Legislature(2001 - 2002)

04/27/2001 03:30 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 27, 2001                                                                                         
                           3:30 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. 229                                                                                                              
"An Act imposing a tax on employment; and providing for an                                                                      
effective date."                                                                                                                
                                                                                                                                
     - HEARD AND HELD                                                                                                           
                                                                                                                                
HOUSE BILL NO. 226                                                                                                              
"An Act relating to the employment  of persons 14 years of age or                                                               
older and under  19 years of age on  licensed premises, including                                                               
hotels, restaurants, or  eating places; and relating  to hours of                                                               
work of minors under 16 years of age."                                                                                          
                                                                                                                                
     - HEARD AND HELD; ASSIGNED TO SUBCOMMITTEE                                                                                 
                                                                                                                                
CONFIRMATION HEARINGS                                                                                                           
                                                                                                                                
Alcoholic Beverage Control Board                                                                                              
                                                                                                                                
     Duane S. Udland - Anchorage                                                                                                
                                                                                                                                
          - CONFIRMATION ADVANCED                                                                                               
                                                                                                                                
Board of Dental Examiners                                                                                                     
                                                                                                                                
     Rena L. Anderson - Anchorage                                                                                               
     Dr. James Blasingame - Anchorage                                                                                           
     Dr. Patricia Bergdahl - Fairbanks                                                                                          
                                                                                                                                
     - CONFIRMATIONS ADVANCED                                                                                                   
                                                                                                                                
State Medical Board                                                                                                           
                                                                                                                                
     Dr. David Head - Nome                                                                                                      
     Sheila Means - Juneau                                                                                                      
                                                                                                                                
     - CONFIRMATIONS ADVANCED                                                                                                   
                                                                                                                                
Board of Certified Direct-Entry Midwives                                                                                      
                                                                                                                                
     Sharon Evans - Chugiak                                                                                                     
                                                                                                                                
     - CONFIRMATION ADVANCED                                                                                                    
                                                                                                                                
Board of Nursing                                                                                                              
                                                                                                                                
     Mary S. Nikodym - Wrangell                                                                                                 
                                                                                                                                
     - CONFIRMATION ADVANCED                                                                                                    
                                                                                                                                
Occupational Safety & Health Review Board                                                                                     
                                                                                                                                
     Representative Cliff Davidson - Kodiak                                                                                     
                                                                                                                                
     - CONFIRMATION ADVANCED                                                                                                    
                                                                                                                                
HOUSE BILL NO. 258                                                                                                              
"An  Act  converting  the  business license  fee  to  a  business                                                               
license tax;  adding, as an  element of that tax,  computation of                                                               
the  tax based  on  the taxpayer's  gross receipts;  establishing                                                               
adjustments to  that tax; and transferring  administration of the                                                               
levy  to  the  Department  of   Revenue;  and  providing  for  an                                                               
effective date."                                                                                                                
                                                                                                                                
     - HEARD AND HELD                                                                                                           
                                                                                                                                
PREVIOUS ACTION                                                                                                               
                                                                                                                                
BILL: HB 229                                                                                                                  
SHORT TITLE:EDUCATION TAX ON EMPLOYMENT                                                                                         
SPONSOR(S): REPRESENTATIVE(S)STEVENS                                                                                            
                                                                                                                                
Jrn-Date   Jrn-Page                     Action                                                                                  
04/02/01     0810       (H)        READ THE FIRST TIME -                                                                        
                                   REFERRALS                                                                                    
04/02/01     0810       (H)        L&C, FIN                                                                                     
04/02/01     0810       (H)        REFERRED TO LABOR & COMMERCE                                                                 
04/27/01                (H)        L&C AT 3:15 PM CAPITOL 17                                                                    
                                                                                                                                
                                                                                                                                
BILL: HB 226                                                                                                                  
SHORT TITLE:EMPLOYMENT OF PERSONS UNDER AGE 19                                                                                  
SPONSOR(S): REPRESENTATIVE(S)HARRIS                                                                                             
                                                                                                                                
Jrn-Date   Jrn-Page                     Action                                                                                  
04/02/01     0809       (H)        READ THE FIRST TIME -                                                                        
                                   REFERRALS                                                                                    
04/02/01     0809       (H)        L&C, JUD                                                                                     
04/02/01     0809       (H)        REFERRED TO LABOR & COMMERCE                                                                 
04/17/01     1021       (H)        COSPONSOR(S): KERTTULA                                                                       
04/25/01                (H)        L&C AT 3:15 PM CAPITOL 17                                                                    
04/25/01                (H)        Scheduled But Not Heard                                                                      
04/27/01                (H)        L&C AT 3:15 PM CAPITOL 17                                                                    
                                                                                                                                
                                                                                                                                
BILL: HB 258                                                                                                                  
SHORT TITLE:CHANGE BUSINESS LIC. FEE TO RECEIPTS TAX                                                                            
SPONSOR(S): REPRESENTATIVE(S)SCALZI                                                                                             
                                                                                                                                
Jrn-Date   Jrn-Page                     Action                                                                                  
04/25/01     1206       (H)        READ THE FIRST TIME -                                                                        
                                   REFERRALS                                                                                    
04/25/01     1206       (H)        L&C, FIN                                                                                     
04/25/01     1206       (H)        REFERRED TO LABOR & COMMERCE                                                                 
04/27/01                (H)        L&C AT 3:15 PM CAPITOL 17                                                                    
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
REPRESENTATIVE GARY STEVENS                                                                                                     
Alaska State Legislature                                                                                                        
Capitol Building, Room 428                                                                                                      
Juneau, Alaska 99801                                                                                                            
POSITION STATEMENT:  Testified as the sponsor of HB 229.                                                                        
                                                                                                                                
CHUCK HARLAMERT, Juneau Section Chief                                                                                           
Tax Division                                                                                                                    
Department of Revenue                                                                                                           
PO Box 110420                                                                                                                   
Juneau, Alaska 99811-0420                                                                                                       
POSITION STATEMENT:  Answered questions regarding HB 229.                                                                       
                                                                                                                                
SENATOR AUSTERMAN                                                                                                               
Alaska State Legislature                                                                                                        
Capitol Building, Room 417                                                                                                      
Juneau, Alaska 99801                                                                                                            
POSITION STATEMENT:  Spoke as the sponsor of the companion                                                                      
legislation, SB 165, to HB 229.                                                                                                 
                                                                                                                                
BRETT FRIED, Economist                                                                                                          
Tax Division                                                                                                                    
Department of Revenue                                                                                                           
PO Box 110420                                                                                                                   
Juneau, Alaska 99811-0420                                                                                                       
POSITION STATEMENT:  Answered questions regarding HB 229 and HB
258..                                                                                                                           
                                                                                                                                
SEAN REILLY                                                                                                                     
1109 C Street                                                                                                                   
Juneau, Alaska 99801                                                                                                            
POSITION STATEMENT:  Testified on HB 229.                                                                                       
                                                                                                                                
REBECCA NANCE GAMEZ, Director                                                                                                   
Division of Employment Security                                                                                                 
Department of Labor & Workforce Development                                                                                     
PO Box 25509                                                                                                                    
Juneau, Alaska 998902-5509                                                                                                      
POSITION STATEMENT:  Answered questions regarding HB 229.                                                                       
Testified that DLWD is supportive of Sections 3 and 4 of HB 226.                                                                
                                                                                                                                
JOHN MANLY, Staff                                                                                                               
to Representative John Harris                                                                                                   
Alaska State Legislature                                                                                                        
Capitol Building, Room 513                                                                                                      
Juneau, Alaska 99801                                                                                                            
POSITION STATEMENT:  Testified on behalf of the sponsor of HB
226.                                                                                                                            
                                                                                                                                
DOUG GRIFFIN, Director                                                                                                          
Alcoholic Beverage Control Board                                                                                                
Department of Revenue                                                                                                           
550 W 7th Avenue, Suite 540                                                                                                     
Anchorage, Alaska 99501-3510                                                                                                    
POSITION STATEMENT:  Testified in opposition to HB 226.                                                                         
                                                                                                                                
REPRESENTATIVE DREW SCALZI                                                                                                      
Alaska State Legislature                                                                                                        
Capitol Building, Room 13                                                                                                       
Juneau, Alaska 99801                                                                                                            
POSITION STATEMENT:  Testified as the sponsor of HB 258.                                                                        
                                                                                                                                
PAM LaBOLLE, President                                                                                                          
Alaska State Chamber of Commerce                                                                                                
217 2nd Street, Suite 201                                                                                                       
Juneau, Alaska  99801                                                                                                           
POSITION STATEMENT:  Testified in opposition to HB 258.                                                                         
                                                                                                                                
JAMIE PARSONS, Executive Director                                                                                               
Juneau Chamber of Commerce                                                                                                      
3100 Channel Drive, Suite 300                                                                                                   
Juneau, Alaska 99801                                                                                                            
POSITION STATEMENT:  Testified in opposition to HB 258.                                                                         
                                                                                                                                
CATHERINE REARDON, Director                                                                                                     
Division of Occupational Licensing                                                                                              
Department of Community & Economic Development                                                                                  
PO Box 110806                                                                                                                   
Juneau, Alaska 99811-0806                                                                                                       
POSITION STATEMENT:  Testified on HB 258.                                                                                       
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
TAPE 01-69, SIDE A                                                                                                              
Number 0001                                                                                                                     
                                                                                                                                
CHAIR  LISA  MURKOWSKI  called   the  House  Labor  and  Commerce                                                               
Standing   Committee    meeting   to    order   at    3:30   p.m.                                                               
Representatives  Murkowski,  Halcro,  Crawford,  and  Hayes  were                                                               
present at the  call to order.  Representatives  Meyer, Kott, and                                                               
Rokeberg arrived as the meeting was in progress.                                                                                
                                                                                                                                
HB 229-EDUCATION TAX ON EMPLOYMENT                                                                                            
                                                                                                                                
CHAIR MURKOWSKI announced that the  first order of business would                                                               
be HOUSE BILL NO. 229, "An  Act imposing a tax on employment; and                                                               
providing for an effective date."                                                                                               
                                                                                                                                
Number 0105                                                                                                                     
                                                                                                                                
REPRESENTATIVE GARY STEVENS,  Alaska State Legislature, testified                                                               
as the sponsor  of HB 229, which  is a companion bill  to SB 165.                                                               
Representative Stevens  paraphrased his sponsor  statement, which                                                               
read as follows:                                                                                                                
                                                                                                                                
     Throughout   the   session,   legislators   have   been                                                                    
     approached   by   numerous  educators   requesting   an                                                                    
     increase in K-12 education funding.   Bills to increase                                                                    
     the  foundation formula  have been  introduced in  both                                                                    
     bodies,   each   requiring  additional   general   fund                                                                    
     dollars, but without  a new source of  revenue for that                                                                    
     increase.  HB  229 will solve that  dilemma by creating                                                                    
     an education head-tax.                                                                                                     
                                                                                                                                
     Under HB  229, the state  will impose  a tax of  $100 a                                                                    
     year  on  each employed  individual  age  19 or  older,                                                                    
     including the self-employed.  HB  229 would require the                                                                    
     employer to  deduct $50 from  the employee's  salary on                                                                    
     each of their first  two regular payrolls after January                                                                    
     1 of the calendar year.   A provision has been added to                                                                    
     prevent this  tax from being  taken out more  than once                                                                    
     when the employee provides proof  to their new employer                                                                    
     that the tax has already been satisfied.                                                                                   
                                                                                                                                
     Preliminary  estimates  by  the Department  of  Revenue                                                                    
     indicate that  the state would collect  between $35 and                                                                    
     $36 million  a year  in new  revenue generated  by this                                                                    
     legislation.  Approximately $2 million  a year would be                                                                    
     required to administer the  increased workload by staff                                                                    
     in that  division if  this measure  becomes law.   This                                                                    
     revenue  would  more than  fund  the  $145 per  student                                                                    
     increase in the foundation formula  as proposed in SB 1                                                                    
     and HB 105.                                                                                                                
                                                                                                                                
     The  tax   collected  under   AS  43.45.021   would  be                                                                    
     deposited into the state's  general fund, but accounted                                                                    
     for  separately.   In turn,  the  legislature may  then                                                                    
     appropriate  the amounts  collected  under the  section                                                                    
     for education.                                                                                                             
                                                                                                                                
     This  authorization   is  not  intended  to   create  a                                                                    
     dedication of fund in violation  of Article IX, Sec. 7,                                                                    
     of the Constitution of the State of Alaska.                                                                                
                                                                                                                                
     I  urge you  to  join  me in  showing  a commitment  to                                                                    
     public education in Alaska by supporting HB 229.                                                                           
                                                                                                                                
Number 0272                                                                                                                     
                                                                                                                                
REPRESENTATIVE HAYES asked whether Representative Stevens had                                                                   
considered making a statutory designation in order to make more                                                                 
of an opportunity for this money to be used for education.                                                                      
                                                                                                                                
REPRESENTATIVE STEVENS answered that  such wasn't part of Senator                                                               
Austerman's original bill.   If that is of interest,  it could be                                                               
reviewed.                                                                                                                       
                                                                                                                                
REPRESENTATIVE  HAYES inquired  as to  why this  tax wouldn't  be                                                               
implemented until February  1, 2003.  He related  his belief that                                                               
June  1,  2003,  would  probably  be a  better  date  because  he                                                               
recalled that  June or July  is the highest month  for employment                                                               
in this state.                                                                                                                  
                                                                                                                                
REPRESENTATIVE STEVENS said  that was a good  idea.  Furthermore,                                                               
it may be more difficult to  collect this money in January, after                                                               
the holidays.   Representative Stevens indicated  his openness to                                                               
consider various options.                                                                                                       
                                                                                                                                
CHAIR MURKOWSKI  remarked that  collection of  this tax  from the                                                               
self-employed  or   commission-based  employees  would   be  more                                                               
difficult.   Therefore, she  asked if  the difficulties  had been                                                               
worked through.                                                                                                                 
                                                                                                                                
REPRESENTATIVE STEVENS  said that he hadn't  worked through that.                                                               
He  noted  that  such  would  need  to  be  handled  through  the                                                               
Department of Revenue.                                                                                                          
                                                                                                                                
Number 0435                                                                                                                     
                                                                                                                                
REPRESENTATIVE  CRAWFORD   said  that   he  remembered   the  $10                                                               
education tax, which  he was glad to see eliminated.   He related                                                               
his personal experience in which  he worked for many employers in                                                               
a year and  thus would have to  wait for a specific  time of year                                                               
to  obtain a  rebate from  the education  tax.   He asked  if the                                                               
financial burden this creates had been reviewed.                                                                                
                                                                                                                                
REPRESENTATIVE STEVENS pointed out that  under HB 229 it would be                                                               
a matter of proving whether  the money had already been collected                                                               
versus a rebate situation.                                                                                                      
                                                                                                                                
REPRESENTATIVE  HAYES inquired  as  to how  this  would work  for                                                               
military personnel and  those who work outside of  the state, but                                                               
claim residency in Alaska.                                                                                                      
                                                                                                                                
REPRESENTATIVE  STEVENS answered  that  military personnel  would                                                               
pay  this  tax.    However, he  acknowledged  the  difficulty  in                                                               
collecting the tax  from checks that are cut  in Washington, D.C.                                                               
Representative Stevens acknowledged the need to work on that.                                                                   
                                                                                                                                
REPRESENTATIVE  HAYES also  inquired as  to  why the  age 19  was                                                               
chosen instead of 18.                                                                                                           
                                                                                                                                
REPRESENTATIVE  STEVENS  said  that  Representative  Hayes  could                                                               
chose 18 years of age if he wanted.                                                                                             
                                                                                                                                
REPRESENTATIVE  HALCRO  asked  if   there  is  any  institutional                                                               
knowledge regarding how the $10  education tax was collected then                                                               
from military personnel.                                                                                                        
                                                                                                                                
Number 0763                                                                                                                     
                                                                                                                                
CHUCK HARLAMERT,  Juneau Section Chief, Tax  Division, Department                                                               
of  Revenue, related  his understanding  that such  a tax  can be                                                               
collected  from military  personnel  who are  legal residents  of                                                               
Alaska, but  not from personnel  that are assigned to  Alaska who                                                               
aren't legal residents of Alaska.                                                                                               
                                                                                                                                
REPRESENTATIVE HALCRO  asked if  there is a  process in  place to                                                               
account  for  such  a  contribution  in  order  to  avoid  double                                                               
dipping.                                                                                                                        
                                                                                                                                
MR. HARLAMERT said  in order to avoid double dipping  it looks as                                                               
if HB  229 places the  responsibility on  the employee to  show a                                                               
second  employer  that  the  employee had  already  had  the  tax                                                               
withheld by a former employer.                                                                                                  
                                                                                                                                
REPRESENTATIVE HALCRO  related his understanding then  that those                                                               
in  the  military  in  active   service  wouldn't  pay  the  $100                                                               
education tax.                                                                                                                  
                                                                                                                                
MR.  HARLAMERT  answered,  "Correct."   In  further  response  to                                                               
Representative  Halcro, Mr.  Harlamert  related  his belief  that                                                               
other federal employees would have to pay the education tax.                                                                    
                                                                                                                                
Number 0875                                                                                                                     
                                                                                                                                
REPRESENTATIVE KOTT  posed a  situation in  which an  active duty                                                               
military person, who  is a resident of the state,  is assigned to                                                               
Elmendorf.  He related his  understanding that the state is going                                                               
to  approach  the  federal  government's  Department  of  Finance                                                               
office in Colorado and request them  to withhold $100 and send it                                                               
to the state.                                                                                                                   
                                                                                                                                
MR.  HARLAMERT replied,  "I  think your  understanding  of it  is                                                               
probably as good as mine."                                                                                                      
                                                                                                                                
REPRESENTATIVE KOTT said  he felt that would be  problematic.  He                                                               
then  inquired as  to the  difference between  applying the  $100                                                               
education  tax  to military  personnel  stationed  in Alaska  who                                                               
aren't residents of this state  and any other person, nonresident                                                               
of the  state, who  seasonally works  in the  state and  would be                                                               
taxed.   He  indicated that  there would  be an  equal protection                                                               
problem.                                                                                                                        
                                                                                                                                
MR. HARLAMERT explained that the  military personnel aren't being                                                               
taxed due to a federal law.                                                                                                     
                                                                                                                                
REPRESENTATIVE  KOTT  asked if  the  working  spouse of  military                                                               
personnel in the state would be taxed.                                                                                          
                                                                                                                                
MR.  HARLAMERT related  his belief  that such  a spouse  would be                                                               
taxed.                                                                                                                          
                                                                                                                                
Number 1005                                                                                                                     
                                                                                                                                
SENATOR AUSTERMAN pointed out that  federal military salaries are                                                               
exempt from state  taxes.  However, if  military personnel worked                                                               
in a  cannery, for  example, as  an extra  job, then  that person                                                               
would be taxed.                                                                                                                 
                                                                                                                                
REPRESENTATIVE KOTT related his  understanding then that military                                                               
personnel are exempt  due to their federal pay  rather than their                                                               
military position.   Therefore,  federal government  workers that                                                               
are nonresidents would not pay the education tax.                                                                               
                                                                                                                                
CHAIR MURKOWSKI interjected  her belief that this  relates to the                                                               
Soldiers &  Sailors Civil  Relief Act,  which says  that specific                                                               
taxes aren't paid as long as  the persons income is from military                                                               
employment.   She  agreed with  Senator  Austerman that  military                                                               
personnel who  have a  job separate  from military  service would                                                               
pay the education tax through that separate job.                                                                                
                                                                                                                                
REPRESENTATIVE  KOTT  requested  a  copy  of  the  aforementioned                                                               
Soldiers & Sailors Civil Relief Act.                                                                                            
                                                                                                                                
REPRESENTATIVE HAYES  inquired as to  which month is  the highest                                                               
month of employment for the State of Alaska.                                                                                    
                                                                                                                                
MR.  HARLAMERT remarked  that he  wasn't sure  that would  matter                                                               
because the bill calls for  withholding $50 per paycheck from the                                                               
first  two  paychecks  of  the  year.   Therefore,  it  would  be                                                               
dependent  upon the  effective date  of the  law.   Regardless of                                                               
whether  an employee  starts work  on January  1 or  July 1,  the                                                               
employee would pay the same.                                                                                                    
                                                                                                                                
REPRESENTATIVE  KOTT  posed  a situation  in  which  an  employee                                                               
begins  work December  1 and  thus  would receive  the first  two                                                               
checks in December.   He asked how much time  the employer has to                                                               
submit  that  [withheld  education  tax]  to  the  Department  of                                                               
Revenue.   He also asked  if there is  enough time built  into HB
229 that would  allow the department to make  the disbursement on                                                               
February 1.                                                                                                                     
                                                                                                                                
MR. HARLAMERT explained that  in Representative Kott's situation,                                                               
the withholding would  be payable in February 1  of the following                                                               
year.   Therefore, he  didn't foresee  that being  a problem.   A                                                               
more problematic scenario  is one in which  an full-year employee                                                               
has the [education tax] withheld  in January, but it isn't turned                                                               
over to the department until February of the following year.                                                                    
                                                                                                                                
REPRESENTATIVE KOTT asked if 30 days is enough time.                                                                            
                                                                                                                                
MR.  HARLAMERT answered  that  the department  didn't  see it  as                                                               
problem.   The money collected  in February 2002 would  be fiscal                                                               
year 2002 money  and would be appropriated by  the legislature in                                                               
the 2003 budget, he suspected.                                                                                                  
                                                                                                                                
Number 1313                                                                                                                     
                                                                                                                                
BRETT  FRIED, Economist,  Department of  Revenue, explained  that                                                               
withholding would  begin January 1,  2002, and continue  for that                                                               
entire calendar  year.  However, the  department wouldn't receive                                                               
the returns with the payments until February 1, 2003.                                                                           
                                                                                                                                
REPRESENTATIVE  HALCRO remarked  that  the aforementioned  didn't                                                               
make much sense to him because  allowing an employer to hold onto                                                               
payments doesn't  make sense for  the state.   Furthermore, there                                                               
are  seasonal employers.   Representative  Halcro felt  that once                                                               
the money  is withheld from the  employee, it should be  filed in                                                               
conjunction with some  monthly report, which would  help the cash                                                               
flow side of this.                                                                                                              
                                                                                                                                
MR.   HARLAMERT  said   that   the  department   drew  the   same                                                               
observations  and  felt   that  the  delay  from   the  point  of                                                               
withholding and  the point  of payment  was unusual  and subjects                                                               
the state  to the risk of  loss.  However, a  monthly withholding                                                               
would  result  in  a  more  expensive tax  to  administer.    One                                                               
suggestion within  the department was  to have a payment  date of                                                               
February of  the same year the  employer withheld, [the tax].   A                                                               
monthly report is of concern.                                                                                                   
                                                                                                                                
Number 1444                                                                                                                     
                                                                                                                                
REPRESENTATIVE HALCRO  related his belief that  waiting an entire                                                               
year for  every employer's education  tax was due on  February 1,                                                               
then it  seems to  indicate that auditing  and enforcing  of this                                                               
will  be tremendous.   Therefore,  he  suggested having  multiple                                                               
reporting times throughout the year.   It seems that the employer                                                               
holding  the  receipts for  a  year  lends  itself to  fraud  and                                                               
nonpayment.                                                                                                                     
                                                                                                                                
MR.   HARLAMERT  acknowledged   that   [the  department]   shared                                                               
Representative  Halcro's observations  when  reviewing the  bill.                                                               
In  regard  to  the  risk   of  loss,  Mr.  Harlamert  felt  that                                                               
Representative  Halcro was  on target.    However, Mr.  Harlamert                                                               
wasn't  sure that  more routine  filings would  result in  better                                                               
compliance.    He  mentioned that  seasonal  employers  represent                                                               
compliance  issues.   Therefore,  Mr. Harlamert  viewed the  cash                                                               
flow issue as  the most valid point and thus  it was thought that                                                               
the  collection would  occur  February 1  for  money withheld  on                                                               
January 1.                                                                                                                      
                                                                                                                                
REPRESENTATIVE  HALCRO  reiterated   concern  over  the  seasonal                                                               
workforce in Alaska.  He felt  that it would be beneficial to the                                                               
employer to have  an additional box for the education  tax on the                                                               
ESC  [Employment Security  Cost]  report.   Therefore, the  first                                                               
quarter  that the  ESC taxes  are done,  the education  deduction                                                               
would  be  submitted with  it  and  then  the next  quarter,  the                                                               
employer can  check a  box indicating  that the  contribution has                                                               
already  been  made.    From  a  reporting  standpoint  from  the                                                               
employer, such would seem more convenient.                                                                                      
                                                                                                                                
Number 1669                                                                                                                     
                                                                                                                                
REPRESENTATIVE  CRAWFORD asked  whether an  employee showing  the                                                               
employer an original pay stub  illustrating that they had already                                                               
paid the education tax would suffice.                                                                                           
                                                                                                                                
MR. HARLAMERT explained that the  bill actually requires that the                                                               
department supply a form that enables  the employee to prove to a                                                               
subsequent  employer  that the  education  tax  has already  been                                                               
withheld.                                                                                                                       
                                                                                                                                
REPRESENTATIVE  KOTT  posed a  scenario  in  which an  individual                                                               
opens a  business in mid-June  and closes  it in mid-July.   This                                                               
employer  has  two or  three  employees.    In such  a  situation                                                               
Representative Kott inquired as to  the mechanisms that the state                                                               
currently   has   in   place   to   identify   these   employees.                                                               
Furthermore,  what assurance  is there  that this  employer would                                                               
deliver the education tax deductions  to the department.  He also                                                               
inquired  as to  the provisions  in law  that would  penalize the                                                               
employer if the employer didn't  forward the education tax to the                                                               
department.                                                                                                                     
                                                                                                                                
MR. HARLAMERT noted  that the Department of Labor  would have the                                                               
wherewithal  to  know  who  is  employed  and  who  isn't.    Mr.                                                               
Harlamert pointed out  that there isn't a provision  at this time                                                               
that would hold the employer  who withheld the money responsible.                                                               
However, there is a penalty if  the employer fails to forward the                                                               
money to  the department.   Essentially, the employee's  money is                                                               
held  in  trust  by  the  employer  to  be  turned  over  to  the                                                               
department and thus there should  be some enforcement and penalty                                                               
provisions placed  on the employer to  pay for this.   In further                                                               
response to Representative  Kott, Mr. Harlamert said  that HB 229                                                               
doesn't  include a  penalty.   However, a  reference to  existing                                                               
penalties under Title 43 could be inserted.                                                                                     
                                                                                                                                
REPRESENTATIVE KOTT asked if the  department has taken a position                                                               
on HB 229.                                                                                                                      
                                                                                                                                
MR.  HARLAMERT  answered that  the  department  has not  taken  a                                                               
position on HB 229.                                                                                                             
                                                                                                                                
Number 1919                                                                                                                     
                                                                                                                                
REPRESENTATIVE   MEYER  related   his  understanding   that  this                                                               
education tax will collect about $35-$36 million.                                                                               
                                                                                                                                
MR. FRIED  noted that was  a preliminary estimate.   However, the                                                               
fiscal  note  actually  estimates  that  $38.2  million  will  be                                                               
collected.   In  further  response to  Representative Meyer,  Mr.                                                               
Fried  explained that  it  would cost  $822,000  to collect  this                                                               
education tax in the first year.                                                                                                
                                                                                                                                
REPRESENTATIVE  MEYER pointed  out  that Representative  Stevens'                                                               
sponsor  statement  estimates  a  cost  of  $2  million  for  the                                                               
collection cost and thus there  seems to be a discrepancy between                                                               
that [and  the department's fiscal  note].   Representative Meyer                                                               
inquired as to why the collection costs so much.                                                                                
                                                                                                                                
MR. HARLAMERT said that the  education tax is a reasonably simple                                                               
tax   to  collect.     The   difficulty  lies   in  the   volume,                                                               
predictability, and seasonality.   He informed the committee that                                                               
about 28,000  returns are received  per year and he  expected [HB
229] to generate about 50,000 as well as 50,000 payments.                                                                       
                                                                                                                                
REPRESENTATIVE  MEYER  related  his  assumption  that  the  money                                                               
collected from the  education tax goes to the general  fund to be                                                               
allocated to the schools through  the foundation formula in order                                                               
to be equitable.                                                                                                                
                                                                                                                                
Number 2101                                                                                                                     
                                                                                                                                
REPRESENTATIVE  HAYES asked  if more  than eight  folks would  be                                                               
necessary to perform the computing.   He assumed that people will                                                               
attempt  to  "play  the  system"  and thus  he  wondered  if  the                                                               
department had  enough people to  perform enforcement  if someone                                                               
decides not to pay.                                                                                                             
                                                                                                                                
MR.  HARLAMERT  answered  that in  the  department's  preliminary                                                               
review,  the principle  enforcement types  were included  at some                                                               
level.  That  is, either reviewing returns  for reasonableness or                                                               
going out in the field examining  returns.  He indicated that the                                                               
hope was to achieve compliance goals through technology.                                                                        
                                                                                                                                
REPRESENTATIVE HAYES  expressed his  fear is that  there wouldn't                                                               
be  enough people  doing enforcement  and thus  people will  slip                                                               
through the  cracks, which is  what happened with the  ABC Board.                                                               
Representative  Hayes didn't  believe  three [enforcement]  folks                                                               
for the state would be  enough.  Representative Hayes inquired as                                                               
to how  this education tax  would work  for those that  are self-                                                               
employed.                                                                                                                       
                                                                                                                                
MR. HARLAMERT  said that  he thinks  that the  paycheck provision                                                               
would be  ignored for self-employed people  and the self-employed                                                               
would pay the $100 for the  year, if they qualify.  Mr. Harlamert                                                               
noted that  there would be  no way  to pick up  the self-employed                                                               
under  the  ESC  rules.    "This  tax  base  really  doesn't  fit                                                               
perfectly with any existing program  that the state has, that I'm                                                               
aware of," he said.                                                                                                             
                                                                                                                                
Number 2186                                                                                                                     
                                                                                                                                
SEAN REILLY highlighted  that thus far the  committee has focused                                                               
on  how people  would potentially  be  able to  fall through  the                                                               
cracks.    Although there  have  been  some valid  questions,  he                                                               
expressed  the need  to emphasize  the positive  aspects of  this                                                               
bill.  Mr.  Reilly said that a large portion  of the revenue that                                                               
would be  generated from this bill  would come from out  of state                                                               
to  earn  money  and  return  home, where  their  state  has  the                                                               
opportunity  to  tax them.    Therefore,  this legislation  would                                                               
provide  the state  with an  opportunity to  obtain a  portion of                                                               
that tax.                                                                                                                       
                                                                                                                                
MR.  REILLY pointed  out that  this session  the legislature  has                                                               
given the  Department of  Education &  Early Development  (EED) a                                                               
strong  dictate to  implement a  program for  an exit  exam.   He                                                               
expressed the  need to  provide EED with  the tools  to implement                                                               
such  a  program.   One  tool  would  be  to fund  the  programs.                                                               
Additionally,  Mr.  Reilly  remarked that  school  board  members                                                               
request additional  funds due to  declining enrollment,  which he                                                               
felt  was partially  due to  the  lack of  services.   Therefore,                                                               
funding  the   schools  would  alleviate  that   problem.    This                                                               
legislation is a  wonderful way to implement  that funding, which                                                               
would give  EED a  clear indication of  support.   In conclusion,                                                               
Mr. Reilly  said that HB  229 is a  step forward in  addressing a                                                               
long-term fiscal planning.                                                                                                      
                                                                                                                                
MR.  REILLY recalled  an earlier  question regarding  going after                                                               
employers that  didn't report for  their employees.   He recalled                                                               
that AS 23 addresses action  regarding the reporting of wages and                                                               
workers' compensation  and thus perhaps similar  wording could be                                                               
utilized with this.                                                                                                             
                                                                                                                                
MR. REILLY,  in response to  Representative Meyer,  recalled that                                                               
the school tax, $10 at that time, was eliminated around 1980.                                                                   
                                                                                                                                
REBECCA NANCE  GAMEZ, Director, Division of  Employment Security,                                                               
Department  of  Labor  &   Workforce  Development,  responded  to                                                               
Representative Halcro.  She said  that the Division of Employment                                                               
Security receives the  ESC reports.  She  explained that employer                                                               
taxes are due to the division 30 days after each quarter.                                                                       
                                                                                                                                
TAPE 01-69, SIDE B                                                                                                              
                                                                                                                                
MS.  NANCE  GAMEZ  continued  by  explaining  that  the  division                                                               
verifies wages  and investigates  possible fraudulent  failure to                                                               
report taxes.   Although she  knew that there are  penalties, she                                                               
wasn't sure of the specifics.                                                                                                   
                                                                                                                                
REPRESENTATIVE HALCRO asked if the  division's staff is proactive                                                               
in ensuring that people are compliant.                                                                                          
                                                                                                                                
MS.  NANCE GAMEZ  informed the  committee that  the division  has                                                               
auditors  that  audit  employers.     Furthermore,  the  division                                                               
proactively  works with  the employer  community in  helping them                                                               
understand the  best tax  rate that  the employer  could achieve.                                                               
There is also the fraud detection unit.                                                                                         
                                                                                                                                
Number 2400                                                                                                                     
                                                                                                                                
CHAIR  MURKOWSKI announced  her intention  to hold  HB 229  while                                                               
recognizing  that this  is  a  piece of  a  larger  puzzle.   She                                                               
indicated  the need  to  address some  of  the details  discussed                                                               
today.                                                                                                                          
                                                                                                                                
REPRESENTATIVE  HALCRO indicated  agreement  that this  education                                                               
tax  is one  way  to get  out-of-state  residents to  contribute.                                                               
Furthermore, he felt  that a very easy reporting  system could be                                                               
created  in conjunction  with  the ESC  by  working with  various                                                               
departments and utilizing existing infrastructure.                                                                              
                                                                                                                                
REPRESENTATIVE  MEYER  asked  if  this  education  tax  would  be                                                               
deductible from the federal income tax.                                                                                         
                                                                                                                                
[REPRESENTATIVE CRAWFORD]  indicated that this could  be deducted                                                               
from one's federal tax, if one itemizes their deductions.                                                                       
                                                                                                                                
There  seemed  to  be agreement  with  Representative  Crawford's                                                               
remark from members of the Department of Revenue.                                                                               
                                                                                                                                
REPRESENTATIVE    ROKEBERG   pointed    out   that    there   are                                                               
constitutional provisions  preventing poll taxes and  other types                                                               
of head taxes.                                                                                                                  
                                                                                                                                
REPRESENTATIVE KOTT related his belief  that this is an ingenious                                                               
way to  generate revenue for  the state.  Certainly,  the revenue                                                               
could  be  applied  to  education.     He  wondered  whether  the                                                               
department  would be  interested in  developing an  exception for                                                               
the working poor.                                                                                                               
                                                                                                                                
Number 2253                                                                                                                     
                                                                                                                                
REPRESENTATIVE STEVENS related his belief  that the meeting was a                                                               
fruitful discussion  that has highlighted  some issues  that need                                                               
further   attention.     Representative   Stevens  reminded   the                                                               
committee that  the education tax  worked in Alaska in  the past.                                                               
He  informed the  committee that  the  companion bill  is in  the                                                               
Senate Finance Committee.                                                                                                       
                                                                                                                                
REPRESENTATIVE  KOTT remarked  that  perhaps  the department  may                                                               
want to review the possibility of  filing this tax on-line with a                                                               
credit card.                                                                                                                    
                                                                                                                                
REPRESENTATIVE  HAYES  reiterated the  need  to  review how  this                                                               
would relate to the self-employed.                                                                                              
                                                                                                                                
[HB 229 was held.]                                                                                                              
                                                                                                                                
HB 226-EMPLOYMENT OF PERSONS UNDER AGE 19                                                                                     
                                                                                                                                
CHAIR MURKOWSKI announced  that the next order  of business would                                                               
be HOUSE  BILL NO.  226, "An  Act relating  to the  employment of                                                               
persons 14  years of age  or older and under  19 years of  age on                                                               
licensed  premises,  including  hotels,  restaurants,  or  eating                                                               
places; and  relating to hours of  work of minors under  16 years                                                               
of age."                                                                                                                        
                                                                                                                                
Number 2133                                                                                                                     
                                                                                                                                
REPRESENTATIVE  KOTT  moved  to   adopt  CSHB  226,  Version  22-                                                               
LS0368\O,  Cramer, 4/27/01,  as the  working document  before the                                                               
committee.   There being no  objection, Version O was  before the                                                               
committee.                                                                                                                      
                                                                                                                                
JOHN  MANLY, Staff  to Representative  John Harris,  Alaska State                                                               
Legislature,  testified on  behalf  of the  sponsor.   Mr.  Manly                                                               
paraphrased the following sponsor statement:                                                                                    
                                                                                                                                
     House  Bill 226  was introduced  with the  objective of                                                                    
     making it easier for minors  to obtain summer and after                                                                    
     school  employment, especially  in hotels,  restaurants                                                                    
     and other eating establishments.   Many more kids could                                                                    
     get jobs  as dishwashers,  hotel maids,  busboys, etc.,                                                                    
     if not for  the fact that most of  the businesses where                                                                    
     they  might   be  employed  have   beverage  dispensary                                                                    
     licenses.                                                                                                                  
                                                                                                                                
     Current   state  law   also   makes  it   unnecessarily                                                                    
     difficult  for employers,  as well  as the  job-seeking                                                                    
     youth.    Finding workers  willing  to  take jobs  that                                                                    
     typically  are not  high-paying becomes  more difficult                                                                    
     if  high school-age  kids  are not  eligible.   And  it                                                                    
     becomes  a real  problem during  the short  but intense                                                                    
     tourist  season  when  kids   on  summer  vacation  are                                                                    
     required to  get their parents' permission  before they                                                                    
     can start  working.   This is a  process that  can take                                                                    
     days or weeks, during which  time the youth lose income                                                                    
     and employers go without help.                                                                                             
                                                                                                                                
     HB  226 seeks  to streamline  this process  by allowing                                                                    
     youth 16-18 years of age  to work in these jobs without                                                                    
     having   to    obtain   their    parents'   permission.                                                                    
     Provisions  in current  law are  retained that  prevent                                                                    
     minors from  serving, mixing, delivering  or dispensing                                                                    
     alcoholic  beverages,  and  requiring the  employer  to                                                                    
     notify   the   Department   of  Labor   and   Workforce                                                                    
     Development of  the fact  that a  minor is  working for                                                                    
     them.  HB  226 also extends state law to  allow 14- and                                                                    
     15-year-olds  to  work  in these  hotels,  restaurants,                                                                    
     resorts, and  other eating places, with  their parents'                                                                    
     permission.                                                                                                                
                                                                                                                                
     This  bill also  makes changes  to state  law governing                                                                    
     the number of  hours and time of day a  minor can work,                                                                    
     while school is  in session and when it  is not, mainly                                                                    
     to align Alaska law with current federal limits.                                                                           
                                                                                                                                
MR. MANLY  turned to the  proposed CS, which attempts  to cleanup                                                               
one of  the statutes that  was left on  the books when  the state                                                               
changed the legal drinking age from 19 to 21.                                                                                   
                                                                                                                                
Number 1980                                                                                                                     
                                                                                                                                
REPRESENTATIVE  KOTT  said  that  this   seems  to  head  in  the                                                               
direction that  "we" have been trying  not to go.   That is, "we"                                                               
have   been   trying   to   disassociate   kids   from   alcohol.                                                               
Representative Kott  asked whether  there is a  potential problem                                                               
with  this legislation  regarding  the ability  of a  16-year-old                                                               
busboy busing tables where alcohol was left on the table.                                                                       
                                                                                                                                
MR.  MANLY acknowledged  that such  may be  a potential  problem.                                                               
Clearly, in  the past  the legislature  didn't want  kids working                                                               
near [alcohol].                                                                                                                 
                                                                                                                                
REPRESENTATIVE KOTT remarked that  perhaps the delivering portion                                                               
of the  legislation would cover this  potential problem; however,                                                               
he  wasn't   sure.    Representative   Kott  surmised   that  the                                                               
restaurant owner will have to  establish drinking and nondrinking                                                               
sections in the restaurant.   He recalled that under current law,                                                               
a person under age 21 can't even lift an alcoholic beverage.                                                                    
                                                                                                                                
MR. MANLY  pointed out  that it  may be  a matter  of segregating                                                               
duties  and training  staff that  employees under  age 21  aren't                                                               
allowed  to bus  tables with  alcohol  or the  [of age  employee]                                                               
removes  the alcohol  before [the  underage  employee] buses  the                                                               
table.                                                                                                                          
                                                                                                                                
Number 1816                                                                                                                     
                                                                                                                                
REPRESENTATIVE HALCRO  said that  as an  employer he  wasn't sure                                                               
that he  would place himself  in a position  of risk by  hiring a                                                               
14-  or 15-year  old to  bus  tables in  a place  where there  is                                                               
alcohol.  Representative Halcro inquired  as to who is requesting                                                               
this legislation.                                                                                                               
                                                                                                                                
MR. MANLY answered that this  legislation was introduced upon the                                                               
request of one  of Representative Harris' constituents  who has a                                                               
combination hotel restaurant lounge  in Valdez.  This constituent                                                               
has difficulty obtaining even dishwashers  due to the way the law                                                               
is  written.    Mr.  Manly related  his  understanding  that  the                                                               
current law says that minors  cannot sell alcoholic beverages and                                                               
thus restaurants  that serve  beer would  not be  able to  have a                                                               
[minor] run  the cash register  because that  constitutes selling                                                               
the alcoholic beverage.                                                                                                         
                                                                                                                                
MR. MANLY, in response to  Chair Murkowski, said that he believes                                                               
that  an  employer  of  a  combination  hotel  restaurant  lounge                                                               
wouldn't be  able to  hire a  15-year-old as  a maid  because the                                                               
building houses a place where alcohol is sold.                                                                                  
                                                                                                                                
REPRESENTATIVE  ROKEBERG  pointed  out  that  the  licensing  law                                                               
requires  a  diagram  of  a licensed  premise,  which  may  limit                                                               
service to a specific area.   However, he acknowledged that there                                                               
may be room service.                                                                                                            
                                                                                                                                
REPRESENTATIVE CRAWFORD said that he  wasn't clear on the current                                                               
law.                                                                                                                            
                                                                                                                                
REPRESENTATIVE  MEYER   related  his  understanding  that   if  a                                                               
business has a  full dispensary license, then  all employees must                                                               
be 21.   However, if  the business has  a beer and  wine license,                                                               
then there can be employees that are under 21.                                                                                  
                                                                                                                                
Number 1621                                                                                                                     
                                                                                                                                
DOUG  GRIFFIN,   Director,  Alcoholic  Beverage   Control  Board,                                                               
Department  of  Revenue,  testified   via  teleconference.    Mr.                                                               
Griffin  explained  that  places that  have  beverage  dispensary                                                               
licenses [such  as a  Red Robin] are  allowed to  employee people                                                               
under  21 years  of age  if a  restaurant designation  permit has                                                               
been  received.    The  restaurant  designation  permit  requires                                                               
approval  by the  local governing  body and  review of  the floor                                                               
plan.   An [underage] employee in  such a location can  engage in                                                               
duties that don't involve the  serving, dispensing, or selling of                                                               
alcoholic beverages.   For  example, a Red  Robin could  have [an                                                               
employee under  the age of  21 as  a] hostess, kitchen  staff, or                                                               
busboy.   Mr. Griffin  agreed with  Representative Kott  that the                                                               
busing  of tables  is one  area in  which it  is possible  for an                                                               
underage  individual   to  come   into  contact   with  alcoholic                                                               
beverages that are unconsumed on  the table.  In such situations,                                                               
[the ABC  Board] encourages the  contents of the beverages  to be                                                               
dumped into a  bin at the table in order  to avoid consumption by                                                               
the  underage employee.   Mr.  Griffin noted  that an  [underage]                                                               
employee, perhaps  a cashier, is  allowed to carry the  bill even                                                               
though the  bill may  contain alcoholic  beverages.   Mr. Griffin                                                               
emphasized  that in  all cases  the establishment  has to  have a                                                               
restaurant  designation permit  [in  order  to employee  underage                                                               
people].    He clarified  that  under  current law  [an  underage                                                               
employee in  a location that serves  alcohol] has to be  at least                                                               
16 years  of age.   In  regard to the  maid example,  Mr. Griffin                                                               
said that  Representative Rokeberg  was correct  in that  a hotel                                                               
with room service  would be part of the  licensed premises, which                                                               
has been  problematic and thus  even a 14- or  15-year-old hasn't                                                               
been allowed to be employed as a maid on such a premises.                                                                       
                                                                                                                                
Number 1403                                                                                                                     
                                                                                                                                
MR.  GRIFFIN  confirmed  that  the  [ABC  Board]  is  opposed  to                                                               
lowering the age limit from 16 years  of age to 14.  Although Mr.                                                               
Griffin was sympathetic  to a brief "labor  shortage" in isolated                                                               
areas in  Alaska, he didn't feel  that it's good policy  to lower                                                               
the age  to 14 in an  attempt to deal  with that issue.   He felt                                                               
that there  are other  areas that the  employer could  explore in                                                               
order  to  deal  with  a   "labor  shortage."    Furthermore,  he                                                               
expressed   concern  with   regard  to   the  lack   of  parental                                                               
permission.   Mr.  Griffin  related his  belief  that things  are                                                               
liberal enough  now and  the system is  working.   Moreover, this                                                               
legislation may  have some unintended consequences.   Mr. Griffin                                                               
also  agreed with  Representative Kott  in that  this legislation                                                               
seems, by allowing  younger and younger people to  be involved in                                                               
jobs that  serve alcohol,  to send a  mixed message.   Therefore,                                                               
the ABC Board is opposed to HB 226.                                                                                             
                                                                                                                                
CHAIR MURKOWSKI  referred to Section 2  of HB 226 that  refers to                                                               
an exception outlined under AS  04.16.049(c), which doesn't allow                                                               
a minor  to consume, possess, or  control alcohol.  She  asked if                                                               
she was missing something.                                                                                                      
                                                                                                                                
MR. GRIFFIN  replied no  and explained  that "we're"  saying that                                                               
there are  some jobs that  can be  performed on a  liquor license                                                               
premises,  assuming  the  restaurant  designation  permit  is  in                                                               
place,  by [the  designated age  group of  minors].   Mr. Griffin                                                               
reiterated the ABC Board's position that  the age of 16 for these                                                               
jobs is  liberal enough.   He pointed  out that 14-  and 15-year-                                                               
olds  are middle  kids versus  16-year-old high  school kids  and                                                               
there is a difference between the maturity level of those ages.                                                                 
                                                                                                                                
REPRESENTATIVE CRAWFORD  returned to the exceptions  and asked if                                                               
these [employees that  are minors] would be allowed  to stock the                                                               
bar after hours and perhaps even  carry in beer to stock the bar.                                                               
Such  actions   don't  seem  to   fall  under   serving,  mixing,                                                               
delivering, or dispensing.                                                                                                      
                                                                                                                                
MR. GRIFFIN  answered that  the general rule  would be  that such                                                               
wouldn't be allowed and would probably be considered delivering.                                                                
                                                                                                                                
Number 1001                                                                                                                     
                                                                                                                                
MR.  GRIFFIN, in  response to  Representative Rokeberg,  answered                                                               
that  if  the  establishment  is  in  an  unorganized  area,  the                                                               
restaurant designation  permit can be obtained  directly from the                                                               
ABC Board.   Mr.  Griffin indicated that  this permit  involves a                                                               
more detailed  diagram than that  existing in the  liquor license                                                               
file because  the board  is interested in  employment as  well as                                                               
the circumstances under  which an individual under the  age of 21                                                               
may be  able to enter  a restaurant  that serves alcohol  for the                                                               
purpose  of  dining.    In  further  response  to  Representative                                                               
Rokeberg,  Mr. Griffin  clarified  that [when  there  is a  local                                                               
governing  body] that  local governing  body has  to approve  the                                                               
permit.                                                                                                                         
                                                                                                                                
Number 0842                                                                                                                     
                                                                                                                                
REBECCA NANCE  GAMEZ, Director, Division of  Employment Security,                                                               
Department of  Labor & Workforce Development  (DLWD), referred to                                                               
Sections 3  and 4 of  HB 226 to  which DLWD would  be supportive.                                                               
Those  sections  place  the  state  in  compliance  with  federal                                                               
regulations by  clearly defining the  hours and days  that minors                                                               
under the age of  16 may work.  The department  has no opinion on                                                               
the other sections of the bill.                                                                                                 
                                                                                                                                
There was  discussion regarding a  CS [Version L] that  was never                                                               
before the  committee.  The  discussion concluded that  Version O                                                               
merely lowers the age while the process remains the same.                                                                       
                                                                                                                                
MR. MANLY agreed that the  main difference in the legislation and                                                               
the current law  is the lowering of  the age as well  as the fact                                                               
that 16- to  20-year-olds wouldn't have to  obtain their parent's                                                               
written  permission to  start work.   However,  if their  parents                                                               
don't want  them to work  at a  particular place, there  is still                                                               
the  common law  fundamental  that these  children  are wards  of                                                               
their  parents and  thus the  parents could  notify the  employer                                                               
that   they   don't   want  their   children   working   at   the                                                               
establishment.                                                                                                                  
                                                                                                                                
MR.  MANLY, in  response  to Chair  Murkowski,  agreed that  this                                                               
legislation would  repeal subsection (d), which  will allow young                                                               
people to  now work the  cash register where  alcoholic beverages                                                               
may be sold.                                                                                                                    
                                                                                                                                
The committee took a brief at-ease from 4:57 p.m. to 5:02 p.m.                                                                  
                                                                                                                                
Number 0345                                                                                                                     
                                                                                                                                
REPRESENTATIVE ROKEBERG noted that the  committee has a number of                                                               
issues before it  involving youth employment and  thus he thought                                                               
the  committee  should  research  those  issues,  including  this                                                               
topic.     Representative   Rokeberg   wasn't   sure  that   this                                                               
legislation addresses an issue that  is applicable statewide.  He                                                               
expressed  the need  to develop  a  streamlined youth  employment                                                               
system.                                                                                                                         
                                                                                                                                
CHAIR  MURKOWSKI  noted  that Representative  Rokeberg  had  been                                                               
chairing the  subcommittee on  HB 128  and thus  she asked  if he                                                               
would be  willing to take on  a subcommittee on HB  226 and other                                                               
related  issues.    She   appointed  herself  and  Representative                                                               
Crawford to be members of this subcommittee.                                                                                    
                                                                                                                                
[HB 226 was heard and held.]                                                                                                    
                                                                                                                                
CONFIRMATION HEARINGS                                                                                                         
                                                                                                                                
CHAIR MURKOWSKI  announced that the  committee would now  turn to                                                               
the  governor's  appointments that  have  been  assigned to  this                                                               
committee.   She noted that  the committee packet  should include                                                               
the resume of every nominee.                                                                                                    
                                                                                                                                
Alcoholic Beverage Control Board                                                                                              
                                                                                                                                
Number 0022                                                                                                                     
                                                                                                                                
REPRESENTATIVE  HALCRO moved  that the  House Labor  and Commerce                                                               
Standing Committee  forward the name  of Duane S. Udland  for the                                                               
Alcoholic Beverage  Control Board  to the entire  legislature for                                                               
consideration.  There being no objection, it was so ordered.                                                                    
                                                                                                                                
TAPE 01-70, SIDE A                                                                                                              
                                                                                                                                
REPRESENTATIVE  ROKEBERG   reminded  members  that   signing  the                                                               
reports regarding  appointments to  boards and commissions  in no                                                               
way reflects  individual members' approval or  disapproval of the                                                               
appointees, and that the nominations  are merely forwarded to the                                                               
full legislature for confirmation or rejection.                                                                                 
                                                                                                                                
REPRESENTATIVE   KOTT  asked   if   someone   had  reviewed   the                                                               
requirements in order  to ensure that the nominee  is filling the                                                               
appropriate position.                                                                                                           
                                                                                                                                
CHAIR MURKOWSKI said that she had done so.                                                                                      
                                                                                                                                
Board of Dental Examiners                                                                                                     
                                                                                                                                
Number 0109                                                                                                                     
                                                                                                                                
REPRESENTATIVE  HALCRO moved  that the  House Labor  and Commerce                                                               
Standing Committee forward  the name of Rena L.  Anderson for the                                                               
Board  of   Dental  Examiners  to  the   entire  legislature  for                                                               
consideration.  There being no objection, it was so ordered.                                                                    
                                                                                                                                
REPRESENTATIVE  HALCRO moved  that the  House Labor  and Commerce                                                               
Standing Committee forward  the name of Dr.  James Blasingame for                                                               
the  Board of  Dental  Examiners to  the  entire legislature  for                                                               
consideration.  There being no objection, it was so ordered.                                                                    
                                                                                                                                
REPRESENTATIVE  HALCRO moved  that the  House Labor  and Commerce                                                               
Standing Committee forward the name  of Dr. Patricia Bergdahl for                                                               
the  Board of  Dental  Examiners to  the  entire legislature  for                                                               
consideration.  There being no objection, it was so ordered.                                                                    
                                                                                                                                
State Medical Board                                                                                                           
                                                                                                                                
Number 0166                                                                                                                     
                                                                                                                                
REPRESENTATIVE  HALCRO moved  that the  House Labor  and Commerce                                                               
Standing Committee  forward the  name of Dr.  David Head  for the                                                               
State Medical Board to the  entire legislature for consideration.                                                               
There being no objection, it was so ordered.                                                                                    
                                                                                                                                
REPRESENTATIVE  HALCRO moved  that the  House Labor  and Commerce                                                               
Standing  Committee forward  the  name of  Shelia  Means for  the                                                               
State Medical Board to the  entire legislature for consideration.                                                               
There being no objection, it was so ordered.                                                                                    
                                                                                                                                
Board of Certified Direct-Entry Midwives                                                                                      
                                                                                                                                
Number 0198                                                                                                                     
                                                                                                                                
REPRESENTATIVE  HALCRO moved  that the  House Labor  and Commerce                                                               
Standing  Committee forward  the  name of  Sharon  Evans for  the                                                               
Board   of  Certified   Direct-Entry  Midwives   to  the   entire                                                               
legislature for consideration.  There  being no objection, it was                                                               
so ordered.                                                                                                                     
                                                                                                                                
Board of Nursing                                                                                                              
                                                                                                                                
Number 0216                                                                                                                     
                                                                                                                                
REPRESENTATIVE  HALCRO moved  that the  House Labor  and Commerce                                                               
Standing Committee  forward the name  of Mary S. Nikodym  for the                                                               
Board  of Nursing  to the  entire legislature  for consideration.                                                               
There being no objection, it was so ordered.                                                                                    
                                                                                                                                
Occupational Safety and Health Review Board                                                                                   
                                                                                                                                
Number 0234                                                                                                                     
                                                                                                                                
REPRESENTATIVE  HALCRO moved  that the  House Labor  and Commerce                                                               
Standing  Committee forward  the  name  of former  Representative                                                               
Cliff  Davidson   for  the  Board   of  Nursing  to   the  entire                                                               
legislature for consideration.  There  being no objection, it was                                                               
so ordered.                                                                                                                     
                                                                                                                                
HB 258-CHANGE BUSINESS LIC. FEE TO RECEIPTS TAX                                                                               
                                                                                                                                
CHAIR  MURKOWSKI  announced  that  the final  order  of  business                                                               
before  the  committee would  be  HOUSE  BILL  NO. 258,  "An  Act                                                               
converting the  business license fee  to a business  license tax;                                                               
adding, as an  element of that tax, computation of  the tax based                                                               
on  the taxpayer's  gross receipts;  establishing adjustments  to                                                               
that  tax; and  transferring administration  of the  levy to  the                                                               
Department of Revenue; and providing for an effective date."                                                                    
                                                                                                                                
Number 0343                                                                                                                     
                                                                                                                                
REPRESENTATIVE DREW  SCALZI, Alaska State  Legislature, testified                                                               
as the  sponsor of HB 258.   Representative Scalzi noted  that HB
258 is before  the committee for discussion purposes  only and he                                                               
hoped to gather some comments  from both business and the general                                                               
public  during  the  interim  before  attempting  to  finalize  a                                                               
statewide  tax.   This legislation  would  transfer the  business                                                               
licensing  function  and  enforcement   from  the  Department  of                                                               
Community  & Economic  Development  (DCED) to  the Department  of                                                               
Revenue.  The current fee for  the annual business license is $25                                                               
a year.  In addition to  the $25 license tax, each business would                                                               
be required  to pay a 2  percent gross receipts tax  up to $2,000                                                               
per item.                                                                                                                       
                                                                                                                                
REPRESENTATIVE SCALZI  pointed out that  a gross receipts  tax is                                                               
easier to calculate and verify than  a sales tax.  Furthermore, a                                                               
gross receipts tax would be on  every level of sell, but wouldn't                                                               
require  a  separate  listing  on  sales  receipts.    The  gross                                                               
receipts  tax would  be  invisible to  the  consumer because  the                                                               
business  owner would  review  the total  sales  of business  and                                                               
calculate a  2 percent  tax.   For those  items over  $2,000, the                                                               
business owner would  need to separate those sales and  add a $40                                                               
tax for  each item.   This  legislation has  a limited  number of                                                               
exemptions  as  it  exempts   gross  receipts  from  educational,                                                               
religious, many nonprofit  activities, hospitals, and municipally                                                               
owned  and operated  utilities.    Additionally, home  handicraft                                                               
sales would  be exempted up  to $500  annually.  He  informed the                                                               
committee that  Alaska had a  gross receipts sales tax  from 1949                                                               
to 1979.                                                                                                                        
                                                                                                                                
REPRESENTATIVE  SCALZI pointed  out that  HB 258  has two  fiscal                                                               
notes,  which he  wanted  to explain.   One  fiscal  note is  for                                                               
approximately  $261,000 for  the  five  personnel that  currently                                                               
operate  the  business  licensing.    The  fiscal  note  shows  a                                                               
negative for the positions [currently  within DCED] because their                                                               
duties would  be moved to the  Department of Revenue.   The other                                                               
fiscal  note addresses  what  this tax  would  collect, which  is                                                               
estimated at about  $320 million.  However, this  is difficult to                                                               
calculate because of the $2,000 cap.                                                                                            
                                                                                                                                
REPRESENTATIVE  SCALZI informed  the  committee  that the  packet                                                               
includes  information  regarding  Vermont's  gross  receipts  tax                                                               
analysis.   This information should  be helpful in  analyzing the                                                               
host of options available and  thus he encouraged members to read                                                               
this   information.      In    response   to   Chair   Murkowski,                                                               
Representative Scalzi reiterated that  there was a gross receipts                                                               
tax from  1949-1979.  In  1979 the  income tax was  eliminated as                                                               
well.   Representative Scalzi  related a  discussion he  had with                                                               
Representative  James in  which  Representative  James said  that                                                               
there needs to  be a validation of the gross  receipts tax, which                                                               
the  income tax  helped provide.    He explained  that an  income                                                               
reporting system  would validate what one's  gross receipts were.                                                               
Therefore,  implementing  this  tax  would  probably  necessitate                                                               
regulations  requiring a  Schedule  C to  accompany  this tax  in                                                               
order to demonstrate the annual revenue.                                                                                        
                                                                                                                                
Number 0800                                                                                                                     
                                                                                                                                
REPRESENTATIVE   CRAWFORD   related    his   understanding   that                                                               
Representative Scalzi views the  fact that people wouldn't notice                                                               
a  gross   receipts  tax   as  a   positive  aspect.     However,                                                               
Representative Crawford  did not  because the gross  receipts tax                                                               
is  a hidden  tax  that  people don't  realize  they are  paying.                                                               
Representative Crawford  said that he  had a problem  with people                                                               
not being able to recognize what they are paying in taxes.                                                                      
                                                                                                                                
REPRESENTATIVE  SCALZI remarked  that it  didn't bother  him when                                                               
the [gross receipts tax] was in  place before.  He indicated that                                                               
when the  municipality implements a tax,  people have [concerns].                                                               
Representative  Scalzi noted  that  the  Alaska Municipal  League                                                               
(AML)  has announced  its opposition  to  a state  sales tax,  as                                                               
encompassed in  HB 233,  because it believes  that a  state sales                                                               
tax  would hinder  municipalities  from  collecting sales  taxes.                                                               
Therefore,   [a  gross   receipts   tax]   wouldn't  preclude   a                                                               
municipality from adding  a sales tax if  the municipality didn't                                                               
already  have one.   In  the case  of Juneau,  if there  was a  7                                                               
percent [sales tax]  and there was the need to  add more, then he                                                               
believes the  municipality would  be less  reluctant to  add more                                                               
than if the state had a visible sales tax.                                                                                      
                                                                                                                                
REPRESENTATIVE ROKEBERG  recalled that  the old  [gross receipts]                                                               
tax  had a  significant number  of exemptions,  which can  become                                                               
problematic.   He asked if there  was review of the  total amount                                                               
of revenue generated by the 2  percent sales tax versus the gross                                                               
receipts tax.                                                                                                                   
                                                                                                                                
REPRESENTATIVE  SCALZI  answered that  the  2  percent sales  tax                                                               
would  generate approximately  $200 million,  without the  $2,000                                                               
cap.  This  legislation, HB 258, would implement a  2 percent tax                                                               
with  a  $2,000 cap  for  which  the department  estimated  would                                                               
generate  over  $300  million.   However,  Representative  Scalzi                                                               
pointed out  that the gross  receipts tax would be  pyramiding in                                                               
that each  time there is a  sale, the item is  taxed.  Therefore,                                                               
by  the time  the item  comes to  the consumer,  there have  been                                                               
multiple taxes and thus the  consumer is probably really paying a                                                               
2.3  or  2.4 percent  tax.    Representative Scalzi  related  his                                                               
belief that in  this case, the gross receipts  tax would generate                                                               
more money than  a flat 2 percent sales tax.   Furthermore, the 2                                                               
percent sales tax would probably  include other exemptions, which                                                               
is why he  included the $2,000 cap  in HB 258.   He remarked that                                                               
when  a tax  is visible,  people  come to  lobby for  exemptions.                                                               
However, when  a tax that  isn't visible, there is  less pressure                                                               
for exemptions.                                                                                                                 
                                                                                                                                
Number 1108                                                                                                                     
                                                                                                                                
REPRESENTATIVE ROKEBERG  likened this  to a  European-style added                                                               
value  tax.   He posed  a situation  in which  a purchase  from a                                                               
wholesaler would be  a taxable event and if those  items are sold                                                               
at retail  that would  be another taxable  event.   Therefore, he                                                               
surmised that the same commodity would have a 4 percent tax.                                                                    
                                                                                                                                
REPRESENTATIVE SCALZI  replied no.   He reiterated  that it  is a                                                               
pyramid tax  that would amount to  more than 2 percent  but not 4                                                               
percent.  He  pointed out that the original  [gross receipts tax]                                                               
in Alaska had  no tax up to  $20,000, after which the  tax was .5                                                               
percent and  over $100,000  in gross receipts  had a  .75 percent                                                               
tax.  Therefore,  it was similar to an income  tax because it was                                                               
graduated.                                                                                                                      
                                                                                                                                
REPRESENTATIVE MEYER asked  if he would be  charged an additional                                                               
$2,000 if he purchased a car.                                                                                                   
                                                                                                                                
REPRESENTATIVE  SCALZI   answered  that   in  such   a  situation                                                               
Representative Meyer would  be charged an extra  $40.  Therefore,                                                               
if one  purchases a $30,000  car, that  person would be  taxed on                                                               
the first $2,000.                                                                                                               
                                                                                                                                
REPRESENTATIVE  MEYER inquired  as to  who a  gross receipts  tax                                                               
would impact the most.                                                                                                          
                                                                                                                                
REPRESENTATIVE  SCALZI   said  that  such  a   tax  would  impact                                                               
everyone.   He  pointed out  that a  gross receipts  tax is  less                                                               
regressive than a  sales tax because the gross  receipts tax more                                                               
fairly taxes all businesses, not just point of sale items.                                                                      
                                                                                                                                
REPRESENTATIVE  MEYER expressed  concern with  regard to  whether                                                               
such a  tax would hurt Alaska  commerce in the sense  that people                                                               
may purchase items out of state  or over the Internet in order to                                                               
avoid the markup for the gross receipts tax.                                                                                    
                                                                                                                                
REPRESENTATIVE SCALZI remarked that  anytime one implements a tax                                                               
or  increases   the  sales  price,  there   will  be  competitive                                                               
disadvantages whether it's a hidden  sales tax or specified sales                                                               
tax.   He said that  it is all dependent  upon the level  and how                                                               
well the entire taxing scheme in  Alaska is balanced.  In further                                                               
response   to   Representative   Meyer,   Representative   Scalzi                                                               
indicated  that the  gross receipts  tax  would include  services                                                               
such as engineering and consulting services.                                                                                    
                                                                                                                                
Number 1308                                                                                                                     
                                                                                                                                
REPRESENTATIVE  HALCRO related  his  understanding  that a  gross                                                               
receipts tax  is only paid by  the business who pays  a tax based                                                               
on  their annual  sales.   For instance,  a retailer  with a  $28                                                               
hammer can't build  in the 2 percent gross receipts  tax into the                                                               
price  because  the  business  is paying  2  percent  on  $28.50.                                                               
Representative Halcro emphasized that  the problem with the gross                                                               
receipts tax  is that the consumer  doesn't bear any part  of it.                                                               
He  inquired as  to how  such a  tax could  be passed  on to  the                                                               
consumer.                                                                                                                       
                                                                                                                                
REPRESENTATIVE  SCALZI said  that the  business could  markup the                                                               
item.                                                                                                                           
                                                                                                                                
REPRESENTATIVE HALCRO posed the following example:                                                                              
                                                                                                                                
     If I have  a $28 hammer and  I know that at  the end of                                                                    
     the day,  I'm going to  have to  pay a 2  percent gross                                                                    
     receipts tax  on that.   I can't  pass that  through to                                                                    
     you [the consumer]  because that means I  would have to                                                                    
     charge $28.20  for that hammer  to you  [the consumer].                                                                    
     But ...  I'm going to  pay 2  percent on $28.20  not on                                                                    
     $28.   So,  there is  no way  you can  pass ...  to the                                                                    
     consumer.                                                                                                                  
                                                                                                                                
REPRESENTATIVE  SCALZI clarified  that the  business wouldn't  be                                                               
adding 2  percent to  the $28 hammer  because the  business would                                                               
have already  paid the 2  percent when the hammer  was purchased.                                                               
Therefore,  the price  to  the  consumer is  marked  up.   The  2                                                               
percent is  absorbed in  the initial  purchases.   There is  no 2                                                               
percent that is added at the end.                                                                                               
                                                                                                                                
REPRESENTATIVE HALCRO reiterated  that a gross receipts  tax is a                                                               
tax on  the businesses  gross receipts, which  is defined  as the                                                               
total revenue done  by a business in a given  time.  Therefore, a                                                               
hardware  store purchases  a $20  hammer from  a wholesaler,  the                                                               
hardware store doesn't pay tax on  that.  The wholesaler will pay                                                               
tax  on the  $20 and  that's on  the gross  receipts at  the end.                                                               
There is  no way  to pass that  along.  He  pointed out  that the                                                               
[wholesaler] will  have to  pay the  same percentage  on whatever                                                               
amount [the purchaser] is charged.                                                                                              
                                                                                                                                
REPRESENTATIVE  ROKEBERG agreed  with Representative  Halcro that                                                               
at the  end of the day,  the business is  at the top of  this tax                                                               
pyramid.  Therefore,  if competitive pressures are  such that the                                                               
business has  to lower the  cost of  its good, then  the business                                                               
would have to  absorb it.  Representative  Rokeberg remarked that                                                               
the  playing field  is fairly  level because  everyone is  in the                                                               
same situation.                                                                                                                 
                                                                                                                                
REPRESENTATIVE MEYER  inquired then why anyone  would do business                                                               
in Alaska.                                                                                                                      
                                                                                                                                
Number 1576                                                                                                                     
                                                                                                                                
REPRESENTATIVE KOTT expressed  similar concerns as Representative                                                               
Meyer.  He  said he was concerned about  in-state businesses such                                                               
as  VECO,  whom   the  state  has  encouraged   to  use  in-state                                                               
contractors.                                                                                                                    
                                                                                                                                
REPRESENTATIVE  CRAWFORD related  the following  question he  had                                                               
received via  e-mail.  He asked  if a travel agent  sold a $1,500                                                               
plane ticket,  how would the  gross receipts be  calculated since                                                               
the travel agent only receives $25.                                                                                             
                                                                                                                                
REPRESENTATIVE  SCALZI estimated  that it  would amount  to about                                                               
$30  worth of  tax.   He  remarked that  the  travel agent  could                                                               
charge $1,530  in order to  absorb the tax.   He agreed  that the                                                               
consumer may then decide to book on the Internet.                                                                               
                                                                                                                                
Number 1752                                                                                                                     
                                                                                                                                
BRETT  FRIED,  Economist, Department  of  Revenue,  turned to  an                                                               
earlier  question regarding  the  department's  estimates of  the                                                               
sales  tax raising  1 percent  per $100  million while  the gross                                                               
receipts tax  would raise  $160 million.   The  department viewed                                                               
the sales tax as a traditional  sales tax that would exempt sales                                                               
for resale.  However, the  gross receipts tax didn't exempt sales                                                               
for resale and thus accounts for the additional revenue.                                                                        
                                                                                                                                
MR.  FRIED, in  response  to  Representative Rokeberg,  confirmed                                                               
that the  2 percent gross  receipts tax without  exemptions would                                                               
raise $320  million with  the $2,000  cap.   The sales  tax would                                                               
raise $100 million on 1 percent  tax with very few exemptions and                                                               
no cap.   There was indication that the department  had not taken                                                               
a position on HB 258.                                                                                                           
                                                                                                                                
Number 1874                                                                                                                     
                                                                                                                                
PAM  LaBOLLE,  President,  Alaska   State  Chamber  of  Commerce,                                                               
testified   in  opposition   to   HB  258.      In  response   to                                                               
Representative  Meyer's earlier  question regarding  who a  gross                                                               
receipts tax  would hurt  the most, Ms.  LaBolle said  that those                                                               
having the  lowest profit  margin would  be hurt  the most.   The                                                               
only people in Alaska who pay  taxes to the state are businesses.                                                               
The  Alaska State  Chamber of  Commerce  has said  that it  would                                                               
support  broad-based taxes  that all  Alaskans would  pay.   This                                                               
proposed gross receipts tax would  place the onus on the business                                                               
to pay  the tax  and then  determine how to  get it  from someone                                                               
else.  Such  a tax will not be seen  or appreciated by consumers.                                                               
This tax will be detrimental to business.                                                                                       
                                                                                                                                
REPRESENTATIVE MEYER  said that  HB 258  seems to  be anti-Alaska                                                               
commerce legislation.                                                                                                           
                                                                                                                                
MS.  LaBOLLE  pointed out  that  many  businesses in  this  state                                                               
operate on  a 2 percent profit  margin.  For example,  the travel                                                               
agency industry and the mining industry.                                                                                        
                                                                                                                                
REPRESENTATIVE ROKEBERG  pondered the  gross receipts of  the Red                                                               
Dog Mine.                                                                                                                       
                                                                                                                                
MS. LaBOLLE  remarked that  this would  be very  far-reaching and                                                               
not something that the state needs to look at for revenue.                                                                      
                                                                                                                                
REPRESENTATIVE HALCRO related a  personal experience in which his                                                               
family  had  a business  in  Hawaii  for  years.   When  Hawaii's                                                               
economy slumped and  tourism declined in the  early 1990s, Hawaii                                                               
raised the  gross receipts tax.   That action placed  the economy                                                               
in a  faster spiral.   Therefore, he  felt that a  gross receipts                                                               
tax is  the fastest way  to ruin  a local economy,  especially in                                                               
isolated economies such as Alaska.                                                                                              
                                                                                                                                
Number 2097                                                                                                                     
                                                                                                                                
JAMIE PARSONS,  Executive Director,  Juneau Chamber  of Commerce,                                                               
informed the  committee that he  is also  a business owner.   Mr.                                                               
Parsons  said that  this legislation  is not  a good  idea.   The                                                               
gross receipts tax  is a hidden substitute for a  sales tax.  Mr.                                                               
Parsons remarked that  the consumer will ultimately  pay for this                                                               
and those  impacted the  most will be  families and  lower income                                                               
people.   He pointed  out that  much of  this gross  receipts tax                                                               
will  come from  grocery  stores, which  impact those  purchasing                                                               
food.  Mr.  Parsons agreed with earlier comments  that this gross                                                               
receipts  tax would  add to  the  impetus for  folks to  purchase                                                               
goods from the Lower 48 and the Internet.                                                                                       
                                                                                                                                
Number 2214                                                                                                                     
                                                                                                                                
CATHERINE REARDON, Director,  Division of Occupational Licensing,                                                               
Department of Community & Economic  Development, pointed out that                                                               
the Division of Occupational  Licensing currently administers the                                                               
business licensing program that would  be moved to the Department                                                               
of Revenue  with the  implementation of  the gross  receipts tax.                                                               
At this  point, Ms. Reardon  saw the  issue as whether  the gross                                                               
receipts tax is  appropriate.  Once that is determined  and if it                                                               
does  go forward,  Ms. Reardon  said that  she would  discuss the                                                               
technical  matters   involving  moving  the   business  licensing                                                               
program.  She  noted that there is a  tobacco endorsement program                                                               
that is associated  with the business licensing  program and thus                                                               
she assumed the  intent of the legislation would be  to move that                                                               
program with the business licensing program.                                                                                    
                                                                                                                                
REPRESENTATIVE ROKEBERG  inquired as  to the reason  the division                                                               
administers  the  business  licensing  program  rather  than  the                                                               
Department of Revenue.                                                                                                          
                                                                                                                                
MS. REARDON remarked  that there are a variety  of departments in                                                               
which the business licensing program  could be housed.  She noted                                                               
that the business licensing program  was housed in the Department                                                               
of Revenue when the gross receipts  tax was in place before.  She                                                               
related her  understanding that once  there wasn't a tax  and the                                                               
program became  more of  a licensing procedure,  it was  moved to                                                               
her division  because it didn't  fit well with the  Department of                                                               
Revenue's mission.                                                                                                              
                                                                                                                                
REPRESENTATIVE  ROKEBERG  asked if  it  is  really  a tax  or  an                                                               
information gatherer for various purposes.                                                                                      
                                                                                                                                
MS. REARDON  viewed it as both.   It charges  a $50 fee for  a 2-                                                               
year  business license,  which amounts  to about  $2 million  per                                                               
year.    Furthermore,  it  provides  information  regarding  what                                                               
businesses  exist  and their  primary  activities.   Ms.  Reardon                                                               
pointed out  that the  program has  been appropriately  housed in                                                               
the division because it is a  flat amount of money.  The division                                                               
doesn't   need  staff   to  determine   whether  businesses   are                                                               
calculating  their taxes  properly  and  the associated  details,                                                               
which she  felt would be  best for  the Department of  Revenue to                                                               
handle.   In  further  response to  Representative Rokeberg,  Ms.                                                               
Reardon  noted  that  the  Division   of  Banking,  Securities  &                                                               
Corporations  registers   business  names  and  deals   with  the                                                               
incorporation of businesses as well  as partnerships.  Therefore,                                                               
the two divisions  work with each other.  Although  she felt that                                                               
the  program   is  currently  in   the  appropriate   place,  the                                                               
administration  would   probably  want  to  discuss   where  this                                                               
function  should   be  placed   if  a   gross  receipts   tax  is                                                               
implemented.                                                                                                                    
                                                                                                                                
CHAIR MURKOWSKI announced that HB 258 would be held.                                                                            
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
There being no  further business before the  committee, the House                                                               
Labor and  Commerce Standing Committee  meeting was  adjourned at                                                               
5:50 p.m.                                                                                                                       

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