Legislature(1993 - 1994)

04/06/1994 01:40 PM JUD

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
                   SENATE JUDICIARY COMMITTEE                                  
                         April 6, 1994                                         
                           1:40 p.m.                                           
                                                                               
  MEMBERS PRESENT                                                              
                                                                               
 Senator Robin Taylor, Chairman                                                
 Senator Rick Halford, Vice-Chairman                                           
 Senator George Jacko                                                          
 Senator Dave Donley                                                           
 Senator Suzanne Little                                                        
                                                                               
  OTHERS PRESENT                                                               
                                                                               
 Senator Bert Sharp                                                            
                                                                               
  COMMITTEE CALENDAR                                                           
                                                                               
 SENATE BILL NO. 293                                                           
 "An Act relating to the authority of the commissioner of natural              
 resources to reconvey, or relinquish an interest in, land to the              
 United States if that land or interest being reconveyed or                    
 relinquished is identified in an amended application for a land               
 allotment under federal law."                                                 
                                                                               
 SENATE BILL NO. 370                                                           
 "An Act providing an exemption from gambling laws for gambling                
 conducted by cruise ships for their ticketed passengers in the                
 offshore water of the state outside of ports; defining `cruise                
 ship'; and providing for the licensing of certain cruise ships                
 before they can conduct gambling in the offshore water of the                 
 state."                                                                       
                                                                               
 HOUSE BILL NO. 373                                                            
 "An Act relating to investments of the permanent fund involving               
 equity interests in and debt obligations secured by mortgages on              
 real estate; and providing for an effective date."                            
                                                                               
 SENATE BILL NO. 333                                                           
 "An Act relating to disclosure of close economic associations by              
 certain state employees and to the prohibition against nepotism in            
 the executive branch of state government; and providing for an                
 effective date."                                                              
                                                                               
 SENATE BILL NO. 342                                                           
 "An Act relating to risk based capital for insurers; and providing            
 for an effective date."                                                       
                                                                               
 SENATE BILL NO. 127                                                           
 "An Act authorizing capital punishment, classifying murder in the             
 first degree as a capital felony, and establishing sentencing                 
 procedures for capital felonies; authorizing an advisory vote on              
 instituting capital punishment; and providing for an effective                
 date."                                                                        
                                                                               
  PREVIOUS SENATE COMMITTEE ACTION                                             
                                                                               
 SB 293 - See Resources minutes dated 3/23/94.                                 
                                                                               
 SB 370 - No previous action to record.                                        
                                                                               
 HB 373 - No previous action to record.                                        
                                                                               
 SB 333 - See State Affairs minutes dated 3/16/94.                             
                                                                               
 SB 342 - See Labor & Commerce minutes dated 3/15/94.                          
                                                                               
 SB 127 - See Judiciary minutes dated 11/16/93 and 2/7/94.                     
                                                                               
  WITNESS REGISTER                                                             
                                                                               
 Bryce Edgmon, Aide                                                            
 Senator George Jacko                                                          
 State Capitol                                                                 
 Juneau, AK 99801-1182                                                         
   POSITION STATEMENT: Testified on SB 293.                                    
                                                                               
 Tom Hawkins, Senior Vice-President                                            
 Bristol Bay Native Corporation                                                
 P.O. Box 100220                                                               
 Anchorage, Alaska 99510                                                       
   POSITION STATEMENT: Supports SB 293.                                        
                                                                               
 Don Stolworthy, Director                                                      
 Charitable Gaming Division                                                    
 Department of Revenue                                                         
 P.O. Box 110440                                                               
 Juneau, Alaska 99811-0440                                                     
   POSITION STATEMENT: Testified on SB 370.                                    
                                                                               
 Tom Dow                                                                       
 Princess Tours                                                                
 2815 2nd Ave., Suite 400                                                      
 Seattle, Washington 98119                                                     
   POSITION STATEMENT: Supports SB 370.                                        
                                                                               
 Bill Scott, Executive Director                                                
 Alaska Permanent Fund Corporation                                             
 Department of Revenue                                                         
 P.O. Box 25500                                                                
 Juneau, Alaska 99802-5500                                                     
   POSITION STATEMENT: Testified on HB 373.                                    
                                                                               
 Randy Welker, Auditor                                                         
 Legislative Audit Division                                                    
 Legislative Affairs Agency                                                    
 P.O. Box 11330                                                                
 Juneau, Alaska 99811-3300                                                     
   POSITION STATEMENT: Testified on SB 333.                                    
                                                                               
 Kevin Richie, Director                                                        
 Division of Personnel/EEO                                                     
 Department of Administration                                                  
 P.O. Box 110201                                                               
 Juneau, Alaska 99811-0201                                                     
   POSITION STATEMENT: Testified on SB 333.                                    
                                                                               
 Dave Walsh, Director                                                          
 Division of Insurance                                                         
 Dept. of Commerce & Economic Development                                      
 P.O. Box 110805                                                               
 Juneau, Alaska 99811-0805                                                     
   POSITION STATEMENT: Testified on SB 342.                                    
                                                                               
 Jerry Reinwand                                                                
 2 Marine Way #219                                                             
 Juneau, Alaska 99801                                                          
   POSITION STATEMENT: Testified on SB 370.                                    
                                                                               
 Susan Burke, Attorney                                                         
 Gross & Burke                                                                 
 424 North Franklin                                                            
 Juneau, Alaska 99801                                                          
   POSITION STATEMENT: Testified on SB 370.                                    
                                                                               
  ACTION NARRATIVE                                                             
                                                                               
 TAPE 94-30, SIDE A                                                            
 Number 001                                                                    
                                                                               
  CHAIRMAN ROBIN TAYLOR  called the Judiciary Committee meeting to             
 order at 1:40 p.m.                                                            
                                                                               
 (Due to a malfunction in the taping of the first tape of the                  
 committee meeting, the minutes for SB 293 have been compiled from             
 the log notes, a newspaper article from the December 24, 1993 issue           
 of THE BRISTOL BAY TIMES, the ANCSA Technical Amendment Package,              
 and correspondence from BBNA-Realty and the Bristol Bay Native                
 Corporation.)                                                                 
                                                                               
 SENATOR TAYLOR introduced SB 293 (NATIVE ALLOTMENTS ON STATE LAND)            
 and invited the sponsor, SENATOR GEORGE JACKO, to review the bill.            
                                                                               
 SENATOR JACKO explained the bill would resolve long-standing Native           
 allotment applications in Wood-tikchik State Park, the state is               
 proposing two options that will circumvent federal adjudication and           
 quicken the process.  The state Department of Natural Resources is            
 offering to  relocate allotments in the state park to unencumbered            
 parcels of equal size anywhere in the state.                                  
                                                                               
 There was a discussion between SENATOR TAYLOR and SENATOR JACKO               
 about which state lands would be exchanged, the value basis of the            
 exchanged land, and whether it would be an acre for acre exchange.            
 SENATOR JACKO explained it would be on an acre for acre exchange.             
                                                                               
 SENATOR JACKO said it would provide an opportunity for an allotment           
 applicant with a valid application as of December 18, 1971 and                
 whose application remains pending as of October 14, 1992, to amend            
 the applicants land description.  He said the exchange is purely              
 voluntary on the part of the allottee.  This legislation resolves             
 allottee/State conflicts over land primarily in State park areas.             
                                                                               
 SENATOR DONLEY asked about a clear title to the exchanged land, and           
 SENATOR JACKO said there would be clear titles.                               
                                                                               
 SENATOR JACKO directed his aide, BRYCE EDGMON, to continue the                
 testimony.                                                                    
                                                                               
 "The allotments originally came under the Native Allotment Act of             
 1906, which was sunsetted in 1991 with the passage of the Alaska              
 Native Claims Settlement Act.  As a result, many applications for             
 allotments were filed in 1971.  But in 1961 the State had selected            
 land that is now Wood-Tikchik State Park as part of its statehood             
 entitlement.                                                                  
                                                                               
 The park itself was created in 1978 with the mandate to protect the           
 area's fish and wildlife breeding and support systems, and to                 
 preserve the continued use of the area for subsistence and                    
 recreation.                                                                   
                                                                               
 Applicants for allotments in the state park must prove use and                
 occupancy of their parcel to the potential exclusion of others                
 prior to 1961."                                                               
                                                                               
 SENATORS JACKO, LITTLE, and DONLEY discussed with MR. EDGMON as to            
 who makes the selections, the 1971 claims, customary use and                  
 trapping, the role of the Bristol Bay Native Corporation, protected           
 areas, and no-net loss.  SENATOR LITTLE asked about the amount of             
 land involved, and SENATOR JACKO answered it was 1.6 million acres.           
                                                                               
 SENATORS TAYLOR and HALFORD discussed possible claims, where the              
 land was located within the state parks, the number of acres, trust           
 land, replacement land, BLM land, tax advantages, and the manner in           
 which the lands were to be swapped.                                           
                                                                               
 TOM HAWKINS, of the Bristol Bay Native Corporation was brought into           
 the discussion, and his remarks are quoted from the BRISTOL BAY               
 TIMES:                                                                        
                                                                               
 "This past summer, on the urging of TOM HAWKINS, chief executive              
 officer of the Bristol Bay Native Corporation, a meeting was held             
 with representatives of the state DNR, the federal BLM, BBNC and              
 BBNA.                                                                         
                                                                               
 Out of that came an agreement that BLM would work on 10 case files            
 a month during the winter, meaning that it would send out 90-day             
 letters for ten applicants each month.  The letters give notice of           
 interested parties that they have 90 days to make comments for or             
 against the application.                                                      
                                                                               
 Last year, REPRESENTATIVE DON YOUNG sponsored an amendment to ANCSA           
 that allows valid alotees to relocate their parcel of state land to           
 other state land.  The relocation must be voluntary.  The state DNR           
 and REPRESENTATIVE LYMAN HOFFMAN are seeking a similar amendment to           
 state law."                                                                   
                                                                               
 The was considerably more discussion on natural resources, the                
 Statehood Act, the BLM, state park land, trespassing, title                   
 problems, and many options.                                                   
                                                                               
 SENATOR HALFORD moved to pass SENATE BILL NO. 293 (NATIVE                     
 ALLOTMENTS ON STATE LAND) from committee with individual                      
 recommendations.  Without objections, so ordered.                             
                                                                               
 SENATOR TAYLOR introduced SB 370 (ALLOW GAMBLING ON CRUISE SHIPS)             
 sponsored by the Senate Transportation Committee and asked SENATOR            
 SHARP to review the bill.                                                     
                                                                               
 (Due to a malfunction in the taping of the first tape of the                  
 committee meeting, the minutes for SB 370 have been compiled from             
 the log notes, Sponsor Statement, the Sectional Summary, and                  
 correspondence from Princess Tours, Royal Cruise Line, Regency                
 Cruises, Cunard, and Crystal Cruises, all in support of SB 370.)              
                                                                               
 SPONSOR STATEMENT: "Senate Bill 370 authorizes to the Department of           
 Commerce and Economic Development to license cruise ships to                  
 conduct gambling outside of three nautical miles of state ports.              
 Casino gambling on cruise ships has been a well established                   
 practice for over twenty years, but state laws prohibit the                   
 practice on waters under state jurisdiction.  By allowing limited             
 gambling activities in these waters, the state benefits from the              
 collection of annual licensing fees of $5,000 to $15,000 depending            
 on the size of the ship.  Casino gambling on cruise ships has no             
 impact whatsoever on Alaskan communities, and polled residents have           
 approved of the established cruise ship gambling by a significant             
 majority (more than 5 to 1).  In the interest of taking advantage            
 of this potential resource of revenue, I urge your support of SB
 370.                                                                          
                                                                               
 SENATOR SHARP disputed the fiscal note from the Charitable Gaming             
 Division which projected the need for two additional positions with           
 operating expenses of $140.4 thousand.  In addition, the analysis             
 was, "Based upon the licensing fee structure in SB 370 and the                
 scheduled number of vessels sailing in Alaska waters in 1994, total           
 program receipts should equal $295.0 thousand."                               
                                                                               
 There was some discussion as to whether it would exclude the state            
 ferries, and SENATOR SHARP said it would.                                     
                                                                               
 DON STOLWORTHY, Director of the Charitable Gaming Division defended           
 the fiscal note for the Department of Revenue, and he referenced              
 subsection (d) on page 2, lines 8 through 11.                                 
                                                                               
 There was general discussion among the committee members about the            
 administration of the provisions, the amount of money involved,               
 taxing provisions, and exemptions.                                            
                                                                               
 TOM DOW, Vice-President of Princess Tours read his letter of                  
 support for SB 370: (Somewhat abbreviated)  "This letter is offered           
 in support of SB 370.  This legislation would allow gambling aboard           
 cruise ships within Alaskan waters for ticketed cruise passengers.            
 Cruise ships within Alaskan waters would be required to pay a fee             
 to the state for a license prior to conducting gambling under this            
 legislation.                                                                  
                                                                               
 Cruise ships have offered gambling as an ancillary entertainment              
 activity for their passengers in Alaska for over twenty years.                
 Alaska Competes in the international marketplace.  Onboard gambling           
 has become generally accepted as one of the variety of activities             
 offered by cruise lines in all the major cruising destinations.               
                                                                               
 The public policy concerns related to gambling are not compromised            
 by the passage of SB 370.  There is no impact to Alaskan families             
 or communities or to the "peace and tranquility" of any area of               
 Alaska as a result of these activities aboard cruise ships.                   
                                                                               
 Research clearly shows that Alaskans appreciate the importance of             
 tourism to the economy of the state.  It also shows that Alaskans             
 don't favor prohibiting the traditional operation of casinos aboard           
 and never have.                                                               
                                                                               
 Although gambling has never been a primary reason to choose an                
 Alaskan cruise, both passengers and travel agents have come to                
 expect gambling as a part of the package of activities, which they            
 would find in a world class cruise vacation.  Eliminating gambling            
 within Alaskan waters would mean that Alaskan cruises would offer             
 something less than that which is available to passengers on the              
 same ships when they are sailing in other locations. ... "                    
                                                                               
 SENATOR TAYLOR decided to hold the bill for now.                              
                                                                               
 SENATOR TAYLOR introduced HB 373 (PERMANENT FUND INVESTMENTS IN               
 REAL ESTATE) by Request of the Legislative Budget and Audit                   
 Committee, and invited BILL SCOTT, Executive Director for the                 
 Alaska Permanent Fund Corporation to testify on the legislation.              
                                                                               
 (Due to a malfunction in the taping of the first tape of the                  
 committee meeting, the minutes for HB 373 have been compiled from             
 the log notes, and selected parts of the Memorandum from the Alaska           
 Permanent Fund Corporation as presented by MR. SCOTT.)                        
                                                                               
 MR. SCOTT:  "HB 373 and SB 245 were originally identical bills                
 introduced by the Legislative Budget & Audit Committee at the                 
 request of the Board of Trustees.  The Trustee's goal is to amend             
 the Permanent Fund's list of authorized investments to provide for            
 up to 100 percent ownership in real estate investments.                       
                                                                               
 HB 373 - which would accomplish the Trustee's goal - passed the               
 House nearly unanimously with only one vote in opposition. ... The            
 Board of Trustees requests that you move the House Bill, HB 373 as            
 originally introduced, from your committee, and here are the                  
 reasons why the Corporation supports this version over                        
 CSSB245(L&C).                                                                 
                                                                               
  Existing Investments  - The fund currently owns approximately 10             
 investments with a market value in excess of $100 million.  If for            
 some reason, the Fund determines that it would be in our best                 
 interest to buy out our partners, even if only on a temporary basis           
 in order to find new partners, the $100 million limitation would              
 prevent that opportunity.                                                     
                                                                               
  New Investments  - Real estate is an increasingly competitive                
 market, and finding good new investments is getting harder all the            
 time.  for example, the Fund has made now new purchases in the                
 first quarter of this calendar year and there are no closings                 
 scheduled for the second quarter either.                                      
                                                                               
  Safety  - Although $100 million is a great deal of money it is only     y    
 two-thirds of one percent of a $15 billion Fund, and in the past,             
 the Fund has made investments larger than this.  For example, it              
 has not been uncommon for the Fund to own as much as $400 million             
 of a single issue of U.S. Treasury bonds.                                     
                                                                               
 The primary reasons your Fund managers are seeking changes in the             
 existing real estate statute are: (1) to gain increased management            
 control over the Fund's real estate investments; and (2) to help              
 the Board of Trustees reach their real estate asset allocation                
 target.  We have been trying to reach that 10 percent target for              
 about ten years and have never come much closer than we are today.            
 It is our view that the Fund will be unable to reach its desired              
 real estate asset allocation until there is relief provided from              
 the 40% ownership rule.                                                       
                                                                               
 Besides the control issue and the need to make larger investments             
 to reach the asset allocation targets, there are other reasons to             
 allow your Permanent Fund to purchase up to 100 percent ownership             
 in properties.  The first is that the Fund sometimes loses                    
 excellent investment opportunities simply because sellers are                 
 unwilling or unable to wait for the Fund to identify co-investment            
 partner, or because our co-investment partner ultimately decides to           
 take the entire investment.                                                   
                                                                               
 The Fund invests in real estate to maximize the risk and return               
 benefits of diversification.  There is nothing in the bill which              
 would hinder that, and much that would enhance it.  On behalf of              
 the Board of Trustees, I request that you give their concerns                 
 serious consideration." (Thus ends MR. SCOTT'S prepared testimony.)           
                                                                               
 There was a short question and answer session among the committee             
 members and MR. SCOTT.                                                        
                                                                               
 SENATOR LITTLE moved to pass HOUSE BILL NO. 373 (PERMANENT FUND               
 INVESTMENTS IN REAL ESTATE) from committee with individual                    
 recommendations.  Without objections, so ordered.                             
                                                                               
 SENATOR TAYLOR introduced SB 333 (DISCLOSURE OF EXECUTIVE BRANCH              
 CLOSE ASSOCIATIONS) at the request of the Legislative Budget and              
 Audit Committee, and asked RANDY WELKER, Legislative Auditor, to              
 review the legislation.                                                       
                                                                               
 (Due to a malfunction in the taping of the first tape of the                  
 committee meeting, the minutes for SB 333 have been compiled from             
 the log notes, and selected parts of the Memorandum from RANDY                
 WELKER, the Legislative Auditor for the Legislative Budget and                
 Audit Committee.)                                                             
                                                                               
 MR. WELKER:  "This memorandum is provided to briefly summarize the            
 contents of Senate Bill 333.  The bill introduced by the                      
 Legislative Budget and Audit Committee is in response to an audit             
 released last year.                                                           
                                                                               
 The impetus for the suggested changes comes primarily from our                
 audit of the Department of Public Safety's Division of Fish and               
 Wildlife Protection (FWP).  However, the problem identified is not            
 limited to only FWP.  Other public officials with discretionary               
 authority could also be placed in a conflict of interest position.            
                                                                               
 Section 1 of the bill establishes a requirement for disclosure of             
 the formation or maintenance of a close economic association                  
 similar to that contained in the Legislative Ethics Act.                      
                                                                               
 The bill also requires a public officer, if it appears feasible and           
 in the best interests of the state, to refrain from taking or with-           
 holding official action in a matter that directly involves a person           
 with whom the public officer has a close economic association.                
 However, if taking or withholding official action is not avoidable,           
 the public officer shall immediately disclose the action to the               
 public officer's designated supervisor.                                       
                                                                               
 The bill requires a supervisor, to whom a public officer has made             
 a disclosure, to make a written determination of whether the                  
 officer's involvement could constitute a conflict of interest.  The           
 supervisor could reassign duties to avoid the conflict or the                 
 supervisor may direct the divestiture or removal by the officer of            
 the financial interest given rise to the conflict.                            
                                                                               
 Section 2 of the bill is a change to the nepotism prohibition in              
 statute.  As the result of an isolated circumstance we found at the           
 Alaska Psychiatric Institute, we are recommending that the statute            
 be expanded.  Currently the only relationship that is prohibited is           
 that a person may not be employed in the same department or agency            
 if they are the spouse of, or related by blood to, the executive              
 head of a principal state department agency.                                  
                                                                               
 We are recommending that the statute be expanded to include all               
 supervisory/subordinate relationships (not just a relationship to             
 the commissioner) and that the definition of relationship is                  
 expended to include a regular member of the officer's household.              
                                                                               
 I appreciate the Committee's consideration of this legislation.  If           
 enacted, this legislation will help improve the public perception             
 and clarify the legislature's disapproval of close economic                   
 associations by public officials who have discretion in taking or             
 withholding official action that may affect the public officer or             
 a person with whom the public officer has an economic association."           
                                                                               
 MR. WELKER presented some recommendations for suggested changes in            
 AS 39.90.020, AS 24.60.090, and AS 39.52.960.                                 
                                                                               
 There was some discussion among the committee members about close             
 economic ties, first and second cousins, and how disclosures should           
 be determined.                                                                
                                                                               
 KEVIN RICHIE, Director for the Division of Personnel/EEO, Dept. of            
 Administration, answered questions by SENATOR LITTLE on class                 
 action suits, infringements, and adverse actions.                             
                                                                               
 SENATOR JACKO moved to pass SENATE BILL NO. 333 (DISCLOSURE OF                
 EXECUTIVE BRANCH CLOSE ASSOCIATIONS) from committee with individual           
 recommendations.  Without objections, so ordered.                             
 SENATOR TAYLOR introduced SB 342 (RISK BASED CAPITAL FOR INSURERS)            
 and invited DAVE WALSH, Director of the Division of Insurance, for            
 the Department of Commerce and Economic Development, to explain the           
 legislation.                                                                  
                                                                               
 (Due to a malfunction in the taping of the first tape of the                  
 committee meeting, the minutes for SB 342 have been compiled from             
 the log notes, and selected parts from the Bill Analysis as                   
 presented by MR. WALSH.)                                                      
                                                                               
  RISK BASED CAPITAL  - "Risk based capital is an amount of capital            
 and surplus calculated by an insurer using a formula derived by the           
 National Association of Insurance Commissioners (NAIC), that will             
 be used for determining whether regulatory action is needed and if            
 regulatory action is needed, of what type.  All insurers will use             
 the same formula to calculate their risk based capital levels but             
 the actual levels resulting from the formula will vary by insurer             
 based upon the risks associated with that insurer's operations.               
                                                                               
 For life and health insurers, the formula for risk based capital              
 incorporates risks associated with the insurer's assets, adverse              
 mortality and morbidity, changes in interest rates, and other                 
 business risks.  For property and casualty insurers \, the formula            
 incorporates asset or default risk, credit risk, underwriting risk,           
 and other business risks.                                                     
                                                                               
 The formula uses asset, reserve, reinsurance, and premium amounts             
 in the insurer's annual financial statement to calculate a level of           
 risk based capital levels are "authorized control level risk based            
 capital."  Three other risk based capital levels are determined by            
 applying percentages to the "authorized control level risk based              
 capital": 200% for a "company action level risk based capital",               
 150% for a "regulatory action level risk based capital" and a                 
 factor of 70% for a "mandatory control level risk based capital."             
 Depending on where an insurer's actual capital and surplus falls              
 within these different risk based capital levels, the director will           
 take the actions outlined in the proposed legislation.                        
                                                                               
 Unlike current Alaska law that requires insurers to maintain a                
 single minimum amount of capital and surplus that is identical for            
 each class of insurer, requiring each insurer to calculate and                
 report its risk based capital to the director will:                           
                                                                               
  1. Require insurers to take actions that would provide greater               
  safety from insolvency, thereby providing greater protection                 
  to consumers.                                                                
  2. Provide guidance and assistance to regulators in                          
  identifying weak insurers.                                                   
  3. Provide the legal authority for the director to intervene                 
  before insolvency occurs or before an insurer's capital and                  
  surplus falls below a level appropriate for that insurer.                    
                                                                               
 Risk based capital will more accurately reflect an insurer's                  
 solvency.  Alaskan insurers fair well under this proposed risk                
 based capital legislation and currently have capital and surplus              
 levels higher than the amount indicated in the risk based capital             
 formula.                                                                      
                                                                               
 The proposed risk based capital legislation is based on the NAIC              
 risk based capital model law that has been adopted as a minimum               
 standard for state accreditation under the NAIC Accreditation                 
 Program.  The NAIC Accreditation Program establishes minimum                  
 standards of regulation through adoption of statues and procedures.           
 State accreditation is granted by the NAIC after on-site review               
 verifying that these minimum standards are met.  The alaska                   
 Division of Insurance received its accreditation in December 1992             
 and is committed to maintaining the standards of the NAIC                     
 Accreditation Program.                                                        
                                                                               
 SENATOR JACKO moved to pass CS FOR SENATE BILL NO. 342(L&C) (RISK             
 BASED CAPITAL FOR INSURERS) from committee with individual                    
 recommendations.  Without objections, so ordered.                             
                                                                               
 SENATOR TAYLOR returned CSSB 127 (CAPITAL PUNISHMENT FOR MURDER)              
 for the purposes of moving the bill from committee.  SENATOR LITTLE           
 objected and moved to rescind the committee substitute for SB 127.            
 SENATOR HALFORD objected, and SENATOR TAYLOR said the bill would              
 continue to be held.                                                          
                                                                               
 SENATOR TAYLOR returned SB 370 (ALLOW GAMBLING ON CRUISE SHIPS) to            
 committee to hear testimony from JERRY REINWAND, owner of the                 
 Alaska Peddler gift shops, protesting the practice by the Costa               
 Cruises of promoting gift shops that have participated in the                 
 promotion of their shops for a fee to cruise lines.                           
                                                                               
 MR. REINWAND explained the cruise lecturers reinforce their                   
 recommendations by handing out copies of the shopping maps showing            
 the location of local participating stores, and he had copies of              
 the 1993 Juneau, Alaska recommended stores.  He also presented an             
 article about the practice in Nassau, the Bahamas, from the May 23,           
 1993 issue of the FORT LAUDERDALE SUN-SENTINEL outlining the                  
 problems between the Nassau's Bay Street merchants and the cruise             
 lines.                                                                        
                                                                               
 SENATOR LITTLE asked how the shops were selected and how much was             
 paid for the promotion.  MR. REINWAND indicated it was a "hefty"              
 amount.                                                                       
                                                                               
 SENATOR TAYLOR moved the following Amendment #1:                              
 Page 1, line 3, after " ports; ":                                             
 Insert " requiring certain disclosures in connection with promotions     s    
 on board cruise ships and making violation of that provision an               
 unfair trade practice; "                                                      
                                                                               
 Page 1, line 12:                                                              
 Delete " and"                                                                 
                                                                               
   Insert " (2) the operator of the cruise ship agrees to comply               
 with all state laws, including those related to unfair trade                  
 practices; and "                                                              
                                                                               
 Renumber following paragraph accordingly.                                     
                                                                               
 Page 3, after line 1:                                                         
  Insert the new bill sections to read:                                        
                                                                               
 " *Sec. 3.  AS 45.50.471(b) is amended by adding a new paragraph to           
 read:                                                                         
   (37) violating AS 45.50.474 (on board promotion).                           
                                                                               
   *Sec. 4.  AS 45.50 is amended by adding a new section to read:              
  Sec. 45.50.474.  REQUIRED DISCLOSURES IN PROMOTIONS ON BOARD                 
 CRUISE SHIPS.  A person may not conduct a promotion on board a                
 cruise ship that mentions or features a business in a state port              
 that has paid something of value for the purpose of having the                
 business mentioned or featured, unless the person conducting the              
 promotion clearly and fully discloses orally and in all written               
 materials used in the promotion that the featured businesses have             
 paid to be included in the promotion.  A violation of this section            
 constitutes an unfair trade practice under AS 45.50.471.  In this             
 section, "cruise ship" has the meaning given in AS 11.66.275."                
                                                                               
 After some discussion among the committee members with MR. REINWAND           
 the motion was passed.                                                        
                                                                               
 Next, SENATOR TAYLOR invited SUSAN BURKE, representing the Princess           
 Tours to testify, and she suggested some solutions.                           
                                                                               
 TAPE 94-31, SIDE A                                                            
 Number 001                                                                    
                                                                               
 MS. BURKE suggested the title should be CRUISE SHIP EXEMPTION.                
                                                                               
 Line 8, page 1, delete "  LICENSING  " and insert "EXEMPTION  " in the   the  
 title of the statute.                                                         
                                                                               
 Line 8 and 9, page 1, delete "The department shall license" and               
 begin the sentence with "A cruise ship ..."  Delete the word "to"             
 and insert the word "may", and she explained the changes including            
 paying their money.                                                           
                                                                               
 On page 2, line 1, instead of calling it the "licensing fee" you              
 would call it the "exemption fee".                                            
                                                                               
 Finally, she said to address the concerns about enforcement,                  
 inspectors, and administrative regulation simply delete subsection            
 (d) lines 8 through 11 on page 2.  MS. BURKE explained she had                
 conceived of the bill as being along the lines conceptually that              
 SENATOR HALFORD indicated, but it will also address the concerns              
 from the Department of Revenue.                                               
                                                                               
 SENATOR TAYLOR asked if the committee understood the amendments,              
 but SENATOR LITTLE expressed a concern about problems with the                
 cruise ships and the recourse by the State of Alaska.                         
                                                                               
 MS. BURKE answered that any of the actual conditions for the                  
 exemptions are set out in Section 2 which is part of the criminal             
 code, and the permission to conduct gambling activities applies               
 only if the cruise ships conform to the paragraphs in Section 2.              
 She explained this was supported by criminal authority.                       
                                                                               
 SENATOR TAYLOR asked about several problems in state interest that            
 might arise. MS. BURKE said no one has a fundamental right to                 
 gamble, and she explained the lest amount of connection between the           
 purpose and the achievement of the purpose.  She thought it was               
 easy to demonstrate that an inability to open the casinos during              
 Alaska cruises outside of port creates a competitive disadvantage             
 for the Alaska cruise market.  She suggested there was a potential            
 for Alaska to lose out in visitor destination competition and                 
 should be limited to exemptions to cruise ships in a constitutional           
 sense.                                                                        
                                                                               
 SENATOR HALFORD offered the testimony from MS. BURKE as a                     
 conceptual amendment.  SENATOR LITTLE questioned whether or not               
 this was doable under our constitution and regulations.  SENATOR              
 TAYLOR thought it was, but probably unique.                                   
                                                                               
 SENATOR DONLEY suggested the conceptual committee substitute be               
 drafted and shown to the legal department for comment.  SENATOR               
 LITTLE it could be addressed in the Finance Committee.                        
                                                                               
 There were no further objections to the conceptual amendment, the             
 amendment was passed.                                                         
                                                                               
 SENATOR DONLEY asked about some concerns from the Department of               
 Revenue, and MR. STOLWORTHY described a visit last summer from the            
 IRS on the taxation of the activity.  He said there was no way to             
 know how much money is gambled in Alaska waters.  He thought the              
 payoffs in the casinos are not as high as those in Los Vegas so the           
 overhead is not nearly as high, and he explained the adjusted gross           
 income.  He indicated there was no real way to conjecture on the              
 amount of taxes that might be due.                                            
                                                                               
 SENATOR TAYLOR suggested these concerns should be discussed in the            
 Finance Committee.  SENATOR DONLEY asked MR. STOLWORTHY about his             
 recommendation on taxes on the gross, and the discussion indicated            
 it would be a complicated process.                                            
                                                                               
 SENATOR LITTLE moved to pass CS FOR SENATE BILL NO. 370(JUD) as               
 amended (ALLOW GAMBLING ON CRUISE SHIPS) from committee with                  
 individual recommendations.  Without objections, so ordered.                  
                                                                               
 SENATOR TAYLOR said there was a motion pending on SB 127 (CAPITAL             
 PUNISHMENT FOR MURDER) to rescind actions in adopting a committee             
 substitute.  He checked with SENATOR HALFORD for objections, and he           
 had none.                                                                     
                                                                               
 SENATOR TAYLOR said there being no objection to the motion to                 
 rescind, motion is granted.  He explained the committee has now               
 rescinded the adoption of the committee substitute, placing the               
 motion back before the committee.  SENATOR TAYLOR then withdrew the           
 motion to adopt the committee substitute.                                     
                                                                               
 SENATOR HALFORD moved to pass SB 127 (CAPITAL PUNISHMENT FOR                  
 MURDER) from committee with individual recommendations.  Both                 
 SENATORS JACKO and LITTLE objected.                                           
                                                                               
 SENATOR DONLEY, on the substance of the main bill, expressed his              
 concerns the constitutional questions have not been addressed.  He            
 said this is the appropriate committee to examine whether or not,             
 under our state constitution, we can do this or not.  He said it              
 was important to have this testimony on the record, and he said it            
 was a huge question.                                                          
                                                                               
 SENATOR DONLEY opined there were different levels within this bill,           
 such as specific levels of homicide to which it should apply.  He             
 thought the bill was inconsistent in its present form and affords             
 the opportunity for the death penalty in many more circumstances              
 than is provided for life without parole.  He also thought this               
 inconsistency also makes it constitutionally suspect, because the             
 difficulty should be the maximum penalty, and it should be in                 
 ascending penalty up to that point, and not have more death penalty           
 crimes than you have life without parole crimes.  He reiterated his           
 belief there were problems with the bill as presented.                        
                                                                               
 There was some raillery by SENATOR HALFORD to change the title.               
                                                                               
 SENATOR TAYLOR called for a vote on Senate Bill No. 127.  The roll            
 was taken with the following results:  SENATORS TAYLOR and HALFORD            
 voted "yea," and SENATORS JACKO, LITTLE, AND DONLEY voted "nay."              
                                                                               
 SENATOR TAYLOR to SENATOR LITTLE:  "Am I missing something; you               
 said you wanted to vote on the bill.  You said we should be voting            
 on the bill."                                                                 
 SENATOR LITTLE:  "That doesn't mean I wanted it to go out of                  
 committee."                                                                   
                                                                               
 SENATOR DONLEY:  "You understand where I'm coming from.  If we're             
 going to have a hearing, we need to examine those questions, I                
 think."                                                                       
                                                                               
 SENATOR TAYLOR:  "I'm sorry I wasted my time, and yours."                     
                                                                               
 There being no further business to come before the committee, the             
 meeting was adjourned at 3:30 by SENATOR TAYLOR.                              
                                                                               

Document Name Date/Time Subjects