Legislature(2001 - 2002)
04/10/2001 03:34 PM House L&C
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
ALASKA STATE LEGISLATURE
HOUSE LABOR AND COMMERCE STANDING COMMITTEE
April 10, 2001
3:34 p.m.
MEMBERS PRESENT
Representative Lisa Murkowski, Chair
Representative Andrew Halcro, Vice Chair
Representative Kevin Meyer
Representative Pete Kott
Representative Norman Rokeberg
Representative Harry Crawford
Representative Joe Hayes
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
HOUSE BILL NO. 214
"An Act relating to a civil action against a person under 21
years of age who enters premises where alcohol is sold or
consumed."
- MOVED CSHB 214(L&C) OUT OF COMMITTEE
HOUSE BILL NO. 225
"An Act relating to municipal taxation of alcoholic beverages
and increasing the alcoholic beverage tax rates."
- HEARD AND HELD
PREVIOUS ACTION
BILL: HB 214
SHORT TITLE:CIVIL ACTION AGAINST MINORS IN BARS
SPONSOR(S): REPRESENTATIVE(S)MEYER
Jrn-Date Jrn-Page Action
03/26/01 0729 (H) READ THE FIRST TIME -
REFERRALS
03/26/01 0729 (H) L&C, JUD
04/03/01 0830 (H) COSPONSOR(S): DYSON
04/10/01 (H) L&C AT 3:00 PM CAPITOL 120
BILL: HB 225
SHORT TITLE:ALCOHOLIC BEVERAGE TAX
SPONSOR(S): REPRESENTATIVE(S)MURKOWSKI
Jrn-Date Jrn-Page Action
03/30/01 0789 (H) READ THE FIRST TIME -
REFERRALS
03/30/01 0789 (H) L&C, FIN
03/30/01 0789 (H) REFERRED TO LABOR & COMMERCE
04/03/01 0830 (H) COSPONSOR(S): HUDSON
04/09/01 (H) L&C AT 3:15 PM CAPITOL 17
04/09/01 (H) Heard & Held
MINUTE(L&C)
04/10/01 (H) L&C AT 3:00 PM CAPITOL 120
WITNESS REGISTER
MIKE GORDON, Owner
Chilkoot Charlie's
2207 Sorbus Way
Anchorage, Alaska 99508
POSITION STATEMENT: Testified on HB 214.
O.C. MADDEN, Personnel Loss & Prevention Manager
Brown Jug, Inc.
4140 Old Steese Highway
Anchorage, Alaska 99503
POSITION STATEMENT: Testified on HB 214.
CINDY CASHEN
Mothers Against Drunk Drivers
211 4th Street
Juneau, Alaska 99801
POSITION STATEMENT: Testified in support of HB 214.
KACE McDOWELL, Executive Director
Anchorage Cabaret Hotel Restaurant & Retailer Association
(No address provided)
POSITION STATEMENT: Testified to CHARR's support of HB 214;
testified on HB 225.
JERI LANIER
Family Centered Services of Alaska
620 5th Avenue
Fairbanks, Alaska 99701
POSITION STATEMENT: Testified in support of HB 225.
ANDY HARRINGTON
Arctic Alliance
4624 Stanford Drive
Fairbanks, Alaska 99709
POSITION STATEMENT: Testified in support of HB 225.
GLEN BRADY, President
Silver Gulch Brewing and Bottling Company
PO Box 82125
Fairbanks, Alaska 99708
POSITION STATEMENT: Testified in opposition to HB 225.
NICHOLAS STONE, Director
"Inroads to Healing" Program
Fairbanks Native Association
5240 Beechcraft Avenue
Fairbanks, Alaska 99701
POSITION STATEMENT: Testified in support of HB 225.
ANNETTE FREIBURGER, Executive Director
Fairbanks Native Association
616 Slater Drive
Fairbanks, Alaska 99701
POSITION STATEMENT: Testified in support of HB 225.
WAYNE WOODGATE, Bartender
PO Box 82974
Fairbanks, Alaska 99708
POSITION STATEMENT: Testified in opposition to HB 225.
JIM ELKINS, Owner
Elkins and Elkins
177 Cranberry Road
Ketchikan, Alaska 99901
POSITION STATEMENT: Testified in opposition to HB 225.
JAMES ELKINS
301 Bawden
Ketchikan, Alaska 99901
POSITION STATEMENT: Testified on behalf of himself in
opposition to HB 225.
DONNA LUTHER
Ketchikan Cabaret Hotel Restaurant & Retailer Association
917 Freeman Street
Ketchikan, Alaska 99901
POSITION STATEMENT: Testified on HB 225.
GEORGE TIPTON
Ketchikan Entertainment Center
PO Box 5762
Ketchikan, Alaska 99901
POSITION STATEMENT: Testified in opposition to HB 225.
FRANCINE WHEELER
125 Main Street
Ketchikan, Alaska 99901
POSITION STATEMENT: Testified as a citizen, as a daughter of an
alcoholic, and on behalf of Arctic Bar on HB 225.
ROSALIE NADEAU
Akeela, Inc.
4111 Minnesota Drive
Anchorage, Alaska 99518
POSITION STATEMENT: Testified in support of HB 225.
ALAN BAILEY
Coalition of Alcohol Abuse and Public Safety;
Anchorage Chapter
Mothers Against Drunk Driving
310 K Street
Anchorage, Alaska 99503
POSITION STATEMENT: Testified in support of HB 225.
TOM ANDERSON, Acting Executive Director
Anchorage Cabaret Hotel Restaurant & Retailer Association
8215 East 2nd
Anchorage, Alaska 99501
POSITION STATEMENT: Testified on HB 225.
JEANETTE JOHNSON, Owner
Crazy Horse Bar
741 West 76TH
Anchorage, Alaska 99518
POSITION STATEMENT: Testified on HB 225.
JOHN PATTEE
721 West 4th Avenue
Anchorage, Alaska 99501
POSITION STATEMENT: Testified in opposition to HB 225.
DON GRASSE, General Manager
K & L Distributors
6307 Arctic Spur Road
Anchorage, Alaska 99516
POSITION STATEMENT: Testified in opposition to HB 225.
CAROL JACKSON, Credit Manager
K & L Distributors
1700 Woo Boulevard
Anchorage, Alaska 99515
POSITION STATEMENT: Testified on HB 225.
CHRIS ANDERSON, Owner
Glacier Brewhouse and Restorante Orso
737 West 5th Avenue
Anchorage, Alaska 99501
POSITION STATEMENT: Testified on HB 225.
ANNE SCHULTZ, Research Analyst
Advisory Board on Alcoholism & Drug Abuse
Department of Health & Social Services
PO Box 110608
Juneau, Alaska 99801
POSITION STATEMENT: Explained the $250 million figure in HB
225.
ACTION NARRATIVE
TAPE 01-54, SIDE A
Number 0001
CHAIR LISA MURKOWSKI called the House Labor and Commerce
Standing Committee meeting to order at 3:34 p.m. Members
present at the call to order were Representatives Murkowski,
Halcro, and Meyer. Representatives Rokeberg, Crawford, Hayes,
and Kott [who joined the evening portion of the meeting] arrived
as the meeting was in progress.
HB 214-CIVIL ACTION AGAINST MINORS IN BARS
Number 0022
CHAIR MURKOWSKI announced that the committee first would
consider HOUSE BILL NO. 214, "An Act relating to a civil action
against a person under 21 years of age who enters premises where
alcohol is sold or consumed."
REPRESENTATIVE MEYER, speaking as the sponsor of HB 214, said
this bill allows bar and liquor store owners to be proactive and
to prosecute underage kids who try to get into an alcohol
establishment by using fake identification (ID). Many bars and
package stores have used this program effectively, and the word
is getting out to the kids.
Number 0155
REPRESENTATIVE MEYER relayed that this program allows the
alcohol licensee to offer cash incentives to employees who turn
in those trying to use a fake ID. Usually [owners] are able to
take the kids to civil court and be awarded up to $1,000. The
programs at Chilkoot Charlie's and the Brown Jug split the money
with the employee, thus giving an incentive for an employee to
look for fake IDs.
REPRESENTATIVE MEYER explained that this program is optional.
The only requirement is that [the owner] put a sign on the door
that says a person must be 21 years of age to enter. Many bars
in Anchorage have been using the program for several years; the
program was started by ordinance, at the request of the liquor
industry, because kids were being caught with fake IDs and were
not being prosecuted. The alcohol industry wanted to be more
proactive keeping underage kids out of their establishments. He
said this would hopefully deter underage drinking.
REPRESENTATIVE MEYER pointed out in the committee file a letter
from the Brown Jug, which uses the program, and one from the
Anchorage Restaurant and Beverage Association (ARBA); he said
ARBA quoted Mike Gordon from Chilkoot Charlie's, who has also
used the program effectively. There is no fiscal note for the
bill, he informed members.
CHAIR MURKOWSKI surmised that if [an owner] brings a small-
claims action against an individual, it would go quickly through
the system. [There was affirmative confirmation on the record.]
She read from the bill that the court shall award civil damages
in the amount of $1,000 and reasonable attorney's fees. Noting
that it doesn't provide for costs, however, she asked if this
was an omission, because typically one would recover [from the
defendant] the costs of the filing fee, which is $35, and
[service of process]. She asked if the sponsor intended to
cover it [in the bill].
Number 0399
REPRESENTATIVE MEYER deferred the question to [O.C. Madden] at
the Brown Jug. He also offered his belief that the half of the
$1,000 which the house keeps is used to pay for the cost of the
[legal] action.
CHAIR MURKOWSKI asked whether an underage person who enters a
liquor establishment to use the phone because of a flat tire,
for example, would be prosecuted.
Number 0470
REPRESENTATIVE MEYER answered that [the person wouldn't] because
the person isn't trying to get into the establishment with a
fake ID and under a false pretense. He said he thought there
was some flexibility there with the various establishments.
Number 0526
MIKE GORDON, Owner, Chilkoot Charlie's, testified via
teleconference. He explained how he uses the program at his
establishment by enforcing the law as it is written in the
Municipality [of Anchorage]. He noted that funds received from
this are distributed as follows: a third is given to the
security people who make the arrest, a third goes toward
collection, and a third goes to the club.
MR. GORDON explained that he likes the law because it creates a
consequence for the minor; in the past, there was none. These
actions jeopardize people's jobs and businesses, and can go on
for years without consequences. Today, the parent is notified
that $1,000 is owed. Mr. Gordon said he would like to see the
program go statewide because he believes it is doing the job and
that the word gets around.
Number 0684
REPRESENTATIVE MEYER remarked that one reason the industry asked
for this ordinance in Anchorage was that when [a liquor] license
comes up for renewal before the governing body, the
establishment gets "dinged" if an underage person has been
caught. This was an effort to get the word out to kids to not
even try to come into other alcohol places if not of age.
MR. GORDON responded that [Chilkoot Charlie's] not only wants
kids to know that they aren't likely to get into the
establishment - no matter what type of false ID is presented -
but also want them to know that there are consequences, and that
[Chilkoot Charlie's] will pursue it to the full extent of the
law.
Number 0716
MR. GORDON, responding to the question of the number of underage
kids prosecuted by his establishments, said he didn't have the
figure.
REPRESENTATIVE MEYER remarked that he had spoken to Doug Griffin
at the Alcoholic Beverage Control (ABC) Board, who said 95
percent of fake IDs turned over to the ABC Board come from
either Chilkoot Charlie's or the Brown Jug.
MR. GORDON said [Chilkoot Charlie's] prosecutes all of them
unless there are extenuating circumstances; he estimated that
his business [does a citizen's arrest] four to six times a week.
He said the program gives [staff] an incentive for being on
their toes. In response to a question about whom the action is
taken against when a kid is under 18 years of age, he said it is
filed against the [minor]. As for whether the permanent fund
[dividend] is garnished if the minor isn't able to pay, he
answered affirmatively.
MR. GORDON, in response to a question by Chair Murkowski, said
if an underage person comes in because of a flat tire, [Chilkoot
Charlie's] has doormen in the entryway at all times who would
accommodate that person; the minor wouldn't need to come into
the club. He then emphasized that [Chilkoot Charlie's] doesn't
try to entrap anyone; there are big signs posted, and minors
know what they are doing when coming in.
CHAIR MURKOWSKI brought attention to language in the bill that
refers to "if" the person enters the premises. She said
regardless of whether the excuse is a blown tire, it is [the
establishment's] obligation to ensure that minors aren't on the
premises.
Number 0955
MR. GORDON agreed and added that 99 percent of these people are
caught at the door. Sometimes it is hard to tell whether [an
ID] is fake; if there is question about age, [Chilkoot
Charlie's] has the person fill out an affidavit and sign it.
When a kid is caught and there is a photo of him or her - a fake
ID or photo of the ID that was presented - and an affidavit,
[the minor] doesn't have much legal standing at this point.
REPRESENTATIVE ROKEBERG asked if fake IDs are turned over to the
ABC Board, and whether there is follow-up about the status of
criminal charges.
MR. GORDON deferred the question to the director. He said
[Chilkoot Charlie's] has handed them over on a number of
occasions; however, he couldn't say what the board does with
them. In response to a question, he clarified that when a minor
is on the premise, a citizen's arrest is made, a police officer
is called, and the minor is arrested; then a civil action is
filed against the minor.
Number 1070
REPRESENTATIVE ROKEBERG referred to language in the bill stating
"the damages in the amount of $1,000" and asked Mr. Gordon if he
thought this was an appropriate amount.
MR. GORDON said in his experience, $1,000 is adequate and is a
lot of money to anybody under 21 years of age. If raised more
than that, it would be too punitive.
REPRESENTATIVE ROKEBERG remarked that [an establishment] or its
employees can be fined up to $50,000 for serving someone who is
[underage].
MR. GORDON said that is a good point, but he didn't think there
was any sense in making it so high [for minors].
Number 1183
CHAIR MURKOWSKI asked Mr. Gordon whether word is out that if a
minor goes to [Chilkoot Charlie's], the minor would be caught
and would have to pay a $1,000 fine. She asked if there has
been a decrease in attempts by minors to get in.
MR. GORDON responded that he is sure word is out; however,
[minors] are still trying to get in. His establishment has
actually caught a couple of people more than once.
CHAIR MURKOWSKI suggested that if it were enforced consistently
in all establishments, minors would really pay attention.
MR. GORDON replied that if more people pursued it to the degree
that [Chilkoot Charlie's] and the Brown Jug do, it would be
helpful in getting the word out. He suggested that these minors
look for places that are easier to enter.
CHAIR MURKOWSKI asked whether Mr. Gordon has someone on staff
who actually deals with these small claims, follow-throughs, and
collections.
MR. GORDON answered that a local attorney did for a couple of
years. That attorney did wonderfully the first year, but did
nothing the next year; his partner's wife ultimately took that
over and continues to do so now.
Number 1340
CHAIR MURKOWSKI remarked that she would like to think the
legislature makes it as easy as possible to pursue the complaint
through to judgment so [the establishment] can execute on the
permanent dividend fund. She didn't want businesses to not
pursue this as an option due to the expense associated with the
judgment. Therefore, she expressed the need for this to be
something that a nonattorney could perform.
MR. GORDON affirmed that this is something that a nonattorney
could perform. He added that it is working quite well. He
offered to keep the committee informed of his progress with
this.
CHAIR MURKOWSKI mentioned that she was interested in whether the
Brown Jug pursues the collection costs as well, because that is
not included in the language of the bill. However, she felt
that the establishment should be entitled to civil damages
amounts as well as the recovery of costs and any reasonable
attorney's fees.
MR. GORDON agreed and pointed out that currently he is absorbing
that cost.
REPRESENTATIVE HALCRO asked whether Mr. Gordon shares the
confiscated IDs or other information that he collects and
whether there any correspondence between ARBA and CHARR
regarding keeping a file on these minors who attempt to enter
establishments.
MR. GORDON replied no and remarked that administering something
like that would be quite a job. The only cooperative measure he
is aware of is in regard to "bad checks." Mr. Gordon added that
he wasn't sure how practical setting up such a correspondence
would be.
Number 1515
O.C. MADDEN, Personnel Loss & Prevention Manager, Brown Jug,
Inc., testified via teleconference. He informed the committee
that [the Brown Jug] was part of the group that helped get this
passed in 1998. He noted the Brown Jug's success with this:
since July 1998 the Brown Jug has confiscated almost 500 IDs
from minors. He echoed Mr. Gordon's testimony that the great
thing about this is there is now a consequence for this action.
He likened the process to zero-cost law enforcement because the
state and the municipality don't have to spend any prosecution
dollars. The only person who bears any cost is the offender.
Furthermore, one great result of this law is that kids have to
tell their parents.
MR. MADDEN explained that the clerk would seize an ID and
complete a detailed form describing the event, including
witnesses. The original ID and detailed form are given to the
ABC Board, and Mr. Madden retains a copy. Then a certified
letter is sent to the last known address of the person, if it
can be determined who the individual is. Often, these minors
are using fake names. If the individual is identified, then the
individual receives a certified letter demanding payment within
15 days. After the 15 days has passed, the establishment can
file a small-claims action. In further response to
Representative Murkowski, Mr. Madden said the Brown Jug does
this in-house.
CHAIR MURKOWSKI asked whether Mr. Madden is able to recover the
costs.
MR. MADDEN recalled that the ordinance in Anchorage allows
establishments to recover reasonable attorney's fees and any
court costs, in addition to the $1,000. In response to a
question by Representative Meyer, he agreed that [the Brown Jug]
reviews each case and does not always go for the $1,000. [The
Brown Jug] seizes IDs from all minors, and if the belief is that
the minor wasn't there to purchase alcohol, then a reduced
amount is sought.
Number 1768
CINDY CASHEN, Mothers Against Drunk Drivers (MADD), noted her
support of HB 214.
KACE McDOWELL, Cabaret Hotel Restaurant & Retailer Association
(CHARR), noted CHARR's support of HB 214.
REPRESENTATIVE CRAWFORD asked Mr. Madden whether, if [a minor]
comes into his store to buy a Coke, that individual is carded.
MR. MADDEN replied yes. He pointed out that an individual must
be 21 years of age to enter the premises [of the Brown Jug].
REPRESENTATIVE CRAWFORD asked what would occur if a person
entered the premises in order to use the telephone.
MR. MADDEN noted that there have been cases in which [the Brown
Jug] has not pursued action. If it is felt that the individual
is not attempting to purchase alcohol, then a reduced amount
would be sought to cover costs. Mr. Madden specified that it is
a class A misdemeanor for a minor to enter the premises without
a parent, adult, spouse, or court-appointed legal guardian.
Number 1829
REPRESENTATIVE ROKEBERG moved that the committee adopt
conceptual Amendment 1, to add language on page 1, line 9, that
would allow the recovery of costs associated with filing the
collection. There being no objection, conceptual Amendment 1
was adopted.
[A motion to move the amended bill from committee was made, but
was withdrawn in order to take up another amendment.]
Number 1937
REPRESENTATIVE CRAWFORD moved that the committee adopt
conceptual Amendment 2, to insert language that in order for [a
civil action to be pursued], there must have been an attempt to
purchase alcohol.
REPRESENTATIVE ROKEBERG objected.
REPRESENTATIVE CRAWFORD related his belief that [an underage]
person who enters the premises to use the telephone shouldn't be
charged. He indicated there could be an emergency.
REPRESENTATIVE ROKEBERG pointed out that strict limitations in
Alaska's liquor laws require the establishment to delineate the
floor plan of the licensed premise. Representative Crawford's
amendment would destroy Alaska's liquor law system. He related
his belief that good judgment should prevail [in situations
described by Representative Crawford].
CHAIR MURKOWSKI emphasized that this is an option available for
the licensee to pursue this action.
REPRESENTATIVE HALCRO mentioned that this is why some of these
stores have large signs posted that say people under 21 are not
permitted entrance without an adult or a legal guardian. He
directed attention to page 1, line 5, of the bill, which says,
"A licensee may bring a civil action".
REPRESENTATIVE CRAWFORD withdrew his motion to adopt conceptual
Amendment 2.
Number 2064
REPRESENTATIVE ROKEBERG moved to report HB 214, as amended, out
of committee with individual recommendations and the
accompanying zero fiscal note. There being no objection, CSHB
214(L&C) was reported from the House Labor and Commerce Standing
Committee.
Number 2080
CHAIR MURKOWSKI announced that the meeting would be recessed to
a call of the chair. [There is no recording on Tape 01-54, Side
B because a new tape was inserted.]
TAPE 01-55, SIDE A
CHAIR MURKOWSKI reconvened the House Labor and Commerce Standing
Committee meeting at 5:42 p.m. Members present at the call back
to order were Representatives Murkowski, Crawford, Rokeberg, and
Halcro. Representatives Hayes and Kott joined the meeting as it
was in progress.
HB 225-ALCOHOLIC BEVERAGE TAX
CHAIR MURKOWSKI announced that the final order of business would
be HOUSE BILL NO. 225, "An Act relating to municipal taxation of
alcoholic beverages and increasing the alcoholic beverage tax
rates." [Before the committee, adopted as a work draft on
4/9/01, was version 22-LS0806\L, Cook, 4/9/01.]
Number 0073
JERI LANIER, Family Centered Services of Alaska (FCSA),
testified via teleconference. She stated:
I am very much for the alcohol tax in the interest of
the fact that [there are] a rising number of agencies
and departments competing for the very few dollars
that there are to spend. I think ... the best thing
to do is to add the tax so that the funding gets
spread out just a little bit further.
ANDY HARRINGTON, Arctic Alliance, testified via teleconference.
He addressed some points discussed at the previous hearing:
Point one: moderate drinkers shouldn't have to bear
this burden. My response is: no Alaskan consumer is
going to have to bear this burden. We each are going
to choose how much of it to bear, whether it's zero or
paying a small amount or paying a large amount.
That's one of the bill's strong points, in my view.
Point two: businesses may have to lay off employees
or close down. Well, this is a legitimate point and
it shouldn't be ignored, but at the same time
everybody seems to agree that there is just too large
a volume of alcohol flowing through our families and
our communities. Decreasing that volume will probably
mean that each seller will be selling less and/or some
businesses may close down. I hope they can put their
[business] skills into branching out or figuring out
how to maintain a reasonable profit level at a lower
volume. And I wish more power to them in that
endeavor, but we just need to have less volume of
alcohol.
Point three: it's unjust to leave alcohol tax
decisions up to municipalities. I don't think that is
a valid point. Local governments are no less
represented than state governments. The statement
that the Fairbanks North Star Borough does not spend
money cleaning up alcohol problems is just simply
wrong, as any member of the borough Health and Social
Services Commission could attest.
Point four: this bill won't solve the problem.
Granted, it won't solve the whole problem by itself,
but its supporters aren't claiming that. We do need
other things. We need the lower DWI [driving while
intoxicated] blood alcohol limit; we need better laws
on minor consumption; we need more treatment programs.
But those don't diminish the needs for this bill,
which is as important a component as those others. ...
Point five is [it will] lead to more bootlegging.
Perhaps, but we have laws that deal with that, and if
they aren't being enforced, that's a dollars issue,
and this tax will generate more revenue to enhance
that effort.
Point six: we can't be sure that all this money will
be spent on alcohol problems. That's true because our
constitution prohibits dedicated funds. We have to
turn to our legislative judgment to decide for any
spending priorities from year to year, as [for] all
Alaska since its statehood. That's not a reason to
not enact this bill.
[Point] seven is the 300 percent increase. Well,
percentage is dependent on where you start as well as
where you finish. If you need this increase to bring
us up from a very low starting point to a merely low
end point, we shouldn't be afraid of it for that
reason.
Number 0132
GLEN BRADY, President, Silver Gulch Brewing and Bottling
Company, testified via teleconference in opposition to HB 225.
He informed members that he is on the board of directors of the
state CHARR (Cabaret Hotel Restaurant & Retailer Association).
He also has a bachelor of science degree in mechanical
engineering and understands the use and abuse of statistics. He
stated:
With that in mind, I'd like to go over some
interesting studies I've come across that may be
enlightening to the committee. First, according to
the State of Alaska Advisory Board on Alcoholism &
Drug Abuse, there are strategy points laid out to
reduce the negative consequences of alcohol and other
substance abuse. Now, bear that in mind; I'm going to
go through some facts. ...
One, according to the Office for National Drug Control
Policy, the total expenditures on illicit drugs in the
United States were $65.8 billion dollars in 1998.
Two, during the same year, the total national output
of money on alcoholic beverages was $84 billion
dollars. ...
Three, according to numerous studies done on the
effects of moderate consumption - that's one drink a
day for women, two drinks a day for men - there is a
clear benefit in terms of the reduction in the risk of
heart disease. There are also studies that indicate,
however, that moderate alcohol consumption [in women]
increases the risk of breast cancer.
Now, here is where I am going to step in with an
opinion. If we set aside statistics and try to
examine some facts, we cannot safely say that moderate
alcohol consumption is evil, nor can we say that it is
a magic bullet. We can, however, say that there is a
growing body of research that indicates that
responsible use can have positive effects. ...
Next, there are no tax revenues collected on illicit
drugs; this is a fact. According to the data from the
Substance Abuse and Mental Health Services
administration, there were 1.5 million people admitted
into treatment programs in the country in 1998. Of
those, 26.1 percent were alcohol only. Of the
addition 20.3 percent, they were classified as alcohol
with secondary drug abuse. What this means is that
about half of the people admitted into treatment had
had problems with alcohol.
Now, while I don't know exactly how much the alcohol
history contributes to the economy with jobs ... in
production, distribution, and service industries, ...
I do know that the illicit drug trade does not
contribute to the economy in any of these ways. ...
All these national numbers don't necessarily translate
to a state level; however, we could safely say that
they probably have some bearing on what's going on in
Alaska.
I'd urge you to not support this bill in its current
wording, because this will affect me as a small
producer by virtue of our already high price point on
the shelves.
CHAIR MURKOWSKI, sponsor of HB 225, asked Mr. Brady how much
Silver Gulch produces on an annual basis.
MR. BRADY responded that last year he produced approximately
under 1,700 barrels, which is about 60,000 gallons.
Number 0198
REPRESENTATIVE HALCRO stated that he appreciates the statistics
that Mr. Brady put forward, but thinks the one statistic that
"trumps" all is the amount of money [the legislature] has to
appropriate every year from the state budget to cover the costs
associated with alcohol.
MR. BRADY said that's a good point, and explained that he had
brought up the national statistics because they are probably
somewhat close to what is occurring in Alaska. Basically, they
show that well over half of the cost is a result of illegal drug
abuse, not just alcohol.
REPRESENTATIVE HAYES asked Mr. Brady what he thinks is an
appropriate alcohol tax.
MR. BRADY answered that as a CHARR board member, he has
discussed this a lot; in principle, he is not adverse to a
reasonable tax increase. However, any tax increase borne by the
industry should go toward addressing the problems. He remarked
that [CHARR] looked at wellness courts and educating children
about the possible ill effects of alcohol and drug abuse. The
fiscal note on those, he said, is $1.9 million plus another half
a million [dollars] for elementary students. He said he thinks
that would seem reasonable.
Number 0242
NICHOLAS STONE, Director, "Inroads to Healing" Program,
Fairbanks Native Association, testified via teleconference in
support of HB 225. He noted that the "Inroads to Healing"
Program is an outpatient treatment service for people with
addiction issues. He said:
I've been in this field for over ten years, all here
in Fairbanks. ... I'm in favor of this bill, and what
I like most about it is this: One, it doesn't put
people in jail for using alcohol; and two, it doesn't
prevent nor stop anyone from using alcohol. What it
does do is tax those who use, and those who use the
most get taxed the most.
Furthermore, given the nature of my business, I see
those who use the most, and those tax dollars have a
great chance of better serving them. As we know - and
it's well documented - those who use the most cost us
the most, not just in treatment costs but in all other
costs in our society. It took Congress years to learn
that tobacco was addictive, so let me be perhaps one
of the first to say right now alcohol is also
addictive.
Currently, we pay over $500 per capita for substance
abuse. The majority of the states pay closer to $200
per capita - and even those with populations close to
our size. I don't have any misconceptions that the
user tax will stop drunk drivers, or that it will go
to treatment programs - although I think it should.
Nor will it put down bar owners or put them out of
business. Frankly, all taxes discriminate, and I
think this one aims to the correct audience.
Number 0269
ANNETTE FREIBURGER, Executive Director, Fairbanks Native
Association (FNA), testified via teleconference in favor of HB
225. She stated:
FNA administers formal residential alcohol and drug
treatment centers as well as [a] long-term residential
unit for chronic inebriates. We have the only detox
unit serving a 250,000 square-mile area, plus we have
instituted an outpatient treatment center. Our
treatment programs have been struggling with flat
funding for more than a decade. It's getting more
difficult all the time to maintain the expected
outcomes with no increases in the budget's covering
expenses, like cost-of-living increases. Our staff is
burning out at an alarming rate due to overtime and no
break in service. We cannot afford to be competitive
with private organizations that use medical personnel
like we require at our detox units, as well as trained
certified treatment staff. Staff turnover is our most
critical difficulty.
FNA is in support of House Bill 225. We believe that
the excise tax on alcohol paid by the people who use
alcohol will relieve some of the budget burdens that
the legislature has to deal with every session. If
this tax is collected and redistributed to help
support the programs that the abuse of alcohol
creates, it would be of great benefit to the people of
the state of Alaska. It would ... only be users that
would be affected. A full 10 percent of Alaska's
population suffer from alcohol dependency, more than
twice the national average. Alcohol abuse is Alaska's
number-one social and public health concern. The
increase is not staggering to anyone except the heavy
user. As heard in prior testimony, the majority of
alcohol users are not abusers; therefore, most users
will not be heavily impacted. This small amount of
money on each drink will have [a] very large economic
impact on struggling programs.
Number 0298
WAYNE WOODGATE, Bartender, testified via teleconference in
opposition to HB 225. He stated:
The [Legislative Information Office teleconference]
room yesterday was completely filled; the room was
standing room only, as you can see by the people who
signed [up] on the roster. ... Most of the people who
were against this proposed bill, as I am, are not here
right now. Unfortunately, that's probably due to the
fact that they have to work.
I myself am a full-time student; I've been a bartender
for 11 years. I had to leave yesterday early. ...
From my own personal experience, I was going to pick
up my year-and-a-half-old son from his mother who was
also going to work; she also works in the bar
industry. ... If anybody says this isn't going to
affect actual real people with real jobs, I think this
is a very good representation of what's going on.
Unfortunately, the testimony from the people on the
opposing side can't be here to really speak their mind
today, ... so I would like to speak for them all, that
we work really hard for our money, and this is
something we do for a living.
Number 0328
JIM ELKINS, Owner, Elkins and Elkins, testified via
teleconference in opposition to HB 225. He stated:
Yesterday was an interesting day for me. I spent two
hours of my time waiting to try to speak on this issue
... that I believe will cost jobs in Ketchikan. And I
spent the later part of the evening, for three hours,
with [U.S.] Senator Murkowski, [Chair Murkowski's]
father, who was in town trying to tell us how to save
jobs and service down here in Ketchikan. ...
All that aside, I would just like to make a couple
comments. In the last few years in Anchorage, the
voters have unanimously turned down two attempts to
put an excise tax on liquor, and then in the third
election ... they passed an ordinance at a referendum
vote that ... three-fifths of the majority had to
approve any tax in Anchorage. So that's 60 percent of
the voters [who] have to go to the polls and say,
"Yes, we want a tax in Anchorage, in the
municipality." And I find it ironic that you would
put forth a bill that would say that the rest of the
municipalities in the state had (indisc.) an excise
tax, and not protect them the same way the Anchorage
voters protected themselves. ...
If you want to pass it, put in there that to add a
municipal election, it has to pass by three-fifths -
60 percent of the voters. Then, statewide, we have a
level playing field. You know there is not a level
playing field now [in] most places in the state,
because most of us pay sales tax in the state, except
they do not in Anchorage. ...
It bothers me that some people think that there's a
lot of money in this business. ... There's less than
400 people per liquor license in Ketchikan. Come down
here and walk in our shoes before you take to the
opinion that there's money flowing out of our pockets
for other things. ... We're already down from ten
employees to six, and most of the people in our
industry are single parents. ...
Speaking on behalf of ... state CHARR, of which I've
been on the board since it started 30 years ago, ...
it helped create a lot of the good legislation in the
state that has helped bring down alcohol abuse. And
if you look at your own figures, from 1984 to '99,
consumption is down because tax revenue is down. ...
Obviously, ... if tax revenue is down, the consumption
cannot be up. But I would say that - as responsible
people in the industry that state CHARR represents -
we don't mind stepping up to the plate and coming up
with a reasonable tax to help pay down the deficit
that the state's going to have. But where's oil?
Where's fish? ... We don't want to be the only ones
stepping up to the plate. ... I get the feeling that
some of the members on this committee almost look at
us like second-class citizens, and don't care what we
say or what we do. It really bothers me.
CHAIR MURKOWSKI responded:
Truly, if I didn't care what you and others within the
industry thought about this, I certainly wouldn't take
the time that I'm taking to hear all the public
testimony. It is important to hear not only your
perspective, but the perspective of other people that
are affected by this alcohol tax.
Number 0399
REPRESENTATIVE HALCRO added that [the committee] needs to
understand the reason for even discussing this. The fact is,
there is a real cost to society, and legislators have a
responsibility to not only the hospitality industry but to every
Alaskan. He clarified that in 1995 there was an alcohol tax on
the ballot in Anchorage; it passed by less than 2 percent, [in
part because of] a fear of taxation, period.
MR. ELKINS responded that he thinks to implement a tax like that
and not make it the same for everybody in the state is criminal.
REPRESENTATIVE HALCRO remarked that he understands that. He
said the municipal contribution has been taken out of the bill;
more important, even if it were in the bill, the people of
Anchorage would still have to approve any increase in the
alcohol tax by a supermajority.
REPRESENTATIVE HAYES asked Mr. Elkin what the reasonable offer
was the industry had come up with.
MR. ELKINS responded that [the industry] gave it to
Representative Kott some time ago, but he thinks it was thrown
out. He stated that the bottom line is that the Alaska state
CHARR has no problem stepping up to the plate to raise taxes to
bring down the deficit in the state.
REPRESENTATIVE CRAWFORD asked Mr. Elkins whether the tax
increase in 1983 affected his industry.
MR. ELKINS responded that it was a long time ago, and things
were a lot different in the state then: there were a lot of
jobs. He said the question is not relevant to today in Alaska.
REPRESENTATIVE KOTT remarked that he would ask somebody in some
part of the state where [the economy] is not depressed.
Number 0453
JAMES ELKINS testified via teleconference on behalf of himself
in opposition to HB 225. He stated the he would like to address
the $249 million number that the Governor's Advisory Board on
Alcoholism & Drug Abuse put out in its annual report. He said
[the board] admits that its numbers are based on national
studies; therefore, he said he looked at those studies. In the
tenth annual report to congress from the Institute on Alcohol
Abuse and Alcoholism it states that the amount lost nationally
was roughly $682 per man, woman, and child. However, states and
local governments only have to pay for 18 percent of that cost,
which in Alaska would only be $77 million. The number, he said,
also includes lost income revenue. He remarked that he
disagrees with anybody who says this isn't going to affect
consumption, because in that tenth annual report to congress it
says a 1 percent increase in price will effectively create a 1
percent decrease in demand.
DONNA LUTHER, Ketchikan Cabaret Hotel Restaurant & Retailer
Association [CHARR], testified via teleconference. She stated:
In Southeast here, with the decline of the timber and
the fishing industry, tourism has become our number-
one industry. ... And if this excise tax that is
referred to as the 10-cents-a-drink tax - which, by
the way, I think is very misleading - is passed, the
hospitality industry is the next to fall by the
wayside of government. There's a lot of people in
this community and people that work with me that will
be affected by this, and I think adversely so.
There [are] jobs at stake here. Let's be reasonable
and realistic: a tax of this magnitude will give an
employer no choice but to cut back his workforce. I
can't think of any industry - or individual, for that
matter - who would not be opposed to a 300 percent
increase, the state taxes, as well as the potential
for an addition 300 percent increase in municipal
taxes. ... I'm not opposed to a tax increase.
Clearly, it's been a long time coming. But what I am
opposed to is the 300 percent increase disguised as a
dime.
Number 0495
GEORGE TIPTON, Ketchikan Entertainment Center, testified via
teleconference in opposition to HB 225. He stated:
I believe the proposed legislation to be an
unreasonable increase in its current form. It's been
stated that more money is needed to pay for social
programs, and supposedly we spend $250 million but
only take in $12 million. I would really like to know
where this $250 million number comes from.
I also believe that not enough money gets to the
education, treatment, or prevention programs because
of the small (indisc.) and administrative overhead. I
see this everywhere, as being politically active in
the community and sitting in local government bodies
in the past; I know exactly how that occurs. There
are a number of varying agencies - federal, state, and
local - that duplicate efforts, and it seems to reason
that these need to be brought under one umbrella [for]
it to be more cost-effective. Let's get the money
where it needs to be.
I also kept hearing yesterday from professionals on
treatment and program [sites] about all the study
data. Another question comes to mind: Just how much
money goes into these studies and away from the actual
programs? Also, can anyone tell me how effective the
treatment and education and preventive programs are -
if they are being duplicated and not consistent in
their factions? It seems we have many repeat
offenders who probably take the biggest percentage of
these dollars.
This bill's a tax - or call it a user fee - on one
industry, but is it not all of the citizens'
responsibility? I have never had kids in a public
school system in the state of Alaska, yet I have paid
a property tax ... for 30-plus years so kids can get
an education - just as I got in the state, in Juneau.
There is no difference in my responsibility as a
citizen of the state in that endeavor, as it is here
for everybody else.
There were some questions that were asked by the
committee members that I would like to respond to.
Yes, we have drink menus at all of our establishments.
I believe this question has been asked because it
could be pointed out that the change to the customer
wouldn't make any difference if the customer does not
physically see it on the menu.
Another question: Who is the tax unfair to? A
majority of the people who are the responsible
drinkers. It would benefit on behalf of the abuser,
that we would have to pay for it.
In the sponsor statement are some charts that reflect
the alcohol beverage's tax revenue with and without a
CPI [consumer price index] adjustment as well as the
current tax per drink. If we would have followed
these scenarios, and (indisc.) there had not been an
increase since 1983, the increase [brought] up on the
CPI report ... would be approximately 44 percent for
.0145 on beer and wine, and .0192 on spirits. This is
a far cry from what's being proposed.
Number 0526
MR. TIPTON continued:
I totally oppose a tax on just the one industry, and
not on all of the state citizens. But if this bill
were to be changed [by] this rate, I think that's
probably pretty close to what the offer was made by
the industry itself, as reflected with a CPI
adjustment in the sponsor statement. I would suggest
that we spread it out over the next couple of years,
as an increase of this magnitude in one year in
unrealistic. Imagine the cost to my business if a
bottle went from $10 to $14.40. Many of us struggle
to survive, but we do our jobs very responsibly, as I
have never had a liquor violation. And we go far out
of our way to make patrons be responsible as well.
Since we have heard many varying proposals for and
against, consider another [possibility]: You could
fund the whole program for $250 million - if that's
the real number - with a state income tax, because it
will supposedly generate exactly that amount annually,
thus bringing up other general fund dollars for
infrastructure, which creates jobs throughout the
state. How unrealistic is this? Only you can
determine in the legislature. It basically boils down
to the fact that the state must produce a long-range
fiscal pact, just as we'll do in business. ...
This is an industry that has approximately 17,000
employees, and an economic impact of $1.4 billion in
the state. We are responsible as an industry, and we
should not be forced to cover, by ourselves,
irresponsible acts of others and all of the ...
liberal social programs. Alaska could become the
highest alcohol-taxed state in the nation.
CHAIR MURKOWSKI remarked that she appreciated Mr. Tipton's
testimony. She stated that there has been a lot of conversation
about agreeing to something reasonable, and yet there has been a
hesitancy to say what that might be; she noted that Mr. Tipton
has tied that to a specific increase. In regard to his concern
about where the $250 million goes, she said treatment is just
one component of that expense, which is made up of the cost to
the Department of Corrections, to the courts, to [the Department
of] Public Safety, and to all aspects of the state that are
affected.
Number 0555
FRANCINE WHEELER testified via teleconference as a citizen, as a
daughter of an alcoholic, and on behalf of Arctic Bar. She
informed members that she has 12 siblings and she is the only
one who drinks. She added that she has worked in every bar [in
Ketchikan] but seven, and has never had a liquor violation.
MS. WHEELER told members she would like to see the overall tax
as an alcohol preventative tax or as an income tax. She said
this is a social issue that needs to be [dealt with] by
everyone. She is not opposed to a raising the alcohol excise
tax by a reasonable increase. She had talked to 200 people and
asked them what they thought of the tax, she reported; they'd
replied that they didn't have enough information, but that if
they were going [to respond] based on the information sent, they
would say "absolutely not" or would have to quit drinking. She
said if they quit drinking, she would have to quit her job. Ms.
Wheeler continued:
We're certainly able to understand that alcohol, like
any mind-altering substance, when used by certain
people among our society, causes pain and many
negative consequences. We also understand that in
many cases it does not. It provides relaxation, and
many, many good memories come out of a night of
celebrations.
I would like to paraphrase a man from Kenai: ...
"House Bill 225 is being put forth as a user tax. If
you don't use it, you don't pay; heavy users pay
heavy." His idea was, if we solve problems in our
society this way, ... we should carry the idea of the
user tax all the way down the line. ...
Spins are put on numbers in every political arena that
there is. None of ours are any different. 10 cents a
beer or a drink doesn't sound like much, but if you
know economics, you know that that 10 cents goes to
the manufacturer, which goes to the bottler, which
goes to the wholesaler, which goes to the deliverer,
which goes to the retailer, and somewhere down the
line that 10 cents gets to the customer. Now, [if] we
take that 10 cents from the state and 10 cents from
the city and 10 cents from the borough, we have 30
cents. You take that 30 cents all the way down the
line and that drink that costs $3.50 is realistically
going to cost $5.00 or $5.50.
TAPE 01-55, SIDE B
Number 0588
MS. WHEELER continued:
... If you are representing the people, then put it to
them so they can understand it. ... When they raised
the taxes in 1983, ... I think that before that they
were collecting, ... $15 million a year in revenue and
taxes, and it went down to $12 million this year.
Before that, it was a voluntary system; they put their
tax money up there. Then we introduced this tax
increase [and] we've lost jobs. ...
There's no earmarking on this bill. There's no cap to
this bill. There's no anything. The way it's worded,
I don't understand. ... We're going to let it [go]
right into the general fund, and then we're going to
hope that some of it gets down to the people who you
say we are supposed to be paying for.
I think this is a society problem, and all of society
needs to split this. ... A lot of this starts with our
children. ... As far as public schools go, we need a
lot of help in the area of our children. We need to
teach them to love and not hate; we need to stop them
from feeling separation. Love, to me, equals self-
responsibility. This is not teaching any child self-
responsibility. CHARR does so much in the community;
we really, really have a lot of people that we are
representing here.
REPRESENTATIVE HALCRO stated that Ms. Wheeler's testimony was
similar to what [the committee] heard yesterday from different
communities: people talked about the local economy being down,
and raising the tax will cause a devastating effect. He asked
Ms. Wheeler, if the economy is so poor in some of these
communities and money is tight, whether these folks should be
spending their money drinking in bars.
MS. WHEELER responded that there is no way [liquor businesses]
should bear the brunt of paying this whole tax. Her point is
that it is a societal problem.
REPRESENTATIVE HALCRO said he has seen about a half a dozen
surveys in which 75 percent would support an increase in the
alcohol tax. He asked Ms. Wheeler, if a nondrinker is driving
down the road and someone who has been drinking runs a red light
and hits the car, whether the victim should have been paying to
address this problem all along or whether it should have been
placed on those who contribute to the problem.
MS. WHEELER responded, "The people in the automobile industry,
should they be paying taxes for having created cars in the first
place?"
REPRESENTATIVE HALCRO replied that it is not the same. The car,
doesn't cause the accident; the people cause the accident.
MS. WHEELER agreed and stated that [the legislature] is not
asking the people to pay a tax for negligent drivers.
Number 0520
ROSALIE NADEAU, Akeela, Inc., testified via teleconference in
support of HB 225. She stated:
We put this a tax on the user, not the industry. Now,
I understand the industry people don't see it that
way, but that is how we see it. We understand that
this is not a tax that is going to be a dedicated tax
to address treatment and prevention needs. ...
I represent one of the larger prevention-and-treatment
organizations in this state, and alcohol is the
number-one substance abuse problem in this state. ...
14 percent of the births in Alaska are FAS [Fetal
Alcohol Syndrome] children, and that puts our rate
twice the national [rate], and a lot higher in the
world of FAS births. That isn't drugs - that's
alcohol. It's the one area I think that ... perhaps
has worse impacts than any drug one can think of, and
that is on the life or the potential life of an unborn
child.
Very little of the ... $250 million ... is spent on
treatment and prevention programs. In fact, the
budget that was set aside for the various programs
impacted by alcohol ... in 1998 were $324 million. ...
Of that, .5 percent ... went to prevention and
treatment. It is, of course, our hope that with the
infusion of some more dollars generated by this
particular measure, more money will find its way into
treatment and prevention.
I think what I hear from the industry is that the
assumption those of us who work in treatment-and-
prevention programs make is true, and that is,
increasing the cost will decrease the consumption. I
know that if I were a waitress or a bartender ... I
would probably be concerned about that. ... But I look
at it from the point of view of what is the impact on
this state of the abuse of alcohol, and I think it
makes this measure not only needed, but a very
sensible approach, especially if some of those funds
are funneled into some of the treatment and prevention
programs.
Number 0486
ALAN BAILEY, Coalition of Alcohol Abuse and Public Safety;
Anchorage Chapter, Mothers Against Drunk Driving (MADD),
testified via teleconference. He noted that he was also a
member of [Governor] Knowles' 1984 DWI taskforce. He said even
17 years ago, some members of that taskforce urged that the
taskforce recommend a significant increase in beverage taxes;
however, it was not done.
MR. BAILEY informed the committee that as the Anchorage
municipal prosecutor for ten and a half years, he'd learned
through his daily work that the vast majority of crimes were
alcohol-related. A family-law attorney in Anchorage for 16
years, Mr. Bailey said the biggest problem he sees involves drug
and alcohol abuse; for example, that afternoon he had to explain
to a young woman how her husband's alcohol abuse affected his
parenting. Alcohol abuse exacerbates domestic violence, child
abuse, child neglect, health problems, the modeling of addictive
behaviors by parents for children, and other kinds of
dysfunction in families and society.
MR. BAILEY suggested that this bill would work to reduce
alcohol-related problems in society, regardless of what the
legislature does with the revenues. Research shows that higher
taxes lower alcohol abuse and the related problems; that
research also shows that even DWIs have been reduced when
societies have significantly increased alcohol taxes.
Number 0456
TOM ANDERSON, Acting Executive Directory, Anchorage Cabaret
Hotel Restaurant & Retailer Association (CHARR), testified via
teleconference. He stated:
Our association has recently started its recruiting
process for members, and I am pleased to report that
nearly every business I've contacted has joined.
These businesses include food distributors and
tourism-and-marketing companies and even a furniture
sales [company]. ...
The connection to restaurants and hotels and bars
these ... businesses have is really a collective
concern about freedom to operate a business without
[being] under restraint in conjunction with the
promotion of a responsible hospitality industry. ... I
think the bottom line is everybody's concerned about
health and safety and welfare. Certainly, I would
say, unequivocally, the hospitality industry is. ...
Interestingly, groups like Anchorage CHARR ... have
the same vision of reducing DWIs and alcohol abuse.
We are being proactive in our community by our own
memberships and activity. ... Anchorage CHARR has been
in contact with Kevin Tubbs. You've probably read the
article he was featured in yesterday regarding the
drug Naltrexone, which is an alcohol-addiction
suppressant. And we've expressed an interest in
administering the ... program that he and Brown Jug
started to assist those addicted to alcohol. ...
We're also looking into Anchorage CHARR researching
the potential for a grant to the University of Alaska
Department of Justice ... in conjunction with the
Department of Geomatics to study -- basically, they
can do math and pinpoint through data just about
anything. And we are looking at alcohol-related
incidents and DWIs in the city, and trying to work
with APD [Anchorage Police Department].
... I give you these examples simply to say that we
are proactive. The "demonization" is unfair, [and]
Anchorage CHARR has members throughout the city active
and willing to try to counter these problems. These
ongoing endeavors, to name a few, I think are
illustrative of the fact that we want to recognize
[that] health and public safety issues should be
number one. ...
I don't think anyone faults the attempt to close the
fiscal gap, and I think you've been stellar and
staunch in supporting a reduction of waste in the
budget and finding alternatives to the opposite of
that. And yet I think we have to be cautious; I mean,
I've worked in legislative budget and audit. ... With
this comment about alcohol abuse costing taxpayers
$249 million, I would love to see the research on
that.
... I think you must... take into account loss of
jobs, wages, and lack of clarity on where the funds
will be dedicated, in addition to the unfair increase
as a whole. So, I think these negatives and the
disabling effect on the industry outweigh the benefit
at this time. ...
I think an audit would be prudent, and I think at this
time it would be better to continue the analysis and
couple it with verification of these alleged costs to
taxpayers, and hold off at least until next session,
and - if anything - reduce the current amount of the
bill.
Number 0392
CHAIR MURKOWSKI stated that she appreciated Mr. Anderson's
testimony. She said she did read the article about Kevin Tubbs,
and she had talked with Judge Wanamaker a couple years ago about
his program and how he applies Naltrexone. She mentioned
Speaker Porter's therapeutic courts bill and several alcohol-
related bills that were moving through the House. She observed
that the industry is not blind to the problem, and is not
unwilling or uncooperative in attempting to address some
systemic problems. However, many legislators believe an
increase to the existing excise tax is a component of that
alcohol package.
REPRESENTATIVE HALCRO concurred. He said he doesn't think it is
the intent to "demonize" anybody who has testified. Noting the
lively debate, he remarked that [the committee] is grappling
with the difference between what alcohol costs the state and
what is taken in, in trying to find ways to fund these programs.
Number 0352
JEANETTE JOHNSON, Owner, Crazy Horse Bar, testified via
teleconference:
Every bar around Anchorage and throughout Alaska
usually donates money to different charitable
organizations. Just in the month of February my bar,
which is the Crazy Horse, ... sold $4,667 worth of
Shamrock. I guess in '89 through the year of '97,
just in the (indisc.) alone, the bar turned in
$500,000. Every bar around Anchorage has some
charitable organization; they're donating money,
they're raising money. And usually we have three
different liquor distributors, which always give us
different things we can sell or auction off to raise
this money. So whether it's one disease [or] another
disease, the bars are doing something besides just
selling a drink.
JOHN PATTEE testified via teleconference in opposition to HB
225. He stated:
First of all, the hospitality industry is very large,
not only in this state but across the country and the
world. In this state it supports thousands of
businesses, their employees, and their families, not
all of which sell alcohol.
Many of these businesses are support-type companies.
Hospitality-industry members are people who live and
work hard for their money to support themselves and
their families. They also support their communities.
Our industry members attend, support, and are
personally involved in every aspect of our community
such as churches, schools, PTAs [Parent Teacher
Associations], community councils, nonprofits,
charities, business organizations, government
agencies, and many, many other organizations that are
good for our communities. Our pull-tab sales alone
support thousands of charities and nonprofits that
would not exist without our help.
We work with the community councils to help solve
problems at the grassroots level. We train our
employees to be responsible servers of alcohol. We've
implemented, or are working on implementing, many
programs that address alcohol abuse, drunk driving,
and even sexual assault. We understand the problems
related with alcohol as well or better than anyone,
and have and will continue to work towards solving
them.
I do not believe the hospitality industry should be
punished by this very large tax. I don't believe the
money generated would or can be dedicated to alcohol
issues. The cigarette tax and tobacco industry
settlement money is a good example of that.
Ms. Murkowski stated that we are number one per capita
in alcohol abuse. This may be true. Because [of] a
small population of our state, we are number one in
almost any category you choose.
Ms. Murkowski also mentioned the $250 million cost to
the state. I don't have any scientific numbers, but I
do believe our industry pays for much more of that
than has been proclaimed. We pay it by our taxes -
personal, property, sales, corporate, and other taxes
including alcohol taxes. We pay it by our time and
efforts involved within our communities to make them a
better place to live and work. We pay it by the tens
of millions in charitable donations and sponsorships
given to our communities directly or by selling pull-
tabs. And we pay it by the local economics the
hospitality industry helps fuel.
Finally, let's not just throw money at our problems.
Let's come up with some real solutions to solve the
problems a small minority of population is creating,
without punishing the rest of us or blaming us for a
problem our whole society helped create. The
hospitality industry members and their families, along
with government and other concerned agencies, can do
it if we work together. Please do not pass this bill;
it will harm many of the people that make Alaska a
great state.
Number 0281
DON GRASSE, General Manager, K & L Distributors, testified via
teleconference in opposition to HB 225. He stated:
We employ over 125 Alaskans in this state, which
includes Teamsters, administrative support, sales
professionals, merchandisers, et cetera. We
distribute our products to over 1,200 license holders
in the state of Alaska. I'm against House Bill 225
with tax increases of 300 percent. ... I've listened
to quite a bit of testimony on this bill, both
yesterday and today, and I'm against a bill that's
designed to penalize an industry - what has been
characterized by a lot of people on the opposing side
as an irresponsible industry.
I wanted to read some facts to the committee. ... The
percentage of teens ages 12 to 17 who reported having
a drink in the past month is 43 percent lower in 1999
than in 1990, and 47 [percent] since 1982. The 1999
teen drinking rate is the lowest level since tracking
began since 1979. By the way, these are national
statistics. The percentage of high school seniors who
reported having a drink in the last 30 days is 12
percent lower in 2000 than in 1990, and 28 percent
since 1982. The percentage of high school seniors who
reported having five or more drinks in a row in the
last two weeks is 7 percent lower ... in 2000 than in
1990, and was down 26 percent in 1982. The percentage
of college freshman who say they drink beer frequently
or occasionally is at its lowest level since record
keeping began in 1966. The record low in 2000 is 15
percent [lower] than in 1990, and 34 percent since
1982.
Number 0244
MR. GRASSE continued:
Signs of progress on drunk driving: The number of
people kill in drunk driving crashes has declined 32
percent since 1990 and 41 percent since 1982; from
18,444 in 1982 to 10,867 in 1999. The number of
people killed in teenage drunk-driving crashes has
declined 40 percent since 1990, and 64 percent since
1982 - going from 3,500 in 1982 to 1,293 in 1999.
Today there are 2.2 million fewer teen drinkers than
there were in 1990, and 3.2 million fewer teen
drinkers than there were in 1982. There were 13,000
fewer high school seniors who reported drinking today
than did in 1990, and nearly 600,000 fewer high school
seniors reported drinking than did in 1982. There
were 5,000 fewer drunk-driving fatalities in 1999 than
there were in 1990, and there were 7,500 fewer drunk-
driving fatalities in 1999 than in 1982. There were
870 fewer teen drunk-driving fatalities in 1999 than
there were in 1990, and 2,300 fewer teen drunk-driving
fatalities in 1999 than there were in 1982. ...
Total fatalities in drunk driving crashes in Alaska
were down 42 percent. Fatalities in teen drunk-
driving crashes in Alaska were down 50 percent since
1982. Dramatic reductions in underage drinking and
drunk driving over the past 20 years indicate that
community-based programs, partnerships, [and]
"personal responsibility" messages are working.
Parents, educators, retailers, law enforcement
authority, and others are seeing signs that their hard
work to reduce the incidence of underage drinking and
drunk driving is making a difference.
Number 0221
MR. GRASSE continued, stating:
Our industry will and has acknowledged alcohol-related
problems, not only nationally but [also] in the state
of Alaska. That's why our industry continues to work
hard to fight alcohol abuse, as witnessed by the most
recent testifiers. The manufacturers also promote
anti-alcohol abuse messages regularly on TV and radio
- programs such as paying for taxi rides, designated-
driver education programs and messages, [and]
speeches. ...
The retailers ... have supported numerous programs
that have impacted these numbers since forever -
holiday media warnings and radio messages; the TAM
program - techniques of alcohol management - which is
run by the CHARR association; taxi rides, again;
lobbying for House Bill 68 that was mentioned; or
House Bill 214, which is the civil fines for underage
drinkers; donations to youth court; community giving
that exceeds hundreds of [thousands of] dollars by all
organizations in the community.
The distributors are doing the same thing: working
with their retailers to support all these programs;
having their own holiday messages that promote safe
drinking and driving, or safe consumption of alcohol;
taxi cab programs; youth court donations; Boys and
Girls Clubs; community sport. And many of the events
that you attend in your communities, the alcohol you
consume has been donated or supplied by industry
members.
K & L distributing is involved in regular, quarterly
programs, whether it's "good sport" programs ... [or]
"We ID" programs, which [are] national programs that
educate retailers on proper identification; safe
snowmobiling and skiing brochures and programs; family
talk on drinking; [and] designated-driver education
programs. We've had speakers that have come to the
schools in the past. In fact, the Anchorage School
District refused to have a speaker speak to the
students about drunken driving who was a registered
nurse, because the money came from K & L Distributing
to support that.
House Bill 225 does not solve any problems. It taxes
responsible citizens and businesses for the abuse of a
few. There has been no industry support for this
bill, and that's because we believe it will not fight
any alcohol abuse problems in Alaska or anywhere. The
industry feels that the higher cost of our product
will not stop any alcohol abuse in the community.
CHAIR MURKOWSKI remarked that the industry is responsible in
many ways; however, the problem is that the product in the
industry is a legal drug that can be used irresponsibly by many
people. She remarked that testimony at yesterday's hearing was
interesting which stated that 20 percent of individuals who
drink, drink irresponsibly.
MR. GRASSE recalled that it was that 20 percent of the consumers
consume 80 percent of the alcohol in the state.
Number 0147
CAROL JACKSON, Credit Manager, K & L Distributors, testified via
teleconference. She stated that approximately 50 percent of her
customers purchase their alcohol on a COD (cash on delivery)
basis. She expressed concern that such a large increase will
force many small businesses to close. Many small towns don't
have the financial resources to qualify for credit terms, which
would put an immediate hardship on [small businesses] just to
get their product in the door - their cash outlay would increase
dramatically. She thinks [the legislature] should question
whether this dramatic tax increase is going to benefit just a
few people at the expense of many, she said - not just a
monetary expense, but closing of business doors and the effect
unemployment will have on families.
CHRIS ANDERSON, Owner, Glacier Brewhouse and Restorante Orso,
testified via teleconference. Currently, he told members, he
does approximately $2 million in annual sales in alcoholic
beverages. A 10 percent reduction caused by [HB 225] would
reduce his sales by $200,000 annually. He employs 225 people,
and without terminating much of his staff, he would have to look
at alternate means to finance this cost; he indicated one means
would be eliminating the $50,000 a year he donates in the
community to civic [organizations].
MR. ANDERSON remarked that this would definitely put a divide in
the local brewing industry. The additional new tax of $16 on a
keg of beer would raise the price at which he currently sells to
$131 dollars. He added that he is supportive of a small tax
increase, but thinks [the committee] needs to look at the
industry as a whole and realize that the contributions that are
really making a difference are working now; it is not the
government that has lowered these statistics.
Number 040
KACE McDOWELL, Executive Director, Anchorage Cabaret Hotel
Restaurant & Retailer Association (CHARR), testified via
teleconference. She remarked that it should be recognized that
there is direct cash [from CHARR to help the programs
mentioned]. For example, CHARR alone has thousands of dollars
in its budget this year to help with the new FAS program for
educating the public. She noted that when allowed to do these
kinds of donations on their own, they know exactly where it
goes. Higher taxes, however, would crimp membership; crimp the
amount of money CHARR has, to give back to the community; and
stop programs because [CHARR] will no longer be able to
participate.
TAPE 01-56, SIDE A
Number 0013
MS. McDOWELL offered that [CHARR] has one of the main programs
that has helped to stop drinking and driving by irresponsible
people, as well as underage drinking. She thinks the TAM
program has been more responsible than any other program in the
state, she said, and it doesn't cost the state a dime.
MS. McDOWELL referred to House Bill 68, relating to a program
started in Anchorage with the Anchorage Downtown Partnership,
CHARR, taxi drivers, and Anchorage Downtown License Beverage
Association; what also distresses her is the $250 million being
spent in the state, Ms. McDowell said, suggesting that committee
members become familiar with it. She added that she knows most
of the programs don't work.
ANNE SCHULTZ, Research Analyst, Advisory Board on Alcoholism &
Drug Abuse, Department of Health & Social Services, came forth
to explain the $250 million figure. It comes from two areas.
In 1989, the office of alcoholism for the state updated a 1975
survey; that $250 million study dealt with the broad range of
government services impacted by alcohol. In the meantime, there
have been a number of national studies. Although [Alaska's]
consumption is higher and [Alaskans'] dependence is higher, [the
board] took national numbers and "normed" them for what is known
about Alaska consumption. That number is also in the $250
million range. Those numbers, which came out in 1998 in a study
commissioned by the National Institutes of Health by the Lewin
Group, had 1992 data.
MS. SCHULTZ reported that in each case the impact on Alaska was
about $250 million. The [board] feels that is strong
corroboration for using the $250 million figure, which is now
about eight years old. She noted that yesterday [the board]
received two small Alaska Mental Health Trust grants and is
going to contract - for $32,000 - with one of Alaska's premier
economic-impact consulting firms to take that $250 million and
make it as accurate as possible.
REPRESENTATIVE HALCRO asked Ms. Schultz how much money was
originally needed to do the study [that the board has just
receive grants for].
MS. SCHULTZ responded that the study that [the board] would have
liked to have had was a major study; however, that's not
possible. By narrowing their expectations and building on the
strength of what is already known, [the board] can take the next
step. The first compromise [the board] made with the Alaska
Mental Health Trust was two years at $75,000 a year; however,
they didn't make that.
REPRESENTATIVE HALCRO asked when [the board] should have the
final report.
MS. SCHULTZ answered, six months.
Number 0182
CHAIR MURKOWSKI called an end to public testimony on HB 225.
She noted that Representative Rokeberg would be offering an
amendment at the next hearing.
[HB 225 was held over.]
ADJOURNMENT
There being no further business before the committee, the House
Labor and Commerce Standing Committee meeting was adjourned at
7:26 p.m.
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