Legislature(2017 - 2018)BARNES 124

01/30/2017 03:30 PM LABOR & COMMERCE

Note: the audio and video recordings are distinct records and are obtained from different sources. As such there may be key differences between the two. The audio recordings are captured by our records offices as the official record of the meeting and will have more accurate timestamps. Use the icons to switch between them.

Download Mp3. <- Right click and save file as
Download Video part 1. <- Right click and save file as

Audio Topic
03:31:15 PM Start
03:31:59 PM HB18
04:17:25 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
-- Please Note Time Change --
Heard & Held
-- Public Testimony --
                    ALASKA STATE LEGISLATURE                                                                                  
          HOUSE LABOR AND COMMERCE STANDING COMMITTEE                                                                         
                        January 30, 2017                                                                                        
                           3:31 p.m.                                                                                            
MEMBERS PRESENT                                                                                                               
Representative Sam Kito, Chair                                                                                                  
Representative Adam Wool, Vice Chair                                                                                            
Representative Andy Josephson                                                                                                   
Representative Louise Stutes                                                                                                    
Representative Chris Birch                                                                                                      
Representative Gary Knopp                                                                                                       
Representative Colleen Sullivan-Leonard                                                                                         
MEMBERS ABSENT                                                                                                                
Representative Bryce Edgmon (alternate)                                                                                         
COMMITTEE CALENDAR                                                                                                            
HOUSE BILL NO. 18                                                                                                               
"An Act relating to race classics."                                                                                             
     - HEARD & HELD                                                                                                             
PREVIOUS COMMITTEE ACTION                                                                                                     
BILL: HB 18                                                                                                                   
SHORT TITLE: RACE CLASSICS                                                                                                      
SPONSOR(s): REPRESENTATIVE(s) ORTIZ                                                                                             
01/18/17       (H)       PREFILE RELEASED 1/9/17                                                                                
01/18/17       (H)       READ THE FIRST TIME - REFERRALS                                                                        
01/18/17       (H)       L&C, FIN                                                                                               
01/30/17       (H)       L&C AT 3:30 PM BARNES 124                                                                              
WITNESS REGISTER                                                                                                              
REPRESENTATIVE DAN ORTIZ                                                                                                        
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  As sponsor, presented HB 18.                                                                             
CHELSEA GOUCHER, Vice President                                                                                                 
Greater Ketchikan Chamber of Commerce                                                                                           
Ketchikan, Alaska                                                                                                               
POSITION STATEMENT:  Testified in support of HB 18.                                                                           
Bill Swift, Executive Director                                                                                                  
Greater Ketchikan Chamber of Commerce                                                                                           
Ketchikan, Alaska                                                                                                               
POSITION STATEMENT:  Testified in support of HB 18.                                                                           
Jason Custer, Board Member                                                                                                      
Greater Ketchikan Chamber of Commerce                                                                                           
Ketchikan, Alaska                                                                                                               
POSITION STATEMENT:  Testified in support of HB 18.                                                                           
KATRINA MITCHELL, Gaming Group Manager                                                                                          
Tax Division                                                                                                                    
Department of Revenue (DOR)                                                                                                     
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Answered questions regarding HB 18.                                                                      
JERRY BURNETT, Deputy Commissioner                                                                                              
Department of Revenue (DOR)                                                                                                     
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Answered questions regarding HB 18.                                                                      
ACTION NARRATIVE                                                                                                              
3:31:15 PM                                                                                                                    
CHAIR  SAM KITO  called  the House  Labor  and Commerce  Standing                                                             
Committee meeting  to order at  3:31 p.m.   Representatives Wool,                                                               
Josephson, Stutes,  Birch, Knopp, Sullivan-Leonard and  Kito were                                                               
present at the call to order.                                                                                                   
                      HB 18-RACE CLASSICS                                                                                   
3:31:59 PM                                                                                                                    
CHAIR KITO  announced that  the only order  of business  would be                                                               
HOUSE BILL NO. 18, "An Act relating to race classics."                                                                          
3:32:33 PM                                                                                                                    
REPRESENTATIVE DAN  ORTIZ, Alaska State Legislature,  stated that                                                               
in  2014, Thomas  Basin  Harbor  became the  finish  line for  an                                                               
unpowered boat  race that started  in Port  Townsend, Washington,                                                               
and journeyed  750 miles to Ketchikan.   The vessels in  the race                                                               
included kayaks  and pedal boats.   The first team to  arrive was                                                               
awarded  a  $10,000  prize,  and   the  second  place  team  has,                                                               
throughout the years, won steak  knives, ski goggles, or corn cob                                                               
holders.  The event is called The  Race to Alaska.  He noted that                                                               
HB 18  would allow people  to wager  on the first  place finisher                                                               
and their time of arrival.  The  bill is in similar spirit of the                                                               
Nenana  Ice Classic.   He  expressed  that the  bill was  brought                                                               
forward  at  the request  of  the  Greater Ketchikan  Chamber  of                                                               
3:35:30 PM                                                                                                                    
CHELSEA  GOUCHER, Vice  President, Greater  Ketchikan Chamber  of                                                               
Commerce, stated her  support of HB 18.  The  proposed bill would                                                               
allow  the  Ketchikan  Chamber  of Commerce  to  raise  money  by                                                               
administering  a race  classic with  a  gaming permit.   This  is                                                               
similar to the Seward Chamber  operations with the Mount Marathon                                                               
race classic.  She stated  her support of  the letter  written by                                                               
Bill Swift  [Included in the  committee packet].   She emphasized                                                               
the importance  of the  provisions of  HB 18  to Ketchikan.   She                                                               
listed  the   chamber's  recent  projects   including:  workforce                                                               
development  initiatives,  economic   and  community  development                                                               
programs, lighting  the town Christmas  tree, the Fourth  of July                                                               
parade,  employee  wellness  trainings,  informational  programs,                                                               
networking  events,  and  assistance  to  developing  businesses.                                                               
These activities  are self-funded  by the chamber,  which depends                                                               
primarily on  member dues  and fundraisers.   She  explained that                                                               
the chamber  is diverse  and non-partisan, and  HB 18  would help                                                               
sustain  the chamber's  efforts  to serve  the community  despite                                                               
reductions in  state and local  funding.  The race  classic would                                                               
likely bring in outside money  from racers and families coming in                                                               
from Washington.                                                                                                                
3:38:17 PM                                                                                                                    
REPRESENTATIVE BIRCH  opined that  the bill  should be  made more                                                               
general.  He asked who would  prevent the classic from being held                                                               
without the bill being passed.                                                                                                  
MS. GOUCHER stated that it would  be a violation of the chamber's                                                               
gaming permit from the tax division.                                                                                            
REPRESENTATIVE BIRCH  asked whether  this falls under  the gaming                                                               
commission in  revenue.  He asked  if it is possible  to make the                                                               
bill  more  general so  the  next  person  interested in  a  race                                                               
classic doesn't have to request specific legislation.                                                                           
MS.  GOUCHER responded  that it  would be  a good  idea, but  the                                                               
Department  of Revenue  (DOR) would  have to  agree.   She stated                                                               
that the  chamber's general  gaming permit  does not  provide for                                                               
this type of classic, but does allow raffles, et cetera.                                                                        
3:40:01 PM                                                                                                                    
REPRESENTATIVE STUTES asked how long the race has been going on.                                                                
3:40:12 PM                                                                                                                    
REPRESENTATIVE ORTIZ stated the race began in 2014.                                                                             
3:40:44 PM                                                                                                                    
Bill  Swift, Executive  Director,  Greater  Ketchikan Chamber  of                                                               
Commerce, testified  to express  the chamber's  unanimous support                                                               
of HB  18.  He stated  that the chamber is  a non-profit, member-                                                               
driven   community   organization,    dedicated   to   supporting                                                               
businesses in the  community.  He spoke about the  history of the                                                               
race.   The  chamber seeks  to  raise funds  for local  community                                                               
projects  and   increase  excitement  around  the   race  with  a                                                               
community guessing  game fundraiser.   He mentioned  the proceeds                                                               
of  the  fundraiser  would  be used  for  the  chamber's  special                                                               
activities, other  community projects, economic  development, and                                                               
a scholarship  fund.  He stated  that the chamber is  a 501(c)(6)                                                               
and  is made  up  of more  than 250  members  - mostly  Ketchikan                                                               
MR.  SWIFT  stated  that  the   chamber  conducted  research  and                                                               
determined that  specific legislative  authority is  necessary to                                                               
conduct the  charitable community fundraising around  the Race to                                                               
Alaska  by including  it in  the state's  existing definition  of                                                               
race classics.   He noted that the Alaskan  tradition of classics                                                               
includes dog musher classics, rain  classics, fish derbies, moose                                                               
derbies, and a  canned salmon classic.   Many non-profit entities                                                               
throughout Alaska  have been given permission  by the legislature                                                               
to conduct  classics fundraisers.   He reported  that there  is a                                                               
strong  precedent for  the chamber  of commerce  organizations to                                                               
host events of  this type; similar events are  hosted by chambers                                                               
in Juneau,  Fairbanks, Kenai, Seward, Petersburg,  Delta, and Big                                                               
Lake.  He  recognized that the legislature has  lots of decisions                                                               
to make, and  he thanked the committee for  hearing the chamber's                                                               
request for a small and necessary change.                                                                                       
3:44:20 PM                                                                                                                    
REPRESENTATIVE SULLIVAN-LEONARD asked  how financially successful                                                               
the race has been since the inception in 2014.                                                                                  
MR. SWIFT stated there has  not been calculated economic activity                                                               
around  this event  in particular.   It's  hard to  determine the                                                               
race's impact  on the economy  in Ketchikan with cruise  ships in                                                               
town  during that  time.   He  noted that  race participants  and                                                               
other visitors come in to follow the race during that time.                                                                     
REPRESENTATIVE SULLIVAN-LEONARD asked  what the financial benefit                                                               
was for the chamber.                                                                                                            
MR. SWIFT  stated that to  this point there's been  no connection                                                               
or benefit to the chamber.                                                                                                      
3:46:00 PM                                                                                                                    
REPRESENTATIVE BIRCH asked  if Mr. Swift would  have an objection                                                               
to  eliminating the  statement "is  limited to"  and permit  race                                                               
classics to continue unabated through the state.                                                                                
MR.  SWIFT stated  that  he would  have no  objection  to a  more                                                               
general procedure.                                                                                                              
3:46:44 PM                                                                                                                    
REPRESENTATIVE  WOOL asked  if  there  is a  formula  for a  fund                                                               
dispersement between chamber funds and participant awards.                                                                      
MR.  SWIFT stated  that the  chamber's formula  with the  current                                                               
gaming  license has  been a  50/50 raffle,  so that's  likely the                                                               
formula that would be applied.                                                                                                  
3:47:33 PM                                                                                                                    
Jason  Custer,   Board  Member,  Greater  Ketchikan   Chamber  of                                                               
Commerce, testified in full support of  HB 18.  He stated that he                                                               
agrees  with  Mr.  Swift  and  Ms.  Goucher's  testimonies.    He                                                               
     The [Greater] Ketchikan Chamber  of Commerce is perhaps                                                                    
     the   largest   and   the   most   diverse   non-profit                                                                    
     organization in Ketchikan, with  over 200 members.  Our                                                                    
     members  include  individuals,  businesses,  non-profit                                                                    
     organizations,  and   local  and   tribal  governments.                                                                    
     We're  a  non-partisan  organization,  which  works  to                                                                    
     promote a  healthy and vibrant  economy and  a livable,                                                                    
     sustainable community that  families and businesses are                                                                    
     proud  to call  home.   The benefits  of HB  18 to  our                                                                    
     organization  and community  would include  providing a                                                                    
     new source  of locally generated revenue  for community                                                                    
     projects,  which  otherwise  would not  be  present  or                                                                    
     possible.   This is ever more  important and meaningful                                                                    
     to  us  given the  fact  that  state, local,  and  even                                                                    
     federal  grants and  discretionary funds  are in  short                                                                    
He  stated  that  HB  18 would  support  community  and  economic                                                               
development  activities and  programs,  would  help get  Alaskans                                                               
excited  about  contributing  to community  projects,  and  would                                                               
promote a culture of community  giving and self-sufficiency.  The                                                               
initiative would not cost anything  to the state but would create                                                               
a new  source of  funding for community  initiatives.   He stated                                                               
that  the chamber  is seeking  the  same ability  given to  other                                                               
chambers of  commerce in other Alaskan  communities to administer                                                               
similar programs.   He  acknowledged that the  bill seems  like a                                                               
modest  request,  but  it  is important  and  meaningful  to  the                                                               
community  with state  and local  grant funding  decreasing.   He                                                               
urged the  committee's support  of HB 18,  and stated  that every                                                               
new source  of revenue  for community  projects is  important and                                                               
3:51:22 PM                                                                                                                    
REPRESENTATIVE  BIRCH  asked if  it  is  possible to  modify  the                                                               
legislation and "let race classics run amok."                                                                                   
KATRINA MITCHELL, Gaming Group  Manager, Tax Division, Department                                                               
of  Revenue  (DOR), answered  that  there  are several  types  of                                                               
classics  defined by  the [Alaska  Gaming Reform  Act], some  are                                                               
specific  to organizations.   Currently  animal classics  are not                                                               
limited.  However,  the Cabbage Classic at  the Cabbage Weigh-Off                                                               
in  Palmer is  limited to  be  operated and  administered by  the                                                               
Palmer Rotary  Club.  She  stated that she  is not sure  why some                                                               
classics are limited  to certain organizations and  some are not.                                                               
She speculated that if you open  up a classic that was limited to                                                               
everyone,  it   might  take  away  from   the  organization  that                                                               
originally hosted the event.                                                                                                    
REPRESENTATIVE  BIRCH  offered  his understanding  that  everyone                                                               
must have a gaming permit in  order to make any revenue from such                                                               
an  event.    He  asked  if  Ms.  Mitchell  sees  a  downside  to                                                               
eliminating  the  language  limiting  the statute  to  the  Mount                                                               
Marathon Classic and the Race to Alaska Classic.                                                                                
MS. MITCHELL said that as  far as administering the program goes,                                                               
she sees no  downside to opening it up as  long as the definition                                                               
is adequate.                                                                                                                    
REPRESENTATIVE BIRCH  stated that this  is good news  for classic                                                               
fans around the state.                                                                                                          
3:54:49 PM                                                                                                                    
CHAIR KITO  suggested doing research  before the next  meeting to                                                               
determine if Representative Birch's idea  is workable and then an                                                               
amendment could be considered.                                                                                                  
3:55:21 PM                                                                                                                    
REPRESENTATIVE JOSEPHSON asked if  the statute requires the money                                                               
from any classic to go to a charitable purpose.                                                                                 
MS. MITCHELL  responded that  in order to  conduct a  classic, an                                                               
organization must hold a gaming  permit and is required to donate                                                               
"net proceeds" to a mission or cause within one year of receipt.                                                                
REPRESENTATIVE JOSEPHSON  voiced that the purchase  of the Nenana                                                               
Ice  Classic tickets  around the  state resembles  gambling.   He                                                               
asked  whether the  proposed bill  might  create a  habit-forming                                                               
misspending of money in a more isolated community.                                                                              
MS.  MITCHELL  responded that  anyone  with  a gaming  permit  is                                                               
required  to  report -  at  least  annually  - the  proceeds  and                                                               
itemized donations  and donation recipients.   The department can                                                               
review that and can verify if it is correct.                                                                                    
REPRESENTATIVE  JOSEPHSON  restated  his  concern  with  creating                                                               
habits  for  wagering  money  in a  small  community,  and  asked                                                               
whether the legislature  should be concerned if  the statute were                                                               
opened up to any opportunity in any community.                                                                                  
MS. MITCHELL stated that it  would be impermissible for anyone or                                                               
any organization  to conduct a  race classic without  obtaining a                                                               
charitable gaming permit through the state.                                                                                     
REPRESENTATIVE JOSEPHSON asked how difficult the task is.                                                                       
MS.  MITCHELL  stated  that  the   permits  are  only  issued  to                                                               
municipalities  or non-profit  organizations  that  have been  in                                                               
existence for 3 years.                                                                                                          
3:58:58 PM                                                                                                                    
CHAIR   KITO  offered   his  understanding   that  Representative                                                               
Josephson's concern is about whether  charitable gaming is a good                                                               
activity.   The legislature establishes  the policy, and  it's up                                                               
to the department to administer the policy.                                                                                     
3:59:28 PM                                                                                                                    
REPRESENTATIVE  KNOPP  asked  if  there are  many  annual  events                                                               
beyond  the listed  classics and  if  it would  be reasonable  to                                                               
expand the bill.                                                                                                                
MS.  MITCHELL stated  that she  doesn't see  a downside  from the                                                               
perspective of  the administration, but mentioned  that there are                                                               
many  kinds of  classics  limited to  certain organizations.  For                                                               
example the  Canned Salmon  Classic can  only be  administered by                                                               
the Petersburg  Chamber of Commerce  and the King  Salmon Classic                                                               
can only be run by [Douglas  Island Pink and Chum, Inc.] (DIPAC).                                                               
Those  organizations have  the market  on that  type of  classic.                                                               
She stated that  the bill would not impact the  gaming section in                                                               
managing the  program, but she is  unsure if it would  impact the                                                               
organizations with the special privilege.                                                                                       
REPRESENTATIVE  KNOPP  asked  about  potential  for  abuse.    He                                                               
further asked if the Greater  Ketchikan Chamber of Commerce would                                                               
have to go  back to the legislature if it  wanted to host another                                                               
event.    He stated  that  he  also  has concerns  about  routine                                                               
gambling.    He noted  his  hope  is to  open  the  door to  less                                                               
regulation restriction, while avoiding abuse.                                                                                   
MS. MITCHELL  stated that she  is not sure striking  the language                                                               
limiting  [classics] to  specific organizations  would result  in                                                               
abuse.   She noted that it  would allow an organization  in every                                                               
town to have a guessing game  with participants, such as the Race                                                               
to Alaska.                                                                                                                      
4:04:30 PM                                                                                                                    
REPRESENTATIVE SULLIVAN-LEONARD  asked if Mr. Burnett  could give                                                               
some history  on classics across  the state  and how and  why the                                                               
gaming rules became more stringent.                                                                                             
JERRY BURNETT, Deputy Commissioner,  Department of Revenue (DOR),                                                               
answered  that gambling  is prohibited  in Alaska.   The  statute                                                               
lists  what  is  allowed  for  charitable  organizations  with  a                                                               
permit.   He  mentioned  that it  used to  be  allowable to  have                                                               
"Monte  Carlo" nights,  but the  legislature was  concerned about                                                               
having  casinos in  Alaska "in  Indian country."  He offered  his                                                               
understanding that  any type  of gambling  allowed in  Alaska for                                                               
any purpose would be allowable under  the Indian gaming laws.  He                                                               
stated that  the legislature  did not  want to  have any  type of                                                               
casinos in  Alaska, so the rules  for a "Monte Carlo"  night were                                                               
adjusted.  He noted that cruise  ships can gamble in state waters                                                               
and Alaska taxes the proceeds,  but the statute specifies that it                                                               
is taxing an unlawful activity.                                                                                                 
4:08:11 PM                                                                                                                    
REPRESENTATIVE  SULLIVAN-LEONARD  noted  some classics  from  her                                                               
districts.   She stated her  opinion that these classics  are not                                                               
habit  forming, rather  the funds  from these  gaming pieces  are                                                               
beneficial for chambers of commerce and other groups.                                                                           
4:09:07 PM                                                                                                                    
REPRESENTATIVE WOOL asked if there is  a limit on how many gaming                                                               
permits are issued.                                                                                                             
MS. MITCHELL  stated that any non-profit  organization that meets                                                               
the requirements  can apply and may  be granted a permit.   There                                                               
is not a cap on the number of permits issued.                                                                                   
REPRESENTATIVE WOOL asked  if any governing body,  other than the                                                               
legislature,  could handle  a request  for more  classics in  the                                                               
future,  or if  there is  a  process within  the department  that                                                               
would be  a gateway.   He  noted that the  idea of  many chambers                                                               
jumping in on a race  would hurt the initial hosting organization                                                               
and the race would lose vitality.                                                                                               
4:10:51 PM                                                                                                                    
MR. BURNETT  stated that there has  been legislation to set  up a                                                               
gaming commission.  He added that  in order for the department to                                                               
manage requests  for classics, either  discretion could  be given                                                               
to the  commissioner of  revenue or  it could  be done  through a                                                               
regulation  process,  which  would  be  difficult  and  sometimes                                                               
slower than the legislative process.   He voiced that it is not a                                                               
responsibility  he would  like to  have  or want  someone in  the                                                               
department to have, because they also regulate the activities.                                                                  
4:11:53 PM                                                                                                                    
REPRESENTATIVE   BIRCH  questioned   if   getting   rid  of   the                                                               
limitations has a downside.                                                                                                     
MR. BURNETT  stated that it  doesn't matter to the  department so                                                               
long as there is a clear definition.                                                                                            
REPRESENTATIVE BIRCH  stated that he  supports the intent  of the                                                               
bill and  wants to  make the  process easier in  the future.   He                                                               
asked if the animal classic is limited to gerbils or hamsters.                                                                  
4:13:01 PM                                                                                                                    
MS. MITCHELL stated  a catch-all phrase - "other rodent"  - is in                                                               
the statute.                                                                                                                    
4:13:20 PM                                                                                                                    
REPRESENTATIVE  ORTIZ  stated  that   in  changing  the  bill  as                                                               
Representative Birch suggested, the  potential downside would not                                                               
fall in  the department's  realm, but  would dilute  the revenues                                                               
and potential benefits to the groups that have permits.                                                                         
MS.  MITCHELL stated  that Representative  Ortiz's assessment  is                                                               
4:14:28 PM                                                                                                                    
REPRESENTATIVE WOOL  commented that  there are exceptions  to the                                                               
gaming  statute  in  Alaska,   including  rodents,  cabbage,  ice                                                               
melting and pull tabs, so a  gaming commission might not be a bad                                                               
4:15:10 PM                                                                                                                    
MR.  BURNETT  stated that  he  does  not  have thoughts  on  that                                                               
comment.   He stated that the  way the legislature has  done this                                                               
historically has been workable for the State of Alaska.                                                                         
4:15:37 PM                                                                                                                    
CHAIR KITO opened public testimony on HB 18.                                                                                    
CHAIR KITO announced that HB 18 was held over.                                                                                  
4:17:25 PM                                                                                                                    
There being no further business before the committee, the House                                                                 
Labor and Commerce Standing Committee meeting was adjourned at                                                                  
4:17 p.m.                                                                                                                       

Document Name Date/Time Subjects
HB018 Sponsor Statement 01.27.17.pdf HL&C 1/30/2017 3:30:00 PM
HL&C 2/3/2017 3:15:00 PM
HB 18
HB018 Sectional Analysis 01.27.17.pdf HL&C 1/30/2017 3:30:00 PM
HL&C 2/3/2017 3:15:00 PM
HB 18
HB018 Supporting Document-Chamber Flyer 01.27.17.pdf HL&C 1/30/2017 3:30:00 PM
HL&C 2/3/2017 3:15:00 PM
HB 18
HB018 Supporting Document-Chamber Letter 01.27.17.pdf HL&C 1/30/2017 3:30:00 PM
HL&C 2/3/2017 3:15:00 PM
HB 18
HB018 Fiscal Note DOR TAX 1.27.17.pdf HL&C 1/30/2017 3:30:00 PM
HL&C 2/3/2017 3:15:00 PM
HB 18