Legislature(1997 - 1998)

02/18/1998 09:05 AM Senate FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
MINUTES                                                                        
SENATE FINANCE COMMITTEE                                                       
18 February 1998                                                               
9:05 a.m.                                                                      
                                                                               
                                                                               
TAPES                                                                          
                                                                               
SFC-98, Tape #35, Sides A and B                                                
    Tape #36, Side A                                                           
                                                                               
                                                                               
CALL TO ORDER                                                                  
                                                                               
                                                                               
Senator Bert Sharp, Co-chairman, convened the meeting at                       
approximately 9:05 a.m.                                                        
                                                                               
                                                                               
PRESENT                                                                        
                                                                               
In addition to Co-chairman Sharp, Senators Torgerson,                          
Parnell and Adams were present when the meeting was                            
convened.  Senators Donley, Phillips and Pearce arrived                        
respectively thereafter.                                                       
                                                                               
                                                                               
Also Attending:  Deborah Vogt, Deputy Commissioner,                            
Department of Revenue;  Bob Bartholomew, Deputy Director,                      
Income & Excise Audit Division, Department of Revenue;                         
Ashley Reed, lobbyist;  Ginger Patton, Fiscal Analyst,                         
Legislative Finance Division;  and aides to committee                          
members and other Legislative members.                                         
                                                                               
Via Teleconference: Mat-Su, Anchorage, Fairbanks, Cordova,                     
Kenai, Ketchikan, Kodiak were on line for listen only.                         
                                                                               
                                                                               
SUMMARY INFORMATION                                                            
                                                                               
                                                                               
SENATE BILL NO. 273                                                            
                                                                               
"An Act requiring that gross receipts and ideal gross                          
be used to account for charitable gaming activities;                           
requiring municipalities to provide to the state                               
records concerning sales taxes assessed for charitable                         
gaming activities; requiring that a charitable share of                        
charitable gaming receipts be dedicated to charitable                          
uses; relating to reports required for charitable                              
gaming activities; relating to payments to the state                           
from gross receipts of charitable gaming; relating to                          
contracts between operators or vendors and permittees;                         
relating to licensing of multiple-beneficiary                                  
permittees and to the duties of a multiple-beneficiary                         
permittee to each holder of the permit; requiring a                            
person employed as a gaming manager to be certified by                         
the state; limiting the expenditure of amounts of gross                        
receipts and ideal gross required to be paid to                                
permittees or retained by permittees; relating to the                          
amount of gross receipts and prizes allowed under a                            
permit or a multiple- beneficiary permit; allowing                             
operators to pool gross receipts, prizes, and door                             
prizes among permittees; and providing for an effective                        
date."                                                                         
                                                                               
                                                                               
Co-chair Sharp called SB 273 before the committee.  He said                    
he would limit discussions to merits of the bill and the                       
concepts therein and not become involved in other vehicles                     
that may or may not be in the committee or on its way to the                   
committee.  Any other proposals for other bills would be                       
dealt with at a later date.  He noted some reasons for this                    
legislation was because last year's budget for the gaming                      
division was reduced by over one-third.  The commitment was                    
made to try and streamline the workload for that division to                   
allow an easier auditing procedure to be established and                       
simplify the procedures and reporting procedures by                            
operators and permittees.  An extensive work session was                       
held in Anchorage last summer wherein every participant                        
present testified.  Most of the information received at that                   
time has been included in the bill as presently filed.                         
                                                                               
Co-chair Sharp noted that teleconference sites on line were                    
Mat-Su, Anchorage, Fairbanks, Cordova, Kenai, Ketchikan and                    
Kodiak.  He outlined the schedule that would be followed                       
regarding this bill hearing.  He said there would be public                    
testimony following testimony from his staff and the                           
department but he would decide then for a time limit                           
depending on those signed up to testify.                                       
                                                                               
Senator Adams advised the committee he had no amendments and                   
asked if any other committee member had amendments.  Co-                       
chair Sharp said all amendments suggested by the industry                      
and permittees were reviewed by the department and as soon                     
as they were numbered they would be distributed into the                       
files.                                                                         
                                                                               
Tom Williams, staff to Co-chair Sharp was invited to join                      
the committee.  In reviewing to the sponsor statement and                      
sectional analysis he referred to a letter included in the                     
packet from the Department of Revenue strongly supporting                      
this legislation.  A spreadsheet also attached showed the                      
relative allocation of pull-tab dollars wagers and what the                    
mix would have been at various percentages of prize payouts                    
and expenses; gross rates and net proceeds rates.  Also                        
included was a copy of the Charitable Gaming Task Force and                    
summary recommendations which the department will address,                     
as well as two computation sheets; one related to bingo                        
charitable share provided by the department, as well as                        
calculation of the vendor charitable share also provided by                    
the department.                                                                
                                                                               
Mr. Williams said the bill would ensure that out of every                      
dollar wagered a certain minimum portion will ultimately be                    
dedicated to charitable purposes.  It will substantially                       
simplify the accounting required for the Department of                         
Revenue, the charities and the operators of the charities                      
permit.  The legislation would maintain the status quo with                    
respect to the relative amounts available for gaming                           
operations collected in State fees and returned to the                         
charities for charitable uses.                                                 
                                                                               
With emphasis on results-based budgeting he explained that                     
this bill was results-based legislation which emphasized                       
dollars going to the charities, coming off the top.  Maximum                   
amount of flexibility was given to operators and MVP                           
managers without State interference.                                           
                                                                               
Mr. Williams explained the sectional as follows:                               
                                                                               
Section 1:  changes the calculation of the State's fee                         
to a gross basis.                                                              
                                                                               
Section 2:  adds gaming manager certificates to the                            
list of items that the department may regulate.                                
                                                                               
Section 3:  adds gaming managers to the list of persons                        
whose books may be examined in conjunction with a                              
gaming investigation.                                                          
                                                                               
 Section 4:  sales tax.                                                        
                                                                               
 Section 5:  charitable receipts.                                              
                                                                               
 Section 6:  charitable receipts.                                              
                                                                               
Section 7:  simplifies recording process and eliminates                        
duplicate reporting.                                                           
                                                                               
Section 8:  requires an operator to permit the                                 
permittee the charitable share due from a gaming                               
activity conducted the previous month by the fifteenth                         
of the following month.  An amendment by the industry                          
would change this to a calendar quarter basis instead                          
of monthly basis.                                                              
                                                                               
 Section 9:  preference to gaming managers.                                    
                                                                               
 Section 10:  Regulation of gaming managers.                                   
                                                                               
Section 11:  Deletes reference to expenses and adds                            
language explicitly prohibiting the charity from paying                        
any expenses of an operator.                                                   
                                                                               
Section 12:  Deletes the requirement the Department                            
either approve or disapprove operator contracts.                               
                                                                               
Section 13:  Operators to conduct gaming for minimum of                        
one month for each permittee.                                                  
                                                                               
Section 14:  Revocation of license of operator who                             
fails to remit minimum charitable share to the                                 
permittee, and further sets the minimum share.                                 
                                                                               
Section 15:  Reporting and payment requirements for                            
MBPS consistent with operator requirements.                                    
                                                                               
 Section 16:  (see section 14)                                                 
                                                                               
Section 17:  Substitutes charitable share for net                              
proceeds.                                                                      
                                                                               
Section 18:  Specific exemption for dog mushing                                
contests.                                                                      
                                                                               
 Section 19:  (see section 14)                                                 
                                                                               
 Section 20:  Net proceeds.                                                    
                                                                               
 Section 21:  Net gross receipts.                                              
                                                                               
 Section 22:  Authorization pool for prizes.                                   
                                                                               
 Section 23:  Charitable share.                                                
                                                                               
 Section 24:  Charitable share.                                                
                                                                               
Section 25:  Regulations of gaming manager                                     
certificates.                                                                  
                                                                               
 Section 26:  Repealer (proposed amendment).                                   
                                                                               
 Section 27:  Substitute ideal gross for ideal net.                            
                                                                               
 Section 28:  Same vendor payment process.                                     
                                                                               
Section 29:  False statement in application for gaming                         
manager certificate.                                                           
                                                                               
 Section 30:  Local sales tax to be excluded.                                  
                                                                               
 Section 31:  Substitute ideal gross for ideal net.                            
                                                                               
Section 32:  Defines charitable share and gaming                               
manager.                                                                       
                                                                               
Section 33:  Repeals all sections dealing with                                 
expenses.                                                                      
                                                                               
Section 34:  Authorizes the department to proceed with                         
regulation changes.                                                            
                                                                               
                                                                               
Senator Donley asked Mr. Williams about section 26 and if                      
there were any differences regarding the dollar amounts.                       
Mr. Williams deferred to the department as the section                         
repealed the existing limits based on net as opposed to                        
gross receipts.  He said they were advised this would be the                   
equivalent of the status quo of the current limitations as                     
translated to gross.                                                           
                                                                               
Senator Adams asked the committee's recommendations on the                     
two amendments mentioned.  Mr. Williams asked if this was on                   
the one year to two years?  Senator Adams indicated as                         
mentioned in his presentation.  Mr. Williams said this was                     
in regards to revocation and would have to be answered by                      
the department as to their recommendation.  He said he                         
understood there was no objection with regard to the                           
revocation limitations; they should be consistent.                             
                                                                               
Senator Adams asked about expenses for administrative                          
manager's fees that could be charged a charity.  Mr.                           
Williams said there were a variety of expenses that were                       
dealt with and would again defer to the department.  He                        
believed, however, the limitations dealt with all sorts of                     
expenses.                                                                      
                                                                               
Senator Adams said he felt there needed to be some control                     
on the gaming manager's fees and he was concerned that some                    
managers may be making as much as $100,000 per year and that                   
would affect the end result of the charity.  Mr. Williams                      
said that under this legislation regardless what a gaming                      
manager charged or the other operating expenses the amount                     
distributed to the charity as their charitable share would                     
not be affected.  Expenses would no longer play a role in                      
determining how much the charities get.                                        
                                                                               
Senator Donley further requested explanation of the theory                     
behind section 26.  He said existing statute had single                        
maximums of prizes awarded and asked what the reason for                       
proposing separate categories for types of activities was                      
and increasing dollar amounts dramatically.  Mr. Williams                      
explained the concept of basing limitations on prize amounts                   
or limitations on expenses had been eliminated.  That needed                   
to be translated to a gross receipts basis and there were a                    
variety of scenarios calculated.                                               
                                                                               
Co-chair Sharp cautioned that the more technical questions                     
be asked of the department.                                                    
                                                                               
Senator Torgerson asked the definition of "gaming manager"                     
and proposed a hypothetical.  Mr. Williams said that as long                   
as an individual received compensation for managing and                        
controlling the actual operation that constituted "gaming                      
manager".                                                                      
                                                                               
Deborah Vogt, Deputy Commissioner, Department of Revenue was                   
invited to join the committee.  She introduced Bob                             
Bartholomew, Deputy Director, Income and Excise Audit,                         
Department of Revenue and noted that he also served as their                   
Legislative Liaison.                                                           
                                                                               
She thanked Co-chair Sharp and his staff for all the work                      
they have done on the bill and also thanked the committee                      
for sponsoring the bill.  She said the primary objective in                    
the bill was budget.  Due to the cuts last year, the                           
director, administrative clerk and all clerical support were                   
eliminated.  With respect to these cuts, everything was                        
added to the duties of the top management of Income and                        
Excise Audit Division.  She listed the primary                                 
responsibilities of the division and said gaming as an                         
income generator was on the very low end of tax income to                      
the State.  This was because the program provided a source                     
of funds for the charities.  She felt the top management was                   
spending an inordinate amount of time on the gaming program                    
including enforcement activities.  This legislation would                      
simplify the program so there could be some control over the                   
gaming industry but still get back to the real business of                     
collecting taxes.  Any charity can negotiate a larger share                    
than what is required by this legislation.  She further                        
noted the department strongly supported this bill.                             
                                                                               
Senator Phillips asked if the Governor endorsed the bill.                      
Ms. Vogt said the Governor knew that she was here today but                    
that she could not speak for him.  She said as far as she                      
knew, however, the concept had been hammered out with the                      
Administration.                                                                
                                                                               
Senator Donley said he did not understand why the                              
Administration did not have a position on the bill.  Ms.                       
Vogt said they strongly supported it.  Senator Donley asked                    
what the difference was between the Administration                             
supporting the bill and the Governor supporting it.  Ms.                       
Vogt said she supposed the fine line was in not taking away                    
the Governor's actual freedom to look over a piece of                          
legislation when it was passed and then make his decision                      
about what he was going to do.  She reiterated that this                       
piece of legislation was strongly supported by the                             
Administration.                                                                
                                                                               
Senator Phillips said the reason he brought up this matter                     
was because in the past, departments had supported bills,                      
giving the impression they had no problems with them, and                      
then after going through the whole process the bill was then                   
vetoed by the Governor.  Co-chair Sharp noted that the                         
committee could summons Pat Porchot.                                           
                                                                               
Senator Adams advised that the committee knew there was no                     
final CS to this piece of legislation and it was in its                        
first version.  As it passed through other bodies it could                     
be changed which would then subject it to veto by the                          
Governor if the original version were changed.  He suggested                   
the committee continue to work on the legislation.  He then                    
referred to page number twelve, line twenty and twenty-one                     
which revoked certification and asked about the language if                    
it were being changed.  Mr. Bartholomew responded and said                     
for operators there was a minimum threshold for revoking                       
their license for one year and a maximum of five.  In                          
drafting this legislation they had started out with a two-                     
year minimum suspension or revocation and by going back to                     
one year it makes the legislation internally consistent with                   
the current statute.                                                           
                                                                               
Senator Donley commented on the inconsistency of the                           
Administration over the past three years and felt the Senate                   
Finance Committee, in particular, had been victimized by                       
these inconsistencies and failure of the Governor to stand                     
behind what his Administration has represented to this                         
committee.  Time again the committee has been told of the                      
Administration's position, only when those exact same                          
provisions went to the Governor they were then used as the                     
basis for a veto.  He said this was not good public policy.                    
                                                                               
Senator Adams in response said the Governor can support                        
legislation at any time, remembering the end results may not                   
be what were started out with.                                                 
                                                                               
Senator Donley said he felt the committee should discuss                       
this matter and that the Governor had an obligation to take                    
a position consistent with his Administration on issues as                     
the legislation develops.   The Governor should be able to                     
identify what he supports, let the Legislature know that,                      
and if they don't take heed, then the Governor was free to                     
veto that action.                                                              
                                                                               
Senator Phillips concurred with Senator Donley and felt also                   
the issue should be discussed.  Co-chair Sharp referred to a                   
memo by the Department of Revenue indicating they strongly                     
support this legislation.                                                      
                                                                               
(pause on record)                                                              
                                                                               
Senator Donley said he wanted a further understanding re                       
section 26.  This would include other sections that deal                       
with maximum amount of prizes and maintain the existing                        
dichotomy between operators and directly operated activities                   
by the charities.  He asked what would be the public policy                    
reason for continuing this.  He referred to past law when                      
operators had to be bonded, secured and licensed; now that                     
they were licensing managers, how far did the public policy                    
go?  Mr. Bartholomew responded that the intent was not to                      
raise the limit of the amount of gaming that could take                        
place with a permit.  Current statute would allow a                            
permittee, who runs their own operation, to award a million                    
dollars in prizes.  Average prize payout for pull-tabs is                      
about seventy-seven percent.                                                   
                                                                               
(Tape #35, Side A, switched to Side B.)                                        
                                                                               
Senator Donley indicated there were a lot of charities that                    
never got their permits in to place and asked if the                           
department had a position on these dollar amounts?   Mr.                       
Bartholomew explained that it had been worked out with                         
Senator Sharp that they would not get into other gaming                        
issues.  They would not deviate from the objective of going                    
to a percentage of gross and simplifying the reporting and                     
levelling of the playing field with some of the MBP                            
operations.  He said they would like to stay within the                        
confines of the bill.                                                          
                                                                               
Senator Torgerson asked if the manager, because he received                    
compensation, to be fingerprinted, licensed and                                
certificated?  Mr. Bartholomew outlined the requirements for                   
the "gaming manager" to pass a test.  He noted the original                    
intent was to make sure the department regulated or licensed                   
the primary person running the gaming activity.  However,                      
when the got into the MBP, the only tool available if                          
someone was in noncompliance was to pull the permit of a                       
permittee.  The operation, however, would be allowed to                        
continue while they got another permit.  This legislation                      
would not only include "gaming manager" but also expand it                     
one step further to affect the self-directed operations.  He                   
explained that if one hired a "gaming manager" to run the                      
operation, they would be subjected to getting a certificate                    
and being regulated by the department.  This would cover the                   
MBPS and the self-directed.                                                    
                                                                               
Senator Torgerson said his main interest was in a couple of                    
organizations that he was familiar with that hired                             
individuals as "gaming managers" who have the management of                    
the day to day operations, however, the bank accounts,                         
bookkeeping and the primary person in charge is not that                       
same person.  These are not "gaming managers" as defined                       
here.  He felt there should be an exemption for these                          
employees.  Mr. Bartholomew said they supported that                           
concept.  He felt a better definition should be brought                        
forth for "gaming manager".  Their intent was not to get to                    
the individuals supervising the day to day activities.                         
                                                                               
Senator Torgerson said a simple suggestion was "...that has                    
sole responsibility for the management, control or oversight                   
of the gaming activities...".  Just because you are called a                   
manager and you get paid for that position is too broad                        
based.  He further inquired if this legislation covered                        
raffles.  Mr. Bartholomew referred to section one and said                     
if they do less than $20,000 worth of gross activities there                   
is no fee paid to the State.  The other part of this bill                      
would try to simplify the recording, wherein they would just                   
tell us their total sales and one line item for expenses.                      
Senator Torgerson further inquired regarding                                   
confidentiality.  He said the names and amounts of                             
permittees were not public information.  He asked if this                      
would not be public information obtained from the                              
municipalities or was this a problem?  Mr. Bartholomew said                    
according to their interpretation it would not be public                       
information.  The department had strong confidentiality                        
statutes for taxpayer information.  A municipality could                       
make their own decision about making this information                          
available to the public.  Senator Torgerson asked if this                      
should be made specific in the bill or if it were just                         
standard practice?  Mr. Bartholomew said it could be                           
clarified in the bill to come under the confidentiality                        
statutes for taxes.  Senator Torgerson asked if this also                      
covered sports pools?  Mr. Bartholomew said this legislation                   
would not address that issue.                                                  
                                                                               
Senator Parnell referred to section eighteen, page nine, and                   
quoted current law AS 05.15.150.  He asked why an exception                    
was being made for dog mushers' associations when all other                    
qualified organizations are required to come before the                        
department.  Mr. Bartholomew said dog mushing was the one                      
activity that consistently gives out way more in prizes than                   
they bring in what would be considered entry fees.  They                       
show a big loss because they use other revenue sources such                    
as corporate donations and other donations to help pay the                     
prizes.  The exception was just to allow them to use all of                    
their gaming proceeds to go towards prizes.  No other                          
activity is allowed to do this.  They do not feel there is                     
any abuse.  The money goes out to prizes.  Senator Parnell                     
asked if there were any other groups that might ask for such                   
an exception?  Mr. Bartholomew said he did not feel there                      
was anyone else who fell into that category.  He said the                      
Ice Classics and Rain Classics uses the money they earn for                    
scholarships.  Senator Parnell asked if there was a problem                    
for the department as regards to work load.  Mr. Bartholomew                   
said either an amendment needed to be made to keep them in                     
compliance or the department needed to decide whether to                       
revoke permits or not.  But he did not think that was a                        
situation they wanted to get into.                                             
                                                                               
Co-chair Sharp asked if Mr. Bartholomew had anything else he                   
wanted to cover.  Mr. Bartholomew said he wanted to explain                    
the percentages of gross that were included.  He explained                     
how they arrived at the different percentages.  For bingo                      
the non-profit organization needed to give 1-1/2 percent of                    
the gross proceeds.   He further referred to section 14.  It                   
is the same percentage that appears in other sections of the                   
bill.                                                                          
                                                                               
Senator Donley mentioned that this was another section that                    
was being repealed and reenacted and asked that the status                     
quo be reviewed.  He noted in prior years there was a                          
quarterly program which created many problems and this                         
latest legislation provided for a year.                                        
                                                                               
Mr. Bartholomew said this provision which is the "mandatory                    
shall revoke" is on an annual basis.  If the minimum share                     
is not paid after one year it will be revoked.  Another                        
section of the bill also requires a monthly payment to the                     
charities.  However, after hearing more testimony this                         
morning they may go back to quarterly.  He said the biggest                    
change taking place as they went to percentage gross was                       
that the statute requires a minimum payment to the non-                        
profits plus all profits in excess of reasonable expenses.                     
Current law says the non-profits would be paid monthly which                   
still varies based on profits and is subject to negotiation                    
between the non-profits and whoever runs the gaming                            
activity.  The department only wants to regulate to the                        
minimum and make sure that minimum is paid.                                    
                                                                               
Senator Donley recalled that in addition to the annual                         
provision in section 14 was that each quarter a certain goal                   
had to be met.  Was this quarterly report done away with a                     
few years ago?  Mr. Bartholomew explained that the current                     
law did still require quarterly reporting to the Department                    
of Revenue.  It can be looked at on a quarterly basis to                       
make sure they are in compliance.  There is, however, no                       
mandatory action taken if they are not.                                        
                                                                               
Senator Donley noted that this was changed in 1993.                            
                                                                               
Mr. Bartholomew continued explaining the percentages.  He                      
referred to a one-page overview in the files, which showed                     
how the 1-1/2 percent was calculated.  This was a good faith                   
attempt to maintain the current statute.  Pull-tabs,                           
however, needed more discussion because it was easy to get                     
confused when looking at many different numbers.  Primarily,                   
one should keep in mind that this is driven by the amount of                   
the prize payout.  If one used a seventy-seven percent                         
payout then there would be seven percent gross.  Seven                         
percent was a good faith adjustment across the board.  There                   
are new tools today that the gaming industry has wherein                       
they can play with prizes and expenses but it does not                         
affect what the charity gets.  In the past it was hard to                      
pay the minimums because certain organizations were not                        
regulated as tightly as others.  There are a number of                         
issues in this legislation that will strengthen the                            
regulation of those MBPS and that will help the over-all                       
industry to be more financially stable.  He said it was                        
important to keep the pressure on the industry to give the                     
money to the non-profits and not to have money taken out of                    
the system.  The last item would include other activities                      
such as raffles.  The requirement of ten percent was being                     
exceeded by almost all those activities and they should not                    
be affected.  The last fee in the bill is the one that comes                   
to the State of Alaska and today the law is one percent of                     
whatever a non-profit receives.  In order to maintain                          
consistency, the department felt they should go to some                        
percentage of gross so that everything would be based on                       
total sales.  That would be one-tenth of one percent of                        
gross sales.  He reviewed the amount received from pull-tabs                   
as an example.  Further he reviewed other gaming activities,                   
such as, raffles, rain classics, ice classics that would                       
probably end up paying slightly less to the State under this                   
legislation.                                                                   
                                                                               
Senator Torgerson asked if there was not a three percent                       
gross tax on pull-tabs now?  Did this go away and was it                       
replaced by one-tenth of one percent?  Mr. Bartholomew said                    
the three percent tax was paid by the pull-tab distributors                    
and that remained unchanged.  It would not be affected by                      
this legislation.  He said it was important to note that                       
that fee would not affect the amount of money they get from                    
gaming.  He said the hopes were that more charities would                      
receive the minimum and have the ability to pay the fees                       
they are having to pay today.                                                  
                                                                               
Senator Donley asked about the one-tenth of one percent and                    
was this a tax on the activity?  Mr. Bartholomew indicated                     
this was correct.  Senator Donley asked how much was                           
generated last year.  Mr. Bartholomew responded                                
approximately $280,000.  He said there were two overviews of                   
the industry taken place in the last couple of years.  In                      
1995 the Charitable Gaming Task Force and in 1996 a                            
Legislative Audit.  Four of the recommendations from the                       
task force were included in the bill presently.  One                           
recommendation, both in the task force and the audit report,                   
but not included in the bill was that the department should                    
spend more of the money collected on running the program.                      
                                                                               
Senator Donley noted the three percent was not a program                       
receipt but inquired if the one tenth of one percent was                       
categorized as a program receipt?  Mr. Bartholomew said                        
money from both fees did go in to funding the budget.                          
Enough revenue was transferred to cover the $600,000 and the                   
remainder stayed in the general fund.  In further response                     
to Senator Donley he said this was not a designated program                    
receipt, but rather a general fund program receipt which is                    
appropriated annually.                                                         
                                                                               
Senator Adams asked about controlling undesirables from                        
being game managers.  This had been a problem in the past.                     
Ms. Vogt explained briefly how this legislation would cover                    
that matter.                                                                   
                                                                               
Co-chair Sharp indicated that at this time he wanted to take                   
public testimony via teleconference.  He noted that he would                   
limit testimony to about three minutes each so everyone                        
would get a chance to testify.                                                 
                                                                               
Joseph Nyquist testified via teleconference from Fairbanks.                    
He noted for the committee that his has operator's license                     
rule changes and regulations.  He said he supported SB 273.                    
                                                                               
Michael Slezak testified via teleconference from Anchorage.                    
He said the charitable gaming industry had just completed a                    
major overhaul of regulations and statutes for 1997.  He                       
said the information received from the department was based                    
on 1995 and 1996 numbers and that as yet the changes had not                   
played out for 1997.  He felt this did not make a lot of                       
sense as to why a radical new concept would be introduced                      
that had not been shown to work anywhere in the lower '48.                     
There was a lot of talk about the elasticity of the gaming                     
dollar, however, elasticity was removed once percentage of                     
gross is established.  He further noted that once prize                        
payouts were lowered, a point would be reached that players                    
would stop playing.  This would cause more competition                         
within the market place to try and attract players back.  In                   
running their own numbers he said with respect to the                          
permittees he worked for every dollar was important to them.                   
They have also had budget cuts due to grants being reduced                     
both locally and on State level.  He said the current                          
proposal on the table with regard to taxes allowed all                         
Federal, State and local taxes to be deducted.  Since they                     
had no control over how taxes were set, they should come off                   
the top of the gross, including the pull-tab three percent                     
tax.                                                                           
                                                                               
Jack Powers, operator license number 022, Anchorage,                           
testified via teleconference from Anchorage.  He does                          
business as Tudor Road Bingo Center.  He said he supported                     
Commissioner Wilson Condon's letter of 28 January 1998 with                    
a few exceptions.  He was concerned with some remaining                        
loopholes regarding MBPS.  He did not want to see SB 199 be                    
attached to this one.  He reviewed sections of the bill that                   
he felt still needed some work.  He specifically identified                    
section 13 and said he did not understand it.  He said he                      
would be glad to come to Juneau to work with the committee                     
and the department regarding this section.                                     
                                                                               
Shirley Montgomery testified via teleconference from Mat-Su.                   
On behalf of the Mat-Su Humane Society she thanked the                         
committee for the opportunity to give testimony regarding                      
this matter.  She said they were very dependant on every                       
dollar received explained how important this was to the                        
Society and animals.  With these funds they are able to                        
support senior citizens in taking care of animals and also                     
teach the care and safety of animals in the schools.  They                     
do not support making their MBP manager a "gaming manager"                     
just so the State gaming people can control him.  She noted                    
that if their MBP manager was not doing a satisfactory job                     
their MBP board could make their own decision of how to deal                   
with this.  She felt this legislation needed more work.                        
                                                                               
                                                                               
Greg Peterson testified via teleconference from Ketchikan.                     
He said the department does need help from the Legislature                     
however feels that the numbers need to be looked at again.                     
                                                                               
Doug McBride testified via teleconference from Ketchikan.                      
He said he was a pull-tab distributor in Ketchikan.  They                      
strongly support the concept of a level playing field.  He                     
said gaming regulators, legislators and all participants in                    
the industry should be able to see what is going on so they                    
will have confidence the charities were getting enough                         
money.  He felt there should be simpler filing, auditing and                   
regulatory compliance measures.  He did not feel that                          
shifting from the ideal net concept to the gross net concept                   
was very misleading.  He said the effective date should be                     
long enough for distributors to sell out their products and                    
replace them with products that comply.                                        
                                                                               
(Co-chair Sharp passed the chair to Senator Phillips at                        
approximately 10:35 a.m.)                                                      
                                                                               
John Regan testified via teleconference from Anchorage.  He                    
said he was with the Spenard Lion's Club and that their                        
permit was used by Tudor Road Bingo (Jack Powers).  They                       
favoured the percentage of gross on bingo and pull-tabs.  He                   
said he was confused with the carry-over of funds by dog                       
mushers.  He said everyone else was required to apply for                      
carry-over.                                                                    
                                                                               
(Tape #35, Side B changed to tape #36, Side A at                               
approximately 10:37 a.m.)                                                      
                                                                               
Mr. Regan continued his testimony and said he was concerned                    
with the department's position and the information they had                    
been giving the committee.  He felt there should be more                       
interaction with the gaming managers.  He further did not                      
understand the situation with gaming managers because in his                   
situation he did not control any money and any monies were                     
put into the MBP's account.  His personal record did not                       
need to be looked at because all he did was draw a paycheck.                   
There was already enough statutes regarding undesirables not                   
being able to seek these positions.  He was also concerned                     
with the increase in the one-tenth of one percent of gross                     
that charities would be paying.  The State of Alaska should                    
not be going after non-profits if they need additional                         
funding.  If a state income tax is needed that should be                       
discussed with the general public.                                             
                                                                               
Ed Bourgeois testified via teleconference from Anchorage.                      
He represented Anchorage Opera.  Their charitable gaming                       
permit was operated by Jack Powers.  He concurred and                          
supported the testimony of Mr. Powers.  He supported the                       
legislation and the Department of Revenue to monitor the                       
industry and level the playing field.                                          
                                                                               
(Co-chair Sharp returned to chair the committee.)                              
                                                                               
Lanie Fleischer testified via teleconference from Anchorage.                   
She indicated she was executive director of Big Brothers and                   
Sisters, Anchorage.  She said she was pleased with the                         
present legislation.  (Concluding testimony was severely                       
affected by poor quality of teleconference.)                                   
                                                                               
There followed miscellaneous discussion at the table amongst                   
the members.                                                                   
                                                                               
Mark Griffin testified via teleconference from Anchorage.                      
He said he owned Alaska Bingo Supply but had not been                          
involved in the gaming industry for many years.  He felt the                   
biggest problem was with the Department of Revenue regarding                   
enforcement.  He suggested all records required should be                      
made public within fifteen days of the day received.  He                       
said the gaming industry was operating in a vacuum and with                    
the lack of disclosed information no one was able to make                      
adequate and informed decisions.  He suggested simpler                         
regulations should be enacted so there would be a more level                   
playing field and all their work would not be wasted.                          
                                                                               
Co-chair Sharp announced that anyone wishing to send in                        
written testimony could do so to the Senate Finance                            
Committee Secretary's office.                                                  
                                                                               
Rosalie Nadeau was invited to join the committee.  She                         
indicated that she was the member in charge of the permit                      
for Akeela Treatment Services, Anchorage.  Since she was in                    
Juneau she came to testify in person.  She has represented                     
charities since 1982.  She said the bill was a good move in                    
the right direction.  A complex law could not be enforced by                   
minimal staff and such staff could not provide guidance to                     
permittees.  She felt simplification was a good move,                          
regardless of the fact the bill still had some problems such                   
as addressed by Mr. Powers and others.  "Gaming manager" was                   
a crucial area.  However, she said they supported the bill                     
and said the drug and alcohol treatment program greatly                        
benefited from pull-tabs.  She did feel that SB 199 should                     
not be "christmas treed" with this bill.                                       
                                                                               
Co-chair Sharp said he would reschedule the bill for 8:30                      
a.m. next Tuesday.  This would give committee members time                     
to review suggested amendments.  He said different sources                     
had been asked to define "operator" and asked the committee                    
to also search out possible refinements.  With that he held                    
the bill in committee.                                                         
                                                                               
Co-chair Pearce announced that the committee meeting                           
tomorrow morning was cancelled but the meeting tomorrow                        
afternoon at 4:30 p.m. was still scheduled.                                    
                                                                               
                                                                               
ADJOURNMENT                                                                    
                                                                               
Co-chair Sharp recessed the committee meeting at                               
approximately 11:00 a.m.                                                       
SFC-98 -1- 02/18/98                                                            

Document Name Date/Time Subjects