03/29/2021 01:00 PM Senate JUDICIARY
| Audio | Topic |
|---|---|
| Start | |
| Confirmation Hearing | |
| SB9 | |
| SJR1 | |
| Adjourn |
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
| += | SB 9 | TELECONFERENCED | |
| += | SJR 1 | TELECONFERENCED | |
| + | TELECONFERENCED |
ALASKA STATE LEGISLATURE
SENATE JUDICIARY STANDING COMMITTEE
March 29, 2021
1:34 p.m.
MEMBERS PRESENT
Senator Lora Reinbold, Chair
Senator Mike Shower, Vice Chair
Senator Shelley Hughes
Senator Robert Myers
Senator Jesse Kiehl
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
CONFIRMATION HEARING:
Commission on Judicial Conduct
Todd Fletcher - Anchorage
- CONFIRMATION ADVANCED
Attorney General, Department of Law
Treg Taylor - Anchorage
- SCHEDULED BUT NOT HEARD
SENATE BILL NO. 9
"An Act relating to alcoholic beverages; relating to the
regulation of manufacturers, wholesalers, and retailers of
alcoholic beverages; relating to licenses, endorsements, and
permits involving alcoholic beverages; relating to common
carrier approval to transport or deliver alcoholic beverages;
relating to the Alcoholic Beverage Control Board; relating to
offenses involving alcoholic beverages; amending Rule 17(h),
Alaska Rules of Minor Offense Procedure; and providing for an
effective date."
- HEARD & HELD
SENATE JOINT RESOLUTION NO. 1
Proposing amendments to the Constitution of the State of Alaska
relating to the Alaska permanent fund and appropriations from
the Alaska permanent fund.
- HEARD & HELD
PREVIOUS COMMITTEE ACTION
BILL: SB 9
SHORT TITLE: ALCOHOLIC BEVERAGE CONTROL; ALCOHOL REG
SPONSOR(s): SENATOR(s) MICCICHE
01/22/21 (S) PREFILE RELEASED 1/8/21
01/22/21 (S) READ THE FIRST TIME - REFERRALS
01/22/21 (S) L&C, JUD, FIN
02/12/21 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
02/12/21 (S) Heard & Held
02/12/21 (S) MINUTE(L&C)
03/03/21 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
03/03/21 (S) Scheduled but Not Heard
03/10/21 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
03/10/21 (S) -- MEETING CANCELED --
03/12/21 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
03/12/21 (S) Moved SB 9 Out of Committee
03/12/21 (S) MINUTE(L&C)
03/15/21 (S) L&C RPT 3DP 1NR
03/15/21 (S) DP: COSTELLO, GRAY-JACKSON, REVAK
03/15/21 (S) NR: STEVENS
03/24/21 (S) JUD AT 1:30 PM BUTROVICH 205
03/24/21 (S) Scheduled but Not Heard
03/29/21 (S) JUD AT 1:00 PM BUTROVICH 205
BILL: SJR 1
SHORT TITLE: CONST AM: GUARANTEE PERM FUND DIVIDEND
SPONSOR(s): SENATOR(s) WIELECHOWSKI
01/22/21 (S) PREFILE RELEASED 1/8/21
01/22/21 (S) READ THE FIRST TIME - REFERRALS
01/22/21 (S) STA, JUD, FIN
02/09/21 (S) STA AT 3:30 PM BUTROVICH 205
02/09/21 (S) Heard & Held
02/09/21 (S) MINUTE(STA)
02/11/21 (S) STA AT 3:30 PM BUTROVICH 205
02/11/21 (S) Scheduled but Not Heard
03/02/21 (S) STA AT 3:30 PM BUTROVICH 205
03/02/21 (S) Moved SJR 1 Out of Committee
03/02/21 (S) MINUTE(STA)
03/03/21 (S) STA RPT 2NR 1AM
03/03/21 (S) NR: SHOWER, REINBOLD
03/03/21 (S) AM: KAWASAKI
03/24/21 (S) JUD AT 1:30 PM BUTROVICH 205
03/24/21 (S) Scheduled but Not Heard
03/29/21 (S) JUD AT 1:00 PM BUTROVICH 205
WITNESS REGISTER
TODD FLETCHER, Appointee
Commission on Judicial Conduct
Alaska Court System
Anchorage, Alaska
POSITION STATEMENT: Testified as appointee to the Commission on
Judicial Conduct.
SENATOR PETER MICCICHE
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Sponsor of SB 9.
ANNA BRAWLEY, Title IV Review Coordinator
Agnew Beck Consulting
Anchorage, Alaska
POSITION STATEMENT: Answered questions during the discussion on
SB 9.
GLEN KLINKHART, Director
Alcohol & Marijuana Control Office (AMCO
Department of Commerce, Community and Economic Development
Anchorage, Alaska
POSITION STATEMENT: Answered question during the hearing on SB
9.
SARA OATES, President
Alaska Cabaret, Hotel, Restaurant and Retailers Association
Anchorage, Alaska
POSITION STATEMENT: Answered questions during the hearing on SB
9.
TIFFANY HALL, Recover Alaska
Anchorage, Alaska
POSITION STATEMENT: Answered questions during the hearing on SB
9.
SENATOR BILL WIELECHOWSKI
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Sponsor of SJR 1.
CLEM TILLION, Chair
Board of Directors
Permanent Fund Defenders
Halibut Cove, Alaska
POSITION STATEMENT: Invited testimony in support of SJR 1.
JOE GELDHOF, Attorney; Member
Board of Directors
Permanent Fund Defenders
Juneau, Alaska
POSITION STATEMENT: Invited testimony in support of SJR 1.
ACTION NARRATIVE
1:34:16 PM
CHAIR LORA REINBOLD called the Senate Judiciary Standing
Committee meeting to order at 1:34 p.m. Present at the call to
order were Senators Hughes, Kiehl, and Chair Reinbold. Senators
Myers and Shower arrived as the meeting was in progress.
^CONFIRMATION HEARING
CONFIRMATION HEARING
Commission on Judicial Conduct
1:34:51 PM
CHAIR REINBOLD announced the consideration of Governor
appointees to Boards and Commissions.
1:35:51 PM
TODD FLETCHER, Appointee, Commission on Judicial Conduct, Alaska
Court System, Anchorage, Alaska, stated that he attended Western
Washington University in Bellingham. He said he is seeking
reappointment to the Commission on Judicial Conduct.
1:37:00 PM
CHAIR REINBOLD asked if he has been involved in political
campaigns.
MR. FLETCHER said he has been involved in a mayoral campaign.
1:37:45 PM
CHAIR REINBOLD asked which branch of government sets policy.
MR. FLETCHER answered that the legislative branch writes laws,
but the judges must be independent and follow the constitution.
1:38:47 PM
CHAIR REINBOLD opened public testimony and, after first
determining no one wished to testify, closed public testimony on
the confirmation hearing for Todd Fletcher.
1:39:09 PM
SENATOR HUGHES stated that in accordance with AS 39.05.080, the
Senate Judiciary Standing Committee reviewed the following and
recommends the appointments be forwarded to a joint session for
consideration:
Commission on Judicial Conduct
Todd Fletcher - Anchorage
Signing the reports regarding appointments to boards and
commissions in no way reflects individual members' approval or
disapproval of the appointees; the nominations are merely
forwarded to the full legislature for confirmation or rejection.
1:39:51 PM
At ease
SB 9-ALCOHOLIC BEVERAGE CONTROL; ALCOHOL REG
1:41:28 PM
CHAIR REINBOLD reconvened the meeting and announced the
consideration of SENATE BILL NO. 9, "An Act relating to
alcoholic beverages; relating to the regulation of
manufacturers, wholesalers, and retailers of alcoholic
beverages; relating to licenses, endorsements, and permits
involving alcoholic beverages; relating to common carrier
approval to transport or deliver alcoholic beverages; relating
to the Alcoholic Beverage Control Board; relating to offenses
involving alcoholic beverages; amending Rule 17(h), Alaska Rules
of Minor Offense Procedure; and providing for an effective
date."
1:41:35 PM
SENATOR PETER MICCICHE, Alaska State Legislature, Juneau,
Alaska, stated that SB 9 contains the same language as
previously seen in the last legislature. The language contained
in SB 9 previously passed the Senate unanimously. He highlighted
that the goals were to create a fair business environment,
provide increased public health and safety, limit youth access
to alcohol, promote responsible alcohol use, reduce the harms of
overconsumption, implement change without negatively harming
existing businesses and responsible operators and to expand
local control for municipalities. He said that the bill stays
with the initial concept of regulating alcohol in the US and
Alaska, including a three-tier system, licensure, and population
limits. He offered his view that this bill is about balance,
reorganization and fairness. He highlighted that 95 percent of
the bill reorganizes the entire title. The statutory rewrite of
the bill helps make sense of the hodgepodge created by passing
bills for 38 years that affect these statutes. SB 9 will address
public health, safety and accountability, he said.
SENATOR MICCICHE said last year he proposed an amendment that
initially created some consternation from the more traditional
industry and the brewers and distillers, but it was worked out,
which is why the bill received unanimous support on the Senate
floor. He offered to summarize the bill in his presentation.
1:43:56 PM
SENATOR MICCICHE began a PowerPoint, "Alcoholic Beverage Control
(ABC) Board Title 4 Review Project," by reviewing slide 2. He
explained that alcohol is unique because nearly 100 percent of
the issues related to opioid drug and substance abuse is related
to alcohol. There is always a balancing act between what is good
for business and still protecting youth and adults' health in
communities.
1:44:33 PM
SENATOR MICCICHE highlighted that stakeholders have spent nine
years of work on the alcohol rewrite in SB 9. The process began
at the ABC Board, but parts of the title no longer work. This
bill will increase law enforcement, he said [slide 3].
SENATOR MICCICHE turned to slide 4, highlighting the diverse
group of stakeholders who worked through issues. The legislative
process has improved this bill.
SENATOR MICCICHE said the goal of the Title 4 review process is
to improve Title 4 by addressing key issues. The alcohol,
restaurant and tourism industries are important ones. The goals
of SB 9 are to help the industry grow, protect use, hold
violators accountable and to reduce the harms of overconsumption
of alcoholic beverages.
1:46:10 PM
SENATOR MICCICHE turned to slide 6. He said this bill will not
change the basic framework of the alcohol industry, but the bill
will address how the industry operates.
1:46:35 PM
SENATOR MICCICHE reviewed slide 7, stating that changes in the
3-tier system are designed to support the local craft industry.
SENATOR MICCICHE said slide 8 illustrates the six areas
stakeholders worked on, including alcohol licenses, the role and
function of the ABC Board, underage drinking, regulation of
internet sales of alcohol, technical or administrative law
changes, and local option communities.
1:47:05 PM
SENATOR MICCICHE reviewed slides 9 through 11 titled, "Alaska's
Liquor License System: Proposed Changes." He stated that these
slides demonstrate how licenses are organized and how
endorsements apply to licenses. Some licenses are not limited,
including many retail licenses designed for tourism.
1:47:34 PM
SENATOR MICCICHE turned to slide 12. He discussed the proposed
conversion of brewpubs. Currently, craft industry members cannot
own a retail license; SB 9 would allow them to have a retail
license. This bill would remove the limit on manufacturing and
allow pairing with any full retail license. This will allow a
brewery to have a Beverage Dispensary License (BDL), a
Recreational and Eating Place (REPL), or a package store
license.
SENATOR MICCICHE highlighted that the proposed conversion of
brewpubs on slide 13 illustrates what he discussed on slide 12.
1:48:38 PM
SENATOR MICCICHE discussed the proposed manufacturer sales
limits by product type on slide 14. This confirms existing
retail sales limits for brewery, winery, and distillery retail
businesses. If the business wishes to purchase an additional
license, he said the bill will allow the business to operate as
a bar.
1:49:04 PM
SENATOR MICCICHE discussed the proposed endorsements on licenses
on slide 15. This new concept would add endorsements to existing
licenses, giving businesses more flexibility without creating
more situation-specific license types. This will allow existing
licensees to select their endorsement and pay a fee. He said
that slide 16 lists the types of endorsements available, which
read:
• R-7A | Bowling Alley Endorsement
• R-7B | Package Store Shipping Endorsement
• R-7C | Package Store Delivery Endorsement
• R-7D | Package Store Re-Packaging Endorsement
• [R-1] Multiple Fixed Counter Endorsement
• [R-1] Hotel/Motel Endorsement
• [R-1] Large Resort Endorsement
• [R-3] Package Store Sampling Endorsement
• [M-1] Brewery Repackaging Endorsement
1:50:03 PM
SENATOR MICCICHE discussed the proposed limited samples for
package stores on slide 17. This will allow customers to sample
the products before buying. The provisions also help the
business manage sampling on-premises.
SENATOR MICCICHE reviewed R-7 standardized permits on slide 18.
The bill puts all the permits in one place.
1:50:39 PM
SENATOR MICCICHE related that the permits for special events are
shown on slide 19, as follows:
square4 R-7F | Beverage Dispensary Caterer's Permit (AS
04.11.230; 3 AAC 304.685)
square4 R-7G | Restaurant Caterer's Dining Permit (3 AAC
304.680)
square4 R-7H | Club Caterer's Permit (3 AAC 304.690)
square4 R-7I | Nonprofit Event Permit (AS 04.11.240)
square4 R-7J | Art Exhibit Permit (3 AAC 304.697)
square4 R-7K | Alcoholic Beverage Auction Permit (3 AAC
304.699)
square4 R-7L | Inventory Resale Permit (Retail Stock Sale
License, AS 04.11.200)
square4 R-7M | Package Store Tasting Event Permit
(proposed)
square4 [amended ver. E] | Music Festival Permit
(proposed)
square4 [amended ver. E] | Live Music & Entertainment
Permit (proposed)
1:51:04 PM
SENATOR MICCICHE stated that the package store tasting event
permit listed on slide 20 is a new concept that will allow a
package store to host a special tasting event on its own
premises with onsite consumption of alcohol paired with foods
for those attending the event.
1:51:15 PM
SENATOR MICCICHE reviewed the population limits on slides 21 and
22. SB 9 makes numerous changes to population limits to support
business growth and communities with limited licenses. He
reported that limits are set in AS 04.11.400, using a residents-
based formula. The ABC Board authorizes a set number of licenses
for each borough and city. This bill will provide some
flexibility to move a license from a borough to a city.
1:52:05 PM
SENATOR MICCICHE reviewed the proposed seasonal Recreational and
Eating Place (REPL) tourism licenses on slide 23. He stated that
these licenses are not under population limits but are designed
for businesses that operate seasonally.
SENATOR MICCICHE turned to slide 24. SB 9 will allow businesses
to convert public convenience licenses to full restaurant
licenses. It would also remove the difficult petition process,
which is time-consuming for the applicant, the city and the ABC
Board. He explained that currently, there are two types of
restaurant licenses, one that can be sold and one that cannot.
1:52:52 PM
SENATOR MICCICHE reviewed slide 25 pertaining to proposed local
government petitions for additional restaurant licenses. He
highlighted that local governments have asked for additional
restaurant license flexibility. He related that his Kenai
Peninsula community and the Mat-Su have requested this. He
explained the process. A city decides the number of licenses the
local community can support. The city can petition the ABC board
to grant more licenses. This process moves away from the case-
by-case process to one that gives cities more control. He
explained that a city or municipality would have the flexibility
to bank the licenses to attract businesses.
1:53:54 PM
SENATOR HUGHES referred to the yes or no arrows on slide 25. She
said some people are concerned that the ABC Board could deny the
restaurant licenses. She pointed out that the Mat-Su valley is
growing. She said having the ability to move licenses could
solve the situation. She said Sun Mountain is a new development
off the Parks Highway. There are five businesses interested in
opening restaurants but lack liquor licenses. She indicated that
if a license is denied, the city must wait a year before
petitioning for more restaurant licenses. She was unsure of the
solution.
1:55:11 PM
SENATOR MICCICHE cautioned that if this bill does not pass,
there will be no potential for success. However, if the bill
does pass, it is possible that everyone could work together to
prepare the petitions. Currently, there is not any flexibility,
he said. He also acknowledged that many people invested in
liquor licenses are on the other side of this equation. This
bill is designed to provide the fairest balance possible for
growing municipalities.
1:55:57 PM
SENATOR HUGHES acknowledged the time spent on the bill. She said
she worked with Recover Alaska when this process first started.
It was focused on protecting Alaska's youth in communities that
suffer from serious alcohol problems.
She was unsure how to resolve the issue of cities or
municipalities seeking new restaurant licenses. She suggested
that the board consider developing criteria so that the petition
would be granted when a community prepares an application and
meets certain criteria. She said she wanted to avoid subjective
decisions.
SENATOR MICCICHE responded that this is a public process. He
offered his view that if communities support the petition, the
board will likely grant the license. He offered his support for
the current ABC Board. He offered his view that growing
communities should have an option to expand their restaurant
liquor licenses. He acknowledged that some licensees do not want
new entrants. He said that the committee could certainly signal
its expectation for new entrants since some communities are
growing.
1:58:35 PM
SENATOR HUGHES pointed out more people live outside the city
limits, so the population being served is 110,000. While she
appreciates that the ABC board is functioning well, board
members change. She said she would like a long-term solution by
establishing criteria for the petition for the license process.
She suggested the current board could propose regulations, or
the committee could consider incorporating language in the bill
to address it. She voiced her understanding of the delicate
balance that is incorporated into the bill.
2:00:28 PM
SENATOR MICCICHE reviewed slide 26, which depicted a flowchart
that illustrates an option to allow reallocation of some
licenses from a borough to a city for package stores. He said it
could provide a solution for a store such as Walmart or Costco
to sell liquor.
2:01:00 PM
CHAIR REINBOLD asked if he could elaborate on whether this
relates only to bigger stores or if it pertains to smaller
businesses.
SENATOR MICCICHE explained the package store option. He said
this provides an avenue to address limited license concerns. If
a package store license were not available in the City of
Wasilla, a retailer could purchase a license from someone
located elsewhere, such as a more remote location.
CHAIR REINBOLD asked if this would benefit big stores over
smaller businesses.
SENATOR MICCICHE responded that there is always an advantage in
alcohol licenses to those with funds to invest. That is the
reason it is a commodity that goes up and down in value, he
said. He characterized this process as a free-market bidding
process that does not change under the bill.
2:02:30 PM
SENATOR MICCICHE reviewed slide 27, related to proposed
regulation of trade practices permitted under federal law. He
deferred to Anna Brawley to explain the enforcement of trade
practices.
2:04:03 PM
ANNA BRAWLEY, Title IV Review Coordinator, Agnew Beck
Consulting, Anchorage, Alaska, responded to illegal trade
practices. She stated that all practices listed on the slide are
prohibited in federal law but are not enforced at the state
level. She said that many states have put these rules in place
to protect small retailers. For example, a manufacturer could
offer an exclusive arrangement or agreement if the retailer
agrees not to sell their competitor's products. This will
protect all tiers of the industry and help to ensure that a
specific brewery is not shut out of the market.
CHAIR REINBOLD appreciated knowing it would help small
businesses.
2:05:18 PM
SENATOR MICCICHE reviewed the adjustments to license fees on
slide 28. He stated that many fees have not been adjusted in
decades. The Alcohol & Marijuana Control Office (AMCO) is
receipts funded and relies on fees for prompt responses to
licensees and enforcement activities.
SENATOR MICCICHE reviewed the proposed accountability for
license fees allocated to local governments on slide 29. It will
clarify the required reports from local law enforcement who are
directly involved in the enforcement of Title 4.
SENATOR MICCICHE reviewed efforts taken by the ABC Board and
AMCO to work with key partners and other agencies on alcohol
education efforts, including schools. It will not replace what
is happening, but these changes clarify their roles.
2:06:34 PM
SENATOR MICCICHE reviewed slide 31 through 33 related to
internet sales. Currently, internet sales are not well
regulated, he said. Alaska residents can buy alcohol online
without paying state excise taxes. This change will protect
small wineries in Alaska that must pay excise taxes. This
provision also prevents alcohol sales to underage Alaskans. It
would hold Federal Express and other carriers accountable for
delivering alcohol to underage consumers or local option areas
throughout Alaska. He related that slide 32 illustrates how the
process works: Alaska consumers order wine online from a winery.
The winery direct shipment licensee verifies the consumer is
over 21, in a non-local option are and within the personal use
limits. The common carriers will transport and deliver the order
in person and verify that the customer is over 21.
SENATOR MICCICHE stated that the ABC board must approve common
carriers to transport.
2:08:49 PM
SENATOR HUGHES asked if the signatures will be required for
internet deliveries.
SENATOR MICCICHE answered yes. He said that verification is not
currently required but will be required under the bill. Carriers
will not leave packages on doorsteps.
2:09:21 PM
SENATOR MICCICHE reviewed tracking alcohol orders in local
option areas under current Title 4 on slide 3. The ABC Board
records the information in a database accessible to the board,
package stores, and law enforcement. Currently, there are
monthly limits on personal use purchases for customers in damp
or dry communities. However, these provisions are presently
unenforceable.
SENATOR MICCICHE reviewed the local option database on slide 35.
Currently, all data in the database is private and deleted after
one year. The aggregate date will be kept for 10 years to allow
the board to publish annual total sales volume by region or
community. This would help communities and law enforcement to
understand the flow of alcohol into local option communities via
legal sales.
2:10:10 PM
SENATOR MICCICHE reviewed slides 36 and 37, related to penalty
provisions in Title 4. Almost all penalties are class A
misdemeanors, from serving alcohol to minors to minor
violations. Most violations are not prosecuted and the system
does not work. SB 9 would reduce violations for compliance
issues not related to safety and other minor offenses to fines
but retain class A misdemeanors for serious offenses. The bill
does change any felony penalties, especially with respect to
local option laws.
2:11:20 PM
SENATOR HUGHES asked how many misdemeanors are being overlooked.
SENATOR MICCICHE deferred to the Alcohol & Marijuana Control
Office to respond.
2:12:27 PM
GLEN KLINKHART, Director, Alcohol & Marijuana Control Office
(AMCO), Department of Commerce, Community and Economic
Development, Anchorage, Alaska, said he has a background in law
enforcement. He said very few cases had been prosecuted, that
cases are investigated but not pursued since the penalties are
onerous. He characterized the penalty provisions in SB 9 as
effective. These changes allow for a process that encourages
compliance. Sometimes warnings are effective, but if not,
violators can be fined. He said that frequent violators could be
prosecuted. He likes the system so well that he has worked with
the industry on a fine schedule.
2:14:40 PM
SENATOR HUGHES asked how many cases were investigated and not
pursued.
MR. KLINKHART offered to provide figures. He estimated about 20
to 75 per year could be handled with small fines. He said that
his enforcement team is excited about this because they
previously felt their hands were tied.
2:15:49 PM
CHAIR REINBOLD appreciated him providing a law enforcement
perspective.
2:16:27 PM
SENATOR MICCICHE stated that slide 38 outlines the proposed
penalties for overserving an adult or serving a minor.
Currently, a licensee or employee who knowingly overserves an
intoxicated adult or serves alcohol to a minor is guilty of a
class A Misdemeanor. The bill would change the penalty for both
statutes to a minor offense subject to a $500 fine. In addition,
the bill would penalize the owner of the license by imposing an
administrative penalty of $250. He related that the license
owner may not know when the servers are repeatedly cited. This
allows the license owner to counsel any servers who are
overserving.
2:17:56 PM
CHAIR REINBOLD asked who would issue the fines.
SENATOR MICCICHE deferred to AMCO to respond.
2:18:30 PM
MR. KLINKHART answered that any certified police officer can
enforce Title 4. While AMCO will continue to provide primary
enforcement, the office will work with other law enforcement
agencies. Any fines will be deposited to the general fund, he
said.
2:19:48 PM
SENATOR MICCICHE reviewed the proposed keg registration on slide
39. This provision was designed to reduce the incidence of
adults purchasing alcohol and providing it to underage drinkers.
He stated that the process is modeled after Anchorage and Juneau
ordinances. When a licensee sells a keg, it is tagged with
purchaser information. If the keg is returned to the licensee,
the tag will be removed by the vendor. However, if underage
drinking occurs, enforcement will confiscate the keg and fine
the adult purchaser.
2:21:37 PM
SENATOR HUGHES asked whether purchasing a keg for a party with
underage drinkers would result in a violation, not a
misdemeanor. She offered her belief that it is one thing if a
parent allows a minor to drink at home, but it seems that the
penalty should be more than a $500 ticket for a person impacting
groups of minors.
CHAIR REINBOLD agreed.
SENATOR MICCICHE deferred to Ms. Brawley.
2:22:57 PM
MS. BRAWLEY responded that two penalties might apply. If a
person purchased a keg and removed the tag, the penalty for an
untagged keg would be a violation and fine of $100. He said that
law enforcement would more likely charge the person with
furnishing alcohol to a minor, a Class A misdemeanor. He added
that if someone works for a licensee, that person would be
charged separately.
2:23:14 PM
SENATOR SHOWER joined the meeting.
2:24:22 PM
SENATOR KIEHL offered his view that the keg regulation may not
be perfect, but it should be effective in reducing the problems
of adults providing alcohol to minors. He expressed concern
about the per capita limits. He said he has not found research
to support that per capita limits are effective in reducing
societal problems with alcohol.
2:25:27 PM
SENATOR KIEHL said the bill appears to place a more restrictive
per capita limit on new categories of licensees. He asked for
public safety reasons to impose this new set of limitations.
SENATOR MICCICHE answered that limits for tasting rooms of 1 in
9,000 were changed in SB 9 to 1 in 12,000. He deferred to Ms.
Oates or Ms. Hall to generally address population limits.
However, the bill changed this provision as a compromise to
address competitors' concerns. One prior restriction was to
prohibit entertainment in the tasting room. Under SB 9, tasting
rooms can have four events per year and hold classes or
community activities. Another provision for breweries and
distilleries will change the closing time from a soft close at
8:00 p.m.to a hard close at 10 p.m. Currently, people can arrive
just before 8:00 p.m., purchase alcoholic drinks, and stay at
the tasting room with no end time.
2:27:34 PM
SENATOR MYERS joined the meeting.
2:27:39 PM
SENATOR MICCICHE explained that the previous ABC Board
director's approach was to regulate activities at tasting rooms
even more. He recalled 1,200 pages of public testimony against
the ABC Board's proposed changes. These changes represent some
balances that work for the breweries and distilleries and
traditional bars or breweries. Since the public supports the new
model, this bill works to find a fair balance that will allow
additional activities to occur while still mindful that
traditional bar and brewery licensees invested substantial money
for their licenses.
2:28:48 PM
SENATOR KIEHL recalled that data supports zoning restrictions,
but he has yet to see anything that substantiates that
population limits work.
2:29:20 PM
SARA OATES, President, Alaska Cabaret, Hotel, Restaurant and
Retailers Association (CHARR), Anchorage, Alaska, responded that
she does not have the data.
2:29:42 PM
TIFFANY HALL, Recover Alaska, Anchorage, Alaska, responded that
research studies show that greater population density is
associated with increased alcohol consumption and related harm,
including medical harm, injury, crime and violence. Restrictive
population limits are an evidence-based strategy recommended by
the US Community Preventative Task Force, the World Health
Association, the federal Substance Abuse and Mental Health
Services Administration (SAMHSA). The Centers for Disease
Control and Prevention (CDC) highly recommend population limits
to reduce crime, violence, injury, and medical harm.
2:31:06 PM
SENATOR HUGHES asked if she could provide figures that would
show the data tipping point to stop these problems from
occurring.
MS. HALL responded that she does not have the figures. She
offered to research and report back to the committee. She
commented that these studies have been conducted in urban and
rural areas and found connections related to population limits.
SENATOR HUGHES highlighted that population limits in the bill
must match the data.
CHAIR REINBOLD agreed.
SENATOR SHOWER said he would like data from other states to
substantiate using population limits.
2:33:53 PM
SENATOR MICCICHE clarified that SB 9 does not change population
limits. Alaska has operated under this system for many years.
This bill captures the way the alcohol bill currently operates,
which is critically important, he said. He characterized it as a
"reset." He strongly urged members to consider other bills to
make additional changes to the system. SB 9 takes this
"hodgepodge" of statutes and regulations and makes it easy to
understand and organizes it.
[SB 9 was held in committee.]
At ease
SJR 1-CONST AM: GUARANTEE PERM FUND DIVIDEND
2:37:19 PM
CHAIR REINBOLD reconvened the meeting and announced the
consideration of SENATE JOINT RESOLUTION NO. 1, Proposing
amendments to the Constitution of the State of Alaska relating
to the Alaska permanent fund and appropriations from the Alaska
permanent fund.
2:37:33 PM
SENATOR BILL WIELECHOWSKI, Alaska State Legislature, Juneau,
Alaska, sponsor of SJR 1, stated that he introduced a similar
resolution for the past eight or nine years. He said that
placing the permanent fund in the constitution is the only way
to protect the permanent fund dividend. The legislature
attempted to do so in 2018 by passing legislation, yet the
permanent fund dividends (PFDs) continue to dwindle. Many people
were shocked when then-Governor Bill Walker cut the PFD by
$1,000 by vetoing full permanent fund dividend funding in 2016.
In the last four years, the legislature cut the PFD amount. The
Alaska Supreme Court said that the legislature and the governor
could ignore the plain mandatory language in multiple statutes
that require a full PFD to be paid each year. Any governor can
reduce the PFD by vetoing the amount to whatever level chosen.
Further, any future legislature can set the PFD at whatever
level it determines, including setting it to zero.
SENATOR WIELECHOWSKI said corporations or special interest
groups often speak to the importance of stability,
predictability and consistency in Alaska's tax structures. He
offered his view that Alaskans deserve the same predictability
and consistency with their PFDs.
2:39:22 PM
SENATOR WIELECHOWSKI pointed out that the permanent fund
dividend program has been one of the most popular programs in
American history. According to the Institute of Social and
Economic Research (ISER) at the University of Alaska, tens of
thousands of Alaskans were elevated from poverty due to the
statutory PFD. Alaska has among the lowest income inequality in
the United States, largely because of the PFD. According to
ISER, the PFD creates thousands of jobs in Alaska.
He said many people don't realize that the founders of the
permanent fund in 1976 had envisioned the prospect of a dividend
to the people of Alaska. Governor Hammond spoke of having a
dividend flow from the permanent fund. In members' packets are
several historical statements that were made about the future
plan for a dividend program, he said. The 1976 constitutional
amendment was specifically changed to allow for PFD payments and
a letter of intent was added to clarify these payments.
2:40:43 PM
SENATOR WIELECHOWSKI said that in 1982, the legislature observed
that special interests and the politically connected were
reaping more benefit from the permanent fund earnings through
government spending than average Alaskans. He reported that the
current value of the Permanent Fund is approximately $74
billion. Article IX, Section 15 of the Alaska Constitution
requires that at least 25 percent of the mineral lease rentals,
royalties, royalty sale proceeds and federal mineral revenue
sharing payments and bonuses received by the state go into the
permanent fund.
2:41:13 PM
SENATOR WIELECHOWSKI cautioned that the PFD is not an
entitlement since the subsurface rights of the state belong to
the people collectively. Under Article IX, Section 2 of the
Alaska Constitution, the state has an obligation to "provide for
the utilization, development, and conservation of all natural
resources belonging to the State, including land and waters, for
the maximum benefit of its people." He said the authors of the
1982 PFD legislation tied the current PFD to this constitutional
obligation. Every Alaskan has a right to their share of Alaska's
oil wealth and the legislature found that the best, most
efficient way to do this was through a dividend.
SENATOR WIELECHOWSKI reported that Alaskans have only received a
very small share of the state's oil wealth. For example, 100
percent of state property taxes, income taxes, and production
taxes and 75 percent of royalties go to the government. The
people receive 25 percent of the state's royalties. Since
royalties are typically set at 12.5 percent, Alaskans only
receive 3.125 percent of Alaska's oil value deposited to the
permanent fund. While Alaskans received 50 percent of the
earnings generated from those contributions, the rest was
available for the government. The current PFD law included a
letter of intent stating that "The people should have the first
call on the earnings of the permanent fund." However, in recent
years, the people have gotten the scraps.
2:42:59 PM
SENATOR WIELECHOWSKI said that SJR 1 will honor the historical
formula. Thus, the people will see the first call not the last
call over the fund income. The government will still have the
authority to use a portion of the permanent fund to fund
government. However, the government must look to generate
revenue in the same way that every other state does.
He offered his view that the only way to protect the permanent
fund dividend is to put it in the constitution. SJR 1 does not
specifically authorize the PFD in the constitution. However, it
would allow the people to vote and decide if the PFD should be
protected in the Alaska Constitution. Those who oppose SJR 1
will have a full and fair opportunity to argue against it. He
said an issue as critically important as this should be decided
in an election. He reiterated the need to let the people decide
this issue once and for all. He urged members to support SJR 1.
2:43:49 PM
CHAIR REINBOLD remarked that she has never voted to cut the PFD.
She related her political struggles due to supporting a full
permanent fund dividend.
CHAIR REINBOLD stated that it will be necessary to cut
government or institute taxes to pay a full PFD. She said she
favors cutting government. She asked if the sponsor is willing
to cut government spending and if so, to identify where cuts
should be made.
SENATOR WIELECHOWSKI responded that he had proposed dozens of
cuts during his time in the legislature. He said he did not wish
to debate how to accomplish budgetary solutions. Everyone will
have different ideas and approaches to tackle this. The state
has approximately $75 billion in the permanent fund. The average
generally accepted accounting value is $70 billion in the last
five years. He pointed out that paying the full dividend will
cost $2 billion. Some people argue that a safe draw is 4
percent; others believe 5 percent is sustainable. A 5 percent
draw would make $1.5 billion available for the government. He
offered his view that oil tax credits should be eliminated, that
Alaska has the lowest oil tax rates in the world yet the oil
industry is harvesting money from Alaska and using it to invest
in other places in the world.
2:47:40 PM
CHAIR REINBOLD recalled she agreed not to debate oil tax rates
with the sponsor, which is better left to the Senate Resources
Committee. She argued that the business environment must be
competitive. She said her husband was laid off from the oil
industry.
SENATOR WIELECHOWSKI said the state has a legal obligation to
achieve a reasonable profit. He argued that Alaska is the most
profitable place in the world for oil companies.
CHAIR REINBOLD suggested she could use charts to support her
viewpoint.
2:48:47 PM
At ease
2:49:09 PM
CHAIR REINBOLD reconvened the meeting. She maintained that she
could bring in economists' charts. She related that this
discussion should focus on the permanent fund dividend. She
remarked that she supports the PFD program.
2:49:48 PM
SENATOR MYERS agreed that the people own the resources in
Alaska. He said he noticed that SJR 1 does not change the
percentage of royalties going to the permanent fund. He asked if
the state should maintain its current rate on royalties.
SENATOR WIELECHOWSKI said that SJR 1 retains the statutory
formula his constituents favored. Some have advocated changing
the formula by going to a percentage of market value (POMV). He
acknowledged that the legislature could debate whether to use
POMV. However, it is not in this resolution.
2:51:04 PM
CHAIR REINBOLD offered her view that the private sector is taxed
at a rate that is three times the national average. The oil and
gas industry offers much more than providing revenue to the
state since it provides jobs.
2:52:13 PM
SENATOR KIEHL reminded members that the constitution's preamble
says, "We the people do ordain and establish this Constitution."
The notion that government is something other than the people is
unwarranted. He said he would also argue that Alaskans received
value in other ways. The people got educated, had their roads
plowed and their fish counted. He said he has questions about
the resolution.
2:53:07 PM
CHAIR REINBOLD turned to invited testimony.
2:53:37 PM
CLEM TILLION, Chair, Permanent Fund Defenders, Halibut Cove,
Alaska, said he would like the existing law related to the
permanent fund dividend put into the constitution so that
Alaskans are protected. This law has worked for 40 years, he
said. However, the Alaska Supreme Court ruled that the
legislature does not need to obey that law. He said he would
like a constitutional amendment that makes the legislature obey
the law.
He expressed concern that people working in the fishing industry
in Dutch Harbor do not pay any taxes since they come to Alaska
from the lower 48. He said he is not opposed to taxes, but he is
against excessive government, so he would like to see severe
cuts. He recommended that the legislature decide which services
it will no longer provide. He reminded members that Alaska is
the only land grant state in the nation, having received an
endowment of 100 million acres. At the time, Alaska selected
land it felt was valuable, including oil fields and wells.
MR. TILLION suggested that the tax debate could be held later.
He recalled a territorial legislator who said if you cut the
government by 20 percent, it will cripple the territory forever.
However, cutting 20 percent of the employees will balance the
budget.
2:56:31 PM
MR. TILLION recalled when the permanent fund was established it
was necessary to call upon the Alaska State Troopers to bring in
two senators to vote. He lamented that the dividend was not put
into the constitution at that time. First and foremost, the
money should be protected, he said. The state should not pay
dividends when it has bad years. He urged members to move the
resolution to the finance committee.
CHAIR REINBOLD agreed that the legislature must cut government.
She also agreed that Lower 48 fishermen not paying taxes should
be addressed. She said legislators need to work together to
determine budget cuts.
2:59:50 PM
JOE GELDHOF, Attorney; Member, Board of Directors, Permanent
Fund Defenders, Juneau, Alaska, stated he serves on the board
with Jack Hickel, Roselynn Cacy, Rick Halford, Juanita
Cassellius and Jim Sykes. The board keeps in touch with
economists throughout the state. The board's primary mission is
to protect the permanent fund, including protecting the
permanent fund dividend. He emphasized that the permanent fund
dividend ties every Alaskan to the funds in the permanent fund.
He expressed concern that the permanent fund would be
squandered.
3:00:56 PM
MR. GELDHOF characterized the permanent fund dividend as a
vexing problem that the legislature has grappled with resolving.
He supported allowing the people to vote on the permanent fund
dividend issue and resolve it. This will enable the legislators
to focus on the critical needs of cuts and revenue enhancement.
He said that if the legislature uses POMV, it will shift from a
permanent fund to an annuity or endowment. He said that the POMV
methodology must be prudent and conservative. Otherwise, the
state risks over harvesting on a percentage basis, which will
jeopardize the corpus of the fund. He suggested that members
listen to Callen & Associates who testified before the Senate
Finance Committee that using 5 percent POMV will put the
permanent fund in jeopardy. He said that the board prefers the
current statutory process in the constitution. However, the
legislature should use 4 percent and a 50:50 split if it moves
to a percentage of market value (POMV).
[SJR 1 was held in committee.]
3:05:52 PM
There being no further business to come before the committee,
Chair Reinbold adjourned the Senate Judiciary Standing Committee
meeting at 3:05 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| SB 9 ver B.pdf |
SJUD 3/29/2021 1:00:00 PM |
SB 9 SB9 Ver B |
| SB 9 Sponsor Statement ver B.pdf |
SFIN 5/3/2021 9:00:00 AM SJUD 3/29/2021 1:00:00 PM |
SB 9 SB9 Sponsor Statement |
| SB 9 Sectional Analysis version B 2.10.21.pdf |
SFIN 5/3/2021 9:00:00 AM SJUD 3/29/2021 1:00:00 PM |
SB 9 SB9 Sectional Analysis Version B |
| SB 9 Letters of Support 2.10.21 complete.pdf |
SJUD 3/29/2021 1:00:00 PM |
SB 9 |
| SB 9 Summary of previous support letters (SB52).pdf |
SJUD 3/29/2021 1:00:00 PM |
SB 9 SB 52 |
| SB 9 Title 4 Review Report 02.2019.pdf |
SJUD 3/29/2021 1:00:00 PM |
SB 9 |
| SB 9_Title4Pres_Senate_JUD_3.2021.1.pdf |
SJUD 3/29/2021 1:00:00 PM |
SB 9 |
| SJR001A.PDF |
SJUD 3/29/2021 1:00:00 PM |
SJR 1 SJR1 Version A |
| SJR 1 Sponsor Statement 2.8.21.pdf |
SJUD 3/29/2021 1:00:00 PM |
SJR 1 SJR1 Version A Sponsor Statement |
| SJR 1 Sectional Analysis 2.8.21.pdf |
SJUD 3/29/2021 1:00:00 PM |
SJR 1 SJR1 Version A Sectional Analysis |
| SJR 1 Leg History 1982 SB842 HFIN_Letter of Intent Al Adams 5-14-82 .pdf |
SJUD 3/29/2021 1:00:00 PM |
SB 842 SJR 1 |