Legislature(1995 - 1996)
04/11/1995 10:05 AM FIN
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
MINUTES SENATE FINANCE COMMITTEE April 11, 1995 10:05 a.m. TAPES SFC-95, #28, Side 1 (100-575) SFC-95, #28, Side 2 (580-end) CALL TO ORDER Senator Rick Halford, Co-chair, convened the meeting at approximately 10:05 a.m. PRESENT Co-chairs Halford and Frank, Senators Phillips, Sharp, Donley and Rieger were present. Senator Zharoff was not present Also Attending: Robert Cole, Director, Administrative Services, Dept. of Corrections; Deborah Vogt, Deputy Commissioner, Dept. of Revenue; Loren Jones, Director, Division of Alcoholism and Drug Abuse, Dept. of Health & Social Services, and Wilda Whitaker, Legislative Aid to Representative Therriault. Teleconference: Teresa Williams, Dept. of Law, Anchorage SUMMARY INFORMATION SB 87 ALCOHOLIC BEVERAGES: LOCAL OPTION & MISC. Discussion was had on SB 87 (JUD). Amendments 1, 2, 3, and 5 were ADOPTED. Amendment 4 FAILED. Amendment to Amendment #1 was ADOPTED. A Friendly Amendment to Amendment #1 was ADOPTED. Co-chair Halford moved to adopt deletion of Section 30. The deletion was ADOPTED. CSSB 87 (FIN) was REPORTED OUT of committee with individual recommendations and a zero fiscal note from the Dept. of Revenue. Senator Phillips MOVED to rescind the action of PASSING OUT OF COMMITTEE CSSB 87 (JUD). No objection having been heard, CSSB 87 (FIN) was RESCINDED and brought back before the committee. Senator Phillips MOVED to delete Section 30. No objection having been heard, deletion of Section 30 was ADOPTED. Co- chair Halford and Senators Phillips and Sharp signed "do pass". Co-chair Frank and Senators Rieger and Donley signed "no recommendations". HB 9 DAMAGE TO PROPERTY BY MINORS Wilda Whitaker testified to HB 9. Amendment #1 with language change with a deletion was ADOPTED. SCSCSHB 9 (FIN) was REPORTED OUT of committee with individual recommendations and 7 fiscal notes (see page 5 of minutes for details). Co-chairs Halford and Frank along with Senators Rieger, Phillips and Sharp signed "do pass". Senator Donley signed "no recommendation". SB 135 PFD NOTICES AND ELIGIBILITY Testimony by Deborah Vogt and Loren Jones was given. SB 135 was REPORTED OUT of committee with 5 fiscal notes (see page 8 in minutes for details). Co-chairs Halford and Frank and Senators Rieger, Phillips and Sharp recommended "do pass". Senator Donley signed "no recommendation". 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 Donley spoke to Amendment K.7. He stated that it deals with making it a violation to frequent an illegal gambling establishment. He said that it is difficult for the owners of the legal establishments because they are frequently accused of the improper activity that goes on at the illegal establishments where they are serving alcohol. After bar hours, people will continue to find a place to drink. When they find an establishment that is not legal, they are not subject to the same kinds of controls as the legal establishments exhibit. This is a tool to help the law enforcement keep people out of these places, by way of issuing a citation, which is a violation to frequent the illegal establishments. The bill did pass the House in the 1988 session, but did not make it through the Senate. Senator Donley MOVED Amendment #2 and it was ADOPTED. Senator Donley stated that he has been in conversation with the Department of Law, the Department of Revenue, and Mr. Sharrock, who is available in Anchorage for teleconference, regarding Amendment #1. In response to the questions brought up at the last committee meeting, Senator Donley pointed out the packet sent by Teresa Williams, Assistant Attorney General in Anchorage, who is handling the illegal gambling cases that involve licensed premises. The information provides a list of 5 cases which have occurred since July of 1990 regarding liquor licensees who were convicted of criminal violations of the gambling laws. The Division of Gaming does not enforce illegal gambling activities, because their charge is to regulate legal gambling activities. Illegal gambling activities are regulated by the troopers or Department of Law. The activity in the 5 cases consisted of slot machines, which is clearly prohibited by statute. These were the particular sanctions they were given by the ABC Board. The ABC Board is free to sanction them from zero to full revocation of their licenses. There are provisions of violations of Title 4, which are more restrictive than that, but these are criminal law violations and they have a general provision in the code that allows them to pursue sanctions which are in the public interest that do not have specific guidelines. He modified Amendment #1, to change 3 months to 6 months for suspension of license. On a subsequent offense, there would be a revocation of the license." He stressed that this is not for violation of our legalized gaming statutes, but only for criminal gambling. He indicated that he wanted to add a new subparagraph C that would read, "if the Board receives notice from the Department of Revenue, that a licensee or permittee has violated a provision of AS 05.15,(the charitable gaming provisions relating to gaming), the Board may suspend a license or permit, and shall suspend for at least 30 days, if the offense is the person's second violation. Senator Donley introduced Amendment #3. This would restructure the ABC Board. Currently there is a mandated requirement of two members of the Board to be involved in industry. The amendment would make it clear that three members of the Board should represent the general public. Currently, two members have to be from industry, but there is no limit. The amendment adds an ethics provision stating that of those two persons who represent the general public, immediate family members could not be directly involved in the industry. The provision would also state that to make a quorum, at least two of the members would have to be from the general public. Currently, the quorum can be made up of two members from the industry and one member from the general public. Senator Donley MOVED Amendment #3. Senator Frank inquired as to the language regarding "immediate family". Senator Sharp indicated his concerns regarding Section 1, in that it does not restrict the number of people involved in counseling on the Board. It could be all three. He stated he did not mind that exclusion, as long as there is a limit as to those represented from industry, he would want a limit on other interests groups. Senator Sharp MOVED a Conceptual Amendment to Amendment #3. Beginning on page 1, line 19, after the words "alcohol beverage industry.", eliminate the period and state, "not more than two members shall represent counseling or related services". No objection having been raised, it was ADOPTED. Senator Rieger inquired as to the clause on line 16 which reads, "engaged in any aspect of". Senator Donley stated that it would be anyone having a financial interest in the industry, either ownership or employed by the industry. Co- chair Frank asked if there are alcohol counselors on the Board? Senator Donley stated that in the past there was a counselor. Senator Phillips MOVED a Friendly Amendment. On page 1, line 16, delete the word "aspect", and after the word "any" add "financial interest in". No objection having been raised, it was ADOPTED. Co-chair Halford asked for a show of hands in moving Amendment #3. By a show of hands Amendment #3 was ADOPTED. Senator Donley introduced Amendment #4. He stated that it is an empowerment of community councils to better protect their own neighborhoods. This shifts the balance of power toward the community councils, but with a check that if the assembly thinks it is in the best interest of the community, they can still do it. Senator Donley MOVED Amendment #4. Senator Sharp OBJECTED based on the unanimous vote of the assembly. Co-chair Frank asked what is the circumstance regarding the city boroughs, do they have absolute veto power, or is it a recommendation to the ABC Board? Ms. Williams responded that the Board may not overturn a protest by a local governing body unless it finds it arbitrary, capricious, and unreasonable. Co-chair Halford pointed out that this amendment also provides for extra territorial jurisdiction in areas of overlapping councils. There may be two or three councils with authority over one location. Senator Sharp asked if community councils are elected through the regular election procedure of the unified city? Senator Donley responded that they are elected to the council. Senator Donley MOVED an Amendment to Amendment #4, stating a requirement of two-thirds the vote rather than unanimous. Without objection, the Amendment to the Amendment the show of hands, the amended Amendment #4 FAILED. Senator Sharp MOVED Amendment #5. No objections being heard, Amendment #5 was ADOPTED. Senator Donley MOVED Amendment #1. He explained that this amendment would set guidelines for appropriate penalties for convictions of illegal gambling activity, and separate standards for violations for charitable gaming laws by liquor licensees. This would also establish for a criminal violation by a licensee, that the Board would suspend for a period of at least 6 months. A second criminal offense would call for permanent revocation. A violation of the charitable gaming laws would mean a discretionary penalty. A second violation for the gaming statutes, it would mean at least a 30-day suspension. There is also a provision that the Division of Gaming would notify the Alcohol Control Beverage Board when there has been a violation. Co-chair Halford stated that this amendment requires a conviction in criminal court subject to the protection of the due process. Without objection Amendment #1 was ADOPTED. Senator Sharp MOVED CSSB 87 (FIN) with individual recommendations and a zero fiscal note from the Department of Revenue. Without objection CSSB 87 (FIN) was REPORTED OUT of committee with a "do pass" recommendation from Co- chairs Halford and Frank and Senators Phillips and Sharp. Senators Rieger and Donley signed "no recommendations". Further discussion on SB 87 is at the end of the text. 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." Wilda Witaker, Legislative Aide to Representative Therriault testified to the amendment proposed for HB 9. The amendment clarifies who is responsible for the minor when visiting versus a custodial parent. Senator Sharp MOVED to amend Amendment #1. Without objection Amendment #1 was ADOPTED to be incorporated in a CS for Finance. Senator Phillips MOVED SCSCSHB 9 (FIN) with individual recommendations and 7 fiscal notes from: Dept. of Law, zero; Dept. Health & Social Services (Foster Care), zero; Dept. Health & Social Services (Residential Child Care), zero; Dept. of Administration, Public Advocacy, zero; Dept. of Administration, Public Defender, zero, Dept. of Administration, Risk Management, zero; and Courts, Indeterminate. Co-chairs Halford and Frank along with Senators Rieger, Phillips and Sharp recommended "do pass". Senator Donley signed "no recommendation". SENATE BILL NO. 135 "An Act relating to permanent fund dividend program notice requirements, to the ineligibility for dividends of individuals convicted of felonies or incarcerated for misdemeanors, and to the determination of the number and identity of certain ineligible individuals; and providing for an effective date." Co-chair Frank explained that this is the same bill as last year expanding the list of people to be denied eligibility to include felons not serving jail time and third time misdemeanant. The concept is to recoup State monies. Last year the bill passed the Senate, but was not considered by the House. There has been incorporated into the bill $2.7 million of expected savings in the FY 96 year, built into the budget process. This bill is part of the Senate's overall spending plan. Co-chair Frank explained that there is no retroactive feature to the bill. This bill will capture the dollars and put it into the budget opposed to distributing them out to the dividend recipients. Debra Vogt, Deputy Commissioner for the Dept. of Revenue introduced Nancy Jones, Director, Permanent Fund Dividend Division. Ms. Vogt spoke to the charts handed out at the meeting (attached to the minutes). SB 135 changes, as the sponsor has indicated, both the way the substantive provisions of the legislation and the timing of the legislation. The bill adds to the list of applicants who are denied dividends for criminal activity. The list adds misdemeanant, third time misdemeanant who are incarcerated, and any felon. The purpose is to reimburse the state for some of the costs associated with criminal activity. The bill also adds to the list of agencies that receive funds from the dividends denied the criminals. Currently, those agencies that are permitted to receive funds include the Crime Victim Compensation Fund, the Council on Domestic Violence, and the Department of Corrections. The legislation adds the Dept. of Revenue for child support, the Dept. of Public Safety and the Dept. of Law. The reason for the addition of the Dept. of Revenue for child support, is that many of those being denied dividends are garnished by the Child Support Enforcement Division for the support of the criminal's children. By appropriating a portion of the funds to the Dept. of Revenue for child support, it does not give the money to the children, who would otherwise receive it if the Child Support Enforcement Division were to distribute to the children. The Department opposes changing the eligibility requirements for dividends. There is opposition to adding to the list of ineligible people and adding to the list of eligible people. The timing and fiscal issues are more important issues. Ms. Vogt referred to her timeline under current law vs under SB 135. The Department believes this is an appropriation to fund state agencies out of the dividend fund. In the legislation, it is prohibited from informing the dividend recipients that this money has been taken out of their check. Section 7 of the legislation says, "notwithstanding the amendments made by the legislation, the notice requirements for 43.23.028 do not apply to appropriations from the dividend fund made for FY 96. The Department recognizes the sponsors desire to close the gap between the criminal activity in one year and the appropriation several years later. A felon in jail for one year can only have one dividend taken away. This legislation appropriates 2 dividends to state government, which is why the Department is opposed to it. Senator Phillips said that the legislation can be viewed as a user fee. Ms. Vogt stated that the Department is not opposed to the idea of denying criminals dividends. The double-dipping aspect of this legislation takes two dividends away, when there is really only one available. Therefore the second dividend is coming from the rest of the people of the state who are not criminals. Loren Jones, Director, Division of Alcoholism and Drug Abuse spoke to two issues in SB 135 that the department wanted to bring to the committee's attention. Under this bill extending it to third time misdemeanant offenders, the majority of those offenders we believe will be referred to the court system into the Alcohol Safety Action Program and thus into alcohol treatment. Unlike felony probationers, misdemeanant probationers, are not supervised by the Department of Corrections. In most cases, if they are alcohol related offenses, they are supervised through the Alcohol Safety Action Program in the Dept. of Health & Social Services. There are substantial costs that the offender pays. Usually, access to, or receipt of the dividend, provides those persons with money to pay for the service. In the Alcohol Treatment System, it is estimated that $300,000 of third party payments, or first party payments from the clients, actually come from the their dividends. There is concern that it would take away from the local non-profit agencies, revenue available to them to charge for their services. Senator Donley asked what else the Dept. of Health & Social Services is doing to collect funds from the criminals? Mr. Jones responded there are several avenues. Providers can go off medicaid. Providers can go after private insurance if the individuals have private insurance. There is a requirement to collect fees through small claims court. Most of the programs have a sliding fee scale. The Department estimates that beyond the dividends there is double that amount of money that is collected from other fees. Many of the clients are also coming out of a homeless situation, and more than 65% report an income of less than $10,000 a year. Mr. Robert Cole, Administrative Director for the Dept. of Corrections, stated there is concern that the Administration does not support the bill. Our most immediate concern is that the FY 96 budget is contingent on this $2.7 million revenue source. A second concern is that the $2.7 million which would be realized if the funds are collected, is still a one time shot and there is a concern of what position that puts the Department in for the succeeding FY 97. Will the Department then be $2.7 million out of the base in succeeding years? There can be no assurances of revenue from collection of permanent fund dividend checks from third time misdemeanant. The Department of Corrections works with the Department of Revenue and Public Safety to try to correlate the information system with public safety's information system and calculate the likely number of future third time misdemeanant who would appear in the Department of Correction's rolls, two and three years out, and in the future. He stated that the payments are used to pay child support payments, cost to treatment programs, debts owed and other costs, fines, etc. He stated there would be a effect on distribution in the future from those purposes to an appropriation purpose. He stated that the Dept. of Corrections does not know where they stand, and that it is up to the appropriations process to decide, and not to be locked in law. Co-chair Frank MOVED to pass out of committee SB 137 with individual recommendations and accompanying fiscal notes. No objection having been heard SB 137 was REPORTED OUT of committee with the following fiscal notes: Department of Revenue $2.4; Department of Corrections, zero; Department of Public Safety, $5.0; Department of Education, zero; Department of Law, zero. Co-chairs Halford, Frank along with Senators Rieger, Phillips, and Sharp recommended "do pass". Senator Donley signed "no recommendations". Co-chair Halford returned to SB 87. Senator Phillips MOVED to delete Section 30. By a show of hands, Section 30 was DELETED from the CS 37 (JUD). Senator Donley brought to the attention of the committee Section 49. He said that Subsection C (2) the question of whether local communities can put a sales tax on alcohol unless there is another sales tax in that area. Conversation on clarity with regard to taxation transpired. Senator Donley MOVED to delete after the word "sales" on line 29, "if sales taxes are imposed on other sales within the municipality". By a show of hands the Amendment FAILED. Senator Phillips MOVED CSSB 87(JUD) with individual recommendations. No objection being heard, CSSB 87 (JUD) was REPORTED OUT of committee. At approximately 11:00 a.m. the meeting RECESSED.