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