Legislature(1995 - 1996)
04/06/1995 09:15 AM Senate FIN
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* first hearing in first committee of referral
+ teleconferenced
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+ teleconferenced
= bill was previously heard/scheduled
MINUTES
SENATE FINANCE COMMITTEE
April 6, 1995
9:15 a.m.
TAPES
SFC-95, #26, Side 1 (010-575)
SFC-95, #26, Side 2 (600-end)
SFC-95, #28, Side 1 (000-100)
CALL TO ORDER
Senator Rick Halford, Co-chair, convened the meeting at
approximately 9:15 a.m.
PRESENT
Co-chair Halford, Senators Phillips, Donley, Sharp, Rieger
and Zharoff were present. Co-chair Frank arrived shortly
after the meeting began.
Also Attending: Senator Taylor; Representative Therriault;
Patrick Sharrock, Director, Alcohol Beverage and Control
Board; Brad Pierce, Office of Management and Budget; Kevin
Richie, Alaska Municipal League; Mike Greany, Director,
Legislative Finance; Margot Knuth, Civil Division, Dept. of
Law; Josh Fink, Legislative Aid to Senator Kelly; Joe
Ambose, Legislative Aide to Senator Taylor; and on
Teleconference: Teresa Williams, Assistant Attorney
General, Commercial Division, Department of Law.
SUMMARY INFORMATION
HB 9 DAMAGE TO PROPERTY BY MINORS
Representative Therriault gave testimony to SCSCSHB 9
(JUD).
Senator Sharp agreed to work on the language with Rep.
Therriault. The bill will be brought before the
committee
at the next meeting.
SB 96 UNFUNDED MANDATES ON MUNICIPALITIES
Discussion was had by Josh Fink, Legislative Aid to
Senator
Kelly. Amendment #1 and #2 were introduced. Mike
Greany
spoke to the zero fiscal note. He will come back to
the
committee at the next meeting reporting the costs
involved
for the Legislative Audit. No action was taken.
SB 87 ALCOHOLIC BEVERAGES: LOCAL OPTION & MISC.
Testimony by Senator Taylor and Joe Ambrose was given.
Section 1-19 were covered in detail by Pat Sharrock.
Teleconference with Teresa Williams, Anchorage. The
Bill
is to be discussed at the next meeting.
HOUSE BILL NO. 9
"An Act relating to recovery of damages from a minor's
parent or legal guardian when property is destroyed by
the minor."
Co-chair Halford invited Representative Therriault to join
the committee. Representative Therriault read the following
statement:
"This victim's rights legislation, which updates a statute
that has been on the books since 1957, is intended to
encourage responsibility among parents and juveniles and to
provide recourse for victims who have lost property. It is
based on the principal that the person having legal custody
of the juvenile who caused the damage is monetarily
responsible for the loss. This legislation would increase
the amount the victim may recover from $2,000 to $10,000.
The impetus for the interest in this bill is partly an
incident that occurred last summer in which vandals caused
approximately $50,000 in damage to two schools in Fairbanks.
Although the vandals were caught, the school district was
able to recoup only a small fraction of its loss. This
legislation would ensure that victims of property damage
could recover a greater amount of their total loss.
The bill was amended by the Judiciary Committee to add the
words "as a result of a knowing or intentional act," which
limits liability to damages that were caused purposely, but
includes unintentional damages that might be caused as a
result of the intentional action.
The Committee also added a new section to incorporate the
intent of House Bill 36. It updates the permanent fund
dividend law that permits the taking of part or all of a
dividend to satisfy a judgment. It increases the amount
that can be recovered from a minor's permanent fund dividend
for injury or damage caused by the minor from the current
$2,000 to $10,000 to maintain the parallel recovery
provision with the change being proposed in House Bill 9.
The Finance Committee further revised the bill to clarify
that the legal custodian is relieved of liability only if a
run away report is filed before the damages are committed,
and to limit liability to the responsible guardian."
Representative Therriault cited the problems of a foster
home situation. Existing statute limits, or precludes, any
damages from being assigned to a foster parent situation.
When a child is in foster care, the facility is not liable
for the damages incurred by the child.
There was extensive discussion regarding the various
scenarios of responsibility for a juvenile. Discussion
covered those parents who may have joint custody, one parent
custody, visitation situations, and living with a non-family
member.
Discussion was had with Margot Knuth, Department of Law
regarding the question of custody. Rep. Therriault brought
attention to the section making reference the legal
guardian. He stated that the juvenile is always responsible.
Under the existing language, the parent who has taken the
child in, would not be held liable because they are not the
legal custodian. When the child has run away, and the parent
has filed a run away report, they are relieved of
responsibility. The person who has taken them in, is not
held responsible. The responsibility in this case would be
the juvenile himself. The purpose of the bill is to strike a
balance over the control of the juvenile's actions, giving
the responsibility back to the person who has raised the
child.
Senator Rieger suggested achieving that balance by leaving
the language as it is in Section 1, adding the clause that
states, "the person who pays the $10.0 has the right to
recover from someone else maintaining the temporary custody.
The court would be the one to decide who is responsible.
This parallels the strict liability laws. Co-chair Halford
stated that it could create going for the "deep pocket". He
stated his concern regarding a difficult minor, who may be
in the custody of one parent for 3 years and goes back to
the custody of the other parent and is beyond discipline.
The parent that tried the second time, may not want to take
the child back and assume the possible $10.0 liability. He
asked Rep. Therriault to come back to the committee with
language defining the custody issue which protects the
innocent or non-responsible parent who may have a liability
that is not intended. Senator Sharp agreed to help Rep.
Therriault on the language. No action was taken and the
bill will be held.
SENATE BILL NO. 96
"An Act relating to municipal activities or services
mandated by state statute."
Co-chair Halford invited Josh Fink to join the committee.
Mr. Fink testified, "Just as the U.S. Congress is attempting
to address the considerable financial hardship unfunded
federal mandates placed on state governments, many state
legislatures are beginning to address the same financial
hardships unfunded state mandates place on local
governments. In fact, at present sixteen states currently
have laws which either limit or prohibit state government
from imposing unfunded mandates on municipalities.
Additionally, more than 20 other state legislatures are
actively considering such legislation. SB96 is introduced
this year to remedy the problem of unfunded state mandates
in Alaska. This legislation is a high priority for the
Alaska Municipal League, the Municipality of Anchorage, the
Fairbanks North Star Borough, and the Alaska Conference of
Mayors. Unfunded mandates cause cash-strapped cities to
decrease basic municipal services such as public safety,
road maintenance, and the local contribution to education to
schools, in order to pay for the unfunded mandates which are
a much lower priority. Moreover, as the unfunded mandates
increase for local governments, aid to municipalities has
been cut more than 55%. A good example is the Senior
Citizen's Property Tax Exemption which has increased 300% in
cost to local governments in the last several years. As
municipalities and local governments struggle to provide
services mandated, but not funded, by the legislature,
increased property and other local taxes have been used as
the funding vehicle. The principle imperative of this
legislation is that the State government should not require
municipalities by statute, appropriation, regulation, or
administrative action to implement any program, service, or
activity which significantly impacts municipality budgets
unless the legislature provides new funding to cover the
costs of these mandates. SB 96 sets up a mechanism
preventing state government from imposing new unfunded
mandates. However, the legislature is ultimately
constitutionally capable of imposing such mandates if it
desires.
Mr. Fink gave a bill analysis, which is attached to the
minutes. Senator Zharoff inquired as to the effective date
of January 1, 1996. By signing the bill now, he asked if
preexisting law is complicated? Mr. Fink responded that
there would not be an effect on any mandates that this
legislature, this year, would have imposed whether
legislation or budgetary. It would become effective the
second session of this legislature.
Brad Pierce was invited to join the committee. He stated
that the governor has no official stand on this bill. He
said that the governor has stated on many different
occasions that there is no intent to pass off costs to local
governments. He said he was asked to come before the
committee and speak to general policy considerations. He
stated there is a concern that this bill is premature and
unnecessary. Other states that have enacted these laws have
a much longer history of state and local relations. The
handout he provided, entitled, "1991 State and Local Taxes:
U.S. Average versus Alaska as Shares of Income of a Family
of Four", shows that state and local taxes combined are
minor compared to other states. At every family income
level the higher tax burden is what municipalities in other
states are complaining about. We do not have the same
situation in Alaska. He referred to a study done in 1992
indicating that the average household of 2.8 persons in
Alaska received $19,600 in state and local services, plus
$2600 in PFD's, while paying $2,000 in state and local
taxes. He suggested that a realignment of responsibilities
is going to have to occur. The administration fully intends
to involve municipalities in the realignment. The main
concern is that in other states, the intent of this type of
legislation is to freeze relations where they are now. He
expressed that municipalities have it good in the state of
Alaska. That it is the state that pays for a good portion
of the schools, maintaining jails, prosecuting criminals,
and a vast array of public services that are the province of
local governments elsewhere. Such services he listed
included social services, environmental protection, health
care, etc. This administration will be looking at a long
range financial plan, and performance measures of the
effectiveness of state programs. He did not endorse the
bill.
Kevin Richie, Alaska Municipal League, was invited to join
the committee. He testified that this bill is very much the
same as the federal bill that is relieving the state from
unfunded mandates. This is a moral imperative. There are a
number of processes in the bill to allow a mutual
relationship and understanding. In essence, it is a
statement by the legislature saying what the federal
government has done for the states. He encouraged the
legislature to allow the municipalities to come to the table
when discussing mandates. Regarding the need to do this,
there are significant costs that can be passed on to the
municipalities. He cited an example where the DEC is
considering water standards which are considerably higher
than those recommended by the federal government. In a
municipality such as Anchorage, the potential costs for
meeting those additional mandates, which could be passed on
by regulation, could be approximately $200 million. The
Municipal League sees this as a very important statement.
Co-chair Halford brought to the attention of the committee,
an Amendment recommended by the sponsor that would repeal
the existing provisions that require municipal fiscal notes.
Mike Greany, Director, Legislative Finance Division, spoke
to the issue of preparing a fiscal note to this bill. He
feels there will need to be a fiscal note for the
Legislative Finance Division in order to fulfill its
requirements. He stated that his office is researching the
costs. Co-chair Halford requested that Mr. Greany come back
to the committee once he has determined the costs, at that
time the amendments will be considered.
End, Tape #26, Side 1
Begin, Tape #26, Side 2
SENATE BILL NO. 87
"An Act relating to community local options for control
of alcoholic beverages; relating to the control of
alcoholic beverages; relating to the definition of
'alcoholic beverage'; relating to purchase and sale of
alcoholic beverages; relating to alcohol server
education courses; and providing for an effective
date."
Senator Taylor testified that last year the Alcoholic
Beverage Control Board, prompted by concerns over a lack of
clarity in how local option elections are to be conducted,
asked for legislation to simplify the process. The board
also asked that the same vehicle be used to address long
needed technical and common sense amendments to Title 4.
The result was Senate Bill 372, which passed the Senate and
moved through the committee process in the House, only to
die in the Rules Committee in the hectic final days of the
18th State Legislature. Senate Bill 87 is substantially the
same as last year's legislation. The bill addresses the
shortcoming in the current statute dealing with local option
elections, for which no provision is made for moving from
one type of option to another. Under current law, a
community must first vote to remove all restrictions on the
sale and importation of alcoholic beverages and then conduct
another vote on a new option. This burdensome process can
cause confusion for municipalities and unincorporated
villages alike. SB 87 was amended in the Community and
Regional Affairs and Judiciary Committees to address
specific concerns raised by local option communities. Those
amendments have the support of the ABC Board and the
chairman of the sponsoring committee. He also noted that
except for a potential average annual income, or increase in
revenues of approximately $5,000 from the registration of
beverages, this legislation does not create any fiscal
impact on Board operations, or on the Division of Elections.
Pat Sharrock, Director, Alcohol Beverage and Control Board,
responded to Senator Rieger's inquiry of Section 1, page 1,
lines 13 and 14. He stated that it does not apply because
it is referring to a package store that would exist in the
community as the result of that community obtaining a
package store license under that local option provision. He
stated that there are only 3 or 4 community-owned package
stores in the state.
Senator Donley questioned Mr. Sharrock as to the Board's
ability to police. He spoke of licensees with frequent
violations and bad records, and asked if there was anything
in this legislation to encourage the Board to take action on
such cases, because he stated that they are not doing it
now.
Mr. Scharrock responded that there was nothing in the
legislation that would detract from the Board's ability to
pursue enforcement activity. He stated that he was in
disagreement because he is the one to enforce the law and
initiating enforcement actions against licensees. Mr.
Scharrock said that the budget is part of the problem. In
response to Senator Donley's inquiry to page 4, line 4, he
stated that 75,000 gallons is what is needed to establish a
brew pub.
Co-chair Halford requested a section by section explanation
of the legislation.
Mr. Scharrock began with Section 1. He stated that a
current licensee could not solicit or have someone in the
area receive orders on his or her behalf. He said that this
bill removes the name community license. Discussion was had
on this section.
Section 3, eliminates the name of the community liquor
license because that has been changed in the local option
provisions.
Section 4, is a suggestion by the Board itself. It is new,
and a result of restaurants holding a beer and wine license
instituting entertainment on their premises, where at times
the primary activity of patrons is not dining, but rather
entertainment. The law and the class of license did not
intend for that to happen. Even the regulations by the
Board, state that primary activity must be dining. The
Board tried to address it through regulation saying that
restaurants could have entertainment between the hours of 6
and 9 p.m. That was unsatisfactory to most licensees. What
this amendment does is allow one license for each 10, to
come under this exempt provision that says all they have to
have is food available. It addresses the issue of either
changing times or the desire of licensees to do different
things. The Board has referred to it at times as a semi-
tavern license. It does not create an additional class of
license. The Board did not want to do that. In essence,
for eating or restaurants offering beer and/or wine, they
cannot have more than 50% of gross revenues from the sale of
alcohol removed for the license.
Joe Ambrose, Legislative Aid from Senator Taylor's office.
He pointed out a provision that would make the licenses non-
transferable to another person. Eventually, there would be
a reduction in the number of licenses, because as people
went out of business, that license would cease to exist.
Additionally, it requests the Board to take action, and must
be approved by the local governing body who has authority
and responsibility over the area in which the premises
exists. Additional discussion regarding the particulars of
this section continued.
Teresa Williams, Dept. of Law, Anchorage interjected that
the semicolon on line 18 means or.
Section 6 relates to a number change related to another
section because of the rewrite of the local option.
Section 7 is a technical amendment which says that a package
store licensee, in response to a written order for alcoholic
beverages, can only ship whatever he orders to the
purchaser.
Teresa Williams responded to Section 8. She stated that it
is a technical amendment to conform with the new law. Beer
is sold in gallons. The language has been changed to
reflect that measure.
Section 9 relates to primary source. It solidifies or
enhances what is nationally known as a three tier system.
Alcohol is produced by a manufacturer, purchased by a
wholesaler, sold to a retailer, who sells to the public.
This requires a registration of brands by wholesalers in
this state, identifying the suppliers that they receive
alcoholic beverages from and they pay a fee to file that
information with the Alcoholic Control Board.
Section 10 is a continuation of Section 9. It states that
holders of beverage dispensary or bar licenses, package
store licenses or club licenses, and restaurant licenses,
must purchase their alcoholic beverages for resale from a
wholesale licensee within the state.
Section 11 has been amended to read that the licensee may
continue to do business if he has not renewed his license,
but the fine has increased to $500 and the new deadline is
January 1.
Section 12 adds a citation difference and removed a sub-
section 7 and 8 which are obsolete since the rewrite of the
local option provision.
Section 13 is an amendment that says the Board can impose
conditions on licenses. Page 9 line 3. Senator Donley asked
if the Board ever denied renewal to a licensee who was
convicted of having illegal gambling operations on their
premises? Mr. Sharrock responded that the Board has
suspended licenses for that offense. Senator Donley would
like to cross-reference the activity division of gaming and
harness illegal operations. His interests were focused on
ABC board revoking licenses. Ms. Williams interjected that
her office deals with approving the filing of non-renewals
and accusations. Her office has filed an accusation in all
cases in which the Division of Gaming has instituted
proceedings against the gaming license. The ABC Board is
the one who often first discovers the problem. In the past
two years, there have been 4 or 5 licenses which have had
action taken against their license, as a result of illegal
gaming. In addition, a non-renewal of license for the
Lonely Lady in Fairbanks, for such activities including the
owners participation in illegal gaming. That license was
revoked.
Senator Donley requested a list covering the past 5 years
showing the licensees recommended to the Board for action
and what the Board actually did.
Section 14 and 15 is a change in the statutory citation.
Ms. Williams explained that subsections 9 and 10 covering
the reference to community liquor license was completely
removed. One of the various options is to restrict licenses
to be: only a package store, a restaurant, or a beverage
dispensary. The notion of a community liquor license
operating as the only operation has been deleted and instead
it is that function which is being permitted.
End of Tape 26
Begin Tape 28, Side 1
Senator Rieger addressed the complaints on arbitrary
enforcement. Mr. Sharrock responded that he has not heard of
a complaint on arbitrary enforcement in a long time. He
stated that he would not bring a matter to review for
prosecution unless he knows he has a strong case. He also
mentioned that continuously, notices of violations are
issued to licensees for perceived or alleged violations or
possible violations as a result of receiving police reports.
Section 17 puts in statute, the Board's ability to impose
restrictions on licenses. It may do so under the force of
statute. He stated that at a recent Board meeting, several
applicants had somewhat questionable backgrounds. Some had
alcohol problems in the past, convictions from misdemeanors,
etc. The Board placed conditions on the granting of those
applications on those licensees stating, "if you have a
problem with substance abuse, alcohol or anything else, on
or off the premises, we would revoke or not renew your
license." The ability to do that is what would be enhanced
by this particular amendment.
Section 18 clarifications of language and changes to
statutory citations because of the rewriting of the local
option law.
Section 19 fixes a glitch that occurred when we moved from
annual to bi-annual renewal. When we went to bi-annual
renewal, half of the licensees that didn't file the renewal
were not reviewed by an assembly or community counsel or
local government body. This allows a municipality during
the window of January 1 to 31st, to review a license
operation and protest.
Senator Sharp questioned the regulations that circumvent the
statutory 30-day period in Section 19 for a local government
protest to be considered? Mr. Sharrock stated that there is
a regulation that allows them an additional 30-days to
protest. Discussion was had on the transfer of days.
Co-chair Halford the bill will be brought back at the next
meeting.
ADJOURNMENT
The meeting was adjourned at approximately 11:00 a.m.
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