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