Legislature(1995 - 1996)
04/07/1995 09:35 AM Senate FIN
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
MINUTES
SENATE FINANCE COMMITTEE
April 7, 1995
9:35 A.M.
TAPES
SFC-95, #23, Side 1 (135-end)
SFC-95, #23, Side 2 (575-end)
CALL TO ORDER
Senator Rick Halford, Co-chairman, convened the meeting at
approximately 9:35 a.m.
PRESENT
In addition to Co-chairman Halford, Senators Donley, Rieger,
and Sharp were present. Co-chairman Frank and Senator
Phillips arrived soon after the meeting began. Senator
Zharoff did not attend.
ALSO ATTENDING: Representative Therriault; Patrick
Sharrock, Director, Alcoholic Beverage Control Board, Dept.
of Revenue; Margot Knuth, Assistant Attorney General,
Criminal Division, Dept. of Law; Bob Cole, Director,
Division of Administrative Services, Dept. of Corrections;
Stan Ridgeway, Deputy Director, Division of Vocational
Rehabilitation, Dept. of Education; Mike Greany, Director,
Legislative Finance Division; Joe Ambrose, aide to Senator
Taylor; and aides to committee members and other members of
the legislature.
ALSO PARTICIPATING VIA TELECONFERENCE: Teresa Williams,
Assistant Attorney General, Dept. of Law, Anchorage; Tom
Nicolos, Barrow; Karen Hegyi, Barrow; and John Farleigh,
Anchorage.
SUMMARY INFORMATION
SB 87 - ALCOHOLIC BEVERAGES: LOCAL OPTION & MISC.
Continued sectional review of secs. 20 through 67
was conducted by Patrick Sharrock and Teresa Williams.
Teleconference testimony was provided from
Anchorage and Barrow. The bill was HELD in
committee for additional review.
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.
Co-chairman Halford referenced related correspondence from
Tom Nicolos of Barrow and from the McLaren River Lodge on
the Denali Highway and directed that the sectional review of
SB 87 continue.
PATRICK SHARROCK, Director, Alcoholic Beverage Control
Board, Dept. of Revenue, came before committee and commenced
continued review:
Sec. 20 contains the menu of local options. There are no
changes from current statutes with the exception of a minor
addition, subsection (A)(2)(d). That option would allow a
community under no existing option to adopt an option
permitting a beverage dispensary licensee or bar owner to
cater events at a facility within the community. The city
of Saxman was cited as an example.
A further addition provides that if a municipality dissolves
and is under a local option at the time of dissolution, that
option continues and is determined by the same boundaries as
when the municipality existed.
Mr. Sharrock noted that a key provision within the bill
relieves communities from need to hold two local option
elections to "get where a community might want to go." The
community can hold one election to adopt a prohibition, or
change the prohibition to another, or remove the option the
community is presently under.
At page 21, commencing with line 11, language provides that
a local option election may not be conducted during the
first 12 months after the local option was adopted or more
than once in an 18-month period.
Discussion followed regarding the local option situation at
Barrow and litigation relating thereto. Mr. Sharrock said
that while it was generally understood that local option
elections could only be had once within a 12-month period,
there was contention over whether Barrow which had held an
election to adopt a local option could, three or four months
later, hold an election to remove the option. The judge
ruled that it was reasonable for the 12-month prohibition to
apply.
Secs. 21 through 27 contain procedural aspects of
implementing a local option election and the effect of each
local option. Provisions are similar to current law but
refined to implement the current rewrite of local options.
TERESA WILLIAMS, Assistant Attorney General, Dept. of Law,
spoke via teleconference from Anchorage. She said that
language within the sections contains a significant
improvement in terms of increased flexibility in language
that can be placed on a local option ballot. It requires an
explanation that a package store is a liquor store, and a
beverage dispensary license represents a bar. Voters are
often not familiar with the technical terms for those
facilities. Where communities are having problems with
existing law, the proposed bill attempts to be more
responsive and provide a much easier process to follow.
Mr. Sharrock added that language at page 21, line 16,
clearly indicates that only one question may be presented at
an election. And after a petition has been certified,
another petition may not be filed or certified until after
the question presented in the first petition has been voted
upon. That is a significant clarification.
Mr. Sharrock referenced a list of 115 local option
communities that implemented options between 1980 and 1984.
These communities are now attempting to change those
determinations. That is what prompted the current rewrite.
Under present law, two elections would have to be held: one
to do away with the existing option and another to implement
the new option. Sec. 21 allows for repeal of an existing
option and implementation of a new one at a single election.
In response to a question from Co-chairman Halford, Mr.
Sharrock advised of authorization for a beer and wine
restaurant license. There is no beer and wine package
license.
Responding to a question from Senator Sharp, Mr. Sharrock
said that municipalities pay for local elections within
their boundaries. The division of elections pays if the
election is within an established borough. Senator Sharp
voiced his understanding that if there is no municipality,
the state pays the cost.
Co-chairman Halford asked that a list of local option
communities be provided for members' files.
Discussion of the five-mile radius (Sec. 22) around a local
option community followed between Co-chairman Halford and
Mr. Sharrock. Mr. Sharrock advised that there had been no
challenge to the provision.
Sec. 23 explains what the impact would be if a community
were to adopt an option prohibiting importation.
Senator Rieger raised a question concerning the definition
of "possession" contained within subsection (d) of Sec. 24.
He noted that it refers to physical possession but does not
include having an alcoholic beverage within the digestive
system. Teresa Williams advised that the definition
reflects current law. She said it is not clear why the
definition was originally included.
End: SFC-95, #23, Side 1
Begin: SFC-95, #23, Side 2
Sec. 25 contains an explanation of the impact should a
municipality adopt an option relating to licenses
municipalities would operate within communities.
Sec. 26 sets forth an explanation of what would occur if a
license within a community is operated by a municipality.
Co-chairman Halford asked if a community could vote in an
option for a community liquor store and thus cancel the
license of an existing establishment outside the five-mile
radius of the community. Teresa Williams voiced her
understanding that the situation has never arisen, although
it could possibly occur. The intent of the original
legislation is to prevent someone from commencing an
operation three miles outside the boundary and thwarting the
purpose of the local option. Co-chairman Halford voiced his
understanding of the purpose on the defensive side of the
issue. He then noted that he was seeking to ensure that it
was not offensively used against an establishment that
predates the option. He expressed discomfort with
extraterritorial jurisdiction.
Sec. 27 describes the procedure for local options--the same
as current law. It merely contains a citation change.
Notice requirements at Page 21, Line 20, are the same as
current law regarding results of local option elections.
Secs. 28 and 29 relate to biennial licensing. When it was
implemented last year, half-year licenses were excluded.
Provisions here allow for half-year licenses that operate
for a twelve-month period within the two-year period.
Alaska has approximately 200 half-year licenses. Many are
held by cruise ships and remote facilities that only operate
six months a year.
Sec. 30 reflects an amendment by Senator Hoffman while the
bill was in Senate Judiciary. In communities which prohibit
sale, this section provides that a club incorporated under
non-profit provisions of statute may allow members to bring
alcoholic beverages to the premises, if authorized by the
local governing body. When queried by Co-chairman Halford
regarding the ABC Board position on the foregoing amendment,
Mr. Sharrock said he had not yet discussed the change with
the board. He acknowledged that the amendment was unusual
in that it provides an exemption in an area where alcohol
has been prohibited. When asked if the provision would
apply in Barrow, Mr. Sharrock answered negatively, saying it
would apply to damp rather than dry communities. In
response to a further question from Senator Sharp, Mr.
Sharrock said that the burden would be on the local
governing body. The ABC Board would have no control over
the establishment since it would not be a licensed premises.
Teresa Williams added that the language relates to "bottle
clubs." She explained that Dept. of Law concerns stem from
the fact that "These are not licensed premises."
Enforcement sections of Title 4 speak to conduct on licensed
premises. There are thus no prohibitions against minors on
the premises, drunken individuals, etc. That will be the
case unless section (d) is altered to require that the
facility be treated as a licensed premises under the
appropriate title.
Referencing cited but unchanged statutory law at Page 22,
line 27 and 28, Senator Rieger asked if there is a
difference between "alcohol beverages" and "alcoholic
beverages." Mr. Sharrock advised that the former reflects a
typographic error.
Sec. 31 contains language similar to 28 states that prohibit
sale of an alcoholic beverage containing more than 76%
alcohol by volume or alcohol in powdered form.
Sec. 32 requires that the invoice on the outside of a
shipping container indicate the quantity and purchase value
of distilled spirits, wine, or malt shipped into a
restricted community.
Sec. 33 clarifies that transportation may occur for use on
premises allowed under certain option provisions where a
licensed premises may reside within a local option
community. The amendment is technical in nature.
Discussion followed among Senator Randy Phillips, Mr.
Sharrock, and Ms. Williams regarding definition of the word
"gallon."
Secs. 34 and 35 contain clarification language.
Sec. 36 relates to clarification of disposition of alcoholic
beverages seized by a police officer. In response to a
question concerning disposal, Mr. Sharrock advised that it
is forfeited and destroyed. He further directed attention
to Sec. 46, Page 28, and noted addition of the following:
and shall order any property forfeited under this
section that was seized in a municipality to be
transferred to the municipality in which the property
was seized.
to existing language stating that the court shall order
destroyed any forfeited property that is harmful to the
public. The foregoing new language was offered in Senate
Judiciary by Senator Adams. Co-chairman Halford asked if
language relates to the alcohol itself or incidental
property. Mr. Sharrock voiced his understanding that it
includes all property. Teresa Williams noted the existing
requirement that the alcohol be destroyed. New language
does not weaken that requirement. Co-chairman Halford
voiced his understanding that the amendment deals with
"other property going to the municipality." Ms. Williams
responded affirmatively.
Sec. 38 contains a citation change.
Sec. 39 responds to Dept. of Law concerns regarding the
original bill which did not define who would establish
community work service. Discussion followed between Ms.
Williams and Co-chairman Halford regarding the types of
entities that would qualify. Ms. Williams advised that the
department would consult with the Dept. of Community &
Regional Affairs to determine qualification in areas where
there is no local governing body.
Secs. 40, 41, 42, 43, 44, and 45 contain citation changes.
(See above (Sec. 36) discussion of forfeiture of property
for information on Sec. 46.)
Sec. 47 enhances municipal ability, under a local option
provision, to provide, by ordinance, the monthly amount of
alcohol an individual may import, the percent of alcohol by
volume the beverage may contain, and the type of alcoholic
beverage container that may be possessed. Co-chairman
Halford inquired concerning need for a floor of 40%. Teresa
Williams advised that it reflects the number suggested by
the board.
Senator Rieger asked how control over the type of alcoholic
beverage container would be interpreted. Ms. Williams
explained that the provision relates to a problem cited by
the Mayor of Nome. She noted covers for beer cans that make
the cans appear as though they contain soda pop. The Mayor
further sought to prohibit individuals from carrying
"certain kinds of flasks." It is ultimately up to the
municipality to determine how provisions will be enforced.
Sec. 48 provides that possession of alcohol in addition to
importation and sale could be deemed a misdemeanor in a
local option community. Senator Rieger referenced file
correspondence indicating that the provision would allow for
greater search warrant activity. Teresa Williams attested
to legal problems associated with "making possession a
misdemeanor." Right-to- privacy issues are raised. There
will also be fiscal impact if those charged with possession
have a right to a public defender. Ms. Williams stressed
that sale should be treated differently than possession in
terms of the severity with it is viewed in criminal law.
Because of these problems, the Dept. of Law felt it was
appropriate to make possession a violation rather than a
misdemeanor.
JOE AMBROSE, aide to Senator Taylor, suggested that language
within Sec. 48 was part of the original draft rather than an
amendment. Ms. Williams advised that she did not recognize
it as department language. Co-chairman Halford noted that
language "allows" rather than requires a municipality to
adopt an ordinance. Mr. Ambrose remarked that problems that
might arise under a municipal ordinance would not incur a
fiscal impact on the state. Discussion of right-to-privacy
issues followed.
Secs. 49 and 50 contain citation changes.
Sec. 51 requires that those checking the identification of
patrons entering licensed premises must receive alcohol
server education training. References to "common carrier
dispensary" and "community" are deleted because training
for common carrier dispensary personnel is clarified in Sec.
52, and the community liquor license, by title, was
eliminated through rewrite of local option provisions.
Sec. 52 speaks to subjects that must be covered in alcohol
server education and clarifies that all subjects do not have
to be covered for training of common carrier personnel.
Alaska Airlines supported the proposal in last year's bill.
Sec. 53 deletes the designation "community liquor license."
Sec. 54 clarifies and improves the definition of "alcoholic
beverage" to include alcohol possessed by a person who
attempts to consume or possess it. Mr. Sharrock cited items
listed in correspondence to Longs Drug Store regarding items
a community did not want shipped in because alcohol was
extracted from the products and consumed. The focus is not
intended to regulate the products but to allow prosecution
in instances where alcohol is extracted and individuals
attempt to possess or consume it. Ms. Williams noted that
the department has had problems in instances where judges
have refused to find that possession of products such as
hair spray converted to alcohol is in violation of liquor
laws because the product was not intended for human
consumption.
Sec. 55 contains a technical clarification of the definition
of "established village."
Sec. 56 implants in another title the same definition of
"established village" as set forth in Title 4.
Co-chairman Halford asked if there was a means, through
definition, to deal with situations such as the McLaren
River Lodge. Mr. Sharrock advised that legislation (HB 180)
to address the issue was introduced by Representative James.
It passed the House and was referred to two committees in
the Senate.
Secs. 57, 58, 59, 60, and 61 contain citation changes.
NOTE - The following portion of the minutes is from
shorthand notes.]
Sec. 62. Mr. Sharrock questioned the reference to 480 and
asked that Teresa Williams comment. She advised that the
reference is okay.
Sec. 63 and 64 contain citation changes.
Sec. 65 contains a repealer of the existing requirement for
a $2,500 beverage dispensary bond. This has been a problem
for both board staff and insurance companies. The only
instance in which the bond would be forfeited would result
from three convictions within a five-year period. That has
never happened. Co-chairman Halford commented that the bond
appears to be ineffective and a waste of time.
Sec. 66 contains transitional provisions regarding statutory
citations that no longer apply.
Sec. 67 is a new section relating to conditions at Barrow.
There is also talk of a petition at Tanana.
Senator Rieger referenced April 6, 1995, correspondence from
Mr. Nicolos in Barrow and noted Mr. Nicolos' objection to
provisions of Sec. 67.
TOM D. NICOLOS next spoke via teleconference from Barrow.
He voiced objection to language in Sec. 67 which would void
a petition to adopt or remove a local option that has not
been voted on by the effective date of Sec. 67. He cited
the substantial amount of work involved in gathering
necessary signatures for a petition and advised that
language in the proposed bill appears to circumvent the
right of people to petition government to bring an issue to
the polls.
In response to a question from Co-chairman Halford, Mr.
Nicolos advised that he is a resident of Barrow and part of
the local group that sued the city over the local option
election.
KAREN HEGYI next spoke via teleconference from Barrow. She
explained that the city of Barrow requested that existing
petitions be voided because the proposed bill would change
both options and procedures. It would be difficult to be
tied into an old process when a better one is in place. The
petition in question was sold to those who signed with the
understanding that Barrow would go back to being damp rather
than wet. At the present time the city would have to hold
an election to completely repeal the current local option,
and then hold another election "going to damp." The easiest
way to solve this problem is to void the existing petition
and hold only one election "going to damp."
JOHN FARLEIGH, owner of Luigis' Pizza Parlor, next spoke via
teleconference from Anchorage. Referencing Sec. 10, he
advised that it would restrict his ability to purchase beer
and wine from a package store. Mr. Farleigh voiced his
belief that the change is supported by distributors. He
explained that his pizza parlor specializes in micro brews.
In many instances, distributors are out of these beers, but
they can still be purchased from a liquor store. Sec. 10
language would prohibit those purchases.
Mr. Farleigh next directed attention to Sec. 4 and advised
that it poses a more immediate concern. He advised that
while he was generally in support of the language, he did
not need provisions (b) and (e). He explained that the
problem is that he cannot have live music in his pizza
parlor after 10:00 p.m.
Mr. Farleigh further objected to prohibitions within
subsection (3) of Sec. 4, which would disallow transfer of
an exempt license to another person. He asked what would
happen in the event of the death or retirement of the
license holder. Noting that it is difficult to sell pizza
without beer, Mr. Farleigh stressed his desire to maintain
the value of his business and pass it along to his heirs.
Mr. Farleigh reiterated his wish to provide entertainment
beyond the 9:00 p.m. deadline and asked if there could be
another way to achieve that goal.
In the course of further discussion of Sec. 10 provisions
with Senator Donley and Mr. Sharrock, Mr. Farleigh
reiterated problems resulting from lack of adequate supply
furnished by distributors. He further advised that he could
go to Costco and buy beer and wine cheaper than from a
distributor. He acknowledged that Costco often does not
carry the beers he needs, but he advised that he saw no
problem with a free market. Mr. Sharrock noted that Mr.
Farleigh's point was well taken.
In further discussion of the 9:00 p.m. deadline for
entertainment in restaurants, Mr. Sharrock pointed to
existing regulations. He advised that the majority of the
revenue earned by such establishments is from dining, and
traditional dining hours are 6:00 p.m. to 9:00 p.m. Mr.
Farleigh advised that he had just appeared before the board
on this issue and was turned down. He acknowledged that
while 6:00 p.m. to 9:00 p.m. is the most common dining
period, a number of people stop by later after a hockey game
or other evening events. Mr. Farleigh stressed that he was
attempting to increase the economically viable period in
which a restaurant exists. He suggested that existing
regulations force people to move their activities to bars
after 9:00 p.m. He noted that he had had a number of such
comments from customers.
Co-chairman Halford advised that he continued to have
problems with sections of the bill relating to bottle clubs
and advised that the bill would be held in committee for
further review.
ADJOURNMENT
The meeting was adjourned at approximately 11:05 a.m.
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