Legislature(2021 - 2022)SENATE FINANCE 532
04/11/2022 09:00 AM Senate FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| SB45 | |
| SB164 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | SB 45 | TELECONFERENCED | |
| += | SB 164 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
SENATE FINANCE COMMITTEE
April 11, 2022
9:04 a.m.
9:04:28 AM
CALL TO ORDER
Co-Chair Bishop called the Senate Finance Committee meeting
to order at 9:04 a.m.
MEMBERS PRESENT
Senator Click Bishop, Co-Chair
Senator Bert Stedman, Co-Chair
Senator Lyman Hoffman
Senator Donny Olson [via teleconference]
Senator Bill Wielechowski
Senator David Wilson
MEMBERS ABSENT
Senator Natasha von Imhof
ALSO PRESENT
Erin Shine, Staff, Senator Click Bishop; Senator Gary
Stevens, Sponsor; Tim Lamkin, Staff, Senator Gary Stevens;
Cody Grussendorf, Staff, Senator Click Bishop.
SUMMARY
SB 45 AGE FOR TOBACCO/NICOTINE/E-CIG; TAX E-CIG
SB 45 was HEARD and HELD in committee for further
consideration.
SB 164 APPROP: CAP; REAPPROP; SUPP
SB 164 was HEARD and HELD in committee for
further consideration.
SENATE BILL NO. 45
"An Act raising the minimum age to purchase, sell,
exchange, or possess tobacco, a product containing
nicotine, or an electronic smoking product; relating
to transporting tobacco, a product containing
nicotine, or an electronic smoking product; relating
to the taxation of electronic smoking products; and
providing for an effective date."
9:05:34 AM
Co-Chair Bishop relayed that it was the second hearing for
SB 45. The committee had previously opened and closed
public testimony. The committee intended to consider a
Committee Substitute (CS) and one proposed amendment.
Co-Chair Stedman MOVED to ADOPT proposed committee
substitute for SB 45, Work Draft 32-LS0311\D (Nauman,
4/5/22).
Co-Chair Bishop OBJECTED for discussion.
9:06:20 AM
ERIN SHINE, STAFF, SENATOR CLICK BISHOP, highlighted that
the proposed CS removed the mandatory product manufacturer
liability insurance policy requirement. It removed a
prohibition on flavored electronic smoking products and
bifurcated the excise tax rate between tobacco products.
The tax rate would stay at 75 percent of wholesale and
would include an electronic smoking product (which included
close-systems electronic smoking products), which was now
an excise tax rate of 45 percent.
Ms. Shine addressed an Explanation of Changes document
(copy on file):
Updated Title
Section 3
Amends AS 11.76.105(c) to reduce the existing
violation fine of $500 to be not more than $300 for
possession of tobacco, an electronic smoking product
or a product containing nicotine by a person under 21
years of age.
Section 4
Adds a new subsection, AS 11.76.105(d), that directs
the court system to treat violations for possession of
tobacco and ESP products similar to a traffic
violation, with a maximum fine of $300, and to waive
mandatory court appearance. This replaces Section 4 of
version O, relating to prohibition of internet sales,
as that is now addressed in Section 11 and 19 of
version D, below, allowing internet sales but with 3rd
party age verification.
Section 10
The section pertaining to mandatory product
manufacturer liability insurance policy was struck
from Version O, and instead replaced Section 10 by
adding a new subsection in Version D, AS
11.81.900(b)(69), that provides a definition of
"nicotine."
Section 14
Amends AS 43.50.300 by establishing an excise tax rate
of 45% of the wholesale price of the Eliquid contained
in an ESP.
Section 15
Amends AS 43.50.300 by adding a new subsection (c)
that provides a definition of "closed system
electronic smoking product"
Section 16
Amends AS 43.50.310(b) to exclude marijuana products
from any provisions of the bill.
Section 18
Amends AS 43.50.320 to:
? delete the prohibition of flavored electronic
smoking products; and
? adds a prohibition of marketing electronic smoking
product, including a flavored products in a manner
likely to promote the use of them by a person under 21
years of age.
9:10:00 AM
Ms. Shine continued to address the Explanation of Changes
document:
Section 27
Amends AS 43.50.390 to provide a reference to the
definition of "nicotine" established in Section 10.
Section 32
Amends AS 45.50.471(b)(58) with conforming changes
made in Section 18, relating to unlawful marketing
practices.
Section 35
Conforming changes to the applicability section as
well as providing a grandfather clause for persons 19
years of age or older who are employed on the
effective date of the act by a person with a business
license endorsement to sell tobacco products.
Section 36
Amends the effective date from "January 1, 2022" to
"July 1, 2023"
Ms. Shine noted that in Section 33 there was a section of
existing law missing from the original bill draft, which
had now been added on page 17. The language had been
omitted via a drafting error in the previous version of the
bill.
Co-Chair Bishop WITHDREW his OBJECTION. There being NO
further OBJECTION, it was so ordered. The CS for SB 45 was
ADOPTED.
9:12:19 AM
SENATOR GARY STEVENS, SPONSOR, explained that the bill was
very simple and was about protecting children from becoming
addicted to nicotine. He shared that he had been working on
the legislation for seven years, during which time the
products addressed in the bill continued to evade any
meaningful public policy to restrict youth access. He
suggested that the more time that passed, the greater
number of young Alaskans would become addicted. He thought
it was common knowledge that the products were unhealthy.
He thought the state seemed to be giving tacit approval
that the products were safe, and he strongly disagreed.
Co-Chair Bishop asked if the sponsor was comfortable with
the proposed CS.
Senator Stevens stated he was fine with the CS.
9:13:54 AM
TIM LAMKIN, STAFF, SENATOR GARY STEVENS, had nothing to add
but was available to answer questions.
Senator Wielechowski referenced the change to allow flavors
and asked if the sponsor had any concerns.
Mr. Lamkin suggested that the CS contained what could be
interpreted as a compromise, where it was recognized that
there were legitimate instances of adults that had used the
products to stop smoking cigarettes and may have a
legitimate reason to prefer the flavored product. He
continued that the compromise was struck that included
provisions allowing that it was unlawful for marketing that
would promote minor use of the products.
Senator Wielechowski asked if the CS would allow for the
sale or marketing of flavors such as Fruit Loops or Lucky
Charms.
Mr. Lamkin thought the matter would be called into question
and the references could be cited as unlawful marketing.
Senator Wilson MOVED to ADOPT Amendment 1:
TO: CSSB45(FIN), Draft Version "D"
Page 7, line 3, following "is":
Insert "15 [AT THE RATE OF 75] percent of the
wholesale price of"
Co-Chair Bishop OBJECTED for discussion.
Senator Wilson spoke to Amendment 1. He explained that the
main point of the bill was to reduce underage usage, which
would conform to the federal law. He thought the bill was
being saddled with penalties. He cited that some of the
products referenced were considered by the Food and Drug
Administration to be appropriate for the protection of
public health and were used for smoking cessation tools.
Instead of raising the age to 21, he considered that a less
harmful alternative should be encouraged. He clarified that
he did not encourage smoking and did not personally use the
products. He thought a less lethal alternative should be
offered. He explained that the intent was to lower the vape
tax to 15 percent instead of the proposed rate of 45
percent.
9:17:36 AM
AT EASE
9:17:59 AM
RECONVENED
Co-Chair Bishop asked if there was further discussion on
the amendment.
Senator Wielechowski asked how the sponsor felt about the
amendment offered by Senator Wilson.
Senator Stevens was opposed to the amendment.
Co-Chair Bishop MAINTAINED his OBJECTION. A roll call vote
was taken on the motion.
IN FAVOR: Wilson
OPPOSED: Wielechowski, Hoffman, Olson, Bishop, Stedman
The MOTION FAILED (1/5).
9:19:31 AM
AT EASE
9:20:48 AM
RECONVENE
Co-Chair Bishop relayed that the committee would request
updated fiscal notes and set the bill aside until the new
fiscal notes were available.
SB 45 was HEARD and HELD in committee for further
consideration.
9:21:08 AM
AT EASE
9:24:17 AM
RECONVENED
SENATE BILL NO. 164
"An Act making appropriations, including capital
appropriations, reappropriations, and other
appropriations; making supplemental appropriations;
and providing for an effective date."
9:24:20 AM
Co-Chair Bishop relayed that the committee would consider a
CS for SB 164, set an amendment deadline, and set the bill
aside.
Co-Chair Stedman MOVED to ADOPT proposed committee
substitute for SB 164, Work Draft 32-GS2436\B (Dunmire,
4/9/22).
Co-Chair Bishop OBJECTED for discussion.
9:25:02 AM
CODY GRUSSENDORF, STAFF, SENATOR CLICK BISHOP, gave an
overview of the information he would address, including a
Summary of Changes document and three reports from the
Legislative Finance Division (copy on file). He explained
that Report A showed each project proposed by the governor
and the structure of funding delineated by columns listing
the governor's supplementally-funded projects, FY 23
projects, the Senate CS total, and a column with comparison
of the totals. He explained that Report B had the same
column structure and showed the agency spending by
Unrestricted General Funds (UGF). Report C was the same but
showed total fund sources.
9:26:29 AM
Mr. Grussnedorf commented that the CS (Version E)
considered all projects proposed by the governor, including
the two supplemental bills, and the objective of the CS was
to find a baseline starting point for the committee's
consideration during the budget process. He addressed the
Summary of Changes document:
General Overview:
Version B incorporates capital requests by the
Governor in SB 165 and SB 176 supplemental bills.
Finance CS ver. B does not:
? add any new legislative projects
? increase funding to any projects
? include any legislative reappropriations
? include any GO Bond proposed projects
Finance CS ver. B Removes all Mental Health budget
capital items.
Finance CS ver. B Removes the following fund sources:
? Coronavirus Capital Project Funds (CCPF) projects
($64M)
? Coronavirus State and Local Fiscal Recovery Funds
(CSLFRF) ($72M)
Governor's budgets proposed $90.7 million of FY 22
Supplemental projects funded with unrestricted general
fund (UGF) dollars. Finance CS Ver. B moves all but
$3.1 million of those to FY 23. These projects are
highlighted below.
Spend Summary:
Governor's budgets including supplementals proposed to
spend a total of $249.1 million UGF.
Finance CS Ver. B including supplementals proposes to
spend $197.4 million UGF, a difference of $51.7
million. This is a 20.7% reduction.
Mr. Grussendorf thought it was notable that the total spend
for the proposed CS did not include the $14 million in
mental health capital projects, nor did it include the $75
million in proposed Infrastructure Investment and Jobs Act
(IIJA) spending in SB 241 [the supplemental appropriations
bill at the request of the governor]. The capital budget
would potentially include the projects. He continued to
address the Summary of Changes document:
Projects included in the FY 22 Supplemental section of
Finance CS ver. B:
? DCCED, AEA Electric Vehicle Infrastructure Plan
$1,500,000 UGF
? DOC, Suicide Prevention Barriers $750,000 UGF
? DOH, Office of Children's Services Lease Expansion
or Relocation $640,000 UGF $360,000 Fed
? DNR, National Historic Preservation Fund $200,000
UGF
? DCCED, Prince William Sound Science Center &
Technology Institute Facilities Replacement and
Associated Debt $5,950,000 EVOS
? OOG, Elections Security under the Help America Vote
Act $1,250,000 Elect. Fund
CSLFRF projects in Finance CS that are changed to UGF
fund source:
Page 3 Line 8 DCCED, Alaska Travel Industry
Association
$5,000,000 UGF
Page 5 Line 17 DOH, Division of Public Assistance E-
Forms and Online Noticing
$4,000,000 UGF matches $4,000,000 Fed funds
Page 5 Line 19 DOH, Division of Public Assistance
Eligibility System Replacement
$4,700,000 UGF matches $18,800,000 Fed funds
Page 7 Line 3 DNR, Statewide Park Sanitation Deferred
Maintenance and Upgrades $1,418,000 UGF
9:31:07 AM
Mr. Grussendorf continued to address the Summary of Changes
document:
Funding requests decreased in Finance CS:
Page 2 Line 25 DCCED, AEA- Strategic Plan for
Railbelt Assets decreased to $1,500,000
UGF. Original request was for $2,500,000 UGF
Page 7 Line 24 DPS, Mobile and Handheld Radio
Replacement decreased to $1,000,000
UGF. Original request was for $3,728,000 UGF
Governor's projects removed in Finance CS and
associated fund source:
? DOA, Azure Adoption to Cloud Migration $23,116,000
UGF
? DCCED, Voice of the Arctic $1,000,000 UGF
? DFG, Arctic Fisheries $1,000,000 UGF
$2,000,000 Fed
? DNR, Cook Inlet Petroleum Potential $1,200,000 UGF
? DEED, William N. Miller K-12 Memorial School,
Napakiak $22,112,000 UGF $32,784,000 REAA
? DOH, Information Technology Security Program
Assessment $1,900,000 UGF
? DOH, Health Record Infrastructure Improvements
$30,000,000 CCPF
? DNR, Eagle River Fire Crew Facility $13,856,000 CCPF
? UA, Student Information Technology Systems
$20,000,000 CCPF
? DCCED, City of Palmer Wastewater Treatment Plant
$6,900,000 CSLFRF
? DCCED, Alaska Mariculture Alliance- Grant Program
$25,000,000 CSLFRF
? DNR, Food Security Agriculture Incentive Grant
Program $25,000,000 CSLFRF
Mr. Grussendorf detailed that that the Coronavirus Capital
Project Fund (CCPF) projects that were removed were the
result of discussions with the Office of Management and
Budget (OMB) that indicated the Department of Treasury was
unlikely to accept the grants for the projects. He cited
ongoing discussions with OMB regarding how to put the
state's plan forward and what projects to include. The
Coronavirus State and Local Fiscal Recovery Fund (CSLFRF)
projects were removed and not changed to UGF funding.
9:33:27 AM
Senator Hoffman asked for more explanation regarding the
Napakiak school project.
Mr. Grussendorf understood that schools within the Regional
Educational Attendance Area (REAA) were funded through the
School Construction Grant list (via statute), which was how
the committee intended to fund the Napakiak School.
Senator Hoffman asked if the item had been fully funded in
the governor's request.
Mr. Grussendorf answered "yes."
Senator Wilson asked about the $136 million being removed
from CCPF and CSLRF funding. He asked about the intention
of the funding and whether it was to be used at a later
date.
Mr. Grussendorf explained that the $64 million of CCPF
funds had been authorized in the American Rescue Plan Act
(ARPA) and was originally intended for broadband.
Subsequently federal guidance was issued that opened up
additional eligibility that was very stringent. There were
currently no projects proposed to access the funds.
Senator Wilson asked about the deadline to request the
funding and wondered if the plan was to utilize the
amendment process to access the funds.
Co-Chair Bishop thought the deadline was September of 2022.
He answered affirmatively that the amendment process would
be utilized.
Senator Wilson asked if it was possible to get the criteria
information in order to utilize the funds.
Co-Chair Bishop understood that the criteria was that the
funding was for broadband projects.
Mr. Grussendorf stated that he had information on the
guidance for the CCPF and agreed to forward the
information. He cited the criteria for treasury to accept
the grants:
1. The project must be designed to directly enable
work, education, and health monitoring.
2. The project must address a critical need that
resulted from or was made apparent or exacerbated by
the COVID-19 public health emergency.
3. The project must address a critical need of the
community to be served by it.
9:36:34 AM
Co-Chair Stedman commented that it was early in the budget
process and the committee would be balancing fund sources
throughout. He mentioned the concern of the Napakiak School
and asserted that it was the committee's intent to get the
school funded in the current year. He discussed bond debt
reimbursement and REAA area funding that was linked to it.
He mentioned a balanced approach and picking up some
arrears. He expected discussions on the mechanics of
getting the school fully funded. He did not want the public
to conclude that the school was being removed from the
budget process and asserted that the committee was
considering fund sources.
Co-Chair Bishop stated the school would be funded through
statute.
Senator Wilson thought the previous speaker had stated that
the intent was to not have so many appropriation bills
"floating around." He asked if the intent was to combine
supplemental capital projects and new infrastructure
capital projects.
Co-Chair Bishop stated that the committee was following the
path to have one capital budget. He answered "yes."
Senator Wilson asked if the committee's intent was to look
for amendments that would cover all three sets of projects.
Co-Chair Bishop stated that there was currently one capital
budget with a small supplemental in FY 22. He asked Co-
Chair Stedman to comment.
Co-Chair Stedman reminded that it was just the beginning of
establishing a budget baseline and the approach was not
much different than how the committee was approaching the
operating budget, which provided clarity for the public. He
explained that generally speaking the legislature did not
have multiple appropriation bills, and there was normally a
consolidation of appropriation bills to minimize numbers.
He explained that the columns on the backup reports were to
provide clarity on the proposed projects.
Co-Chair Bishop WITHDREW his OBJECTION. There being NO
further OBJECTION, it was so ordered. The CS for SB 164 was
ADOPTED.
SB 164 was HEARD and HELD in committee for further
consideration.
Co-Chair Bishop relayed an amendment deadline of Thursday,
April 14 at 5 o'clock p.m.
9:40:28 AM
AT EASE
9:40:38 AM
RECONVENED
Co-Chair Bishop discussed the agenda for the afternoon.
ADJOURNMENT
9:41:00 AM
The meeting was adjourned at 9:41 a.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| SB 45 Work Draft ver. D 4.5.22.pdf |
SFIN 4/11/2022 9:00:00 AM |
SB 45 |
| SB 45 Explanation of Changes ver. O to D 4.5.22.pdf |
SFIN 4/11/2022 9:00:00 AM |
SB 45 |
| SB 45 Amendment #1 Wilson.pdf |
SFIN 4/11/2022 9:00:00 AM |
SB 45 |
| SB 164 ver. B_Explaination of Changes.pdf |
SFIN 4/11/2022 9:00:00 AM |
SB 164 |
| SB 164 Document C_SCS1 AgencySummary.pdf |
SFIN 4/11/2022 9:00:00 AM |
SB 164 |
| SB 164 Document A_SCS1 ProjectDetailByAgency.pdf |
SFIN 4/11/2022 9:00:00 AM |
SB 164 |
| SB 164 Document B_SCS1 AgencySummary UGF Only.pdf |
SFIN 4/11/2022 9:00:00 AM |
SB 164 |
| SB 164 work draft B.pdf |
SFIN 4/11/2022 9:00:00 AM |
SB 164 |
| SB 45 04-11-2022 Taxpayers Protection Alliance Testimony RE SB45.pdf |
SFIN 4/11/2022 9:00:00 AM |
SB 45 |
| SB 164 Public Testimony Packet 4.pdf |
SFIN 4/11/2022 9:00:00 AM |
SB 164 |
| SB 164 4.19.2022 Letter of Support to increase Capital Budget CSSB 164 - Senator Bishop.pdf |
SFIN 4/11/2022 9:00:00 AM |
SB 164 |