Legislature(1993 - 1994)

04/17/1993 09:40 AM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
                                                                               
                             MINUTES                                           
                    SENATE FINANCE COMMITTEE                                   
                         April 17, 1993                                        
                            9:40 a.m.                                          
                                                                               
  TAPES                                                                        
                                                                               
  SFC-93, #60, Side 1 (000-end)                                                
  SFC-93, #62, Side 1 (000-end)                                                
  SFC-93, #64, Side 1 (000-350)                                                
                                                                               
  CALL TO ORDER                                                                
                                                                               
  Senator  Drue  Pearce,  Co-chair,  convened the  meeting  at                 
  approximately 9:40 a.m.                                                      
                                                                               
  PRESENT                                                                      
                                                                               
  In addition to  Co-chairs Frank and Pearce,  Senators Jacko,                 
  Kelly, Kerttula, Rieger, Sharp, and were present.                            
                                                                               
  ALSO ATTENDING:  Senator Rick  Halford, Senator Judith Salo,                 
  Shelby Stastny,  Director,  Office of  Management &  Budget;                 
  Nancy    Bear    Usera,    Commissioner,    Department    of                 
  Administration; Raga Elim, Special  Assistant, Department of                 
  Natural Resources;  Nico  Bus,  Chief,  Financial  Services,                 
  Department of Natural  Resources; C. E.  Swackhammer, Deputy                 
  Commissioner, Department of Public Safety; John Hansen, Jr.,                 
  Gaming  Manager,   Department   of   Commerce   &   Economic                 
  Development;  Jerry  Luckhaupt, Attorney,  Legislative Legal                 
  Counsel,    Legislative    Affairs   Agency;    Paul   Fuhs,                 
  Commissioner, Department of Commerce & Economic Development;                 
  Diane Kaplin, President & CEO,  Alaska Public Radio Network;                 
  Rip Andrews, American  Association of Retired  Persons; Mike                 
  Greany,  Director  and David  Tonkovich, and  Karen Rehfeld,                 
  Fiscal Analysts,  Legislative Finance Division; and aides to                 
  committee members.                                                           
                                                                               
  SUMMARY INFORMATION                                                          
                                                                               
  SB 50 -   An Act making appropriations for capital projects;                 
            and providing for an effective date.                               
                                                                               
            Discussion was held with Shelby Stastny, Director,                 
            Office of Management &  Budget; Raga Elim, Special                 
            Assistance  &  Legislative Liaison,  Department of                 
            Natural  Resources;  and C.E.  Swackhammer, Deputy                 
            Commissioner,  Department of Public Safety.  SB 50                 
            was HELD in committee.                                             
                                                                               
  SB 58 -   An Act relating to the longevity bonus program.                    
                                                                               
            The committee adopted CSSB 58(FIN) work draft "E".                 
            Testimony   was  heard   by   Nancy  Bear   Usera,                 
                                                                               
                                                                               
            Commissioner, Department of Administration and Rip                 
            Andrews, American Association  of Retired  Persons                 
            in  support of the  bill.  Senator  Rieger MOVED a                 
            conceptual amendment in regard to the severability                 
            clause.  The bill was HELD for a written amendment                 
            from legal services.                                               
                                                                               
  SB 200-   An    Act    allowing    the    holders    of    a                 
            multiple-beneficiary charitable gaming permit that                 
            consists  entirely  of  noncommercial broadcasting                 
            stations or networks  of such  stations to sell  a                 
            pull-tab series  at more than one  location during                 
            the  same  day  if  the  sales  are  made  at  the                 
            customary business location of one  or more of the                 
            holders, at another location by an employee of one                 
            of the stations  or networks,  or by a  registered                 
            vendor; allowing permittees that are noncommercial                 
            broadcasting stations or networks of such stations                 
            to  contract with  vendors  to  sell pull-tabs  on                 
            behalf of the permittee at retail  establishments,                 
            eating  establishments,  and  establishments  with                 
            liquor   licenses;   allowing   municipalities  to                 
            prohibit vendors from conducting gaming activities                 
            within  the municipality;  relating to  reports by                 
            the commissioner regulating  charitable gaming  to                 
            the   legislature;   requiring   registration   of                 
            vendors;    relating    to    multiple-beneficiary                 
            charitable  gaming  permits  and  door prizes  for                 
            charitable gaming; preventing persons  with felony                 
            convictions  or  convictions for  crimes involving                 
            theft  or dishonesty  or a  violation of  gambling                 
            laws from  being  involved  in  charitable  gaming                 
            activities  as  a  permittee,   licensee,  vendor,                 
            person responsible for an activity, fund raiser or                 
            consultant  of  a  licensee,  or   employee  in  a                 
            managerial or supervisory  capacity and  providing                 
            exceptions for certain  persons whose  convictions                 
            are  at  least  10  years  old  and  are  not  for                 
            violation of  an unclassified felony  described in                 
            AS 11, a class A felony, or extortion; prohibiting                 
            a  prize  or  award of  more  than  $250,000  in a                 
            pull-tab game that provides a right to participate                 
            in a  lottery; requiring a vendor contracting with                 
            a  permittee  to  pay the  permittee  at  least 50                 
            percent of the ideal net  for each pull-tab series                 
            delivered  to the  vendor  by the  permittee;  and                 
            providing for an effective date.                                   
                                                                               
            The committee ADOPTED CSSB 200(FIN) word draft "E"                 
            and  made amendments.    Testimony  was  heard  in                 
            support  and discussion was  had by  Diane Kaplin,                 
            Alaska   Public   Broadcasting   Commission;  John                 
            Hansen,   Jr.,   Gaming  Manager,   Department  of                 
            Commerce & Economic Development;  Jerry Luckhaupt,                 
                                                                               
                                                                               
            Attorney, Legislative  Legal Counsel,  Legislative                 
            Affairs  Agency;  and  Paul   Fuhs,  Commissioner,                 
            Department  of  Commerce  & Economic  Development.                 
            Senator Kerttula voiced his concern with regard to                 
            legalized gambling  by the  state.   CSSB 200(FIN)                 
            was REPORTED OUT  of committee  as amended with  a                 
            "do  pass"  and with  a zero  fiscal note  for the                 
            Department  of  Commerce  & Economic  Development.                 
            Co-chairs  Pearce and  Frank, Senators  Jacko, and                 
            Rieger signed  a "do  pass."   Senators Kelly  and                 
            Kerttula signed a "do not pass," and Senator Sharp                 
            signed a "no rec."                                                 
                                                                               
  CSSB 76-  An Act requiring regulations relating to pull-tabs                 
  (JUD)     adopted by the Department of Commerce and Economic                 
            Development  to  be  consistent   with  the  North                 
            American Gaming  Regulators Association  standards                 
            on pull-tabs; allowing permittees to contract with                 
            vendors  to  sell  pull-tabs   on  behalf  of  the                 
            permittee; restricting the  purchase of  pull-tabs                 
            by   certain  persons;   requiring  the   sale  of                 
            pull-tabs by vendors  to be  solely by a  pull-tab                 
            ticket  dispensing  machine;   requiring  receipts                 
            before  certain prizes  may  be paid;  prohibiting                 
            distributors from supplying pull-tabs  to vendors;                 
            relating to registration of vendors; requiring the                 
            licensing of out-of-state  manufacturers; allowing                 
            public or nonprofit broadcasting  stations to sell                 
            pull-tabs at  more than  one location;  preventing                 
            persons  with  certain   convictions  from   being                 
            involved  in  charitable  gaming  activities as  a                 
            permittee,  licensee,  vendor,  person responsible                 
            for an activity,  fund raiser  or consultant of  a                 
            licensee,   or   employee  in   a   managerial  or                 
            supervisory capacity and providing  exceptions for                 
            certain persons  whose convictions are at least 10                 
            years   old;   relating   to  multiple-beneficiary                 
            charitable gaming  permits  and  door  prizes  for                 
            charitable   gaming;   requiring   Department   of                 
            Commerce  and  Economic  Development  approval  of                 
            contracts between charitable gaming permittees and                 
            operators  before gaming  may occur;  limiting the                 
            amount of authorized expenses  to a percentage  of                 
            adjusted gross  income  for  a  charitable  gaming                 
            activity; relating to the reporting and payment of                 
            a  percentage  of  the  adjusted  gross  income by                 
            operators to permittees;  requiring Department  of                 
            Commerce  and  Economic  Development  approval  of                 
            contracts   between   permittees   and  operators;                 
            allowing the commissioner of commerce and economic                 
            development to issue orders prohibiting violations                 
            of state gaming laws; relating to the authority of                 
            the   commissioner   of   commerce  and   economic                 
            development  to   suspend  or  revoke   a  permit,                 
                                                                               
                                                                               
            license, or  registration; relating to the uses to                 
            which  charitable  gaming  proceeds  may  be  put;                 
            relating  to  `political   uses'  and   `political                 
            organizations'  as those  terms  are used  in  the                 
            charitable gaming  statutes; and providing  for an                 
            effective date.                                                    
                                                                               
            The committee  rescinded its action  adopting CSSB
            76(FIN) work draft  "M" and amendment 1.   It then                 
            ADOPTED CSSB  76(FIN) work  draft "S"  and ADOPTED                 
            amendments 1,  2 and 3.   CSSB 76(FIN)  work draft                 
            "S" was REPORTED OUT of  committee as amended with                 
            a "do pass"  and with a  zero fiscal note for  the                 
            Department of Commerce & Economic Development  and                 
            a new fiscal note for the Department of Revenue in                 
            the amount of $86.9.   Co-chairs Pearce and Frank,                 
            Senators Jacko, Kelly, Sharp and Rieger signed "do                 
            pass."  Senator Kerttula signed "no rec."                          
                                                                               
  These bills were scheduled but not heard:                                    
                                                                               
  SB  59 - SCHOOL CONSTRUCTION & MAINTENANCE GRANTS                            
  SB  60 - APPROP:SCHOOL CONSTRUCTION GRANT FUND                               
  SB 165 - APPROP: ALYESKA SETTLEMENT FUND                                     
  SB 180 - SCHOOL CONSTRUCTION DEBT REIMBURSEMENT                              
  SB 181 - SCHOOL CONSTRUCTION GRANTS                                          
  SB 183 - APPRO: EXXON VALDEZ RESTORATION PROJECTS                            
                                                                               
                                                                               
  SENATE BILL NO. 50:                                                          
                                                                               
       An Act making appropriations  for capital projects; and                 
       providing for an effective date.                                        
                                                                               
  Department of Natural Resources:                                             
                                                                               
  NICO BUS,  Chief, Financial Services, Department  of Natural                 
  Resources,  came  before  the committee  to  speak  to three                 
  projects.    The first  project  was the  RS  2477 Assertion                 
  Project from the federal government in the amount of $720.0.                 
  He said it was  not part of the original  Governor's budget.                 
  The state  has been  informed that  there is  a deadline  to                 
  present the  recommendations for approximately  1,500 right-                 
  of-ways to  the Congress by May 1.   The $720.0 pays for the                 
  mapping and  identification for this  presentation in  order                 
  for  the state  to receive  title and  ownership.   Co-chair                 
  Pearce asked  the difference  between this  request and  the                 
  request in the original SB 50 from the Governor for $2,265.0                 
  for owner state assertion  and land selections.  He  said in                 
  the land selection capital project,  $175.0 was included for                 
  the most critical right-of-ways.   The department understood                 
  that would be all that was asked for and those would be used                 
  as  test cases dealing with the federal government.  Because                 
                                                                               
                                                                               
  of the time frame of the  statue of limitations, the request                 
  was amended to include all right-of-ways.                                    
                                                                               
  The next  project was  the  Alaska North  Slope Royalty  Oil                 
  Price Reopeners for $100.0 enabling the state to discuss oil                 
  price and methodology with the large oil companies.  It will                 
  buy expert advice  on such  things as transportation  costs,                 
  capitalization, destination value, etc.  It will be  used as                 
  a contingency fund if there is a need for it.                                
                                                                               
  The last amended  request was funding  for the Alaska Oil  &                 
  Gas  Conservation  Commission  for $100.0  to  evaluate  the                 
  Alaska Prudhoe Bay Reservoir models that large oil companies                 
  have done.   This  is important for  the state  in order  to                 
  maximize  the  production of  oil  and determining  the most                 
  appropriate time for gas  sales.  The money will be used for                 
  consultants to evaluate  the existing  models.  SENATOR  TIM                 
  KELLY  asked why the  full time state  consultants could not                 
  take  on this  project.  Mr.  Bus said  that their  time was                 
  already being taken  up by North  Slope work with the  large                 
  oil companies to insuring production is up to standards.  In                 
  answer to  Senator Sharp, Mr. Bus explained  that the Alaska                 
  Oil  & Gas Conservation  Commission's responsibility  was to                 
  maximize  existing  reservoir  analysis  for  the  state  to                 
  optimize production.   The reservoir in  the request is  for                 
  future oil and  gas explorations.   Co-chair Pearce  pointed                 
  out that  their is  a confidentiality  issue that  may be  a                 
  problem if the commission was asked to share information.                    
                                                                               
  Co-chair Pearce  asked how  many models  would be  analyzed.                 
  Mr. Bus said that  the oil companies are asserting  that the                 
  most advantageous  time to  sell gas  would be  in the  year                 
  2000.    This  reservoir  study  would make  an  independent                 
  determination  regarding the oil company's conclusion.  RAGA                 
  ELIM, Special  Assistant, Department  of Natural  Resources,                 
  said that there were  three models by oil companies  and the                 
  request would retain  a consultant who would  evaluate these                 
  existing models and provide an  independent analysis of that                 
  information to help the state determine the appropriate time                 
  to shift to gas sales.                                                       
                                                                               
  SHELBY  STASTNY,  Director, Office  of Management  & Budget,                 
  said  that  the chairman  of  the commission  had  told him,                 
  because of the intense  pressure to start gas sales  and the                 
  oil  companies reluctance to  agree that it  is not feasible                 
  for at least ten years, this independent study was needed to                 
  make a determination for the state.                                          
                                                                               
  Co-chair  Pearce said  that  the  latest  phase of  the  gas                 
  handling facility on the north slope  was going on line this                 
  year.  Since all the gas in Prudhoe  Bay is being reinjected                 
  to help produce oil,  she felt that the companies  know what                 
  they are talking about  and that they are using  all the gas                 
  right  now.    She  felt  the  state  would  lose  some  oil                 
                                                                               
                                                                               
  production if gas  was sold off  at the  present time.   She                 
  agreed that the state needed this  information as a base for                 
  decision making.                                                             
                                                                               
  In answer to Senator  Kelly, Mr. Elim said that there is one                 
  vacancy on  the Alaska  Oil &  Gas Conservation  Commission.                 
  Mr.  Elim said that  the vacancy must be  filled by a public                 
  member.                                                                      
                                                                               
  SENATOR STEVE RIEGER asked for  an explanation regarding the                 
  difference between gas sales and reinjection.  Mr. Elim said                 
  that the  oil  companies have  given  their time  frame  for                 
  optimum gas revenues to be between 2015 and 2030.   There is                 
  increasing interest for potential gas sales.  Given the time                 
  frame that the state  is hearing from the oil  industry, the                 
  state is asking for  independent information to find  out if                 
  that  information is accurate.  Senator  Rieger said that he                 
  would like to know what  the dynamics would be to cause  the                 
  interests of the state to diverge from the oil companies.                    
                                                                               
  Mr. Stastny  said that  according to  Harold Hines,  special                 
  assistant to oil & gas commission in the Governor's  office,                 
  when gas sales do  begin it will be around  $300-500 million                 
  of revenue a year.  It seemed that the oil companies may not                 
  have that same  interest since they  have a pipeline of  oil                 
  and have enough gas to satisfy customers from other sources.                 
  So  he  could see  a  divergent  interest  occurring at  the                 
  present time.                                                                
                                                                               
  Department of Public Safety:                                                 
                                                                               
  C. E. SWACKHAMMER, Deputy Commissioner, Department of Public                 
  Safety, said  that the department  had two items  for budget                 
  amendments.  The first was a  $50.0 appropriation to correct                 
  the  ventilation  system  in  the  Kodiak  jail  which is  a                 
  settlement of  a  lawsuit.    He  explained  that  the  poor                 
  condition  of  the Kodiak  jail  caused inmates  to  bring a                 
  lawsuit against  the city.   This request would  provide the                 
  state's contribution for clean air for prisoners.  In answer                 
  to Senator Sharp, he said that the Kodiak jail is a contract                 
  facility but  it was cheaper for the  state to help with the                 
  jail improvements than  to build  a new facility.   He  said                 
  that the jail would eventually need to be replaced.  He said                 
  $50.0 would pay the state's portion of the lawsuit.                          
                                                                               
  Mr. Swackhammer said that the request  of $150.0 was for the                 
  cost of seizing vessels that  were caught fishing illegally.                 
  Last year vessels from 20 to 200 feet were seized.   It will                 
  result  in income to the state for  penalties.  If the state                 
  decides  to  be aggressive  to  correct the  illegal fishing                 
  activity, then seizure  must be made  and the funds must  be                 
  provided to accomplish the seizures.   Discussion was had by                 
  Senators Jacko, Rieger, Co-chair Pearce, and Mr. Swackhammer                 
  regarding the high  cost of moving  the seized vessels.   In                 
                                                                               
                                                                               
  answer to Senator Sharp, Mr.  Swackhammer said cost recovery                 
  had been realized  through fines in  the amount of about  $1                 
  million.  Mr.  Stastny said that last year  the money had to                 
  be taken  out of other budget  items to fund  the seizure of                 
  three  vessels  and that  was  when  it was  decided  that a                 
  revolving  fund  be  established  for  this  purpose.    Mr.                 
  Swackhammer  said  that legislation  was  being  drafted and                 
  would  be  ready  next session  between  the  Departments of                 
  Public Safety, Fish &  Game, and Law to develop  a fund such                 
  as Mr. Stastny described.                                                    
                                                                               
  Senator Jacko asked for  a detailed break down of  the costs                 
  for moving  the three seized vessels.   Mr. Swackhammer said                 
  that he would provide that information to the committee.                     
                                                                               
                                                                               
  SENATE BILL NO. 58:                                                          
                                                                               
       An Act relating to the longevity bonus program.                         
                                                                               
                         Recess 10:15am                                        
                        Reconvene 10:18am                                      
                                                                               
  Senator Sharp MOVED for adoption of  CSSB 58(FIN) work draft                 
  "E" dated April 16, 1993.  No objections being heard, it was                 
  ADOPTED.                                                                     
                                                                               
  Senator  Sharp  said  that  the  bill  phased  out  all  new                 
  applicants to the  longevity bonus  program by December  31,                 
  1996.  It would stairstep down benefits that new  applicants                 
  can receive after January 1, 1994.   Everyone already in the                 
  program would continue to  receive $250 a month.   Section 2                 
  said that if a person is disqualified from receiving a bonus                 
  for purposes  called  for  that  they may  not  reapply  for                 
  application unless they apply before the cut-off date as set                 
  forth in  this legislation.  Section  3, items 5  and 6, set                 
  out certain disqualifications.                                               
                                                                               
  Co-chair  Pearce said  that it was  intended that  the draft                 
  have a severability  clause for  the section that  disallows                 
  those seniors  who move  to Alaska  after their  eligibility                 
  year.                                                                        
                                                                               
  In  answer to  Senator Kelly,  Senator  Sharp said  that all                 
  present situations, including medical leave, that are exempt                 
  from disqualification remain  so, and  that only those  that                 
  become disqualified under  present statutes have  to reapply                 
  under the new regulations.                                                   
                                                                               
  NANCY    BEAR    USERA,    Commissioner,    Department    of                 
  Administration, spoke in support of CSSB  58(FIN).  She said                 
  the Governor's proposal  had tried  to protect the  original                 
  intent of the  longevity bonus program which was  to provide                 
                                                                               
                                                                               
  uninterrupted residence  and provide  an opportunity and  an                 
  incentive for  long-time Alaskans  to stay  in the  state of                 
  Alaska.  Because  of the lawsuit in 1983  that made terms of                 
  the original  program unconstitutional, the  program now had                 
  23,000 participants and is growing at a rate of $5 million a                 
  year.  Over  the life of  the program, this translates  into                 
  $150  million  cost to  the  state to  continue  paying each                 
  year's  worth  of   new  entrants   into  the  program   and                 
  unaffordable.  The  resources spent on this  not needs-based                 
  program will be money unavailable to provide more meaningful                 
  services to seniors in the future.  The long term plan is to                 
  protect participants and  provide a reasonable phase  out of                 
  the  program.   She  said  that  the department  was  in the                 
  process of designing a package of bills that expand assisted                 
  living  opportunities  for  seniors as  well  as  expand the                 
  program "elders against abuse".  This would provide a safety                 
  net for  the  future  with  a more  meaningful  package  for                 
  current  seniors and those  to come.  She  said this was the                 
  seventh year of  debate of this  issue and she  felt it  was                 
  hard for the seniors for this  issue to be remain undecided.                 
  Once this issue  was decided, the  state could then move  on                 
  into other areas for seniors.                                                
                                                                               
  RIP ANDREWS,  American Association of Retired  Persons, said                 
  that a letter had gone out to the committee regarding SB 58.                 
  He  said that his organization would  prefer an annuity bill                 
  but  did support the  Governor's phase out  bill rather than                 
  the House version which was an  immediate cut off of January                 
  1, 1994.                                                                     
                                                                               
  Co-chair Pearce said  that additional  language in the  CSSB
  58(FIN) was needed  relating to disqualification on  page 2,                 
  lines 28  through page 3, line  1.  She questioned  the need                 
  for a severability clause for Section 2.  Senator Sharp said                 
  that he  had requested the  advisability from legal  on that                 
  issue and was expecting an answer momentarily.                               
                                                                               
  Co-chair Pearce announced that CSSB 58(FIN) would be held in                 
  committee.                                                                   
                                                                               
  SB200                                                                        
                                                                               
  SENATE BILL NO. 200:                                                         
                                                                               
       An Act  allowing the holders of  a multiple-beneficiary                 
       charitable  gaming  permit  that  consists entirely  of                 
       noncommercial broadcasting stations or networks of such                 
       stations  to sell a  pull-tab series  at more  than one                 
       location during the same  day if the sales are  made at                 
       the customary business location  of one or more of  the                 
       holders, at another  location by an employee  of one of                 
       the stations or  networks, or  by a registered  vendor;                 
       allowing permittees that are noncommercial broadcasting                 
       stations or networks of such  stations to contract with                 
                                                                               
                                                                               
       vendors to sell pull-tabs on behalf of the permittee at                 
       retail  establishments,   eating  establishments,   and                 
       establishments   with    liquor   licenses;    allowing                 
       municipalities  to  prohibit  vendors  from  conducting                 
       gaming activities within the municipality; relating  to                 
       reports  by  the  commissioner   regulating  charitable                 
       gaming to  the legislature;  requiring registration  of                 
       vendors;  relating  to  multiple-beneficiary charitable                 
       gaming  permits and door  prizes for charitable gaming;                 
       preventing   persons   with   felony   convictions   or                 
       convictions for crimes involving theft or dishonesty or                 
       a violation  of gambling  laws from  being involved  in                 
       charitable gaming activities as  a permittee, licensee,                 
       vendor, person responsible for an activity, fund raiser                 
       or  consultant  of   a  licensee,  or  employee   in  a                 
       managerial  or  supervisory   capacity  and   providing                 
       exceptions for certain persons whose convictions are at                 
       least 10  years old  and are  not for  violation of  an                 
       unclassified  felony  described  in AS  11,  a  class A                 
       felony, or extortion;  prohibiting a prize or  award of                 
       more than $250,000 in a  pull-tab game that provides  a                 
       right to participate  in a lottery; requiring  a vendor                 
       contracting with a  permittee to  pay the permittee  at                 
       least 50  percent of  the ideal  net for  each pull-tab                 
       series delivered to  the vendor  by the permittee;  and                 
       providing for an effective date.                                        
                                                                               
  Co-chair  Pearce said that SB  200 was before the committee.                 
  She pointed out  that several years ago  the legislature had                 
  given public radio the authority to develop a statewide game                 
  in order to raise money for  an endowment to replace general                 
  fund that are  used to  support public radio.   She  invited                 
  Diane Kaplin, President & CEO,  Alaska Public Radio Network,                 
  to join the committee at the table and speak to the bill.                    
                                                                               
  End SFC-93 #60, Side 1                                                       
  Begin SFC-93 #62, Side 1                                                     
                                                                               
  DIANE  KAPLIN  said  that in  1967  a  Presidential Carnegie                 
  Commission created  the concept  of the  public broadcasting                 
  system in the United States.  It set out the  aspirations of                 
  what  the  public broadcast  system could  do.   One  of the                 
  important aspects was how  the system would be  financed and                 
  that a tax would be collected  on every television and radio                 
  set sold in the U.S.  That tax section was not adopted, and,                 
  annually,  a battle is fought  over funds for financing pbs.                 
  In  Alaska,  a  very  large  percentage  of  our  population                 
  receives only public broadcasting, and it has become more of                 
  an issue.  The legislature has supported substantial amounts                 
  of funding for public broadcasting with the investment at $6                 
  million annually.  With the decline of oil revenues in 1986,                 
  public  broadcast  has been  looking for  new ways  to raise                 
  revenues  recognizing a decline of state  grants.  Today, 32                 
  percent  of  state grants  have  been  lost.   In  1986, all                 
                                                                               
                                                                               
  stations  carried the  public national  radio  schedule, now                 
  only three carry it because of  the cost.  Several countries                 
  including Denmark,  Canada, Norway, Finland and  England use                 
  games to finance their system.  There was a federal law that                 
  prohibited on air contests or games.  PBS approached Senator                 
  Stevens to  get that  federal law  changed and  in 1989  the                 
  charity gaming act was signed.  At that point, pbs in Alaska                 
  approached the legislature and HB 587 was passed to allow an                 
  on-the-air  game.  Last  year, the  legislature appropriated                 
  $50,000 to hire  experts to put together  a game to  fund an                 
  endowment for support of  pbs.  Dave Rose, former  member of                 
  the permanent fund  dividend corporation, was hired,  and he                 
  has set  up  a  plan  for an  endowment  trust  fund.    She                 
  explained that SB  200 would allow  pbs to move towards  the                 
  goal of  setting up a game and the  endowment.  A poll taken                 
  last year of 3200 Alaskans said  that 84 percent approved or                 
  were neutral about  the subject  of the appropriateness  for                 
  pbs to raise money on the air by a game.                                     
                                                                               
  Senator Kelly said  he was opposed to SB 200 but asked if SB
  200 allowed for the sale of  pull tabs on the ferry  system.                 
  JOHN HANSEN, JR.,  Gaming Manager, Department of  Commerce &                 
  Economic Development, said that  pull tabs would be able  to                 
  be sold on the ferries.  Senator Kelly felt that would  be a                 
  problem.   He said  he was also  opposed to pull  tabs being                 
  sold in restaurants.   Ms. Kaplin  said that in rural  areas                 
  that might be the  only place that could sell the pull tabs.                 
  Mr.  Hansen  said   that  SB  200  would  allow  any  retail                 
  establishment to sell pull tabs.                                             
                                                                               
  Senator Jacko MOVED for adoption of CSSB 200(FIN) work draft                 
  "E".  No objections being heard, it was ADOPTED.                             
                                                                               
  JERRY  LUCKHAUPT,  Attorney,   Legislative  Legal   Counsel,                 
  Legislative Affairs Agency,  suggested that the words  "pull                 
  tab series  or the" on page 7, line  14 be deleted.  Senator                 
  Jacko MOVED an amendment deleting the words "pull tab series                 
  or the" on  page 7, line 14, including a change to the title                 
  to that affect.   No objections being heard, the  words were                 
  deleted and the title changed.                                               
                                                                               
  Senator Kelly asked how  the pull tab game would  be played.                 
  Ms. Kaplin said that the pull tabs  would be mailed in and a                 
  drawing  would be  held.   She said  that it  could be  held                 
  several  times   a  year,   limited  to   twelve  hours   of                 
  broadcasting a  year over  the air.   The  station would  be                 
  prohibited  from  using  operators, and  the  game  would be                 
  conducted by  Alaska  public radio  network.   It would  not                 
  receive  any state moneys to fund the  games.  She said that                 
  the majority of  the funds would go into an  endowment.  Mr.                 
  Hansen  said that  public radio  would have  to get  special                 
  permission to hold funds for more than one year.  Ms. Kaplin                 
  said   the  board  of  directors  met   on  February  2  and                 
  established a trust fund.  She  said that 50 percent of  the                 
                                                                               
                                                                               
  funds  would  go   into  a  general  endowment   for  public                 
  broadcasting statewide and the balance would be divided into                 
  separate endowment  accounts for each  broadcasting station.                 
  She said that  there was some  concern that funds should  be                 
  retained by the communities that raised them.  Senator Kelly                 
  felt that the endowment should be outlined in the bill.  Ms.                 
  Kaplin said that she  did not object to that.   In answer to                 
  Co-chair Pearce, Mr.  Luckhaupt said that a  certain percent                 
  could  be  put into  an endowment.    Discussion was  had by                 
  Senators  Rieger,  Pearce,  Mr.  Luckhaupt  and  Mr.  Hansen                 
  regarding the endowment and existing statutes regarding  the                 
  use of the gaming funds.                                                     
                                                                               
  Senator Kelly MOVED  for adoption of a  conceptual amendment                 
  that would provide for  at least half of the  adjusted gross                 
  income  to  go  into an  endowment  with  the Commissioner's                 
  approval.   Mr. Hansen  said that  under SB  76 at  least 30                 
  percent of the adjusted  net income would be required  to be                 
  shown as net proceeds.                                                       
                                                                               
  Mr. Hansen said that gross sales  were defined as the dollar                 
  paid for the pull tab game.   After prizes are subtracted it                 
  is  called the  adjusted gross  income.  After  expenses are                 
  paid the result is net proceeds.  Under SB 76, 30 percent of                 
  the adjusted gross income is required  to be reported as net                 
  proceeds.  In answer to Senator  Kelly, Mr. Hansen said that                 
  in  addition to regular  reports, SB 200  required a special                 
  report to the legislature.                                                   
                                                                               
  Senator  Kerttula asked for  the amendment to  be in writing                 
  rather  than  a  conceptual   amendment.    Co-chair  Pearce                 
  announced an at ease.                                                        
                                                                               
                         Recess 11:10am                                        
                        Reconvene 11:23am                                      
                                                                               
  Senator Kelly MOVED for  adoption of amendment 3 on  page 7,                 
  line  24 (copy of file).  No  objections being heard, it was                 
  ADOPTED.                                                                     
                                                                               
  Senator Kerttula voiced his opposition  to using gambling to                 
  fund public  broadcasting.  He  said that he  understood the                 
  need for  becoming independent  from state  funds but  asked                 
  about  the moral  issues  around gambling  and how  it would                 
  effect  the image of  public broadcasting.   Ms. Kaplin said                 
  that discussion had been going on for years on this subject.                 
  Some local boards were opposed to using gambling as a way to                 
  raise funds.   This was one reason the recent poll was done.                 
  Every station  is locally owned and operated  by a community                 
  board.  Each  station will  have to make  this decision  for                 
  themselves.    She said  that  the  game would  be  aimed at                 
  viewers who wanted  to be supportive of  public broadcasting                 
  and would not  target traditional  gamblers or presented  in                 
  gambling institutions.   The choice may come down  to giving                 
                                                                               
                                                                               
  up public broadcasting  and its  services or participate  in                 
  the game for support.  She believed that some stations would                 
  opt not to participate.                                                      
                                                                               
  Senator  Kerttula  maintained  his  opposition  to  allowing                 
  gambling in the state  and proposed that the state  could be                 
  seen as an advocate  of gambling.  He questioned  what other                 
  forms  of gambling  could  be approved.   He  maintained his                 
  objection to public broadcasting participating in gaming and                 
  felt it set a bad tone.                                                      
                                                                               
  Senator Rieger MOVED for adoption of amendment  4 adding the                 
  words "the earnings  of which  may be used"  after the  word                 
  fund to amendment 3 (copy on file).  Senator Sharp OBJECTED.                 
  Discussion  was  had  by Co-chair  Pearce,  Senators Rieger,                 
  Jacko, Sharp, and Mr. Luckhaupt regarding  the sunset of the                 
  bill  and  the possibility  of  earnings from  the endowment                 
  supporting public broadcasting.  Senator Sharp withdrew  his                 
  objection.  No  further objections being heard,  amendment 4                 
  was ADOPTED.                                                                 
                                                                               
  Co-chair Pearce asked Mr. Luckhaupt what would happen to the                 
  endowment  after  the sunset  date  in the  present proposed                 
  bill.  Mr.  Luckhaupt said that  when the bill sunsets,  the                 
  language  restricting  endowment  uses  would  end  and  his                 
  opinion  was  that public  broadcasting  could then  use the                 
  endowment at that time.   Senator Kelly said that he did not                 
  disagree with that.                                                          
                                                                               
  Senator Jacko asked, of the amount raised  by the endowment,                 
  how much  would be  generated from  federal matching  funds.                 
  Ms. Kaplin said that  it is a substantial amount.   Matching                 
  funds would be 13 cents on the dollar, and in rural areas or                 
  native stations it  varies between  19 and 26  cents on  the                 
  dollars.                                                                     
                                                                               
  Senator  Sharp asked if it  was their intention to advertise                 
  pull  tabs on  public broadcasting.   Ms.  Kaplin said  that                 
  advertising on the air was prohibited by law.  She said that                 
  the law  allowed 12 hours a year on the air for the game and                 
  most of that time would be  used for the on-the-air drawing.                 
  Senator Sharp said it would  disturb him, especially because                 
  of the young  people, if there was  a promotion on  the air.                 
  Senator Kerttula said  that "friends"  of the station  could                 
  buy air time on other stations or newspaper ads.  Ms. Kaplin                 
  maintained that any advertising would  be disallowed by law.                 
  Mr.  Luckhaupt  said   that  there  cannot  be   any  gaming                 
  advertising or promotions  on commercial broadcasting.   The                 
  twelve  hours  that Ms.  Kaplin  mentioned are  an exception                 
  provided in this legislation.                                                
                                                                               
  End SFC-93 #62, Side 1                                                       
  Begin SFC-93 #64, Side 1                                                     
                                                                               
                                                                               
  PAUL FUHS, Commissioner, Department  of Commerce &  Economic                 
  Development, said that several years ago the legislature had                 
  passed authorization for APRN to hold a game.  He said  that                 
  because of existing statutes, APRN had not been able to hold                 
  a game that  the department could  authorize.  He said  that                 
  the  department  and  APRN  needed  clarification  from  the                 
  legislature regarding what  could be authorized in  order to                 
  proceed.  He said that he was not opposed to SB 200 but said                 
  that  the  Governor  was opposed  to  extending  gambling in                 
  Alaska.                                                                      
                                                                               
  Senator Jacko MOVED for passage of CSSB  200(FIN) as amended                 
  from committee  with individual  recommendations.   Senators                 
  Kerttula and Kelly OBJECTED  for the record.  CSSB  200(FIN)                 
  was REPORTED OUT of committee  with a "do pass" with  a zero                 
  fiscal  note  for  the  Department  of Commerce  &  Economic                 
  Development.   Co-chairs Pearce  and Frank,  Senators Jacko,                 
  and Rieger signed a "do pass."   Senators Kelly and Kerttula                 
  signed a "do not pass," and Senator Sharp signed a "no rec."                 
                                                                               
                                                                               
                         Recess 11:50am                                        
                        Reconvene 12:05pm                                      
                                                                               
                                                                               
  CS FOR SENATE BILL NO. 76(JUD):                                              
                                                                               
       An Act  requiring  regulations  relating  to  pull-tabs                 
       adopted by  the  Department of  Commerce  and  Economic                 
       Development to  be consistent  with the  North American                 
       Gaming Regulators Association  standards on  pull-tabs;                 
       allowing permittees  to contract  with vendors  to sell                 
       pull-tabs on behalf  of the permittee;  restricting the                 
       purchase of pull-tabs by certain persons; requiring the                 
       sale of pull-tabs by vendors to be solely by a pull-tab                 
       ticket  dispensing  machine; requiring  receipts before                 
       certain prizes  may be  paid; prohibiting  distributors                 
       from  supplying  pull-tabs   to  vendors;  relating  to                 
       registration  of  vendors; requiring  the  licensing of                 
       out-of-state   manufacturers;   allowing    public   or                 
       nonprofit  broadcasting stations  to sell  pull-tabs at                 
       more than one location; preventing persons with certain                 
       convictions from  being involved  in charitable  gaming                 
       activities  as a  permittee,  licensee, vendor,  person                 
       responsible for an activity, fund raiser or  consultant                 
       of  a  licensee,   or  employee  in  a   managerial  or                 
       supervisory  capacity  and  providing   exceptions  for                 
       certain persons whose convictions are at least 10 years                 
       old; relating to multiple-beneficiary charitable gaming                 
       permits   and  door   prizes  for   charitable  gaming;                 
       requiring   Department   of   Commerce   and   Economic                 
       Development  approval  of contracts  between charitable                 
       gaming  permittees  and  operators  before  gaming  may                 
                                                                               
                                                                               
       occur; limiting the amount of  authorized expenses to a                 
       percentage  of adjusted gross  income for  a charitable                 
       gaming activity; relating to  the reporting and payment                 
       of  a  percentage  of  the  adjusted  gross  income  by                 
       operators  to  permittees;   requiring  Department   of                 
       Commerce and Economic Development approval of contracts                 
       between   permittees   and   operators;  allowing   the                 
       commissioner of  commerce and  economic development  to                 
       issue  orders prohibiting  violations  of state  gaming                 
       laws; relating to the authority  of the commissioner of                 
       commerce and economic development to suspend or  revoke                 
       a  permit, license,  or registration;  relating to  the                 
       uses to which  charitable gaming  proceeds may be  put;                 
       relating   to   `political    uses'   and    `political                 
       organizations'  as   those  terms   are  used  in   the                 
       charitable  gaming  statutes;  and   providing  for  an                 
       effective date.                                                         
                                                                               
  Senator  Sharp  MOVED  to  RESCIND  prior  committee  action                 
  adopting CSSB 76(FIN)  work draft "M"  and amendment 1.   No                 
  objections being heard, prior action was RESCINDED.                          
                                                                               
  Senator Sharp  MOVED for ADOPTION of CSSB 76(FIN) work draft                 
  "S" dated April 16, 1993.  No objections being heard, it was                 
  ADOPTED.    Co-chair  Pearce outlined  the  changes  in CSSB
  76(FIN) work  draft "S".   She said  that felony  exclusions                 
  remained in the bill, net proceeds  from pull tabs and bingo                 
  (not  raffle  proceeds) are  prohibited for  direct campaign                 
  contributions  to  candidates  as  in  the prior  bill,  net                 
  proceeds  are  also  prohibited  for  payment to  registered                 
  lobbyists, third  party vendor language has  been tightened,                 
  multiple beneficiary  permits allowed, the  APRN section has                 
  been removed, and  language was removed allowing  the use of                 
  vendor machines for pull  tabs.  She said that  an amendment                 
  had been prepared to allow package stores to  participate in                 
  the sale of pull tabs.  She invited John Hansen, Jr., Gaming                 
  Manager,  Department of Commerce  & Economic  Development to                 
  rejoin the members at the table.                                             
                                                                               
  Senator Sharp MOVED for ADOPTION of  amendment 1 on page 15,                 
  line 16 of  CSSB 76(FIN) work  draft "S".   Mr. Hansen  said                 
  that amendment 1  was a technical amendment  that would give                 
  an exception to the Department of  Labor that would allow 16                 
  to 19 year  olds to work in restaurants where  pull tabs are                 
  sold.  The  way the bill  is drafted, it basically  excludes                 
  those establishments from  being able to  sell pull tabs  as                 
  vendors.    No  objections  being  heard,  amendment  1  was                 
  ADOPTED.                                                                     
                                                                               
  Senator Sharp MOVED for ADOPTION of  amendment 2 on page 15,                 
  line 11, with  consideration of the title.   Co-chair Pearce                 
  explained that amendment 2 would  add package store licenses                 
  back into the  third party  vendor.  In  answer to  Co-chair                 
  Pearce,  Mr. Hansen  said that  package  stores were  at the                 
                                                                               
                                                                               
  present time  selling pull  tabs in  Alaska.  No  objections                 
  being heard, amendment 2 was ADOPTED.                                        
                                                                               
  Mr.  Hansen  said that  currently  in Alaska  pull  tabs are                 
  authorized and allowed  to be  sold in any  location.   This                 
  bill would provide for permittees to go directly to bars and                 
  liquor stores and receive a minimum of 50 percent of the net                 
  proceeds at  the time  they deliver  the pull  tabs.   Under                 
  current,  these  sales  are  occurring  using  operators  or                 
  permittees.   When  they  use an  operator  they  receive  a                 
  minimum  of 15  percent  of net  proceeds,  that minimum  is                 
  usually the maximum.   Discussion was had by Mr.  Hansen and                 
  Senator Kelly regarding net proceeds, expenses and profit.                   
                                                                               
  Co-chair Pearce invited  Paul Fuhs, Commissioner, Department                 
  of  Commerce  &  Economic Development,  to  come  before the                 
  committee again and  speak to SB 76.  Mr. Fuhs said that the                 
  Governor was opposed to gambling but  if the state was going                 
  to authorize  it, he  felt profits  should be  going to  the                 
  charities.  He said that gaming associations were opposed to                 
  the  legislation.  He  explained that  every bar  could have                 
  pull tabs under the existing law, and of the 1,320 permittee                 
  locations in Alaska,  537 are bars.   The advantage of  this                 
  legislation  is  that  the charities  would  get  50 percent                 
  instead of 15 percent  under existing legislation.   He said                 
  that his department  was in support of  prohibiting proceeds                 
  for use for campaign contributions.                                          
                                                                               
  Discussion was had  by Senator Kelly, Mr.  Fuhs and Co-chair                 
  Pearce  regarding the difference  between using  third party                 
  vendors  and  operators.    Mr.   Fuhs  estimated  that  the                 
  combination of stopping the diversion  of gaming proceeds to                 
  campaign contributions and lobbyists and the increase in the                 
  percentages would result  in about $10  million more a  year                 
  going to charities than under existing legislation.  He said                 
  that about $16 million net goes  to charities at the present                 
  time.                                                                        
                                                                               
  Co-chair said that a  new fiscal note for the  Department of                 
  Revenue  shows $86.9  but  because  of  the addition  of  an                 
  auditor  position it could provide $100.0 additional revenue                 
  for the department.                                                          
                                                                               
  Senator Rieger  asks for clarification  regarding permittees                 
  expenses.  Mr.  Hansen said  that under CSSB  76(FIN), if  a                 
  permittee  chooses  to use  an  operator  or  a  vendor,  or                 
  operates the game out of their own bingo hall, they are  not                 
  going  to be  allowed to  use more  than  70 percent  of the                 
  adjusted gross income  for overall expenses which  leaves 30                 
  percent for charities.                                                       
                                                                               
  Senator Kelly MOVED  for ADOPTION  of amendment  3 adding  a                 
  comma and the words "directly or indirectly" after  the word                 
  "portion" on page  9, line 19.   No objections being  heard,                 
                                                                               
                                                                               
  amendment 3 was ADOPTED.                                                     
                                                                               
  Senator Kelly MOVED for passage  of CSSB 76(FIN) as  amended                 
  with individual  recommendations.  CSSB  76(FIN) work  draft                 
  "S" was  REPORTED OUT  of committee  as amended  with a  "do                 
  pass" and  with a  zero fiscal  note for  the Department  of                 
  Commerce & Economic  Development and a  new fiscal note  for                 
  the Department of Revenue in the amount of $86.9.  Co-chairs                 
  Pearce and Frank,  Senators Jacko,  Kelly, Sharp and  Rieger                 
  signed "do pass."  Senator Kerttula signed "no rec."                         
                                                                               
  ADJOURNMENT                                                                  
                                                                               
  The meeting was adjourned at approximately 12:40 p.m.                        
                                                                               

Document Name Date/Time Subjects