Legislature(2017 - 2018)SENATE FINANCE 532

04/14/2018 10:00 AM FINANCE

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
-- Reconvene at 3:00 p.m. --
+ Bills Previously Heard/Scheduled: TELECONFERENCED
Moved SCS CSHB 31(STA) Out of Committee
Heard & Held
Moved HB 121 Out of Committee
Moved CSHB 215(FIN) Out of Committee
Moved SCS CSHB 275(FIN) Out of Committee
                 SENATE FINANCE COMMITTEE                                                                                       
                      April 14, 2018                                                                                            
                        10:09 a.m.                                                                                              
10:09:52 AM                                                                                                                   
CALL TO ORDER                                                                                                                 
Co-Chair  MacKinnon  called  the  Senate  Finance  Committee                                                                    
meeting to order at 10:09 a.m.                                                                                                  
MEMBERS PRESENT                                                                                                               
Senator Lyman Hoffman, Co-Chair                                                                                                 
Senator Anna MacKinnon, Co-Chair                                                                                                
Senator Click Bishop, Vice-Chair                                                                                                
Senator Peter Micciche                                                                                                          
Senator Donny Olson                                                                                                             
Senator Gary Stevens                                                                                                            
Senator Natasha von Imhof                                                                                                       
MEMBERS ABSENT                                                                                                                
ALSO PRESENT                                                                                                                  
Representative  Geran  Tarr,   Sponsor;  Representative  Sam                                                                    
Kito,  Sponsor;  Elizabeth  Diament,  Staff,  Representative                                                                    
Paul  Seaton;  Jill  Lewis,  Deputy  Director,  Division  of                                                                    
Public  Health, Department  of Health  and Social  Services;                                                                    
Representative Adam Wool,  Sponsor; Kris Curtis, Legislative                                                                    
Auditor, Alaska  Division of Legislative Audit;  Juli Lucky,                                                                    
Staff,  Senator  Anna  MacKinnon; Crystal  Koeneman,  Staff,                                                                    
Representative    Sam   Kito;    Laura   Stidolph,    Staff,                                                                    
Representative Adman Wool.                                                                                                      
PRESENT VIA TELECONFERENCE                                                                                                    
Erika  McConnell, Director,  Alcohol  and Marijuana  Control                                                                    
Office, Anchorage.                                                                                                              
CSHB 31(FIN)                                                                                                                    
          SEX ASSAULT TRAINING & EXAM KITS;DOM VIOL                                                                             
          SCS  CSHB 31(STA)  was REPORTED  out of  committee                                                                    
          with  a "do  pass" recommendation  and with  a new                                                                    
          zero  fiscal note  from the  Department of  Public                                                                    
          Safety,  and a  previously  published zero  fiscal                                                                    
          note: FN 3(DPS).                                                                                                      
HB 121    OCC. HEALTH AND SAFETY CIVIL PENALTIES                                                                                
          HB 121  was REPORTED out  of committee with  a "do                                                                    
          pass"  recommendation  and   with  one  previously                                                                    
         published fiscal impact note: FN 2(LWF).                                                                               
CSHB 215(FIN)                                                                                                                   
          DHSS: PUBLIC HEALTH FEES                                                                                              
          CSHB 215(FIN)  was REPORTED out of  committee with                                                                    
          a   "do   pass"   recommendation  and   with   one                                                                    
          previously  published   fiscal  impact   note:  FN                                                                    
CSHB 275(FIN)                                                                                                                   
          EXTEND: BOARD OF MASSAGE THERAPISTS                                                                                   
          SCS CSHB  275(FIN) was  REPORTED out  of committee                                                                    
          with a  "do pass" recommendation and  with one new                                                                    
          fiscal   impact  note   from  the   Department  of                                                                    
          Commerce, Community and Economic Development.                                                                         
CSHB 299(FIN)                                                                                                                   
          ABC BOARD: EXTEND; DIRECTOR; DECISIONS                                                                                
          CSHB 299(FIN) was HEARD and  HELD in committee for                                                                    
          further consideration.                                                                                                
CS FOR HOUSE BILL NO. 31(FIN)                                                                                                 
     "An  Act  relating  to   law  enforcement  training  in                                                                    
     domestic  violence  and  sexual  assault;  relating  to                                                                    
     sexual  assault investigation  protocols; requiring  an                                                                    
     inventory  and  reports   on  untested  sexual  assault                                                                    
     examination  kits;  and   providing  for  an  effective                                                                    
10:11:09 AM                                                                                                                   
Co-Chair  MacKinnon  reported the  bill  had  been heard  on                                                                    
April 4,  2018 where  public testimony  had been  heard. The                                                                    
fiscal notes had been reviewed as well.                                                                                         
REPRESENTATIVE GERAN TARR, SPONSOR, introduced herself.                                                                         
Co-Chair MacKinnon  shared that  there were  two outstanding                                                                    
issues for the  committee to address. The  first was related                                                                    
to  the  process  of  how   anonymous  reports  worked.  The                                                                    
committee  had engaged  in discussions  with the  department                                                                    
that  had met  her satisfaction.  The second  topic was  the                                                                    
cost of  training resulting  from an  increase from  2 hours                                                                    
from  some  departments to  12  hours.  She had  provided  a                                                                    
series  of  emails  with  the  Anchorage  Police  Department                                                                    
(APD),  where  APD had  indicated  it  did not  believe  the                                                                    
change would be an undue  burden on its facilities. The bill                                                                    
did  not cover  Village Public  Safety Officers  (VPSO), who                                                                    
accessed a  different form of  training and were  not police                                                                    
Representative Tarr agreed.                                                                                                     
10:13:00 AM                                                                                                                   
Co-Chair MacKinnon asked for a brief overview of the bill.                                                                      
Representative  Tarr explained  that  the bill  accomplished                                                                    
three things.  First, it  put in  statute a  victim centered                                                                    
approach  to  reporting  sexual   assault  crimes.  She  had                                                                    
brought a sexual assault examination  kit box to the meeting                                                                    
in case someone had not  seen one previously. She elaborated                                                                    
the box was  an evidence collection kit. Much  work had been                                                                    
done on the  issue, and a victim centered  approach had been                                                                    
developed   that  included   anonymous  reporting   and  law                                                                    
enforcement  reporting.  Anonymous   reporting  allowed  the                                                                    
victim to  have the evidence  collected, which needed  to be                                                                    
done  in a  timely fashion  (within 72-hours),  but did  not                                                                    
require the  victim to  decide whether  they wanted  to move                                                                    
forward with a  criminal prosecution. If a  person wanted to                                                                    
move forward  with a  prosecution at  the time  evidence was                                                                    
collected they would select the  law enforcement report. The                                                                    
bill would put the victim centered approach into statute.                                                                       
Representative  Tarr   explained  the  bill   also  required                                                                    
individuals to  receive 72 hours of  sexual assault response                                                                    
training during their law enforcement  training in Alaska in                                                                    
addition to  12 hours  of domestic violence  training, which                                                                    
was  currently  in  statute.  Although  the  sexual  assault                                                                    
training was  already in statute,  the bill  underscored its                                                                    
importance.  The bill  also included  an ongoing  audit. The                                                                    
first  audit had  concluded and  was  presented in  November                                                                    
2017,  which  provided  an understanding  of  the  issue  in                                                                    
Alaska. She  noted the issue was  also happening nationwide,                                                                    
but there were  over 3,000 untested rape kits  in Alaska. It                                                                    
would be  somewhat expensive to  get all of the  kits tested                                                                    
and go through  the process with the victims  to ensure they                                                                    
wanted  to   participate.  The   audit  would   provide  the                                                                    
legislature with an  annual status update. At  some point it                                                                    
would  no   longer  be  necessary   when  the   backlog  was                                                                    
eliminated, and cases were  prosecuted. She complimented Co-                                                                    
Chair MacKinnon for discussions that  had taken place in the                                                                    
committee.  She  understood  the  discussions  had  been  so                                                                    
informative, some of  Co-Chair MacKinnon's suggestions would                                                                    
be  incorporated into  the process.  She explained  the bill                                                                    
was one  step towards ensuring  there was reform in  the way                                                                    
rape  kits were  tested, victims  received the  justice they                                                                    
deserved, and to keep dangerous criminals off the street.                                                                       
10:15:47 AM                                                                                                                   
Co-Chair  MacKinnon  shared  that  under  the  current  bill                                                                    
victims   went  to   healthcare  providers   when  reporting                                                                    
anonymously. She was  concerned there could be  a closure or                                                                    
problem  with keeping  track of  the location  in Anchorage,                                                                    
where storage  for the  rape kits  was centralized.  She had                                                                    
asked  if   the  department  could   work  with   state  law                                                                    
enforcement  so that  victims would  go  to law  enforcement                                                                    
instead  of  independent  hospitals  or  medical  facilities                                                                    
across Alaska.  There was more  likely in the next  50 years                                                                    
to  be  a  state  trooper position  that  could  locate  the                                                                    
numbers  for  anonymous  reporting than  individual  medical                                                                    
facilities  that may  change over  administrations and  lose                                                                    
track  of important  data. She  elaborated that  some people                                                                    
did not remember  that things happened after  awhile when an                                                                    
experience  was  traumatizing.  She explained  they  may  be                                                                    
triggered by something in the  future that may cause them to                                                                    
seek out  the information. She appreciated  the troopers and                                                                    
others who had  taken time to speak to her  on the important                                                                    
Vice-Chair Bishop reviewed  a new zero fiscal  note from the                                                                    
Department  of Public  Safety for  statewide support  of the                                                                    
training  academy (OMB  Component Number  524) He  read from                                                                    
the second paragraph of the fiscal note's analysis:                                                                             
     The  Alaska  Law  Enforcement   Training  (ALET)  is  a                                                                    
     sixteen week  course providing instruction  in criminal                                                                    
     investigation,  police  procedure, laws,  and  physical                                                                    
     skills. Instruction  comes primarily  from commissioned                                                                    
     Alaska  State Troopers  stationed  in  Sitka. The  ALET                                                                    
     program fulfills the requirements  to be certified as a                                                                    
     municipal police officer or an Alaska State Trooper.                                                                       
     The ALET program currently exceeds  the number of hours                                                                    
     of  instruction and  training in  sexual assault  laws,                                                                    
     response,  and   investigation  as  proposed   by  this                                                                    
     legislation so there  would be no fiscal  impact to the                                                                    
     DPS Training Academy should it  pass. Therefore, a zero                                                                    
     fiscal note is being submitted.                                                                                            
10:18:43 AM                                                                                                                   
Senator  von  Imhof  noted   that  Representative  Tarr  had                                                                    
indicated  there were  currently about  3,000 untested  rape                                                                    
kits in the  backlog. She remarked that the  fiscal note was                                                                    
zero  and she  believed  it specified  the department  would                                                                    
absorb the  cost to address  the backlog. She asked  for the                                                                    
accuracy of her statements.                                                                                                     
Representative  Tarr responded  that  currently the  funding                                                                    
used to  address the backlog  had been provided  through two                                                                    
federal Department  of Justice  grants. The kits  were being                                                                    
tested  in batches  -  once  those funds  were  gone, if  an                                                                    
additional grant  was not awarded,  the state would  have to                                                                    
figure out  how to pay  for the cost  through appropriations                                                                    
in the capital  budget or other. There  was no appropriation                                                                    
with  the  current  legislation or  linked  to  testing  the                                                                    
backlog. She stated, "this is  other policy changes, so, the                                                                    
actual testing is a separate issue."                                                                                            
Co-Chair  MacKinnon relayed  she  had met  with  a group  of                                                                    
individuals  including  John   Skidmore  with  the  Attorney                                                                    
General's Office,  Diane Casto, Executive  Director, Council                                                                    
on  Domestic  Violence  and Sexual  Assault,  Department  of                                                                    
Public Safety,  Orin Dym with  the state DPS Crime  Lab, and                                                                    
others. There were  about 3,400 untested kits,  114 of which                                                                    
had  been reported  anonymously. She  noted the  numbers had                                                                    
been rounded.  There was a  possibility for a  bare-bone DNA                                                                    
analysis at  $1,000 per kit.  She wanted to  understand what                                                                    
the  bare  essential  analysis  provided  -  she  considered                                                                    
whether  it  was  sufficient  information  compared  to  the                                                                    
$2,300 cost for prosecuting a  kit under some of the current                                                                    
grants. She noted there was a  range in cost. She added that                                                                    
it  was possible  to identify  gender  DNA differently.  The                                                                    
majority of  sexual assaults in  Alaska were  perpetrated by                                                                    
men on  women. Tests had  been developed that could  go back                                                                    
for  almost one  week instead  of 72  hours, which  had been                                                                    
best practice  when she  had been  the director  of Standing                                                                    
Together  Against  Rape.  She  continued  that  science  was                                                                    
taking  leaps  and  bounds  forward,   but  the  tests  were                                                                    
expensive  as   they  tried  to  recoup   the  research  and                                                                    
development to  get the tests  on the market.  She expounded                                                                    
they  could  highlight the  male's  DNA  when searching  for                                                                    
10:21:32 AM                                                                                                                   
Senator von  Imhof asked how  far the current  grant funding                                                                    
would stretch to cover the 3,400 untested kits.                                                                                 
Representative  Tarr  answered  that  the  first  grant  was                                                                    
$100,000 for  testing and  additional training.  She relayed                                                                    
that Mr. Dym  was online and may be able  to provide further                                                                    
detail related  to the training component.  The second grant                                                                    
was largely  to develop new  systems; it was more  about the                                                                    
reform  aspects   and  less  about  dollars   going  towards                                                                    
testing.  She relayed  she would  need to  double check  the                                                                    
figures  she had  provided. A  handful of  kit batches  were                                                                    
being sent  out under the  first grant. Additionally,  a new                                                                    
grant was  available that  she had  encouraged APD  to apply                                                                    
for because some  of [the kits] were in  its possession. She                                                                    
speculated that several thousand  kits would remain once the                                                                    
grant  funds  had been  used.  She  used  1,500 as  a  rough                                                                    
average  and  reported  the  cost was  in  the  millions  of                                                                    
dollars. She  explained that every  kit would not  be tested                                                                    
because in some  cases an individual would not  want to move                                                                    
forward  (there  was  an anonymous  reporting  option).  She                                                                    
believed it  would be a  multiyear process to  determine how                                                                    
to address the  issue. As people were  identified and linked                                                                    
to other crimes, there would be prosecution as well.                                                                            
Senator  Micciche appreciated  the sponsor's  work have  the                                                                    
kits   processed  and   evaluated.   He   noted  there   was                                                                    
information  in member's  packets  that  was informative  on                                                                    
understanding the funding options.                                                                                              
Senator Stevens  referenced the anonymous  reporting option.                                                                    
He asked  if the anonymous  kits went  to the bottom  of the                                                                    
Representative Tarr  replied there were two  groups of kits.                                                                    
There were  cases that were  far more recent,  which totaled                                                                    
about 70  at the lab currently.  The queue was not  based on                                                                    
whether a kit was anonymous  but was mostly about the timing                                                                    
of the  prosecution and when the  information was requested.                                                                    
She elaborated  when a  case came  up for  consideration the                                                                    
lab was contacted  to process the kit. She  explained that a                                                                    
victim  could chose  to move  forward  at any  time with  an                                                                    
anonymous report and it would put  the kit in the queue. She                                                                    
explained the  kit was not  ranked at the bottom  because it                                                                    
was anonymous, but if a  person had done the kit anonymously                                                                    
it meant  they specified they were  not presently interested                                                                    
in  moving  forward with  testing.  Until  that changed,  it                                                                    
remained in the anonymous pile.                                                                                                 
10:25:27 AM                                                                                                                   
Senator  Stevens  asked  for  verification  that  if  a  kit                                                                    
remained anonymous it would not be tested.                                                                                      
Representative  Tarr   answered  in  the   affirmative.  She                                                                    
remarked it  could be hard to  accept because if it  had the                                                                    
potential  to get  a  dangerous person  off  the streets  it                                                                    
would  be  desirable to  move  forward;  however, the  white                                                                    
paper referenced by Senator Micciche  from the Department of                                                                    
Justice  outlined   the  victim  centered   approach,  which                                                                    
recommended  not  moving  forward   unless  the  victim  was                                                                    
comfortable with that.                                                                                                          
10:25:59 AM                                                                                                                   
Co-Chair MacKinnon  listed individuals available  online for                                                                    
Vice-Chair  Bishop MOVED  to REPORT  SCS  CSHB 31(STA)  from                                                                    
committee with  individual recommendations  and accompanying                                                                    
fiscal notes. There being NO OBJECTION, it was so ordered.                                                                      
SCS CSHB  31(STA) was REPORTED  out of committee with  a "do                                                                    
pass" recommendation  and with a  new zero fiscal  note from                                                                    
the Department of Public Safety,  and a previously published                                                                    
zero fiscal note: FN3 (DPS).                                                                                                    
10:26:54 AM                                                                                                                   
AT EASE                                                                                                                         
10:28:11 AM                                                                                                                   
HOUSE BILL NO. 121                                                                                                            
     "An  Act relating  to  occupational  safety and  health                                                                    
     enforcement penalties;  and providing for  an effective                                                                    
10:28:29 AM                                                                                                                   
Co-Chair MacKinnon reported that the  bill had been heard on                                                                    
April 11,  2018. She asked  Vice-Chair Bishop to  review the                                                                    
fiscal note.                                                                                                                    
Vice-Chair  Bishop  discussed  the   fiscal  note  from  the                                                                    
Department of  Labor and  Workforce Development  (DLWD), OMB                                                                    
Component  Number  970.  The  note  reflected  a  change  in                                                                    
revenue of $230,200  in FY 19 and $460,400 in  FY 20 through                                                                    
FY 24. He  read from the second and third  paragraphs in the                                                                    
analysis on page 2:                                                                                                             
     The  regulations resulting  from this  legislation will                                                                    
     initially  adjust maximum  and minimum  civil penalties                                                                    
     for  inflation  going back  to  1990,  and then  adjust                                                                    
     penalties  yearly  according  to changes  in  the  U.S.                                                                    
     Consumer Price Index for All Urban Consumers (CPI-U).                                                                    
     It is anticipated that these  changes will result in an                                                                    
     additional $460.4  in revenue to the  general fund each                                                                    
     year. Given  the length of  time it takes  to implement                                                                    
     regulations  changes,   it  is  anticipated   that  the                                                                    
     revenue  increase  will  occur about  halfway  into  FY                                                                    
     2019.  Therefore, the  FY  2019  revenue increase  will                                                                    
     only be half of this amount.                                                                                               
10:30:29 AM                                                                                                                   
Co-Chair  MacKinnon  asked the  bill  sponsor  and staff  to                                                                    
provide a brief bill overview.                                                                                                  
REPRESENTATIVE SAM  KITO, SPONSOR, shared that  the bill had                                                                    
been  requested by  DLWD,  which would  bring  Alaska up  to                                                                    
federal  standards  for  the Alaska  Office  of  Safety  and                                                                    
Health. The bill  would allow the department  to change fees                                                                    
with  regulation to  keep  up with  a  consumer price  index                                                                    
(CPI) increase  expected from the  federal government  on an                                                                    
annual  basis and  would avoid  the  need to  return to  the                                                                    
legislature  annually to  adjust  the fees.  The bill  would                                                                    
theoretically  increase some  revenue,  but  there was  also                                                                    
significant flexibility,  so it was not  as though penalties                                                                    
would just  increase. He elaborated  that if  employers were                                                                    
complying there was  a negotiated process by  which the fees                                                                    
could be waived  or decreased in order to focus  on the goal                                                                    
of improving  worker safety in  Alaska. It was not  a matter                                                                    
of  being  punitive, but  of  trying  to  keep up  with  the                                                                    
federal  requirements; if  the state  did not  keep up  with                                                                    
federal requirements  it stood to lose  some federal funding                                                                    
and   potentially  the   ability   to   implement  its   own                                                                    
occupational safety and health office.                                                                                          
10:32:08 AM                                                                                                                   
Vice-Chair  Bishop MOVED  to REPORT  HB  121 from  committee                                                                    
with  individual  recommendations  and  accompanying  fiscal                                                                    
note. There being NO OBJECTION, it was so ordered.                                                                              
HB  121 was  REPORTED  out  of committee  with  a "do  pass"                                                                    
recommendation  and  with  one previously  published  fiscal                                                                    
impact note: FN2 (LWF).                                                                                                         
10:32:46 AM                                                                                                                   
AT EASE                                                                                                                         
10:35:11 AM                                                                                                                   
Co-Chair MacKinnon handed the gavel to Vice-Chair Bishop.                                                                       
CS FOR HOUSE BILL NO. 215(FIN)                                                                                                
     "An Act relating to program receipts; and relating to                                                                      
     fees for services provided by the Department of Health                                                                     
     and Social Services."                                                                                                      
10:35:29 AM                                                                                                                   
Vice-Chair Bishop detailed  that the bill had  been heard on                                                                    
April 11,  2018. He asked  the sponsor's staff to  provide a                                                                    
recap of the bill.                                                                                                              
ELIZABETH  DIAMENT,   STAFF,  REPRESENTATIVE   PAUL  SEATON,                                                                    
detailed the bill  would give fee authority  to the Division                                                                    
of  Public Health  to charge  program receipts  and fees  to                                                                    
recoup  some   of  its  costs  for   public  health  related                                                                    
programs.  The  bill  would   expand  the  department's  fee                                                                    
authority to charge fees by regulation to recoup costs.                                                                         
Senator Olson asked if there  had been any opposition to the                                                                    
bill from user groups that may be affected by the charges.                                                                      
Ms.  Diament replied  that the  only  reservations had  been                                                                    
from  Alaska State  Hospital  and  Nursing Home  Association                                                                    
(ASHNHA) in the House  Health and Social Services Committee.                                                                    
The association's  concern had  been about public  input and                                                                    
process  at the  beginning  of the  regulatory process.  She                                                                    
noted that Section  3 had been added to the  bill to address                                                                    
the  concern. The  section would  require  a public  scoping                                                                    
meeting  for each  regulation in  order for  the public  and                                                                    
stakeholders to  have a chance  to comment  before something                                                                    
moved   to  the   regulatory  process.   She  reported   the                                                                    
association was supportive of  the legislation after Section                                                                    
3 had been added.                                                                                                               
10:37:40 AM                                                                                                                   
Senator Olson  asked if  the sponsor  had heard  from Native                                                                    
health corporations in rural areas.                                                                                             
Ms.  Diament  deferred the  question  to  the Department  of                                                                    
Health and Social Services.                                                                                                     
JILL  LEWIS, DEPUTY  DIRECTOR,  DIVISION  OF PUBLIC  HEALTH,                                                                    
DEPARTMENT OF  HEALTH AND SOCIAL SERVICES,  replied that the                                                                    
division  had not  heard any  opposition from  tribal health                                                                    
Senator Olson asked specifically about 638 contractors.                                                                         
Ms.  Lewis  replied that  the  division  had not  heard  any                                                                    
concerns  or  opposition  except  the  previous  concern  by                                                                    
ASHNHA, which  had later  provided a  letter of  support for                                                                    
the legislation.                                                                                                                
10:38:58 AM                                                                                                                   
Senator  von Imhof  asked if  other  state agencies  charged                                                                    
fees for data collection.                                                                                                       
Ms.  Lewis responded  that she  could not  say definitively.                                                                    
She believed  other agencies charged for  data and analysis.                                                                    
A lengthy fee report was  produced annually by the Office of                                                                    
Management and Budget listing all of the individual fees.                                                                       
Senator Olson asked  if the department had  concern it would                                                                    
miss things like STDs, TB  checks and other related items if                                                                    
a fee to  have the checks done was  implemented. He wondered                                                                    
if the department was concerned an epidemic may occur.                                                                          
Ms. Lewis responded that the  types of fees addressed by the                                                                    
bill  were mostly  administrative  charges and  professional                                                                    
services fees that would be  charged to the industry and not                                                                    
to individuals.  There were exceptions  in statute,  so fees                                                                    
would not be  charged when not in the  public interest, when                                                                    
it did  not support public  health, and when in  response to                                                                    
communicable  disease investigations.  The division  did not                                                                    
and would not charge in those situations.                                                                                       
10:40:58 AM                                                                                                                   
Senator Micciche noted in the  last meeting on the bill, the                                                                    
committee had been left with  the impression that MRI and CT                                                                    
imaging equipment  was not inspected. He  clarified that the                                                                    
machines were  all currently required  to be  inspected; all                                                                    
imaging equipment in the state was inspected.                                                                                   
Vice-Chair Bishop  added he  had also  asked to  verify that                                                                    
the   equipment  was   all   operating   according  to   the                                                                    
manufacturers' recommended standards.                                                                                           
Senator  Micciche  MOVED  to REPORT  CSHB  215(FIN)  out  of                                                                    
committee with  individual recommendations  and accompanying                                                                    
fiscal note. There being NO OBJECTION, it was so ordered.                                                                       
CSHB  215(FIN) was  REPORTED  out of  committee  with a  "do                                                                    
pass"  recommendation  and  with  one  previously  published                                                                    
fiscal impact note: FN2 (DHS).                                                                                                  
10:42:17 AM                                                                                                                   
AT EASE                                                                                                                         
10:44:37 AM                                                                                                                   
CS FOR HOUSE BILL NO. 299(FIN)                                                                                                
     "An Act  relating to the  authority of the  director of                                                                    
     the  Alcoholic Beverage  Control  Board; extending  the                                                                    
     termination  date  of  the Alcoholic  Beverage  Control                                                                    
     Board;  relating to  the  application  of precedent  to                                                                    
     decisions of the Alcoholic  Beverage Control Board; and                                                                    
     providing for an effective date."                                                                                          
10:45:37 AM                                                                                                                   
Vice-Chair  Bishop  asked the  sponsor  to  provide a  brief                                                                    
overview of the bill.                                                                                                           
REPRESENTATIVE ADAM  WOOL, SPONSOR, explained that  the bill                                                                    
would  extend the  Alcoholic Beverage  Control (ABC)  Board.                                                                    
The bill had  been amended twice in its  process through the                                                                    
House. The ABC  Board was a quasi-judicial board  made up of                                                                    
five members  including two from  industry, one  from public                                                                    
safety, one  rural member, and  one public member.  The bill                                                                    
included   a  four-year   extension  based   on  the   audit                                                                    
recommendation  by the  Division of  Legislative Audit.  The                                                                    
board  regulated  almost  2,000   licenses  in  the  alcohol                                                                    
industry. The division had previously  been housed under the                                                                    
Department of  Revenue and  had moved  to the  Department of                                                                    
Public  Safety (DPS)  - where  individuals had  more closely                                                                    
resembled public safety officers  with badges and weapons) -                                                                    
and  then  it  had  moved to  the  Department  of  Commerce,                                                                    
Community and Economic Development (DCCED).                                                                                     
Representative Wool disclosed that  he owned a business with                                                                    
a  beverage dispensary  license, which  was governed  by the                                                                    
board. He added  that he had been a license  holder when the                                                                    
division  had been  under the  Department of  Public Safety.                                                                    
Eventually,  the   legislature  had  decided  to   move  the                                                                    
division  to DCCED  to make  it more  business friendly  and                                                                    
receptive   to  the   idea  of   commerce  instead   of  law                                                                    
enforcement.  He  noted the  division  was  under DCCED  for                                                                    
administrative  purposes   only  and  he   acknowledged  his                                                                    
uncertainty  about  what  that meant.  He  communicated  the                                                                    
audit made five recommendations.                                                                                                
10:48:08 AM                                                                                                                   
KRIS  CURTIS,   LEGISLATIVE  AUDITOR,  ALASKA   DIVISION  OF                                                                    
LEGISLATIVE AUDIT, reviewed the  findings in the legislative                                                                    
audit dated  November 2017 (copy  on file). The  audit found                                                                    
that the  board was  operating in  the public's  interest in                                                                    
all  areas except  licensing. The  audit  found the  board's                                                                    
meetings  had been  conducted in  accordance  with law,  its                                                                    
investigations   were  processed   timely,  and   the  board                                                                    
actively  developed  and  adopted regulations  necessary  to                                                                    
implement  statutes. The  audit concluded  the board  should                                                                    
improve  its procedures  for issuing  renewals, recreational                                                                    
site   licenses  and   beverage  dispensary   licenses  that                                                                    
encouraged  tourism. Testing  found that  the licenses  were                                                                    
not  consistently   issued  in  accordance   with  statutes.                                                                    
Additionally,  operational   improvements  were   needed  in                                                                    
enforcing   laws,  monitoring   board   related  local   law                                                                    
enforcement    activity,   and    processing   refunds    to                                                                    
municipalities.  The division  recommended  an extension  of                                                                    
four years.                                                                                                                     
Ms.  Curtis highlighted  report conclusions.  She turned  to                                                                    
page 8  of the audit  where the division concluded  that the                                                                    
board's  enforcement efforts  had declined,  and operational                                                                    
improvements  were  needed.  Alcohol and  Marijuana  Control                                                                    
Office   (AMCO)   investigators   had   stopped   conducting                                                                    
compliance   checks  as   of   April   2015.  Through   AMCO                                                                    
investigators,   the   board  had   historically   conducted                                                                    
compliance  checks  where  investigators  employed  underage                                                                    
individuals who attempt to purchase  alcohol. When a license                                                                    
failed  a  compliance  check they  were  issued  a  criminal                                                                    
summons or  citation. Federal grant funding  for the program                                                                    
had  run  out  in  2012. Supplemental  funding  to  continue                                                                    
conducting compliance checks had  been received through June                                                                    
2014. At  that point investigators had  continued conducting                                                                    
the checks using program receipts through April 2015.                                                                           
Ms. Curtis  stated that although  there was no  statutory or                                                                    
regulatory  requirement to  conduct compliance  checks, AMCO                                                                    
management  had  stated  it  was an  integral  part  of  its                                                                    
enforcement   of  alcoholic   beverage  laws   and  it   was                                                                    
evaluating  alternative   means  of   providing  enforcement                                                                    
through  shared  services  with other  state  agencies.  The                                                                    
audit  noted that  the  board and  AMCO  management had  not                                                                    
established  a  written  enforcement   plan  to  direct  the                                                                    
limited  enforcement  resources. Additionally,  the  control                                                                    
office did  not monitor  or track  all complaints  to ensure                                                                    
complaints were followed up and investigated timely.                                                                            
Ms. Curtis turned to page  2, paragraph 2 where the division                                                                    
concluded  the  board  and  control  office  staff  had  not                                                                    
maintained  a  list  of  restricted  purchasers  within  the                                                                    
statewide  database of  written  orders  in accordance  with                                                                    
regulation,  potentially   allowing  persons   convicted  of                                                                    
illegally  selling  or  manufacturing  alcohol  to  continue                                                                    
purchasing  alcohol via  written  order.  The division  made                                                                    
eight  recommendations for  improvements. Two  of the  eight                                                                    
were  repeat recommendations  from the  prior sunset  audit,                                                                    
beginning  on  page  12.  First,   the  authority  to  renew                                                                    
licenses should be limited to  the board. Statutes were very                                                                    
specific that only  the board may issue or  renew a license.                                                                    
There was a statutory  provision to temporarily delegate the                                                                    
authority to  the executive director,  but the  division had                                                                    
found  that   the  board   had  permanently   delegated  the                                                                    
authority  to  the  executive  director,  who  had  in  turn                                                                    
delegated the authority to licensing staff.                                                                                     
Ms. Curtis  addressed the  second audit  recommendation that                                                                    
the  board issue  recreational site  licenses in  accordance                                                                    
with statutory requirements. The  division had tested 10 out                                                                    
of  29 active  recreational site  licenses during  the audit                                                                    
period. She elaborated that all  10 licenses had not met the                                                                    
definition of a recreational  site. The statutory definition                                                                    
was included  at the bottom of  page 12 of the  audit, which                                                                    
specifically identified what  activities qualified including                                                                    
baseball  games, car  races,  hockey  games, dogsled  racing                                                                    
events,  or curling  matches held  during a  season. The  10                                                                    
non-compliant  licenses  included   travel  tour  companies,                                                                    
bowling alley, art council, pool  hall, movie theater, and a                                                                    
spa. The  same issue  had been found  in the  previous audit                                                                    
and  the same  recommendation had  been made.  Board members                                                                    
had been aware  they were issuing the  licenses in violation                                                                    
with  statute  but believed  it  was  in the  public's  best                                                                    
interest  to do  so. The  board also  believed the  licenses                                                                    
would be addressed in a future rewrite of the law.                                                                              
Ms. Curtis  detailed the issuance  of the  licenses expanded                                                                    
the number  of establishments licensed to  sell alcohol over                                                                    
the  number  allowed  for  in  statute.  The  audit's  third                                                                    
recommendation  was   for  the   board  to   issue  beverage                                                                    
dispensary   licenses    in   accordance    with   statutory                                                                    
requirements.  The  division  had  sampled  16  out  of  126                                                                    
beverage  dispensary licenses  issued  to encourage  tourism                                                                    
and it found  5 were transferred and 6  were renewed despite                                                                    
not meeting  statutory requirements. Page 13  explained that                                                                    
the statutes  gave the board  authority to issue  a beverage                                                                    
dispensary license  without regard for  statutory population                                                                    
limits  if  it could  be  shown  a license  would  encourage                                                                    
tourism and  the statutes provided  for a minimum  number of                                                                    
rental  rooms that  must be  met in  order to  qualify as  a                                                                    
business that  encourages tourism.  The errors found  by the                                                                    
division  were  in  entities  that did  not  meet  the  room                                                                    
requirements.  The  board  believed it  was  appropriate  to                                                                    
continue  to   issue  the  licenses  because   the  original                                                                    
licenses  had  been  issued  prior to  1985  (the  year  the                                                                    
statute had been implemented). However,  the statute did not                                                                    
provide for  grandfathering of  a license  as it  existed at                                                                    
the time.                                                                                                                       
Ms.  Curtis moved  to the  fourth audit  recommendation. She                                                                    
detailed   the  board,   AMCO   director,  and   enforcement                                                                    
supervisor should work together  to establish an enforcement                                                                    
plan to  direct their limited  resources. She noted  she had                                                                    
reviewed the  same recommendation  as part of  the Marijuana                                                                    
Control Board  audit. The fifth recommendation  was directed                                                                    
to the  Marijuana Control  Board to  implement a  process to                                                                    
monitor and  track all complaints to  ensure complaints were                                                                    
followed up timely.                                                                                                             
Ms. Curtis  reviewed the sixth audit  recommendation on page                                                                    
15.  The division  recommended the  board and  AMCO director                                                                    
develop  written  procedures   for  updating  the  statewide                                                                    
database   with   restricted  purchasers.   The   background                                                                    
information section  of the audit described  the database of                                                                    
written  orders.  The  database  was  used  to  control  and                                                                    
monitor  the sale  of  alcohol to  restricted  areas of  the                                                                    
state. It was also used  to provided package store licensees                                                                    
with  a  list  of  individuals who  had  been  convicted  of                                                                    
selling  or  manufacturing  alcohol; the  stores  were  then                                                                    
prohibited   from   selling   alcohol  to   the   restricted                                                                    
purchasers. The  audit had determined  restricted purchasers                                                                    
had not  been entered  into the  database due  to a  lack of                                                                    
procedures.  Further, the  reports  of  convictions had  not                                                                    
been  consistently provided  to  the control  office by  the                                                                    
Court System.                                                                                                                   
Ms. Curtis  addressed the seventh recommendation  on page 16                                                                    
specifying  that the  board and  AMCO  staff should  improve                                                                    
procedures to  ensure municipalities reported  violations of                                                                    
alcohol laws. Statute required  municipalities to report the                                                                    
information  as  a  condition   of  receiving  half  of  the                                                                    
biennial licensing fees.  The audit had found only  4 of the                                                                    
40 locations  had been  reporting the  information; however,                                                                    
the fees had been routinely refunded.                                                                                           
Ms. Curtis  moved to  the eighth  recommendation on  page 17                                                                    
specifying the  AMCO director  should develop  and implement                                                                    
procedures   to  ensure   refunds  to   municipalities  were                                                                    
appropriately  reviewed. Auditors  reviewed the  process for                                                                    
calculating the refunds  and found there was  only one staff                                                                    
person  responsible   for  calculating  and   approving  the                                                                    
payments,  with no  independent review.  The lack  of review                                                                    
increased  the risk  for incorrect  payments. The  Office of                                                                    
the Governor  agreed the  board should  be extended  and its                                                                    
response to  the audit  began on  page 27.  The department's                                                                    
response  on  page  29 concurred  with  all  recommendations                                                                    
except  the first,  which was  the  recommendation to  limit                                                                    
renewal to  the board. The department  believed the statutes                                                                    
could  be interpreted  in a  different  manner; however,  it                                                                    
agreed that going forward, all  renewals would be brought to                                                                    
the board.                                                                                                                      
Ms. Curtis  detailed that the  board's response was  on page                                                                    
33. The  board chair agreed with  all recommendations except                                                                    
the  third   regarding  dispensary  licenses   to  encourage                                                                    
tourism.  The   board  chair  felt  the   grandfathering  of                                                                    
licenses  was  appropriate.   She  explained  that  auditing                                                                    
standards  required the  division  to address  circumstances                                                                    
when  an  auditee  disagreed   with  a  recommendation.  Her                                                                    
comments were  on page  35 where  she discussed  the board's                                                                    
disagreements  with  the  third recommendation.  She  stated                                                                    
that  no additional  information had  been provided  for her                                                                    
review.   She   reaffirmed   the  report   conclusions   and                                                                    
Senator  Micciche remarked  there were  issues with  the ABC                                                                    
Board but allowing  the board to sunset would  not solve the                                                                    
issues.   He  supported   the  bill.   He  mentioned   other                                                                    
legislation that  he believed  would simplify  management of                                                                    
the board  dramatically and could help  with struggles shown                                                                    
in various audit findings.                                                                                                      
10:57:11 AM                                                                                                                   
Senator Stevens  appreciated the  comments in  the committee                                                                    
substitute specifying the  director was not a  member of the                                                                    
board, could  not vote,  and could not  cast a  tie breaking                                                                    
vote.  He thought  the board  structure  was different  than                                                                    
other boards  given the  term limit  members could  serve on                                                                    
the  board  or as  chair.  He  asked  for detail  about  the                                                                    
structure in other boards and how the ABC Board differed.                                                                       
Ms.  Curtis answered  that page  1 of  the audit  noted that                                                                    
statutes did  not limit  the number  of consecutive  terms a                                                                    
member may  serve. She continued  it was the  one difference                                                                    
the division  had noted that  there were individuals  on the                                                                    
board  that  had  been  there   for  quite  some  time.  The                                                                    
Marijuana  Control Board  was different  in its  requirement                                                                    
that a  member was required to  leave the board for  a given                                                                    
number  of years  before returning.  The ABC  Board did  not                                                                    
have the requirement.                                                                                                           
Senator Olson asked Representative  Wool for his response to                                                                    
the audit  recommendations. He remarked  on his  respect for                                                                    
Ms. Curtis and her work.                                                                                                        
Representative Wool  agreed with the  audit recommendations.                                                                    
He provided  a brief overview of  some of the issues  he saw                                                                    
with the board decisions. He  noted he was not familiar with                                                                    
all   of   the   board's  decisions.   He   referenced   the                                                                    
recommendation  to  issue  licenses  according  to  statute,                                                                    
which he believed the board  was trying to do. He elaborated                                                                    
that Alaska  Airlines was experiencing a  situation with the                                                                    
board  where it  was  not currently  renewing the  airline's                                                                    
licenses. The issue  had to do with the  fingerprints of all                                                                    
the  airline's vice  presidents.  Historically, the  airline                                                                    
had provided  the information  in one way  in the  past, but                                                                    
had been  told by  the board was  following statute  and the                                                                    
airline  could not  longer provide  the  information in  the                                                                    
same  way.  He  explained   that  the  board  was  following                                                                    
statute,  but  he questioned  whether  it  was in  the  best                                                                    
interest of  the business,  the state,  or commerce.  He was                                                                    
not  concerned about  Alaska Airlines  and  knew they  would                                                                    
come  up  with  a  solution   because  they  had  money  and                                                                    
attorneys.  He reasoned  that did  not  mean it  was a  good                                                                    
solution because many people did not have that option.                                                                          
Representative  Wool  continued  that   the  audit  did  not                                                                    
address  how  the  board  was   making  business  easier  or                                                                    
unencumbered. He referenced  grandfathering in of businesses                                                                    
that  could  not  renew their  licenses  suddenly  after  25                                                                    
years. He  referenced another  bill currently  going through                                                                    
the  legislature that  would fix  the issue.  He stated  the                                                                    
board was  following statute, but  he wondered if  there was                                                                    
another  interpretation  or  another  set of  eyes.  He  was                                                                    
amenable to the audit recommendations.                                                                                          
11:01:00 AM                                                                                                                   
AT EASE                                                                                                                         
11:01:39 AM                                                                                                                   
Senator Stevens continued his  earlier questioning about the                                                                    
ABC  Board compared  to  other boards.  He  stated that  the                                                                    
Marijuana  Control Board  had  a limit  of  three terms  for                                                                    
members. He  asked Ms.  Curtis if  she believed  term limits                                                                    
should be explored.                                                                                                             
Ms.  Curtis  replied that  the  division  used the  criteria                                                                    
found in  the back  of the  audit to  conduct an  audit. She                                                                    
explained  if   there  were  no   criteria  to  use   for  a                                                                    
recommendation, the division did  not make a recommendation.                                                                    
She stated it  was a policy call. She did  not know what the                                                                    
legislative  intent had  been when  creating  the ABC  Board                                                                    
structure. The  division would have  to dive into  the issue                                                                    
prior to providing any type of response.                                                                                        
CSHB 299(FIN)  was HEARD and  HELD in committee  for further                                                                    
[Note:  CSHB  299(FIN) was  heard  again  at 3:20  p.m.  See                                                                    
11:02:54 AM                                                                                                                   
3:14:28 PM                                                                                                                    
CS FOR HOUSE BILL NO. 275(FIN)                                                                                                
     "An Act extending the termination  date of the Board of                                                                    
     Massage  Therapists; relating  to  license renewal  and                                                                    
     criminal history record  checks for massage therapists;                                                                    
     and providing for an effective date."                                                                                      
3:14:53 PM                                                                                                                    
Vice-Chair   Bishop  MOVED   to  ADOPT   proposed  committee                                                                    
substitute  for   CSHB  275(FIN),  Work   Draft  30-LS1185\O                                                                    
(Radford, 4/14/18).                                                                                                             
Co-Chair MacKinnon  OBJECTED for  discussion. She  noted the                                                                    
bill had been  heard on April 3, 2018  when public testimony                                                                    
had been  heard and the  fiscal note had been  reviewed. She                                                                    
asked her staff to review the changes in the bill.                                                                              
JULI  LUCKY, STAFF,  SENATOR  ANNA  MACKINNON, reviewed  the                                                                    
committee  substitute (CS).  She  referenced a  conversation                                                                    
earlier  in  the day  about  a  massage therapist  bill  and                                                                    
finger printing.  The previous version  of HB 25 had  a very                                                                    
similar provision  that limited the finger  printing to once                                                                    
every three  renewals. The bill  moved out of  the committee                                                                    
earlier  in  the day  had  similar  language, which  limited                                                                    
finger printing to  once every six years.  The committee did                                                                    
not want  to run into  a technical problem with  passing two                                                                    
bills that  revised the same  section of law  with different                                                                    
language;  therefore,  the  CS  was a  simple,  clean  board                                                                    
extension  to  June  30,  2024  with  all  of  the  language                                                                    
regarding finger printing removed.                                                                                              
Co-Chair MacKinnon asked if the  extension was the same year                                                                    
as the previous bill.                                                                                                           
Ms.  Lucky affirmed  that the  bill had  the same  extension                                                                    
year as  the previous  bill that had  been presented  to the                                                                    
Co-Chair MacKinnon  WITHDREW her  OBJECTION. There  being NO                                                                    
further OBJECTION, it was so ordered.                                                                                           
3:17:19 PM                                                                                                                    
Co-Chair MacKinnon invited the  sponsor's staff to the table                                                                    
and asked if the sponsor was  amenable to the changes in the                                                                    
CRYSTAL  KOENEMAN, STAFF,  REPRESENTATIVE SAM  KITO, replied                                                                    
that  the  sponsor [Representative  Sam  Kito]  was in  full                                                                    
support of the changes in the CS.                                                                                               
Vice-Chair Bishop MOVED  to REPORT SCS CSHB  275(FIN) out of                                                                    
Committee   with   individual    recommendations   and   the                                                                    
accompanying fiscal  note. There being NO  OBJECTION, it was                                                                    
so ordered.                                                                                                                     
SCS CSHB 275(FIN)  was REPORTED out of committee  with a "do                                                                    
pass"  recommendation and  with one  new fiscal  impact note                                                                    
from  the Department  of  Commerce,  Community and  Economic                                                                    
3:18:13 PM                                                                                                                    
AT EASE                                                                                                                         
3:20:05 PM                                                                                                                    
CS FOR HOUSE BILL NO. 299(FIN)                                                                                                
     "An Act  relating to the  authority of the  director of                                                                    
     the  Alcoholic Beverage  Control  Board; extending  the                                                                    
     termination  date  of  the Alcoholic  Beverage  Control                                                                    
     Board;  relating to  the  application  of precedent  to                                                                    
     decisions of the Alcoholic  Beverage Control Board; and                                                                    
     providing for an effective date."                                                                                          
3:20:05 PM                                                                                                                    
Co-Chair  MacKinnon provided  a brief  history on  the bill,                                                                    
which  had been  heard earlier  in the  meeting. She  listed                                                                    
individuals available to testify.                                                                                               
REPRESENTATIVE  ADAM WOOL,  SPONSOR,  reported  that HB  299                                                                    
would  extend the  Alcohol Beverage  Control Board  for four                                                                    
years  as  recommended by  the  audit  [by the  Division  of                                                                    
Legislative  Audit]. The  committee had  reviewed the  audit                                                                    
recommendations  previously.  He  noted there  had  been  an                                                                    
amendment  in the  House Labor  and  Commerce Committee  and                                                                    
another in the House Finance Committee.                                                                                         
Co-Chair  MacKinnon  asked for  a  review  of the  Sectional                                                                    
LAURA STIDOLPH, STAFF, REPRESENTATIVE  ADMAN WOOL, read from                                                                    
the Sectional  Analysis for CSHB  299(FIN), version  U (copy                                                                    
on file):                                                                                                                       
     Section  1. AS  04.06.075 is  amended by  adding a  new                                                                    
     subsection, "(b)  The director is  not a member  of the                                                                    
     board and may not vote on a matter before the board."                                                                      
     Section 2. AS 44.66.010(a)(1)  is amended to extend the                                                                    
    Alcoholic Beverage Control Board to June 30, 2022.                                                                          
     Section 3.  AS 04.11.437  Application of  Precedent "In                                                                    
     determining   whether   issuance,  renewal,   transfer,                                                                    
     relocation, suspension,  or revocation of a  license is                                                                    
     in the  best interests  of the  public, the  board need                                                                    
     not  conform to  or distinguish  its decision  from any                                                                    
     action  it  has  taken  in  the  past  on  applications                                                                    
     presenting  similar facts,  but  may  instead base  its                                                                    
     decision only  on the particular  facts before  it." is                                                                    
     Section 4. 3 AAC 304.025(c) is annulled.                                                                                   
     Section  5.   Section  2  of  this   Act  takes  effect                                                                    
     immediately under AS 01.10.070(c).                                                                                         
Ms.  Stidolph   elaborated  that  Section  4   annulled  AAC                                                                    
304.025(c),  which   was  a  regulation  that   allowed  the                                                                    
director to be a voting member of the board.                                                                                    
3:23:47 PM                                                                                                                    
Senator Stevens assumed the executive  director was hired by                                                                    
the board.  He asked if  the five-member board  selected its                                                                    
own chair.                                                                                                                      
Representative  Wool  replied  that   the  board  chair  was                                                                    
selected by the governor.                                                                                                       
Senator  Stevens  asked  whether   the  board  director  was                                                                    
appointed by the board.                                                                                                         
Representative Wool stated that  the director of the Alcohol                                                                    
and  Marijuana Control  Board (AMCO)  was  appointed by  the                                                                    
governor and technically worked for the board.                                                                                  
Co-Chair MacKinnon  looked at  [page 1] line  7 of  the bill                                                                    
and  wondered  if there  had  been  an issue  regarding  the                                                                    
director voting. She asked for history on the matter.                                                                           
Ms. Stidolph reported that in  2012 the statute that allowed                                                                    
the director to be a voting  member was repealed, but it had                                                                    
been left in regulation. The  regulation had been noted in a                                                                    
January  board  meeting  that  in  the case  of  a  tie  the                                                                    
director would  cast the tie  breaking vote. She  noted that                                                                    
the director's vote had not  ultimately been needed. She had                                                                    
been told the situation was the  first time in a decade that                                                                    
the director  may have been  asked to cast the  tie breaking                                                                    
vote. The bill only  repealed the regulations (the provision                                                                    
had already been repealed in statute).                                                                                          
3:25:59 PM                                                                                                                    
Co-Chair  MacKinnon  asked  about  the  composition  of  the                                                                    
current board.                                                                                                                  
Ms.  Stidolph replied  that the  ABC Board  made up  of five                                                                    
members  including  two  from   industry,  one  from  public                                                                    
safety, one rural member, and one public member.                                                                                
Senator von  Imhof considered the numerous  letters (copy on                                                                    
file) pertaining to the bill,  which alleged the regulations                                                                    
were not  clear. She  highlighted that  local establishments                                                                    
were in danger  of being shut down. She  noted a grandfather                                                                    
clause  dovetailed on  the issue.  She stated  the bill  was                                                                    
merely a  board extension,  but there  seemed to  be concern                                                                    
about  existing regulations.  She asked  how the  pieces all                                                                    
fit together.                                                                                                                   
Ms.  Stidolph responded  that the  auditors  had found  that                                                                    
there were  34 businesses in noncompliance  that had tourism                                                                    
beverage dispensary  licenses. The  businesses had  all been                                                                    
operating  since   1985  with  the  belief   they  had  been                                                                    
grandfathered in  since the last  rewrite. There had  been a                                                                    
couple of  board meetings that had  determined a legislative                                                                    
fix   was  needed.   She  noted   Representative  Wool   was                                                                    
sponsoring  separate  legislation  that  would  provide  the                                                                    
legislative fix. She  summarized the issue had  arisen in an                                                                    
audit  finding  that was  currently  being  resolved by  the                                                                    
3:28:19 PM                                                                                                                    
Senator von Imhof asked about the bill being referenced.                                                                        
Ms.  Stidolph specified  that HB  301 was  currently in  the                                                                    
Senate Labor and Commerce Committee.                                                                                            
Senator Stevens  asked for  detail on  the current  board in                                                                    
terms of  the number  of appointments  members had  and when                                                                    
the  appointments had  occurred.  He was  interested in  the                                                                    
information  broken   out  by   the  four   board  appointee                                                                    
Co-Chair  MacKinnon replied  that the  requested information                                                                    
could  be  provided.  She understood  there  were  not  term                                                                    
limits on  the board. She  had seen  the chair of  the board                                                                    
multiple times  during her service  in the  legislature. She                                                                    
considered whether the audit included the information.                                                                          
3:30:01 PM                                                                                                                    
AT EASE                                                                                                                         
3:30:31 PM                                                                                                                    
Co-Chair MacKinnon  referenced page 1 [of  the audit], which                                                                    
included  a   list  of   the  board   member  representation                                                                    
including one  rural member, one  public member,  one public                                                                    
safety member,  and two industry members.  She asked Senator                                                                    
Stevens for verification he was  interested in the longevity                                                                    
of each board member.                                                                                                           
Senator  Stevens replied  in the  affirmative. He  requested                                                                    
the  dates   of  each   appointment  and   whether  multiple                                                                    
appointments had occurred.                                                                                                      
Co-Chair  MacKinnon agreed  and noted  there may  be someone                                                                    
available online to provide the information.                                                                                    
Senator  von  Imhof  thought the  bill  was  important.  She                                                                    
wanted to  read through the  audit and provide  questions to                                                                    
Co-Chair MacKinnon.                                                                                                             
Co-Chair  MacKinnon  agreed. She  planned  to  set the  bill                                                                    
aside  to address  some questions  and intended  to hear  it                                                                    
again as quickly as possible.                                                                                                   
3:32:04 PM                                                                                                                    
Co-Chair MacKinnon OPENED and CLOSED public testimony.                                                                          
Vice-Chair  Bishop discussed  FN  2 from  the Department  of                                                                    
Commerce, Community and  Economic Development, OMB Component                                                                    
Number 3119.  The annual cost  was $1,660,000  in designated                                                                    
general funds. He  read from the page 2, paragraph  3 of the                                                                    
fiscal note:                                                                                                                    
     If  the  bill passes  the  following  expenses will  be                                                                    
     incurred:  Personal Services:  $765.5 (eight  full time                                                                    
     agency  staff: 3  Special Investigator  I, Records  and                                                                    
     Licensing   Supervisor,    2   Occupational   Licensing                                                                    
     Examiner, Administrative Assistant  I, Criminal Justice                                                                    
     Technician I)                                                                                                              
3:33:45 PM                                                                                                                    
AT EASE                                                                                                                         
3:33:54 PM                                                                                                                    
Vice-Chair Bishop continued to read from the fiscal note                                                                        
     Travel:  $73.5  (board  members attend  at  least  five                                                                    
     board meetings per  year; board is required  to meet in                                                                    
     each judicial  district at least once  per year; agency                                                                    
     director and  occasionally board chair or  other agency                                                                    
     management   staff   travel  for   conferences   and/or                                                                    
     training;  enforcement  staff travel  throughout  state                                                                    
     for inspections and investigations)                                                                                        
     Services: $750.0  (includes information  technology and                                                                    
     department support for  deleted positions; support from                                                                    
     the  Department  of  Law;  hearing  services;  building                                                                    
     leases; meeting advertising;  meeting space rental; and                                                                    
     other  reimbursable  services   agreements  with  other                                                                    
     Commodities:   $71.6   (supplies   including   printing                                                                    
     statute/regulation    books;    required   signs    for                                                                    
     licensees;  ammunition and  other enforcement  training                                                                    
     supplies; office supplies)                                                                                                 
     The  ABC Board's  work is  funded by  program receipts.                                                                    
     Fees  for applicants  and licensees  for new  licenses,                                                                    
     renewal of  licenses, or  transfer of  licenses include                                                                    
     an  application fee  set in  regulation, a  license fee                                                                    
     mostly  set  in  statute  (a   few  license  types  are                                                                    
     established  in  regulation  along with  their  license                                                                    
     fee), and a background check  fee set by the Department                                                                    
     of Public Safety.   Permit fees are set  in statute for                                                                    
     permits established  in statute, and set  in regulation                                                                    
     for  permits  established   in  regulation.  The  total                                                                    
     amount  of revenue  collected approximately  equals the                                                                    
     actual regulatory costs.                                                                                                   
Co-Chair  MacKinnon  asked  to  hear  from  the  ABC  Office                                                                    
director. She  referenced an earlier question  [from Senator                                                                    
Stevens] regarding  the longevity  of the  members currently                                                                    
serving on the board.                                                                                                           
ERIKA  MCCONNELL, DIRECTOR,  ALCOHOL  AND MARIJUANA  CONTROL                                                                    
OFFICE, ANCHORAGE (via teleconference),  stated that not all                                                                    
the  five members  listed in  the audit  were current  board                                                                    
members; two of  the members had been replaced.  She did not                                                                    
have precise  numbers but reported  that the chair  (Mr. Bob                                                                    
Klein) had  been serving  for a  long period  of time  - she                                                                    
estimated his  service at 20  years. She believed  Mr. Evans                                                                    
had been  serving for around  5 years;  Mr. Rex Leath  was a                                                                    
new public  safety member and  had been serving for  about 1                                                                    
year (the  public safety  seat had  been established  by the                                                                    
legislature  in the  past year),  the  remaining public  and                                                                    
industry members had recently been replaced.                                                                                    
Co-Chair  MacKinnon asked  Senator Stevens  if limiting  the                                                                    
information request  regarding the length of  service to Mr.                                                                    
Klein and Mr. Evans was acceptable.                                                                                             
Senator Stevens replied in the affirmative.                                                                                     
Co-Chair  MacKinnon  would  contact  the  administration  to                                                                    
receive the  information. She appreciated the  longevity and                                                                    
the perspective of industry and  rural representation on the                                                                    
3:38:08 PM                                                                                                                    
Vice-Chair  Bishop how  many of  the eight  full-time agency                                                                    
staff  carried firearms.  Ms. McConnell  answered all  eight                                                                    
investigators throughout the state carried firearms.                                                                            
Vice-Chair Bishop  asked whether all the  staff were trained                                                                    
in Sitka.  Ms. McConnell  responded that  all the  staff had                                                                    
previously been  police officers.  She assumed they  had all                                                                    
been through the appropriate police academies.                                                                                  
Co-Chair  MacKinnon asked  Representative Wool  to repeat  a                                                                    
disclosure he had provided earlier in the meeting.                                                                              
Representative Wool declared a  conflict of interest because                                                                    
he was the  owner of a beverage  dispensary license governed                                                                    
by the board.                                                                                                                   
Ms. McConnell asked to provide testimony on the bill.                                                                           
Co-Chair MacKinnon asked Ms. McConnell to proceed.                                                                              
Ms. McConnell provided testimony with prepared remarks:                                                                         
     This testimony  relates to Section  3 of HB  229, which                                                                    
     repeals AS 04.11.537 application  of precedent. This is                                                                    
     a  very  short section  and  it  says, "in  determining                                                                    
     whether   issuance,   renewal,  transfer,   relocation,                                                                    
     suspension, or revocation  of a license is  in the best                                                                    
     interest of the  public, the board need  not conform to                                                                    
     or  distinguish its  decision from  any  action it  has                                                                    
     taken in  the past  on applications  presenting similar                                                                    
     fact, but  may instead  base its  decision only  on the                                                                    
     particular facts before it."                                                                                               
     On April 10th  the ABC Board voted to  recommend to the                                                                    
     legislature that this section  be retained within Title                                                                    
     IV. This  section of statute  allows the board  to make                                                                    
     decisions  based  on  the   facts  and  the  particular                                                                    
     circumstances  of  each  case   that  comes  before  it                                                                    
     without being bound by how  the board treated a similar                                                                    
     case  in the  past.  This section  does  not allow  the                                                                    
     board  to make  random  decisions based  on whims.  The                                                                    
     board  works  hard to  be  consistent  so that  it  can                                                                    
     properly  discharge  its  authority under  statute  and                                                                    
     maintain credibility and  predictability for the public                                                                    
     including licensees.  However, the  flexibility allowed                                                                    
     by  this section  of statute  is vital  to the  board's                                                                    
     requirement to act in the public's interest.                                                                               
     The board is required by  AS 04.06.050 to travel to the                                                                    
     four judicial districts in the  state at least once per                                                                    
     year to modify the  existing board regulations in light                                                                    
     of statewide  and local problems.  This acknowledgement                                                                    
     of  the  particular  challenges that  face  the  varied                                                                    
     communities in  the state, along with  the local option                                                                    
     provisions   and  the   broad  opportunity   for  local                                                                    
     government   protests  on   licenses  recognizes   that                                                                    
     different  situations  exist in  different  communities                                                                    
     within  the  state  with respect  to  the  manufacture,                                                                    
     barter,  possession, and  sale of  alcoholic beverages.                                                                    
     Consequently, the board may  be faced with applications                                                                    
     presenting similar  facts in different  communities and                                                                    
     need  to take  different  actions based  on the  public                                                                    
     input from  those communities. The  board must  be free                                                                    
     to conclude  that what  is in  the public  interest may                                                                    
     differ  in   different  parts  of  the   state  and  be                                                                    
     different over time.                                                                                                       
     My  speculation on  why this  amendment was  offered is                                                                    
     that Representative Wool is  attempting to address very                                                                    
     real  frustrations with  situations where  licensees or                                                                    
     board  staff has  followed certain  practices or  taken                                                                    
     certain actions,  sometimes over a period  of months or                                                                    
     years, some  of which were  unknown to the board  or to                                                                    
     the  director  and  which   did  not  necessarily  have                                                                    
     statutory support.                                                                                                         
3:42:37 PM                                                                                                                    
Ms. McConnell continued with her prepared testimony:                                                                            
     Representative   Wool   this  morning   mentioned   the                                                                    
     situation with  Alaska Airlines.  While there  are very                                                                    
     valid  frustrations   with  this  type   of  situation,                                                                    
     removing the board's  flexibility to address individual                                                                    
     circumstances  as described  above  will not  guarantee                                                                    
     against human error  either on part of  the board staff                                                                    
     or licensees and errors where  they are consistent with                                                                    
     statute should be corrected.  In summary, the Alcoholic                                                                    
     Beverage   Control   Board  recommends   retaining   AS                                                                    
     04.11.537 in Title IV. Thank you.                                                                                          
3:43:14 PM                                                                                                                    
Senator  Stevens  understood  Ms.  McConnell's  comments  on                                                                    
flexibility and  versus consistency and following  rules. He                                                                    
asked for provide  an example of why the board  would not be                                                                    
consistent with following the rules.                                                                                            
Ms.  McConnell stated  that the  section did  not allow  the                                                                    
board to  be inconsistent in  following the rules  set forth                                                                    
in statute and regulations.  The section specified that when                                                                    
the  board had  acted  in  a certain  manner  for a  license                                                                    
application in  Juneau for example,  the board could  face a                                                                    
similar license  application in Bethel  where there  was not                                                                    
public or local  government support. In that  case the board                                                                    
may  act differently  on a  similar  license application  in                                                                    
Bethel and in Juneau because  of the different situations in                                                                    
the  two communities,  the different  public input,  and the                                                                    
different interests of the local governments.                                                                                   
Co-Chair   MacKinnon  asked   for   verification  that   Ms.                                                                    
McConnell was referencing regulation and not statute.                                                                           
Ms.  McConnell   replied  that   she  was   referencing  the                                                                    
statutory  section the  bill proposed  to delete.  The board                                                                    
worked to implement statute and regulation.                                                                                     
Co-Chair MacKinnon  asked if Ms.  McConnell was  speaking to                                                                    
Section 4. Ms. McConnell clarified  that she was speaking to                                                                    
Section 3 of the bill.                                                                                                          
3:45:25 PM                                                                                                                    
Senator Micciche  thought the  issue might  be related  to a                                                                    
problem  occurring  in  Alaska  where  individuals  who  had                                                                    
invested  their  savings  in a  business  that  was  license                                                                    
premised  were subject  to  the decision  by  the board  and                                                                    
staff to evaluate  renewal differently than they  had in the                                                                    
past.  He asked  how Ms.  McConnell would  feel if  the bill                                                                    
only  allowed   the  decision  to  change   in  a  different                                                                    
geographic  location  as   opposed  to  particular  licensed                                                                    
Ms. McConnell asked if Senator  Micciche was suggesting that                                                                    
the application  of precedent section be  more specific with                                                                    
regard to location and time.                                                                                                    
Senator  Micciche stated  he had  assumed Ms.  McConnell was                                                                    
concerned the board could be  locked into a decision made in                                                                    
Juneau,  which may  be a  very different  situation than  an                                                                    
issue the  board may be  dealing with in  another community.                                                                    
He posed  a scenario where  the board was  protected against                                                                    
having the same  decision throughout the state.  He asked if                                                                    
there was a  way to protect the board from  a decision based                                                                    
on  geographic  location versus  a  different  reading as  a                                                                    
license regarded as grandfathered in one location.                                                                              
Ms. McConnell  expected there were  many ways to  phrase the                                                                    
bill to try to accommodate  the board's concerns with regard                                                                    
to acting in  the public interest and the  types of concerns                                                                    
raised  by  the  committee.  She did  not  have  a  specific                                                                    
suggestion at present.                                                                                                          
Co-Chair MacKinnon CLOSED public testimony.                                                                                     
3:48:21 PM                                                                                                                    
AT EASE                                                                                                                         
3:49:34 PM                                                                                                                    
Co-Chair   MacKinnon   referenced    a   document   entitled                                                                    
"Alcoholic  Beverage Control  Board,"  which listed  current                                                                    
board  members  and  detailed  board  information  (copy  on                                                                    
file).  She stated  that the  committee  would persevere  to                                                                    
obtain additional information.                                                                                                  
Senator Micciche  requested to  from the  sponsor pertaining                                                                    
to Section 3.                                                                                                                   
Representative  Wool  referenced  a memorandum  authored  by                                                                    
legislative  counsel  Linda  Bruce  with  Legislative  Legal                                                                    
Services dated April  3, 2018 on the  subject of application                                                                    
of precedent  (copy on file).  The memo noted that  no other                                                                    
board  had the  provision, including  the Marijuana  Control                                                                    
Board. The memo  stated that the language  could present due                                                                    
process and equal protection  problems by treating similarly                                                                    
situated   licenses  differently   and  potentially   giving                                                                    
different punishments for  similar violations. He understood                                                                    
the  regional  differences  and   applauded  the  board  for                                                                    
considering  the situations  differently.  He explained  the                                                                    
removal of the section did not  mean the board had to adhere                                                                    
to  precedent. The  section specified  that the  board could                                                                    
ignore  precedent, which  he found  troubling. He  continued                                                                    
that   Ms.  McConnell   was  correct   that  he   felt  some                                                                    
frustration from  hearing from different  parties, including                                                                    
licensees with  licenses that were  not being  renewed after                                                                    
35  years due  to a  law change.  He referenced  frustration                                                                    
expressed  by Alaska  Airlines and  other anecdotal  stories                                                                    
from licensees he had spoken with.                                                                                              
Representative Wool  explained that Section 3  had come from                                                                    
Legislative  Legal Services.  He believed  it would  help in                                                                    
looking at  situations he had  been made aware  of regarding                                                                    
board  decisions  in  the past.  He  mentioned  that  Alaska                                                                    
Airlines had been  treated one way for a decade  or more and                                                                    
had  suddenly  been  asked  to provide  22  sets  of  finger                                                                    
prints. He and the  industry found the situation cumbersome.                                                                    
He  wondered whether  the  board could  come  to a  solution                                                                    
without  going  through  its  normal  process  involving  an                                                                    
administrative  law  judge  and  state  superior  court.  He                                                                    
reiterated his  earlier testimony  that the situation  was a                                                                    
little  more  doable  for  a  big  corporation  but  may  be                                                                    
impossible  for a  small business  (especially if  they were                                                                    
facing  closure). He  was trying  to remove  road blocks  to                                                                    
making good decisions.                                                                                                          
3:53:20 PM                                                                                                                    
Senator  von Imhof  recalled that  Alaska Airlines  had gone                                                                    
from a  requirement of 5 sets  of finger prints to  22 sets.                                                                    
She gleaned  that the  board was  adhering to  statutes more                                                                    
literally than  in the  past, which was  the reason  for the                                                                    
requirement  for the  additional  finger  prints. She  asked                                                                    
whether Alaska  Airlines could go  back to providing  5 sets                                                                    
of finger prints if Section 3 was repealed.                                                                                     
Representative Wool  stated that  he was not  suggesting the                                                                    
action mentioned by  Senator von Imhof. He  explained it was                                                                    
a  legal  question. The  ABC  Board  had  a lawyer  who  had                                                                    
communicated  the  requirement for  the  22  sets of  finger                                                                    
prints, even though  it had not been the  requirement in the                                                                    
past. The audit requested that  the board adhere to statute.                                                                    
He  reiterated  that  he  was  trying  to  remove  potential                                                                    
obstacles to using  evidence that could make  the board more                                                                    
amenable to removing road blocks  in situations like the one                                                                    
facing  Alaska Airlines.  He explained  Alaska Airlines  had                                                                    
been presented  with providing 22  sets of finger  prints or                                                                    
creating a  corporation within Alaska  for the  sole purpose                                                                    
of holding  liquor licenses it  used in Alaska.  He surmised                                                                    
that  the  issue was  manageable  for  large companies  like                                                                    
Alaska  Airlines, but  not all  companies  could handle  the                                                                    
burdensome  needs  required to  adhere  to  the statute.  He                                                                    
reiterated  that no  other board  had the  provision and  it                                                                    
could be a due process problem.                                                                                                 
3:55:14 PM                                                                                                                    
Co-Chair  MacKinnon reported  that amendments  were due  the                                                                    
following day  by noon. She  discussed the schedule  for the                                                                    
following meeting.                                                                                                              
CSHB 299(FIN)  was HEARD and  HELD in committee  for further                                                                    
Co-Chair  MacKinnon asked  if members  wanted  to hear  from                                                                    
anyone else in the future regarding CSHB 299(FIN).                                                                              
Senator von Imhof  thought it could be helpful  to hear from                                                                    
the Department of Law.                                                                                                          
Co-Chair MacKinnon provided additional closing remarks                                                                          
regarding the schedule.                                                                                                         
3:57:59 PM                                                                                                                    
The meeting was adjourned at 3:58 p.m.                                                                                          

Document Name Date/Time Subjects
CSHB299 (HFIN) Explanation of Changes ver A to ver U 4.9.18.pdf SFIN 4/14/2018 10:00:00 AM
HB 299
HB 299 - Additional Backup - Precedent Alaska Airlines.pdf SFIN 4/14/2018 10:00:00 AM
HB 299
HB 275 Work Draft Version O.pdf SFIN 4/14/2018 10:00:00 AM
HB 275
HB 299 Alcoholic Beverage Control Board Fact Sheet and Roster - with Source.pdf SFIN 4/14/2018 10:00:00 AM
HB 299
HB 215 DPH response SFIN 4-11-2018.pdf SFIN 4/14/2018 10:00:00 AM
HB 215
HB 299 ABC Board Resolution re amendment to HB 299.pdf SFIN 4/14/2018 10:00:00 AM
HB 299
HB299_ABC Board Resolution.pdf SFIN 4/14/2018 10:00:00 AM
HB 299