Legislature(1997 - 1998)
01/28/1997 08:00 AM House STA
| Audio | Topic |
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE STATE AFFAIRS STANDING COMMITTEE
January 28, 1997
8:00 a.m.
MEMBERS PRESENT
Representative Jeannette James, Chair
Representative Ethan Berkowitz
Representative Fred Dyson
Representative Kim Elton
Representative Mark Hodgins
Representative Ivan Ivan
Representative Al Vezey
MEMBERS ABSENT
All members present.
COMMITTEE CALENDAR
* HOUSE BILL NO. 1
"An Act relating to taxes on cigarettes and tobacco products; and
providing for an effective date."
- HEARD AND HELD
* HOUSE BILL NO. 52
"An Act relating to taxes on cigarettes and tobacco products; and
providing for an effective date."
- HEARD AND HELD
(* First public hearing)
PREVIOUS ACTION
BILL: HB 1
SHORT TITLE: CIGARETTE AND TOBACCO TAX
SPONSOR(S): REPRESENTATIVE(S) BUNDE, Ivan, Croft, Porter
JRN-DATE JRN-PG ACTION
01/13/97 26 (H) PREFILE RELEASED 1/3/97
01/13/97 26 (H) READ THE FIRST TIME - REFERRAL(S)
01/13/97 27 (H) STATE AFFAIRS, HES, FINANCE
01/21/97 (H) STA AT 8:00 AM CAPITOL 102
01/21/97 (H) MINUTE(STA)
01/28/97 (H) STA AT 8:00 AM CAPITOL 102
BILL: HB 52
SHORT TITLE: INCREASE TOBACCO TAXES
SPONSOR(S): REPRESENTATIVE(S) JAMES
JRN-DATE JRN-PG ACTION
01/13/97 41 (H) PREFILE RELEASED 1/10/97
01/13/97 41 (H) READ THE FIRST TIME - REFERRAL(S)
01/13/97 41 (H) STATE AFFAIRS, HES, FINANCE
01/21/97 (H) STA AT 8:00 AM CAPITOL 102
01/21/97 (H) MINUTE(STA)
01/28/97 (H) STA AT 8:00 AM CAPITOL 102
WITNESS REGISTER
REPRESENTATIVE CON BUNDE
Alaska State Legislature
Capitol Building, Room 104
Juneau, Alaska 99801-1182
Telephone: (907) 465-4843
POSITION STATEMENT: Sponsor of HB 1.
JACK CHENOWETH, Attorney
Legislative Legal Counsel
Legislative Legal and Research Services
Legislative Affairs Agency
130 Seward Street, Suite 409
Juneau, Alaska 99801-2105
Telephone: (907) 465-2450
POSITION STATEMENT: Provided testimony on HB 1 and HB 52.
KAREN PERDUE, Commissioner
Department of Health and Social Services
P.O. Box 110601
Juneau, Alaska 99811-0601
Telephone: (907) 465-3030
POSITION STATEMENT: Provided testimony on HB 1 and HB 52.
PAT CARR, Health Program Manager
Community Health and Emergency Medical Services
Division of Public Health
Department of Health and Social Services
P.O. Box 110616
Juneau, Alaska 99811-0616
Telephone: (907) 465-8618
POSITION STATEMENT: Provided testimony on HB 1 and HB 52.
MICHAEL CARROLL, M.D.
J Michael Carroll, PC
1919 Lathrop, Suite 202
Fairbanks, Alaska 99701
Telephone: (907) 452-4768
POSITION STATEMENT: Provided testimony on HB 1 and HB 52.
GLENN HACKNEY
1136 Sunset Drive
Fairbanks, Alaska 99709
Telephone: (907) 474-0610
POSITION STATEMENT: Provided testimony on HB 1 and HB 52.
PHIL MILTON, Principal
Palmer Middle School
1159 South Chugach
Palmer, Alaska 99645
Telephone: (907) 745-3812
POSITION STATEMENT: Provided testimony on HB 1 and HB 52.
PAUL SHERRY, Deputy Director
Alaska Native Health Board
4201 Tudor Center, Suite 105
Anchorage, Alaska 99508
Telephone: (907) 562-6006
POSITION STATEMENT: Provided testimony on HB 1 an HB 52.
ANNE HARRISON
3270 Rosie Creek Road
Fairbanks, Alaska 99709
Telephone: (907) 479-3594
POSITION STATEMENT: Provided testimony on HB 1 and HB 52.
ANNE MARIE HOLEN, Manager Tobacco Control Program
Alaska Native Health Board
11241 Latta Circle
Anchorage, Alaska 99516
Telephone: (907) 562-6006
POSITION STATEMENT: Provided testimony on HB 1 and HB 52.
ROMIE DESCHAMPS
HC 5 Box 9779
Palmer, Alaska 99645
Telephone: (907) 745-2299
POSITION STATEMENT: Provided testimony on HB 1 and HB 52.
NATHAN BAILY, Representative
Tobacco Alliance of the Peninsula
P.O. Box 3337
Kenai, Alaska 99611
Telephone: (907) 283-3984
POSITION STATEMENT: Provided testimony on HB 1 and HB 52.
SYLVIA SULLIVAN, President
Alaskans for a Just Society
P.O. Box 2684
Valdez, Alaska 99686
Telephone: (907) 835-3729
POSITION STATEMENT: Provided testimony on HB 1 and HB 52.
ROBERT TOLLISON, Professor of Economics
George Mason University
The Center for Public Choice 1D3
4400 University Drive
Fairfax, Virginia 22030-4444
Telephone: (703) 993-2315
POSITION STATEMENT: Provided testimony on HB 1 and HB 52.
DELISA CULPEPPER, President
Alaska Public Health Association
1874 Wickersham Drive
Anchorage, Alaska 99507
Telephone: (907) 563-7425
POSITION STATEMENT: Provided testimony on HB 1 and HB 52.
DEB LESSMEIR, Physician
SEARHC Medical/Dental Clinic
3245 Hospital Drive
Juneau, Alaska 99801
Telephone: (907) 463-4040
POSITION STATEMENT: Provided testimony on HB 1 and HB 52
BARBARA COHEA, Health Education Coordinator
Manilaq Association
P.O. Box 43
Kotzebue, Alaska 99752
Telephone: (907) 442-7176
POSITION STATEMENT: Provided testimony on HB 1 and HB 52.
LYNDA ADAMS
P.O. Box 7171
Ketchikan, Alaska 99901
Telephone: (907) 225-6227
POSITION STATEMENT: Provided testimony on HB 1 and HB 52.
PETE SNITZER
3930 Mt. View Drive
Anchorage, Alaska 99508
Telephone: (907) 274-7473
POSITION STATEMENT: Provided testimony on HB 1 and HB 52.
CATHY FLAVIN, Health Educator
Bristol Bay Area Health Corporation
P.O. Box 492
Dillingham, Alaska 99576
Telephone: (907) 842-9345
POSITION STATEMENT: Provided testimony on HB 1 and HB 52.
STEVE DONALDSON
P.O. Box 2083
Cordova, Alaska 99574
Telephone: (907) 424-7286
POSITION STATEMENT: Provided testimony on HB 1 and HB 52.
MIKE ELERDING, President
Northern Sales Company of Alaska
P.O. Box 8112
Ketchikan, Alaska 99901
Telephone: (907) 225-5040
POSITION STATEMENT: Provided testimony on HB 1 and HB 52.
JUDITH NELSON, Dental Hygienist
Yukon-Kuskokwin Health Corporation
P.O. Box 287
Bethel, Alaska 99559
Telephone: (907) 543-6339
POSITION STATEMENT: Provided testimony on HB 1 and HB 52.
ACTION NARRATIVE
TAPE 97-2, SIDE A
Number 0001
The House State Affairs Standing Committee was called to order by
Chair Jeannette James at 8:00 a.m. All members were present at the
call to order.
CHAIR JEANNETTE JAMES announced Representative Con Bunde would
present his bill first, HB 1, then she would present her bill, HB
52, followed by testimony from the Administration and then the
public.
HB 1 - CIGARETTE AND TOBACCO TAX
HB 52 - INCREASE TOBACCO TAXES
Number 0233
The first order of business to come before the House State Affairs
Standing Committee was HB 1, "An Act relating to taxes on
cigarettes and tobacco products; and providing for an effective
date." And, HB 52, "An Act relating to taxes on cigarettes and
tobacco products; and providing for an effective date."
CHAIR JAMES called on Representative Con Bunde, sponsor of HB 1, to
present the bill.
REPRESENTATIVE CON BUNDE, Alaska State Legislature, expressed his
sorrow for having to hear HB 1 and HB 52, or for any bill labeled
"taxes." He stated, "Because then I would be bringing a bill to
you that would say `user fee bill' and `economic barrier bill.'
Because that's the purpose of the bill. We have a vehicle in an
existing tobacco tax and that has become the vehicle for both your
bill and my bill. And, that's the most expedient way to get to
what I want, and that is an economic barrier to young people to
begin to smoke and a user fee for those that are costing the state
hundreds of thousands of dollars a year in medical expenses
stemming from their addiction to nicotine."
REPRESENTATIVE BUNDE explained he was initially hesitant to
introduce HB 1 because he did not believe in a sin tax. He stated,
"You need to convince me, educate me that this indeed--this
approach to the use of tobacco will work and will serve as a
economic barrier to young people beginning to smoke." His
constituents and the research indeed were able to convince him. He
cited in Canada the use of tobacco went down 4 percent for every 10
percent the price increased among the general population. The
impact was even greater among young people whose income tended to
be limited. He reiterated he was convinced a significant increase
in the user fee would deter young people from beginning to smoke.
The evidence also supported that most smokers started when they
were teenagers. Teenagers believed that they were bullet proof.
"The consequences of tobacco use are not visited on folks
immediately. If you smoked today and next week developed oral
cancer, probably not many people would begin to smoke. But, it
takes 20 years. In my mother's case she began to smoke when she
was 16, and the tobacco did not kill her until she was 50. It
takes a while." Furthermore, teenagers were very susceptible to
the media. He cited the effective campaign of the commercials
during the Super Bowl Game. The advertisers did not spend $1
million or more to produce a commercial because they loved football
or because they loved the audience, but because it was a very
effective means to move a product. "And, the same with Phillip
Morris and RJ Reynolds and the rest of them. They spend a great
deal of money and they do it because it's effective and it recruits
new smokers. And, the new smokers, as I said earlier, are
virtually all young people." He further stated he knew that HB 1
would not stop everyone from smoking. "When people are seriously
addicted, they will do what they need to do to feed their
addiction." However, if this bill would stop a significant number
of young people from starting to smoke then that would be
wonderful.
Number 0716
REPRESENTATIVE BUNDE further stated the use of tobacco products
costs the state of Alaska hundreds of thousands of dollars each
year in medical expenses. "I think that if any other activity was
costing us that much money, we would ask the people engaged in the
activity to try to help us finance the cost of this activity."
House Bill 1 and House Bill 52 would not absolve the state from all
of the cost, but they would move the state in the right direction.
Number 0764
REPRESENTATIVE BUNDE briefly explained the difference between HB 1
and HB 52. According to HB 1 the money raised would go directly to
the general fund to help manage the budget allowing the state to
not tap into its savings account. He cited the figure projected
would be about $40 million.
REPRESENTATIVE BUNDE in conclusion stated he did not claim to have
the only solution to this issue and was looking forward to hearing
other opinions surrounding the concerns of where the money should
go.
Number 0886
CHAIR JAMES announced her opinion had not changed regarding the
issue of a tobacco tax from last year. The most basic and valid
rationale was the extra medical expenses incurred as a result of
the use of tobacco products. It was a wise idea to collect from
the users to help pay for the medical expenses, she declared. She
had always supported a tobacco tax provided that the funds could be
dedicated to the construction of schools. She noted some people in
the Interior of Alaska and the Fairbanks area felt that she was
being disingenuous by stating she was personally opposed to this
method of manipulating social behavior, yet she sponsored a bill to
support the behavior. Chair James did not feel she was being
disingenuous, but rather perfectly honest regarding her stance.
She sponsored the bill because so many people in the state
indicated that they wanted such a tax. Therefore, as a
representative in a representative form of government, she felt
obligated to bring forth this issue. She could not control what
would happen to the bill after it left her fingers, but she was
willing to bring it forward for everyone's consideration.
CHAIR JAMES further stated her interest in the school fund stemmed
back from the first year she was elected to the Alaska State
Legislature in 1993. She cited as of December of 1996 the budget
for school maintenance and construction needs was $620 million. In
1993 a big funding was given towards school construction some of
which was in the form of bonds and the state was now paying for
them. That figure did not even touch the surface of the needs for
school construction in Alaska, she declared. That was the love she
had for HB 52. She called it a win-win solution for the demands of
those that wanted a tobacco tax and for the needs of the schools.
She cited a school in her district, Tri-Valley, was built for 165
students and had grown to 300 students. The school was in need of
more bathroom facilities due to the increase. Its request was far
down on the list due to life, health and safety issues that needed
immediate repairs. Therefore, she stated, the validity of putting
the money into a dedicated fund for school construction and
maintenance held a lot of weight. "And, as long as I feel like I
can get that little positive thing, I'm willing to support and pass
the tobacco tax at $1 a pack."
Number 1159
CHAIR JAMES further explained both bills implemented a $1 tax
increase on the effective date. In three years the tax would
increase an additional 24 cents, and in three more years another 24
cents. She reiterated the only difference between the two bills
was that HB 52 dedicated the money to a pre-statehood dedicated
fund.
Number 1188
CHAIR JAMES explained there was dispute surrounding HB 52 regarding
the constitutionality of dedicating money into the pre-statehood
education fund. The attorney general wrote a legal opinion in 1959
or 1960 that indicated if there was a change made to the tax levy
of a dedicated fund the grandfather rights were lost. There was
evidence, however, in the minutes of the Alaska State
Constitutional Convention, whereby, Mr. White, Chair, Finance and
Taxation Committee, indicated that was not the committee's
intention. The committee believed that as long as the tax was not
eliminated, the grandfather rights remained intact. Therefore, an
increase or decrease, the kind of tax, or the use of the fund would
not affect the ability to dedicate the funds. She pointed out that
this could be challenged in court. There was evidence, however, in
other court cases where committee intentions swayed the ruling.
Therefore, she felt comfortable that the bill would have a chance
of moving forward.
Number 1280
CHAIR JAMES further stated she had received a lot of support
regarding this issue and was looking forward to hearing the rest of
the testimony.
Number 1318
REPRESENTATIVE KIM ELTON wondered what would happen during the
course of a court appeal to the taxes collected. He specifically
asked, if the tax would go into the general fund, for example, or
be suspended?
CHAIR JAMES called on Jack Chenoweth, Legislative Affairs Agency,
to come forward and address the question of Representative Elton.
CHAIR JAMES stated she understood that the tax would not go away if
the issue was lost in court.
Number 1359
JACK CHENOWETH, Attorney, Legislative Legal Counsel, Legislative
Legal and Research Services, Legislative Affairs Agency, stated the
tax would continue to be collected according to the language in HB
52. An alternative was drafted in the event the court ruled that
raising the levy would destroy the dedication of the funds. The
alternative indicated the funds would go to the general fund as in
Representative Bunde's bill. He did not know if the court would
enjoin the collection of the taxes while it sorted through the
constitutionality of the dedication. He believed the courts would
let the taxes go forward to the dedicated fund and if it ruled
against the dedication then at that point the funds would go to the
general fund as the alternative directed.
Number 1433
REPRESENTATIVE IVAN IVAN asked Mr. Chenoweth to compare the levies
in HB 1 and HB 52, and to comment on the two bills in general.
Number 1449
MR. CHENOWETH replied the rates of levy and the date that the
levies would change were identical in both bills. He explained in
1959 or 1960 the attorney general indicated that if the rate of a
levy in a dedicated tax was changed the dedication would be lost.
As a result, whenever the legislature changed the rate of a
cigarette tax, the tax went to a different source of authority, AS
Sec. 43.50.190, "Additional tax levy on cigarettes," where that
component of the tax was at 12 mills. House Bill 1 increased the
levy to 50 mills immediately and then to 24 mills at three year
intervals thereafter. House Bill 52 increased the original levy in
AS Sec. 43.50.090, "Tax imposed," which had not changed since
statehood, by 50 mills and then by 24 mills at three year intervals
thereafter. The rates of levy were the same in both bills. It was
just a question of where the money would go-to the general fund or
to the school fund. Furthermore, the tax on tobacco products,
those products other than cigarettes, also increased in both bills
by the same rate and were indexed to increase every two years.
Number 1550
REPRESENTATIVE MARK HODGINS stated the mills were usually dedicated
according to an assessment. He asked Mr. Chenoweth what the
assessment was in this case?
Number 1562
MR. CHENOWETH replied the tax was per cigarette. Currently, 2.5
mills were dedicated and 12 mills were un-dedicated for a total of
a 14.5 mills per cigarette, or a 29 cent tax per package of
cigarettes. The two bills would increase the tax from $1 to $1.29
per package of cigarettes.
Number 1593
REPRESENTATIVE HODGINS asked Mr. Chenoweth when it would be
possible to ascertain a new ruling from the attorney general
regarding the dedication of the tax?
Number 1605
CHAIR JAMES replied she understood that the attorney general would
maintain his current opinion. The attorney general would probably
not file for a court case. There was no way to determine, however,
if anybody would file for a court case.
Number 1636
REPRESENTATIVE HODGINS asked Chair James why she did not impose a
maximum tax right now compared to the incremental increases imposed
in the bills? He stated, "If we're going to do a deterrent to
people smoking, why not do a deterrent to people smoking?"
Number 1659
CHAIR JAMES replied that the testimony the committee was about to
hear would answer his question. She further mentioned that a bill
could be changed, and if that was the desire of Representative
Hodgins, he could make a motion to support his desire.
Number 1695
REPRESENTATIVE AL VEZEY asked Mr. Chenoweth to confirm his
understanding that the bill would increase the mills to 86 by the
year 2006.
Number 1711
MR. CHENOWETH replied, "Yes."
REPRESENTATIVE VEZEY further asked Mr. Chenoweth to confirm his
understanding that the bill would then double in 21 years.
MR. CHENOWETH replied, "Approximately, yes."
REPRESENTATIVE VEZEY further asked Mr. Chenoweth if this tax would
approximately escalate at an average rate of 4 mills per year?
MR. CHENOWETH replied, "Yes, that's correct."
Number 1732
KAREN PERDUE, Commissioner, Department of Health and Social
Services, was the next person to testify before the House State
Affairs Standing Committee. She declared the department's support
of HB 1 and HB 52, and stated she was here today to discuss the
health implications of the bills and not the revenue implications.
The department supported the $1 tax increase for health reasons.
According to the National Institutes of Health, she explained, the
use of tobacco products was the nations deadliest addiction. In
1964 the surgeon general issued the first report that indicated
smoking was harmful. In 1988 the surgeon general issued a report
that indicated nicotine was an addictive agent and demonstrated
that most tobacco users found it difficult to quit.
Number 1844
MS. PERDUE continued by asking the question, "Why now? What's the
fuss? What's the issue here?" The health community was coming
forth now because of the alarming statistics. The rate of smoking
and the use of tobacco for young kids was growing in the state.
The state should be compelled to do something aggressively about
this issue because it knew what the results would be. She stated
the department believed in aggressive measures, education and
enforcement as a three-part strategy where the price was an
important factor as well. Ms. Perdue explained Pat Carr,
Department of Health and Social Services, was her to explain the
findings in the handout titled, "Tobacco Tax Bill Analysis-
Presentation to the 20th Alaska Legislature," to the committee
members.
Number 1889
PAT CARR, Health Program Manager, Community Health and Emergency,
Medical Services, Division of Public Health, Department of Health
and Social Services, was the next person to testify. She explained
the analysis before the committee members highlighted the
department's major concerns regarding the use of tobacco in Alaska
and the efficacy of taxation as a strategy.
MS. CARR referred to page 2 and explained tobacco usage was the
number one cause of preventable death and disease in the United
States causing over 419,000 deaths per year. And, 23 percent of
the deaths of Alaskans 35 years of age or older in 1991 were
attributed to smoking.
MS. CARR referred to page 3 and explained the 419,000 deaths caused
by smoking in the United States were more than deaths caused by
fires, illegal drugs, homicides, Acquired Immune Deficiency
Syndrome (AIDS), suicides, motor vehicular accidents and alcohol
combined.
MS. CARR referred to page 4 and explained in Alaska cigarette
smoking contributed to over 1,400 deaths. This was more than
deaths caused by fires, firearms, aircraft crashes, AIDS, falls,
motor vehicular accidents and alcohol combined.
MS. CARR referred to page 5 and explained 83 percent of adult
smokers reported that they started smoking before the age of 20.
She called nicotine addiction a pediatric disease. Twenty-one
percent of Alaskan high school students reported that they
regularly smoked in the last month. Twenty-five percent of Alaskan
middle school students reported smoking at least one cigarette in
the last month. This meant that there was a problem among very
young children.
MS. CARR referred to page 6 and explained 64 percent of Alaskan
tobacco merchants complied with tobacco restriction laws in 1996.
Therefore, 36 percent of Alaskan vendors did not comply. She
explained the federal government mandated an 80 percent compliance
rate by the year 2000 under the Synar Amendment or else, Alaska
would loose 40 percent of its substance abuse block grant. The
study further founded that tobacco vendors refused to sell to 14-15
year olds 71 percent of the time, while 16-17 year olds were
refused 58 percent of the time.
MS. CARR referred to page 7 and explained there was a special
concern among Alaska Natives in the state. The findings suggested
that Alaska Natives had some of the highest rates of tobacco use in
the world, at 47 percent for men and 39 percent for women. Alaska
Natives accounted for 23 percent of smoking related deaths while
they accounted for 17 percent of the state's population.
MS. CARR referred to page 8 and explained Alaska Natives also had
the highest cancer mortality rate of any indian health service
area. The lung cancer death rate among Alaska Native women was
three times the national average, and tobacco use among Alaska
Native youth was higher than non-native youth.
MS. CARR referred to page 9 and explained the table illustrated the
comparison of tobacco use between United States high school
student, Alaska and Alaska Natives.
MS. CARR referred to page 10 and explained 41 percent of Alaska
Native boys and 32 percent of Alaska Native girls were using
smokeless tobacco products weekly. And, among the boys, 45 percent
started using tobacco before the age of 8.
MS. CARR referred to page 11 and explained the direct medical costs
for smoking related illnesses for Alaskans aged 35 years or older
in 1993 was $96.5 million. Twenty-three million dollars of the
direct medical care costs for smoking related illness was paid by
Medicaid in Alaska. Meanwhile, the state collected only $15.6
million in cigarette tax revenues in 1993 illustrating the
disparity between the users and the health care costs.
MS. CARR referred to page 12 and explained the state of Alaska had
taxed tobacco since its territorial days, when a 5 cents per pack
tax was levied on cigarettes to help fund school construction. The
current tax level of 29 cents per pack had been in place since
1989. In 1989 Alaska ranked 17th among the 50 states and the
District of Columbia in the amount of tobacco tax levied.
Currently, Alaska was ranked 28th among the states.
MS. CARR referred to page 13 and explained that tobacco taxation
had been gradually reducing as a portion of the total cost of the
retail price of a cigarette.
MS. CARR referred to page 14 and explained that for every 10
percent increase in tobacco prices, youth tobacco consumption would
fall by at least 10 percent. And, for every 10 percent increase in
tobacco prices, general consumption would fall by 4 percent. At
the current teenage smoking rates, approximately 18,000 Alaskans
under the age of 18 would die prematurely of a tobacco related
illness. Therefore, there was indeed a potential to save Alaskan
lives.
MS. CARR referred to page 15 and explained a $1 per pack tax
increase would reduce youth smoking in Alaska by an estimated 32
percent. The tobacco tax would prevent 5,700 premature deaths
under the age of 18.
MS. CARR referred to page 16 and explained the tobacco tax rate
comparison among the major industrialized nations where the United
States was the lowest at 57 cents per package of cigarettes.
MS. CARR referred to page 17 and explained that the groundwork was
in place to support a tobacco tax. There was broad public support.
A survey indicated 75 percent of Alaskans supported the $1 per pack
tax. This figure included 75 percent conservatives, 75 percent
moderates, 73 percent liberals, and 55 percent smokers.
MS. CARR referred to page 18 and explained the tax was also
supported by C. Everett Koop, M.D., former Surgeon General. It was
also supported by the Alaska Tobacco Control Alliance including the
Alaska Native Health Board, the American Cancer Society, and the
American Heart Association.
Number 2218
REPRESENTATIVE FRED DYSON commented he understood that the health
effects from cigarettes were far more dangerous than other forms of
tobacco use. He asked Ms. Carr to qualify his statement.
Number 2238
MS. CARR replied there was more evidence on the effects of
cigarette smoking. However, there was evidence to support a
significant rate of oral cancer and addiction, for example, from
smokeless tobacco.
Number 2247
REPRESENTATIVE DYSON asked Ms. Carr if this was also true for cigar
and pipe tobacco?
Number 2251
MS. CARR replied it was also true in terms of oral cancer and
addiction.
Number 2263
REPRESENTATIVE DYSON commented it appeared that the rates of lung
cancer and emphysema were significantly different for non-cigarette
smoking compared to cigarette smoking. He asked Ms. Carr if that
was true?
Number 2272
MS. CARR replied she could not answer that directly in terms of the
exact comparison between cigarette and pipe tobacco smoking. An
increase in the harmful effects would be expected for the
respiratory tract, however.
Number 2285
REPRESENTATIVE DYSON asked Ms. Carr if there was any other health
problem besides oral cancer that was associated with non-smoking
tobacco use?
Number 2298
MS. CARR replied oral cancer was certainly the most significant.
There was also an association between the use of nicotine and
cardiovascular diseases.
Number 2309
REPRESENTATIVE HODGINS asked how much would the state have to raise
the tobacco tax to get people to quit totally?
Number 2324
MS. CARR replied the department did not have a projection to
support an ultimate price.
Number 2339
REPRESENTATIVE HODGINS asked Ms. Carr if anybody had done a study
on the consequences of outlawing tobacco entirely?
Number 2349
MS. CARR replied it was not a strategy that the department
advocated because there were backlashes as the outlaw on alcohol
supported.
REPRESENTATIVE HODGINS commented outlawing drugs did not work
either.
Number 2362
CHAIR JAMES stated that violent crimes increased during the push to
counter the drug traffic. Therefore, she was concerned about the
unintended consequences of her bill. Chair James further believed
that the use of drugs was a symptom and not a cause. It was
important to look at why a person started to smoke. She asked Ms.
Carr, if the state were to address the causes of smoking among the
youths, where would it start?
Number 2432
MS. CARR responded the department currently followed multiple
strategies. It was trying to address the effectiveness of taxation
on the increase of the price. The issue of how the youth were able
to obtain tobacco products was also a concern. The issue of
advertising and the glamorization of tobacco use were also concerns
that needed to be considered. There was not just one answer. The
department would like to continue the discussion on taxation and
would be glad to provide information on other strategies to address
the root causes of tobacco use.
Number 2467
CHAIR JAMES stated she did not want to detract from the issue of a
tobacco tax. The evidence clearly indicated that this approach was
accomplishable. She asked Ms. Carr what the department was going
to do to watch and measure the replaced behavior when cigarettes
became too expensive?
TAPE 97-2, SIDE B
Number 0022
MS. CARR replied the positive substitution of a negative behavior
and risk taking behavior were certainly concerns of the department.
She cited peer counselling and adult role modelling as examples
that the department could use as positive substitutions.
Number 0053
CHAIR JAMES reiterated she did not want to make a big issue out of
this. She just wanted to make the point that there would be useful
statistics as a result of the tax, and she hoped that the health
care professionals would utilize those statistics.
Number 0071
REPRESENTATIVE HODGINS stated in about 20 years the tax would be
$2.50 and the cost of a carton of cigarettes would be $25. He
wondered when bootlegging would become an issue.
Number 0105
CHAIR JAMES responded that the testimony over the next few days
would answer Representative Hodgins' question.
Number 0117
REPRESENTATIVE IVAN asked Commissioner Perdue, what was the
department's position on HB 1 and HB 52, surrounding the issue of
the proceeds?
Number 0135
COMMISSIONER PERDUE replied that the Governor was open to a variety
of discussions regarding education and health funding. The
Governor had not settled on one particular area. She deferred the
question to the Department of Law for further details surrounding
the constitutionality of the dedication of the funds raised
earlier.
Number 0154
CHAIR JAMES replied that she would be surprised if anybody in the
Administration took a favorable approach to the dedication of the
funds in light of the opinion of the attorney general. She did not
expect the Administration to oppose the issue flat out, nor did she
expect the Administration to support it either. It was a time to
agree to disagree.
Number 0182
COMMISSIONER PERDUE stated it was always a matter of weighing legal
risk. The Administration, therefore, would like to hear more
discussion in the committee.
Number 0196
CHAIR JAMES replied she did not fear a legal risk. At times, a
court decision was needed for guidance, and maybe this issue was
one of those times. It should have been decided a long time ago,
she said, before the state lost its use of the dedicated highway
taxes.
Number 0228
COMMISSIONER PERDUE reported to Representative Dyson that the
department would provide information to him on the harmful effects
of other uses of tobacco products that he addressed earlier.
CHAIR JAMES opened the meeting up to testimony from the
teleconference network.
Number 0361
MICHAEL CARROLL, M.D., J Michael Carroll, PC, was the first person
to testify via teleconference in Fairbanks. He stated lung cancer
over the past 20 years had been the leading cause of cancer death
in Fairbanks. Over the last 20 years, there were two years when
every patient with lung cancer died. Death usually occurred within
6 to 18 months. The survival rate for lung cancer was only around
10 percent both nationally and locally, in comparison to breast
cancer which had a 75 percent five year survival rate, colon cancer
which had a 65 percent five year survival rate, and prostate cancer
which had 70 percent five year survival rate. A 10 percent five
year survival rate was dismal. And, tobacco related cancers were
the most preventable types of cancer. "If we can just make a 1
percent or a 2 percent or a 3 percent impact on the frequency of
death, we're going to make an immense savings as far as lives, as
far as state dollars, as far as suffering." More lives would be
saved then the state's crime prevention programs or highway safety
programs, for example. He strongly urged the committee members to
pass the bill.
Number 0489
GLENN HACKNEY was the next person to testify via teleconference in
Fairbanks. He declared it was a big disappointment to see this
same issue pass the Senate last year and not even get a floor vote
in the House. He asked the committee members to consider the
following key facts: "Tobacco use kills. Tobacco is an addictive
substance." There were kids in Fairbanks that went outside in
freezing temperatures to smoke. "Those kids are addicted to
tobacco use," he declared. Furthermore, "It is a health issue.
Not primarily a tax issue. The aim is to keep Alaskan kids from
starting to smoke and statistically this approach works."
Furthermore, "This issue concerns your constituents, your fellow
Alaskans-part of the family. Not a (indisc.) from the tobacco
industry." Tobacco use cost, it did not pay. He stated HB 1 was
a clean bill, while HB 52 was a magnet for a court challenge. The
legislature had the authority to allocate money from the tax to
education out of the general fund. He concluded by stating,
"Please keep it simple."
Number 0654
PHIL MILTON, Principal, Palmer Middle School, was the next person
to testify via teleconference in Mat-Su. He stated as a principal
at a middle school for a number of years he had watched kids use
tobacco products and had seen the detrimental effects of those
products. We have support programs in our school to educate kids
about the use of tobacco products. He believed smoking was a
possible gateway to the use of other drugs. He had also observed
that the use of tobacco products interfered in extra curricular
activities and performance in physical education classes. He
declared he was a supporter of children, and agreed with the
earlier comments made by Representative Bunde. He supported any
means that would require children to think about the use of tobacco
products even if it was a $1 per pack increase in the cigarette tax
to make them think about the use or to prevent the use. He
reiterated he supported children and whether or not he supported a
tax was not the issue. It was mainly the support of children.
Number 0775
PAUL SHERRY, Deputy Director, Alaska Native Health Board, was the
next person to testify via teleconference in Anchorage. The board
represented 20 different Alaska Native owned health care provider
agencies including 6 hospitals and a large number of community
health centers and practitioner services. The board supported the
tobacco tax in both bills. The board was concerned about the
quality of life of its residents and the increasing problems of
death and disability related to the use of tobacco. It was also
concerned about the medical cost associated with the treatment of
these diseases as a result of misuse. He commented the statistics
for Alaska Natives were frightening. Forty-three percent of Alaska
Native teenagers were frequent smokers compared to 21 percent of
the rest of Alaskans. The board was convinced that an increase in
the tax would reduce the consumption of tobacco products among the
youth. He announced this issue was one of the highest priorities
for the board. The board looked at the tobacco tax as one part of
a larger strategy that was needed to address the problem. He cited
the board was also looking at controlling access to the products,
promoting a tobacco free environment in the communities, and
providing quit smoking programs for addicts. In conclusion, he
declared that the board adamantly opposed a reduction in the
tobacco tax. It did not have a position, however, on the
dedication of the funds from the tax.
Number 0939
ANNE HARRISON was the next person to testify via teleconference in
Fairbanks. She declared she was 100 percent in support of a
tobacco tax in Alaska. She arrived at this support after 31 years
as a nurse practitioner and the abundantly clear body of research.
She reiterated her support of the tobacco tax, and stated, "The
sooner the better."
Number 0973
ANNE MARIE HOLEN, Manager Tobacco Control Program, Alaska Native
Health Board, was the next person to testify in Juneau. She
announced she was also active with the Alaska Tobacco Control
Alliance and the Citizens to Protect Kids from Tobacco, the
coalition spearheading the campaign to raise state tobacco taxes.
The tobacco industry called people like us zealots "because we get
a little upset over the needless suffering and death caused by
their products." We also got upset over the tobacco industry's
tactics used to get kids addicted. And, because the industry
continued to deny that their products caused death and suffering
despite what medical research indicated as well as what their own
internal documents show us. She referred the committee members to
a recent letter produced by the "Alaska Smokers Rights." The
letter was addressed to an individual Alaskan rather than "Dear
Smoker." It framed the issues as the "anti-smoking zealots" versus
reasonable fair minded Alaskans. And, it urged the recipient to
send a public opinion message in opposition to the tax. It also
included points to make in their correspondence. Where was this
group getting the money to do this? she asked. The organization
was not engaged in a grass roots campaign but in an "astro turf"
campaign. She declared, "The money comes from Phillip Morris or RJ
Reynolds or the Tobacco Institute." Therefore, the "Alaska Smokers
Rights" was a front group for the tobacco industry. They could not
be traced. They had no phone number or local address. The
organizations that supported the tax used similar tactics as well,
but there were important distinctions beside the fact that the
tobacco companies had almost unlimited money to spend. The three
primary difference were: the origins of the campaign - Alaska
versus Winston-Salem, North Carolina; the motives behind the
organizations - to protect lives and prevent addiction versus to
promote addictions; and, finally, the use of information - factual
versus misinformation. The Alaska Smokers Rights indicated that
the tax increase would promote incentives for smuggling. She
argued the only border country was Canada where the price of
tobacco products would still be much higher even after the passage
of the tobacco tax. The "Alaska Smokers Rights" also indicated
that a tobacco tax would not stop the youth from smoking "as any
parent could tell you that," she stated. The vast majority of the
parents in Alaska supported the tobacco tax as a way to help them
prevent their children from becoming victims of the tobacco
industry. I think, she stated, the biggest most cynical lie of all
was reflected in the name of this front group, "Alaska Smokers
Rights." Remember, it was the tobacco industry that was behind
this effort. And, one of the points used by "Alaska Smokers
Rights" was that anti-smoking zealots were attacking the personal
freedom of choice to smoke. Ms. Holen argued that another name for
a drug addiction was drug dependence, and dependence was the
opposite of freedom. Furthermore, because of the delay in the
effects of tobacco products, it allowed the tobacco industry to
continue to use the personal freedom argument despite the fact that
most smokers wanted to quit but could not because they were
addicted to nicotine, and that addiction started when they were
kids. Furthermore, she declared, "The truth is that the tobacco
industry doesn't give a darn about protecting personal freedom.
All they care about is protecting their profits at the expense of
personal freedom." She urged the committee members to pass the
bills from the committee as soon as possible.
Number 1318
ROMIE DESCHAMPS was the next person to testify via teleconference
in Mat-Su. He explained he had been a pharmacist by trade for over
30 years and had lived in Alaska for about 24 years. He had also
been president of the American Cancer Society in the past. He
stated 90 percent of new smokers were teenagers or children that
replaced the smokers who either quit or died prematurely from
smoking related diseases. These children were encouraged to start
smoking from friends and family members who smoked themselves,
tobacco advertising and promotions, and the easy availability of
tobacco products. Furthermore, he explained the risk of becoming
addicted to nicotine was between 1:2 and 1:3, while the risk of
becoming dependent on alcohol was 1:9, and the risk for crack
cocaine was 1:4. In conclusion, he stated that if nothing was done
to deter smoking, 70 percent of the health care dollars would be
directly contributed to tobacco related illness by the year 2015.
Number 1577
NATHAN BAILY, Representative, Tobacco Alliance of the Peninsula,
was the next person to testify via teleconference in Kenai. He
announced he was also testifying as an ex-smoker. He declared his
support of the prior testimony of Anne Marie Holen regarding the
price of cigarettes in Canada versus Alaska. This also answered
the question of Representative Hodgins regarding bootlegging. He
also agreed that the current campaign against the tobacco tax was
being financed by the tobacco industry. He had received a call
from Phillip Morris urging him to contact his representatives to
prevent the passage of the bills. He announced the tobacco
industry would spend any amount of money necessary to prevent the
tax. He cited in Oregon last year the industry spent over $2
million to prevent the tobacco tax from passing. He asked everyone
to keep that in mind when they heard information that contradicted
common sense. Research indicated that the rate of teenage smokers
declined when a tax was imposed contrary to the arguments of the
tobacco industry. In conclusion, he stated he admired the efforts
of HB 52 and Representative James, however, the Tobacco Alliance of
the Peninsula, supported HB 1 to keep the focus on the issue of
anti-smoking and not on the constitutionality of dedicating the
funds.
Number 1787
SYLVIA SULLIVAN, President, Alaskans for a Just Society, was the
next to testify via teleconference in Valdez. She asked Chair
James if these two bill were considered the Governor's bills?
CHAIR JAMES replied, "No." These bills were introduced by
Representative Bunde and James. The Governor's bill was not on the
table.
Number 1831
MS. SULLIVAN asked Chair James if Mr. Chenoweth was still present
in the audience?
CHAIR JAMES replied Jack Chenoweth had left.
Number 1844
MS. SULLIVAN referred to AS, Title 24, Sec. 24.08.030,
"Appropriation bills," and read, "Bills for appropriation shall be
confined to appropriations and shall include the amount involved
and the purpose, method, manner, and other related conditions of
payment." Ms. Sullivan remarked neither HB 1 nor HB 52 stated a
purpose. They only talked about the taxes that would be raised.
She explained the Alaskans for a Just Society was formed because of
the fraud being perpetrated upon Alaskans by the Administration and
last years legislators. She agreed with the prior testimony
regarding the health issues. However, that did not have anything
to do with the two bills, she said. The people were blind if they
were going to ask for a tax not knowing where the money would go.
Furthermore, she announced she started smoking as a teenager
because her parents both smoked. It was easy to access cigarettes.
The parents had a great deal of influence. She stated she would
like the money to go towards helping the parents stop smoking. In
conclusion, she called the two bills fraudulent because the
Administration was paying for the stock of the Phillip Morris
Company through the Permanent Fund. So, on one hand, the Governor
was concerned about the health of Alaskan children, while on the
other hand, he was taking money from Alaskans to ensure that
Phillip Morris was still alive to continue to supply tobacco.
Number 2114
ROBERT TOLLISON, Professor of Economics, George Mason University,
was the next person to testify via the telephone in Virginia. He
announced he was testifying today on behalf of the tobacco
industry. He explained he had written extensively about the issues
in HB 1. He called HB 1 extremely ill-advised. The bill had
draconian implications for the poorest of Alaskans. He also
believed that the revenue estimates were extensively static. The
tobacco tax would drive purchases onto the military bases. He
asked, "Why give ordinary citizens incentive to go onto a military
base and buy low cost tobacco products and then bring them off base
and resell them?" It also gave the potential criminals among the
citizens equally bad incentive to smuggle tobacco products. He
cited the country of Canada had a tremendous problem with smuggling
and had to back off from its draconian taxes. He said Alaska was
flirting with the same type of experiences. Finally, an excise tax
would not have an affect on what the young people did compared to
friends and family.
Number 2443
DELISA CULPEPPER, President, Alaska Public Health Association, was
the next to testify via teleconference in Anchorage. She explained
that the Tobacco Institute was not a prevention institution, but
rather an institution founded by the tobacco industry to help fight
tobacco prevention efforts across the nation.
TAPE 97-3, SIDE A
Number 0001
MS. CULPEPPER further stated that pricing strategies were the most
effective prevention methods available. It would not stop
everyone, but it would stop a lot of people, she declared. Any
life saved was worthwhile. This was an issue that effected the
health of the public, therefore, the user fees were justifiable.
The Alaska Public Health Association supported the tobacco tax and
would encourage the committee members to move the bill quickly
through.
Number 0100
DEB LESSMEIR, Physician, SEARHC Medical/Dental Clinic, was the next
person to testify before the committee in Juneau. She believed
that this tax was one of the biggest ways to help combat smoking.
That was why she was here today. As a physician, she was able to
calculate about 5,000 conversation with both children and adults
that she had over the years regarding smoking. She announced last
year that the community of doctors overwhelmingly supported the
bill. Nicotine was a strong addiction, therefore, prevention
methods were really important and the best way to address this
issue. She discovered that most people did not want to smoke, that
did not mean, however, that they wanted to quit. There was a
difference. The conversations that she had with teenagers were
that they did not intend to be a smoker for a number of years.
They usually started due to peer pressure, curiosity, and
rebellion, for example. Based on her experience most smokers
started when they were young and most adults did not want to smoke.
Therefore, prevention was the only answer, it was a vote of
compassion.
Number 0508
BARBARA COHEA, Health Education Coordinator, Manilaq Association,
was the next person to testify via teleconference in Kotzebue. She
explained she was old enough to remember the commercials from the
tobacco industries in the 1950's when they advertized smoking was
good for a person. We now know that was a lie. She also
remembered when the first surgeon general in the 1960's announced
that smoking was a grievous health problem. But, the tobacco
industry continued to sell cigarettes by saying that report
contained faulty science performed by anti-smoking zealots. We now
know that was a lie as well. In the 1970's and the 1980's
subsequent reports documented the deleterious effects of passive
second hand smoke. The tobacco industry continued to sell
cigarettes insisting that second hand smoke was not dangerous. We
now know that was a lie. The tobacco industry also stated they did
not target young people, yet it continued to use cartoon characters
to sell cigarettes. She asked the committee members, "When was the
last time anybody bought anything because Joe Cool looked neat, or
because Mickey Mouse endorsed it?" The last time that happened for
me, it was a Mini Mouse lunch box and I was 12." It was obvious
who the cartoon charters were aimed at, and once again the tobacco
industry lied. Now, the industry was trying to tell us that a
tobacco tax would not effect the young. She asked, "If the tax
will have no affect, why is the tobacco industry fighting it so
vigorously?" She did not believe the tobacco industry was
altruistic and she did not support testimony from it addressing the
personal freedom of Alaskans and its argument that money was being
taken from the pockets of poor Alaskans. She remarked, "How stupid
do they think I am?" The industry was not worthy of being trusted
because they had spent the past 50 years lying. She urged everyone
to do the social and moral thing by putting the health of Alaskan
children before the profits of the tobacco industry.
Number 0825
LYNDA ADAMS was the next person to testify via teleconference in
Ketchikan. She had served as a community volunteer and executive
director of a drug prevention program for 15 years before retiring
one and a half years ago. She had also completed numerous
training, workshops and conferences on tobacco prevention. The
research indicated that an increase in a tobacco tax would affect
consumption and use. Her work in this field also supported the
need to recognize the potential for addiction using these products.
She supported the tax for a number of reasons. The reasons she
indicated were: the majority of Alaskans were asking for this tax,
it would reduce spending on programs to help those with addictions,
and it would provide a savings for the health care system, thereby
reducing state spending.
Number 0960
PETE SNITZER was the next person to testify via teleconference in
Anchorage. Mr. Snitzer said if the state continued to increase
taxes there would not be any more money to collect. If a tax
really prevented smoking then nobody would be smoking in Canada and
Europe. He called this issue a "political football." The state
only wanted more money. Why not increase the cigar and pipe
smokers? he asked. They were the most solid citizens in the state.
He reiterated the tax was a means to raise money. The state was
not interested in the children, nor was it a means to stop smoking
or else, there would not be any smoking in Canada and Europe.
Number 1059
CATHY FLAVIN, Health Educator, Bristol Bay Area Health Corporation,
was the next person to testify via teleconference in Dillingham.
She announced she was also testifying on behalf of herself. The
Bristol Bay Area Health Corporation strongly supported the bills.
It would help protect the health of Alaskans and future
generations. Tobacco use was a large problem in Dillingham and
throughout the Bristol Bay region. Increasing the tobacco tax
would help reduce the early experimentation and curb the early
addiction. There were many people in rural Alaska that supported
the increase in the tobacco tax because it would help protect the
health of Alaskan and the future generations.
Number 1181
STEVE DONALDSON was the next person to testify via teleconference
in Cordova. Mr. Donaldson declared his support of the $1 increase
in the tobacco tax. He stated he had already lost family members
due to the use of tobacco products. He knew a lot of young users
and believed it was a drug. He was, therefore, in support of the
increase.
Number 1220
MIKE ELERDING, President, Northern Sales Company of Alaska, was the
next person to testify via teleconference in Ketchikan. He
explained Northern Sales Company of Alaska was a tobacco
wholesaler. As a parent, he saluted the efforts to restrict access
to tobacco products to teenagers and school children. Nationally,
Alaska ranked 27th in the taxation of cigarettes based on a per
carton state excise tax. The proposed legislation would give
Alaska the distinction of being the state with the highest excise
tax in the country by 50 percent. It would be 403 percent higher
then the national average. The proposed tax increase for Alaska
would be a 344 percent increase. A 344 percent increase did not
sound reasonable even on a product like tobacco. This was going to
create a black market for tobacco products, and the state would not
be able to collect any money from a black market. The Northern
Sales Company of Alaska was a good company, employing 82 people
throughout Southeast Alaska, of which 34 percent of its revenues
were generated through tobacco products. This tax would hurt its
business. The company was not opposed to a reasonable tax
increase, but it did not support raising the tax to a level that
would create a black market competition. There were a lot of tax
exempt markets in Alaska now - the military bases and the indian
smoke shops. There was already a price disparity. California and
Michigan found that when they raised their tobacco taxes, military
sales jumped dramatically. He suggested, to control under age
smoking, get the parents involved by spending quality time with
their kids. Taxation was not going to control adolescent behavior.
He called it naive and ill-conceived. He referred to a petition
that contained over 100 signature and explained he would forward it
to the committee members for review.
Number 1366
JUDITH NELSON, Dental Hygienist, Yukon-Kuskokwin Health
Corporation, was the next person to testify via teleconference in
Bethel. As a dental hygienist, she treated the effects of tobacco
related products. As a consumer, she was exposed to the tobacco
advertisements that graphically depicted tobacco use as cool and
sexy. These advertisements were aimed at young people. She
declared her support of the tobacco tax increase and hoped that it
would discourage the tobacco use among young people.
ADJOURNMENT
Number 1440
CHAIR JAMES adjourned the House State Affairs Standing Committee
meeting at 10:00 a.m.
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