Legislature(1997 - 1998)

03/20/1997 08:05 AM STA

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
             HOUSE STATE AFFAIRS STANDING COMMITTEE                            
                         March 20, 1997                                        
                            8:05 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                                                            
 SENATE BILL NO. 77                                                            
 "An Act relating to the Alaska Day of Prayer."                                
      - PASSED SB 77 OUT OF COMMITTEE                                          
 HOUSE BILL NO. 84                                                             
 "An Act limiting the authority to conduct pull-tab charitable                 
 gaming to qualified organizations that are exempt from taxation               
 under 26 U.S.C. 501(c)(3) or (19); and providing for an effective             
      - HEARD AND HELD                                                         
 *HOUSE BILL NO. 143                                                           
 "An Act relating to the art in public places requirements for                 
 state-owned and state-leased buildings and facilities."                       
      - HEARD AND HELD                                                         
 *HOUSE BILL NO. 78                                                            
 "An Act relating to the definition of certain state receipts; and             
 providing for an effective date."                                             
      - SCHEDULED BUT NOT HEARD                                                
 *HOUSE BILL NO. 155                                                           
 "An Act relating to hearings before and authorizing fees for the              
 State Commission for Human Rights; and providing for an effective             
      - SCHEDULED BUT NOT HEARD                                                
 HOUSE BILL NO. 83                                                             
 "An Act relating to commercial motor vehicle inspections; and                 
 providing for an effective date."                                             
      - SCHEDULED BUT NOT HEARD                                                
 (* First public hearing)                                                      
 PREVIOUS ACTION                                                               
 BILL:  SB  77                                                               
 SHORT TITLE: ALASKA DAY OF PRAYER                                             
 SPONSOR(S): SENATOR(S) TAYLOR, Leman, Phillips, Parnell, Ward,                
 Green, Pearce, Halford, Duncan, Sharp, Miller, Kelly, Torgerson,              
 Mackie; REPRESENTATIVE(S) Grussendorf, Dyson                                  
 JRN-DATE      JRN-PG             ACTION                                       
 02/04/97       226    (S)   READ THE FIRST TIME - REFERRAL(S)                 
 02/04/97       226    (S)   STATE AFFAIRS                                     
 02/25/97              (S)   STA AT  3:30 PM BELTZ ROOM 211                    
 02/25/97              (S)   MINUTE(STA)                                       
 02/26/97       516    (S)   STA RPT  3DP                                      
 02/26/97       516    (S)   DP:  GREEN, MILLER, WARD                          
 02/26/97       516    (S)   ZERO FISCAL NOTE (S.STA)                          
 03/05/97              (S)   RLS AT 11:52 AM FAHRENKAMP RM 203                 
 03/05/97              (S)   MINUTE(RLS)                                       
 03/06/97       592    (S)   RULES TO CALENDAR  3/6/97                         
 03/06/97       598    (S)   READ THE SECOND TIME                              
 03/06/97       598    (S)   ADVANCED TO THIRD READING UNAN CONSENT            
 03/06/97       598    (S)   READ THE THIRD TIME  SB 77                        
 03/06/97       598    (S)   COSPONSOR(S): LEMAN, PHILLIPS, PARNELL            
 03/06/97       598    (S)   WARD, GREEN, PEARCE, HALFORD, DUNCAN,             
 03/06/97       598    (S)   SHARP, MILLER, KELLY, TORGERSON, MACKIE           
 03/06/97       599    (S)   PASSED Y20 N-                                     
 03/06/97       607    (S)   TRANSMITTED TO (H)                                
 03/07/97       577    (H)   READ THE FIRST TIME - REFERRAL(S)                 
 03/07/97       577    (H)   STATE AFFAIRS                                     
 03/07/97       594    (H)   CROSS SPONSOR(S): GRUSSENDORF                     
 03/10/97       618    (H)   CROSS SPONSOR(S): DYSON                           
 03/20/97              (H)   STA AT  8:00 AM CAPITOL 102                       
 BILL:  HB  84                                                               
 SHORT TITLE: PULL-TABS LIMITED TO 501(C)(3) OR (19)                           
 SPONSOR(S): REPRESENTATIVE(S) MARTIN                                          
 JRN-DATE      JRN-PG             ACTION                                       
 01/22/97       122    (H)   READ THE FIRST TIME - REFERRAL(S)                 
 01/22/97       122    (H)   STATE AFFAIRS, L&C, FINANCE                       
 03/11/97              (H)   STA AT  8:00 AM CAPITOL 102                       
 03/11/97              (H)   MINUTE(STA)                                       
 03/13/97              (H)   STA AT  8:00 AM CAPITOL 102                       
 03/13/97              (H)   MINUTE(STA)                                       
 03/15/97              (H)   STA AT 11:00 AM CAPITOL 102                       
 BILL:  HB 143                                                               
 SPONSOR(S): REPRESENTATIVE(S) VEZEY                                           
 JRN-DATE      JRN-PG             ACTION                                       
 02/17/97       374    (H)   READ THE FIRST TIME - REFERRAL(S)                 
 02/17/97       375    (H)   STATE AFFAIRS                                     
 03/20/97              (H)   STA AT  8:00 AM CAPITOL 102                       
 WITNESS REGISTER                                                              
 JOE AMBROSE, Legislative Assistant                                            
    to Senator Robin Taylor                                                    
 State Capitol, Room 30                                                        
 Juneau, Alaska 99801-1182                                                     
 Telephone:  (907) 465-3873                                                    
 POSITION STATEMENT:  Presented sponsor statement for SB 77.                   
 REPRESENTATIVE TERRY MARTIN                                                   
 Alaska State Legislature                                                      
 State Capitol, Room 502                                                       
 Juneau, Alaska 99801-1182                                                     
 Telephone:  (907) 465-3783                                                    
 POSITION STATEMENT:  Sponsor of HB 84.                                        
 DENNIS POSHARD, Director                                                      
 Charitable Gaming Division                                                    
 Department of Revenue                                                         
 P.O. Box 110440                                                               
 Juneau, Alaska 99811-0440                                                     
 Telephone:  (907) 465-2229                                                    
 POSITION STATEMENT:  Provided testimony on HB 84.                             
 GERALD J. DORSHER, Legislative Officer                                        
 Veterans of Foreign Wars                                                      
 P.O. Box 240003                                                               
 Douglas, Alaska 99824                                                         
 Telephone:  (907) 364-3346                                                    
 POSITION STATEMENT:  Provided testimony on HB 84.                             
 GEORGE WRIGHT, Representative                                                 
 Alaska Native Brotherhood Camp Number 2                                       
 320 Willoughby Avenue, Suite 100                                              
 Juneau, Alaska 99801                                                          
 Telephone:  (907) 586-2049                                                    
 POSITION STATEMENT:  Provided testimony in opposition to HB 84.               
 JOCELYN YOUNG, Curator of Public Art                                          
 Anchorage Museum of History and Art                                           
 121 West 7th Avenue                                                           
 Anchorage, Alaska 99501                                                       
 Telephone:  (907) 343-6473                                                    
 POSITION STATEMENT:  Provided testimony on HB 143.                            
 DAVID ROSENTHAL                                                               
 P.O. Box 635                                                                  
 Cordova, Alaska 99574                                                         
 Telephone:  Not provided                                                      
 POSITION STATEMENT:  Provided testimony in opposition to HB 143.              
 SCOTT HAMANN                                                                  
 P.O. Box 934                                                                  
 Kenai, Alaska 99611                                                           
 Telephone:  (907) 283-4481                                                    
 POSITION STATEMENT:  Provided testimony in support of HB 143.                 
 VICTORIA LORD, Director                                                       
 Ketchikan Arts Council                                                        
 338 Main Street                                                               
 Ketchikan, Alaska 99901                                                       
 Telephone:  (907) 225-2211                                                    
 POSITION STATEMENT:  Provided testimony in opposition to HB 143.              
 EMILY MOORE                                                                   
 722 Park Avenue                                                               
 Ketchikan, Alaska 99901                                                       
 Telephone:  (907) 225-6558                                                    
 POSITION STATEMENT:  Provided testimony in opposition to HB 143.              
 MICHAEL OLSON, President                                                      
 Seward Arts Council                                                           
 P.O. Box 2152                                                                 
 Seward, Alaska 99664                                                          
 Telephone:  (907) 224-7162                                                    
 POSITION STATEMENT:  Provided testimony in opposition to HB 143.              
 ANNIE STOKES                                                                  
 570 Alder Street                                                              
 Juneau, Alaska 99801                                                          
 Telephone:  (907) 586-2852                                                    
 POSITION STATEMENT:  Provided testimony in opposition to HB 143.              
 SHANNON PLANCHON, Grant Administrator                                         
 Alaska State Council on the Arts                                              
 411 West 4th Avenue                                                           
 Anchorage, Alaska 99501                                                       
 Telephone:  (907) 269-6610                                                    
 POSITION STATEMENT:  Provided testimony in opposition to HB 143.              
 ALAN MUNRO                                                                    
 120 West 9th Street                                                           
 Juneau, Alaska 99801                                                          
 Telephone:  (907) 586-3694                                                    
 POSITION STATEMENT:  Provided testimony in opposition to HB 143.              
 MIKE ANDERSON                                                                 
 P.O. Box 1603                                                                 
 Cordova, Alaska 99574                                                         
 Telephone:  (907) 424-3142                                                    
 POSITION STATEMENT:  Provided testimony in opposition to HB 143.              
 JAMES EVENSON                                                                 
 P.O. Box 324                                                                  
 Kenai, Alaska 99611                                                           
 Telephone:  (907) 776-8060                                                    
 POSITION STATEMENT:  Provided testimony in opposition to HB 143.              
 CARL KRONBERG                                                                 
 1266 Millar                                                                   
 Ketchikan, Alaska 99901                                                       
 Telephone:  (907) 225-1297                                                    
 POSITION STATEMENT:  Provided testimony in opposition to HB 143.              
 CAROL BRYNER                                                                  
 626 "N" Street                                                                
 Anchorage, Alaska 99501                                                       
 Telephone:  (907) 277-7967                                                    
 POSITION STATEMENT:  Provided testimony in opposition to HB 143.              
 SYBIL DAVIS                                                                   
 1116 Timberline Court                                                         
 Juneau, Alaska 99801                                                          
 Telephone:  (907) 780-4376                                                    
 POSITION STATEMENT:  Provided testimony in opposition to HB 143.              
 LYNETTE TURNER, President                                                     
 Arts for a Healthy Alaska                                                     
 305 St. Anns Avenue                                                           
 Juneau, Alaska 99824                                                          
 Telephone:  (907) 364-2420                                                    
 POSITION STATEMENT:  Provided testimony in opposition to HB 143.              
 JENANN KIRCHMEIER                                                             
 Address not provided                                                          
 Telephone:  Not provided                                                      
 POSITION STATEMENT:  Provided testimony in opposition to HB 143.              
 ACTION NARRATIVE                                                              
 TAPE 97-29, SIDE A                                                            
 Number 0001                                                                   
 The House State Affairs Standing Committee was called to order by             
 Chair Jeannette James at 8:05 a.m.  Members present at the call to            
 order were Representatives James, Dyson, Elton, Ivan and Vezey.               
 Members absent were Berkowitz and Hodgins.                                    
 REPRESENTATIVE IVAN IVAN introduced Mr. Michael Chatman from the              
 audience.  He was here at the capitol building all day with a                 
 project called "Follow That Bill."  He hoped that Mr. Chatman would           
 not pick up on his bad habits.                                                
 SB 77 - ALASKA DAY OF PRAYER                                                
 The first order of business to come before the House State Affairs            
 Standing Committee was SB 77, "An Act relating to the Alaska Day of           
 CHAIR JEANNETTE JAMES called on Mr. Joe Ambrose, Legislative                  
 Assistant to Senator Robin Taylor, sponsor, to present the bill.              
 Number 0136                                                                   
 JOE AMBROSE, Legislative Assistant to Senator Robin Taylor, read              
 the following sponsor statement into the record:                              
 "In 1952, the US Congress resolved that a National Day of Prayer be           
 established, with the specific date subject to Presidential                   
 proclamation.  On May 5, 1988, President Ronald Reagan signed into            
 law a bill setting aside the first Thursday in May each year as the           
 National Day of Prayer.                                                       
 "Senate Bill 77 would also mark the first Thursday in May as the              
 Alaska Day of Prayer.                                                         
 "Observance of a Day of Prayer is as old as the nation itself and             
 in fact pre-dates the Declaration of Independence.  George                    
 Washington first proclaimed a day of prayer in 1775, during the               
 First Continental Congress.                                                   
 "Thomas Jefferson, who termed the First Amendment `a wall of                  
 separation between church and state', said he was convinced that a            
 man's natural right to religious expression was not in opposition             
 to his political function.                                                    
 "Establishment of a Day of Prayer in Alaska follows a tradition               
 dating back to the Founding Fathers.  It would encourage Alaskans             
 to pray without compelling them to do so."                                    
 Number 0257                                                                   
 REPRESENTATIVE ETHAN BERKOWITZ asked Mr. Ambrose if any other                 
 states had adopted a state day of prayer to complement the national           
 Number 0265                                                                   
 MR. AMBROSE replied seven states had adopted a state day of prayer.           
 In addition, many stated observed the day through an annual                   
 proclamation.  The Alaska Senate two years ago passed a resolution            
 asking the Governor to declare the first Thursday in May as the day           
 of prayer in Alaska.                                                          
 Number 0324                                                                   
 REPRESENTATIVE BERKOWITZ asked Mr. Ambrose if there was any                   
 particular reason why the state needed a day of prayer when there             
 was a national day?                                                           
 Number 0331                                                                   
 MR. AMBROSE replied it would put a special emphasis on the day and            
 it would bring Alaskans together.                                             
 Number 0348                                                                   
 REPRESENTATIVE KIM ELTON commented that he believed it should be              
 the second Thursday in May because by that time the body would need           
 it more than the first Thursday in May.                                       
 CHAIR JAMES called for a motion to pass the bill out of the                   
 Number 0378                                                                   
 REPRESENTATIVE FRED DYSON moved that SB 77 move from the committee            
 with individual recommendations and the attached zero fiscal                  
 note(s).  There was no objection, SB 77 was so moved from the House           
 State Affairs Standing Committee.                                             
 REPRESENTATIVE DYSON stated, for the record, that he had stepped on           
 the presenter's toes, literally; not figuratively, and apologized.            
 HB 84 - PULL-TABS LIMITED TO 501(C)(3) OR (19)                              
 The next order of business to come before the House State Affairs             
 Standing Committee was HB 84, "An Act limiting the authority to               
 conduct pull-tab charitable gaming to qualified organizations that            
 are exempt from taxation under 26 U.S.C. 501(c)(3) or (19); and               
 providing for an effective date."                                             
 CHAIR JAMES called on Representative Terry Martin, sponsor of HB
 84, to present the bill.                                                      
 Number 0405                                                                   
 REPRESENTATIVE TERRY MARTIN, Alaska State Legislature, distributed            
 to the committee members a handout titled, "A Great Time to Brag."            
 People were concerned that the bill would stop their source of                
 money from the pull-tabs.  He told them it would depend on what               
 they told the committee and what they had been doing with the                 
 money.  If the money did not go towards charitable purposes, then             
 there would be a problem.  It was also a time for the charitable              
 groups and the citizens to brag about their programs and how they             
 had been helping true charitable purposes.  Had they been giving              
 their money to Beans Cafe, or to scholarships, for example?  Had              
 they been helping youth athletic programs?  Were organizations                
 giving out more scholarships now that they had a permit?  It was a            
 great time to see what was happening with the millions and millions           
 of dollars gained from pull-tabs.  From the state's perspective, 8            
 percent of the total of $270 million was not very much when illegal           
 gamblers paid 10 to 15 percent for protection.  He believed some of           
 the money went to the Alaska Charitable Gaming Association, Inc. to           
 protect what they were doing.  Some used the money to fight                   
 regulations in the courts instead of coming to the legislature                
 asking for adjustments.  He reiterated it was a great opportunity             
 to scrutinize what was happening in the pull-tab world.                       
 Number 0669                                                                   
 REPRESENTATIVE MARTIN further stated that HB 84 was strictly                  
 related to pull-tabs.  It had nothing to do with the organizations            
 that had a permit for auctions or bingos, for example.                        
 Number 0699                                                                   
 REPRESENTATIVE IVAN asked Representative Martin if HB 84 would                
 prohibit municipalities from selling pull-tabs?                               
 Number 0730                                                                   
 REPRESENTATIVE MARTIN replied it would be very interesting to find            
 out what the municipalities were doing.                                       
 CHAIR JAMES asked Representative Martin to answer the question of             
 Representative Ivan.                                                          
 REPRESENTATIVE MARTIN replied he did not know if the bill would               
 prohibit municipalities.  If they were not using the money for                
 charitable purposes then they should be questioned.                           
 CHAIR JAMES asked Representative Martin if the bill prohibited                
 REPRESENTATIVE MARTIN replied, "As I see it now it does, yes."  It            
 was up to the committee if municipalities should be put back in as            
 charitable organizations.  If they were using the money just for              
 more revenue instead of taxation, then they should be questioned.             
 Number 0774                                                                   
 REPRESENTATIVE IVAN asked Representative Martin if the                        
 unincorporated communities would also be impacted by HB 84?  Would            
 they be prevented from participating for example?                             
 Number 0826                                                                   
 REPRESENTATIVE MARTIN replied, from my point of view, they should             
 be if the money was not going for charitable purposes.  If the                
 money was going to the local administration then it was not very              
 charitable.  That was what taxes and other avenues of money were              
 for, even in unincorporated communities.                                      
 Number 0851                                                                   
 CHAIR JAMES asked Representative Martin to explain the identified             
 codes in the bill and which ones would be excluded.                           
 REPRESENTATIVE MARTIN deferred the question to Mr. Poshard,                   
 Director, Charitable Gaming Division, Department of Revenue.                  
 Number 0895                                                                   
 REPRESENTATIVE IVAN asked Representative Martin if he had                     
 documentation that accounted for the amount of dollars from pull-             
 tab sales being placed into campaigns?                                        
 Number 0925                                                                   
 REPRESENTATIVE MARTIN replied he was going to save that information           
 for his other bill - HB 156.  At such time, he would bring the                
 backup information that would give a person an idea of how much               
 money was going into the political process - directly and                     
 indirectly.  "It is absolutely amazing how much money.  They make             
 the oil companies look like little pimps."                                    
 Number 0955                                                                   
 CHAIR JAMES asked Representative Martin if campaign finance reform            
 last year eliminated political contributions from pull-tab                    
 Number 0963                                                                   
 REPRESENTATIVE MARTIN replied, "We attempted to."  But the words              
 and phrases did not accomplish what we wanted to.  The backup                 
 information would show the loopholes.  The biggest loophole, he               
 declared, was the prevention of corporations and unions from                  
 contributing.  The legislation did not prevent non-profit                     
 organizations, however.                                                       
 Number 1004                                                                   
 CHAIR JAMES replied that campaign finance reform made it                      
 specifically clear that only individuals could make political                 
 Number 1017                                                                   
 REPRESENTATIVE MARTIN replied there were big loopholes that needed            
 to be closed.                                                                 
 Number 1032                                                                   
 REPRESENTATIVE BERKOWITZ asked Representative Martin if he was                
 seeking to exclude certain non-profits from qualifying?                       
 Number 1044                                                                   
 REPRESENTATIVE MARTIN replied the challenge of HB 84 was to find              
 out which groups were not fulfilling the idea of charitable                   
 purposes from the sale of pull-tabs.  They had not been challenged            
 in 10 years.  "Just because they are our friends and neighbors and            
 everything else, doesn't mean the monies they earn from pull-tabs             
 go to charitable purposes."                                                   
 Number 1083                                                                   
 REPRESENTATIVE BERKOWITZ asked Representative Martin if he had a              
 list of the organizations that he was seeking to exclude?                     
 CHAIR JAMES stated the Administration was going to come forward to            
 answer that question.                                                         
 Number 1096                                                                   
 REPRESENTATIVE IVAN commented that the legislature was trying to              
 downsize government.  Therefore, he believed that this bill would             
 have a detrimental impact on some of the communities that he                  
 represented.  He asked Representative Martin what was his opinion?            
 Number 1136                                                                   
 REPRESENTATIVE MARTIN replied it could go either way.  It depended            
 on what the committee discovered.  Part of the reason that pull-              
 tabs came about was to help the charitable needs of a community.              
 In addition, of the $270 million, less than 8 percent went to                 
 actual charities.  And from that charity alone maybe one-half of              
 the 8 percent went to an actual charitable purpose.  Other states             
 mandated that 30 percent off of the top went to charity.                      
 Number 1210                                                                   
 CHAIR JAMES asked Representative Martin if HB 84 did that?                    
 Number 1226                                                                   
 REPRESENTATIVE MARTIN replied HB 84 scrutinized what the groups               
 were doing.                                                                   
 CHAIR JAMES asked Representative Martin if HB 84 had anything to do           
 with the percentages?                                                         
 REPRESENTATIVE MARTIN replied, "No."  His second bill addressed the           
 CHAIR JAMES stated that the committee members should focus on HB
 REPRESENTATIVE MARTIN replied HB 84 focused on what groups should             
 be allowed and which groups should not be allowed.                            
 Number 1250                                                                   
 DENNIS POSHARD, Director, Charitable Gaming Division, Department of           
 Revenue, explained that the division and the department had not               
 taken a position of either for or against the bill.  "We feel that            
 the legislature has every right to decide who does and who does not           
 deserve to receive a permit to conduct charitable gaming                      
 activities."   It had been difficult to come up with an accurate              
 fiscal note because no state agency maintained a list of                      
 501(c)(3)'s, 501(c)(19)'s or any other 501(c) type of organization.           
 The Income, Excise and Audit Division and the Corporation Division            
 maintained a list of 501(c)'s, but with no further designation.  As           
 a result, the division contacted the Internal Revenue Service (IRS)           
 that provided a list of all of the designations.  The division                
 received it last week, therefore, he did not have the time to redo            
 the fiscal note.  The division was currently comparing the list of            
 501(c)(3)'s and 501(c)(19)'s from the IRS with the division's list            
 of pull-tab permitees.  The division intended to create three                 
 lists:  organizations that currently had pull-tab permits that                
 would no longer be eligible; organizations that currently had pull-           
 tab permits that would remain eligible; and organizations that did            
 not have a pull-tab permit but would be eligible.  The lists would            
 - hopefully - be available tomorrow, March 21, 1997.                          
 MR. POSHARD further explained that the fiscal notes contained                 
 several assumptions:  that all 1995 charitable, educational and               
 religious organization that were issued permits were considered               
 501(c)(3)'s; and that the veteran organizations that were issued              
 permits were 501(c)(19)'s.  He discovered there were some that were           
 designated as 501(c)(4).  The division also assumed that all other            
 1995 organizations - IRA Native villages, volunteer fire                      
 departments, fraternal organizations, fishing derby associations,             
 dog mushing associations, municipalities, labor organizations, non-           
 profit trade associations, and civic or service organizations -               
 were not designated as 501(c)(3)'s.  The division, therefore,                 
 calculated that approximately 362 charities that currently had                
 pull-tab permits would no longer be authorized to sell pull-tabs.             
 And the total estimated loss would be about $12 million, slightly             
 reducing the division's budget.  It did not mean that the division            
 would have 362 less reports or applications to process because many           
 of those organizations conducted raffles as well, for example.  The           
 division, however, would see a slight reduction in its program                
 receipts because it received a 3 percent pull-tab tax of the ideal            
 net of every pull-tab game, and a 1 percent fee of the $12 million            
 in proceeds.                                                                  
 Number 1561                                                                   
 CHAIR JAMES stated that the fiscal note also said that the division           
 would lose two full-time positions.                                           
 MR. POSHARD replied, "Correct."                                               
 CHAIR JAMES asked Mr. Poshard if the $117,000 marked on the fiscal            
 note was the two positions?                                                   
 MR. POSHARD replied, "Correct."                                               
 CHAIR JAMES asked Mr. Poshard if the reduction in lost revenues was           
 expected to be $1,155,300?                                                    
 MR. POSHARD replied, "Correct."                                               
 CHAIR JAMES replied then actually the division would only spend               
 $117,000 less.                                                                
 MR. POSHARD replied, "Correct."                                               
 CHAIR JAMES replied there was a bigger gap in the division's income           
 versus its expenses.                                                          
 Number 1597                                                                   
 REPRESENTATIVE DYSON asked Mr. Poshard if the 362 groups would not            
 be able to operate pull-tabs now because they did not qualify under           
 the federal non-profit regulations?                                           
 Number 1621                                                                   
 MR. POSHARD replied, "Correct."  The number was an estimation based           
 on the assumptions mentioned earlier.  The current estimation was             
 that 362 organizations would not qualify because they did not have            
 501(c)(3) or 501(c)(19) status with the IRS.                                  
 Number 1652                                                                   
 REPRESENTATIVE DYSON asked Mr. Poshard if many of them would                  
 qualify if they applied?                                                      
 MR. POSHARD replied some would be able to qualify just by applying            
 with the IRS, and some would not because they were not                        
 incorporated.  He explained incorporation was not a requirement,              
 currently.  However, some had already received a designation, such            
 as 501(c)(4).  They would have difficulty applying with the IRS to            
 receive a different designation because the designations were very            
 Number 1730                                                                   
 REPRESENTATIVE DYSON wondered if that was because their activity              
 fell outside of the framework of the charitable non-profits.                  
 Number 1750                                                                   
 MR. POSHARD replied, "Correct."  According to the IRS code, a                 
 501(c)(3) was typically a, "religious, educational, charitable,               
 scientific, literary, testing for public safety, to foster national           
 or international amateur sports competition, or prevention of                 
 cruelty to children or animals organization."  A 501(c)(19) was               
 designated as, "post or organization of past or present members of            
 the armed forces."  Therefore, if they were not an organization               
 that fell under those categories, they could potentially be                   
 designated in a different (c) status.                                         
 Number 1786                                                                   
 REPRESENTATIVE DYSON asked Mr. Poshard if there would be 70 or a              
 100 or so of the 362 that would not qualify with their current                
 stated purpose?                                                               
 Number 1798                                                                   
 MR. POSHARD replied it was difficult to estimate, but a majority              
 would probably not be able to qualify.  The list was being run now.           
 Number 1819                                                                   
 REPRESENTATIVE MARK HODGINS asked Mr. Poshard if he had a                     
 description of the 501 designations?                                          
 Number 1837                                                                   
 MR. POSHARD replied that he had two lists - the IRS codes and a               
 layman's term list.                                                           
 Number 1850                                                                   
 REPRESENTATIVE HODGINS asked Mr. Poshard for a list of the 501                
 groupings that currently had pull-tab licenses, if possible.                  
 CHAIR JAMES explained that the division was working on the list               
 now.  She asked Mr. Poshard how soon would the list be ready?                 
 MR. POSHARD replied - hopefully - tomorrow.                                   
 Number 1877                                                                   
 REPRESENTATIVE BERKOWITZ asked Mr. Poshard if the list included the           
 organizations that would be affected by HB 84?                                
 MR. POSHARD replied, "Yes."  The division was working on three                
 lists:  current 501(c)(3) and (19) designations that did not have             
 pull-tab permits; 501(c)(3) and (19) designations that did have               
 pull-tab permits; and organizations that had pull-tab permits and             
 did not have a 501(c)(3) or (19) designation.                                 
 Number 1918                                                                   
 REPRESENTATIVE ELTON stated that part of the problem with the bill            
 was the suggestion that the money collected was not going where it            
 ought to go.  He asked Mr. Poshard if it was possible to see                  
 information from his office on these organizations?                           
 Number 1960                                                                   
 MR. POSHARD replied the division had an annual report that                    
 summarized that information.  In addition, all of its records were            
 considered public information.  Each permittee was required to file           
 a schedule E that required a list of every check that it wrote to             
 show how it used its proceeds.                                                
 Number 2002                                                                   
 REPRESENTATIVE ELTON asked Mr. Poshard if he went to his office and           
 asked to see the file of the Auke Bay Volunteer Fire Department,              
 for example, it would be available?                                           
 MR. POSHARD replied, "Correct."  He could look at the file to see             
 how it spent its money, how it made its money, and/or its expenses.           
 Number 2023                                                                   
 CHAIR JAMES stated that this was convoluted because of the                    
 description of the statements made by the sponsor indicating that             
 he had another bill related to this.  The question of wanting to              
 know the contents of their file was irrelevant.  House Bill HB 84             
 said that if an organization was not entitled to be tax-exempt from           
 the IRS then it was not entitled to a pull-tab permit.  Thus, those           
 who would qualify and who would give money to the right places had            
 nothing to do with the bill.  Part of the requirement was that no             
 political activities were allowed in a 501(c)(3) designation.  It             
 was also her understanding that it did not have to do with whether            
 or not an organization was putting its money in the right places or           
 handling its money correctly, as-much-as, it was a philosophical              
 opinion.  Therefore, anything that the committee would do to the              
 bill would totally change the philosophical bent of the bill.  "So,           
 I think all of this other information is superfluous to the issue             
 before us."   It was not clear in HB 84 that the intent was to                
 scrutinize how the money was being spent.                                     
 Number 2140                                                                   
 REPRESENTATIVE ELTON replied he agreed with the interpretation of             
 Chair James.  However, before he could make a decision on the bill            
 he wanted to know the impact on the organizations that would be               
 excluded and on the charities that they supported.                            
 Number 2150                                                                   
 CHAIR JAMES replied the list that the committee members were going            
 to get from the Charitable Gaming Division would allow him to do              
 Number 2160                                                                   
 MR. POSHARD stated that the division could add the amount of net              
 proceeds that each of the charitable organizations received from              
 their pull-tab activity.  It would take a little bit more time to             
 prepare the list, however.                                                    
 CHAIR JAMES replied that was a good idea.  She reiterated that                
 those issues were irrelevant to the intent of the bill; however, to           
 narrow those organizations that qualified for pull-tabs as a money            
 making entity.                                                                
 Number 2208                                                                   
 REPRESENTATIVE HODGINS asked Mr. Poshard if it would be possible to           
 provide how many of the pull-tab organizations used operators?                
 Number 2223                                                                   
 MR. POSHARD replied it was another designation that could be added            
 to the report.  It would not be a significant amount; however, not            
 as much as one-half.                                                          
 Number 2246                                                                   
 GERALD J. DORSHER, Legislative Officer, Veterans of Foreign Wars,             
 was the first person to testify in Juneau.  Some good points were             
 raised today in regards to where the committee was going with the             
 bill.  The veterans of foreign wars had for some reason been                  
 designated as a 501(c)(4) when it should be a 501(c)(19).  The                
 department was pursuing the issue at this time through its mother             
 organization.  The department hoped that Representative Martin                
 would include a 501(c)(4) during the interim of its designation as            
 a 501(c)(19).                                                                 
 Number 2318                                                                   
 CHAIR JAMES asked Mr. Dorsher if there were any other advantages              
 for the veterans to be a 501(c)(19) as opposed to a (4), besides a            
 pull-tab permit?                                                              
 Number 2331                                                                   
 MR. DORSHER replied, "No."  The IRS designated past and present               
 military organizations as a 501(c)(19).                                       
 Number 2340                                                                   
 REPRESENTATIVE AL VEZEY announced that he had the definitions of              
 the 501(c) designations.  A 501(c)(19) was a special classification           
 for veteran organizations entitling them to a tax-exempt status.              
 The 501(c)(3) category was not just a public-welfare organization,            
 but a tax-deductible organization.  Many public welfare                       
 organizations did not try to get a tax deductible status -                    
 501(c)(4) and 501(c)(8) - for example.  Therefore, we should                  
 consider more than just the 501(c)(3) and 501(c)(19) designations.            
 There were valid reasons to be a (c)(4) rather than a (c)(19); it             
 expanded what could be done without jeopardizing the tax-exempt               
 Number 2408                                                                   
 CHAIR JAMES stated that she did not want to do anything to distress           
 the veterans.  They were the most valued citizens.                            
 Number 2420                                                                   
 GEORGE WRIGHT, Representative, Alaska Native Brotherhood (ANB) Camp           
 Number 2, was the next person to testify in Juneau.  The ANB Camp             
 Number 2 opposed the bill because it eliminated a lot of the                  
 gambling for villages that use it for a fund raiser.  "It would               
 completely knock the Brotherhood out."  It had applied for a                  
 501(c)(3) and (c)(8) status which had not been attained yet.  The             
 Alaska Native Brotherhood Grand Camp was a (c)(8) which covered all           
 of the ANB camps.  The bill, however, did not include (c)(8).                 
 "It's a bad bill."  It simply chopped off everything else that was            
 irrelevant, such as:  how it spent its money and how it earned its            
 money.  He was part of a task force to rewrite the gaming rules and           
 regulations and for some reason neither body had reviewed the                 
 recommendations; for example, to finance the department with extra            
 man power so that it could go after the people....                            
 TAPE 97-29, SIDE B                                                            
 Number 0001                                                                   
 MR. WRIGHT further said that the ANB followed the guidelines of a             
 fraternal organization on the one hand and the guidelines of a                
 501(c)(3) on the other.  The board members were having a hard time            
 trying to get its certificate with the IRS.  Under a 501(c)(3)                
 designation the organization could not donate money to its members.           
 "Well everybody in the village is somehow related and that kind of            
 chopped them off at the knees."  How do you break it up if you're             
 all related and you started this organization and you want to give            
 money to your son.  This is a very bad bill."  The ANB did like the           
 tax-exempt portion of the bill, however.  Mr. Elton established the           
 city sales tax in Juneau to raise revenues from pull-tabs.                    
 Currently, the city taxed the gross dollar amount of sales.  If a             
 ticket sold for $1, the city would put a 4 cents sales tax on every           
 ticket in the box.  The city did not give any consideration to the            
 price pay-outs or the play-backs.  The city taxed the whole amount            
 which was 39 percent of the ANB's profits.  The ANB paid 51 percent           
 to the city of Juneau because of its tax structure after covering             
 the cost of business.  "They refuse to recognize that the charity             
 only controls the money that they take to the bank.  They don't               
 control the money that they pay out in prizes.  That money is held            
 in trust until somebody wins it, but they tax it."  He suggested if           
 a bill was going to be written to examine the tax structure, it               
 would force a lot of people out of business in Juneau then Mr.                
 Martin would not have to worry about HB 84.                                   
 Number 0099                                                                   
 REPRESENTATIVE VEZEY asked Mr. Wright if the ANB was organized                
 under 501(c)?                                                                 
 MR. Wright  replied the grand camp was organized under 501(c)(8).             
 The ANB Camp Number 2 was a subordinate just like the Moose Lodges.           
 REPRESENTATIVE VEZEY asked Mr. Wright if he would object to the               
 bill if it incorporated 501(c)(8)?                                            
 MR. WRIGHT replied he would object because some of the villages               
 could not be that way.  For example, the spring carnival in some              
 villages were the biggest event of the year, of which, pull-tabs              
 were used to raise money for prizes to draw the people back to the            
 villages for the carnival.  If they wanted to grandfather the bill            
 then there would not be a problem.  If they wanted to eliminate               
 those that were not operating to the color of the law then let's              
 take the matter to the Charitable Gaming Division and give it more            
 investigators.  "Two investigators to do 1,600 permits in the state           
 of Alaska is quite skimpy."  He suggested that the committee                  
 members look at the task force rewrites and the recommendations.              
 Number 0169                                                                   
 REPRESENTATIVE HODGINS asked Mr. Wright to give him information               
 about the Native groups and how many used operators and where were            
 they located.                                                                 
 Number 0184                                                                   
 REPRESENTATIVE ELTON commented that Mr. Wright and he had a                   
 history.  The city of Juneau did apply a sales tax to pull-tabs in            
 the same way that it applied a sales tax to a loaf of bread.  The             
 sales tax was not applied to the profit; it was applied to the sale           
 Number 0200                                                                   
 CHAIR JAMES asked Representative Elton if she paid $1 for a pull-             
 tab, did she have to pay $1.04?                                               
 REPRESENTATIVE ELTON replied in Juneau she would have to pay $1.05.           
 CHAIR JAMES replied she did not think that was the way it worked.             
 REPRESENTATIVE ELTON explained the assembly recognized that $1.05             
 could inhibit the sale of a pull-tab rather than $1.  Therefore,              
 the assembly gave the operators an option to charge $1.05, lower              
 the pay-out of the game by 5 cents, or absorb the cost.  He could             
 not think of anybody in town charging $1.05 now.                              
 Number 0247                                                                   
 MR. WRIGHT replied, "No."  Playing pull-tabs was a sporadic thing.            
 The ANB did not have a problem paying the tax on the $1 spent.  It            
 had a problem with paying the tax on the ticket that was won                  
 because generally the individual exchanged the winning amount of              
 the ticket for more tickets.  Thus, no money was exchanged; but,              
 the city took 5 cents for each one of the tickets.                            
 REPRESENTATIVE ELTON replied the city appreciated it.                         
 MR. WRIGHT explained the Ketchikan court ruled that pull-tabs were            
 intangible objects.  It was not a retail product, nor like anything           
 else that was sold in a store.  It was an object sold with a                  
 liability - the price pay-out.                                                
 Number 0304                                                                   
 CHAIR JAMES stated this was an interesting conversation.  She did             
 not buy pull-tabs but her husband did.  It was called "fun raising"           
 not "fund raising" at the Elks on Friday nights.  She knew that he            
 was paying only $1 for a ticket which meant that the 5 cents was              
 coming out of the sale.  It was not a tax on the person, therefore.           
 In this case the seller paid the tax because $1.05 would be very              
 inconvenient for the buyer.                                                   
 Number 0376                                                                   
 CHAIR JAMES announced, for the record, that Mr. Minor W. Thomas III           
 from the Loyal Order of Moose in Juneau, was opposed to HB 84.  He            
 urged it to be defeated and asked that his letter be part of the              
 "I am sorry that I cannot be there in person to testify on this               
 bill, however please accept my gratitude for allowing me t submit             
 written testimony.                                                            
 "We here at the Juneau Moose and the other lodges around the state            
 are vehemently opposed to H.B. 84.  First, why is Representative              
 Martin excluding Sec. 501 C-8 organizations from this bill?  That             
 would include all of the Moose lodges in the state and I don't know           
 how many other organization.                                                  
 "Moose lodges are organized under 501(C8) as non-profit fraternal             
 organizations with no political ties and none allowed.  We are                
 organized under a strict members only policy and any monies made by           
 Moose lodges must come from its members and not the general public.           
 This includes any pull tab monies we make.  It must be remembered             
 that we support many charities with our pull tab monies as                    
 evidenced with the information packs given to Representative Elton            
 and Hudson.  Along with the information for Juneau, you could look            
 at the Craig lodge who sent thousands of dollars back into the                
 community.  In fact, they are the major contributor to the                    
 Ambulance Corp.  The Petersburg lodge donated over $100,000 back to           
 the community last year.  In Anchorage along last year $123,000 was           
 given to charity.                                                             
 "With figures like these it is hard to fathom how anyone could deny           
 501(C8) organizations the right or privilege to sell pull tabs to             
 its members.                                                                  
 "If we cannot sell pull tabs who is going to fund and support the             
 many charities.                                                               
 "Again, we urge that H.B. 84 be defeated.                                     
 "Thank you for your time and consideration."                                  
 Number 0401                                                                   
 REPRESENTATIVE MARTIN distributed to the committee members the                
 report on what was happening to charitable dollars and how the                
 money got into the political process - directly and indirectly.               
 Number 0440                                                                   
 CHAIR JAMES asked Representative Martin if he would do this again             
 after the 1998 campaign to see what the changes would be because of           
 campaign finance reform?                                                      
 Number 0449                                                                   
 REPRESENTATIVE MARTIN replied it depended on if he was reelected.             
 The report showed each individual candidate and how much money came           
 in from groups that had a pull-tab permit.  It also showed how much           
 went to the political parties and then to the candidates                      
 illustrating the loopholes in the system.  He cited the Home                  
 Builders Association raised a lot of money.  He did not see how it            
 was a charitable organization, however.                                       
 Number 0519                                                                   
 CHAIR JAMES replied it was a public policy decision to determine if           
 the organizations met the ordinary understanding of charitable                
 issues.  House Bill 84 would change it so that only recognized                
 charitable activities would be able to be funded from pull-tabs.              
 Number 0566                                                                   
 REPRESENTATIVE MARTIN replied this was just the beginning.  It was            
 not to be exclusive of anything.  There was confusion with the IRS            
 in regards to what organization was a charity.                                
 CHAIR JAMES replied she disagreed with the fact that the IRS was              
 confused.  "They tell us who is and who isn't.  They aren't                   
 confused about that at all."                                                  
 REPRESENTATIVE MARTIN replied the IRS was confused in regards to              
 what Alaska called a charity.                                                 
 CHAIR JAMES replied the IRS did not care if the state was confused            
 because they were not confused.                                               
 REPRESENTATIVE MARTIN reiterated it was confusing to the IRS in               
 regards to what the state called charity.                                     
 CHAIR JAMES replied that was none of its business.  The IRS was a             
 taxing authority and it could tax the way it wanted to and it was             
 none of its business what the state did.                                      
 REPRESENTATIVE MARTIN replied this was charity and not tax.  "If              
 you're saying in the name of charity that we're letting these                 
 people have all of these millions of dollars then we can stick our            
 heads in the sand.  We don't care if we're going to touch                     
 motherhood and apple pie."                                                    
 Number 0634                                                                   
 REPRESENTATIVE ELTON stated he understood what Representative                 
 Martin was trying to accomplish.  He wondered, however, if it could           
 be accomplished by drafting legislation that said the proceeds                
 could only be used in a manner that would be contemplated under               
 501(c)(3) or 501(c)(19).  Therefore, it would not limit those who             
 could do it, but it would limit how the proceeds could be used.               
 Number 0662                                                                   
 REPRESENTATIVE MARTIN replied he could have done a thousand                   
 different things.  "I do take the challenge of bringing it open and           
 they're talking about motherhood and apple pie."  No one expected             
 1,600 people to get a pull-tab permit when almost any three or four           
 individuals could call themselves a non-profit organization and               
 they did not qualify for the intent of the legislation.                       
 Number 0683                                                                   
 REPRESENTATIVE ELTON replied this was like hunting sparrows with a            
 shotgun.  If there were legitimate purposes by the VFW, for                   
 example, that was a (c)(4) designation, the bill would get rid of             
 it no matter how it used the proceeds.  The better way to approach            
 this would be to say what the proceeds could be used for rather               
 than saying who could sell pull-tabs.                                         
 Number 0712                                                                   
 REPRESENTATIVE MARTIN replied the challenge for the committee was             
 to look and to say that Representative Martin was a complete idiot.           
 The legislature should see what was happening with the money.  "If            
 you don't want to then vote VFW and motherhood."  The Chiropractor            
 Association was not a charitable organization, he declared.                   
 Number 0736                                                                   
 REPRESENTATIVE ELTON asked Representative Martin if the money went            
 to charities then what was the difference?                                    
 REPRESENTATIVE MARTIN replied the Chiropractor Association put a              
 lot of money into the political process and it put a lot of money             
 into its own organization; and, yes, it did contribute $250 to a              
 little league.  But, when it gained $50,000 and only gave out $250,           
 that was not charity.                                                         
 CHAIR JAMES announced that the bill would be held in the committee.           
 Number 0766                                                                   
 REPRESENTATIVE ELTON introduced his shadow for the day, Joel                  
 Cladouhos from Juneau Douglas High School.  His unfortunate duty              
 was to follow him around today so he was trying to make it pleasant           
 for him.                                                                      
 HB 143 - REPEAL ART IN PUBLIC PLACES REQUIREMENT                            
 The next order of business to come before the House State Affairs             
 Standing Committee was HB 143, "An Act relating to the art in                 
 public places requirements for state-owned and state-leased                   
 buildings and facilities."                                                    
 CHAIR JAMES called on Representative Al Vezey, sponsor of HB 143,             
 to present the bill.                                                          
 Number 0793                                                                   
 REPRESENTATIVE VEZEY stated the bill was really very simple.  The             
 co-essence of the bill was Section 3.  The rest of the sections               
 were technical requirements to implement Section 3.  The bill                 
 repealed the requirements in statute for a formula program on how             
 the state funded art in its public buildings, therefore, removing             
 the responsibility from the legislature on how it appropriated                
 state funds.  It was not correct or proper that the legislature               
 tried to shy away from its responsibility to appropriate.  "I think           
 if we want to appropriate money for art that we should make a                 
 deliberate appropriation.  I also think that we should defer to               
 local entities whenever possible as how they should use that money            
 best for their communities.  And a mandate in state statute is not            
 a proper way to do state business."                                           
 Number 0864                                                                   
 REPRESENTATIVE DYSON asked Representative Vezey if this would only            
 save $34,000?  A figure that was presented to him.                            
 Number 0883                                                                   
 REPRESENTATIVE VEZEY replied the bill repealed the Alaska statute             
 that required 1 percent of the monies appropriated for public                 
 facilities that would go to the procurement of art through the                
 Alaska State Council on the Arts.  If $34,000 was 1 percent of what           
 the state spent on public facilities, then it was correct.                    
 Number 0904                                                                   
 REPRESENTATIVE DYSON asked Representative Vezey if the fiscal note            
 was zero?  He stated it must cost something to administer this as             
 a portion of the contracts.                                                   
 Number 0925                                                                   
 REPRESENTATIVE VEZEY replied this was the third time that he had              
 introduced this bill.  He had seen numerous different fiscal notes            
 including some zeros.  "I don't see this bill as saving money.  I             
 see it as returning to the legislature the responsibility and the             
 authority of how we appropriate money."  The formula absolved the             
 legislature from its responsibility to appropriate.                           
 Number 0979                                                                   
 CHAIR JAMES responded she remembered the rhetoric in opposition to            
 the appropriation for art.  In her piece of legislation three years           
 ago she tried to set up a plan to address deferred maintenance in             
 the state which received the same rhetoric.  She asked                        
 Representative Vezey if the bill made this voluntary?                         
 Number 1027                                                                   
 REPRESENTATIVE VEZEY replied the bill removed the statutory                   
 requirement for the formula.  It left everything else.                        
 CHAIR JAMES commented she just received information on an                     
 elementary school on Eielson Air Force Base and its art work.  She            
 tallied the individual art pieces to $97,000.  She did not remember           
 what the actual cost was for the school.  She asked Representative            
 Vezey if it said "1 percent" or did it say "a percent" for art?               
 Was it arbitrary?  Where did it say 1 percent?                                
 Number 1132                                                                   
 REPRESENTATIVE VEZEY replied in Title 35 AS 35.27.020(c) it said,             
 "at least 1 percent".  There were a lot of questions involved, and            
 HB 143 simply removed the statute to remove all of the questions.             
 He did not know how the statute was interpreted, however.  He also            
 did not know how the legislature could abrogate its responsibility            
 to appropriate because the formula was applied by the                         
 Administration and not by the legislature.                                    
 Number 1173                                                                   
 CHAIR JAMES replied then the $97,000 related to a $9,700,000                  
 school.  She asked Representative Vezey when money was asked for a            
 school was its price included at 99 percent plus the 1 percent for            
 art?  In addition, she asked what would the money be spent on if it           
 was not spend on art?                                                         
 Number 1199                                                                   
 REPRESENTATIVE VEZEY replied, "Yes."  A contractor usually added 1            
 percent to its cost-estimate of a project.  The other question did            
 not have an answer.  It was up to the legislature.                            
 Number 1228                                                                   
 REPRESENTATIVE HODGINS commented that the state was looking at the            
 deferred maintenance problem.  He asked Representative Vezey if the           
 law in statute also meant that 1 percent of the appropriation for             
 deferred maintenance would have to go to art?                                 
 REPRESENTATIVE VEZEY replied, "Yes."                                          
 REPRESENTATIVE HODGINS asked Representative Vezey if the state                
 would be taking away from its deferred maintenance and putting it             
 into art?                                                                     
 REPRESENTATIVE VEZEY replied, "Yes."  That was what the formula               
 said now.  It was more complex, however, because a number of public           
 facilities that were not considered as places to put art also had             
 to contribute to the program.                                                 
 Number 1274                                                                   
 REPRESENTATIVE HODGINS asked Representative Vezey if the art that             
 was actually put into a building became permanent property of that            
 location or was it moved around?                                              
 REPRESENTATIVE VEZEY replied it depended on the appropriation and             
 who it was to.  It belonged to the entity that received the                   
 appropriation and who built the facility.                                     
 Number 1300                                                                   
 REPRESENTATIVE HODGINS commented that years ago there was                     
 discussion of putting $40 million dollars into the Homer High                 
 School which related to $400,000 in art that had to go into the               
 facility which would have been a lot of text books.  He thanked               
 Representative Vezey for bringing the bill forward.                           
 Number 1324                                                                   
 REPRESENTATIVE VEZEY stated that one of the things that continued             
 to inspire him to bring the bill forward was the fact that museums            
 were the recipients of a large quantity of valuable art and the art           
 had no place to go.  The art could not be used as the 1 percent for           
 art according to the regulations.                                             
 Number 1358                                                                   
 REPRESENTATIVE ELTON replied one of the things that inspired him              
 was art.  In addition, the fiscal note from the Department of                 
 Transportation and Public Facilities indicated that the money would           
 go to additional amenities in the building or to higher quality               
 construction.  Furthermore, he did not think that the legislature             
 had abrogated its responsibility of the appropriation process but             
 rather it set up a structure of what it wanted to accomplish.  The            
 bill before the committee was the best example because if the bill            
 passed, it reestablished a change of priority instead of abrogating           
 its responsibility.                                                           
 Number 1437                                                                   
 CHAIR JAMES replied she did not know her position on this issue               
 because she could argue both sides.  There had been art in                    
 buildings since the beginning.  The difference was whether or not             
 it should be funded by private sources or it should be taken out of           
 a capital expense.  She would argue for art as a valid thing to               
 have in buildings.  She also agreed with Representative Vezey                 
 having been to the University of Alaska's museum that had a huge              
 amount of fine art that no one got to see.  They did want to built            
 an extension to the museum so that more of it could be put up.  It            
 was also nice to change the art instead of having the same art in             
 place.  In addition, the art in the elementary school on Eielson              
 Air Force Base was being created to go along with who the school              
 was named after.  Therefore, the art would not have been created if           
 the fund had not been there.                                                  
 Number 1578                                                                   
 REPRESENTATIVE BERKOWITZ replied to Representative Hodgins that               
 there was not a mandate that all deferred maintenance receive an              
 art  funding.  It only had to go to public buildings.  Therefore,             
 a building that was not being used by the public would not require            
 a art appropriation.                                                          
 CHAIR JAMES replied the state had a $620 million deferred                     
 maintenance problem at the last count for schools.                            
 Number 1623                                                                   
 REPRESENTATIVE VEZEY replied that Representative Berkowitz was                
 correct in that the formula did not apply to roads and bridges, but           
 it did apply to other infrastructure that the public did not use or           
 occupy, such as sewage treatment plants and prisons.  The cost went           
 back into the formula.                                                        
 Number 1646                                                                   
 REPRESENTATIVE BERKOWITZ explained AS 44.27.060 stated that the art           
 requirement was exempt when the building or facility was not                  
 designed for substantial public use which would apply to a sewer              
 Number 1667                                                                   
 REPRESENTATIVE VEZEY replied the statute was interpreted and the              
 way the regulations were written so that there were many public               
 facilities where the art would not be displayed but the cost was              
 allocated, except for roads and bridges.  The one example that he             
 recalled looking at was a sewage treatment plant.                             
 Number 1696                                                                   
 REPRESENTATIVE DYSON explained there was 1 percent for the                    
 Anchorage waste water treatment plant.  The one unintended result             
 of all this was the Performing Art Center in Anchorage.  It was all           
 for art and it had to have 1 percent set aside for art which he               
 felt was an unfortunate restriction and he would have loved to have           
 spent the money on handicapped access, for example.                           
 Number 1833                                                                   
 JOCELYN YOUNG, Curator of Public Art, Anchorage Museum of History             
 and Art, was the first person to testify via teleconference in                
 Anchorage.  There was disinformation and misinformation about this            
 law.  The municipal ordinance followed the state statute.  In                 
 addition, the museum had found that the this was one of the most              
 public processes.  There was at least one or two people from each             
 facility, the architect, community members and members of various             
 commissions within the municipality on the committee.  Therefore,             
 there was ownership of the art for the people living and working in           
 the building on a day-to-day basis.  She had also seen those that             
 were not very excited about this usually embrace it after seeing              
 how their organization could be represented in the public.  She               
 cited the art piece in the Anchorage police headquarter training              
 center became the logo for the department adding a light touch to             
 its serious role.  In addition, the artists in the state receiving            
 the commission did not receive a chunk of money because they had to           
 pay for:  studio rent, contractors, and electricians, for example.            
 The money did not just go to one person.  The rural school did not            
 have a 1 percent commission, they had a 0.5 percent commission.               
 She had also found that the public art throughout the state was               
 considered a museum without walls because it was accessed by those            
 that often did not have a chance to go to a museum.  "It becomes              
 there own public art in their own community or school."                       
 Number 2069                                                                   
 DAVID ROSENTHAL was the next person to testify via teleconference             
 in Cordova.  He was against repealing the 1 percent for art.  He              
 had done some art for the state in the past which was meaningful to           
 him to pass on.  He did not believe that by getting rid of the 1              
 percent for art the legislature would take care of its $600 million           
 in deferred maintenance or provide wheelchair access.  "I don't               
 believe it's going to save any money and it has been a good thing             
 for the state."  It brought the art to people who normally did not            
 get the chance to see it.  In addition, a wide range of art was               
 selected because of the public process.                                       
 Number 2153                                                                   
 SCOTT HAMANN was the next person to testify via teleconference in             
 Kenai.  He supported HB 143.  Art had been in public buildings from           
 the day that they were built and by getting rid of this 1 percent             
 for art did not mean that there would not be art.  It was a                   
 continual process.  However, he did not believe that there should             
 be a blanket 1 percent.  "I think that we need to sit down and look           
 at every building that we build and decide how much money we want             
 to spend on art and go ahead and do that."  The art could come from           
 private individuals or it could be donated.  It was the                       
 responsibility of the legislature to be frugal with state money.              
 The money could be better spent.                                              
 Number 2269                                                                   
 VICTORIA LORD, Director, Ketchikan Arts Council, was the next                 
 person to testify via teleconference in Ketchikan.  She thanked               
 Representative Vezey for bringing us together every year to                   
 reaffirm the importance of the 1 percent for art program in Alaska            
 and for giving us the opportunity to remind the legislators that              
 the program was of value.  She disagreed with Representative James            
 that art just belonged in museums.  Art was all around, it added              
 life and livability to the public spaces.  The residents of the               
 City and Borough of Ketchikan enjoyed fine works of public art and            
 many were here because of the state mandate.  She cited the                   
 airport, pioneers home, public health center, and public schools              
 housed a variety of art work by a variety of artists.  Ketchikan              
 was proud of the work of its artists that had received commissions            
 not only in Ketchikan but throughout the Northwest.  She cited the            
 names of the artists who contributed art to the new buildings that            
 fell under the mandate.  As Director of the Ketchikan Arts Council,           
 she had witnessed the process of selecting the art work.  When it             
 was time to select the art work for the high school the process               
 included the students.                                                        
 Number 2439                                                                   
 EMILY MOORE was the next person to testify via teleconference in              
 Ketchikan.  She was a senior at Ketchikan High School.  The 1                 
 percent for arts funding was very important.  Her freshman year               
 began in a brand new building which was nice, but it represented a            
 sterile bathroom.  The funds from the 1 percent for arts was a good           
 TAPE 97-30, SIDE A                                                            
 Number 0018                                                                   
 MICHAEL OLSON, President, Seward Arts Council, was the next person            
 to testify via teleconference in Seward.  He was also a volunteer             
 member of the arts selection committee for the new ferry.  He                 
 explained the administration cost came from the 1 percent.  And the           
 formula was only calculated from state funds.  He opposed HB 143.             
 In 1975, Alaska took bold steps to recognize the importance of art            
 by developing the 1 percent for art program.  Since that time many            
 other states had followed and looked up to us.  The state of Utah             
 was the most recent to adopt such a program.  It would be ludicrous           
 for the state to drop the ball now.  The 1 percent would not go               
 back to the General Fund because contractors factored in a 5 to 10            
 percent contingency for cost overruns and it was this money that              
 the art work was derived from.  If money was the sole reason for HB
 143, it was a waste of precious time; there was no bang for the               
 buck.  In 1985, he worked on a project where there was a cost                 
 overrun so 1 percent could not go into the art.  Other funds were             
 raised after the fact.                                                        
 Number 0233                                                                   
 ANNIE STOKES was the first person to testify in Juneau.  She also             
 thanked Representative Vezey for bringing up this issue again                 
 because it stimulated public dialogue, and it made people really              
 assess what was important to them.  It was apparent from the                  
 comments from the committee members that there was a great deal of            
 misinformation, confusion, and questions about the bill that no one           
 had the answers to.  She was opposed to HB 143 because it was not             
 in the best interest of the state.  It was premature as was shown             
 through the questions.  In addition, governmental policy was to               
 bring up a problem, to investigate it, and then to act accordingly.           
 She reiterated the bill was premature at this point because there             
 were too many questions.  Moreover, HB 143 denied the individuals             
 that wanted to see their cultures reflected in the public.  It was            
 a public process and those involved had only said positive things             
 statewide for the program.  The artists were selected by the area.            
 It was a competitive process with stringent procedures to go                  
 through.  It also denied the children in the schools who assist               
 with the projects and watch the process.  She cited the art work in           
 Dzantik'l Heeni Middle School in Juneau.  In addition, it also                
 denied the tourists who came to see the land and to buy art.  The             
 figures indicated that art was a viable industry that should be               
 supported by the state just like natural resources.                           
 Number 0485                                                                   
 SHANNON PLANCHON, Grant Administrator, Alaska State Council on the            
 Arts, was the next person to testify in Juneau.  She was also the             
 Percent for Art Coordinator.  She distributed to the committee                
 members a handout titled, "Percent for Art-Samples of Percent for             
 Art Projects From Across the State."  She explained Tim Wilson was            
 not here today because he was travelling.  The council was opposed            
 to the passage of HB 143.  Public art had been commissioned since             
 the antiquities.  "It was one of the important ways that we come to           
 know and identify our cultures, our buildings, and who we are."               
 There were over 100 percent for art programs operating in the                 
 United States:  the federal government, 29 states, and scores of              
 cities.  Anchorage was the only city in Alaska that had a full-time           
 percent for art person.  At the state level the council operated              
 without a direct administrative expense offering technical services           
 to departments that were required to consult with the council per             
 the statute.  In 1986 the Visual Arts Coordinator position was cut            
 from the program.  The council had a strong interest in the 1                 
 percent for art program because it served its constituents and the            
 public.  "We think it's an ideal program, fiscally conservative,              
 while the state's budget is robust.  A small percent of the capital           
 budget is reserved for it and then when times are tough the                   
 projects are cut back."  In addition, art installed became a                  
 permanent part of the building and amortized over the life of the             
 building.  The Art in Public Places Fund was a different pot of               
 money.  It was for buildings that were not used by the public.  The           
 portion that was designated for the art went to the fund to help              
 augment art in the art banks for portable art.  The fund right now            
 was at $34,000.  In conclusion, HB 143 would negatively affect its            
 two constituencies, the public and the artists.  "Public art is               
 public pride."                                                                
 Number 0723                                                                   
 ALAN MUNRO was the next person to testify in Juneau.  He was a                
 practicing artist in Juneau.  He read the following statement into            
 the record:                                                                   
 "Art, as painting and sculpture, has made major contributions to              
 public life and public buildings since the time of the Egyptians,             
 Greeks and Romans.  We continue in that historic tradition to this            
 "Now, there are certain politicians who would say:  `No more!'                
 "What is the reason?  What good purpose could possibly be served by           
 eliminating art from our daily lives?  Is this an anti-art, anti-             
 intellectual movement or is it simply naivete', due to too little             
 opportunity to experience meaningful art.  Perhaps it is purely a             
 financial issue, fueled by contractors who would stand to profit by           
 a little extra money designated for `nice but not necessary' art.             
 "Supporters of the repeal say:  `It is a government give away which           
 merely supports individual artists who can not make it on their               
 own.'  This is a ridiculous argument, since any money left over               
 after materials, hard earned wages and taxes would have to last a             
 very long time between awards.  There is no give away here, just an           
 honest wage in return for talent, professional ability and public             
 enrichment.  We will never know how far Michelangelo would have               
 been able to go without the financial support of the Vatican.  He             
 also had trouble with individuals in control of that funding                  
 source, over 400 years ago.                                                   
 "Be that as it may, there does exist a long established art                   
 selection process that very carefully selects the percent for art             
 recipients.  This ensures that , serious artists, producing quality           
 works of art, are awarded these percent moneys.                               
 "We, of European descent, tent to isolate art from our daily lives            
 whether we profess to appreciate it or not.  Older and wiser                  
 cultures accept art as a given in their daily lives.  Art provides            
 them a dimension of societal well being they would otherwise not              
 have.  Obviously, we have a long way to go before we are as                   
 accepting or as wise.  It is one of the reasons why we are gathered           
 here today.                                                                   
 "Madam chairwoman, I recommend we become more accepting of art.               
 Let us continue on the centuries long journey other have made                 
 before us.  Let us continue this critically important percent for             
 art program.  Let this sadly uninformed and regressive bill die in            
 Number 0906                                                                   
 MIKE ANDERSON was the next person to testify via teleconference in            
 Cordova.  He was a local artist in Cordova amongst the other things           
 he did for his community.  The art created under the percent for              
 art program added a great deal to the buildings.  It also added               
 public pride and warmth.  It also allowed for the preservation of             
 culture and the creation of art that otherwise would not have been            
 created on speculation because of to the size of the art work.                
 "Without these commissions the artists would be relegated to doing            
 small enough things that would fit in a tourist package and heading           
 out of the state."  The work that he did for the percent for art              
 project was specifically designed in relation to the durability and           
 function of the building.  Furthermore, he also had worked in the             
 field of construction.  "I know that this will not save 1 percent."           
 Money going into the windows, for example, was far more than 1                
 percent.  The 1 percent of the 10 percent contingency for bidding             
 errors and necessary changes was eaten up in no time in the                   
 construction of a building.  "I don't think we're going to see any            
 change in this.  We might see a little bit more spendy tile on the            
 floor.  We might see spendier doors, maybe slightly more glass.  We           
 won't hardly see it at all in the buildings."  In addition, the 1             
 percent would not go back to the legislature.  "You're not going to           
 get the warmth of putting artists out of business.  The artists               
 that are already doing this are artists that are going to make it             
 regardless of whether they're getting a percent for art or not."              
 Number 1076                                                                   
 JAMES EVENSON was the next person to testify via teleconference in            
 Kenai.  He called HB 143 a bad bill because there was no better               
 investment than money spent on art.  The program was not welfare              
 for artists, it was not just a matter of putting pretty pictures on           
 the wall.  It was a statement by the government that the art was              
 important for the lives of the citizens.  Everything that was made            
 by the hands of man had an artistic decision.  He cited cars,                 
 tools, and houses as examples.  "Art is part of the fabric of our             
 daily lives.  It's just as much so as science or even the oil                 
 industry."  Therefore, to eliminate the percent for art program               
 meant diminishing the quality of life for our people in the schools           
 and public buildings.  He suggested to continue to try to improve             
 the program for more involvement.  "Please do not eliminate this              
 Number 1178                                                                   
 CARL KRONBERG was the next person to testify via teleconference in            
 Ketchikan.  The art in public requirement was an important and                
 positive program for the Ketchikan community.  The most recent                
 example was the placement of art in the Ketchikan High School.  The           
 school had been recently rebuilt and the art requirement made it a            
 more cheerful place for the teachers and the students creating a              
 better educational environment.  The art requirement was also a               
 valuable public partnership for very little money creating economic           
 benefits for local communities in tourism, for example.                       
 Number 1267                                                                   
 CAROL BRYNER was the next person to testify via teleconference in             
 Anchorage.  She was an artist and a volunteer at the museum as well           
 as having served on juries for the public art program in Anchorage.           
 She travelled quite a bit and looked at how communities showed                
 itself in its art.  There was a big difference between Seattle,               
 Washington; and Taunton, Massachusetts for example.  Last year at             
 this time she was in Italy where there were lines three hour long             
 to see art, of which, a lot of it was public art.  The bill was a             
 shortsighted way to look at the future and what we would leave to             
 our children and grandchildren.  "The art that we have around us is           
 incredibly important.  If you look around you and see nothing but             
 new roads and new bathrooms; it doesn't say much about our                    
 culture."  She was opposed to HB 143.                                         
 Number 1353                                                                   
 SYBIL DAVIS was the next person to testify in Juneau.  She had                
 lived in Juneau for a long time.  She was also a parent and a                 
 person who had been actively involved in the arts and who                     
 appreciated aesthetics.  She cited a story when she was seasick on            
 a missionary trip and the skipper suggested that she focus on the             
 horizon to help her seasickness.  She suggested that the committee            
 members focus on the horizon now to realize this was something that           
 would be left long after they were gone.  Art was a positive impact           
 on the environment, it was the culture, it reflected the people,              
 and 1 percent was not much.  If the bill was to pass and the money            
 was rescinded, it would not go into the capital budget, it would              
 not get what the committee members were seeking.  She was opposed             
 to the bill.                                                                  
 Number 1421                                                                   
 LYNETTE TURNER, President, Arts for a Healthy Alaska (AHA), was the           
 next person to testify in Juneau.  The AHA was a statewide arts               
 advocacy organization.  The AHA opposed HB 143 because both the               
 public and the artists benefitted greatly from the program.  The              
 schools and universities would be negatively impacted because so              
 many of the projects were done there.  In addition to decreasing              
 the degree of exposure that the youth would have, it would also               
 affect artist's employment.  "To walk through a public building and           
 have the opportunity to be exposed to various types of art can be             
 a rewarding experience and can have a profound affect."  In the               
 words of playwright, Thornton Wilder, "We can only be said to be              
 alive in those moments when our hearts are conscious of our                   
 treasures."  The arts were a treasure that should be shared.                  
 Please support the 1 percent for art program.                                 
 Number 1480                                                                   
 JENANN KIRCHMEIER was the next person to testify via teleconference           
 in Cordova.  She was a practicing artist in Cordova.  She had not             
 been a part of the program but was opposed to eliminating the                 
 percent for art because she felt it was a form of bankruptcy to               
 look at art in this way when it was such a life enhancing form.               
 She looked forward to buildings going up so that she could see what           
 would happen in them.  In addition, she had seen first hand in the            
 villages how the children responded to the art in their schools.              
 She was opposed to eliminating the 1 percent for art program.                 
 Number 1540                                                                   
 CHAIR JAMES adjourned the House State Affairs Standing Committee              
 meeting at 10:05 a.m.                                                         

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