Legislature(2007 - 2008)BELTZ 211
05/08/2007 01:30 PM Senate LABOR & COMMERCE
| Audio | Topic |
|---|---|
| Start | |
| HB155 | |
| HB205 | |
| HB228 | |
| SB165 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | HB 155 | TELECONFERENCED | |
| + | HB 228 | TELECONFERENCED | |
| *+ | HB 205 | TELECONFERENCED | |
| *+ | SB 165 | TELECONFERENCED | |
| + | HB 217 | TELECONFERENCED | |
| + | TELECONFERENCED |
ALASKA STATE LEGISLATURE
SENATE LABOR AND COMMERCE STANDING COMMITTEE
May 8, 2007
1:34 p.m.
MEMBERS PRESENT
Senator Johnny Ellis, Chair
Senator Gary Stevens, Vice Chair
Senator Bettye Davis
Senator Con Bunde
MEMBERS ABSENT
Senator Lyman Hoffman
COMMITTEE CALENDAR
CS FOR HOUSE BILL NO. 155(FIN)
"An Act extending the termination date of the Alcoholic Beverage
Control Board; and providing for an effective date."
MOVED CSHB 155(FIN) OUT OF COMMITTEE
CS FOR HOUSE BILL NO. 228(L&C)
"An Act relating to fees for certain medical treatment and
service under the Alaska Workers' Compensation Act; and
providing for an effective date."
MOVED CSHB 228(L&C) OUT OF COMMITTEE
CS FOR HOUSE BILL NO. 205(FIN)
"An Act relating to real estate broker and real estate
salesperson licensing; and providing for an effective date."
MOVED CSHB 205(FIN) OUT OF COMMITTEE
SENATE BILL NO. 165
"An Act relating to required onboard disclosures about
promotions, tours, flight seeing operations, other shore side
activities, shore side vendors, and visitors bureaus; and
providing for an effective date."
MOVED SB 165 OUT OF COMMITTEE
CS FOR HOUSE BILL NO. 217(JUD)
"An Act relating to required onboard disclosures about
promotions, tours, flight seeing operations, other shore side
activities, shore side vendors, and visitors bureaus; and
providing for an effective date."
SCHEDULED BUT NOT HEARD
PREVIOUS COMMITTEE ACTION
BILL: HB 155
SHORT TITLE: EXTEND ALCOHOLIC BEVERAGE CONTROL BOARD
SPONSOR(s): LABOR & COMMERCE
02/26/07 (H) READ THE FIRST TIME - REFERRALS
02/26/07 (H) L&C, FIN
03/16/07 (H) L&C AT 3:00 PM CAPITOL 17
03/16/07 (H) -- MEETING CANCELED --
03/28/07 (H) L&C AT 3:00 PM CAPITOL 17
03/28/07 (H) Moved Out of Committee
03/28/07 (H) MINUTE(L&C)
03/29/07 (H) L&C RPT 7DP
03/29/07 (H) DP: GARDNER, LEDOUX, BUCH, NEUMAN,
GATTO, RAMRAS, OLSON
04/11/07 (H) FIN AT 1:30 PM HOUSE FINANCE 519
04/11/07 (H) Moved CSHB 155(FIN) Out of Committee
04/11/07 (H) MINUTE(FIN)
04/13/07 (H) FIN RPT CS(FIN) 6DP 3NR
04/13/07 (H) DP: GARA, CRAWFORD, HAWKER, JOULE,
CHENAULT, MEYER
04/13/07 (H) NR: NELSON, STOLTZE, KELLY
04/25/07 (H) FIN CS ADOPTED Y24 N12 E4
04/26/07 (H) TRANSMITTED TO (S)
04/26/07 (H) VERSION: CSHB 155(FIN)
04/27/07 (S) READ THE FIRST TIME - REFERRALS
04/27/07 (S) L&C, FIN
05/08/07 (S) L&C AT 1:30 PM BELTZ 211
BILL: HB 228
SHORT TITLE: WORKERS' COMP. MEDICAL TREATMENT FEES
SPONSOR(s): REPRESENTATIVE(s) KELLY
03/29/07 (H) READ THE FIRST TIME - REFERRALS
03/29/07 (H) L&C, FIN
04/16/07 (H) L&C RPT CS(L&C) 2DP 5NR
04/16/07 (H) DP: NEUMAN, OLSON
04/16/07 (H) NR: GARDNER, LEDOUX, BUCH, GATTO,
RAMRAS
04/16/07 (H) L&C AT 10:00 AM CAPITOL 17
04/16/07 (H) Moved CSHB 228(L&C) Out of Committee
04/16/07 (H) MINUTE(L&C)
04/25/07 (H) FIN AT 1:30 PM HOUSE FINANCE 519
04/25/07 (H) Moved CSHB 228(L&C) Out of Committee
04/25/07 (H) MINUTE(FIN)
04/26/07 (H) FIN RPT CS(L&C) 5DP 3NR
04/26/07 (H) DP: STOLTZE, KELLY, HAWKER, MEYER,
CHENAULT
04/26/07 (H) NR: GARA, CRAWFORD, THOMAS
05/02/07 (H) TRANSMITTED TO (S)
05/02/07 (H) VERSION: CSHB 228(L&C)
05/03/07 (S) READ THE FIRST TIME - REFERRALS
05/03/07 (S) L&C
05/08/07 (S) L&C AT 1:30 PM BELTZ 211
BILL: HB 205
SHORT TITLE: REAL ESTATE BROKERS/SALESPERSONS
SPONSOR(s): LABOR & COMMERCE BY REQUEST
03/16/07 (H) READ THE FIRST TIME - REFERRALS
03/16/07 (H) L&C, FIN
04/13/07 (H) L&C AT 3:00 PM CAPITOL 17
04/13/07 (H) Moved CSHB 205(L&C) Out of Committee
04/13/07 (H) MINUTE(L&C)
04/16/07 (H) L&C RPT CS(L&C) 2DP 2NR
04/16/07 (H) DP: NEUMAN, OLSON
04/16/07 (H) NR: GARDNER, BUCH
04/17/07 (H) FIN AT 1:30 PM HOUSE FINANCE 519
04/17/07 (H) Heard & Held
04/17/07 (H) MINUTE(FIN)
04/18/07 (H) FIN AT 1:30 PM HOUSE FINANCE 519
04/18/07 (H) Moved CSHB 205(FIN) Out of Committee
04/18/07 (H) MINUTE(FIN)
04/19/07 (H) FIN RPT CS(FIN) 4DP 4NR
04/19/07 (H) DP: CRAWFORD, THOMAS, MEYER, CHENAULT
04/19/07 (H) NR: GARA, STOLTZE, JOULE, HAWKER
04/27/07 (H) TRANSMITTED TO (S)
04/27/07 (H) VERSION: CSHB 205(FIN)
04/30/07 (S) READ THE FIRST TIME - REFERRALS
04/30/07 (S) L&C, JUD
05/08/07 (S) L&C AT 1:30 PM BELTZ 211
BILL: SB 165
SHORT TITLE: TOURISM DISCLOSURES AND NOTICES
SPONSOR(s): SENATOR(s) ELTON
04/30/07 (S) READ THE FIRST TIME - REFERRALS
04/30/07 (S) L&C, JUD
05/08/07 (S) L&C AT 1:30 PM BELTZ 211
WITNESS REGISTER
EMILY WOLF
Staff to Representative Olson
Alaska State Capitol
Juneau, AK
POSITION STATEMENT: Commented on HB 155 and HB 205 for the
sponsor.
PAT DAVIDSON, Legislative Auditor
Division of Legislative Audit
Juneau, AK
POSITION STATEMENT: Supported HB 155.
DALE FOX, President and CEO
Cabaret, Hotel, Restaurant and Retailer's Association (CHARR)
Anchorage, AK
POSITION STATEMENT: Supported HB 155 with a one-year extension.
ANDY LUNDQUIST, Treasurer
Kodiak CHARR
Kodiak, AK
POSITION STATEMENT: Supported HB 155 with a one-year extension.
DOUG GRIFFIN, Director
Alcohol Beverage Control Board (ABC)
Anchorage, AK
POSITION STATEMENT: Commented on HB 155.
DAVE FEEKIN
Alaska Association of Realtors
Anchorage, AK
POSITION STATEMENT: Supported HB 205.
RICK URION, Director
Division of Corporations, Business and Occupational Licensing
Department of Commerce, Community & Economic Development
Juneau, AK
POSITION STATEMENT: Supported HB 205.
DEREK MILLER
Staff to Representative Kelly
Alaska State Capitol
Juneau, AK
POSITION STATEMENT: Commented on HB 228 for the sponsor.
LINDA HALL, Director
Division of Insurance
Department of Commerce, Community & Economic Development (DCCED)
Juneau, AK
POSITION STATEMENT: Supported HB 228.
MIKE HOGAN, Executive Director
Alaska Physicians and Surgeons
Anchorage, AK
POSITION STATEMENT: Supported HB 228.
REPRESENTATIVE LINDSEY HOLMES
Alaska State Legislature
Juneau, AK
POSITION STATEMENT: Commented on SB 165.
JAMES WALDO
Staff to Representative Lindsey Holmes
Alaska State Capitol
Juneau, AK
POSITION STATEMENT: Commented on SB 165 for Representative
Holmes.
DON HESS
Chilkat River Adventures
Haines, AK
POSITION STATEMENT: Supported SB 165.
JOHN DUNLAP, Manager
Allen Marine Tours
Sitka, AK
POSITION STATEMENT: Supported SB 165.
STEVE HEIGHTS
Skagway Streetcar Company
Skagway, AK
POSITION STATEMENT: Supported SB 165.
ALLEN LEMASTER
Gakona, AK
POSITION STATEMENT: Supported SB 165.
KELLY DINDINGER
Alaska Travel Adventurers
Alaska Cruises Inc.
Juneau, AK
POSITION STATEMENT: Supported SB 165.
ACTION NARRATIVE
CHAIR JOHNNY ELLIS called the Senate Labor and Commerce Standing
Committee meeting to order at 1:34:30 PM. Present at the call to
order were Senators Stevens, Davis, Bunde and Ellis.
CSHB 155(FIN)-EXTEND ALCOHOLIC BEVERAGE CONTROL BOARD
1:35:28 PM
CHAIR ELLIS announced CSHB 155(FIN) to be up for consideration.
EMILY WOLF, staff to Representative Kurt Olson, sponsor of HB
155, said because of some difficulties Legislative Audit found,
the scheduled extension was changed from 2013 to 2010 by the
Finance Committee.
1:36:40 PM
PAT DAVIDSON, Legislative Auditor, Division of Legislative
Audit, explained said that she recommended that the ABC Board
continue to 2013 even thought the standard recommendation for an
extension is eight-years. She recommended six-years because of a
lack of administrative strategy for accomplishing overall
enforcement goals. She explained that the Board is responsible
for compliance checks of businesses that serve alcohol. The
number of inspections did increase, however their distribution
still needs improvement. For example, businesses in Fairbanks
and Juneau have a 100 percent chance of being inspected over a
four-year period, but Kenai businesses have a 38 percent chance
of an inspection over that same time period. The Board also
needs to improve notifications of its meetings and activities to
provide for better public participation.
1:38:41 PM
She said another area where improvement is needed is that the
ABC executive director can make a tie-breaking vote and her
concern is that basically he is then acting as a public member.
However he has never been screened to determine whether he meets
the qualifications of a public member. Also, being the executive
director, he is privy to more information than the board members
are. She said there are alternative ways to get a tie-breaking
vote.
1:39:30 PM
MS. DAVIDSON said a minor issue of more interest to the Finance
Committee than the Labor and Commerce Committee is that the
general wholesale license fees are based on sales volume and
hadn't changed since 1980. What has happened is that the
increase in sales volume has turned what was a progressive tax
structure into a regressive tax structure and the legislature
might want to adjust that.
1:39:57 PM
CHAIR ELLIS asked how she would characterize the ABC Board's
reaction to her recommendations.
MS. DAVIDSON replied the members were supportive of the
recommendations and were looking for ways to change. The
Department of Public Safety (DPS) to which the Board is
administratively associated was also supportive of the changes
and was willing to help it in any way it could.
CHAIR ELLIS asked if the administration would have legislation
in the future that would address these issues.
MS. DAVIDSON replied that she didn't know.
1:40:55 PM
DALE FOX, President and CEO, Alaska Cabaret, Hotel, Restaurant
and Retailer's Association (
CHARR), said he supported a strong ABC Board and HB 155. He said
that beverage licensees around the state are dismayed with ABC's
administration and anti-business approach. Many of his members
were not aware of this meeting today or they would have been
testifying. He said that CHARR has been working both internally
and externally to try to correct some of the more significant
challenges and he thought a one-year extension would be good so
that if improvements aren't seen by then, the legislature could
provide remedies.
SENATOR BUNDE asked for some specific examples of his
organization's concerns.
1:43:33 PM
MR. FOX replied everything from the lack of timeliness of
response to the garbled response in terms of what the rules are
and how they are being reinterpreted. One example is
interpretation of TAM card statues and Title 4 regulations. The
Board has come up with 3, 4 or 5 different interpretations. He
explained that everyone who serves alcohol needs a TAM card and
the question then becomes who else needs a TAM card. In previous
years it has been the supervisor of people serving alcohol. Then
the administration came out and said that included any
stockholder. Then it was asked if all CIRRI stockholders have to
have TAM cards because CIRRI has a liquor license. He said that
CHARR has three different written opinions from the ABC Board on
the TAM card issue and the statute tells them a fourth.
Another example is enforcement issues. The statute says that you
have to have your TAM card on you or that you made a copy. Well,
that seems clear to him, but the ABC Board and its enforcers
have now said that if you have a copy, that just means you can
finish the shift and you still get a ticket. They have gone as
far as walking into an establishment to do an inspection and
asking to see the TAM card. When the bartender went to her purse
to get her TAM card and she was told she had to have it on her
person. Also, he said you can't get a license in any sort of
reasonable time and enforcement is "punitive from top to
bottom." For all these reasons CHARR wanted to see a one-year
extension.
1:46:28 PM
ANDY LUNDQUIST, Treasurer, Kodiak CHARR, said he is also a 25-
year operator of a bar and package store in Kodiak. He said the
ABC Board is professionally run and he liked the idea that a
number of industry interests are represented on it. He agreed
that improvements are still needed and that a one-year sunset
would be useful.
1:48:03 PM
DOUG GRIFFIN, Director, Alcohol Beverage Control Board (ABC),
said the Board appreciated the concerns raised in the audit and
that it is trying to respond to them. He said it had implemented
all of the recommendations that were made in the prior audit and
use this oversight as a tool to seek ways to improve. He
reported that the Board is in the process of refining its
database to address some other internal control issues that were
raised. He concurred that the board director should not be the
tie-breaking vote and he has heard the Palin administration was
going to introduce legislation about that.
1:50:29 PM
He said part of the issue with enforcement of the alcohol
beverage laws in Alaska is that it is not done solely by ABC
investigators and he has no control over them. In fact, there
are only four investigators for the entire state. A trooper is
also assigned to do compliance checks, but aside from that
meager enforcement staff, they really rely on municipal police
departments and the Alaska State Troopers. He said that adequate
training to enforcement taken from other agencies needs to
happen and that these laws need to be applied in a thoughtful
uniform manner.
MR. GRIFFIN said he preferred a six-year extension because the
Board needs additional time to implement some of the
recommendations made by Legislative Audit. If CHARR has issues,
those need to be dealt with in separate legislation, not in the
sunset vehicle. Some CHARR people don't like the fact that the
ABC Board is now in the Department of Public Safety (DPS), but
having moved to the DPS has increased its enforcement profile
and the audit said that was a good move.
1:54:21 PM
CHAIR ELLIS said he thought the administration would come up
with legislation to address some of the other issues, but it is
a given that the ABC Board will be extended. He narrowed the
issue down saying he was comfortable with the three-year
extension that was proposed in the version before them.
SENATOR BUNDE concurred with the chair.
SENATOR STEVENS agreed as well.
1:55:19 PM
SENATOR BUNDE moved to pass CSHB 155(FIN) with individual
recommendations. There were no objections and it was so ordered.
CSHB 205(FIN)-REAL ESTATE BROKERS/SALESPERSONS
1:57:03 PM
CHAIR ELLIS announced CSHB 205(FIN) to be up for consideration.
ELEANOR WOLF, staff to Representative Kurt Olsen, sponsor of HB
205, said this bill was introduced at the request of the
Association of Realtors. Specifically, section 1 would increase
the hours of education for a license applicant from 20 to 40.
Section 2 increases continuing education hours from 20 to 30
hours. The realtors preferred to increase their hours rather
than scrimp on the education content. Section 3 adds a provision
that 7 years must elapse for anyone convicted of a felony
involving moral turpitude to reapply for licensure.
Section 4 adds language that allows a broker to live outside the
state if he does not employ a licensee or his licensees are
directly supervised by an associate broker. Section 5 provides
that a broker who owns, operates or is employed by multiple
corporations requiring real estate licensing is at a single
physical address for all principle offices. Apparently there was
an incident where one person owned three or four different real
estate offices and was never appearing in any of them.
Therefore, he was not there to oversee.
1:57:45 PM
Section 6 states that all policies and procedures be made
available to the public. Section 7 is a February 1, 2008
effective date. This coincides with the issuance of the renewal
licenses.
1:58:45 PM
SENATOR STEVENS asked if any other statutory language says a
felony involves only "moral turpitude."
MS. WOLF replied that other statutes say you can't be under
indictment for forgery, theft, extortion, conspiracy to defraud
creditors or any other felony involving moral turpitude or be
convicted of such offense. The bill has added after a lapse of
seven years.
SENATOR STEVENS said he didn't think the bill said what the
sponsor statement says. The bill just says "a felony".
1:59:22 PM
CHAIR ELLIS asked MS. WOLF to get that clarified.
1:59:45 PM
DAVE FEEKIN, Alaska Association of Realtors, supported HB 205
and said it is a modernization of the existing statutes relating
to real estate brokerage. He highlighted that this bill
increases the education time from 20 to 40 hours before a person
takes the real estate licensing exam and remarked that at 20
hours, Alaska was the lowest in the country; however, at 40
hours it is still the lowest in the country. The Association
supported increasing post-licensing education from 20 to 30
hours to have time to adequately teach the required course
material rather than reducing the content.
2:01:21 PM
Section 8 requires a broker to be responsible and supervise the
actions of their licensees. He explained that the Alaska Supreme
Court ruled in the 80s that a broker is not responsible for
conduct that they had no knowledge of, but this provision makes
it the duty of the licensee to inform the broker of issues
needing his supervision.
MS. WOLF clarified and apologized that she was looking at the
wrong version of the bill before, but she needed more time to
see if she used the correct sponsor statement.
SENATOR STEVENS added that he went through the bill more
carefully and saw that every reference to "moral turpitude" was
removed. Saying "any felony" was tougher language and he was
comfortable with it.
2:03:38 PM
RICK URION, Director, Division of Corporations, Business and
Occupational Licensing, Department of Commerce, Community &
Economic Development, supported HB 205 saying it is more
workable for both the division and the public.
2:04:43 PM
SENATOR STEVENS moved to pass CSHB 205(FIN) from committee with
individual recommendations and attached fiscal note. There were
no objections and it was so ordered.
CSHB 228(L&C)-WORKERS' COMP. MEDICAL TREATMENT FEES
2:05:20 PM
CHAIR ELLIS announced CSHB 228 (L&C) to be up for consideration.
DEREK MILLER, staff to Representative Kelly, sponsor of HB 228,
said in 2005 the Alaska Legislature passed SB 130, which was a
major rewrite of the Workers' Compensation statutes. As a part
of that, medical payments were frozen at the 2004 fee schedule
so that a review could be done to find the underlying reasons
for premium increases. This review was to be jointly done by a
special workers' compensation legislation task force in concert
with the Department of Labor and Workforce Development (DOLWD)
Medical Review Committee. The task force was to develop
recommendations to moderate program increases in the future as
part of the conditions of this medical rate freeze and to
complete its work by February of 2006. The rate freeze would
sunset in August 2007 and a plan is not yet in place for the
post rate freeze sunset period and that is why this legislation
was introduced.
MR. MILLER said under HB 228 the medical rate freeze would be
extended for two years to allow time for recommendations to be
developed and it also implements an annual rate increase based
on the medical component of the consumer price index (CPI). In
closing, he said this is not meant to be a long-term fix, but a
stop-gap measure.
2:07:36 PM
He said this bill is supported by the Alaska State Hospital and
Nurses Home Association, the Alaska Physicians and Surgeons, the
Alaska State Medical Association, the Alaska Municipal League
Joint Insurance Agency, the State Chamber of Commerce, the
Department of Labor and Workforce Development (DOLWD), the
Division of Insurance and Bradner's Alaska Legislative Digest
that on page 6 said this bill is a "must have" for the Palin
administration.
2:07:56 PM
LINDA HALL, Director, Division of Insurance, Department of
Commerce, Community & Economic Development (DCCED), said she
supported HB 228 and that she wanted to highlight some of its
points. She stated with the freeze having been in place,
Attachment 1 shows the portion of workers' compensation system
cost nationally is 58 percent - comprised of medical expenses.
In Alaska, that percentage is at 69 percent and rising. System
cost means what is paid out for treatment of injured workers and
indemnity as lost wages. They are not the same thing as premium,
but they are a component of premium.
MS. HALL explained that in her premium calculations that she
ultimately approves through public rate hearings, she looks at
historical system costs and their trending. For example, if she
charged $10 for a single workers' compensation claim today and
trended that over the next 10 years, potentially it would likely
to trend up to $15 or $20. On top of that, she explained,
insurance companies have what is called an "expense factor" that
they put on top of that.
2:10:12 PM
MS. HALL urged them to look at Exhibit 4 and said as of October
2006, an Oregon study shows that the workers' compensation rates
in Alaska are the highest in the country - and they might climb
even higher unless some better controls on medical expenses are
found. This is not to imply that people are necessarily charging
too much; medical costs in Alaska are higher than in the rest of
the country, also. This is seen in all the state's systems.
2:11:38 PM
The last attachment in her presentation she said is a review and
evaluation of this bill by the National Counsel on Compensation
Insurance. The second paragraph predicts what would occur
without this legislation and it projects a 4.5 to 5.8 percent
increase in system costs overall. HB 228 holds it at a minimal
1.3 percent. Ms. Hall said the system costs are compounded by
other parts of the rate making process. So, it is critical to
look at this additional freeze.
2:12:50 PM
SENATOR BUNDE said she mentioned the medical costs were around
60 percent in Alaska and lower in other states and asked if that
is a factor of the cost of the medical procedures in Alaska or
does something else in the system make that percentage higher.
MS. HALL responded that she just recently reviewed a two-year
National Counsel on Compensation Insurance study on that and
found that, in general, the cost of doing business in Alaska is
more expensive than in other areas of the country.
SENATOR BUNDE recalled seeing something recently saying that the
cost of living in Anchorage is probably less than it is in
Portland and Seattle and yet the cost of medical treatment is so
much higher. A chart showed that a colonoscopy costs $2,500 in
Alaska and $1,400 in the Lower 48. He found it hard to believe
that the cost should be that much higher in Alaska.
MS. HALL said she didn't disagree with that.
CHAIR ELLIS said he shared that concern and he hoped to get to
the bottom of that. He asked if building inflation-proofing into
the bill was reasonable
MS. HALL replied that it was an objective way to make an
increase and she didn't think it appropriate or fair to continue
to freeze the medical fee schedule at the December 2004 level.
To use objective criteria is the most appropriate way to do
that.
CHAIR ELLIS asked Senator Bunde if the base is fair and the
mechanism is reasonable, could he support inflation proofing so
the legislature didn't have to spend time revisiting it.
SENATOR BUNDE said it's hard to find doctors for Medicare
patients because of the federally mandated level of
reimbursement. He asked if she could envision injured workers
having problems with finding someone to treat them at these
rates.
2:17:06 PM
MS. HALL replied that her division hadn't received a complaint
about access to medical care and she didn't envision this
legislation having an impact on people getting medical care.
MIKE HOGAN, Executive Director, Alaska Physicians and surgeons,
supported HB 228.
2:18:45 PM
SENATOR STEVENS moved to pass CSHB 228(L&C) from committee with
individual recommendations and attached fiscal notes. There were
no objections and it was so ordered.
SB 165-TOURISM DISCLOSURES AND NOTICES
2:19:53 PM
CHAIR ELLIS announced SB 165 to be up for consideration. He said
it is companion legislation to house legislation that is coming
over shortly. His goal was to hear this bill and move it on to
the Judiciary Committee and expect the House legislation to meet
it there. He said that Representative Holmes had done the lion's
share of the work and would speak for Senator Elton.
REPRESENTATIVE LINDSEY HOLMES, sponsor of the HB 217, asked
JAMES WALDO, her staff person, to help present the bill.
MR. WALDO said SB 165, which is the companion for HB 217,
addresses concerns of the local vendor tour businesses. It
alters and improves the disclosure section that was passed in
the cruise ship initiative, Ballot Measure 2, in the last
election. It adds several requirements for disclosure for on-
board sales and alters the commission rate disclosure; it also
adds a section that applies that to advertisements for shore-
side retailers as well. He said the on-board tour sales are
changed to require a disclosure under every sale that the on-
board sale is a wholesale/retail relationship between the shore-
side tour vendor and the cruise line. This basically helps the
passengers to be informed that the cruise line will keep a
percentage of the money paid for a tour. The disclosure is also
required to include information on other alternatives available
at future ports of call with different prices and different
features. It also requires the cruise ships to provide vendors'
contact information to the visitors' bureaus in each port of
call so that the passengers can contact them independently and
compare prices.
2:21:51 PM
MR. WALDO said this legislation alters the disclosure
requirement that was in the initial initiative. It originally
said the cruise line is required to disclose the exact
commission rate in all written materials when they sold that
tour. However, that threatened the local Alaskan business on the
shore-side because it would expose their pricing structures and
they had a very really worry that this would lead to price
undercutting. This price undercutting would only affect the
Alaskan businesses because they would be competing with each
other for lower and lower prices while the cruise ships
maintained the higher commission rate.
After working with the initiative's sponsors, Mr. Waldo said,
they came to a good fix in requiring a disclosure when the
commission reaches a certain threshold of over 20 percent. This
helps the consumer realize they are paying a commission over a
certain rate.
2:24:19 PM
Finally, it adds a new section that was left out of the
initiative. That section applies these disclosure requirements
to shore-side retailers as well. Right now on-board the cruise
ships shore-side retailers, like Diamonds International,
advertise, but they charge extremely steep advertising rates
that amount to a percentage of the sales. This would allow
passengers to see that a percentage of those retail sales are
being recouped by the cruise ship and effectively allows them to
realize that there are other stores and other alternatives for
them to use.
2:25:10 PM
SENATOR BUNDE asked if sponsors of the cruise ship initiative
agree with this legislation.
MR. WALDO replied yes. He said that Joe Geldhof is on record in
the House Judiciary Committee speaking in favor of HB 217 and
Kirsten Cohen, another sponsor of the initiative, had also
written a letter in support.
SENATOR BUNDE said he heard from a number of constituents who
said they knew what they voted for and didn't want it changed.
MR. WALDO responded that to assuage those concerns even more,
one of the more significant final pieces in the bill corrects an
error in the initiative that cited violation of these
requirements as an unfair trade practice - with a maximum fine
of $100 - which for a cruise line, is just a slap on the wrist.
Any other unfair trade practice has a penalty of $1,000 to
$25,000, a significant deterrent. So, SB 165 and HB 217 remove
the requirement the $100-penalty and replace it with $1,000 to
$25,000.
2:27:58 PM
DON HESS, Chilkat River Adventures, supported SB 165. He was
once in the logging business, then he turned to trucking and
being a heavy equipment operator. In 1973, he decided to start a
river tour business in Haines. He said his current company is
successful only because of the cruise ships and now it is being
drastically affected by the initiative's disclosure requirement.
He urged them to pass SB 165 out of committee today; 50
businesses have testified in support of these changes and not
one business has testified in opposition.
CHAIR ELLIS said he personally thought a good balance had been
struck between the spirit of the initiative and the sponsors and
some of the practical implications.
2:32:37 PM
JOHN DUNLAP, Manager, Allen Marine Tours, supported SB 165 and
thought the language met the intent of the voters better than
that in the ballot initiative.
2:34:16 PM
STEVE HEIGHTS, Skagway Streetcar Company, supported SB 165. He
agreed with the previous two testifiers and said that most
importantly, the committee should understand that tour operators
don't pay commissions to the cruise lines. Rather the cruise
lines customers pay them. He explained:
We create, manufacture, tour products, and we sell
those at wholesale net price to the cruise ship or
retail store. We sell our products at a volume rate,
too, because blocks of seats - we can produce for less
than the cost of a single seat. Some of us sell
retail, as well, at our windows, but those are at a
retail price, not at the wholesale volume price.
He knows of no other retail business that has to disclose their
retail markups. He is not opposed to disclosure, but the
disclosure he wants to see is the truth. He said point 4 in SB
165 is still wrong in that it still includes an arbitrary 20
percent figure; it still uses the incorrect word "commission"
and this is not true. Rather:
The truth is that there is a retail/wholesale
relationship here and having been so stated in a
statute, there should be no more that needs to be said
- because that in and of itself in business states the
truth of commerce. HB 217 and SB 165 may be a
temporary fix, but they still do not state the truth
and truth and honesty in disclosure for the citizens
of Alaska, for the consumer, is what the people voted
for. Thank you so much for my opportunity and I do
hope you pass this along.
2:37:10 PM
ALLEN LEMASTER testified from Gakona in support of Mr. Heights'
testimony. This bill is the best fix we can have for what is a
bad idea initially.
2:38:46 PM
KELLY DINDINGER, Alaska Travel Adventurers and Alaska Cruises
Inc., said she is very concerned that this bill may not move
forward quickly. She said Alaska Travel Adventurers is her
livelihood and it doesn't start making money until July - and
"We're out of money now. We need to start making our sales." She
just got an announcement that some cruise lines are telling
their customers if they don't buy a tour before hitting Alaskan
waters, they are not going to get to buy it, because they don't
know what is legal.
2:42:19 PM
SENATOR STEVENS moved to pass SB 165 from committee with
individual recommendations and attached fiscal note. There being
no objection, it was so ordered.
There being no further business to come before the committee,
Chair Ellis adjourned the meeting at 2:42:48 PM.
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