MINUTES SENATE FINANCE COMMITTEE April 10, 1993 10:15 a.m. TAPES SFC-93, #50, Side 2 (end-000) SFC-93, #52, Side 1 (355-end) SFC-93, #52, Side 2 (end-000) SFC-93, #56, Side 1 (000-135) CALL TO ORDER Senator Drue Pearce, Co-chair, convened the meeting at approximately 10:15 a.m. PRESENT In addition to Co-chair Pearce, Senators Kelly, Jacko and Sharp were present. Senator Kerttula arrived while the meeting was in progress. Senators Frank and Rieger were absent. ALSO ATTENDING: Senators Randy Phillips, Robin Taylor, and Rick Halford; John Hansen, Jr., Gaming Manager, Department of Commerce & Economic Development; Paul Fuhs, Commissioner, Department of Community & Economic Development; Randall Hines, Program Officer, Division of Family & Youth Services, Department of Health & Social Services; Annette Kreitzer, Aide to Senator Leman, prime sponsor of SB 91; Dave Williams, Department of Health & Social Services Planner, Project Choice, Department of Health & Social Services; Kaye Kanne, Certified Direct-Entry Midwife; Marilyn Holmes, Midwifery Consumers; Don Hitchcock, Director, Department of Administration; Mike Greany, Director, and other analysts, Legislative Finance Division; and aides to committee members. SUMMARY INFORMATION SB 51 - An Act providing for establishment of work camps for juveniles adjudicated delinquent, and extending to all cities and to nonprofit corporations authority to maintain facilities for juveniles. Senator Phillips, sponsor of SB 51, and Randall Hines, Program Officer, Division of Family & Youth Services, Dept. of Health & Social Services, testified in support of SB 51. Discussion was had by Senators Kerttula, Phillips and Mr. Hines regarding a previous state program for youth. SB 51 was REPORTED OUT of committee with a fiscal note for the Dept. of Health & Social Services for $9.3. CSSSSB 91 - An Act prohibiting unfair discrimination against (HES) direct-entry midwives who perform services within the scope of their certification; providing for coverage of midwife services under Medicaid; reordering the priority of optional services provided by the state under Medicaid; and providing for an effective date. Annette Kreitzer, Aide to Senator Leman, sponsor of SB 91, spoke in support of the bill. Kaye Kanne, Certified Direct-Entry Midwife, and Marilyn Holmes of Midwifery Consumers, also spoke in support of the bill. Dave Williams, Dept. of Health & Social Services Planner, Project Choice, Dept. of Health & Social Services, spoke to the fiscal notes. CSSSSB 91(HES) was REPORTED OUT of committee with fiscal notes for DH&SS (Medical Assistance, Medicaid Non-facility) of $65.0, DH&SS (Medical Assistance, Claims Processing) of $41.2, and DH&SS (Medical Assistance, Medicaid Facility) of $(180.0). CSSB 45(HES) - An Act relating to persons under 21 years of age; providing for designation of shelters for runaway minors; relating to the detention and incarceration of minors; and providing for an effective date. Senator Phillips, Randall Hines, Program Officer, Division of Family & Youth Services, Dept. of Health & Social Services, and Donna Schultz and Pat O'Brien, testified in support of the bill. Senator Taylor voiced his opposition to the bill. CSSB 45(HES) was HELD in committee until April 13, 1993. CSSB 141(L&C)- An Act relating to workers' compensation coverage for certain high school students in uncompensated work-study programs. Senator Kelly, sponsor of SB 141, testified in support of the bill. Don Hitchcock, Director, Dept. of Administration, spoke to the fiscal notes. CSSB 141(L&C) was REPORTED OUT of committee with fiscal notes for Dept. of Education of $24.0, Dept. of Administration of $24.0, and a zero fiscal note for the Dept. of Labor. CSSB 153(RES)- An Act relating to the exchange of certain fish for seafood products, custom processing of certain fish, and use of certain fish for charitable purposes. Senator Taylor, sponsor of SB 153, testified in support of the bill. Senator Jacko voiced his concern that this bill allowed easier export of sport caught fish. CSSB 153(RES) was REPORTED OUT of committee with a fiscal note for DEC of $5.0, and a zero fiscal note for DF&G. CSSB 76(JUD) - An Act requiring regulations relating to pull-tabs adopted by the Department of Commerce and Economic Development to be consistent with the North American Gaming Regulators Association standards on pull-tabs; allowing permittees to contract with vendors to sell pull-tabs on behalf of the permittee; restricting the purchase of pull-tabs by certain persons; requiring the sale of pull-tabs by vendors to be solely by a pull-tab ticket dispensing machine; requiring receipts before certain prizes may be paid; prohibiting distributors from supplying pull-tabs to vendors; relating to registration of vendors; requiring the licensing of out-of-state manufacturers; allowing public or nonprofit broadcasting stations to sell pull-tabs at more than one location; preventing persons with certain convictions from being involved in charitable gaming activities as a permittee, licensee, vendor, person responsible for an activity, fund raiser or consultant of a licensee, or employee in a managerial or supervisory capacity and providing exceptions for certain persons whose convictions are at least 10 years old; relating to multiple-beneficiary charitable gaming permits and door prizes for charitable gaming; requiring Department of Commerce and Economic Development approval of contracts between charitable gaming permittees and operators before gaming may occur; limiting the amount of authorized expenses to a percentage of adjusted gross income for a charitable gaming activity; relating to the reporting and payment of a percentage of the adjusted gross income by operators to permittees; requiring Department of Commerce and Economic Development approval of contracts between permittees and operators; allowing the commissioner of commerce and economic development to issue orders prohibiting violations of state gaming laws; relating to the authority of the commissioner of commerce and economic development to suspend or revoke a permit, license, or registration; relating to the uses to which charitable gaming proceeds may be put; relating to `political uses' and `political organizations' as those terms are used in the charitable gaming statutes; and providing for an effective date. Co-chair Pearce announced that CSSB 76(FIN) work draft "M" was before the committee. Discussion was had by Co-chair Pearce, Senator Kelly, Commissioner Paul Fuhs, and John Hansen, Jr., Gaming Manager, Dept. of Commerce & Economic Development. CSSB 76(JUD) was HELD in committee until April 12, 1993. Bills scheduled but not heard: SB 88 - Capital Project Grants SB 89 - Approp: Capital Project Matching Grants SB 148 - Alaska Railroad Corporation, would not be heard and held in committee. SENATE BILL NO. 51: An Act providing for establishment of work camps for juveniles adjudicated delinquent, and extending to all cities and to nonprofit corporations authority to maintain facilities for juveniles. CO-CHAIR DRUE PEARCE invited Senator Randy Phillips, sponsor of SB 51, to join the committee at the table and speak to the bill. SENATOR RANDY PHILLIPS said similar legislation had been introduced several years ago. He said that the work camp facility would be used only by minors. The individuals placed in the work camp could be required to do labor on buildings or perform other duties including educational projects. SB 51 would authorize the Department of Health & Social Services (DH&SS) to establish regulations for the operation of these work camps and would place delinquents into work camps instead of detention facilities. It would also provide that a city or non-profit organization could maintain a juvenile work camp under regulations to be adopted by DH&SS. There are 23 states that have some kind of boot or work camps as an alternative for young adult offenders. He said the bill carried a fiscal note for DH&SS in the amount of $9.3 to set up regulations. He said he provided the committee with a sectional analysis, and a handout describing a successful boot camp in Nevada (copy on file). SENATOR JAY KERTTULA said that state work camps had been established right after statehood. It seemed to work very well until special interest groups began to provide full- cost-of-care. The result was that full-cost-of-care services for the least of the delinquents cost the state more per person per day than it did after the program was decreased to half and only the incorrigibles were being served. He warned that this well-meaning program could turn into a disaster. Senator Phillips pointed out that SB 51 had passed through the Health & Social Services and Judiciary Committee with no changes. Co-chair Pearce invited Randall Hines, Program Officer, Division of Family & Youth Services, Department of Health & Social Services, to join the committee at the table. RANDALL HINES spoke to the fiscal note in the amount of $9.3 which would fund the design of the regulations establishing the work camp as outlined in SB 51. He said that the department was in support of the legislation. SENATOR TIM KELLY asked if this facility could be contracted out. Mr. Hines said that it would not have to operated by the state. Senator Kerttula spoke in support of SB 51 but felt the fiscal note would not cover the total expense of starting this program. He reiterated his support but advised that this was a multi-million dollar program. Possibly it was the least expensive way to handle youth problems but felt the department should be more realistic about the real cost. Mr. Hines said the department was just beginning to develop the program, and had not decided what individuals would fit into it. He said that money is being spent on these individuals now and hopefully that same money would be transferred to this program. Senator Phillips said that the department could draw sufficient information from the work camps in other states. He felt the intention was to go slowly and do it right. He pointed out Sec. 4 outlined who could run a work camp. Senator Kelly MOVED for passage of SB 51 from committee with individual recommendations. No objections being heard, SB 51 was REPORTED OUT of committee with individual recommendations and with a fiscal note for the Department of Health & Social Services for $9.3. Co-chair Pearce, Senators Kelly and Sharp signed "do pass." Senators Kerttula and Jacko signed "no recommendation." Senator Frank had left the meeting and did not sign. CS FOR SPONSOR SUBSTITUTE FOR SENATE BILL NO. 91(HES): An Act prohibiting unfair discrimination against direct-entry midwives who perform services within the scope of their certification; providing for coverage of midwife services under Medicaid; reordering the priority of optional services provided by the state under Medicaid; and providing for an effective date. Co-chair Pearce invited Annette Kreitzer, Aide to Senator Loren Leman, prime sponsor of SB 91, to join the committee at the table and give an overview of the bill. ANNETTE KREITZER said that SB 91 would add certified direct entry midwives to the optional services covered by Medicaid. It would reorder the priority of optimum services provided by the State under Medicaid which would make midwives the first to be dropped from the list in case there was not enough coverage for all services. It was amended in the Health & Social Services Committee to add certified direct entry midwives to the statute that prohibits unfair discrimination by insurance companies against midwives providing midwifery services. She explained that this bill would not add to the numbers of pregnant women who do presently qualify for Medicaid. She wanted it to be clear that this bill would not expand Medicaid roles, but instead would allow the state to stretch its dollars for services provided under Medicaid. DAVE WILLIAMS, Department of Health & Social Services Planner, Project Choice, Department of Health & Social Services, said the fiscal note for Medicaid Facility showed a projected savings to the department of $180.0 under SB 91. The department projected that 250 women would use certified direct entry midwives, and that half of these women would be Medicaid eligible. It was suggested that it may be higher than the projection. He said the department felt that more mothers would seek care and seek it earlier in their pregnancy if midwifery was an option. That cost was shown on the Medicaid non-facility fiscal note for $65.0. The fiscal note for claims processing was in the amount of $41.2. KAYE KANNE, Certified Direct-Entry Midwife, said that in addition to the savings pointed out by Dave Williams, because midwifes see their patients more often, better educate their patients, and stress the need for self care, healthier babies are born providing even more savings to the state. MARILYN HOLMES of Midwifery Consumers said that the midwifery group costs run about 37 percent of the medical group. If women go to doctors because they do not have access to midwives through Medicaid the fee is $5,000 (physician and hospital combined). She pointed out that midwifery births result in 50-70 percent less c-sections which cost about $8,000. She pointed out that midwifery care is more comprehensive and includes information about nutrition and breast feeding. Midwives also visit the home at least four times after the birth. This results in less costs after the birth because the infants receive extra care that they would not receive in a medical setting. By reading the fiscal notes, she said that by the end of the decade, SB 91 could save the state a quarter of a million dollars a year. Co-chair Pearce asked how many communities in Alaska had licensed midwives. Ms. Kanne said that she did not know but approximately 15 communities. Senator Kelly MOVED for passage of SB 91 from committee with individual recommendations. No objections being heard, SB 91 was REPORTED OUT of committee with individual recommendations, and three fiscal notes for the Department of Health & Social Services for $65.0 -- Medicaid Non- facility, $41.2 -- Claims Processing and $(180.0) -- Medicaid Facility. Co-chair Pearce, Senators Kelly and Sharp signed "do pass." Senator Jacko signed "no recommendation." Senators Frank and Kerttula had left the meeting and did not sign. CS FOR SENATE BILL NO. 45(HES): An Act relating to persons under 21 years of age; providing for designation of shelters for runaway minors; relating to the detention and incarceration of minors; and providing for an effective date. Senator Randy Phillips said that SB 45 dealt with runaway youth under the age of 21. According to the Department of Health & Social Services, there are about 3,500 runaway youth in Alaska every year. He noted that a sectional analysis and a position paper by the Department of Health & Social Services had been provided to the committee (copy on file). He said that this bill focuses on some problems of youth by changing the statutes relating to persons under the age of 21 as well as providing a mechanism for licensing shelters. It would also change the definition of contributing to the delinquency of a minor. Current statutes provide that a person over the age of 19 may not aid, induce, cause or encourage a child under the age of 16 to be absent from the custody of a parent or legal guardian. The bill raises that age from 16 to 18. It also would prohibit an unemancipated minor from working without the permission of the minor's legal guardian after 10:00 p.m. or 9:00 p.m. on school nights if the minor is under age 16. The bill would also allow parents of a minor child to file an emancipation petition with the court on behalf of the minor. It would allow parents who cannot compel a child to remain in their custody and control, to initiate the process that would make the child solely accountable for his/her own actions. It would require parents to take steps to work with the child before a minor could be emancipated. He said that this bill also would add sections from SB 25, sponsored by Senator Jim Duncan. He said that SB 45 was intended as a one-step comprehensive look at statutes that pertain to minor children. As a result of a conference held in Wasilla in December 1991, the "Children's Crisis Booklet" had been written and was offered to the committee. Senator Phillips noted that the committee had before them an amendment that provided an exemption for runaway shelters. He said the amendment was at the request of Covenant House Alaska, a runaway crisis center in Anchorage. RANDALL HINES, Program Officer, Division of Family & Youth Services, Department of Health & Social Services, introduced Donna Schultz, Associate Coordinator and Pat O'Brien, Program Officer, both from the Department of Health & Social Services. Mr. Hines confirmed that the department had been working with Senator Phillips on the issue of runaway and homeless youth in his district and had developed recommendations that came out of the aforemen-tioned runaway and homeless youth conference. Another conference was held this year and additional recommendations would be available soon. Senator Phillips asked for an explanation of sections taken from SB 25. DONNA SCHULTZ, Associate Coordinator, Department of Health & Social Services, said that those sections would prohibit the confinement of youth in lockup jails and correctional facilities except under special conditions. The conditions that would allow the lockup would be that a juvenile could be held on a criminal offense for up to six hours before being transferred to a juvenile facility. They may be held longer if transportation to a juvenile facility is not possible. Such a situation could happen in the bush if a plane or weather made it impossible to transport the juvenile. Or a juvenile could be held in protective custody if the juvenile was intoxicated. Senator Kelly said that six hours seemed too short a time. Ms. Schultz said that the six hour restriction had to do with federal regulations that the state was required to monitor. Senator Kelly asked if an exception was made if a juvenile was under the influence of drugs. Ms. Schultz said she did not know but if the juvenile was incapacitated it seemed that would apply. She also said another exception was made that a juvenile could be held for longer than six hours if they had been waived to adult jurisdiction. She said that since 1990 work was being done so the state could receive federal funding money in this area. She said that the state received about $325.0 a year to deal with the juvenile justice program, and for the last few years the state has had to seek waivers since it has not met the federal mandates. The jail removal legislation was dependent upon the state receiving those federal dollars. SENATOR ROBIN TAYLOR voiced his concern that SB 45 did not have a Judiciary Committee referral. He cited the long battle regarding juvenile legislation. He felt there was a series of problems with SB 45 that would further confiscate the opportunity of a parent or the police to reasonably act in regard to minors. He pointed out that there is not a juvenile facility in Ketchikan. Ms. Schultz said that one option since 1989 in Ketchikan as well as other communities is a non-secured shelter where juveniles can be placed instead of a lock-up or jail facility. She said that it cost $171.0 to set up these shelters. If the police cannot find the parents then juveniles can be placed in these shelters and arrangements can be made to find the parents or the juvenile can be taken to another detention facility. Senator Taylor raised a question regarding private residences not being able to be used for shelters for runaway minors, unless they are designated as a shelter for runaways by a non-profit corporation that is licensed to do that work. He did not think there was one home established in the area he represented. PAT O'BRIEN, Program Officer, Department of Health & Social Services, said that those shelters Senator Taylor spoke to were not available currently, but that this legislation would create shelters. These shelters differ from the non- secured shelters that Ms. Schultz described. She said that in Wrangell and Craig, eight or nine people were on call to care for juveniles. Co-chair Pearce said that Sec. 3 through 8 changed the way juveniles could be emancipated and allowed a parent or legal custodian to petition to emancipate a juvenile. She asked what happened to a minor that was emancipated by his/her parent or guardian. Ms. Schultz said that although this would allow a parent or guardian to file a petition to emancipate a juvenile it would not change the standards by which the judge would base that decision. Ms. Schultz said the judge would have to look a the juvenile's ability to support him/her self because the juvenile would be considered as an adult in all aspects from the point he/she is emancipated. End SFC-93 #50, Side 1 Begin SFC-93 #52, Side 1 SENATOR BERT SHARP voiced his objection to the inclusion of Sec. 13 in SB 45. Senator Kelly asked why SB 45 had not gone to the Judiciary Committee. Co-chair Pearce suggested that the committee pass the bill out of committee with a recommendation of referral to the Judiciary Committee. Senator Taylor said that he would be willing to work with Senator Phillips regarding some of the issues raised. Recess 11:05am Reconvene 11:11am End SFC-93 #52, Side 1 Begin SFC-93 #52, Side 2 Senator Kelly MOVED for adoption of an amendment by Senator Phillips dated March 22, 1993 "8-LS0355\J.1 (copy on file) amended to change "47.10.350(a) or" to "47.10.350(c) or". Co-chair Pearce asked for a show of hands. The amendment as amended was adopted on a vote of 4 to 1. (Senators Pearce, Jacko, Kelly, and Sharp were in support. Senator Kerttula was opposed.) Co-chair Pearce announced that CSSB 45(FIN) would be HELD in committee until Tuesday, April 13, 1993, enabling Senators Phillips and Taylor to develop amendments on the areas of concern. CS FOR SENATE BILL NO. 141(L&C): An Act relating to workers' compensation coverage for certain high school students in uncompensated work-study programs. Senator Kelly said that SB 141 sponsored by Representative Bettye Davis was designed to provide workers compensation for work study students receiving vocational training for a profit employer. The employers will not hire the students because they are liable and the students are not eligible for workers compensation. This legislation would provide workers compensation taking the liability away from the employer. Since the students do not receive any compensation for the work study program, they would not receive any compensation if they were injured. Only their medical expenses would be covered. Discussion followed between Senators Sharp and Kelly regarding the coverage provided under this legislation. Senator Taylor voiced his support of SB 141, and felt similar legislation should be passed providing coverage for prisoners on work programs. SENATOR GEORGE JACKO MOVED for passage of CSSB 141(L&C) from committee with individual recommendations. No objections being heard, CSSB 141(L&C) was REPORTED OUT of committee with a do pass, with a zero fiscal note for the Department of Labor, and fiscal notes for the Department of Administration for $24.0, and for the Department of Education for $24.0. Co-chair Pearce, Senators Kelly, Jacko and Sharp signed "do pass." Co-chair Frank, Senators Kerttula and Rieger did not sign. CS FOR SENATE BILL NO. 153(RES): An Act relating to the exchange of certain fish for seafood products, custom processing of certain fish, and use of certain fish for charitable purposes. Senator Robin Taylor, prime sponsor of SB 153, said that this bill would allow sport caught fish to be brought to a seafood processor where it could be smoked or canned. He pointed out that a tremendous volume of seafood leaves the state every year as whole fish either frozen or fresh. If those fish were processed in Alaska, it could mean more jobs for Alaskans. Most sport fishermen are on a tight time frame and they cannot wait for their fish to be processed in Alaska. This bill would allow for an exchange of sport caught fish for already processed fish. A fee would be charged for processing. The processor could use commercially caught fish to provide the exchange but the sport caught fish could not be sold commercially. He said that this arrangement is already being done in Alaska illegally. He also felt that SB 153 would provide a way to assess the amount of sport caught salmon leaving the state, besides providing more jobs in Alaska. Ketchikan had estimated that SB 153 would provide a minimum of $1M worth of additional employment the first year. He said other areas of the state would benefit also. The Alaska Troller's Association had voiced its concern over SB 153. He said that a letter of intent had been adopted in the Resources Committee which spoke to concerns regarding export limitations and possession limits, and asked the Board of Fish to consider these concerns at their next regularly scheduled meeting. Senator Jacko voiced his concern regarding SB 153. He felt that it would make it easier for sport caught fish to leave the state. Discussion was had by Senators Taylor and Jacko regarding the procedure for processing and the export of sport caught fish. Senator Jacko said that the tension between sport and commercial fishermen was on the increase and felt that SB 153 would aggravate it even more. Senator Taylor argued that this legislation would allow the Department of Fish and Game to keep track of the amount of sport caught fish leaving the state, and through analysis decide whether more limitations on sport fish should be established. Senator Kelly MOVED for passage of CSSB 153(RES) from committee with individual recommendations. Senator Jacko OBJECTED. Co-chair Pearce announced that CSSB 153(RES) would be held in committee until April 12, 1993. At the end of the meeting, Senator Kelly again MOVED for passage of CSSB 153(RES) from committee with individual recommendations. No objections being heard, CSSB 153(RES) was REPORTED OUT of committee with individual recommendations, with a zero fiscal note for the Department of Fish & Game, a fiscal note for the Department of Environmental Conservation for $5.0, and a letter of intent from the Resources Committee. Co-chair Pearce, Senators Kelly, and Sharp signed "do pass." Senator Jacko signed "no recommendation." Co-chair Frank, Senators Kerttula and Rieger did not sign. CS FOR SENATE BILL NO. 76(JUD): An Act requiring regulations relating to pull-tabs adopted by the Department of Commerce and Economic Development to be consistent with the North American Gaming Regulators Association standards on pull-tabs; allowing permittees to contract with vendors to sell pull-tabs on behalf of the permittee; restricting the purchase of pull-tabs by certain persons; requiring the sale of pull-tabs by vendors to be solely by a pull-tab ticket dispensing machine; requiring receipts before certain prizes may be paid; prohibiting distributors from supplying pull-tabs to vendors; relating to registration of vendors; requiring the licensing of out-of-state manufacturers; allowing public or nonprofit broadcasting stations to sell pull-tabs at more than one location; preventing persons with certain convictions from being involved in charitable gaming activities as a permittee, licensee, vendor, person responsible for an activity, fund raiser or consultant of a licensee, or employee in a managerial or supervisory capacity and providing exceptions for certain persons whose convictions are at least 10 years old; relating to multiple-beneficiary charitable gaming permits and door prizes for charitable gaming; requiring Department of Commerce and Economic Development approval of contracts between charitable gaming permittees and operators before gaming may occur; limiting the amount of authorized expenses to a percentage of adjusted gross income for a charitable gaming activity; relating to the reporting and payment of a percentage of the adjusted gross income by operators to permittees; requiring Department of Commerce and Economic Development approval of contracts between permittees and operators; allowing the commissioner of commerce and economic development to issue orders prohibiting violations of state gaming laws; relating to the authority of the commissioner of commerce and economic development to suspend or revoke a permit, license, or registration; relating to the uses to which charitable gaming proceeds may be put; relating to `political uses' and `political organizations' as those terms are used in the charitable gaming statutes; and providing for an effective date. Co-chair Pearce announced that CSSB 76(FIN) work draft "M" was before the committee. Senator Jacko MOVED for adoption of the "M" version of CSSB 76(FIN). Hearing no objections, IT WAS SO ORDERED. Co-chair Pearce, prime sponsor of SB 76, spoke to the bill. She said the original bill excluded some felons from access to gaming in Alaska in terms of acting as supervisory or management personnel. Secondly, it prevented proceeds from gaming to be used for direct contributions to political candidates. She said the Department of Commerce & Economic Development had requested some additions to the legislation. She explained that the finance version would still include a prohibition against using net proceeds to pay registered lobbyists. It also added third party vendor language which allows charitable organizations direct profitable alternatives by placing their permits with profit operators. Permittees who operate their own permits often double their net proceeds. It allows these permittees to contract with vendors to sell pull tabs for them. It also adds multiple beneficiary permit language which allows the department to issue permits authorizing two to six permittees to jointly operate under one permit. This enables the permittees to band together and allows them to hire a management team to run their games that is answerable only to them. The permittees would have the direct hire and fire authority. The Department of Commerce & Economic Development also asked to approve contracts between operators and permittees. Language has been included that allows the department to revoke a permit license or vendor registration upon proof that insider information was given or acted upon. She said that language has also been included that gives the department discretion over mandating the use of ticket dispensing machines for pull tabs. There is a requirement that the department would license out of state manufacturers of pull tabs. She also stated that Alaska Public Radio Network had asked for a statewide on-line game. The language in the bill clarifies the type of game APRN could run. The proceeds from that game would then fund an endowment that would eliminate the need for APRN to continue receiving general funds from the state. Co-chair Pearce said that a teleconference had been held on SB 76 and two main concerns had been raised and addressed in this legislation. First, because of problems with dispensing machines, their use has been left to the discretion of the department. Secondly, language in the bill has been changed to say that direct payment from gaming cannot be made to a registered lobbyist or a political candidate. Senator Kelly voiced his opinion that SB 76 allowed a statewide lottery for public radio. JOHN HANSEN, JR., Gaming Manager, Department of Commerce & Economic Development, said that this legislation would allow APRN to sell a larger series pull tab game in more than one location on a given day. It would also provide them with the opportunity to have that game extended to include a drawing. The provisions of the drawing are currently in the state regulations. Senator Kelly asked if this was not the same as authorizing a statewide lottery. Mr. Hansen said that there were significant differences between this legislation and a statewide lottery, but confirmed that there had been a similar game without the drawing that had been shut down some years back. PAUL FUHS, Commissioner, Department of Community & Economic Development, said he wanted it to be clear that the Governor was not in support of the section of the bill that applied to the APRN gaming. Co-chair Pearce said that section had been added in the Judiciary Committee by Senator Jacko. Senator Kelly asked where the provision was that provided for an endowment with the proceeds of the APRN game. Senator Kelly voiced his concern that APRN would be the only organization that could profit from such a statewide game. Co-chair Pearce asked if Senator Kelly would be in favor of APRN paying a portion of their proceeds into the general fund. Discussion was had by Senators Kelly, Pearce and Mr. Fuhs regarding the APRN game. Commissioner Fuhs also pointed out that CSSB 76(FIN) was different than the Judiciary CS in that it removes as third party vendor outlets, retail and eating establishments. He said that the department was strongly in support of that action because gaming is an adult activity. Discussion was had by Senator Kelly, Mr. Hansen and Mr. Fuhs regarding vendors, operators, and the percentage of profit outlined in the bill. End SFC-93 #52, Side 2 Begin SFC-93 #56, Side 1 Senator Sharp asked for clarification regarding the adjusted gross income in regard to gaming. Mr. Fuhs explained that the adjusted gross income is the total amount of proceeds minus prizes and taxes. After that, the overhead of running the operation is subtracted, and according to this legislation, only 70 percent of that can be subtracted as overhead. Mr. Hansen said that there are two acceptable accounting methods in the statutes. One method is the actual cash method where every night sales are reported. The other method is the ideal method, where a number of pull tabs are considered for sale and the accounting is done around that number. The only difference between the ideal net and the adjusted gross are the taxes owed -- a three percent pull tab tax and any federal income tax. Senator Kelly MOVED amendment #1 that would add a new section to read "Section 1. SHORT TITLE. This act may be known as the Gaming Reform Act 1993" (copy on file). No objections being raised, it was ADOPTED. In answer to Senator Sharp, Mr. Hansen said that the percent required by operators to pay permittees each quarter was reduced from 15 to 10 percent for non-pull tabs. He said that about 80 percent of the gaming activity is pull tab activity. Of that remaining 20 percent about 17 percent is bingo. In the past, many operations have used other non- pull tab expenses to reduce pull tab income. The percentages in this version of legislation are significant because they no longer allow the losses of other activities to offset the pull tab activity. Mr. Fuhs said that in the some village operations 15 percent is too high. If bingo is even one percent it helps a lot on the pull tab because they can't write the losses off. He felt 10 percent was reasonable. Senator Jacko MOVED for passage of CSSB 76(FIN) from committee with individual recommendations. Senator Kelly OBJECTED. Co-chair Pearce announced that CSSB 76(FIN) would be HELD in committee until April 12, 1993. ADJOURNMENT The meeting was adjourned at approximately 12:12 a.m.