Legislature(2003 - 2004)

04/10/2003 01:35 PM L&C

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                    ALASKA STATE LEGISLATURE                                                                                  
          SENATE LABOR AND COMMERCE STANDING COMMITTEE                                                                        
                         April 10, 2003                                                                                         
                           1:35 p.m.                                                                                            
MEMBERS PRESENT                                                                                                               
Senator Con Bunde, Chair                                                                                                        
Senator Ralph Seekins, Vice Chair                                                                                               
Senator Gary Stevens                                                                                                            
Senator Bettye Davis                                                                                                            
MEMBERS ABSENT                                                                                                                
Senator Hollis French                                                                                                           
COMMITTEE CALENDAR                                                                                                            
SENATE BILL NO. 128                                                                                                             
"An Act relating to licensing common carriers to dispense                                                                       
alcoholic beverages; and providing for an effective date."                                                                      
     MOVED SB 128 OUT OF COMMITTEE                                                                                              
SENATE BILL NO. 111                                                                                                             
"An Act relating to the submission of payroll information by                                                                    
contractors and subcontractors performing work on a public                                                                      
construction contract; and providing for an effective date."                                                                    
     HEARD AND HELD                                                                                                             
SENATE BILL NO. 114                                                                                                             
"An Act increasing the fee for a state business license; and                                                                    
providing for an effective date."                                                                                               
     HEARD AND HELD                                                                                                             
PREVIOUS ACTION                                                                                                               
SB 128 - No previous action to record.                                                                                          
SB 111 - See Labor and Commerce minutes dated 3/25/03.                                                                          
SB 114 - See Labor and Commerce minutes dated 3/18/03.                                                                        
WITNESS REGISTER                                                                                                              
Mr. Richard Schmitz                                                                                                             
Staff to Senator Cowdery                                                                                                        
Alaska State Capitol                                                                                                            
Juneau, AK  99801-1182                                                                                                          
POSITION STATEMENT: Commented on SB 128.                                                                                      
Mr. Irving Bertram                                                                                                              
General Counsel                                                                                                                 
Alaska Airlines                                                                                                                 
No address provided                                                                                                             
POSITION STATEMENT: Supported SB 128.                                                                                         
Mr. Doug Griffin                                                                                                                
Alcoholic Beverage Control Board                                                                                                
550 W 7th, No. 540                                                                                                              
Anchorage AK 99501                                                                                                              
POSITION STATEMENT: Supported SB 128.                                                                                         
Commissioner Greg O'Claray                                                                                                      
Department of Labor & Workforce                                                                                                 
PO Box 21149                                                                                                                    
Juneau, AK 99802-1149                                                                                                           
POSITION STATEMENT: Supported SB 111.                                                                                         
Ms. Paula Scavera, Program Specialist                                                                                           
Department of Labor & Workforce                                                                                                 
PO Box 21149                                                                                                                    
Juneau, AK 99802-1149                                                                                                           
POSITION STATEMENT: Commented on SB 111.                                                                                      
Mr. Dick Cattanach                                                                                                              
Association of General Contractors                                                                                              
8005 Schoon St.                                                                                                                 
Anchorage AK 99518                                                                                                              
POSITION STATEMENT: Opposed SB 111.                                                                                           
Mr. Rick Urion, Director                                                                                                        
Division of Occupational Licensing                                                                                              
Department of Labor & Workforce                                                                                                 
PO Box 21149                                                                                                                    
Juneau, AK 99802-1149                                                                                                           
POSITION STATEMENT: Commented on SB 114.                                                                                      
ACTION NARRATIVE                                                                                                              
TAPE 03-20, SIDE A                                                                                                            
              SB 128-COMMON CARRIER LIQUOR LICENSE                                                                          
CHAIR CON  BUNDE called  the Senate  Labor and  Commerce Standing                                                             
Committee meeting to  order at 1:35 p.m. and announced  SB 128 to                                                               
be up for consideration.                                                                                                        
MR.  RICHARD   SCHMITZ,  staff   to  Senator   Cowdery,  sponsor,                                                               
explained that  the purpose of  SB 128  is to streamline  some of                                                               
the permitting requirements in situations  where a common carrier                                                               
(airplane or boat) also sells liquor  as part of its function and                                                               
is, therefore,  regulated. Alaska Airlines, for  instance, has to                                                               
get a separate  license for every airplane that  it owns, because                                                               
it  can't separate  out  which  planes may  or  may  not come  to                                                               
Alaska. The  purpose of the  bill is  to allow those  carriers to                                                               
instead license a certain number  of planes, probably 10, and pay                                                               
a fee  for each plane  beyond that.  It also affects  planes that                                                               
serve  cruise  ship passengers  that  go  to McKinley  Park  from                                                               
Anchorage or Seward and it would  allow trains that have bar cars                                                               
to get one license.                                                                                                             
MR. IRVING  BERTRAM, general counsel, Alaska  Airlines, said that                                                               
licensure requires  filling out a lot  of paperwork and is  a bit                                                               
of  an   administrative  burden  for  Alaska   Airlines  and  the                                                               
Alcoholic Beverage Control Board  (ABC). Alaska Airlines hopes to                                                               
eliminate that process as its  fleet continues to grow. Currently                                                               
it has 100 licenses and would like  to simply pay a minor fee for                                                               
additional   planes   without   having    to   go   through   the                                                               
administrative  hassle and  expense  of  posting and  publishing.                                                               
They  would also  like  to  see their  overall  licensing fee  be                                                               
reduced and  pay the regular  fee for  the first 10  licenses and                                                               
$100 for each additional license.                                                                                               
MR. BERTRAM  explained that  the fee  structures in  other states                                                               
are significantly  different from Alaska's. Arizona  charges $275                                                               
and in  California, Alaska Airlines pays  a $400 fee and  $12 per                                                               
aircraft for  duplicate licenses. In  Oregon it pays $203  and in                                                               
Washington has a  $1,200 cost with $750 for the  fee, plus $5 for                                                               
each  aircraft.  Alaska Airlines  pays  over  $40,000 in  Alaska,                                                               
which it  feels is a little  bit inequitable given the  nature of                                                               
its business and what the state  has to do in terms of regulation                                                               
for them  as a  licensee. While Alaska  Airlines prefers  the fee                                                               
structure of California  and Oregon, it is  satisfied with what's                                                               
in SB 128.                                                                                                                      
CHAIR  BUNDE commented  that  many Alaskans  would  like to  have                                                               
airfares between  Alaskan cities priced similarly  to airfares in                                                               
the Lower 48 as well.                                                                                                           
MR.  BERTRAM agreed  that was  a good  point, but  added that  he                                                               
wished Alaska Airline's costs were the same, too.                                                                               
CHAIR  BUNDE asked  if  he  would support  the  bill  if it  were                                                               
revenue neutral.                                                                                                                
MR. BERTRAM replied yes.                                                                                                        
MR.  DOUG  GRIFFIN,  ABC  Board,  concurred  with  Mr.  Bertram's                                                               
remarks  and supported  SB 128.  He said  this is  an area  where                                                               
state  law  has  not  kept  up with  modern  times  in  terms  of                                                               
logistics of aircraft. These fees  could be acting as a deterrent                                                               
for other airlines  to come into Alaska.  The duplicate licensing                                                               
concept is used in other states.                                                                                                
CHAIR BUNDE asked if this would also apply to Era and Penn Air.                                                                 
MR. GRIFFIN replied it would if they provide that service.                                                                      
SENATOR STEVENS asked what the  state does in terms of regulation                                                               
and whether inspections are involved.                                                                                           
MR. GRIFFIN replied the state  does very little. The main concern                                                               
is safety and bad behavior caused by alcohol consumption.                                                                       
SENATOR  FRENCH asked  if all  airlines  who do  business in  the                                                               
state, specifically  those who  are not  based here,  have Alaska                                                               
liquor licenses.                                                                                                                
CHAIR  BUNDE  replied  they  do   if  they  serve  Anchorage  and                                                               
Fairbanks, but for Anchorage and Seattle, no.                                                                                   
SENATOR  SEEKINS  moved  to  pass  SB  128  from  committee  with                                                               
individual recommendations and its attached fiscal note.                                                                        
The  roll was  called. SENATORS  SEEKINS, FRENCH,  STEVENS, DAVIS                                                               
and BUNDE voted yea and it passed from committee.                                                                               
        SB 111-PUBLIC CONSTRUCTION PROJECT REQUIREMENTS                                                                     
CHAIR BUNDE announced SB 111 to  be up for consideration and that                                                               
the  Department of  Labor had  worked on  a committee  substitute                                                               
SENATOR SEEKINS moved  to adopt the CS. There  were no objections                                                               
and it was so ordered.                                                                                                          
COMMISSIONER  GREG O'CLARAY,  Department Of  Labor And  Workforce                                                               
Development,  said the  department was  looking for  revenue that                                                               
would offset  general funds that  are now being spent  to operate                                                               
the Labor Standards and Safety Division.                                                                                        
CHAIR BUNDE asked him to explain the changes in sections 4 - 8.                                                                 
COMMISSIONER  O'CLARAY  explained that  there  is  a new  section                                                               
under  AS  36.05.045   -  Notice  of  Work   and  Completion  and                                                               
Withholding of  Payment. In concept,  they tried to figure  out a                                                               
way to  withhold payment for  those subcontractors that  might be                                                               
in  violation  of the  prevailing  wage  rate without  having  an                                                               
adverse impact on the general contractor.                                                                                       
CHAIR BUNDE  asked if this  would take  care of the  concern that                                                               
someone might  do a half-day of  work, make $500 and  have to pay                                                               
the state $200.                                                                                                                 
The Commissioner  answered that is  true. He added a  new section                                                               
attempts  to resolve  the problem  of the  department withholding                                                               
the final payment on a  project to the general contractor because                                                               
of one  employee. It says  that the department can  only withhold                                                               
the  amount it  estimates  is necessary  to compensate  employees                                                               
under a Title  36 investigation. It also sets a  timeline for the                                                               
notice and  filing of fees no  later than 14 days  after work has                                                               
commenced. Section 3  is identical to the  original bill. Another                                                               
change was  about a  concern over  tenant improvements  in public                                                               
SENATOR FRENCH asked  if the records will be  retained within the                                                               
Department of Labor.                                                                                                            
COMMISSIONER  O'CLARAY  said they  would  be  and the  department                                                               
would start using  on-line filing by July 1, 2004  and instead of                                                               
every week, require a filing every second week.                                                                                 
SENATOR  STEVENS said  municipalities  were  concerned that  they                                                               
would have to keep records and  request an exemption. He asked if                                                               
that had been dealt with.                                                                                                       
MS. PAULA SCAVERA, Program Assistant,  answered that in Section 1                                                               
of the CS, recordkeeping is retained in the Department of Labor.                                                                
SENATOR STEVENS asked  if the municipalities are  required now to                                                               
keep records.                                                                                                                   
MS.  SCAVERA said  they are  not. She  added that  municipalities                                                               
were also  concerned about emergency  response work, such  as the                                                               
recent windstorm  in Anchorage. The  notice of filing fee  may be                                                               
filed after  work has begun  if the public  construction contract                                                               
is for work undertaken in  immediate response to an emergency and                                                               
the noticing  fees are  not filed  later than  14 days  after the                                                               
work has begun.                                                                                                                 
MR.  DICK CATTANACH,  Association of  General Contractors  (AGC),                                                               
said the  AGC understands the  department needs to  raise revenue                                                               
and  AGC has  consented to  the first  portion, which  allows the                                                               
department  to  capture up  to  $5,000,  but  the AGC  still  has                                                               
problems with the  rest of the bill -  the reporting requirements                                                               
in   section   (2)(c)   and   withholding   payment   because   a                                                               
[subcontractor] didn't  comply with  what they legally  agreed to                                                               
do. He  thought there were already  remedies in law to  deal with                                                               
that so he didn't see the need  to add more paperwork to what the                                                               
contractors have to do.                                                                                                         
MR. CATTANACH said he had just seen  this new CS and hadn't had a                                                               
chance to talk to the commissioner about it.                                                                                    
CHAIR BUNDE said Legislative Legal  and Research had not reviewed                                                               
this  version yet  and he  was going  to keep  it until  the next                                                               
meeting.   That  would   give   him  the   opportunity  to   have                                                               
conversations with the department and the commissioner.                                                                         
              SB 114-INCREASE BUSINESS LICENSE FEE                                                                          
CHAIR BUNDE announced SB 114 to be up for consideration.                                                                        
SENATOR  SEEKINS  gave  everyone  a  printout  of  the  different                                                               
CHAIR BUNDE asked  Mr. Urion if he was  concerned about returning                                                               
to a  one-year licensing  requirement as  opposed to  the current                                                               
MR.  RICK URION,  Director, Division  of Occupational  Licensing,                                                               
said he thought the additional cost would not be significant.                                                                   
CHAIR  BUNDE asked  if  it  would complicate  things  to make  it                                                               
MR. URION replied that he thought it would.                                                                                     
SENATOR STEVENS said  there are 330 businesses and  they are just                                                               
talking  about  $6,000,  but  a  lot  of  businesses  don't  sell                                                               
tobacco, like Burger King and McDonald's.                                                                                       
MR.  URION explained  that most  of the  franchises are  separate                                                               
SENATOR  STEVENS  asked  if  he  had  figured  the  cost  to  the                                                               
department in any of his calculations.                                                                                          
SENATOR SEEKINS replied that he  had not; he thought the multiple                                                               
location approach would offset the  additional cost of the annual                                                               
renewal fee.                                                                                                                    
MR. URION  added if  they go  to an annual  license, the  law for                                                               
tobacco  endorsement  that  passed  a  few  years  ago  says  the                                                               
endorsement is good for the length  of the term of the license it                                                               
accompanies. An  annual license renewal would  automatically make                                                               
the tobacco  endorsement an annual  license, which is  $100. That                                                               
would generate an additional $125,600 per year for the state.                                                                   
CHAIR BUNDE asked  for Mr. Urion's thoughts on  adopting option 4                                                               
with $100 for 0 to 4 employees up to $100,000 gross.                                                                            
MR.  URION replied  that he  had been  around awhile  and was  in                                                               
business  when  Alaska  had  a  gross  business  tax.  People  in                                                               
business  today get  really upset  when  you talk  about a  gross                                                               
business  tax. He  noted, "That's  something  that doesn't  exist                                                               
There was a general discussion on the issues.                                                                                   
TAPE 03-20, SIDE B                                                                                                            
CHAIR BUNDE  said his concern  was about generating  less revenue                                                               
and he was seeking direction from the committee.                                                                                
SENATOR SEEKINS  responded in his  opinion, the  committee should                                                               
go with  $100 for the 0  to 4 annually  and a minimum of  $200 to                                                               
$300 for  the 5 to 19  and 20 plus requiring  individual licenses                                                               
with multiple locations, but he  thought they could get away with                                                               
$100, $300 and $500 without causing  undue harm and get closer to                                                               
some of the revenue goals.                                                                                                      
CHAIR BUNDE said they would hold the bill for further work and                                                                  
adjourned the meeting at 2:29 p.m.                                                                                              

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