Legislature(2003 - 2004)

04/29/2003 01:37 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 29, 2003                                                                                         
                           1:37 p.m.                                                                                            
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Senator Con Bunde, Chair                                                                                                        
Senator Ralph Seekins, Vice Chair                                                                                               
Senator Gary Stevens                                                                                                            
Senator Hollis French                                                                                                           
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Senator Bettye Davis                                                                                                            
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
CS FOR SENATE BILL NO. 114(L&C)                                                                                                 
"An Act  relating to the  fee for  a state business  license; and                                                               
providing for an effective date."                                                                                               
                                                                                                                                
     MOVED CSSB 114(L&C) OUT OF COMMITTEE                                                                                       
                                                                                                                                
SENATE BILL NO. 175                                                                                                             
"An Act  relating to civil liability  for commercial recreational                                                               
activities   and  for   guest  passengers   on  an   aircraft  or                                                               
watercraft; and providing for an effective date."                                                                               
                                                                                                                                
     MOVED CSSB 175(L&C) OUT OF COMMITTEE                                                                                       
                                                                                                                                
SENATE BILL NO. 176                                                                                                             
"An  Act  relating  to  civil liability  for  injuries  or  death                                                               
resulting from livestock activities."                                                                                           
                                                                                                                                
     MOVED SB 176 OUT OF COMMITTEE                                                                                              
                                                                                                                                
SENATE CS FOR CS FOR HOUSE BILL NO. 214(JUD)(efd fld S)                                                                         
"An Act relating  to the recovery of punitive  damages against an                                                               
employer who is  determined to be vicariously liable  for the act                                                               
or omission of an employee."                                                                                                    
                                                                                                                                
     HEARD AND HELD                                                                                                             
                                                                                                                                
CS FOR SPONSOR SUBSTITUTE FOR HOUSE BILL NO. 184(L&C) am                                                                        
"An Act relating to individual  deferred annuities; and providing                                                               
for an effective date."                                                                                                         
                                                                                                                                
     HEARD AND HELD                                                                                                             
                                                                                                                                
SENATE BILL NO. 102                                                                                                             
"An Act increasing the amount of revenue received by the state                                                                  
from charitable gaming activities; and providing for an                                                                         
effective date."                                                                                                                
                                                                                                                                
     HEARD AND HELD                                                                                                             
                                                                                                                                
PREVIOUS ACTION                                                                                                               
                                                                                                                              
SB 114 - See Labor and Commerce minutes dated 3/18/03, 4/10/03,                                                                 
4/15/03 and 4/24/03.                                                                                                            
                                                                                                                                
SB 175 - No previous action to consider.                                                                                        
                                                                                                                                
SB 176 - No previous action to consider.                                                                                        
                                                                                                                                
HB 214 - No previous action to consider.                                                                                        
                                                                                                                                
HB 184 - No previous action to consider.                                                                                        
                                                                                                                                
SB 102 - See Labor and Commerce minutes dated 3/13/03 and                                                                       
4/24/03.                                                                                                                        
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
Mr. Rick Urion, Director                                                                                                        
Division of Occupational Licensing                                                                                              
Department of Community & Economic Development                                                                                  
PO Box 110800                                                                                                                   
Juneau, AK 99811-0800                                                                                                           
POSITION STATEMENT: Supported the CS to SB 114(L&C).                                                                          
                                                                                                                                
Mr. Brian Hove                                                                                                                  
Staff to Senator Seekins                                                                                                        
Alaska State Capitol                                                                                                            
Juneau, AK  99801-1182                                                                                                          
POSITION STATEMENT: Commented on SB 175 for the sponsor.                                                                      
                                                                                                                                
Mr. Ron Peck, President                                                                                                         
Alaska Travel Industry Association                                                                                              
Juneau AK 99801                                                                                                                 
POSITION STATEMENT: Supported SB 175.                                                                                         
                                                                                                                                
Mr. Chris Vonimhof                                                                                                              
Alyeska Resort                                                                                                                  
Girdwood AK                                                                                                                     
POSITION STATEMENT: Supported SB 175.                                                                                         
                                                                                                                                
Mr. Steven Conn                                                                                                                 
Alaska Public Interest Research Group (AKPIRG)                                                                                  
PO Box 1690                                                                                                                     
Seward AK 99446                                                                                                                 
POSITION STATEMENT: Opposed SB 175 and commented on SB 176.                                                                   
                                                                                                                                
Mr. John George                                                                                                                 
3328 Fritz Cove Rd.                                                                                                             
Juneau AK 99801                                                                                                                 
POSITION STATEMENT: Supported SB 175.                                                                                         
                                                                                                                                
Mr. Bob Dindinger, Chairman                                                                                                     
Alaska Travel Industry Association &                                                                                            
President and CEO                                                                                                               
Alaska Travel Adventures                                                                                                        
9085 Glacier Hwy., No. 303                                                                                                      
Juneau AK 99801                                                                                                                 
POSITION STATEMENT:  Supported SB 175.                                                                                        
                                                                                                                                
Ms. Gabi Dominguez                                                                                                              
Tanana Whirlwinds 4H Club                                                                                                       
PO Box 10866                                                                                                                    
Fairbanks AK 99710                                                                                                              
POSITION STATEMENT: Supported SB 176.                                                                                         
                                                                                                                                
Mr. Ted Franke, Camp Director                                                                                                   
Camp Lila                                                                                                                       
PO Box 10434                                                                                                                    
Fairbanks AK 99710                                                                                                              
POSITION STATEMENT:  Supported SB 176.                                                                                        
                                                                                                                                
Ms. Lauren Wilfer                                                                                                               
Tanana Whirlwinds 4H Club                                                                                                       
PO Box 70192                                                                                                                    
Fairbanks AK 99707                                                                                                              
POSITION STATEMENT: Supported SB 176.                                                                                         
                                                                                                                                
Ms. Kate Sanders                                                                                                                
PO Box 80982                                                                                                                    
Fairbanks AK 99708                                                                                                              
POSITION STATEMENT: Supported SB 176.                                                                                         
                                                                                                                                
Ms. Beverly Nester, Associate Coordinator                                                                                       
Cowboy Mounted Action Shooters                                                                                                  
5465 Chena Hot springs Rd.                                                                                                      
Fairbanks AK 99712                                                                                                              
POSITION STATEMENT: Supported SB 176.                                                                                         
                                                                                                                                
Ms. Shirley Schollenberg,                                                                                                       
Kenai Peninsula Farm Bureau                                                                                                     
2014 Lake, Ste. 201                                                                                                             
Homer AK 99603                                                                                                                  
POSITION STATEMENT:  Supported SB 176.                                                                                        
                                                                                                                                
Mr. Matt Robus, Acting Director                                                                                                 
Division of Wildlife Management                                                                                                 
Department of Fish & Game                                                                                                       
PO Box 25526                                                                                                                    
Juneau, AK  99802-5226                                                                                                          
POSITION STATEMENT: Commented on SB 176.                                                                                      
                                                                                                                                
Mr. Jim Douglas                                                                                                                 
Cooperative Extension Service                                                                                                   
University of Alaska Fairbanks                                                                                                  
Juneau AK                                                                                                                       
POSITION STATEMENT: Supported SB 176.                                                                                         
                                                                                                                                
Ms. Jan Hanscom                                                                                                                 
4H leader                                                                                                                       
Tanana Valley                                                                                                                   
PO Box 72832                                                                                                                    
Fairbanks AK 99707                                                                                                              
POSITION STATEMENT: Supported SB 176.                                                                                         
                                                                                                                                
Ms. Marsha Davis, General Counsel                                                                                               
Era Aviation                                                                                                                    
POSITION STATEMENT: Supported HB 214.                                                                                         
                                                                                                                                
Ms. Pam LaBolle, President                                                                                                      
Alaska State Chamber of Commerce                                                                                                
217 Second Street                                                                                                               
Juneau, Alaska 99801                                                                                                            
POSITION STATEMENT: Supported HB 214.                                                                                         
                                                                                                                                
Ms. Jessica Graham, Chairman                                                                                                    
Anchorage Society of Human Resources Management                                                                                 
1029 W 3rd, Ste. 300                                                                                                            
Anchorage AK 99501                                                                                                              
POSITION STATEMENT: Supported HB 214.                                                                                         
                                                                                                                                
Representative Coghill                                                                                                          
Alaska State Capitol                                                                                                            
Juneau, AK  99801-1182                                                                                                          
POSITION STATEMENT: Sponsor of HB 184.                                                                                        
                                                                                                                                
Mr. Larry Persily, Deputy Commissioner                                                                                          
Department of Revenue                                                                                                           
PO Box 110400                                                                                                                   
Juneau, AK  99811-0400                                                                                                          
POSITION STATEMENT: Commented on SB 102.                                                                                      
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
TAPE 03-26, SIDE A                                                                                                            
                                                                                                                                
              SB 114-INCREASE BUSINESS LICENSE FEE                                                                          
                                                                                                                                
CHAIR CON  BUNDE called  the Senate  Labor and  Commerce Standing                                                             
Committee meeting  to order  at 1:37  p.m. Present  were SENATORS                                                               
STEVENS, SEEKINS and FRENCH. The Chair  announced SB 114 to be up                                                               
for consideration.                                                                                                              
                                                                                                                                
SENATOR  SEEKINS moved  to  adopt CSSB  114(L&C),  version I,  as                                                               
their working  document. There were  no objections and it  was so                                                               
ordered.                                                                                                                        
                                                                                                                                
CHAIR BUNDE explained that the  committee substitute (CS) deletes                                                               
the requirement for multiple licenses  for businesses in multiple                                                               
locations.                                                                                                                      
                                                                                                                                
MR.  RICK URION,  Director, Division  of Occupational  Licensing,                                                               
supported  the new  CS and  urged the  committee to  pass it  out                                                               
today.                                                                                                                          
                                                                                                                                
CHAIR BUNDE asked  him for an estimate of what  revenue this bill                                                               
would now generate.                                                                                                             
                                                                                                                                
MR. URION  replied that their  original estimate was  $77,000 for                                                               
multiple location licenses and that would be deleted.                                                                           
                                                                                                                                
CHAIR BUNDE noted that aside from  stores like Fred Meyer, SB 114                                                               
also included cab drivers and coffee carts on the other hand.                                                                   
                                                                                                                                
SENATOR FRENCH asked  if it is correct that the  CS now says that                                                               
Safeway  has to  have only  one  business license  for the  whole                                                               
state.                                                                                                                          
                                                                                                                                
MR. URION said that is correct.                                                                                                 
                                                                                                                                
SENATOR FRENCH  said it isn't as  if they are reducing  what they                                                               
have to pay now, and, in  fact, their fee is being increased from                                                               
$25 per year to $300.                                                                                                           
                                                                                                                                
SENATOR  SEEKINS  asked   if  Safeway  has  to   have  a  tobacco                                                               
endorsement for each store or for just the one license.                                                                         
                                                                                                                                
MR.  URION  replied  that  tobacco   endorsements  go  with  each                                                               
location.                                                                                                                       
                                                                                                                                
SENATOR  SEEKINS moved  to pass  CSSB 114(L&C),  version I,  from                                                               
committee  with individual  recommendations  and attached  fiscal                                                               
note.                                                                                                                           
                                                                                                                                
The roll was called. SENATORS  STEVENS, FRENCH, SEEKINS and BUNDE                                                               
voted yea and CSSB 114(L&C), version I, passed from committee.                                                                  
                                                                                                                                
          SB 175-LIABILITY:RECREATIONAL ACTIVITY/BOATS                                                                      
                                                                                                                                
CHAIR BUNDE announced SB 175 to be up for consideration.                                                                        
                                                                                                                                
MR.  BRAIN HOVE,  staff to  Senator Seekins,  sponsor, said  that                                                               
Alaska has many recreational opportunities,  but the high cost of                                                               
liability  insurance   is  a   significant  factor   to  existing                                                               
enterprises  that  offer  these  types  of  activities.  It  also                                                               
presents a  substantial barrier  to new  businesses, as  the vast                                                               
majority of existing  companies are small firms  based in Alaska.                                                               
SB  175   delineates  the  burden   of  responsibility   for  the                                                               
commercial recreation business, as well  as the person who elects                                                               
to participate in that activity.                                                                                                
                                                                                                                                
CHAIR  BUNDE  asked if  he  could  address  the concerns  of  Mr.                                                               
Richard  Dow  with  Alaska  Resorts and  Ms.  Tracy  Knutson,  an                                                               
attorney.                                                                                                                       
                                                                                                                                
MR.  HOVE replied  that those  concerns resulted  in the  current                                                               
committee substitute (CS).                                                                                                      
                                                                                                                                
SENATOR  SEEKINS moved  to  adopt  CSSB 175,  version  H, as  the                                                               
working  document.  There  were  no  objections  and  it  was  so                                                               
ordered.                                                                                                                        
                                                                                                                                
CHAIR BUNDE  asked Mr.  Hove if the  CS adequately  addressed the                                                               
concerns of Tracy Knutson and Richard Dow.                                                                                      
                                                                                                                                
MR. HOVE replied that it does.                                                                                                  
                                                                                                                                
MR.  RON PECK,  President,  Alaska  Travel Industry  Association,                                                               
said  the industry  has  been  working for  10  years to  improve                                                               
reform in recreational liability and supported SB 175.                                                                          
                                                                                                                                
MR. CHRIS  VONIMHOF, Alyeska  Resort, said he  had been  with the                                                               
Resort for  30 years and  when the ski liability  package passed,                                                               
it was a tremendous help to  their business. Safety is the key to                                                               
so many  sports and this  bill protects  both the client  and the                                                               
operator.                                                                                                                       
                                                                                                                                
MR. STEVE  CONN, Alaska Public Interest  Research Group (AkPIRG),                                                               
said  he is  currently a  resident  of Seward,  a community  that                                                               
depends on many of the  activities covered in this bill, although                                                               
he doesn't run a recreational  activity personally. He said there                                                               
seems  to be  a kind  of  fever running  through the  Legislature                                                               
where favored persons or businesses  are being immunized from all                                                               
forms of civil  liability. He hoped legislators  were prepared to                                                               
predict all situations,  because they are going back  in time and                                                               
recreating, through  the reintroduction of  an old horse  in tort                                                               
law, contributory negligence, an absolute  bar to lawsuits in all                                                               
situations -  ones involving foreign tourists,  elderly tourists,                                                               
ones involving  less reputable  operations that  come and  go. He                                                               
said that currently,  Alaska juries have a real  disdain for what                                                               
they view  as a  frivolous lawsuit.  He thought  a law  like this                                                               
would seriously  harm the  tourism industry  and create  very bad                                                               
publicity for Alaska's burgeoning recreation industry.                                                                          
                                                                                                                                
MR. JOHN GEORGE  said he was representing himself  today, not the                                                               
insurance industry. He knows how  difficult it is for the smaller                                                               
operators or anyone  who is doing anything  that isn't absolutely                                                               
mainstream  to get  insurance. He  thought this  bill would  go a                                                               
long way  to easing  that by providing  relief for  the insurance                                                               
industry.                                                                                                                       
                                                                                                                                
MR. BOB DINDINGER, Chairman,  Alaska Travel Industry Association,                                                               
said  he  is  also  the   President  and  CEO  of  Alaska  Travel                                                               
Adventures, the  state's largest provider of  guided recreational                                                               
activities handling just under 100,000  clients per year. He said                                                               
SB 175  would be very  beneficial to this  industry, particularly                                                               
to the smaller businesses. He said  it is always difficult to get                                                               
insurance in  this state and there  has never been more  than two                                                               
or three  underwriters for this  type of service. At  times there                                                               
has been  only one underwriter, which  led to a 50  percent to 60                                                               
percent rate  increase per  year. If  this bill  passes, clients,                                                               
many from out  of state, would still be able  to pursue frivolous                                                               
lawsuits and  they would still  be expensive to  defend. However,                                                               
this legislation  would help  get those  cases thrown  out before                                                               
companies have to undertake a great deal of expense.                                                                            
                                                                                                                                
MR. DINDINGER  explained that most  of the suits are  settled for                                                               
the deductible of the operator.  The insurance company never eats                                                               
a dime,  because it's very  common to have deductibles  of $5,000                                                               
to $10,000  per incident.  The first  thing an  insurance company                                                               
does is offer up the first  $5,000 to $10,000. At that point, his                                                               
company has  to defend  itself or  agree to  pay. This  bill will                                                               
solve a  lot of those frivolous  suits and he is  hopeful that it                                                               
encourages additional underwriters to enter the market.                                                                         
                                                                                                                                
SENATOR STEVENS asked if frivolous lawsuits happen regularly.                                                                   
                                                                                                                                
MR. DINDINGER replied  about one dozen per year, but  in 20 years                                                               
of business  his company has  never had to hospitalize  a client.                                                               
He has  had to pay  $50,000 to $100,000  this year in  defense of                                                               
those types of claims.                                                                                                          
                                                                                                                                
SENATOR STEVENS asked if this  bill would affect the out-of-state                                                               
lawsuits.                                                                                                                       
                                                                                                                                
MR. DINDINGER replied that it wouldn't.                                                                                         
                                                                                                                                
SENATOR  FRENCH  asked  how  this bill  would  not  immunize  his                                                               
company from poorly trained employees.                                                                                          
                                                                                                                                
MR.  DINDINGER replied  that it's  not mentioned  specifically in                                                               
the bill. To the extent  employees make mistakes, the business is                                                               
liable for those mistakes. Those  are errors, not inherent risks.                                                               
For example,  with river rafting,  his employees have to  take 10                                                               
trips down a river under instruction  before they can take a paid                                                               
client. There is a check-out  process as well, and those expenses                                                               
would  not  be  diminished  by  this bill.  It  is  in  his  best                                                               
interests  to have  very well  trained employees  and he  did not                                                               
think they  would put attorneys  out of business,  but litigation                                                               
will be reduced.  He has defended a lot of  rafting incidents and                                                               
never lost a case.                                                                                                              
                                                                                                                                
SENATOR  FRENCH asked  what  the differences  would  be from  the                                                               
common laws that exist now.                                                                                                     
                                                                                                                                
MR. DINDINGER replied that this  legislation will add clarity and                                                               
could  be sent  to  clients in  response to  the  first letter  a                                                               
company  receives in  which  the client  is  threatening to  file                                                               
suit. The  company could  also send  them a  copy of  the release                                                               
they signed  saying that  they are in  good condition  and accept                                                               
the inherent risks.                                                                                                             
                                                                                                                                
SENATOR FRENCH  asked if Ms.  Knutson has had the  opportunity to                                                               
look at the CS.                                                                                                                 
                                                                                                                                
SENATOR SEEKINS said he wasn't sure.                                                                                            
                                                                                                                                
CHAIR BUNDE said that he knew  that Mr. Vonimhof had reviewed the                                                               
CS and his concerns had been taken care of.                                                                                     
                                                                                                                                
SENATOR  SEEKINS noted  that  this bill  goes  to his  committee,                                                               
Judiciary, next  and he was  sure that Ms. Knutson  would contact                                                               
him if there were any concerns.                                                                                                 
                                                                                                                                
CHAIR BUNDE  noted that  there was  no fiscal  note, but  that he                                                               
assumed one would be forthcoming.                                                                                               
                                                                                                                                
SENATOR  SEEKINS said  that is  correct.  He moved  to pass  CSSB                                                               
175(L&C),   Version    H,   from   committee    with   individual                                                               
recommendations.  SENATORS  FRENCH,  SEEKINS, STEVENS  and  BUNDE                                                               
voted yea and it moved from committee.                                                                                          
                                                                                                                                
        SB 176-CIVIL LIABILITY FOR LIVESTOCK ACTIVITIES                                                                     
                                                                                                                                
CHAIR BUNDE announced SB 176 to be up for consideration.                                                                        
                                                                                                                                
MR. BRIAN  HOVE, staff to  Senator Seekins,  said that SB  176 is                                                               
largely  a  reincarnation  of  HB 111,  introduced  in  the  22nd                                                               
Legislature. It is  intended to give livestock  owners and others                                                               
associated  with  livestock  activities   a  certain  measure  of                                                               
protection  from frivolous  lawsuits. It  recognizes that  people                                                               
assume  some  degree  of  risk when  placing  themselves  in  the                                                               
vicinity  of livestock.  The livestock  owner, with  the best  of                                                               
intentions, cannot  completely prevent accidents  from happening.                                                               
SB  176 will  not  protect the  livestock owner  who  acts in  an                                                               
unreasonable manner, but  by reducing some of  the liability, the                                                               
expectation is  that this legislation  will create  an atmosphere                                                               
that will  encourage more  livestock activity.  This bill  is the                                                               
work of 4H  members statewide and 44 other  states currently have                                                               
similar legislation.                                                                                                            
                                                                                                                                
MS. GABI DOMINGUEZ, a livestock owner, supported SB 176.                                                                        
                                                                                                                                
MR. TED FRANKE,  Camp Director, Camp Leila, supported  SB 176. He                                                               
said Camp  Leila is a  non-profit organization and has  about 450                                                               
kids each summer and additional kids who come up to visit.                                                                      
                                                                                                                                
MS. LAUREN WILFER,  Tanana Whirlwinds 4H Club,  supported SB 176.                                                               
She has  fiends who have horses  and other animals. SB  176 would                                                               
help  her friend  who is  a riding  instructor at  the University                                                               
with  liability if  one of  her  students was  killed or  injured                                                               
accidentally. Anyone who accepts any  payment is not considered a                                                               
volunteer and isn't eligible for the University's insurance.                                                                    
                                                                                                                                
MS.  KATE  SANDERS   said  she  is  thinking   about  becoming  a                                                               
veterinarian and supported  SB 176. Right now, if  an owner helps                                                               
her hold  or restrain their  animal and  gets hurt, they  can sue                                                               
her. That is unfair. She also thought  it was a good idea for the                                                               
person  who owns  an animal  to do  the restraining,  because the                                                               
animal is more familiar with that person.                                                                                       
                                                                                                                                
MS. BEVERLY NESTER, Associate  Coordinator, Cowboy Mounted Action                                                               
Shooters,  said she  is  also  the founder  of  the Alaska  Trail                                                               
Riders  Association. She  has worked  with  horses, horsemen  and                                                               
private landowners  for over four  decades. She supported  SB 176                                                               
because  it would  add much  needed common  sense to  the lawsuit                                                               
crazed society we live in today.                                                                                                
                                                                                                                                
MS.  SHIRLEY   SCHOLLENBERG,  Secretary,  Kenai   Peninsula  Farm                                                               
Bureau, said  she had  been a  4H leader for  26 years  and gives                                                               
riding lessons  and does tours on  her farm. She said  the bureau                                                               
voted  to  support  the  bill.  She is  also  treasurer  for  the                                                               
Ninilchik  Fair  Association  and   this  bill  would  definitely                                                               
benefit fairs, since they are  continually dealing with liability                                                               
issues.                                                                                                                         
                                                                                                                                
MR. STEVE  CONN, AKPIRG, said there  are parts of this  bill that                                                               
AKPIRG very much supports.                                                                                                      
                                                                                                                                
TAPE 03-26, SIDE B                                                                                                            
                                                                                                                              
MR. CONN  continued to say  AKPIRG doesn't support some  parts of                                                               
it, for  example the  part that  lists rabbits,  hamsters, guinea                                                               
pigs, turkeys,  chickens, pheasants, peafowls, pigeons  and ducks                                                               
as inherently dangerous and unpredictable livestock.                                                                            
                                                                                                                                
He  said  this  immunizing  bill   stretches  the  definition  of                                                               
livestock and  the reach  of individuals  pretty far.  He pointed                                                               
out  that the  conclusion on  page  3, lines  16 -  20, does  not                                                               
affect  a  civil action  resulting  from  what  may be  the  core                                                               
problem,  which  is when  a  participant  who provides  livestock                                                               
makes a  reasonable and prudent  effort to determine  the ability                                                               
of someone  to safely manage  the livestock activity.  He thought                                                               
this bill might not be as strong as the 4H folks think it is.                                                                   
                                                                                                                                
MR.   MATT  ROBUS,   Acting   Director,   Division  of   Wildlife                                                               
Conservation, pointed out the definition  of livestock on page 4,                                                               
line 19, includes  caribou and they are,  by definition elsewhere                                                               
in  statute, a  game animal  and not  a domestic  animal. Caribou                                                               
cannot be  owned by a  person and can  only be possessed  under a                                                               
permit  from  the department.  Therefore,  a  caribou is  not  an                                                               
appropriate  animal  for the  list.  The  domestic form  of  that                                                               
species is  reindeer, which  is on  the list.  Furthermore, there                                                               
are  three  species   that  can  legally  be   owned  under  some                                                               
circumstances  that would  otherwise be  game animals.  Those are                                                               
bison,  musk ox  and elk.  Wild populations  are managed  as game                                                               
animals, but if  a person has a  bill of sale that  is proof that                                                               
they are  owned as  domestic animals. He  suggested that  for the                                                               
purposes  of   this  definition  of  livestock,   it  be  clearly                                                               
indicated  that the  bill only  addresses the  domestic forms  of                                                               
those species.                                                                                                                  
                                                                                                                                
Finally,  Mr.  Robus suggested  regarding  the  word "duck"  that                                                               
there are other water fowl that  are owned and shown as livestock                                                               
under these conditions. He suggested  removing "duck" and, at the                                                               
end of the  list, after "alpaca," inserting  "waterfowl for which                                                               
a  permit  from  the  U.S.  Fish  and  Wildlife  Service  is  not                                                               
required".                                                                                                                      
                                                                                                                                
SENATOR SEEKINS said he would work  on language with Mr. Robus to                                                               
make sure the bill protects the people they intend to protect.                                                                  
                                                                                                                                
MR. JIM  DOUGLAS, Cooperative Extension  Service, UAF,  said this                                                               
bill is an  attempt by the Cooperative Extension  Service and the                                                               
4H program  to try to get  kids to understand the  process of law                                                               
by choosing a  pertinent issue and finding out what  happens to a                                                               
bill. They do  not have litigious folks in their  group, but they                                                               
certainly have  litigious insurance  companies that tend  to look                                                               
at the  University and property  owners as deep pockets.  He said                                                               
an excellent example is an  incident that occurred last year when                                                               
four new  horses were in  a judging activity and  someone slapped                                                               
one of them and was seriously  stepped on. In that situation, one                                                               
might question whether the person  should have been that close to                                                               
the horses in the first place,  even though he was just trying to                                                               
help out. The bill is designed for people to use common sense.                                                                  
                                                                                                                                
SENATOR  FRENCH  said that  kids  like  to pet  attractive  furry                                                               
animals. He questioned why an  owner wouldn't put a screen around                                                               
such an animal so that a child doesn't get his fingers bit.                                                                     
                                                                                                                                
MR. DOUGLAS  replied that the  fair provides the cages,  but it's                                                               
difficult to find a screen  with holes that small. Domestic cages                                                               
have about  a half-inch  space and  it does  take some  amount of                                                               
force to get a child's fingers  through them, but some kids still                                                               
try - even with warning signs and moving the cages back.                                                                        
                                                                                                                                
SENATOR FRENCH asked if anyone he  knew had been sued under these                                                               
circumstances aside from the owner of the horse who was slapped.                                                                
                                                                                                                                
MR.  DOUGLAS replied  no,  he has  not  seen a  lot  of suits  in                                                               
Alaska, but fellow extension agents  around the West are starting                                                               
to see them. He thought Alaskans had a little tougher mentality.                                                                
                                                                                                                                
SENATOR  FRENCH  had  some  hesitance  about  this  bill  because                                                               
individual responsibility could go both ways.                                                                                   
                                                                                                                                
MR.  DOUGLAS responded  that the  bill says  gross negligence  as                                                               
opposed to just negligence.                                                                                                     
                                                                                                                                
MS. JAN HANSCOM, 4H leader  in the Tanana Valley, favored keeping                                                               
small  animals like  chickens and  guinea pigs  in the  bill. She                                                               
said they  are very well behaved,  but they do bite  because kids                                                               
pull their hair and ears.                                                                                                       
                                                                                                                                
SENATOR  SEEKINS  moved  to  pass  SB  176  from  committee  with                                                               
individual recommendations.                                                                                                     
                                                                                                                                
The roll was called. SENATORS  STEVENS, FRENCH, SEEKINS and BUNDE                                                               
voted yea and SB 176 moved from committee.                                                                                      
                                                                                                                                
        CSHB 214(JUD)-PUNITIVE DAMAGES AGAINST EMPLOYERS                                                                    
                                                                                                                                
CHAIR BUNDE announced CSHB 214(JUD) to be up for consideration.                                                                 
                                                                                                                                
REPRESENTATIVE RALPH SAMUELS,  sponsor of HB 214,  said this bill                                                               
adds a section to the  punitive damages statute that would create                                                               
a  guideline  for damages  against  an  employer under  vicarious                                                               
liability.  It   stipulates  that   an  employer  shall   not  be                                                               
responsible  for  paying  punitive damages  unless  the  employer                                                               
okays the  act or knew about  it later or that  the employer knew                                                               
the  employee  to be  unfit  and  recklessly employed  them.  One                                                               
example would be a construction  company owner that requires drug                                                               
testing and training and specifically  tells his employee that he                                                               
cannot drive the  forklift or truck because the  employee has not                                                               
been trained.  If the  employee does so  anyway and  someone gets                                                               
injured,  then  the company  should  still  be  on the  hook  for                                                               
compensatory damages to  pay for the pain and  suffering, but the                                                               
company  should not  be  punished  if it  has  not done  anything                                                               
wrong.  Their policies  would  not be  changed  and the  punitive                                                               
damage factor should not apply.                                                                                                 
                                                                                                                                
REPRESENTATIVE SAMUELS  explained that  the bill does  not affect                                                               
any portion of  the law with respect to direct  liability. If the                                                               
company,  itself, does  something  wrong, the  current law  would                                                               
apply and  this does nothing to  change that. It does  not affect                                                               
the ability  of the  plaintiff to  get compensatory  damages. The                                                               
language came  almost word for  word from a restatement  of tort,                                                               
which is  an amalgamation  of case law  from across  the country.                                                               
The standard also  comes from the Laidlaw Case,  heard before the                                                               
Supreme Court, which  commented if this had been brought  up at a                                                               
trial, it  would have  ruled with  language that  is in  the case                                                               
right now.                                                                                                                      
                                                                                                                                
MR. STEVEN CONN,  AkPIRG, cautioned against passage  of this bill                                                               
because  although a  small  employer  would deserve  immunization                                                               
from punitive damages  in that particular instance,  the only way                                                               
to  motivate  larger  corporations   is  with  punitive  damages.                                                               
Hopefully, a message will be sent  to big companies to tighten up                                                               
and improve their  hiring and training practices.  He opposed the                                                               
bill for its broad reach and asked them to trust civil juries.                                                                  
                                                                                                                                
MS. MARSHA DAVIS,  General Counsel, Era Aviation,  said the Exxon                                                               
Valdez punitive damages issue had  been raised in the House Labor                                                               
and  Commerce committee  and the  actual issues  had been  pretty                                                               
well clarified there. The $5  billion in punitive damages that is                                                               
being batted  around in court  right now was a  direct assessment                                                               
against Exxon,  therefore this  bill would  not touch  that. This                                                               
bill  does  not  affect  employers' direct  liability  for  their                                                               
compensatory damages or direct liability.  What would be at stake                                                               
would  be  the  $5,000  in punitive  damages  that  was  assessed                                                               
against  Mr.  Hazelwood  and  the question  is  would  Exxon,  in                                                               
addition, be  vicariously liable  for that  $5,000. The  issue of                                                               
big versus small is also a red herring. She told members:                                                                       
                                                                                                                                
     The size of the employer  isn't the issue; it's whether                                                                    
     or not an  employer should be held  strictly liable for                                                                    
     punitive  damages  assessed   against  their  employee.                                                                    
     While the  punitive damages are intended  to motivate a                                                                    
     change  in  behavior, then  it  does  no good  to  make                                                                    
     strict  liability, because  you  have disconnected  the                                                                    
     employer's  behavior from  the liability  outcome. Only                                                                    
     where the  employer's behavior  affects the  outcome of                                                                    
     that liability  do you have a  motivation. For example,                                                                    
     at  Era Aviation,  we do  our  best to  make sure  that                                                                    
     employees  are  screened  for drug  and  alcohol  usage                                                                    
     problems. We do drug and  alcohol testing on a pre-hire                                                                    
     basis.  We   do  required  random  testing   at  a  set                                                                    
     percentage established by the  FAA regulations. We also                                                                    
     have a right  to do for cause drug  and alcohol testing                                                                    
     anywhere  we have  suspicions of  abuse.  We do  annual                                                                    
     training of  all supervisors to  spot drug  and alcohol                                                                    
     problem  usage   amongst  employees  so  that   we  can                                                                    
     activate our for cause program.                                                                                            
                                                                                                                                
     Yet, we  had a  situation several  years back  where an                                                                    
     employee  stopped at  their lunch  break,  drank a  few                                                                    
     beers, drove the  company van and hit  a motorcycle. If                                                                    
     there's strict liability for  the punitive damages that                                                                    
     would  be  assessed  against  our  employee,  what,  if                                                                    
     anything, could  Era have done differently?  The answer                                                                    
     is nothing.  So, in that  instance, where Era  does not                                                                    
     have a  fault, has not  done something wrong,  it makes                                                                    
     no  sense  to  make   us  vicariously  liable  for  the                                                                    
     punitive  damages assessed  an  employee  who may  have                                                                    
     acted   outrageously   or   recklessly.   Rather,   the                                                                    
     standards set out in this  bill are totally reasonable.                                                                    
     They  have   been  tested  and  tried   throughout  the                                                                    
     nation...We  strongly support  the  bill and  encourage                                                                    
     its passage.                                                                                                               
                                                                                                                                
MS.  PAM LABOLLE,  President, Alaska  State Chamber  of Commerce,                                                               
stated support for fairness in  the civil justice system and said                                                               
CSHB  214(JUD)   brings  a  greater  degree  of fairness  to  the                                                               
system. Punitive  damages are intended to  punish wrongdoers, who                                                               
through  outrageous conduct  and acts  of malice  or indifference                                                               
have harmed or  caused loss to another. To  hold employers liable                                                               
for  punitive  damages when  their  acts  have  no affect  on  an                                                               
employee's behavior  is not what  punitive damages  were intended                                                               
for.                                                                                                                            
                                                                                                                                
MS.  JESSICA   GRAHAM,  Anchorage  Society  of   Human  Resources                                                               
Management, said she  is also an employment  lawyer. She strongly                                                               
seconded  Marsha Davis's  comments  and added  that  in the  last                                                               
several years when she has  been litigating employment cases, she                                                               
has  not seen  a  complaint that  has not  included  a claim  for                                                               
punitive damages. She  feels this is a feather in  the cap of the                                                               
plaintiff's bar  that they regularly  use to up the  ante against                                                               
employers.  It increases  the cost  for litigation  regardless of                                                               
whether the claim actually has any merit or not. She commented:                                                                 
                                                                                                                                
     Secondly, in  the greater scheme  of things,  under the                                                                    
     current system, if an employer  is held strictly liable                                                                    
     for the  actions of an employee,  regardless of whether                                                                    
     the employer did anything to  encourage it or benefited                                                                    
     in any way, what happens at  the end of the day is that                                                                    
     the employer can  pay out an enormous sum  of money and                                                                    
     do  enormous  damage  to   their  ability  to  continue                                                                    
     business while the employee, who  actually did the harm                                                                    
     probably gets fired, walks  off essentially scott free,                                                                    
     goes  and gets  another  job at  a different  employer,                                                                    
     does not disclose  where he previously works  and a new                                                                    
     employer is going to be  ultimately responsible for the                                                                    
     same kind of  conduct that can happen  again and again.                                                                    
     In the  general spirit of Alaska  independence you want                                                                    
     to put the  responsibility where it lies and  put it on                                                                    
     the   individuals  who   are  doing   these  kinds   of                                                                    
     activities that  give rise  to these  punitive damages.                                                                    
     If you want to stop  the conduct, tell the employee who                                                                    
     sexually  harasses someone  that  they  will hold  them                                                                    
     personally  liable  rather  than tagging  that  on  the                                                                    
     employer who has otherwise done everything right.                                                                          
                                                                                                                                
SENATOR  FRENCH  said he  heard  her  and others  mention  strict                                                               
liability with respect to assigning  fault to an employer for the                                                               
acts of their  employees and asked what cases in  Alaska have set                                                               
forth that standard.                                                                                                            
                                                                                                                                
MS.  DAVIS replied  in 1986  the Alaska  Supreme Court  initially                                                               
enunciated the  standard that is  called the Scope  of Employment                                                               
Rule for  liability for punitive  damages in the  Alaskan Village                                                               
versus  Spaulding  case. That  case  was  over  a dogfight  in  a                                                               
trailer court and was later cited  by the Alaska Supreme Court in                                                               
the  Laidlaw case  and  others  as the  standard  in Alaska.  She                                                               
continued:                                                                                                                      
                                                                                                                                
     Essentially the  public employment rule as  the Supreme                                                                    
     Court enunciated it is if  an employee is acting within                                                                    
     the scope  of their employment  at the time  the injury                                                                    
     or damage  is incurred  and the jury  assesses punitive                                                                    
     damages  against that  employee, the  employer will  be                                                                    
     vicariously  liable for  those damages  the same  as it                                                                    
     would be for the comparative or the standard damages.                                                                      
                                                                                                                                
     That  stands  in  contrast to  the  restatement,  which                                                                    
     essentially sets out a set  of four criteria that needs                                                                    
     to be met  before an employer could be  held liable for                                                                    
     those punitive damages.                                                                                                    
                                                                                                                                
SENATOR  FRENCH asked  if  that  is what  she  would call  strict                                                               
liability.                                                                                                                      
                                                                                                                                
MS. DAVIS replied  that it's strict liability if  you assume that                                                               
acting  within the  scope of  employment is  a given  on both  of                                                               
those standards. For  instance, the employee was  hired to drive,                                                               
and while the employee wasn't  hired to drive drunk, the employee                                                               
was doing  something in furtherance  of the employer's  conduct -                                                               
as opposed  to them employee  driving the company vehicle  on his                                                               
own time  at night to a  bar when the vehicle  wasn't supposed to                                                               
be used.                                                                                                                        
                                                                                                                                
CHAIR BUNDE  asked if  the legal arguments  could be  deferred to                                                               
the   Judiciary  Committee.   Representative  Samuels   indicated                                                               
concurrence and the Chair set HB 214 aside.                                                                                     
                                                                                                                                
        CSSSHB 184(L&C)am-INDIVIDUAL DEFERRED ANNUITIES                                                                     
                                                                                                                                
CHAIR   BUNDE  announced   CSSSHB   184(L&C)am  to   be  up   for                                                               
consideration.                                                                                                                  
                                                                                                                                
REPRESENTATIVE  COGHILL, sponsor,  said the  National Association                                                               
of  Insurance Commissioners  (NAIC)  made  a recommendation  with                                                               
regard  to minimum  values of  annuity contracts.  Currently, the                                                               
minimum  amount is  set in  statute. HB  184 deals  with deferred                                                               
annuities and has an effective date.  It started out on a minimum                                                               
non-forfeiture amount  of 3 percent.  However, the NAIC  does not                                                               
think  that  can continue  and  has  asked  to have  the  statute                                                               
changed  from 3  percent to  1.5 percent.  In addition,  the NAIC                                                               
wants to bring in  an index system and faxed him  copies of it as                                                               
he introduced the  bill. Although he is still  learning about the                                                               
index  system, he  explained  that it  basically  allows for  the                                                               
reasons for the variable indexing.  Page 2, subsection 2 contains                                                               
what they  will need to study  the most - the  interest rate used                                                               
to determine  the minimum non-forfeiture  amount. The  NAIC wants                                                               
to halve the cap  of 3 percent and on line 8, and  tie it to a 5-                                                               
year constant  maturity treasury, an  index that the  NAIC agreed                                                               
would always be there and could be discovered readily every day.                                                                
                                                                                                                                
Subsection (c) is  the floor, which is a  resulting interest rate                                                               
of  not less  than  1  percent. This  protects  the company  from                                                               
collapsing under  a payout it  can't sustain and it  protects the                                                               
customer who wants  to get money out under  a non-forfeiture from                                                               
costing more than it's worth.                                                                                                   
                                                                                                                                
REPRESENTATIVE  COGHILL said  the Division  of Insurance  and the                                                               
National  Association  of  Insurance Commissioners  endorse  this                                                               
bill. Fourteen other states have already made this change.                                                                      
                                                                                                                                
CHAIR BUNDE  said it would  be nice  to have a  win-win situation                                                               
and that  he looked  forward to  working with  him on  this issue                                                               
next week.                                                                                                                      
                                                                                                                                
3:00 - 3:06 p.m. - at ease                                                                                                      
                                                                                                                                
             SB 102-CHARITABLE GAMING REVENUE/TAXES                                                                         
                                                                                                                              
CHAIR BUNDE announced SB 102 to  be up for consideration. He told                                                               
members he wanted  to put something together that  would work and                                                               
move it from  committee today so that it has  some possibility of                                                               
being discussed  at another  level. He noted  that some  folks in                                                               
the pulltab industry in Fairbanks have  found a way to cancel any                                                               
communication with  his office by  sending out epistles  like the                                                               
one he had before him.                                                                                                          
                                                                                                                                
CHAIR BUNDE  said there was concern  that a surety bond  might be                                                               
difficult to get at any level  in this industry so he wanted that                                                               
deleted.                                                                                                                        
                                                                                                                                
He said  the other issue  was the amount  of tax and  Mr. Persily                                                               
had provided them with a  comparison of the different returns. He                                                               
said they  had already turned  down the  8 percent of  gross that                                                               
would have generated $24 million  in taxes. The current committee                                                               
substitute  (CS)  suggests  5  percent   of  gross,  which  would                                                               
generate  $15 million  in taxes.  Industry doesn't  like it,  but                                                               
feels  it  could  live  with  3 percent  of  gross,  which  would                                                               
generate $9 million in taxes.                                                                                                   
                                                                                                                                
SENATOR SEEKINS  asked Mr. Persily  if he believes  any operators                                                               
in the state could  be out of compliance in the  way they pay out                                                               
to either their charities or their taxes and to what extent.                                                                    
                                                                                                                                
MR. PERSILY replied if charities  are out of compliance when they                                                               
renew  their licenses,  they are  given the  opportunity to  come                                                               
into  compliance. If  they don't,  their permits  are yanked.  He                                                               
wasn't aware  of any charities  that are currently  operating out                                                               
of  compliance,  but  he  did  know  of  some  who  were  out  of                                                               
compliance that are no longer gaming.                                                                                           
                                                                                                                                
SENATOR  SEEKINS  asked  what  number   he  figured  the  various                                                               
percentages of the gross against.                                                                                               
                                                                                                                                
MR. PERSILY  replied those numbers  were based on  the assumption                                                               
that  the total  gross  receipts  to gaming  do  not change.  The                                                               
people in gaming  would have to change their prizes  or deal with                                                               
expenses in order to come up with extra money for taxes.                                                                        
                                                                                                                                
SENATOR  SEEKINS  asked if  he  could  think  of any  reason  the                                                               
committee should  base the tax on  the ideal net rather  than the                                                               
gross.                                                                                                                          
                                                                                                                                
MR.  PERSILY replied  that from  the charities'  perspective, the                                                               
ideal  net is  more  realistic  as that  is  what  is left  after                                                               
prizes. The Governor's  proposal is based on gross,  so the state                                                               
would take a percentage of  the total amount of gaming regardless                                                               
of  how much  charities  choose  to pay  out  in  prizes. From  a                                                               
charity's perspective,  he assumed a tax  on net would be  a more                                                               
reasonable basis.                                                                                                               
                                                                                                                                
CHAIR  BUNDE said  according to  figures from  the Department  of                                                               
Revenue, a 3 percent tax on gross  would be equal to a 15 percent                                                               
tax on the ideal net; 4 percent  would be 18 percent of the ideal                                                               
net;  and 5  percent would  be 20  percent of  the ideal  net. He                                                               
thought  that 5  percent would  be closer  to 25  percent of  the                                                               
ideal net and asked why he was confused.                                                                                        
                                                                                                                                
MR.  PERSILY  replied  that  the   department  doesn't  know  how                                                               
changing  the tax  rate would  affect prizes  or expenses  and he                                                               
felt  these  figures are  close  enough  for the  discussion.  He                                                               
clarified  that  currently,  the  department takes  in  about  $2                                                               
million per year in charitable  gaming proceeds and these numbers                                                               
are not in addition to that, but a total.                                                                                       
                                                                                                                                
CHAIR BUNDE pointed  out that the CS refers to  25 percent of the                                                               
ideal net.  He suggested  that they  have three  options -  to go                                                               
with the CS that  has the 25 percent of the  ideal net, to change                                                               
the amount of  the ideal net, or  they can allow the  bill to die                                                               
in committee. However, this was the  last day he wanted to invest                                                               
time in it.                                                                                                                     
                                                                                                                                
SENATOR  SEEKINS said  he was  wondering if  there was  a formula                                                               
somewhere in the net that would make the equation work.                                                                         
                                                                                                                                
TAPE 03-27, SIDE A                                                                                                            
                                                                                                                              
SENATOR SEEKINS  asked how  much of  the net  charities currently                                                               
take.                                                                                                                           
                                                                                                                                
Someone replied 30 percent.                                                                                                     
                                                                                                                                
SENATOR SEEKINS said  the Governor was trying to  get 35 percent,                                                               
which would  leave 65 percent of  the ideal net for  the operator                                                               
and expenses  or for the charity  if they were running  their own                                                               
operation. He wondered if that is  how they should consider it if                                                               
they are  going to try  to roll  the Governor's numbers  into the                                                               
equation.                                                                                                                       
                                                                                                                                
MR. PERSILY  responded that the Governor's  bill proposed setting                                                               
in statute  a limit on the  prize payout, because they  are now a                                                               
little  more than  $60  million. However,  if  the charities  are                                                               
going to pay  a higher tax bill,  they are going to  have to take                                                               
it out of their own pockets or  out of the pockets of the players                                                               
by reducing  the prize payout.  Without limiting the size  of the                                                               
payout, it  would be hard  to guesstimate what would  happen with                                                               
the volume of gaming.                                                                                                           
                                                                                                                                
CHAIR  BUNDE  reminded  them  that  the  committee  rejected  the                                                               
Governor's  latest proposal  of 8  percent of  the gross,  plus a                                                               
limit of  68 percent on  prize payout. He noted  information from                                                               
Mary Magnuson that indicates that  the volume of gaming went down                                                               
in other states when they were too restrictive.                                                                                 
                                                                                                                                
SENATOR FRENCH asked  Mr. Persily to comment on section  5 of the                                                               
CS, which removes  a borough's ability to collect a  sales tax on                                                               
pulltabs. He asked if he knew  how much Juneau, or any other city                                                               
that  levies a  sales tax  on pulltabs,  is taking  in right  now                                                               
through the tax.                                                                                                                
                                                                                                                                
MR.  PERSILY  replied  that  Juneau  is  the  largest  city  that                                                               
assesses  a  sales  tax  on   pulltabs  and  he  believes  it  is                                                               
collecting about $400,000 to $500,000 per year.                                                                                 
                                                                                                                                
CHAIR BUNDE  said that is  what the city  is owed, but  he didn't                                                               
think Juneau had collected all of that.                                                                                         
                                                                                                                                
SENATOR  FRENCH  said he  didn't  know  about other  cities  like                                                               
Sitka,  Ketchikan, Wrangell  and Kenai  where they  have a  sales                                                               
tax, as well.                                                                                                                   
                                                                                                                                
CHAIR BUNDE replied that his  understanding is that Juneau is the                                                               
only major city where the sales tax applies to pulltabs.                                                                        
                                                                                                                                
MR. PERSILY  added that was  his understanding as well,  and that                                                               
Juneau charges  it on the gross,  so that when a  player comes in                                                               
and has $5, but wins and  keeps playing pulltabs, he may play $20                                                               
worth of pulltabs  for the $5 investment. Under  the Juneau sales                                                               
tax  code, Juneau  wants  5 percent  of the  $20,  a much  higher                                                               
percent of the actual cash that  was played at the table. This is                                                               
certainly the problem from the charity's perspective.                                                                           
                                                                                                                                
SENATOR  FRENCH   said  that  he   was  just   given  information                                                               
indicating  that Palmer  does 3  percent of  the gross,  Kotzebue                                                               
does 6  percent of the  gross, North Pole  does 3 percent  of the                                                               
gross and Wasilla does 2.5 percent of the ideal net.                                                                            
                                                                                                                                
CHAIR BUNDE said  one of his arguments is  that Juneau's industry                                                               
continues even though charities are  paying the state tax and the                                                               
local  sales tax,  which  would, in  his mind,  come  close to  5                                                               
percent of  the gross. He  has heard  some feedback that  if this                                                               
legislation was 15  percent of the ideal net or  3 percent of the                                                               
gross, it would  raise the revenue to about $9  million and might                                                               
have some negative impact on  marginal operations, but it appears                                                               
that many people in the industry  could survive the shake out and                                                               
become more efficient.                                                                                                          
                                                                                                                                
SENATOR FRENCH  said he  feels like he  has barely  scratched the                                                               
surface of this issue and that  Senator Seekins has learned a lot                                                               
about  it. He  offered  to serve  with any  other  members on  an                                                               
interim committee to figure out how to make some needed reforms.                                                                
                                                                                                                                
SENATOR  STEVENS said  he appreciated  Senator French's  comments                                                               
and said  he wasn't  ready to  make any  decisions. He  asked the                                                               
Chair if he considered working on SB 102 in the interim.                                                                        
                                                                                                                                
CHAIR  BUNDE replied  that  he didn't  ever want  to  work on  it                                                               
again, being the charitable gaming guru  that he is, but he would                                                               
bring it up again if that was the wish of the committee.                                                                        
                                                                                                                                
SENATOR  SEEKINS said  it  seem  this issue  boils  down to  four                                                               
things.  The  first is  the  tax  issue  and  the fact  that  the                                                               
Governor wants  to get a  larger portion of gambling  revenue for                                                               
the state  in a manner  that doesn't harm the  beneficiaries. The                                                               
question is  what pot of  money they  are looking at.  He thought                                                               
the committee  needs to  look at  the ideal  net and  then decide                                                               
what percentages goes to whom.                                                                                                  
                                                                                                                                
He  said the  second issue  seems  to be  the size  of the  prize                                                               
payout and how to change  that without reducing the incentive for                                                               
people  to  gamble.  He thought  the  committee  could  establish                                                               
target ranges. The  third and fourth issues relate  to the sphere                                                               
of operation.  He questioned whether  it is  right to be  able to                                                               
raise  money  for  a  Little League  baseball  team  by  allowing                                                               
someone hundreds of miles away to  have a gambling operation in a                                                               
community not  connected to  the license holder  in any  way. The                                                               
fourth issue is who can participate.  There is a certain size pie                                                               
and as more groups qualify, they  flood the pie and everyone gets                                                               
a smaller piece - the  competition gets fiercer, which could lead                                                               
to abuses.                                                                                                                      
                                                                                                                                
SENATOR SEEKINS  reasoned if the  Governor wants more  money this                                                               
year,  the committee  should focus  on the  first two  issues. If                                                               
they  want to  look farther,  and  he thought  they should,  they                                                               
would have to look at the other questions.                                                                                      
                                                                                                                                
CHAIR BUNDE  noted a youth  sports organization in  Fairbanks has                                                               
benefited  from charitable  gaming and  it has  been able  to set                                                               
aside a nest egg of $2 million.                                                                                                 
                                                                                                                                
SENATOR  SEEKINS  said  Senator  Wilken sits  on  that  Board  of                                                               
Directors and  it's very well known  that group has done  a great                                                               
job. He related  they helped get wheelchair ramps  for his wife's                                                               
disabled handicapped  riding program so  that the kids  could get                                                               
up beside the horse.                                                                                                            
                                                                                                                                
CHAIR BUNDE asked Mr. Persily  how much money the state currently                                                               
brings in from pulltabs.                                                                                                        
                                                                                                                                
MR. PERSILY  replied that it  was slightly more than  $60 million                                                               
in calendar year 2001 and the state's take was a couple million.                                                                
                                                                                                                                
CHAIR BUNDE  asked how much  the Governor's original  proposal to                                                               
make the  tax 25 percent  of the  ideal net would  have increased                                                               
the taxable income.                                                                                                             
                                                                                                                                
MR. PERSILY  replied that it  would change the state's  take from                                                               
$2 million to $14.5 million.                                                                                                    
                                                                                                                                
CHAIR  BUNDE pointed  out if  the legislature  does nothing,  the                                                               
administration  will ask  for reductions  elsewhere  to fill  the                                                               
$10.5  million hole  to limit  the CBR  draw. If  the legislature                                                               
does nothing, it will need to  look for another $10.5 million. He                                                               
asked if Senators  Seekins, French and Stevens wanted  to look at                                                               
potential short-range solutions this  year or form a subcommittee                                                               
over the interim and come back with recommendations.                                                                            
                                                                                                                                
SENATOR SEEKINS said if the state  is going to allow gambling and                                                               
the intent is to do something  for charities, they have to make a                                                               
comprehensive review  of this  whole matter. He  said he  is more                                                               
than  willing to  work on  the matter  over the  summer with  the                                                               
understanding  that  the  subcommittee  would  be  undertaking  a                                                               
comprehensive review.                                                                                                           
                                                                                                                                
SENATOR  STEVENS also  thought the  issue needed  a comprehensive                                                               
review.                                                                                                                         
                                                                                                                                
SENATOR FRENCH said he would participate as well.                                                                               
                                                                                                                                
CHAIR BUNDE  appointed them to  a subcommittee and said  he hoped                                                               
to have a report from them by January at the latest.                                                                            
                                                                                                                                
CHAIR BUNDE adjourned the meeting at 3:35 p.m.                                                                                  
                                                                                                                              

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