Legislature(1995 - 1996)

04/06/1995 09:15 AM FIN

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

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