Legislature(2001 - 2002)

04/27/2001 01:45 PM Senate CRA

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                     ALASKA STATE LEGISLATURE                                                                                   
           SENATE COMMUNITY & REGIONAL AFFAIRS COMMITTEE                                                                      
                          April 27, 2001                                                                                        
                             1:45 p.m.                                                                                          
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Senator John Torgerson, Chair                                                                                                   
Senator Alan Austerman                                                                                                          
Senator Randy Phillips                                                                                                          
Senator Georgianna Lincoln                                                                                                      
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Senator Pete Kelly                                                                                                              
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
HOUSE BILL NO. 186                                                                                                              
"An Act relating  to a municipal enhanced 911 surcharge  on wireless                                                            
telephones."                                                                                                                    
     MOVED HB 186 OUT OF COMMITTEE                                                                                              
                                                                                                                                
SENATE BILL NO. 42                                                                                                              
"An  Act  requiring  an annual  inflation  adjustment  of  the  base                                                            
student allocation  used in the formula for state  funding of public                                                            
education; and providing for an effective date."                                                                                
     MOVED CSSB 42 OUT OF COMMITTEE                                                                                             
                                                                                                                                
SENATE BILL NO. 175                                                                                                             
"An Act providing  municipalities  with the authority to  protest or                                                            
to recommend  conditions on the issuance  and renewal of  charitable                                                            
gaming permits  and requiring the  Department of Revenue  to deny or                                                            
condition  the license or  permit unless  the protest or  conditions                                                            
are  arbitrary,  capricious,  or  unreasonable,  or  the  conditions                                                            
conflict with state law."                                                                                                       
     MOVED SB 175 OUT OF COMMITTEE                                                                                              
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
HB 186 -  No previous action recorded                                                                                           
                                                                                                                                
SB 42 - No previous action recorded                                                                                             
                                                                                                                                
SB 175 - No previous action recorded                                                                                            
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
Representative Kevin Meyer                                                                                                      
Alaska State Capitol, Room 110                                                                                                  
Juneau, AK  99801-1182                                                                                                          
POSITION STATEMENT: Sponsor of HB 186                                                                                         
                                                                                                                                
Dan Youmans                                                                                                                     
Juneau LIO offnet                                                                                                               
No address provided                                                                                                             
POSITION STATEMENT:  Testified on  HB 186                                                                                     
                                                                                                                                
Douglas Robinson                                                                                                                
Municipality of Anchorage                                                                                                       
P.O. Box 196650                                                                                                                 
Anchorage, AK 99519                                                                                                             
POSITION STATEMENT:  Testified on  HB 186                                                                                     
                                                                                                                                
Theresa Hillhouse                                                                                                               
Attorney for the Municipality of Anchorage                                                                                      
P.O. Box 196650                                                                                                                 
Anchorage, AK 99519                                                                                                             
POSITION STATEMENT:  Testified on  HB 186                                                                                     
                                                                                                                                
Mark Mew                                                                                                                        
Deputy Chief                                                                                                                    
Anchorage Police Department                                                                                                     
4501 South Bragaw Street                                                                                                        
Anchorage, AK 99507-1599                                                                                                        
POSITION STATEMENT:  Testified on  HB 186                                                                                     
                                                                                                                                
Steve O'Connor                                                                                                                  
231 S. Binkley                                                                                                                  
Soldotna, AK 99669                                                                                                              
POSITION STATEMENT:  Testified on  HB 186                                                                                     
                                                                                                                                
Tim Rogers                                                                                                                      
Municipality of Anchorage                                                                                                       
P.O. Box 96650                                                                                                                  
Anchorage, AK 99519                                                                                                             
POSITION STATEMENT:  Testified on  HB 186                                                                                     
                                                                                                                                
Mark Johnson                                                                                                                    
Chief                                                                                                                           
Department of Health & Social Services                                                                                          
Community Health & Emergency Medical Services                                                                                   
P.O. Box 110616                                                                                                                 
Juneau, AK 99811-0616                                                                                                           
POSITION STATEMENT:  Testified on  HB 186                                                                                     
                                                                                                                                
Richard Benavides                                                                                                               
Staff for Senator Bettye Davis                                                                                                  
Alaska State Capitol, Room 504                                                                                                  
Juneau, AK  99801-1182                                                                                                          
POSITION STATEMENT: Introduced SB 42                                                                                          
                                                                                                                                
Eddie Jeans                                                                                                                     
Manager                                                                                                                         
Department of Education and Early Development                                                                                   
School Finance and Facilities Section                                                                                           
801 W. 10th Street STE 200                                                                                                      
Juneau, AK 99801-1984                                                                                                           
POSITION STATEMENT: Testified on SB 42                                                                                        
                                                                                                                                
Vernon Marshall                                                                                                                 
NEA-AK                                                                                                                          
114 2nd Street                                                                                                                  
Juneau, AK 99801                                                                                                                
POSITION STATEMENT: Testified on SB 42                                                                                        
                                                                                                                                
Senator Kim Elton                                                                                                               
Alaska State Capitol, Room 115                                                                                                  
Juneau, AK  99801-1182                                                                                                          
POSITION STATEMENT: Sponsor of SB 175                                                                                         
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
TAPE 01-14, SIDE A                                                                                                            
Number 001                                                                                                                      
                                                                                                                                
CHAIRMAN  JOHN TORGERSON  called  the  Senate Community  &  Regional                                                          
Affairs  Committee  meeting  to  order  at 1:45  p.m.  Present  were                                                            
Senators Austerman, Phillips, Lincoln and Chairman Torgerson.                                                                   
                                                                                                                                
            HB 186-911 SURCHARGE ON WIRELESS TELEPHONES                                                                     
                                                                                                                              
Representative  Kevin Meyer,  bill  sponsor, testified  that HB  186                                                            
allows  municipalities  to impose  the  same surcharge  on  wireless                                                            
phones as is currently  charged on hard line phones in order to help                                                            
pay for  enhanced  911 services.  Wireless or  cell phones  comprise                                                            
about  25 percent  of the 911  calls made  today and  the number  is                                                            
rising.  The enhanced  911  system provides  a visual  location  and                                                            
telephone  number of  the individual  making the  911 call. This  is                                                            
particularly  helpful  for those  individuals  who are  not able  to                                                            
articulate that information.                                                                                                    
                                                                                                                                
It provides  the technology,  equipment and  staffing necessary  for                                                            
fast  response  time  and  automatic  routing   to  the appropriate                                                             
emergency response unit.                                                                                                        
                                                                                                                                
With wire line  phones, Anchorage  is currently able to impose  an E                                                            
911 surcharge  of up  to 50 cents  while all  other communities  may                                                            
impose up to a 75 cent  monthly charge. This was made possible by an                                                            
enabling state statute  passed in 1994 that covered wire line phones                                                            
only.                                                                                                                           
                                                                                                                                
The enhanced  911 surcharge is not  unique to Alaska; in  fact, many                                                            
Lower 48 cities  have surcharges far  in excess of those  in Alaska.                                                            
It is  needed to  help cover  the cost  for cities  to purchase  and                                                            
maintain  equipment and  technology  to provide  adequate  emergency                                                            
services.                                                                                                                       
                                                                                                                                
This is a priority  for Anchorage, Fairbanks and Kenai  all of which                                                            
are anxious  to implement enhanced  911 service for wireless  phones                                                            
this summer  or fall. The wireless  carriers AT&T, ACS and  GCI have                                                            
all been very supportive.                                                                                                       
                                                                                                                                
He called attention to  the letters of support in committee packets.                                                            
                                                                                                                                
Senator Lincoln joined the meeting.                                                                                             
                                                                                                                                
SENATOR AUSTERMAN  asked how many wireless phones  would be assessed                                                            
the enhanced fee so he  could get an idea of what is currently going                                                            
on and what the  increase would be. He also wanted  to know what the                                                            
total increase  has been for 911 calls if 25 percent  of those calls                                                            
are now coming  from cell phones. Are there fewer  calls coming from                                                            
wire line phones  with the increase  in cell phone use? Originally,                                                             
the enabling state  statue passed in 1994 was for  wire line phones.                                                            
He  wondered  whether the  50  and  75 cent  surcharges  were  still                                                            
realistic due to the volume of phones and subscribers.                                                                          
                                                                                                                                
REPRESENTATIVE  MEYERS said that was a good question  and Mr. Rogers                                                            
with the  Municipality  of Anchorage  would be able  to answer  that                                                            
question. He surmised the  original statute was designed to purchase                                                            
equipment and technology  and the support staff to maintain it. With                                                            
the  wireless, new  equipment  would  need to  be purchased  so  the                                                            
surcharge would go toward those purchases.                                                                                      
                                                                                                                                
DAN  YOUMANS  testified  via  teleconference  as  an  AT&T  wireless                                                            
representative in support  of HB 186. The combination of cell phones                                                            
and 911  network has created  a new and  vital communication  system                                                            
for AT&T customers.                                                                                                             
                                                                                                                                
They support a  reasonable and equitable surcharge  on the customers                                                            
to help  defer the  cost of 911  services. With  this in mind,  they                                                            
support  a 50 cent  maximum surcharge  for all  municipalities.  The                                                            
technology and services  for cell phones is very different from wire                                                            
line phones  so they  feel the  charge should  be the  same for  all                                                            
areas.  Since cell phones  are mobile  and 911  calls could  be made                                                            
from  any location,  all  wireless  customers  should  pay the  same                                                            
amount.                                                                                                                         
                                                                                                                                
Cost  recovery  would  only  apply  when  municipalities  are  in  a                                                            
position to  offer new, enhanced 911  services for wireless  phones.                                                            
In the  future,  911 operators  will be  able to  receive the  phone                                                            
number of the wireless  caller the location of the cell site that is                                                            
connecting the call and  eventually, the approximate location of the                                                            
caller. Since the new technologies  benefit the general public, they                                                            
feel  that  wireless   carriers  should  have  some  mechanism   for                                                            
recovering  their costs. HB 186 says  they would be able  to recover                                                            
those costs  as specified  by the Federal  Communication  Commission                                                            
(FCC). The legislation cites the FCC order on this issue.                                                                       
                                                                                                                                
CHAIRMAN TORGERSON  asked, "Your testimony  is that the 50  cents is                                                            
just to pay for the hardware?"                                                                                                  
                                                                                                                                
MR. YOUMANS said the 50  cents would pay for needed upgrades and the                                                            
general cost  of serving  people who are calling  911 on their  cell                                                            
phones.  When new  technology  and upgrades  are needed  at the  911                                                            
operator level  and by the carriers,  they have the need  to recover                                                            
those upgrade costs.                                                                                                            
                                                                                                                                
SENATOR AUSTERMAN said  the bill allows municipalities to assess the                                                            
surcharge  so they  may  have the  enhanced  911 service.  He  asked                                                            
whether  he heard  correctly  that they  expected  to recover  their                                                            
costs for service and what service was that?                                                                                    
                                                                                                                                
MR.  YOUMANS  said there  are  two phases  of  the new  services  as                                                            
defined  by the  FCC. The  first phase  allows the  911 operator  to                                                            
receive  the phone  number of  the wireless  phone  caller. It  also                                                            
allows the  wireless operators to  receive the location of  the cell                                                            
site that  is connecting  the call. The second  phase will  give the                                                            
approximate  location of the  caller, which  is a vital safety  tool                                                            
for the operator.                                                                                                               
                                                                                                                                
SENATOR  AUSTERMAN asked  Mr. Youmans  to call his  office at  (907)                                                            
465-2487 so he could have a one to one conversation.                                                                            
                                                                                                                                
DOUGLAS ROBINSON  with the Municipality  of Anchorage testified  via                                                            
teleconference that he  would be providing statistics, some of which                                                            
applies to the State of Alaska.                                                                                                 
                                                                                                                                
There  are currently  30  states with  legislation  authorizing  the                                                            
collection  of wireless  911 surcharges.  The charges  vary from  35                                                            
cents  to  $2.00  and that  revenue  is  used  to  assist  financing                                                            
equipment, software  upgrades for the E 911 public  safety answering                                                            
points.                                                                                                                         
                                                                                                                                
Specific uses for the revenues could be:                                                                                        
                                                                                                                                
   · For modifying the existing P-SAP software so the wireless X,Y                                                              
     coordinate location data provided by the wireless carriers can                                                             
     be displayed and tracked by 911 call takers                                                                                
   · Purchase required data interfaces for P-SAP computer aided                                                                 
     dispatch system of larger P-SAPs such as in Anchorage and                                                                  
     Fairbanks                                                                                                                  
   · Network upgrades between the 911 system and the local exchange                                                             
     carrier                                                                                                                    
                                                                                                                                
The surcharge  is  strongly endorsed  by the  Association of  Public                                                            
Safety Communication  Officers  (APSCO), National  Emergency  Number                                                            
Association (NENA). APSCO  has recommended Anchorage as a model city                                                            
for phase 2 wireless 911 implementation.                                                                                        
                                                                                                                                
THERESA  HILLHOUSE,  Anchorage  Municipal   Attorney's  Office,  was                                                            
available for questions.                                                                                                        
                                                                                                                                
MARK  MEW,  Deputy   Chief  of  the  Anchorage  Police  Department,                                                             
testified  that about  250,000  calls per  year come  through  their                                                            
dispatch center and a large  portion of those come through the E 911                                                            
system.                                                                                                                         
                                                                                                                                
The system  was  sized for  wire line  service. Cell  phone use  has                                                            
proliferated  and a study conducted  four years ago determined  that                                                            
25 percent of  the calls were coming in via cell phone.  He believes                                                            
they are  now approaching  50 percent.  Due to  the large number  of                                                            
cell phone users, a single event will trigger multiple calls.                                                                   
                                                                                                                                
Wire line  users are  paying for  the 911 service  while cell  phone                                                            
users are not.                                                                                                                  
                                                                                                                                
SENATOR LINCOLN  asked how many lines  are designated for  the E-911                                                            
lines and  how many would  be added if the  surcharge is  instituted                                                            
and is the 50 cent surcharge sufficient.                                                                                        
                                                                                                                                
MR. MEW thought the number  is eight trunks. About 50 calls will jam                                                            
the dispatch center and  it's not unusual to receive that many calls                                                            
at  once.  A consultant   would need  to  determine  the  number  of                                                            
additional lines to put  in. The 50 cent charge does not cover costs                                                            
now; it merely helps to  offset the charges. He anticipates the cell                                                            
phone  surcharge   will  help  but   not  cover  costs  completely.                                                             
Currently,  the surcharge covers  about half  the costs and  he does                                                            
not know the percentage the cell surcharge would cover.                                                                         
                                                                                                                                
STEVE O'CONNOR  testified via teleconference as the  Kenai Peninsula                                                            
911  Advisory Committee  Chairman.  They have  had  an enhanced  911                                                            
system  since the  early  1990s. Since  that  time cell  phone  call                                                            
volume has  increased from 5 percent  to about 50 percent.  They are                                                            
dealing with the same difficulties  as Anchorage with multiple calls                                                            
for  a single  incident  causing  a  911  overload.  They  currently                                                            
collect 75 cents per line  per month for wire line and recommend the                                                            
same fees for  wireless phones. Fees  offset the costs of  operation                                                            
but don't cover them. The  borough is budgeting $350,000 to $400,000                                                            
for Phase 1 and they view  the 75 cent surcharge as important. Local                                                            
government  is in the best  position to decide  what the fee  should                                                            
be.                                                                                                                             
                                                                                                                                
TIM ROGERS, Legislative  Program Coordinator for the Municipality of                                                            
Anchorage,  thought  he could  answer  some of  Senator Austerman's                                                             
questions. Recently, the  Anchorage voters approved a bond issue for                                                            
$1.5 million  to pay for necessary  cellular upgrades for  the E-911                                                            
service.  That will cover  consultants, hardware  and software  that                                                            
will be  needed but  not operational  costs.  The current  surcharge                                                            
pays for  roughly 40 percent  of total operating  costs and  nothing                                                            
toward capital costs.                                                                                                           
                                                                                                                                
There are estimated to be 200,000 cell phones in Alaska.                                                                        
                                                                                                                                
SENATOR AUSTERMAN asked how the 200,000 relates to volume.                                                                      
                                                                                                                                
MR.  ROGERS  did  not  know  but  currently  the  annual   surcharge                                                            
collected in  Anchorage is around  $1 million so an answer  could be                                                            
figured mathematically.                                                                                                         
                                                                                                                                
MARK  JOHNSON,   Chief  of  Emergency   Medical  Services   for  the                                                            
Department  of Health  & Social Services,  said  there might  be too                                                            
many calls  coming in  from urban  areas but calls  from outside  an                                                            
urban  area from  a  caller  who does  not  know their  location  is                                                            
difficult, time consuming and potentially life threatening.                                                                     
                                                                                                                                
The  rationale   for  the  difference   in  fees  is  that   smaller                                                            
communities  have fewer  phones  to collect  fees from  so a  higher                                                            
surcharge is necessary.  If the fee is only 50 cents then some small                                                            
communities may not be able to afford the upgrades.                                                                             
                                                                                                                                
SENATOR LINCOLN  asked for an explanation of 911 available  referred                                                            
to in his letter.                                                                                                               
                                                                                                                                
MR. JOHNSON said  there are many Alaskan communities  with basic 911                                                            
service but there is no  information available on who is calling and                                                            
from where.  The enhanced feature  provides the telephone  number of                                                            
the caller and the location.                                                                                                    
                                                                                                                                
SENATOR  LINCOLN asked  if the list  provided was  for wire  line or                                                            
wireless.                                                                                                                       
                                                                                                                                
MR. JOHNSON said the list provided was for wire line.                                                                           
                                                                                                                                
SENATOR LINCOLN said fourteen  communities that are listed as having                                                            
911 capabilities  and she sincerely  doubts that they have  that the                                                            
ability  to dial  911.  She named  Red Devil  and  Crooked Creek  as                                                            
examples.                                                                                                                       
                                                                                                                                
MR. JOHNSON  said she might be correct.  The data was lifted  from a                                                            
recent McDowell Group study.                                                                                                    
                                                                                                                                
SENATOR AUSTERMAN  asked for assurance  that the option to  charge a                                                            
75 cent surcharge was currently in the bill.                                                                                    
                                                                                                                                
CHAIRMAN TORGERSON said it mirrored the wire line surcharges.                                                                   
                                                                                                                                
SENATOR PHILLIPS  moved HB 186 and  zero fiscal note from  committee                                                            
with individual recommendations. There was no objection.                                                                        
                                                                                                                                
                 SB 42-FOUNDATION FORMULA INCREASE                                                                          
                                                                                                                              
RICHARD BENAVIDES,  staff  for Senator Davis,  introduced SB  42 for                                                            
Senator Davis  because she was attending  a HESS committee  meeting.                                                            
He described it  as an issue that has been a priority  this year due                                                            
to the recognition  that current levels of funding  have not kept up                                                            
with  teaching   costs.  SB  42  would   help  alleviate   the  most                                                            
unpredictable  reason  for the  erosion  by inflation  proofing  the                                                            
foundation  formula. Inflation  has  risen about  30 percent in  the                                                            
last 10 years and the legislature  has increased the base foundation                                                            
formula by  only five percent.  During the  same time, the  required                                                            
local contribution has risen about 37 percent.                                                                                  
                                                                                                                                
There  are many  examples of  rising school  costs such  as fuel  or                                                            
electricity increases  and this legislation allows  school districts                                                            
to continue  to operate without eliminating  positions due  to those                                                            
types of increases.                                                                                                             
                                                                                                                                
This action  would not  bind future legislatures.  Each legislature                                                             
would have the  power to determine the appropriate  level of funding                                                            
for each fiscal year.                                                                                                           
                                                                                                                                
CHAIRMAN  TORGERSON  said  he  had  prepared  a  CS  to  change  the                                                            
effective date from 2001 to 2002.                                                                                               
                                                                                                                                
SENATOR PHILLIPS  moved the CS \J  version as the working  document.                                                            
                                                                                                                                
SENATOR  LINCOLN   objected  for  the  purpose  of   asking  for  an                                                            
explanation  of the difference  is between  "preceding fiscal  year"                                                            
from page  1, line 7 of  the original bill  and "preceding  calendar                                                            
year" on page  1, line 7 of the CS \J version. She  wondered whether                                                            
the change  is  supposed to  coincide with  the  effective date  and                                                            
whether the new language is acceptable with Senator Davis.                                                                      
                                                                                                                                
MR. BENAVIDES  said the language was acceptable with  Senator Davis.                                                            
                                                                                                                                
SENATOR LINCOLN withdrew her objection.                                                                                         
                                                                                                                                
SENATOR  PHILLIPS commented  that he thought  some school  districts                                                            
are on a calendar year versus a fiscal year.                                                                                    
                                                                                                                                
EDDY JEANS, school  finance manager for the Department  of Education                                                            
and Early  Development,  said the  purpose of  the language  "second                                                            
preceding calendar  year" is because of the timing  in which the TPI                                                            
index comes  out. This allows the  appropriate increase to  be built                                                            
into the budget for the upcoming year.                                                                                          
                                                                                                                                
Both the department and  the administration support the bill. School                                                            
districts have  lost 25 percent of the purchasing  power they had 10                                                            
years  ago. Chairman  Torgerson represents  a  school district  that                                                            
struggles to meet their  budget. The municipality contributes to the                                                            
CAP on  an annual basis  and yet the school  district has  increased                                                            
costs of personnel  services through  salaries and benefits  of over                                                            
$1 million per year. This  must be absorbed from other programs. The                                                            
department  believes  it  is  time  to  provide  some  inflationary                                                             
adjustment in the foundation formula.                                                                                           
                                                                                                                                
VERNON   MARSHALL,   executive  director   of   National   Education                                                            
Association (NEA) Alaska,  said inflation is a cruel and unavoidable                                                            
tax. There  is no avoiding that inflationary  payment and  kids have                                                            
felt that tax  in terms of missed educational opportunities.  Unless                                                            
inflation is offset it  will be charged against current capacity. At                                                            
a time when both teaching  and learning standards are being improved                                                            
it is time to stop "the  hemorrhage of academic depreciation and the                                                            
effects of inflation."                                                                                                          
                                                                                                                                
Retirement  incentive  programs  (RIP)  have  been  used  to  offset                                                            
inflation.  Data  from the  American  Federation of  Teachers  (AFT)                                                            
clearly shows ground has  been lost in terms of employee salary as a                                                            
percentage of  education expenditure. At the same  time, in relation                                                            
to  other states  ground  has  also been  lost  in terms  of  school                                                            
operational  costs.  For  the  year  1999-2000  they  estimate  that                                                            
teachers salaries are approximately  $1,000 to $1,100 less than they                                                            
were in 1998-1999.  This could be caused by retiring  of experienced                                                            
teachers at the  high end of the scale and hiring  teachers lower on                                                            
the  salary  scale  but the  $1,100  times  the  approximately  8000                                                            
teachers, equals  $8,800,000 that  has come out of experience  to be                                                            
put back into the classroom  and programs. Part of the cause of that                                                            
is because inflation is not offset.                                                                                             
                                                                                                                                
He closed in saying  that they support the efforts  of the committee                                                            
and will work  together but asked  for stabilization of the  funding                                                            
for children  in the  future.  It is a  wise move  for the State  of                                                            
Alaska  because  schools  are  thrown  into  a catch  up  race  when                                                            
inflation is not offset and the children will never win.                                                                        
                                                                                                                                
SENATOR  LINCOLN asked  for explanation  of the  ranking on a  sheet                                                            
handed to committee members.                                                                                                    
                                                                                                                                
MR. MARSHAL said  the figures on the far right indicate  the percent                                                            
change during  the decade. It's a comparison of the  state's percent                                                            
of the U.S. average over the ten year period.                                                                                   
                                                                                                                                
SENATOR LINCOLN said Alaska  was ranked #1 in 1988-1989 and number 6                                                            
in 1998-1999.                                                                                                                   
                                                                                                                                
 MR. MARSHAL responded Alaskan teacher's salaries ranked #1 ten                                                                 
years ago. The ranking does not reflect 1999-2000 and 2000-2001                                                                 
and they believe  the RIP has had  a significant impact on  schools.                                                            
They believe that the ranking for 1998-1999 is actually 8 rather                                                                
than the 6th place shown. Using the percentage as a part of the                                                                 
national average our ranking today is 51st.                                                                                     
                                                                                                                                
SENATOR LINCOLN moved CSSB 42 from committee with individual                                                                    
recommendations and accompanying fiscal note. There were no                                                                     
objections.                                                                                                                     
                                                                                                                                
            SB 175-MUNICIPAL PROTESTS OF GAMING PERMITS                                                                     
                                                                                                                              
SENATOR ELTON,  bill sponsor and Senator  from district B,  said the                                                            
bill addressed  a problem that has  arisen in his community.  SB 175                                                            
gives  municipalities  the  opportunity   to  protest  or  recommend                                                            
conditions on the issuance  or renewal of a gaming permit similar to                                                            
the  way  municipalities  now  protest  or  ask  for  conditions  on                                                            
alcoholic beverage control (ABC) licenses.                                                                                      
                                                                                                                                
Under the bill provisions,  a municipality or applicant may, after a                                                            
hearing,  make a  defense and  then protest  the permit  or ask  for                                                            
conditions.  One  provision  would,  under  certain  circumstances,                                                             
preclude  municipalities  from  doing  that.  For  example,  if  the                                                            
municipality  holds gaming  permits, they could  hold a hearing  and                                                            
protest  a  permit  for non-payment  of  taxes.  The  Department  of                                                            
Revenue would  then review  the protest by  the municipality  and if                                                            
they determine  that it is a reasonable protest they  could deny the                                                            
issuance of a  permit. They too would have to hold  a hearing and go                                                            
through a process before  they could deny the permit thus giving the                                                            
applicant another chance to present their case.                                                                                 
                                                                                                                                
Without  the bill,  municipalities  may  only  have a  local  option                                                            
election that  would allow them to ban all gaming  or just pull-tabs                                                            
or,  by ordinance,  they  may prohibit  a  vendor or  operator  from                                                            
managing  a permit. The permit  would then  go to another vendor  or                                                            
operator.                                                                                                                       
                                                                                                                                
The situation  is Juneau was that three operators  did not pay taxes                                                            
and over a three  year period, their tax liability  grew to $627,000                                                            
plus $300,000 in attorney  and other costs. There was no way for the                                                            
municipality  to protest  the issuance  of the  permits even  though                                                            
they  are issued  on a yearly  basis.  Since the  operators have  no                                                            
assets to attach,  there is no way  of recovering the liability.  In                                                            
doing  nothing to  the  operators  who are  flaunting  the law,  the                                                            
municipality  is  giving  them  a  competitive  advantage  over  the                                                            
operators who are paying the taxes.                                                                                             
                                                                                                                                
This sets in place a system  to give municipalities control over the                                                            
operations  of the permits.  Other situations  in which a  community                                                            
might want  to have a hearing before  protesting a license  are fire                                                            
safety or public nuisance issues.                                                                                               
                                                                                                                                
Side B                                                                                                                          
                                                                                                                                
This solution is reserved for organized municipalities.                                                                         
                                                                                                                                
CHAIRMAN TORGERSON  commented that public nuisance  is in the eye of                                                            
the beholder and he does  not like the idea of a municipality having                                                            
to define  nuisance and then  place conditions  on the activity.  He                                                            
looks upon  the tax as a good policy  but the nuisance bothers  him.                                                            
He recommended tightening the definition a bit.                                                                                 
                                                                                                                                
SENATOR ELTON  responded arbitrary, capricious and  unreasonable are                                                            
definitions  lifted from  the ABC  statutes and  there is  precedent                                                            
behind those issues so new definitions should not be necessary.                                                                 
                                                                                                                                
CHAIRMAN  TORGERSON  asked whether  anyone  from the  Department  of                                                            
Revenue was present.                                                                                                            
                                                                                                                                
SENATOR  ELTON  said  the Deputy  Commissioner  showed  up  for  the                                                            
previous hearing that was  canceled and his arrival was anticipated.                                                            
                                                                                                                                
CHAIRMAN  TORGERSON said he  could not get  there in time.  He asked                                                            
for the next committee of referral.                                                                                             
                                                                                                                                
SENATORS LINCOLN AND PHILLIPS said it was Labor and Commerce.                                                                   
                                                                                                                                
CHAIRMAN TORGERSON  said he had some  problems with the bill  but he                                                            
would entertain  a motion to move the bill. He wants  to continue to                                                            
work with  Senator Elton  to narrow  the focus  to taxes. He  wasn't                                                            
sure about fire  hazard. He thought perhaps they could  come up with                                                            
an amendment to offer.                                                                                                          
                                                                                                                                
SENATOR  ELTON asked to  be advised  of which  staff member  to work                                                            
with and he would get any information that was needed.                                                                          
                                                                                                                                
CHAIRMAN  TORGERSON indicated  his  Community and  Regional  Affairs                                                            
staff person, Mary Jackson.                                                                                                     
                                                                                                                                
SENATOR  LINCOLN  moved  SB  175  from  committee   with  individual                                                            
recommendations   and  accompanying  fiscal  note.   There  were  no                                                            
objections.                                                                                                                     
                                                                                                                                
CHAIRMAN TORGERSON adjourned the meeting at 2:40 p.m.                                                                           
                                                                                                                                
                                                                                                                                

Document Name Date/Time Subjects