HOUSE FINANCE COMMITTEE APRIL 8, 1997 1:40 P.M. TAPE HFC 97 - 89, Side 1, #000 - end. TAPE HFC 97 - 89, Side 2, #000 - #253. CALL TO ORDER Co-Chair Gene Therriault called the House Finance Committee meeting to order at 1:40 P.M. PRESENT Co-Chair Hanley Representative Kelly Co-Chair Therriault Representative Grussendorf Representative Davies Representative Martin Representative Davis Representative Moses Representative Foster Representative Mulder and Representative Kohring were not present for the meeting. ALSO PRESENT Representative Mark Hodgins; Michael Conway, Acting Director, Division of Air & Water Quality, Department of Environmental Conservation; Dennis Poshard, Director, Charitable Gaming Division, Department of Revenue. SUMMARY HB 50 An Act relating to the use of broadcasting to promote or conduct certain classics or sweepstakes; and providing for an effective date. CS HB 50 (FIN) was reported out of Committee with "individual recommendations" and with a zero fiscal note by the Department of Revenue dated 2/21/97. HB 128 An Act relating to water quality; directing the Department of Environmental Conservation to conduct water quality research; establishing the Water Science Oversight Board; and providing for an effective date. CS HB 128 (FIN) was reported out of Committee with a "do pass" recommendation and with a fiscal note by the Department of Law dated 4/01/97 and the House Finance Committee. 1 HOUSE BILL 128 "An Act relating to water quality; directing the Department of Environmental Conservation to conduct water quality research; establishing the Water Science Oversight Board; and providing for an effective date." Co-Chair Hanley MOVED to RESCIND previous action of moving CS HB 128 (FIN) out of Committee, 4/07/97, in order that the fiscal note could be further discussed. There being NO OBJECTION, action was rescinded. MICHAEL CONWAY, ACTING DIRECTOR, DIVISION OF AIR & WATER QUALITY, DEPARTMENT OF ENVIRONMENTAL CONSERVATION, stated that the Department supports the fiscal note as prepared by the House Finance Committee. Co-Chair Hanley MOVED to report CS HB 128 (FIN) out of Committee with individual recommendations and with the new fiscal note adopted by the House Finance Committee and the 4/01/97 fiscal note by the Department of Law. There being NO OBJECTION, it was so ordered. CS HB 128 (FIN) was reported out of Committee with a "do pass" recommendation and with a fiscal note by the Department of Law dated 4/01/97 and the House Finance Committee. HOUSE BILL 50 "An Act relating to the use of broadcasting to promote or conduct certain classics or sweepstakes; and providing for an effective date." REPRESENTATIVE MARK HODGINS explained that HB 50 would amend AS 05.15.640 by removing the prohibition on broadcast advertising for the legislatively identified classics as per statute. At present the only classics that are allowed to use broadcasting for promotion are fishing derbies. To provide an advertising vehicle will assist these organizations to increase public awareness of their events. Representative Martin noted his concern in opening the door to "gambling". He questioned how the proposed classification had been chosen. Representative Hodgins replied that the proposed groups are the only non-profits in the State established legislatively. Co-Chair Therriault pointed out that this year, the Iditarod had lost money which they attribute to not being able to advertise the race. He inquired if they were the ones who 2 had requested the legislation. Mr. Hodgins noted that he had been working most closely with the Kenai Chamber of Commerce based upon their concern for the local Snow Goose Classic race. These groups can not advertise their events, curtailing public knowledge of ticket availability. At this time, the only legal advertising which can be done, is through broadcast media news stories. Advertising by statute only provides that the organization receive 5% of the revenue generated. Co-Chair Hanley questioned where in statute the 5% reference occurred. DENNIS POSHARD, DIRECTOR, CHARITABLE GAMING DIVISION, DEPARTMENT OF REVENUE, responded that there is no 5% percent budget limit requirement on advertising with regard to gaming statutes. He pointed out that he could not speak to other statutes which may exist. Co-Chair Hanley asked if these organizations had been allowed to advertise through print media only and not through broadcast. Mr. Poshard stated that this restriction would apply to all charitable gaming activities and would only be applied to the use of broadcasting as defined in statute. The restriction is on the use of broadcasting to "promote" or "conduct" the use of charitable gaming activities. Representative Hodgins explained his understanding of the difference between "conducting" and "promoting" activities. The intent of HB 50 is solely for advertising. Mr. Poshard emphasized that the bill would continue to prohibit the use of broadcasting to promote or conduct bingo, pull-tabs, raffles, lotteries and contests of skill. The only games which would become open would be the classics and dog mushing contests. Mr. Poshard pointed out that those types of activities account for less than 1% of the total charitable gaming pie. Dog mushing is not a major part of charitable gaming activities. The ice classics are small, although returns a higher percentage of gross than other activity types. Co-Chair Therriault asked if there would be a problem with deleting "or conduct", on Page 1, Line 6. He thought that deletion would clarify that broadcasting would be used only to "promote". Representative Hodgins commented that he would support that change. Mr. Poshard indicated that the Department objected to the change, unless language was added prohibiting the conduct of gaming over the airwaves. Removing that language would remove the prohibition on conducting. Co-Chair Therriault pointed out that concern had been clarified on Page 1, Line 14. Mr. Poshard agreed. 3 Co-Chair Therriault MOVED Amendment #1 which would delete "or conduct", reiterating that the change would allow the "promotion" of the classics without the "conducting". Co- Chair Hanley pointed out conflict with the reference on Page 2, Section (b), should that language be deleted. Representative Hodgins explained that the entire list of designated non-profits indicated in the sponsor statement were not all in operation at this time. Representative J. Davies concurred that problems would result with the proposed language change. Representative Kelly referenced language on Page 2, Line 4, in which "cable" is used for a distribution method. Co- Chair Therriault WITHDREW the MOTION to adopt Amendment #1. He suggested that changes to Section (b) would not be for the promotion of the fish derbies but rather would provide a means to conduct the fish derbies. Mr. Poshard clarified the intent of the House State Affairs committee substitute. A deletion to the group using broadcasting to promote fish derbies, would remove the exemption from the prohibition, in which broadcasting would then no longer be used to promote the derbies. Section (a) of the bill allows promotion or conducting of all the classic contests. Co-Chair Therriault inquired if there would be a problem in deleting the language on Page 1, Line 6. Mr. Poshard could not foresee a problem with that change. Discussion followed between Mr. Poshard and Representative Kelly regarding broadcasting to promote charitable gaming activities and the use of cable lines. Representative Hodgins pointed out that Section (a) allows the broadcast of various activities. A group may not use broadcasting to promote or conduct any other activities other than the ones listed. There is no prohibition on cable. Mr. Poshard emphasized, currently, an organization is not allowed to use any broadcast means to conduct charitable gaming other than the exemption for non-commercial. Under the proposed legislation, a group would be able to use commercial, non- commercial or cable to promote or conduct a charitable gaming activity. Mr. Poshard explained his personal distinction between conducting and promoting over the airwaves. Conducting would be using the airwaves to conduct the activity; whereas, announcing a winner or having a live broadcast at a fish derby weigh-in would merely be promoting. Mr. Poshard pointed out that auctions are not gaming activities. 4 (Tape Change HFC 97-89, Side 2). Representative Martin asked if the drawing of a winning ticket on television would be promoting or conducting. Mr. Poshard stated that he felt that would be promoting. For the use of the broadcast media to consider conducting would involve the participants in that media. Mr. Poshard spoke to the fiscal note. He pointed out that currently in Alaska, there exists a limited number of organizations which could qualify to participate in this type of activity. The Department does not anticipate that there will be much more work generated since the activities must be authorized by statute. Violation of any action could place the permit in jeopardy, creating a natural monitor. Co-Chair Hanley asked if there was a limit attached to the profit received for classics. Mr. Poshard replied that $1 million dollars could be awarded in prizes annually for all charitable gaming activities except bingo which has a $840 thousand dollar limit. Co-Chair Therriault MOVED to delete "or conduct", Page 1, Line 6. Representative Foster OBJECTED. A roll call vote was taken on the MOTION. IN FAVOR: Moses, Kelly, Martin, Therriault, Hanley OPPOSED: J. Davies, G. Davis, Grussendorf Representatives Mulder, Foster and Kohring were not present for the meeting. The MOTION PASSED (5-3). Co-Chair Hanley suggested that the legislation would provide an advantage to the classics. He thought that advantage could result in other groups "pushing" for legislative designation in order to take advantage of such advertising. Representative Martin voiced his concern with passage of the legislation. He reiterated that action would provide "openings" for more gambling in the State. Representative Foster MOVED to report CS HB 50 (FIN) out of Committee with individual recommendations and with the accompanying fiscal note. Representative Martin OBJECTED. A roll call vote was taken on the MOTION. IN FAVOR: J. Davies, G. Davis, Grussendorf, Foster, Moses, Therriault OPPOSED: Kelly, Martin, Hanley 5 Representatives Mulder and Kohring were not present for the vote. The MOTION PASSED (6-3). CS HB 50 (FIN) was reported out of Committee with "individual recommendations" and with the fiscal note by the Department of Revenue dated 2/21/97. ADJOURNMENT The meeting adjourned at 2:35 P.M. 6