HOUSE STATE AFFAIRS STANDING COMMITTEE February 8, 1994 8:00 a.m. MEMBERS PRESENT Representative Al Vezey, Chairman Representative Pete Kott, Vice Chairman Representative Bettye Davis Representative Gary Davis Representative Harley Olberg Representative Jerry Sanders Representative Fran Ulmer MEMBERS ABSENT None COMMITTEE CALENDAR HB 328: "An Act relating to motor vehicle registration and registration fees; to fees for drivers licenses and permits; and providing for an effective date." HEARD AND HELD TO TIME UNCERTAIN HB 363: "An Act repealing an additional fee for motor vehicle registration not conducted by mail." HEARD AND HELD TO TIME UNCERTAIN HCR 25: Relating to a state materials exchange. PASSED OUT OF COMMITTEE HB 240: "An Act allowing gaming devices on ferries." HEARD AND HELD TO TIME UNCERTAIN HB 345: "An Act relating to the preservation of public facilities and to appropriations for annual maintenance and repair, periodic renewal and replacement, and construction of public facilities." NOT HEARD WITNESS REGISTER REP. TERRY MARTIN Alaska State Legislature Alaska State Capital, Room 411 Juneau, AK 99811 Phone: 465-3783 Position Statement: Sponsor of HB 328. JANE BUTLER, Staff REPRESENTATIVE PETE KOTT Alaska State Capitol, Room 409 Juneau, AK 99811 Phone: 465-3777 Position Statement: Testified in favor of HB 328. JUANITA HENSLEY Division of Motor Vehicles Department of Public Safety P.O. Box 20020 Juneau, AK 99802 Phone: 465-2650 Position Statement: Testified in favor of HB 328 and HB 363. REPRESENTATIVE CARL MOSES Alaska State Legislature Alaska State Capitol, Room 204 Juneau, AK 99811 Phone: 465-4451 Position Statement: Sponsor of HB 240. DONALD STOLWORTHY, Director Division of Charitable Gaming Department of Revenue P.O. Box 110440 Juneau, AK 99811 Phone: 465-2229 Position Statement: Answered questions on HB 240. PREVIOUS ACTION BILL: HB 328 SHORT TITLE: BIENNIAL VEHICLE REGISTRATION SPONSOR(S): REPRESENTATIVE(S) MARTIN,BARNES,Phillips,B.Davis JRN-DATE JRN-PG ACTION 01/03/94 2013 (H) PREFILE RELEASED 01/10/94 2013 (H) READ THE FIRST TIME/REFERRAL(S) 01/10/94 2013 (H) STATE AFFAIRS, FINANCE 01/13/94 2054 (H) COSPONSOR(S): B. DAVIS 01/22/94 (H) STA AT 08:00 AM CAPITOL 102 01/22/94 (H) MINUTE(STA) 01/29/94 (H) MINUTE(STA) 02/08/94 (H) STA AT 08:00 AM CAPITOL 102 BILL: HB 363 SHORT TITLE: NO FEE FOR CAR REGISTRATION IN PERSON SPONSOR(S): REPRESENTATIVE(S) KOTT,B.Davis JRN-DATE JRN-PG ACTION 01/11/94 2033 (H) READ THE FIRST TIME/REFERRAL(S) 01/11/94 2033 (H) STATE AFFAIRS, FINANCE 01/13/94 2056 (H) COSPONSOR(S): B. DAVIS 01/29/94 (H) STA AT 08:00 AM CAPITOL 102 01/29/94 (H) MINUTE(STA) 01/29/94 (H) MINUTE(STA) 01/29/94 (H) MINUTE(STA) 02/08/94 (H) STA AT 08:00 AM CAPITOL 102 BILL: HCR 25 SHORT TITLE: STATE INDUSTRIAL MATERIALS EXCHANGE SPONSOR(S): REPRESENTATIVE(S) KOTT,Green,Menard,Nordlund,B.Davis JRN-DATE JRN-PG ACTION 01/10/94 2005 (H) READ THE FIRST TIME/REFERRAL(S) 01/10/94 2005 (H) LABOR & COMMERCE, STATE AFFAIRS 01/14/94 2082 (H) COSPONSOR(S): GREEN 01/21/94 2126 (H) COSPONSOR(S): MENARD 01/24/94 2139 (H) COSPONSOR(S): NORDLUND 01/26/94 2159 (H) COSPONSOR(S): B. DAVIS 01/27/94 (H) L&C AT 03:00 PM CAPITOL 17 01/27/94 (H) MINUTE(L&C) 01/31/94 2201 (H) L&C RPT CS(L&C) 6DP 01/31/94 2201 (H) DP: HUDSON, PORTER, SITTON, MACKIE 01/31/94 2201 (H) DP: WILLIAMS, GREEN 01/31/94 2201 (H) -ZERO FISCAL NOTE (DEC) 1/31/94 02/08/94 (H) STA AT 08:00 AM CAPITOL 102 BILL: HB 240 SHORT TITLE: GAMBLING DEVICES ON STATE FERRIES SPONSOR(S): REPRESENTATIVE(S) MOSES,Bunde JRN-DATE JRN-PG ACTION 03/19/93 708 (H) READ THE FIRST TIME/REFERRAL(S) 03/19/93 708 (H) TRANSPORTATION, STATE AFFAIRS, FINANCE 04/01/93 (H) TRA AT 05:00 PM CAPITOL 17 04/01/93 (H) MINUTE(TRA) 04/05/93 977 (H) TRA RPT 1DP 3NR 04/05/93 978 (H) DP: G.DAVIS 04/05/93 978 (H) NR: MACKIE, MULDER, MENARD 04/05/93 978 (H) -FISCAL NOTE (DOT) 4/5/93 04/05/93 978 (H) REFERRED TO STATE AFFAIRS 02/08/94 (H) STA AT 08:00 AM CAPITOL 102 BILL: HB 345 SHORT TITLE: PRESERVATION OF PUBLIC FACILITIES SPONSOR(S): REPRESENTATIVE(S) JAMES JRN-DATE JRN-PG ACTION 01/07/94 2018 (H) PREFILE RELEASED 01/10/94 2018 (H) READ THE FIRST TIME/REFERRAL(S) 01/10/94 2018 (H) STATE AFFAIRS, FINANCE 01/25/94 (H) STA AT 08:00 AM CAPITOL 102 01/25/94 (H) MINUTE(STA) 02/08/94 (H) STA AT 08:00 AM CAPITOL 102 ACTION NARRATIVE TAPE 94-8, SIDE A Number 000 CHAIR AL VEZEY called the meeting to order at 8:00 a.m., announcing that a quorum was present. Members present were REPRESENTATIVES KOTT, SANDERS, G. DAVIS, B. DAVIS, and ULMER. REPRESENTATIVE OLBERG entered at 8:01 a.m. HB 345 was postponed by request of the sponsor, REPRESENTATIVE JEANNETTE JAMES. CHAIR VEZEY opened the floor with HB 328 and a work draft of the committee substitute to HB 328 was handed out. HB 328 - BIENNIAL VEHICLE REGISTRATION Number 046 REPRESENTATIVE TERRY MARTIN, sponsor of HB 328, began with an overview of the committee substitute to HB 328. He thanked the Department of Finance and the Department of Environmental Conservation (DEC) for their contributions to the revised version of HB 328. There is now a savings of $300,000 dollars to the general fund which will be made up by fees. Changes include the date, the addition of picking up stalled or trashed vehicles, and the DEC will be the major enforcer of emissions control. Cities do not like the idea of collecting their own taxes, however, it will add to the efficiency of the registration process. REPRESENTATIVE MARTIN noted Anchorage as an example. JANE BUTLER, representing REPRESENTATIVE KOTT, explained the changes to HB 328. Sections 1-5 have no changes. Section 6 adds a motor vehicle pollution fee, while deleting the annual Motor Vehicle Registration Tax (MVRT). The MVRT will be transferred to municipalities. Sections 7-11 have no changes. Section 12 is corrected on page 6(15) to have no increase in fee. Section 13 allows the Division of Motor Vehicles (DMV) to collect the emission control program fee, which will be transferred to the DEC. Section 14 allows fees to be paid with a credit card. Section 15 is a conforming amendment to Section 16 having the municipalities impose the tax instead of the DMV. Section 16 changes the title from the DMV to the municipalities. The fee schedule is the same, but the reference to the DMV to collect the tax is deleted, page 8(c). Section 18 refers to the DEC administering the emission control program. DEC is to determine enforcement, regulation, and price of the program. Section 18(f) establishes a motor vehicle emissions control account in the general fund which the Environmental Protection Agency is in favor of. Section 19 deletes AS 28.10.108(b) by request of the DMV because it is no longer applicable to the current registration process. AS 28.10.431 will be repealed and a new statute will be enacted with the municipalities to cover the tax collection change. Section 20 allows the registration fee to be collected at the time of registration or renewal. Section 20(b) begins a start up fee on July 1, 1994, through December 1, 1994, which will cost $2 for six months before the biennial process begins. This fee will provide DEC with a start up fund to implement the emissions program. DEC's fee for biennial registration, which is yet to be determined, will begin on January 1, 1995. Number 208 REP. FRAN ULMER inquired if the transfer of the tax to the municipalities would really be more efficient. The increase of paperwork was as concern. Number 225 MS. BUTLER could not answer the question and deferred it to REPRESENTATIVE MARTIN to answer in later testimony. Number 237 CHAIR VEZEY noted the direction of HB 328 was to remove the DMV from the collection of municipal property taxes. He asked if the possibility of collecting taxes on a biennial basis was explored. MS. BUTLER believed not. The main accomplishment of HB 328 was to separate the DMV from the MVRT. Number 250 CHAIR VEZEY asked if the vehicle registration fees remained unchanged and if they still are one and one-half times the current rate. He noted the change to allow the DMV to collect a $2 emissions fee for the rest of the calendar year. MS. BUTLER replied the fee begins July 1, 1994. Number 257 CHAIR VEZEY emphasized the July 1, 1994, start up date and the effective date in Section 22 would be nullified without a two-thirds vote by both houses. Number 261 MS. BUTLER stated the DEC expects the administration costs for the emission control program will be covered by a fee of approximately $8 every two years. Number 263 CHAIR VEZEY questioned why the tax rate for vehicles is included in HB 328, if the DMV is getting out of collecting taxes. MS. BUTLER replied the original information was located in AS 28 which is under DMV. The information is being repealed from AS 28 to be in AS 29 under a municipalities statute. Number 299 CHAIR VEZEY asked who would be collecting the taxes under Section 16. MS. BUTLER responded the municipalities would be. Number 304 CHAIR VEZEY stated he understood why a state would need a statute if it needed to collect taxes, however, he did not understand why the legislature would need to be involved in the Anchorage municipality. Number 310 REPRESENTATIVE GARY DAVIS asked MS. BUTLER which of the fees or taxes are new to the municipality of Anchorage. Number 313 MS. BUTLER noted the MVRT under Section 16 is exactly the same as what is currently being charged. REPRESENTATIVE G. DAVIS believed Section 16 would be new. MS. BUTLER pointed out to REPRESENTATIVE G. DAVIS that the MVRT has always been collected. REPRESENTATIVE PETE KOTT stated there may be reason to remove Section 16 from HB 328 since there is not a fee change. REPRESENTATIVE BETTYE DAVIS requested the testimony of REPRESENTATIVE MARTIN on HB 328. Number 341 REPRESENTATIVE ULMER highlighted the principle purposes of HB 328 to REPRESENTATIVE MARTIN. She then questioned what the true efficiency would be of giving the MVRT back to the municipalities and wondered if it would be a duplication of the current state process. Number 359 REPRESENTATIVE MARTIN replied in the past individuals received and filled out a property tax statement. The DMV then began collecting taxes for the city. He believed this was done to make the people believe they were paying less in property taxes by having the state take care of it. The fees are included because the Alaska Constitution states only the Legislature has the power to tax and it shall never be surrendered; meaning the state has the power on all levels to impose taxes. The degree of taxation is included in Title 29 for municipalities. REPRESENTATIVE MARTIN noted the MVRT has become a burden to the state and just last year the DMV wanted to increase the fees to 35 percent. The cities, however, did not want to give them more money for collecting the fee. He felt the one form the city will provide would be more efficient than the transporting process from the state to the city. REPRESENTATIVE MARTIN emphasized Section 16 was included to show the changes occurring and his major concern with HB 328 was to decrease the lines at the DMV. REPRESENTATIVE B. DAVIS inquired if this process would provide the $300,000 savings. Number 423 REPRESENTATIVE MARTIN replied yes, and noted the DEC will be able to decrease the general fund allocation to about $260,000 and also collect fees on those who default on getting their registration. Decals are going to be provided to ease in the enforcement of inspection and registration control. Number 439 CHAIR VEZEY asked REPRESENTATIVE MARTIN if he believed Section 16 was needed to grant Anchorage the authority to takeover the MVRT. Number 442 REPRESENTATIVE MARTIN responded Anchorage already has the authority and it is for technical purposes to return it to Title 29. CHAIR VEZEY asked if the legislature structures property taxes for municipalities. REPRESENTATIVE MARTIN clarified the legislature allows the cities certain authority. Number 452 CHAIR VEZEY noted the legislature does not structure sales taxes. Number 453 REPRESENTATIVE MARTIN replied the authority (to structure taxes) is in Title 29. Number 454 CHAIR VEZEY wondered why the cities needed more authority than that given in Title 29 to do property taxes. Number 455 REPRESENTATIVE MARTIN answered past legislatures decided the MVRT would be the tax for various vehicles and experts believe it should now be in Title 29. Number 461 CHAIR VEZEY introduced JUANITA HENSLEY as the next witness. Number 474 JUANITA HENSLEY, representing the DMV, testified in favor of HB 328. MS. HENSLEY stated the DMV has been collecting 5-6 million dollars for 10 municipalities, eight percent of which is being kept to cover administrative costs. HB 328 will account for a 4.9 million dollar loss to the general fund which will be further increased without the eight percent collection. Section 16 of HB 328 will provide a set fee for the municipalities to collect the MVRT. Currently, the municipalities are set into a tax base when they agree to have the DMV collect their taxes. Therefore, without DMV available for collection, Section 16 will provide the municipalities with tax base guidelines. MS. HENSLEY proposed Section 16 be deleted and the authority be placed back with the municipalities under Title 29, but do not establish a set tax base structure. The municipalities could set it where they like. DMV is in favor of biennial vehicle registration to cut down on their lines and improve efficiency. Number 510 CHAIR VEZEY asked if it would be feasible to change the tax collection to a biennial period. Number 518 MS. HENSLEY did not know if there was a constitutional problem with collecting on a two year tax base, in which case, moving out of the state and eligibility for rebates would have to be a consideration. Number 522 CHAIR VEZEY noted people do not receive a rebate after buying an annual license and moving out of state after six months. Number 524 MS. HENSLEY replied there is a difference between an annual registration and an actual tax the state is collecting for the cities. Number 525 CHAIR VEZEY clarified the state is collecting the tax now and people who are living in Alaska only part of the year are not being rebated. Number 527 MS. HENSLEY agreed with CHAIR VEZEY. Number 528 CHAIR VEZEY was not aware of any constitutional problems with biennial tax collection. Number 530 REPRESENTATIVE ULMER questioned how the DMV felt towards the collection of the municipalities taxes and if this process was a stable situation as long as the fees to cover the administrative cost are being collected. Number 532 MS. HENSLEY replied the DMV has a neutral opinion. DMV is one of the revenue generators for the state, as it collects over 29 million dollars for the general fund. REPRESENTATIVE ULMER requested an overview of the fiscal note. Number 540 MS. HENSLEY noted the loss incurred with the change from two times the current rate to one and one-half times. The fee will be reduced from $70 to $53 every two years which will amount to a loss of $4.6 million. The MVRT will also lose the collection of fees for one year due to the expanded two year base. This factor will amount to about $4.9 million in lost funds to the state. An additional $2.75 million will be lost to the municipalities in the original version of HB 328. The revised version of HB 328 which takes the MVRT from the DMV and places it back on the municipalities will total the states losses at $4.9 million. Number 559 REPRESENTATIVE ULMER could not understand why state revenues were being released when the state has a great deficit. Efficiency is great, however, a revenue neutral bill should be considered. MS. HENSLEY added the credit card cost would be another cost with an operational fee of approximately $225,000 a year. CHAIR VEZEY asked to point out the credit card cost in the bill. Number 569 MS. HENSLEY noted page 3, line 22, Section 9(3). The cost is paid to the credit card companies. Number 576 CHAIR VEZEY inquired of the DMV's position on the use of credit cards. Number 578 MS. HENSLEY welcomed credit card use to cut down on NSF checks and the extra work they create. Number 582 REPRESENTATIVE KOTT reaffirmed MS. HENSLEY'S opinion. The extra payment on top of the reduction in fees may "dig a deeper hole" REPRESENTATIVE KOTT stated. Number 586 MS. HENSLEY urged the use of credit cards to ease those people who dislike using checks or money orders. A credit card system will provide an easier move to higher technology using touch-tone phones to renew registrations and ATM machines to acquire driving records. Drivers license reinstatements can also be quite expensive and the use of a credit card would ease payments for the customer. The reduction of fees, MS. HENSLEY believes, does not have to happen and the current rate times two could remain in place, thereby, the state would only incur the credit card cost. Number 614 CHAIR VEZEY asked if the credit card cost would be less than the current cost of pursuing bad debt receipts. Number 619 MS. HENSLEY replied no. The action taken on bad checks received is to place holds on registrations, titles, and drivers licenses. The credit card fee would have to be appropriated because the DMV budget could not absorb it. Number 623 CHAIR VEZEY related to the reason of increased efficiencies as a justification for the credit card cost. Number 627 MS. HENSLEY agreed. REPRESENTATIVE HARLEY OLBERG stated the credit card fees would be deducted from the revenues generated by the fees from the bank in which it is deposited. Therefore, no appropriation should be necessary. CHAIR VEZEY believed the state would probably not see the money unless it was accounted for. Number 635 REPRESENTATIVE G. DAVIS questioned if an extra charge could already be on the credit card and if the credit card company would collect it. Number 641 REPRESENTATIVE OLBERG answered an extra charge cannot be charged for a service or product because the payment is made by credit card. As the transaction takes place the bank will skim its discount off the transaction and there will be no exchange of money between the State of Alaska and the bank. CHAIR VEZEY asked REPRESENTATIVE OLBERG if he was referring to federal law and whether it was still legal to offer cash discounts as opposed to credit card charges. REPRESENTATIVE OLBERG replied yes. Number 649 Seeing no more testimony, CHAIR VEZEY asked REPRESENTATIVE KOTT if he would like to continue working on HB 328. Number 651 REPRESENTATIVE KOTT replied it would be a good idea to look HB 328 over again as the committee substitute was just received. The reduction in fees is a concern and the need for Section 16 will be examined. Number 663 CHAIR VEZEY announced HB 328 would be held over for review and would be rescheduled in the future. HB 363 - NO FEE FOR CAR REGISTRATION IN PERSON CHAIR VEZEY opened the floor for discussion on HB 363. Number 672 REPRESENTATIVE KOTT reviewed HB 363. The $10 surcharge is repealed for those who want to apply for their vehicle registration in person. A fiscal impact of a $1.6 million would occur. He felt the registration fees for those who apply in person could increase by $5 which would generate $2 million and offset the $1.6 million loss. If the situation were to remain neutral the state could gain about $400,000. A $5 reduction would still be offered for those who opt to use the mail system. CHAIR VEZEY asked if a sponsor or committee substitute would be proposed for HB 363. Number 696 REPRESENTATIVE KOTT replied yes. TAPE 94-8, SIDE B Number 000 REPRESENTATIVE OLBERG asked if REPRESENTATIVE KOTT intended to propose the substitute in State Affairs or in Finance. REPRESENTATIVE KOTT said it did not really make a difference; however, Finance may be the appropriate place for it. The fees for all registered vehicles will increase by $5 in person with a $5 break for using the mail system. Number 026 REPRESENTATIVE OLBERG stated he had received a numerous amount of support for repealing the $10 fee and he supports REPRESENTATIVE KOTT'S $5 increase and decrease suggestion. REPRESENTATIVE OLBERG did state he cannot support HB 328 if it includes any sort of reduction in registration fees. REPRESENTATIVE OLBERG is in favor of moving HB 328 to Finance. REPRESENTATIVE ULMER liked REPRESENTATIVE KOTT's adjustment to HB 328 and asked how successful the $10 fee was in discouraging people from coming in and applying in person. Number 055 JUANITA HENSLEY answered questions on HB 363. Prior to the $10 fee 30 percent mailed registration renewals in. After imposing the fee, the percentage of mailed registration renewals has increased to 60 percent. Lines have decreased in size. There is a three-five percent increase in new titles every year. MS. HENSLEY believed a $5 increase will not be a suitable deterrent for coming to DMV in person. Number 087 REPRESENTATIVE KOTT responded an increase in the size of lines may turn out to be more incentive to want to use the mail system. There is no greater efficiency by using the mail rather than applying in person because handling the mail takes just as long as person to person contact. He reinforced the lines would not substantially increased and the $5 increase would be alright. MS. HENSLEY hoped to see a decrease of lines because the front counter clerks tend to take a lot of abuse from the public. Number 141 REPRESENTATIVE ULMER suggested the application for the permanent fund dividend include a one page attachment for motor vehicle registration. The public may take note of the form if attached to a widely read document. She also suggested to REPRESENTATIVE KOTT that a State Affairs committee substitute to HB 328 be proposed before it is given to the Finance Committee because they may not pay attention to a revenue reducing bill. A bill which will raise revenues may have more of a chance. REPRESENTATIVE G. DAVIS agreed with REPRESENTATIVE ULMER and would like a substitute to HB 328. REPRESENTATIVE KOTT had no problem with proposing a substitute, however, he has contacted Finance with the changes to be made to HB 328 and they had no problem with it. Number 195 CHAIR VEZEY asked for further comment on HB 363. REPRESENTATIVE KOTT asked CHAIR VEZEY for his decision on HB 363. CHAIR VEZEY announced HB 363 would be held in committee for reconsideration. Number 216 REPRESENTATIVE KOTT asked the committee members if an amendment might be offered so HB 328 might move out of committee amended. Number 221 CHAIR VEZEY did not want to move HB 328 out of committee on a verbal amendment, however, the committee substitute may be discussed. REPRESENTATIVE OLBERG reminded REPRESENTATIVE KOTT a committee substitute for HB 328 would be made be State Affairs members. Number 230 REPRESENTATIVE ULMER proposed a committee substitute should be prepared with a new fiscal note so HB 328 may pass out of the committee with "do pass" written on it. CHAIR VEZEY allowed REPRESENTATIVE KOTT to put forth an amendment if he wished to do so. Number 246 REPRESENTATIVE KOTT opted to bring back a committee substitute. HCR 25 - STATE INDUSTRIAL MATERIALS EXCHANGE Number 248 CHAIR VEZEY opened the floor for discussion of CSHCR 25 announcing a zero fiscal note and that if passed it will proceed to House Rules. Number 259 REPRESENTATIVE KOTT, sponsor of CSHCR 25, began an overview of the contents. CSHCR 25 would acknowledge April as the State Materials Exchange Month. REPRESENTATIVE KOTT read his sponsor statement. (See attached.) CSHCR 25 is a joint effort of the public and private sector to reduce the flow of industrial waste into Alaska landfills. The Support Industry Alliance, British Petroleum, ARCO, and the DEC Pollution Prevention office are participants. Various materials will be for sale or just available at no cost. A computerized network or booklet will be available to locate available materials. Across Canada and the lower 48 states there are about two dozen material exchanges already in operation. These exchanges are saving the industry approximately $27 million annually and the equivalent of 100,000 barrels of oil. REPRESENTATIVE KOTT believed CSHCR 25 would foster responsible management of available resources in Alaska with minimal or no cost. There is great support for CSHCR 25. Number 319 CHAIR VEZEY wanted to clarify if REPRESENTATIVE KOTT meant mainly hazardous and toxic materials, not general construction materials. REPRESENTATIVE KOTT answered the materials could consist of anything. There is no limit. (i.e. large machinery) Number 324 CHAIR VEZEY stated hazardous and toxic waste has a very important role in our society and he clarified CSHCR 25 does relate to all industrial materials. Number 332 REPRESENTATIVE KOTT agreed. Number 333 CHAIR VEZEY inquired of the states role in the materials exchange process. Number 335 REPRESENTATIVE KOTT replied the state would facilitate the private and public sector to work together. Number 339 REPRESENTATIVE G. DAVIS indicated CSHCR 25 sounded like other recycling efforts and wanted to make sure CSHCR 25 would not be duplicating other business. Number 347 CHAIR VEZEY rejected CSHCR 25 as recycling, rather a redistribution of useful materials. A potentially hazardous material needs to be handled properly as long as it is useful, however, it becomes an expensive commodity when termed a hazardous waste and no longer needed. CSHCR 25 allows potential users to locate surplus supplies. Number 366 REPRESENTATIVE JERRY SANDERS agreed with the intent of CSHCR 25, however, he questioned the zero fiscal note and the desire government employees to facilitate the program for nothing. Number 372 REPRESENTATIVE KOTT responded he would not challenge the fiscal note and stated he was informed the employees would cooperate. The cost estimated at $30 would have to be absorbed and there would be little work to do. He noted the effort has been on-going and CSHCR 25 is merely recognizing April as the "kick-off month". This coincides with DEC's major promotional effort to prevent pollution. Number 387 CHAIR VEZEY stated if the amount of material being dumped in disposal sites would be reduced there would be substantial savings in future recycling efforts. CSHCR 25 is a statement of support for the program without mandating any programs or authorizing any funds. Number 398 REPRESENTATIVE SANDERS offered CSHCR 25 may have a negative fiscal note with more research. Number 402 CHAIR VEZEY agreed if the program was identified. CHAIR VEZEY also felt private industry would not support the resolution if it did not see CSHCR 25 as a place to save money. Number 404 REPRESENTATIVE G. DAVIS supported CSHCR 25 and proposed this effort may have been instigated by large companies due to DEC eliminating clean-up day after a reduction in its' budget. Number 421 REPRESENTATIVE KOTT did not know who began the program. DEC is merely beginning a campaign to include both the public and private sector in the clean up process. Number 430 REPRESENTATIVE ULMER moved CSHCR 25 to the committee and asked for individual recommendations. Number 435 CHAIR VEZEY asked if there were any objections, hearing none, the secretary noted the vote had unanimous consent, and the bill was passed around the committee for signatures and recommendations. CHAIR VEZEY called for a short recess at 9:10 a.m. and will reopen business with HB 240. (REPRESENTATIVE ULMER left the committee meeting at 9:10 a.m.) HB 240 - GAMBLING DEVICES ON STATE FERRIES CHAIR VEZEY reconvened the meeting at 9:20 a.m. and opened discussion on HB 240. Number 448 REPRESENTATIVE MOSES, sponsor of HB 240, presented a brief overview of HB 240 supplied by his sponsor statement. (See attached.) HB 240 is intentionally crafted to allow the state ferry system to set up and operate or contract out the program. Number 465 CHAIR VEZEY commented HB 240 has been created in a convoluted manner and asked if Commerce and Economic Development has been changed to Revenue. Number 478 REPRESENTATIVE MOSES replied if HB 240 passes "(we) can do whatever we want to it." Number 481 CHAIR VEZEY understood the Commissioner of Revenue would have control over the gambling. CHAIR VEZEY questioned the wording which states "...a gambling device does not include a gambling device as authorized by statutes." "...a gambling enterprise is not a vessel of the Alaska Marine Highway System." He felt the approach of HB 240 seemed backwards and asked if it was necessary because Alaska's gambling was so complicated. Number 492 REPRESENTATIVE MOSES was not very familiar with the technical details of HB 240, but felt the problems could be worked out. Number 495 CHAIR VEZEY began to examine where the gambling machines would be located. Number 503 REPRESENTATIVE MOSES answered the ferries would find room. CHAIR VEZEY noted the different sizes of the ferries and the limited space on the smaller ones. He questioned if HB 240 was practical. Number 514 REPRESENTATIVE MOSES assumed the ferry system would have discretion to put the gambling devices only on ferries where it would be practical. CHAIR VEZEY warned of constituents who are against legalized gambling and wondered how it could be explained to those individuals. Number 527 REPRESENTATIVE MOSES explained a revenue stream would be developed and the winter traffic on ferries would probably increase by 20 percent. CHAIR VEZEY asked if the increase in traffic would be primarily residents of Alaska. REPRESENTATIVE MOSES believed the gambling would be an attraction for the tourist industry. The increased flow of traffic would be very beneficial. Number 539 REPRESENTATIVE KOTT commented some cruise lines have closed down their gaming operations because they were not very profitable. He warned the public may not feel the incentive to take the ferry solely to gamble. He also inquired about the associated costs involved in managing the gaming facilities. Number 554 REPRESENTATIVE MOSES had not seen a projected revenue report and responded to REPRESENTATIVE KOTT gambling would be added attraction to the ferries, not the sole incentive. Number 561 REPRESENTATIVE OLBERG commented the gaming machines must be located in the bar area to limit those under 21 years of age from playing. REPRESENTATIVE KOTT agreed a regulated area must be available Number 572 CHAIR VEZEY added minors are allowed in places which serve alcoholic beverages as long as they are accompanied by a parent or legal guardian. He did not, however, know if the law also applied to gambling facilities. Number 575 REPRESENTATIVE MOSES reaffirmed CHAIR VEZEY and stated minors are allowed inside, however, gambling is not encouraged. REPRESENTATIVE KOTT agreed with CHAIR VEZEY and noted HB 240 has a provision which prohibits minors from entering a gambling area. A ferry's bar area would no longer work as a location for the gambling machines. The alcohol establishment statute would either have to be changed or HB 240 would override it. Number 598 REPRESENTATIVE MOSES thought the liquor laws would have to be incorporated whereby HB 240 would be changed to specify "unless accompanied by a parent or legal guardian." Number 607 REPRESENTATIVE KOTT agreed and mentioned policies of other states. Number 610 CHAIR VEZEY thought other states did not allow minors in alcohol facilities at all. REPRESENTATIVE OLBERG suggested a space be dedicated to the gambling devices and have the access controlled. An overhead would have to be incurred. Number 617 REPRESENTATIVE KOTT commented alcohol and gambling are closely related in other facilities. Number 621 REPRESENTATIVE OLBERG noted the object is to raise revenue. Number 622 REPRESENTATIVE KOTT suggested alcohol and gambling not be separated. Number 625 REPRESENTATIVE SANDERS wanted HB 240 to be worded like the liquor laws where minors may be present if accompanied by a parent or guardian. REPRESENTATIVE OLBERG stated if the gambling devices are not in the bar the overhead becomes self-defeating. An extra employee would be required. Number 634 REPRESENTATIVE SANDERS added the social atmosphere would not be the same in a separate area from the bar. The purpose of HB 240 would be defeated. Number 637 REPRESENTATIVE KOTT did not want minors in the gambling area. He believed it did not facilitate the proper social attitude. CHAIR VEZEY clarified slot machines were not the topic of conversation. The machines used would not distribute coins or cash. Number 660 REPRESENTATIVE OLBERG suggested the use of machines which dispense pull tabs. Number 661 CHAIR VEZEY agreed. Number 663 REPRESENTATIVE B. DAVIS expressed concern for the amount of machines required and the anticipated revenue stream. She then asked if there was not any money coming to the state, would HB 240 be for entertainment purposes only. REPRESENTATIVE MOSES replied entertainment on coin operated machines is common now with two people playing a machine, not exposing their money, but still making debts. TAPE 94-9, SIDE A Number 007 REPRESENTATIVE B. DAVIS asked if these games are already being played on the boats. Number 011 REPRESENTATIVE MOSES said no, but the machines are available and found in bars. Number 022 REPRESENTATIVE KOTT illustrated the fiscal note does state six machines will be put on mainline vessels. CHAIR VEZEY recalled reading the provision of six machines written in the fiscal note. REPRESENTATIVE MOSES stated the amount of machines may increase due to demand for their use. CHAIR VEZEY introduced DONALD STOLWORTHY as the next witness. Number 052 DONALD STOLWORTHY, DIRECTOR, CHARITABLE GAMING DIVISION, DEPARTMENT OF REVENUE, answered questions on HB 240. On July 1, 1993, Charitable Gaming transferred from the Department of Commerce to the Department of Revenue by Executive Order 82. HB 240 states this change is for "house cleaning purposes." Number 072 CHAIR VEZEY recognized this reason. REPRESENTATIVE KOTT asked what kind of machines might be installed on the ferries. MR. STOLWORTHY explained the three classes of gaming: Class 1 - video games, pinball machines; Class 2 - pull tabs, bingo (nonelectronic & nonmechanical sanctioned games); Class 3 - slot machines, electronic pull tab games (District Court 4, District of Columbia, Washington, recently ruled electronic pull tab games as Class 3.), video poker. Class 3 games return either money or tokens from the machine to the player. MR. STOLWORTHY predicted HB 240 would allow electronic pull tab games, video poker, and slot machines which return tokens. CHAIR VEZEY asked for a clarification of the three classes of gaming devices. Number 150 MR. STOLWORTHY offered the three criteria as proposed by the courts which constitute gambling. These three include chance, consideration (i.e. paying money), and prize (i.e. receiving cash). Once past Class 1 the games are considered gambling devices. CHAIR VEZEY questioned if Class 1 games are not gambling devices, why are they classified as a Class 1 gambling device? Number 174 MR. STOLWORTHY replied the Class 1 games are for entertainment purposes only and he could not answer why they are labeled as gambling devices. Number 180 REPRESENTATIVE KOTT noted the difference between Class 1 and Class 2 and 3 combined is no external pay out. He then asked if HB 240 could require the provided slot machines to only emit tokens which could be redeemed on the ferry. Number 201 MR. STOLWORTHY felt REPRESENTATIVE KOTT's request could be included in HB 240, however, he believed the ferries would be more likely to use video poker and video pull tab machines which dispense tokens. Number 213 REPRESENTATIVE SANDERS asked about the use of "set back buttons" on machines he has seen used in bars. Number 222 MR. STOLWORTHY answered "set back buttons" are currently illegal to use in the state of Alaska because the amount of payout by the facility is harder to keep track of. Fraternal clubs, veterans organizations, and bars tend to have machines with these devices installed in them. CHAIR VEZEY inquired if "set back buttons" were used to reduce the chances of winning. MR. STOLWORTHY responded "set back buttons" are merely used to circumvent the law. The game tallies the total amount of games played and can be reset at any time. Computers are available to be hooked up to machines without "set back" devices which give tallies of the amount of free games left on the machines that have been paid back in cash. REPRESENTATIVE SANDERS thought some states had their gambling machines directly wired into the State Department of Revenue and inquired if it would be possible on ferries. Number 282 MR. STOLWORTHY clarified REPRESENTATIVE SANDERS was referring to "on-line technology". States, such as Nevada, have computers which calculate the odds on many machines and print out any discrepancies found. These computers are extremely accountable. He noted paper pull tabs have a wide margin for pay out discrepancies with forged cards and insider trading. Reports are filed quarterly that are matched up with the computer printouts. This process creates a solid accounting system. Number 338 CHAIR VEZEY did not understand the incentive behind only allowing gaming devices that do not dispense coins or cash. MR. STOLWORTHY did not know the reason. CHAIR VEZEY clarified Department of Revenue did not have a preference because the accountability of both types of machines would be close to the same. Number 346 MR. STOLWORTHY replied the money and token dispensing machines are identical devices which merely vary where the money is picked up. Number 348 CHAIR VEZEY asked for a committee member to volunteer to work with REPRESENTATIVE MOSES, sponsor, on HB 240. REPRESENTATIVE B. DAVIS volunteered. Hearing no more testimony, HB 240 was held in committee to be rescheduled. ANNOUNCEMENTS CHAIR VEZEY announced a meeting for the Alaska Railroad Review Committee would be scheduled, possibly Saturday, February 12, and asked for members to relay convenient times. ADJOURNMENT Seeing no more business before the committee, CHAIR VEZEY adjourned the meeting at 10:00 a.m. BILLS NOT HEARD HB 345 - "An Act relating to the preservation of public facilities and to appropriations for annual maintenance and repair, periodic renewal and replacement, and construction of public facilities" was scheduled but not heard.