Legislature(2003 - 2004)

03/25/2004 01:43 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                                                                        
                         March 25, 2004                                                                                         
                           1:43 p.m.                                                                                            
TAPE(S) 04-26, 27                                                                                                             
MEMBERS PRESENT                                                                                                               
Senator Con Bunde, Chair                                                                                                        
Senator Ralph Seekins, Vice Chair                                                                                               
Senator Gary Stevens                                                                                                            
Senator Bettye Davis                                                                                                            
Senator Hollis French                                                                                                           
MEMBERS ABSENT                                                                                                                
All members present                                                                                                             
COMMITTEE CALENDAR                                                                                                            
SENATE BILL NO. 337                                                                                                             
"An Act relating to the powers  of the Alaska Energy Authority to                                                               
make grants and  loans and enter into contracts;  relating to the                                                               
bulk  fuel revolving  loan fund;  relating to  the Alaska  Energy                                                               
Authority's liability  for the provision of  technical assistance                                                               
to  rural utilities;  relating to  the Alaska  Energy Authority's                                                               
investment  of   the  power   development  fund;   repealing  the                                                               
electrical  service   extension  fund;   and  providing   for  an                                                               
effective date."                                                                                                                
     MOVED CSSB 337(L&C) OUT OF COMMITTEE                                                                                       
CS FOR HOUSE BILL NO. 285(JUD)                                                                                                  
"An  Act  adopting  the   Uniform  Electronic  Transactions  Act;                                                               
repealing  certain statutes  relating to  electronic records  and                                                               
electronic  signatures;  amending  Rule   402,  Alaska  Rules  of                                                               
Evidence; and providing for an effective date."                                                                                 
     MOVED CSHB 285(JUD) OUT OF COMMITTEE                                                                                       
CS FOR HOUSE BILL NO. 15(FIN) am                                                                                                
"An   Act  relating   to  fair   trade  practices   and  consumer                                                               
protection,   to    telephone   solicitations,    to   charitable                                                               
solicitations; and providing for an effective date."                                                                            
     HEARD AND HELD                                                                                                             
SENATE BILL NO. 368                                                                                                             
"An Act  relating to  taxes on  cigarettes and  tobacco products;                                                               
relating to tax  stamps on cigarettes; relating  to forfeiture of                                                               
cigarettes   and   of   property   used   in   the   manufacture,                                                               
transportation,  or sale  of  unstamped  cigarettes; relating  to                                                               
licenses  and   licensees  under  the  Cigarette   Tax  Act;  and                                                               
providing for an effective date."                                                                                               
     MOVED SB 368 OUT OF COMMITTEE                                                                                              
PREVIOUS COMMITTEE ACTION                                                                                                     
BILL: SB 337                                                                                                                  
SHORT TITLE: ENERGY PROGRAMS & FUNDS                                                                                            
SPONSOR(s): RULES BY REQUEST OF THE GOVERNOR                                                                                    
02/16/04       (S)       READ THE FIRST TIME - REFERRALS                                                                        
02/16/04       (S)       L&C, FIN                                                                                               
03/11/04       (S)       L&C AT 1:30 PM BELTZ 211                                                                               
03/11/04       (S)       Heard & Held                                                                                           
03/11/04       (S)       MINUTE(L&C)                                                                                            
03/25/04       (S)       L&C AT 1:30 PM BELTZ 211                                                                               
BILL: HB 285                                                                                                                  
SHORT TITLE: ELECTRONIC TRANSACTIONS & SIGNATURES                                                                               
SPONSOR(s): REPRESENTATIVE(s) MCGUIRE                                                                                           
04/25/03       (H)       READ THE FIRST TIME - REFERRALS                                                                        
04/25/03       (H)       L&C, JUD                                                                                               
05/07/03       (H)       L&C AT 3:15 PM CAPITOL 17                                                                              
05/07/03       (H)       Scheduled But Not Heard                                                                                
05/09/03       (H)       L&C AT 3:15 PM CAPITOL 17                                                                              
05/09/03       (H)       Scheduled But Not Heard                                                                                
05/12/03       (H)       L&C AT 3:15 PM CAPITOL 17                                                                              
05/12/03       (H)       Moved Out of Committee                                                                                 
05/12/03       (H)       MINUTE(L&C)                                                                                            
05/13/03       (H)       L&C RPT 2DP 4NR                                                                                        
05/13/03       (H)       DP: LYNN, ANDERSON; NR: GATTO,                                                                         
05/13/03       (H)       CRAWFORD, GUTTENBERG, DAHLSTROM                                                                        
01/21/04       (H)       JUD AT 1:00 PM CAPITOL 120                                                                             
01/21/04       (H)       Moved CSHB 285(JUD) Out of Committee                                                                   
01/21/04       (H)       MINUTE(JUD)                                                                                            
01/23/04       (H)       JUD RPT CS(JUD) 7DP                                                                                    
01/23/04       (H)       DP: SAMUELS, HOLM, GARA, OGG,                                                                          
01/23/04       (H)       GRUENBERG, ANDERSON, MCGUIRE                                                                           
02/19/04       (H)       TRANSMITTED TO (S)                                                                                     
02/19/04       (H)       VERSION: CSHB 285(JUD)                                                                                 
02/20/04       (S)       READ THE FIRST TIME - REFERRALS                                                                        
02/20/04       (S)       L&C, JUD                                                                                               
03/25/04       (S)       L&C AT 1:30 PM BELTZ 211                                                                               
BILL: HB  15                                                                                                                  
SHORT TITLE: SOLICITATIONS/CONSUMER PROTECTION                                                                                  
SPONSOR(s): REPRESENTATIVE(s) FATE                                                                                              
01/21/03       (H)       PREFILE RELEASED (1/10/03)                                                                             
01/21/03       (H)       READ THE FIRST TIME - REFERRALS                                                                        
01/21/03       (H)       L&C, STA, FIN                                                                                          
01/29/03       (H)       L&C AT 3:15 PM CAPITOL 17                                                                              
01/29/03       (H)       <Bill Postponed>                                                                                       
02/07/03       (H)       L&C AT 3:15 PM CAPITOL 17                                                                              
02/07/03       (H)       Moved CSHB 15(L&C) Out of Committee                                                                    
02/07/03       (H)       MINUTE(L&C)                                                                                            
02/10/03       (H)       L&C RPT CS(L&C) NT 3DP 4AM                                                                             
02/10/03       (H)       DP: CRAWFORD, ROKEBERG, ANDERSON;                                                                      
02/10/03       (H)       AM: LYNN, GATTO, GUTTENBERG, DAHLSTROM                                                                 
02/18/03       (H)       STA AT 8:00 AM CAPITOL 102                                                                             
02/18/03       (H)       Heard & Held                                                                                           
02/18/03       (H)       MINUTE(STA)                                                                                            
02/25/03       (H)       STA AT 8:00 AM CAPITOL 102                                                                             
02/25/03       (H)       Scheduled But Not Heard                                                                                
03/11/03       (H)       STA AT 8:00 AM CAPITOL 102                                                                             
03/11/03       (H)       Heard & Held                                                                                           
03/11/03       (H)       MINUTE(STA)                                                                                            
03/13/03       (H)       STA AT 8:00 AM CAPITOL 102                                                                             
03/13/03       (H)       Moved CSHB  15(STA) Out of Committee                                                                   
03/13/03       (H)       MINUTE(STA)                                                                                            
03/26/03       (H)       STA RPT CS(STA) NT 3DP 4NR                                                                             
03/26/03       (H)       DP: SEATON, GRUENBERG, WEYHRAUCH;                                                                      
03/26/03       (H)       NR: HOLM, LYNN, DAHLSTROM, BERKOWITZ                                                                   
02/19/04       (H)       FIN AT 1:30 PM HOUSE FINANCE 519                                                                       
02/19/04       (H)       Heard & Held                                                                                           
02/19/04       (H)       MINUTE(FIN)                                                                                            
02/23/04       (H)       FIN AT 1:30 PM HOUSE FINANCE 519                                                                       
02/23/04       (H)       Moved CSHB 15(FIN) Out of Committee                                                                    
02/23/04       (H)       MINUTE(FIN)                                                                                            
02/24/04       (H)       FIN RPT CS(FIN) NT 7DP 3NR                                                                             
02/24/04       (H)       DP: HAWKER, CROFT, CHENAULT, FATE,                                                                     
02/24/04       (H)       MEYER, HARRIS, WILLIAMS; NR: STOLTZE,                                                                  
02/24/04       (H)       JOULE, MOSES                                                                                           
03/03/04       (H)       TRANSMITTED TO (S)                                                                                     
03/03/04       (H)       VERSION: CSHB 15(FIN) AM                                                                               
03/04/04       (S)       READ THE FIRST TIME - REFERRALS                                                                        
03/04/04       (S)       L&C, JUD                                                                                               
03/25/04       (S)       L&C AT 1:30 PM BELTZ 211                                                                               
BILL: SB 368                                                                                                                  
SHORT TITLE: TOBACCO TAX; LICENSING; PENALTIES                                                                                  
SPONSOR(s): RULES BY REQUEST OF THE GOVERNOR                                                                                    
03/19/04       (S)       READ THE FIRST TIME - REFERRALS                                                                        
03/19/04       (S)       L&C, FIN                                                                                               
03/25/04       (S)       L&C AT 1:30 PM BELTZ 211                                                                               
WITNESS REGISTER                                                                                                              
Ms. Sara Fisher Goad                                                                                                            
Financial Analyst                                                                                                               
Alaska Energy Authority (AEA)                                                                                                   
Alaska Industrial Development and Export Authority (AIDEA)                                                                      
Anchorage AK                                                                                                                    
POSITION STATEMENT:  Commented on SB 337.                                                                                     
Ms. Vanessa Tondini                                                                                                             
Staff to Representative Lisel McGuire                                                                                           
Alaska State Capitol                                                                                                            
Juneau, AK  99801-1182                                                                                                          
POSITION STATEMENT: Commented on HB 285 for sponsor.                                                                          
Mr. Art Peterson, Attorney                                                                                                      
Uniform Law Commissioner                                                                                                        
State of Alaska                                                                                                                 
POSITION STATEMENT: Supports HB 285.                                                                                          
Ms. Vicky Backus                                                                                                                
State Recorder                                                                                                                  
Department of Natural Resources                                                                                                 
400 Willoughby Ave.                                                                                                             
Juneau, AK  99801-1724                                                                                                          
POSITION STATEMENT: Supports HB 285.                                                                                          
Mr. David Jones, Assistant Attorney General                                                                                     
Department of Law                                                                                                               
PO Box 110300                                                                                                                   
Juneau, AK  99811-0300                                                                                                          
POSITION STATEMENT: Commented on HB 285.                                                                                      
Ms. Cindy Drinkwater, Assistant Attorney General                                                                                
Consumer Protection Unit                                                                                                        
Department of Law                                                                                                               
PO Box 110300                                                                                                                   
Juneau, AK  99811-0300                                                                                                          
POSITION STATEMENT: Commented on HB 15.                                                                                       
Mr. Pat Luby                                                                                                                    
AARP Alaska                                                                                                                     
3601 C Street, Ste 1420                                                                                                         
Anchorage AK 99503                                                                                                              
POSITION STATEMENT: Supports HB 15.                                                                                           
Mr. Robert Flint, Atty.                                                                                                         
Hartig Rhodes Hoge & LeKisch                                                                                                    
Counsel for the Direct Marketing Association (DMA) &                                                                            
Magazine Publishers of America (MPA)                                                                                            
717 K Street                                                                                                                    
Anchorage AK 99501                                                                                                              
POSITION STATEMENT: Opposes HB 15.                                                                                            
Mr. Joel Gilbertson, Commissioner                                                                                               
Department of Health &                                                                                                          
  Social Services                                                                                                               
PO Box 110601                                                                                                                   
Juneau, AK  99801-0601                                                                                                          
POSITION STATEMENT: Supports SB 368.                                                                                          
Mr. Steve Porter, Deputy Commissioner                                                                                           
Department of Revenue                                                                                                           
PO Box 110400                                                                                                                   
Juneau, AK  99811-0400                                                                                                          
POSITION STATEMENT: Supports SB 368.                                                                                          
Ms. Johanna Bales, Program Manager                                                                                              
Cigarette and Tobacco Products Excise Tax                                                                                       
Department of Revenue                                                                                                           
PO Box 110400                                                                                                                   
Juneau, AK  99811-0400                                                                                                          
POSITION STATEMENT: Supports SB 368.                                                                                          
Ms. Carole Edwards                                                                                                              
Alaska Nurses Association                                                                                                       
3998 Diane Rd.                                                                                                                  
Juneau AK 99801                                                                                                                 
POSITION STATEMENT: Supports SB 368.                                                                                          
Ms. Jennifer App, Alaska Advocacy Director                                                                                      
American Heart Association                                                                                                      
1057 W. Fireweed Lane, Suite 100                                                                                                
Anchorage AK 99518                                                                                                              
POSITION STATEMENT: Supports SB 368.                                                                                          
Ms. Christie Garbe, Director                                                                                                    
American Lung Association of Alaska                                                                                             
500 W. International Airport Rd., Suite A                                                                                       
Anchorage AK 99518                                                                                                              
POSITION STATEMENT: Supports SB 368.                                                                                          
Ms. Mariah Warren                                                                                                               
UAS student                                                                                                                     
Juneau AK 99801                                                                                                                 
POSITION STATEMENT: Supports SB 368.                                                                                          
Ms. Emily Nenon, Alaska Advocacy Manager                                                                                        
American Cancer Society                                                                                                         
1057 W. Fireweed Lane, Suite 204                                                                                                
Anchorage AK 99503                                                                                                              
POSITION STATEMENT: Supports SB 368.                                                                                          
Ms. Doris Robbins                                                                                                               
PO Box 21011                                                                                                                    
Juneau AK 99802                                                                                                                 
POSITION STATEMENT: Supports SB 368.                                                                                          
Ms. Marguerite Stetson                                                                                                          
Anchorage AK                                                                                                                    
POSITION STATEMENT: Supports SB 368.                                                                                          
Ms. Joelle Hall                                                                                                                 
Anchorage AK                                                                                                                    
POSITION STATEMENT: Supports SB 368.                                                                                          
Ms. Kattaryna Stiles                                                                                                            
Alaska Native Health Board                                                                                                      
Anchorage AK                                                                                                                    
POSITION STATEMENT: Supports SB 368.                                                                                          
ACTION NARRATIVE                                                                                                              
TAPE 04-26, SIDE A                                                                                                            
                 SB 337-ENERGY PROGRAMS & FUNDS                                                                             
CHAIR CON  BUNDE called  the Senate  Labor and  Commerce Standing                                                             
Committee meeting  to order  at 1:43  p.m. Present  were Senators                                                               
Bettye Davis,  Hollis French  and Chair  Con Bunde.  Senator Gary                                                               
Stevens  arrived at  1:50 and  Senator Ralph  Seekins arrived  at                                                               
2:35. The  first order of  business to come before  the committee                                                               
was SB 337. This was its second hearing.                                                                                        
SENATOR HOLLIS FRENCH moved to adopt amendment 1.                                                                               
                      A M E N D M E N T  1                                                                                  
OFFERED IN THE SENATE LABOR                                                                                                     
       AND COMMERCE COMMITTEE                                                                                                   
     TO:  SB 337                                                                                                                
Page 7, line 9:                                                                                                                 
     Delete ", 42.45.200,"                                                                                                      
Page 7, following line 9:                                                                                                       
     Insert new bill sections to read:                                                                                          
   "* Sec. 12.  AS 42.45.200 is repealed.                                                                                     
    * Sec.  13.   The uncodified  law of the  State of  Alaska is                                                             
amended by adding a new section to read:                                                                                        
     TRANSITION:  ELECTRICAL SERVICE EXTENSION FUND.  Subject to                                                                
appropriation,  the money  in  the  electrical service  extension                                                               
fund established  in former AS 42.45.200, repealed  by sec. 12 of                                                               
this Act, is transferred to the general fund."                                                                                  
 Renumber the following bill sections accordingly.                                                                              
Page 7, following line 12:                                                                                                      
     Insert a new bill section to read:                                                                                         
   "*  Sec. 15.   Sections  12  and 13  of this  Act take  effect                                                             
July 1, 2004."                                                                                                                  
Renumber the remaining bill section accordingly.                                                                                
Page 7, line 13:                                                                                                                
     Delete "This"                                                                                                              
     Insert "Except as provided in sec. 15 of this Act, this"                                                                   
CHAIR BUNDE objected for discussion purposes.                                                                                   
MS. SARA FISHER-GOAD, Financial  Analyst, Alaska Energy Authority                                                               
(AEA), explained that amendment  1 repeals the Electrical Service                                                               
Extension Fund  effective July  1, 2005 and  makes it  subject to                                                               
CHAIR BUNDE removed his objection and amendment 1 was adopted.                                                                  
SENATOR FRENCH moved to adopt amendment 2.                                                                                      
                      A M E N D M E N T  2                                                                                  
OFFERED IN THE SENATE LABOR                                                                                                     
       AND COMMERCE COMMITTEE                                                                                                   
     TO:  SB 337                                                                                                                
Page 1, line 2:                                                                                                                 
     Following "loans":                                                                                                       
          Delete "and"                                                                                                        
          Insert ", to"                                                                                                       
     Following "contracts":                                                                                                   
          Insert ", and to improve, equip, operate, and maintain                                                              
     bulk fuel, waste energy, energy conservation, energy                                                                     
     efficiency, and alternative energy facilities and                                                                        
CHAIR BUNDE objected for an explanation.                                                                                        
MS. GOAD explained that it expands the title to contain the                                                                     
subject of the whole bill.                                                                                                      
CHAIR BUNDE  removed his objection  and amendment 2  was adopted.                                                               
He recapped that  SB 337 would change the AEA  to make additional                                                               
loans  for  waste  energy,  energy  conservation  and  efficiency                                                               
MS. GOAD agreed that was a good explanation of that section.                                                                    
SENATOR FRENCH said his questions were cleared up.                                                                              
CHAIR BUNDE said CSSB 337(L&C) would be set aside until other                                                                   
members of the committee arrived.                                                                                               
          HB 285-ELECTRONIC  TRANSACTIONS & SIGNATURES                                                                      
CHAIR CON BUNDE announced CSHB 285(JUD) to be up for                                                                            
MS. VANESSA TONDINI, staff to  Representative Lisel McGuire, said                                                               
the   uniform  laws   were  promulgated   by   the  Uniform   Law                                                               
Commissioners in 1999  in an effort to prepare state  law for the                                                               
electronic commerce era.                                                                                                        
     The    objective    of   UETA    (Uniform    Electronic                                                                    
     Transmissions   Act)   is   to  establish   the   legal                                                                    
     equivalence of  electronic records and  signatures with                                                                    
     paper writings and  manually signed signatures removing                                                                    
     barriers  to  electronic  commerce.   This  is  a  very                                                                    
     limited, but  important objective - that  an electronic                                                                    
     record of  a transaction is  the equivalent of  a paper                                                                    
     record and  that an electronic  signature be  given the                                                                    
     same legal  affect, whatever that  may be, as  a manual                                                                    
     signature. UETA does not attempt  to create a whole new                                                                    
     system of  legal rules for the  electronic marketplace.                                                                    
     It doesn't  make any changes substantively  to rules of                                                                    
     law  that currently  apply, such  as contractor  agency                                                                    
     law,  and  it's  really  a framework  that  allows  for                                                                    
     regulations and  acceptance if - and  this is important                                                                    
     -  both parties  voluntarily choose  to use  electronic                                                                    
     If we  don't set  this framework up  on a  state level,                                                                    
     the  federal E-sign  Law will  apply and  UETA is  much                                                                    
     more  comprehensive than  that. Forty-five  states have                                                                    
     already adopted  UETA to  date, so  we're a  little bit                                                                    
     behind  the curve.  I believe  that  Alaska should  now                                                                    
     join the rest of the  nation in adopting this bill. The                                                                    
     version that  you have before  you is the  version that                                                                    
     unanimously passed  the House.... The only  change from                                                                    
     the original version of the  bill is the addition of AS                                                                    
     45.02  in section  1...the UCC  chapter  on sales.  Its                                                                    
     omission was just a drafting oversight.                                                                                    
MR.  ART PETERSON,  Uniform Law  Commissioner,  State of  Alaska,                                                               
said he is one of the five  commissioners. He said this bill is a                                                               
product  of the  Uniform Law  Conference along  with the  Uniform                                                               
Commercial  Code,   the  Uniform  Probate  Code,   Child  Custody                                                               
Jurisdiction. The  conference covers a broad  variety of subjects                                                               
in the legal  world that are thoroughly  analyzed, studied, well-                                                               
written, etc.  He supported Ms.  Tondini's testimony in  favor of                                                               
this  bill  and speculated  that  not  enacting it  would  hinder                                                               
commerce within the state  and interstate commerce significantly.                                                               
It's  the  first  comprehensive  state  law  for  the  electronic                                                               
commerce era.                                                                                                                   
     It  doesn't change  contract law;  it simply  says that                                                                    
     when  you  engage  in contracts,  when  you  engage  in                                                                    
     transactions by means of electronics,  it will have the                                                                    
     same effect as the old-fashioned paper method.                                                                             
MR. PETERSON  said the  federal E-Sign Law  has a  provision that                                                               
says if states  enact UETA essentially verbatim,  state law would                                                               
govern and not the federal one.                                                                                                 
     It's  a  very unusual  situation.  I  believe it's  the                                                                    
     first  time   federal  law  has  actually   included  a                                                                    
     provision that  specific to a  product of  the national                                                                    
He said that  section 7 of AS  09.80.040 is the heart  of the act                                                               
and sets out some  basic rules on page 3, line  19. Page 10 deals                                                               
with governmental entities.                                                                                                     
CHAIR  BUNDE politely  asked  Mr.  Peterson to  stay  on hand  to                                                               
answer questions.                                                                                                               
MS.  PAULA  KELSEY,  Recorder Manager,  State  Recorders  Office,                                                               
deferred testimony  to Vicky Backus,  but said she  was available                                                               
to answer questions.                                                                                                            
MS. VICKY BACKUS, State Recorder, supported UETA saying:                                                                        
     A high  percentage of  mortgage transactions  in Alaska                                                                    
     today  involve out-of-state  lenders and  standardizing                                                                    
     the electronic  recording process within  the framework                                                                    
     of a  uniform law  like UETA  will benefit  commerce in                                                                    
     those states  with a uniform  approach. The  handful of                                                                    
     states   that  don't   have  uniform   laws  may   find                                                                    
     themselves  at  a disadvantage  when  we  get into  the                                                                    
     world  of electronic  commerce and  recordation. E-Sign                                                                    
     and  UETA permit  state and  federal agencies  to allow                                                                    
     and  control  electronic  filings, but  E-Sign  doesn't                                                                    
     provide   any   authority   for   establishing   filing                                                                    
     standards and  this must be  derived only from  UETA or                                                                    
     from  other   state  law.   So,  UETA   will  encourage                                                                    
     government  filing offices  to promote  consistency and                                                                    
     inner operability and that's what we're looking for.                                                                       
MR.  DAVID JONES,  Assistant Attorney  General, wanted  to answer                                                               
any  question and  to clarify  that  43 states,  the District  of                                                               
Columbia and  the U.S.  Virgin Islands have  adopted UETA  in the                                                               
five years since the Uniform  Law Commissioners drafted it. "It's                                                               
clear  that it's  not particularly  controversial." It  primarily                                                               
gives   folks   who   choose  to   conduct   their   transactions                                                               
electronically  the ability  to enforce  them in  court. It  will                                                               
allow efficiencies  not only to private  sector transactions, but                                                               
to governmental operations, as well.                                                                                            
CHAIR BUNDE observed that there was no opposition to the bill.                                                                  
SENATOR HOLLIS FRENCH said the signature section of the bill on                                                                 
page 12, lines 3 - 5, is a crucial aspect and asked how it                                                                      
MR. JONES said he had some background in electronic signatures.                                                                 
     Currently  under   Alaska  statutes,  which   would  be                                                                    
     repealed  by this  bill, we  have very  technologically                                                                    
     specific definitions of  electronic signatures that are                                                                    
     sort of the Cadillac  version of electronic signatures.                                                                    
     They require that the  electronic signature be attached                                                                    
     to  the electronic  record in  such a  way that  if any                                                                    
     change is made  to the electronic record,  that will be                                                                    
     evident  and  the  signature   will  be  registered  as                                                                    
     invalid by what is known as a certifying authority.                                                                        
     It's a  fairly complicated process to  explain, but the                                                                    
     UETA has the advantage in  the beauty of not making the                                                                    
     technological    choices    in   defining    electronic                                                                    
     signatures. One, because there  may be different levels                                                                    
     of   security  that   are  appropriate   for  different                                                                    
     transactions. Just  as when  we go  to the  store, some                                                                    
     may  require  that  we  show   an  i.d.,  some  may  be                                                                    
     satisfied   with  just   a   signature   or  for   some                                                                    
     transactions  it may  be necessary  that  we provide  a                                                                    
     notarized signature,  a birth certificate,  a passport.                                                                    
     Depending  on  the  significance  of  the  transaction,                                                                    
     there  may   be  different  types  of   the  electronic                                                                    
     signatures that would suffice. In  one case, a personal                                                                    
     identification number,  a PIN,  might do the  trick. In                                                                    
     another  case, you  might  want  the Cadillac  version,                                                                    
     which    involves   the    public   in    private   key                                                                    
     infrastructure  and  a   certifying  authority  that  I                                                                    
     referred to earlier.                                                                                                       
     Another   reason   it's  a   good   idea   not  to   be                                                                    
     technologically  specific  in  the definition  is  that                                                                    
     technology is  changing so rapidly that  the definition                                                                    
     we adopt  today, if it's technologically  specific, may                                                                    
     be obsolete in  another five years or  sooner. So, this                                                                    
     definition   of  electronic   signature  is   not  very                                                                    
     definite;  it's fairly  broad and  that is  very useful                                                                    
     for purposes of a uniform law.                                                                                             
CHAIR BUNDE  asked if  signing a  credit card at  a store  is one                                                               
level   of  electronic   signature  where   others  might   be  a                                                               
typewritten name with a PIN.                                                                                                    
MR. JONES replied that is correct.                                                                                              
SENATOR FRENCH said  that answers his question  and asked another                                                               
- if buying something from  Amazon.com and clicking "I Accept" is                                                               
another version of electronic signature.                                                                                        
MR. JONES replied that is correct.                                                                                              
SENATOR  FRENCH  said  it  looks like  they  are  leaning  toward                                                               
raising or  lowering the level  of formality a person  chooses to                                                               
use.   He   was   wondering   what   kinds   of   formality   and                                                               
trustworthiness were  going to follow  the new  transactions. "It                                                               
sounds to me like  you're saying it's just going to  be up to the                                                               
MR. JONES replied that is correct.                                                                                              
     They are  going to  be in the  best position  to decide                                                                    
     between   themselves  what   level   of  security   and                                                                    
     formality they need for those electronic signatures.                                                                       
SENATOR FRENCH asked if the act has fraud provisions.                                                                           
MR. JONES replied:                                                                                                              
     There  are not  specific fraud  provisions in  the act.                                                                    
     The  same  fraud rules  that  would  apply to  a  paper                                                                    
     contract  or  transaction   will  apply  to  electronic                                                                    
     records and transactions.                                                                                                  
SENATOR FRENCH said he would  have to reread the forgery statutes                                                               
in light of this bill.                                                                                                          
CHAIR BUNDE  said it appears that  the bill is running  the gamut                                                               
from buying a book on Amazon.com to signing a 30-year mortgage.                                                                 
     At one  level, my electronic signature  could simply be                                                                    
     "I  Accept."  The other  would  have  to be  an  actual                                                                    
     physical  replication of  my signature  something along                                                                    
     the Cadillac that you've mentioned.                                                                                        
MR. JONES replied that is correct.                                                                                              
MR.  PETERSON  commented  that   the  House  Judiciary  Committee                                                               
discussed fraud also  and he wrote a letter to  Professor Pat Fry                                                               
who chaired the committee that  drafted this act and her response                                                               
regarding the fraud question was:                                                                                               
     Use of  electronic technology is consensual.  No one is                                                                    
     required by  statute to use them.  Accordingly, parties                                                                    
     are  free  to condition  their  assent  to the  use  of                                                                    
     electronic technologies  on the use of  agreed security                                                                    
     procedures. Consequently, any  security technologies to                                                                    
     be  used  are to  be  taken  into account  when  courts                                                                    
     consider   issues  of   identity  and   agreement.  The                                                                    
     strength of  the technology should  go directly  to the                                                                    
     evidentiary   weight  of   the  electronic   record  or                                                                    
     As to opening up people to  fraud, all UETA does is say                                                                    
     that  people may  deal electronically.  As I  noted, it                                                                    
     does not require one to  do so. There are fraudsters on                                                                    
     line. UETA is  not designed to, nor does it  in any way                                                                    
     supersede,  the common  law  or  statutes dealing  with                                                                    
     various forms  of fraud and larceny.  [Indisc.] statute                                                                    
     has been  on the  books for years  or is  newly enacted                                                                    
     specifically for  the on-line environment. UETA  is not                                                                    
     a  regulatory  or criminal  statute;  it's  a piece  of                                                                    
     infrastructure  validating electronic  transactions and                                                                    
     records.  [Indisc.] tells  courts to  accept electronic                                                                    
     evidence;  it  should  assist  in  the  prosecution  of                                                                    
     frauds.  At the  same  time, it  validates millions  of                                                                    
     legitimate  transactions  entered into  by  individuals                                                                    
     every day.                                                                                                                 
     Everyone  I  have contacted  as  someone  who has  been                                                                    
     thoroughly immersed  in these technologies and  the law                                                                    
     surrounding them feel  that this is not  opening up any                                                                    
     fraud  potential  that's   really  any  different  from                                                                    
     current potential on paper.                                                                                                
CHAIR BUNDE said, "Senator French, I note that you will have                                                                    
another bite at this apple if you want to bone up on your                                                                       
SENATOR FRENCH responded, "Fair enough, Mr. Chairman."                                                                          
CHAIR BUNDE noted there were  no more witnesses and closed public                                                               
SENATOR  GARY  STEVENS  moved  to   pass  CSHB  285(JUD)  out  of                                                               
committee  with  individual   recommendations  and  the  attached                                                               
fiscal note.                                                                                                                    
CHAIR BUNDE asked for the  roll call vote. Senators Bettye Davis,                                                               
Gary Stevens,  Hollis French and  Chair Con Bunde voted  yea; and                                                               
CSHB 285(JUD) moved from committee.                                                                                             
            HB  15-SOLICITATIONS/CONSUMER PROTECTION                                                                        
CHAIR  CON   BUNDE  announced  CSHB   15(FIN)am  to  be   up  for                                                               
MR. JIM POUND,  staff to Representative Hugh  Fate, sponsor, said                                                               
HB  15 was  introduced to  put a  stop to  annoying telemarketing                                                               
telephone  calls  that people  get  during  the dinner  hour.  He                                                               
related  that Congress  passed HR  385 establishing  the national                                                               
do-not-call  list and  the 10   Circuit  Court recently  affirmed                                                               
that it  does not violate  the U.S. Constitution.  CSHB 15(FIN)am                                                               
puts language  in statute that  acknowledges there is  a national                                                               
do-not-call list, establishes  registration for telemarketers and                                                               
enhances  the   federal  restrictions  they  must   follow  while                                                               
conducting business in  the State of Alaska. It  gives the Alaska                                                               
Department of Law authority to  enforce and go after those people                                                               
who  do  not  comply.  The  language  is  a  combined  effort  of                                                               
Representative Fate  and the  Department of Law  and is  aimed at                                                               
filling  in the  gaps left  by the  federal law,  which was  very                                                               
CHAIR  BUNDE   asked  for  information   on  the  fee   that  was                                                               
established and if the state was going to make money on this.                                                                   
MR. POUND replied  that the fiscal note indicates  that the state                                                               
should bring in $76,000 per  year from telemarketing registration                                                               
CHAIR  BUNDE  asked, "Is  this  a  break-even proposition  or  an                                                               
actual net gain?"                                                                                                               
MR. POUND replied:                                                                                                              
     There will be a  net gain. The original bill...requires                                                                    
     us to  set up our  own do-not-call list and  of course,                                                                    
     there's a negative  fiscal note on that  because of the                                                                    
     amount of labor-intensive aspects  of it. Tying in with                                                                    
     the  federal  legislation  basically  makes  it  a  lot                                                                    
     easier as  far as us  not having to maintain  a do-not-                                                                    
     call list specifically for Alaska.                                                                                         
CHAIR BUNDE asked him to expand on the exemptions in section 21.                                                                
MR. POUND explained that language was in existing statute and                                                                   
essentially exempts people from paying the registration fees.                                                                   
SENATOR HOLLIS FRENCH asked if an embalmer or funeral director                                                                  
has to abide by the national do-not-call list.                                                                                  
MR. POUND replied, "Yes, he does."                                                                                              
SENATOR FRENCH asked if they would have to pay a fee.                                                                           
MR. POUND replied that they don't.                                                                                              
SENATOR FRENCH said they would have to register, though.                                                                        
MR. POUND indicated that was correct.                                                                                           
CHAIR BUNDE asked how an entity goes through the process of                                                                     
registering with the department and if there is criteria for                                                                    
approval or disapproval.                                                                                                        
MR. POUND deferred that answer to Ms. Drinkwater, Department of                                                                 
Law, who helped draft the legislation.                                                                                          
MS. CINDY DRINKWATER, Assistant Attorney General, Consumer                                                                      
Protection Unit, answered:                                                                                                      
     If a telemarketer  wants to solicit in  the state, they                                                                    
     can either  request from the  Department of Law  a copy                                                                    
     of the  registration form or they  can simply down-load                                                                    
     it  off our  website.  It's a  fairly straight  forward                                                                    
     form  that requests  that they  attach copies  of their                                                                    
     articles   of  incorporation,   that  they   provide  a                                                                    
     description  of  any  affiliated  companies  or  parent                                                                    
     companies,  that  they provide  a  list  of the  actual                                                                    
     solicitors  who  would  be making  the  calls  and  the                                                                    
     managers of those solicitors. They  are asked to attach                                                                    
     a copy  of the scripts  or the sales  presentation that                                                                    
     they  use over  the  phone to  customers  and they  are                                                                    
     asked  to attach  a  copy of  a  written contract.  Our                                                                    
     registration  statute requires  that telemarketers  who                                                                    
     are  going to  be selling  over the  phone in  terms of                                                                    
     accepting  a  credit  card  number,  that  before  that                                                                    
     transaction  happens,  they  need   to  have  a  signed                                                                    
     purchase agreement  from the  consumer. So, as  part of                                                                    
     the registration  process, they  would need to  show us                                                                    
     an example of the contract form they intend to use.                                                                        
CHAIR  BUNDE  asked   how  a  national  firm   would  know  about                                                               
registering and how would the department enforce it.                                                                            
MS. DRINKWATER replied  that it's not unusual for  states to have                                                               
registration statutes  like Alaska's. Any national  company would                                                               
know it has to make  the inquiry about registration statutes. Her                                                               
office gets  quite a few phone  calls and hits on  its website on                                                               
that question.                                                                                                                  
Regarding  enforcement,   she  said  the  department   relies  on                                                               
consumers to  file complaints of  telemarketers who  are breaking                                                               
the  law.  Because of  the  large  number  of exemptions  to  the                                                               
registration statute, many telemarketers  can conduct business in                                                               
the state without having to register.                                                                                           
CHAIR BUNDE  said that might take  quite a few teeth  out of this                                                               
MS.  DRINKWATER agreed  and explained  that is  existing statute.                                                               
The amendments  in HB  15 include  requiring businesses  that are                                                               
registering to  pay a fee  and tightens  up other aspects  of the                                                               
current  law such  as for  paid  solicitors, who  in addition  to                                                               
paying fees, would  have to submit financial  reports after their                                                               
solicitation campaign ends.                                                                                                     
CHAIR BUNDE  said that the  trend is for  user fees to  equal the                                                               
cost of  providing the service, but  HB 15 has a  positive fiscal                                                               
note and  asked Representative  Fate to  explain his  thoughts on                                                               
REPRESENTATIVE FATE  replied that it  was felt that  this service                                                               
should pay for its own way under today's fiscal regime.                                                                         
SENATOR FRENCH asked if this act applied to charities.                                                                          
MS. DRINKWATER replied:                                                                                                         
     Basically,  HB   15  amends   not  only   the  Consumer                                                                    
     Protection Act  and, in  particular, the  state do-not-                                                                    
     call  bill, which  is  in existence  now,  but it  also                                                                    
     amends the  Charitable Solicitations Act  and Telephone                                                                    
     Solicitations Act, as I mentioned  before, as well as a                                                                    
     separate   statutory   scheme   called   the   Business                                                                    
     Opportunities Act, although the  amendments to that are                                                                    
     fairly minor.                                                                                                              
     As to  your question, does  this affect charities  - it                                                                    
     does  affect charities  and  their  paid solicitors  in                                                                    
     terms  of the  registration requirements.  Perhaps your                                                                    
     question is more directed to  the do-not-call aspect of                                                                    
     the bill  and the  answer to that  would be  that under                                                                    
     the  federal  do-not-call  registry, charities  do  not                                                                    
     have  to purchase  the registry.  They do  not have  to                                                                    
     scrub their lists  of people who do wish  to be called.                                                                    
     However, there  is also another  means by  which people                                                                    
     can  express  their  desire not  to  receive  telephone                                                                    
     calls. Not  only can they  sign up for  the do-not-call                                                                    
      list, but they can also tell companies on a case-by-                                                                      
     case basis that they do not  want to be called and that                                                                    
     is  referred to  as the  internal do-not-call  list. In                                                                    
     other  words,  the  paid  telemarketers  for  charities                                                                    
     would have to abide  by that internal do-not-call list,                                                                    
     although they  would not have  to purchase  the federal                                                                    
SENATOR FRENCH asked if he puts himself on the federal do-not-                                                                  
call list, would the local television station that he                                                                           
contributes to be free to call him once a year to remind him                                                                    
that he is a contributor.                                                                                                       
MS. DRINKWATER replied, "Yes, they would be able to do that,                                                                    
because they do not have to scrub their lists from the federal                                                                  
do-not-call registry."                                                                                                          
SENATOR FRENCH asked if that would apply to any other charities                                                                 
that he has not contributed to. "It sounds like you're saying                                                                   
these charities sort of fall out of the blocked category."                                                                      
MS. DRINKWATER replied:                                                                                                         
     That is correct.... The best  thing that a consumer can                                                                    
     do  in  terms  of  if  they  are  receiving  charitable                                                                    
     solicitations  that  they  do   not  wish  to  receive,                                                                    
     chances are that  the calls are being placed  by a paid                                                                    
     solicitor and  they can request on  an individual basis                                                                    
     that  they do  not wish  to  receive any  calls in  the                                                                    
MR. PAT LUBY, AARP Alaska, said:                                                                                                
     Thousands of  Alaskans are signed  up for  the national                                                                    
     do-not-call  list. AARP's  interest  is in  maintaining                                                                    
     the privacy of our citizens  who have signed up for the                                                                    
     national do-not-call list. Older  persons are home most                                                                    
     of the day.  They get many more calls than  those of us                                                                    
     who  are in  the  workplace -  in particular,  magazine                                                                    
     sales are  the most  notorious ones. We  get complaints                                                                    
     from our  members. These are  folks who  bother people;                                                                    
     they have what they call  goose lists that they sell to                                                                    
     each other  and anything we  can do to control  some of                                                                    
     those   calls  is   going  to   be  helpful   to  those                                                                    
     If an  Alaskan citizen  is signed  up for  the national                                                                    
     do-not-call  list,  they  should not  be  subjected  to                                                                    
     telemarketing  calls  that  originate in  Fairbanks  or                                                                    
     Anchorage  or  anywhere  else  in  the  state.  Federal                                                                    
     courts have reaffirmed that citizens  have the right to                                                                    
     privacy in their  homes. They should not  be subject to                                                                    
     home invasion over the telephone  if they indicate that                                                                    
     they do  not want to  be bothered. We hope  that you'll                                                                    
     give us back our dinner  hour and respect the wishes of                                                                    
     Alaskans who  have signed up  for the  national do-not-                                                                    
     call    list.   AARP    requests   your    support   of                                                                    
     Representative Fate's HB 15. Thank you.                                                                                    
SENATOR STEVENS asked for an  explanation of violation on page 2,                                                               
in section 4.                                                                                                                   
MR.  POUND replied  that section  refers to  someone who  did not                                                               
mean to make the call, for  instance, a solicitor who got a wrong                                                               
SENATOR STEVENS  asked who  decides what  the violations  are and                                                               
whether the punishments fit the crimes.                                                                                         
MS. DRINKWATER replied  that the penalty for a  violation of this                                                               
provision is in  the state's Consumer Protection  Act. That means                                                               
that if  the state  were to seek  a lawsuit, it  could ask  up to                                                               
$5,000 per violation, restitution  for damages, injunctive relief                                                               
and any  other remedy  that might be  appropriate. The  other key                                                               
feature  is  that  it  gives  the  private  right  of  action  to                                                               
consumers, because  the Consumer  Protection Act has  a provision                                                               
awarding triple damages.                                                                                                        
     If we're left  with just trying to  enforce the federal                                                                    
     law, which  state attorneys general have  the authority                                                                    
     to  do,  we  would  be limited  to  bringing  cases  in                                                                    
     federal  court, although  the  amount  of the  possible                                                                    
     fine or  civil penalty is  higher - it's up  to $11,000                                                                    
     per violation.  There is more  flexibility in  terms of                                                                    
     other  relief  under  our Consumer  Protection  Act  in                                                                    
     state court.                                                                                                               
SENATOR STEVENS asked if penalties are just a fine of money.                                                                    
MS. DRINKWATER  replied that injunctive relief  is a possibility.                                                               
That  means  shutting a  business  down  or ceasing  the  illegal                                                               
conduct at the very least.                                                                                                      
TAPE 04-26, SIDE B                                                                                                            
MR.  ROBERT  FLINT,  Hartig  Rhodes Hoge  and  Lekisch,  said  he                                                               
represents  Direct  Marketing   Association  (DMA)  and  Magazine                                                               
Publishers of America (MPA).                                                                                                    
     These are trade associations  of businesses that market                                                                    
     products  directly to  consumers  by mail,  advertising                                                                    
     and  telephone.  Products  include  periodicals,  sound                                                                    
     recordings,  books,  CDs   videos  and  similar  items.                                                                    
     Promotions often  include free  gifts or  trial periods                                                                    
     with  a  cancellation option  if  the  customer is  not                                                                    
     satisfied or  has a change  of mind. In all  cases, the                                                                    
     customer specifically accepts the  offer before it goes                                                                    
     into effect.                                                                                                               
     HB 15  contains a Section 21  on page 8, line  14, that                                                                    
     would  remove the  exemption  for  magazines and  other                                                                    
     periodicals   and  similar   items   from  the   Alaska                                                                    
     Telemarketing Act,  AS 45.63.80(10).  I want  to hasten                                                                    
     to add  I'm talking  about this particular  section and                                                                    
     not  the direct  call  provision. The  concern that  my                                                                    
     clients  have  is  with this  exemption,  which  is  an                                                                    
     exemption  from  the  Telemarketing  Act.  We  have  no                                                                    
     testimony  or  complaint  about  the  do-not-call  list                                                                    
     either state or federal.                                                                                                   
     For  reasons  I  will  discuss,  the  direct  marketing                                                                    
     publishers oppose the removal  of this exemption. I was                                                                    
     saying also that from the  beginning the summary of the                                                                    
     bill  says that  the changes  to the  exemption statues                                                                    
     are technical.  This is not  a technical  amendment. It                                                                    
     takes a large segment of  the industry, removes it from                                                                    
     exemption  of  the  act  and   subjects  it  to  severe                                                                    
     criminal penalties for violation of that act.                                                                              
     The  origin of  the  Alaska  Telemarketing Act...is  an                                                                    
     anti-fraud statute  that was  originally aimed  at fly-                                                                    
     by-night   telemarketers.  It   requires  registration,                                                                    
     which is easier  to charge as a  violation than proving                                                                    
     fraud.  So,  the  charge  and  the  penalties  are  for                                                                    
     failure to register rather than  the fraud, itself. But                                                                    
     here,  to underline  the  non-technical  aspect of  the                                                                    
     change  of  section  21, are  the  criminal  penalties,                                                                    
     which  you will  find  in the  Telemarketing Act,  [AS]                                                                    
     43.63.060.  That hasn't  been changed,  so it's  not in                                                                    
     the  CS   bill....  This  is   in  AS   43.63.060,  the                                                                    
     Telemarketing Act.  A person  who sells or  attempts to                                                                    
     sell  property  or  services  by  telephonic  means  by                                                                    
     making substantially  the same offer  and substantially                                                                    
     the  same   terms  to  two  or   more  persons  without                                                                    
     complying with the  registration - that's one  - or who                                                                    
     solicits  or receives  payment  for  a purchase  before                                                                    
     receiving the  written contract required, is  guilty of                                                                    
     a class C felony. The people who are after the fly-by-                                                                     
     nighters were serious  about this and that  is why this                                                                    
     is a [indisc.] statute. We're  not talking about a fine                                                                    
     or  an injunction  or even  a misdemeanor  for heaven's                                                                    
     sakes. It's a class C felony.  So, for example - let me                                                                    
     back up  just a second  - to sell property  or services                                                                    
     by  telephonic  means  is  defined   in  the  act  -  '                                                                    
     Telephonic  means includes  a letter,  postcard, notice                                                                    
     or  other written  communication advising,  requesting,                                                                    
     motivating  or   otherwise  encouraging  a   person  to                                                                    
     contact  a  seller by  telephonic  means.'  So a  small                                                                    
     publication,  for example  Archeology Today....  It has                                                                  
     an ad in its publication...on  the newsstand in Alaska,                                                                    
     which  says  you  can subscribe  to  this  magazine  by                                                                    
     calling this  number. If they are  not registered, that                                                                    
     is  a  violation  of  the act  and  subject  to  felony                                                                    
     The other  circumstance is the written  contract, which                                                                    
     simply  does not  conform with  what national  business                                                                    
     does.  First of  all, I'd  like  to put  it in  context                                                                    
     here. The calls we all  love to hate are the solicitors                                                                    
     that call  us at dinnertime.  We all have that;  we all                                                                    
     hate them. That's why there  is a do-not-call list. But                                                                    
     the Telemarketing  Act is not determined  by the origin                                                                    
     of  the call.  An incoming  call from  a customer  to a                                                                    
     seller is covered by the  act. So, someone sees the ad.                                                                    
     It may  be the  ad in  a magazine,  which is  already a                                                                    
     class  C  felony,  or  it  may  be  someplace  else.  A                                                                    
     magazine may  have placed  an ad  in the  newspaper. It                                                                    
     could even be on the  Internet, I suppose, these days -                                                                    
     definitely these days. So,  the customer originates the                                                                    
     call to  the operator at  Rapid City, South  Dakota, or                                                                    
     India, wherever  these people are these  days, and says                                                                    
     I'd like  to subscribe to  your magazine. And  she says                                                                    
     fine, thank  you, you can  pay by credit card.  What is                                                                    
     your credit card number? The  customer gives the credit                                                                    
     card number; she  books the sale and she's  guilty of a                                                                    
     class  C felony  because there's  no written  contract.                                                                    
     Now, how  do you cure that?  Well, the way you  cure it                                                                    
     is you either,  first, conform to the act  and you have                                                                    
     a  written   contract  or   you  redline   Alaska.  The                                                                    
     practical fact  is that  this national  business, which                                                                    
     does  transactions   in  the  hundreds   of  thousands,                                                                    
     doesn't do business that way.                                                                                              
     A  written  contract  in  advance  has  the  effect  of                                                                    
     selling twice, I guess. It  just isn't the way national                                                                    
     business is  done. So, the  seller of  Archeology Today                                                                  
     magazine or Time magazine or  anything else isn't going                                                                  
     to conform  the national  market to Alaska.  After all,                                                                    
     the national  market is -  well let's see -  my figures                                                                    
     were  Alaska  is one  quarter  of  one percent  of  the                                                                    
     American  market.  So,  they would  have  to  create  a                                                                    
     special procedure  for Alaska that would  be costly and                                                                    
     raise  the cost  for  them, at  least,  for the  Alaska                                                                    
     consumer.  They'll  absorb it,  if  they  could do  it.                                                                    
     Generally, these people have  uniform prices across the                                                                    
     country.  This,  after  all, is  a  national  marketing                                                                    
     business to the entire country.                                                                                            
     Now, we  are an  association. The Direct  Marketers and                                                                    
     the Magazine  Publishers Association is a  trade group.                                                                    
     So, they don't  actually do it. And  there are hundreds                                                                    
     and literally  thousands of marketers and  they all had                                                                    
     to  make  their own  decisions.  But  the fact  of  the                                                                    
     matter  is to  do  that  for a  small  market would  be                                                                    
     extraordinarily   costly  and,   I   think,  the   only                                                                    
     conclusion that  they would come to  basically with one                                                                    
     quarter of one  percent of the market is, as  I say, to                                                                    
     take Alaska out  of the market. So, that  the ads would                                                                    
     have,  in  small print  I  guess,  offer not  valid  in                                                                    
     Alaska. And  the operators would have  to be instructed                                                                    
     to basically  not take the  call over the  telephone. I                                                                    
     think  that's a  pretty drastic  solution, particularly                                                                    
     because when this  law was enacted in Alaska  in 1993 -                                                                    
     it was originally enacted in  California in 1985 - that                                                                    
     actually, I gather,  happens to be where a  lot of this                                                                    
     back  room  stuff  goes  on  -  where  people  do  this                                                                    
     telemarketing,  get  credit  cards and  then  move  and                                                                    
     basically have  no fixed address. So,  California would                                                                    
     start  that and  Alaska followed  along with  a lot  of                                                                    
     other states.                                                                                                              
     In 1993, the Direct  Marketing Association was involved                                                                    
     with  the Attorney  General's  Office.  Attached to  my                                                                    
     testimony I've  given you a  letter from  the assistant                                                                    
     attorney general at the time  who worked with, in fact,                                                                    
     the  principal that  I work  with now  [indisc.].... At                                                                    
     that time,  the Attorney General's Office  seemed to be                                                                    
     in sync as  to who the target of  the Telemarketing Act                                                                    
     really was and who was  not a target and the legitimate                                                                    
     businesses represented by the  association were not the                                                                    
     target. This  law changes  that substantially  to bring                                                                    
     them under basically the same as the fly-by-nighters.                                                                      
     The  [indisc.] of  my testimony  here is  that what  we                                                                    
     have  substantial businesses  nationwide who  have long                                                                    
     done  this legitimately.  They are  subject to  Federal                                                                    
     Trade  Commission regulations  that  are extensive  and                                                                    
     govern  these  items; they  were  not  involved in  the                                                                    
     rash,  as I've  noted here,  in the  80s and  early 90s                                                                    
     where there  was prosecution by  the state  and federal                                                                    
     governments for this type of fraud....                                                                                     
     As I  say, it's deliberately onerous.  The registration                                                                    
     itself is  20 questions including the  name and address                                                                    
     and principal address of each  seller. So, I assume the                                                                    
     telephone operator  in India  would have to  be listed.                                                                    
     We are  not sure what  the impetus for this  removal of                                                                    
     the   exemption  is.   In  my   discussions  with   the                                                                    
     Department  of Law,  magazines were  supposed  to be  a                                                                    
     problem. Now,  whether that's an inbound  problem or an                                                                    
     outbound  problem, I  don't know  and can't  tell. I've                                                                    
     asked for  statistical information from  the Department                                                                    
     of Law. I've filed a  freedom of information request to                                                                    
     try to see  what the scope of the problem  is, but have                                                                    
     heard nothing  back from that. So,  basically, for this                                                                    
     amendment,  there is  actually no  empirical data  that                                                                    
     supports  the  removal,  much less  the  imposition  of                                                                    
     criminal  penalties.  Again,  I  would  note  that  the                                                                    
     association, as  you see from my  correspondence, makes                                                                    
     every  effort  to  work  with   states  and  work  with                                                                    
     attorney generals  to deal with  these problems.  It is                                                                    
     as much  in their interest  as it is in  the consumer's                                                                    
     to  have honest  business conducted  so they  don't get                                                                    
     mud splashed  on them.... Nothing of  the kind happened                                                                    
     here. I  must say that I  do not believe an  effort has                                                                    
     been made  by the Department  of Law to  educate itself                                                                    
     on how this business works and the impact.                                                                                 
CHAIR BUNDE asked him to summarize.                                                                                             
MR. FLINT summarized:                                                                                                           
     The people I  represent aren't the crooks  and we don't                                                                    
     think  we   should  be  made  the   crooks.  There  are                                                                    
     significant  regulations  and   we  believe  those  are                                                                    
     adequate.  We do  not believe  the exemption  should be                                                                    
CHAIR BUNDE asked  Ms. Drinkwater if he went to  a magazine stand                                                               
and  bought a  magazine with  a printed  solicitation for  him to                                                               
call in and order a magazine,  would that company be in violation                                                               
of HB 15 as currently written.                                                                                                  
MS.  DRINKWATER replied  that was  a possible  interpretation. An                                                               
amendment  could  exclude that  kind  of  situation, because  the                                                               
purpose of that definition, which  is found in AS 45.63.100, that                                                               
is  not part  of the  bill,  was to  include letters,  postcards,                                                               
notices   or  other   written   communications   to  a   consumer                                                               
encouraging them to call.                                                                                                       
     What the problem  that we see is  that people sometimes                                                                    
     get  postcards that  have  very  little information  on                                                                    
     them and  it will say  we've been trying to  reach you.                                                                    
     Please call us at our  800 number. The consumer doesn't                                                                    
     know what the nature of  the postcard is or why someone                                                                    
     has been  trying to  contact them.  They call  and find                                                                    
     that it's  a magazine  offer that's being  presented to                                                                    
       them.... So, I think that's something that can be                                                                        
MS.  DRINKWATER  explained that  magazine  scams  have a  lot  of                                                               
effect  on  consumers  in  Alaska,  often  senior  citizens.  She                                                               
outlined  four  consumer  complaints  from  2003.  One  gentleman                                                               
complained  that for  a year  he had  received magazines  and had                                                               
been billed  for them, but  he had  never ordered them.  He spent                                                               
considerable  efforts  over  18  months  trying  to  resolve  the                                                               
problem. When  he left the  country to  be a missionary  in South                                                               
Africa,  his  subscriptions  were  forwarded  to  his  sister  in                                                               
California and the bills continued to arrive.                                                                                   
Another  example is  a woman  received  a phone  call offering  a                                                               
subscription to some magazines for a  year. She told them she was                                                               
on  disability  and could  only  afford  payments of  $29.90  per                                                               
month.  That  amount was  debited  electronically  from her  bank                                                               
account.  Suddenly  the company  started  taking  out twice  that                                                               
amount. When  she called about it,  they told her it  was because                                                               
she had  two separate  accounts and they  were going  to continue                                                               
billing her in that same fashion.                                                                                               
A third example  is of magazine renewal  scams. Another gentleman                                                               
complained  about  receiving  a  subscription  renewal,  but  the                                                               
information did not  come from the company that had  sold him the                                                               
magazine, rather from a fraudulent  business that somehow learned                                                               
subscribers' information.                                                                                                       
A fourth complaint  is from an 86-year old gentleman  who did not                                                               
order any magazines,  but was suddenly billed for  them. When the                                                               
department wrote to the company  with his complaint attached, the                                                               
company responded that  he did, in fact, make the  order on tape.                                                               
It appeared that  he had consented over the phone  to receive the                                                               
magazines,  but  he  didn't recall  that  phone  conversation.  A                                                               
written  contract  would have  provided  him  with the  paperwork                                                               
necessary to review the information.                                                                                            
CHAIR  BUNDE asked  the bill's  sponsor, Ms.  Drinkwater and  Mr.                                                               
Flint to work together to address the concerns that were raised.                                                                
REPRESENTATIVE FATE  pointed out  that language  on page  3, line                                                               
18, exempts a  customer who initiates a phone call  from being in                                                               
violation of this act.                                                                                                          
CHAIR  BUNDE related  a solution  he  used once  for a  long-play                                                               
record club. He was sent to  Germany by the military and tried to                                                               
discontinue his  subscription, but the  company never got  any of                                                               
his cancellation  notices. It sent  "tons" of records  to Germany                                                               
that arrived  in multiple  pieces. He wrote  to the  company many                                                               
times saying he  never received the records and asked  to be left                                                               
alone, but they  threatened to sue him. When he  got married, his                                                               
wife took the  situation seriously and tore a piece  of paper out                                                               
of a spiral  notebook and wrote in pencil, "My  husband, he ain't                                                               
workin'. We ain't got no money." They never bothered him again.                                                                 
                 SB 337-ENERGY PROGRAMS & FUNDS                                                                             
CHAIR CON  BUNDE announced  CSSB 337(L&C) to  be back  before the                                                               
SENATOR RALPH SEEKINS moved to  pass CSSB 337(L&C) from committee                                                               
with  individual   recommendations  and  attached   fiscal  note.                                                               
Senators  Gary  Stevens,  Bettye   Davis,  Hollis  French,  Ralph                                                               
Seekins and  Chair Con Bunde  voted yea; and CSSB  337(L&C) moved                                                               
from committee.                                                                                                                 
            SB 368-TOBACCO TAX; LICENSING; PENALTIES                                                                        
CHAIR CON BUNDE announced SB 368 to be up for consideration.                                                                    
MR.  JOEL  GILBERTSON,  Commissioner, Department  of  Health  and                                                               
Social Services  (DHSS), explained  why it  is important  for the                                                               
state to  address the tobacco  levy this  year. It is  the number                                                               
one  public  health  crisis  threatening   the  state  of  Alaska                                                               
according to  a new report called  Tobacco in the Great  Land - A                                                             
Portrait of Alaska's Leading Cause  of Death, published Feb 2004.                                                             
He summarized:                                                                                                                  
     Tobacco is  the number  one cause of  death, disability                                                                    
     and  chronic illness  in this  state.  We have  already                                                                    
     seen  in Alaska,  alone, the  impact of  increasing the                                                                    
     tobacco tax  on consumption of tobacco  products. Since                                                                    
     1997, which  is the year  in which the most  recent tax                                                                    
     was increased, we've  seen a 30 percent  decline in the                                                                    
     consumption of  tobacco products  in Alaska.  Those are                                                                    
     round  numbers done  for the  section of  Epidemiology.                                                                    
     It's also  true to say  that there is an  absolute link                                                                    
     between  the  price  of  a   tobacco  product  and  its                                                                    
     consumption both  by youth  and adults.  Increasing the                                                                    
     unit  price of  tobacco  products is  one  of the  most                                                                    
     effective ways in deceasing  the utilization of tobacco                                                                    
     products  by  minors.  Young individuals  have  limited                                                                    
     resources;  they are  least prepared  to afford  higher                                                                    
     tobacco  prices  and for  that  reason  we see  a  very                                                                    
     beneficial  affect   on  the  consumption   of  tobacco                                                                    
     products by minors.                                                                                                        
     As youth  are especially  sensitive to the  proposed $1                                                                    
     per pack tax increase, we  believe this will add to the                                                                    
     50 percent decline  we have seen in  the consumption of                                                                    
     tobacco   since  1995.   In   1995,   we  conducted   a                                                                    
     statistically valid  youth risk behavior survey  and we                                                                    
     have  completed another  statistically valid  survey in                                                                    
     2003,  just last  year. The  numbers between  those two                                                                    
     studies   have   shown   a  50   percent   decline   in                                                                    
     consumption.  We believe  that  can be  built upon  and                                                                    
     additional successes can be  realized with the increase                                                                    
     in the tobacco tax. A  further drop in youth smoking of                                                                    
     just  15   percent  from   the  current   levels  would                                                                    
     translate  to 1,800  lives saved  from premature  death                                                                    
     due to smoking.                                                                                                            
     Adults  will also  see a  great benefit  from this  tax                                                                    
     increase,  because  it  is also  an  effective  way  of                                                                    
     discouraging continued  use of tobacco products  and to                                                                    
     incentivize the  use of tobacco cessation  programs. It                                                                    
     is  estimated that  the  increased  cost of  purchasing                                                                    
     cigarettes  following this  tax increase  will lead  to                                                                    
     about 350,000  adult smokers  to finally  quit smoking.                                                                    
     For  every 3,500  smokers who  quit, that  means you'll                                                                    
     have about 800 individuals who  will not die because of                                                                    
     a smoking caused death.                                                                                                    
     We have some other  vulnerable populations in the state                                                                    
     as  a  result  of tobacco  consumption.  Smoking  among                                                                    
     expectant mothers  would also reduce  significantly and                                                                    
     we believe that  this would result in  an estimated 850                                                                    
     babies being  spared from exposure to  maternal smoking                                                                    
     while in utero during the next five years.                                                                                 
     With  the  smoking  prevalence of  44  percent,  Alaska                                                                    
     Natives  have the  most to  benefit from  this program.                                                                    
     Alaska   Natives  disproportionately   consume  tobacco                                                                    
     products. It's  one of a number  of unacceptable health                                                                    
     disparities  that we're  working in  the department  to                                                                    
     correct. We  see it  in suicide, we  see it  in alcohol                                                                    
     consumption, but it's also  in tobacco consumption. The                                                                    
     Alaska Natives who  smoke is nearly double  the rate of                                                                    
     non-Natives.  Among  the  high  school  population,  of                                                                    
     those  who  participated  in the  youth  risk  behavior                                                                    
     survey, smoking is  almost four times that  of the non-                                                                    
     Native  population. We  believe that  is another  great                                                                    
     reason to move ahead with the tobacco tax increase.                                                                        
     This  reduction  in  Alaska's   health  burden  due  to                                                                    
     tobacco will  translate into health care  cost savings.                                                                    
     Within five  years, Alaska's  health care  savings from                                                                    
     fewer  smoking  related  pregnancies  and  births  will                                                                    
     amount to  $1.6 million in  savings and that  came from                                                                    
     the  Campaign for  Tobacco-Free Kids....  In 1998,  the                                                                    
     medical  expenditure cost  in  this  state, alone,  was                                                                    
     $133  million as  a result  of tobacco  consumption. In                                                                    
     terms  of lost  productivity  just  because of  tobacco                                                                    
     related deaths was $137 million.  That does not include                                                                    
     illness,  sickness, breaks  - that's  just deaths  from                                                                    
     This proposed  increase will raise $45.5  million.... I                                                                    
     would say that  we did look at some  of the econometric                                                                    
     studies that  were done.  We looked  at the  17 largest                                                                    
     econometric studies  and they  analyzed the  effects of                                                                    
     price   increases  on   tobacco   use  prevalence   and                                                                    
     consumption in the general  population. In every single                                                                    
     study, in each one of  the 17 econometric studies, they                                                                    
     did  find a  correlation between  an increase  in price                                                                    
     and  a decrease  in  consumption  of tobacco  products.                                                                    
     That  has ranged  from 1.5  to 3.7  percent. It's  more                                                                    
     acute in juvenile populations.  There are strong public                                                                    
     health reasons.                                                                                                            
     I started out by saying  that tobacco is the number one                                                                    
     public health  problem for the  State of Alaska.  It is                                                                    
     our leading cause of death;  it is our leading cause of                                                                    
     disability; it's  our leading cause of  chronic illness                                                                    
     and  I  can   go  through  a  litany   of  health  care                                                                    
     complications  that come  from  tobacco consumption.  I                                                                    
     think you're  aware of them and,  ironically enough, so                                                                    
     are smokers.  We did  do an  analysis of  what smokers,                                                                    
     themselves,  think   of  the  health   consequences  of                                                                    
     smoking....  Alaska ATS  in  2003, found  that  5 of  6                                                                    
     Alaska adults  who smoke  wish they  could quit.  Of 85                                                                    
     percent that  were surveyed, 85 percent  said that they                                                                    
     would like to  quit and would like  to have assistance.                                                                    
     Three out of four adults  who smoke believe that people                                                                    
     should be protected from second hand smoke.                                                                                
     We know there's  a public health problem  here and this                                                                    
     is  an appropriate  step to  bring our  tobacco tax  in                                                                    
     alignment with  other states, but  also to  insure that                                                                    
     we're protecting young people  from beginning to smoke.                                                                    
     People don't start smoking when  they are 30, 40 or 50.                                                                    
     Some do, but  very few. Most start when  they are under                                                                    
     the age  of 18.  The more  we can do  to make  the cost                                                                    
     prohibitive  for the  consumption of  tobacco products,                                                                    
     the  less we  will have  of downstream  consequences of                                                                    
     tobacco.  On  behalf  of  the  governor,  I  urge  your                                                                    
     consideration of this bill and moving it forward.                                                                          
CHAIR BUNDE  observed that during  the previous tobacco  tax war,                                                               
many people didn't believe that  price would have any impact, but                                                               
later acknowledged  that the consumer  was affected by  price. He                                                               
said a lot of people wanted  to testify on this issue and limited                                                               
the time to two minutes a person.                                                                                               
MR.  STEVE PORTER,  Deputy Commissioner,  Department of  Revenue,                                                               
said the  governor totally supported  this bill,  which increases                                                               
the excise tax from  $1 to $2 per pack. The  total revenues for a                                                               
fiscal year is estimated to be $35 million.                                                                                     
MS.  JOHANNA  BALES,  Program   Manager,  Cigarette  and  Tobacco                                                               
Products  Excise Tax,  Department  of Revenue,  pointed out  that                                                               
this bill  has some  clean up  measures from old  tax law  in the                                                               
first  sections  that  weren't   addressed  last  year  when  the                                                               
cigarette  excise  tax stamp  legislation  passed.  The issue  of                                                               
double taxation  where the tax had  to be paid again  in state if                                                               
the licensee was from out of state and had already paid the tax.                                                                
A couple other items had to  do with technical corrections to the                                                               
same  legislation. Current  law has  no provision  that allows  a                                                               
distributor who  makes sales  of product  out of  state to  get a                                                               
credit for taxes that may have  been paid in Alaska. Now there is                                                               
a  credit provision.  Another issue  was  corrected by  providing                                                               
credit for tax stamps that get lost in transit.                                                                                 
The new  legislation increases  the cigarette tax  from $1  to $2                                                               
per pack.  Tax on other  tobacco products would increase  from 75                                                               
percent to  100 percent  of the wholesale  price. There  are also                                                               
forfeiture provisions,  which means if someone  imports unstamped                                                               
cigarettes into the state for sale,  that the state would be able                                                               
to seize assets  that were used in the commission  of that crime,                                                               
which is a felony tax evasion.                                                                                                  
The final,  major, provision would  require a floor stock  tax to                                                               
be paid  on all inventories  that are  currently in the  state at                                                               
the time of the  effective date of the act. A  floor stock tax is                                                               
the difference  between the old  and new tax rates.  Every person                                                               
who  stocks cigarettes  for sale  would  be required  to take  an                                                               
inventory and pay the tax to  the Department of Revenue within 30                                                               
days. This  is an  important provision because  in 1997  when the                                                               
tobacco tax was  originally increased without a  floor stock tax,                                                               
a  significant amount  of stock  piling  occurred. She  estimated                                                               
about 200 million sticks of  cigarettes were stockpiled primarily                                                               
by  retailers  who  didn't  pass the  savings  on  to  consumers.                                                               
Approximately $7 million  of revenue was lost  and the department                                                               
received numerous complaints about it.                                                                                          
MS. CAROLE EDWARDS, Alaska Nurses  Association, said she has been                                                               
an oncology nurse for 20 years.                                                                                                 
     The  Alaska Nurses  strongly support  the tobacco  tax.                                                                    
     Tobacco use, as you know,  is directly linked to cancer                                                                    
     and it  is the most  preventable cause of death  in our                                                                    
     society. Second-hand smoke causes  illness and death to                                                                    
     innocent victims  who have  chosen not  to smoke  or in                                                                    
     our  children   who  cannot  make  that   decision  for                                                                    
     Tobacco  use is  alarmingly high  in our  Alaska Native                                                                    
     population, particularly  in children  and adolescents.                                                                    
     Statistics  do  show  that increased  cost  of  tobacco                                                                    
     decreases the use particularly in our youth.                                                                               
MS.  EDWARDS  related  a  short  story about  how  she  became  a                                                               
cigarette smoker at the age of  17. She tried to quit many times,                                                               
but was unsuccessful, even after  her second child was born seven                                                               
weeks prematurely and almost died.  "It is an extremely addictive                                                               
disease and  very difficult to  quit once you have  started." She                                                               
finally quit when  her husband left the army and  she didn't have                                                               
access to cheap cigarettes any more. This happened 31 years ago.                                                                
MS.  JENNIFER  APP,  Alaska  Advocacy  Director,  American  Heart                                                               
Association, strongly supported SB 368.                                                                                         
     Cardiovascular disease  takes a  big toll in  the State                                                                    
     of Alaska. It is the number  one cause of death in this                                                                    
     state, if  you combine  heart attacks and  strokes. The                                                                    
     number one preventable  cause of cardiovascular disease                                                                    
     is cigarette smoke.                                                                                                        
She supported the testimony  of Commissioner Gilbertson regarding                                                               
the costs of smoking.                                                                                                           
     If we  actually wanted  to recoup  the amount  of money                                                                    
     that  this  state subsidizes  every  year  in terms  of                                                                    
     taking  care of  people  sickened by  cigarettes or  in                                                                    
     terms of lost  productivity, we would need  to tax each                                                                    
     pack of cigarettes at $6.38  per pack. So, when we talk                                                                    
     about increasing this tax to  $2 a pack, we're not even                                                                    
     making  up  the  difference.  So, I  really  urge  this                                                                    
     committee  to  think  hard  about  both  the  financial                                                                    
     aspects and also the important health costs.                                                                               
MS.   CHRISTIE  GARBE,   Director,  American   Lung  Association,                                                               
strongly supported SB 368.                                                                                                      
     High  school smoking  rates  have dramatically  dropped                                                                    
     since  1995  and  it's  a  commitment  from  all  these                                                                    
     program  elements  working  together. One  of  the  big                                                                    
     features in  that was increasing  the tax in  '97. What                                                                    
     we're  talking about  is children  not picking  up that                                                                    
     first cigarette... and don't have to quit later....                                                                        
     I just  heard yesterday  in the Alaska  Tobacco Control                                                                    
     Alliance meeting [that] the number  one cause of cancer                                                                    
     with Alaska  Natives is  now lung  cancer and  this has                                                                    
     come upon  them as  a new  horizon and  this is  a very                                                                    
     serious  problem....  The  reason  we  are  here  today                                                                    
     supporting the tax has nothing  to do with the revenue.                                                                    
     It has  only to do  with lives saved and  future health                                                                    
     care costs reduced.                                                                                                        
MS. MARIAH  WARREN, Alaskan  resident, said she  is a  student at                                                               
the University  of Alaska  Southeast and works  at a  local super                                                               
market and it's very apparent to  her that the cost of cigarettes                                                               
has a  very direct  link to  who smokes.  She fully  supported SB                                                               
MS.  EMILY  NENON,  Alaska  Advocacy  Director,  American  Cancer                                                               
Society, supported everyone's testimony and passage of SB 368.                                                                  
CHAIR  BUNDE asked  her  what percentage  of  the general  Alaska                                                               
public supported the tobacco tax.                                                                                               
MS.  NENON  replied that  67  percent  of Alaska  voters  support                                                               
increasing the  tobacco tax. The  support is the same  whether it                                                               
is  at 50  cents  or $1.  There is  consistent  support from  all                                                               
regions of the state.                                                                                                           
MS.  DORIS ROBBINS,  Juneau resident,  said she  is on  a crusade                                                               
against tobacco.  She agreed with  everything that has  been said                                                               
here  today. The  tax would  obviously lower  the number  of kids                                                               
starting  to smoke  and encourage  adults to  stop. She  has read                                                               
biological  data   that  says  when  children   get  addicted  to                                                               
something, it is much harder  for them to stop. Something happens                                                               
to  their brains  in their  formative years.  She also  heard Dr.                                                               
Urata say on  KTOO radio that if tobacco was  introduced as a new                                                               
product today, the Federal Drug  Administration (FDA) would never                                                               
allow it to be put on the shelves.                                                                                              
MS. ROBBINS  thought that  stopping kids  from ever  starting was                                                               
important, but focusing  on the cost was important  as well. Data                                                               
from Alaska Tobacco-Free Kids said  that in 1998, $60 million was                                                               
spent in Medicaid costs for tobacco related illnesses.                                                                          
TAPE 04-27, SIDE A                                                                                                            
MS. ROBBINS  related how a  friend of  hers died last  year after                                                               
contracting  pancreatic cancer  from  smoking.  She lasted  about                                                               
four months and in that time she  used all of her savings and had                                                               
to go  to the hospital because  the pain was so  severe she could                                                               
not be  at home.  She spent the  last months of  her life  in the                                                               
hospital trying to relieve pain.                                                                                                
Personally, she has permanently  reduced lung function and asthma                                                               
caused by second-hand smoke and  has to take daily medications to                                                               
be able to breath. That costs  her $4,800 per year if she doesn't                                                               
get sick.  She pointed out  that a  few people in  senior housing                                                               
smoke and it affects all the  other people who live there; she is                                                               
personally trying to help one of them now.                                                                                      
     Apparently, smoking  is allowed in all  [senior] Alaska                                                                    
     housing   which  is   partially  financed   with  state                                                                    
     funding. In order  to save the state money,  we need to                                                                    
     look at  tobacco as a  whole -  what it is  costing the                                                                    
     state. I look at this  tobacco tax as pre-insurance for                                                                    
     tobacco users, because they're going  to wind up at the                                                                    
     end of their  ropes on Medicaid.... This is  a big bill                                                                    
     for the State of Alaska.                                                                                                   
MS. MARGUERITE STETSON, State Coordinator for Advocacy, AARP                                                                    
Alaska, supported SB 368.                                                                                                       
     ...a  higher tobacco  tax will  help prevent  our youth                                                                    
     from  beginning  to  smoke.  It  will  also  help  some                                                                    
     current smokers to stop. If  raising the cost of a pack                                                                    
     of   cigarettes   helps   prevent   any   of   Alaska's                                                                    
     grandchildren from  starting to smoke, we  are strongly                                                                    
     in favor of it.                                                                                                            
     We  are  concerned  with the  data  in  the  governor's                                                                    
     transmittal letter indicating  that Alaska Natives, and                                                                    
     particularly Alaska Native  high school students, smoke                                                                    
     at a  much higher rate than  the non-Native population.                                                                    
     We  strongly recommend  that some  of  the new  revenue                                                                    
     coming in to state government  from the tax increase be                                                                    
     used  to target  cessation  efforts  to Native  smokers                                                                    
     and, in particular, to our Native youth.                                                                                   
     This week we heard a  report from the Medicare trustees                                                                    
     indicated  that  health  care costs  were  higher  than                                                                    
     expected. In AARP, we  worry about Medicare's financial                                                                    
     status. We also  know that Medicare would  be in better                                                                    
     financial  shape if  so many  current retirees  had not                                                                    
     been smokers.  Increasing tobacco  taxes in  Alaska has                                                                    
     immediate beneficial health  consequences. It also will                                                                    
     have  beneficial long-term  financial consequences  for                                                                    
     both  Medicare and  Medicaid. SB  368 is  good economic                                                                    
     policy and  good health policy.  It makes sense  and it                                                                    
     is fair.... Thank you.                                                                                                     
MS. JOELLE HALL, mother of two young children, said when they                                                                   
reach 12 and 13 years old, she really hopes that smoking is cost                                                                
prohibitive for them.                                                                                                           
     I  hope you  will consider  this inflation  proofing of                                                                    
     Alaska's tobacco  tax and that you  will consider doing                                                                    
     it again in a couple years,  because I think we need to                                                                    
     keep  it expensive  and  keep it  away  from our  kids.                                                                    
MS. KATTARYNA STILES, Alaska Native Health Board, said:                                                                         
     I do  think this proposal is  a good idea. It's  a good                                                                    
     idea  because it  will  save lives.  It's  a good  idea                                                                    
     because  it will  raise  money; and  it's  a good  idea                                                                    
     because it will reduce health care costs....                                                                               
She supported previous testimony,  especially comments on what it                                                               
means particularly to the Alaska Native community.                                                                              
     In western  Alaska, among  pregnant women,  the tobacco                                                                    
     use rate is as high  as 67 percent. Sixty-seven percent                                                                    
     of any  demographic using tobacco is  unacceptable, but                                                                    
     100  percent of  those  unborn  children are  ingesting                                                                    
     tobacco products.                                                                                                          
CHAIR BUNDE asked if anyone else  wanted to testify. There was no                                                               
response  and   he  closed  public   testimony.  There   were  no                                                               
amendments and he asked the will of the committee.                                                                              
SENATOR  SEEKINS  moved  to  pass  SB  368  from  committee  with                                                               
attached fiscal note and individual recommendations.                                                                            
CHAIR BUNDE asked  for a roll call vote.  Senators Hollis French,                                                               
Ralph Seekins,  Gary Stevens,  Bettye Davis  and Chair  Con Bunde                                                               
voted  yea; and  SB  368  moved from  committee.  There being  no                                                               
further business to  come before the committee,  he adjourned the                                                               
meeting at 3:30 p.m.                                                                                                            

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