk-                                                                     
     driving fatalities  in 1999 than  in 1982.   There were                                                                    
     870 fewer  teen drunk-driving  fatalities in  1999 than                                                                    
     there were in 1990,  and 2,300 fewer teen drunk-driving                                                                    
     fatalities in 1999 than there were in 1982. ...                                                                            
     Total  fatalities in  drunk driving  crashes in  Alaska                                                                    
     were  down  42  percent.   Fatalities  in  teen  drunk-                                                                    
     driving crashes  in Alaska were  down 50  percent since                                                                    
     1982.   Dramatic  reductions in  underage drinking  and                                                                    
     drunk  driving over  the past  20  years indicate  that                                                                    
     community-based    programs,     partnerships,    [and]                                                                    
     "personal   responsibility"   messages   are   working.                                                                    
     Parents,   educators,    retailers,   law   enforcement                                                                    
     authority, and others are seeing  signs that their hard                                                                    
     work to  reduce the incidence of  underage drinking and                                                                    
     drunk driving is making a difference.                                                                                      
Number 0221                                                                                                                     
MR. GRASSE continued, stating:                                                                                                  
     Our industry will  and has acknowledged alcohol-related                                                                    
     problems, not  only nationally but [also]  in the state                                                                    
     of Alaska.   That's why our industry  continues to work                                                                    
     hard to fight  alcohol abuse, as witnessed  by the most                                                                    
     recent  testifiers.    The manufacturers  also  promote                                                                    
     anti-alcohol abuse  messages regularly on TV  and radio                                                                    
     - programs  such as paying for  taxi rides, designated-                                                                    
     driver   education   programs   and   messages,   [and]                                                                    
     speeches. ...                                                                                                              
     The  retailers  ...  have supported  numerous  programs                                                                    
     that  have  impacted  these  numbers  since  forever  -                                                                    
     holiday  media warnings  and  radio  messages; the  TAM                                                                    
     program -  techniques of alcohol management  - which is                                                                    
     run  by  the  CHARR  association;  taxi  rides,  again;                                                                    
     lobbying  for  House Bill  68  that  was mentioned;  or                                                                    
     House Bill 214,  which is the civil  fines for underage                                                                    
     drinkers;  donations to  youth court;  community giving                                                                    
     that exceeds hundreds of [thousands  of] dollars by all                                                                    
     organizations in the community.                                                                                            
     The  distributors are  doing the  same thing:   working                                                                    
     with  their retailers  to support  all these  programs;                                                                    
     having  their own  holiday messages  that promote  safe                                                                    
     drinking and  driving, or safe consumption  of alcohol;                                                                    
     taxi  cab programs;  youth  court  donations; Boys  and                                                                    
     Girls Clubs; community  sport.  And many  of the events                                                                    
     that you  attend in your  communities, the  alcohol you                                                                    
     consume  has  been  donated  or  supplied  by  industry                                                                    
     K &  L distributing  is involved in  regular, quarterly                                                                    
     programs, whether  it's "good sport" programs  ... [or]                                                                    
     "We ID"  programs, which  [are] national  programs that                                                                    
     educate  retailers   on  proper   identification;  safe                                                                    
     snowmobiling and skiing  brochures and programs; family                                                                    
     talk  on  drinking; [and]  designated-driver  education                                                                    
     programs.   We've had  speakers that  have come  to the                                                                    
     schools in  the past.   In  fact, the  Anchorage School                                                                    
     District  refused  to  have  a  speaker  speak  to  the                                                                    
     students  about drunken  driving who  was a  registered                                                                    
     nurse, because the  money came from K  & L Distributing                                                                    
     to support that.                                                                                                           
     House Bill 225  does not solve any problems.   It taxes                                                                    
     responsible citizens and businesses  for the abuse of a                                                                    
     few.   There  has  been no  industry  support for  this                                                                    
     bill, and that's  because we believe it  will not fight                                                                    
     any alcohol abuse problems in  Alaska or anywhere.  The                                                                    
     industry  feels that  the higher  cost  of our  product                                                                    
     will not stop any alcohol abuse in the community.                                                                          
CHAIR  MURKOWSKI remarked  that  the industry  is responsible  in                                                               
many  ways; however,  the  problem  is that  the  product in  the                                                               
industry is a  legal drug that can be used  irresponsibly by many                                                               
people.  She  remarked that testimony at  yesterday's hearing was                                                               
interesting  which  stated that  20  percent  of individuals  who                                                               
drink, drink irresponsibly.                                                                                                     
MR. GRASSE recalled that it was  that 20 percent of the consumers                                                               
consume 80 percent of the alcohol in the state.                                                                                 
Number 0147                                                                                                                     
CAROL JACKSON, Credit Manager, K  & L Distributors, testified via                                                               
teleconference.  She stated that  approximately 50 percent of her                                                               
customers  purchase their  alcohol on  a COD  (cash on  delivery)                                                               
basis.   She expressed  concern that such  a large  increase will                                                               
force many  small businesses  to close.   Many small  towns don't                                                               
have the financial  resources to qualify for  credit terms, which                                                               
would put  an immediate  hardship on  [small businesses]  just to                                                               
get their product in the door  - their cash outlay would increase                                                               
dramatically.    She  thinks [the  legislature]  should  question                                                               
whether this  dramatic tax  increase is going  to benefit  just a                                                               
few  people  at the  expense  of  many, she  said  -  not just  a                                                               
monetary expense,  but closing of  business doors and  the effect                                                               
unemployment will have on families.                                                                                             
CHRIS  ANDERSON, Owner,  Glacier Brewhouse  and Restorante  Orso,                                                               
testified  via teleconference.   Currently,  he told  members, he                                                               
does  approximately  $2  million  in annual  sales  in  alcoholic                                                               
beverages.   A  10 percent  reduction  caused by  [HB 225]  would                                                               
reduce his  sales by $200,000  annually.  He employs  225 people,                                                               
and without terminating much of his  staff, he would have to look                                                               
at alternate means  to finance this cost; he  indicated one means                                                               
would  be  eliminating the  $50,000  a  year  he donates  in  the                                                               
community to civic [organizations].                                                                                             
MR. ANDERSON remarked that this  would definitely put a divide in                                                               
the local brewing  industry.  The additional new tax  of $16 on a                                                               
keg of beer would raise the  price at which he currently sells to                                                               
$131 dollars.   He  added that  he is supportive  of a  small tax                                                               
increase,  but  thinks  [the  committee] needs  to  look  at  the                                                               
industry as a  whole and realize that the  contributions that are                                                               
really  making  a difference  are  working  now;  it is  not  the                                                               
government that has lowered these statistics.                                                                                   
Number 040                                                                                                                      
KACE  McDOWELL,  Executive   Director,  Anchorage  Cabaret  Hotel                                                               
Restaurant   &  Retailer   Association  (CHARR),   testified  via                                                               
teleconference.  She  remarked that it should  be recognized that                                                               
there  is   direct  cash  [from   CHARR  to  help   the  programs                                                               
mentioned].   For example, CHARR  alone has thousands  of dollars                                                               
in its  budget this  year to  help with the  new FAS  program for                                                               
educating the  public.  She noted  that when allowed to  do these                                                               
kinds  of donations  on their  own,  they know  exactly where  it                                                               
goes.  Higher  taxes, however, would crimp  membership; crimp the                                                               
amount of  money CHARR has,  to give  back to the  community; and                                                               
stop  programs  because  [CHARR]  will   no  longer  be  able  to                                                               
TAPE 01-56, SIDE A                                                                                                              
Number 0013                                                                                                                     
MS. McDOWELL  offered that [CHARR]  has one of the  main programs                                                               
that has  helped to  stop drinking  and driving  by irresponsible                                                               
people,  as  well as  underage  drinking.    She thinks  the  TAM                                                               
program has been  more responsible than any other  program in the                                                               
state, she said, and it doesn't cost the state a dime.                                                                          
MS. McDOWELL  referred to  House Bill 68,  relating to  a program                                                               
started  in Anchorage  with the  Anchorage Downtown  Partnership,                                                               
CHARR,  taxi drivers,  and  Anchorage  Downtown License  Beverage                                                               
Association; what also  distresses her is the  $250 million being                                                               
spent in the state, Ms.  McDowell said, suggesting that committee                                                               
members become familiar  with it.  She added that  she knows most                                                               
of the programs don't work.                                                                                                     
ANNE SCHULTZ,  Research Analyst,  Advisory Board on  Alcoholism &                                                               
Drug Abuse,  Department of Health  & Social Services,  came forth                                                               
to explain  the $250 million  figure.   It comes from  two areas.                                                               
In 1989,  the office of alcoholism  for the state updated  a 1975                                                               
survey; that  $250 million  study dealt with  the broad  range of                                                               
government services impacted by alcohol.   In the meantime, there                                                               
have  been a  number of  national studies.   Although  [Alaska's]                                                               
consumption is higher and [Alaskans']  dependence is higher, [the                                                               
board] took national numbers and  "normed" them for what is known                                                               
about  Alaska consumption.    That  number is  also  in the  $250                                                               
million range.  Those numbers, which  came out in 1998 in a study                                                               
commissioned by  the National Institutes  of Health by  the Lewin                                                               
Group, had 1992 data.                                                                                                           
MS. SCHULTZ reported  that in each case the impact  on Alaska was                                                               
about  $250   million.    The   [board]  feels  that   is  strong                                                               
corroboration for  using the  $250 million  figure, which  is now                                                               
about  eight years  old.   She noted  that yesterday  [the board]                                                               
received  two small  Alaska  Mental Health  Trust  grants and  is                                                               
going to  contract - for $32,000  - with one of  Alaska's premier                                                               
economic-impact consulting  firms to  take that $250  million and                                                               
make it as accurate as possible.                                                                                                
REPRESENTATIVE  HALCRO  asked  Ms.  Schultz how  much  money  was                                                               
originally  needed to  do  the  study [that  the  board has  just                                                               
receive grants for].                                                                                                            
MS. SCHULTZ responded that the  study that [the board] would have                                                               
liked  to  have  had  was  a major  study;  however,  that's  not                                                               
possible.   By narrowing their  expectations and building  on the                                                               
strength of what is already known,  [the board] can take the next                                                               
step.   The  first compromise  [the board]  made with  the Alaska                                                               
Mental Health  Trust was  two years at  $75,000 a  year; however,                                                               
they didn't make that.                                                                                                          
REPRESENTATIVE  HALCRO asked  when  [the board]  should have  the                                                               
final report.                                                                                                                   
MS. SCHULTZ answered, six months.                                                                                               
Number 0182                                                                                                                     
CHAIR  MURKOWSKI called  an end  to public  testimony on  HB 225.                                                               
She  noted  that Representative  Rokeberg  would  be offering  an                                                               
amendment at the next hearing.                                                                                                  
[HB 225 was held over.]                                                                                                         
There being no further business before the committee, the House                                                                 
Labor and Commerce Standing Committee meeting was adjourned at                                                                  
7:26 p.m.                                                                                                                       

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