Legislature(2017 - 2018)BARNES 124
01/30/2017 03:30 PM House LABOR & COMMERCE
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| Audio | Topic |
|---|---|
| Start | |
| HB18 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HB 18 | TELECONFERENCED | |
HB 18-RACE CLASSICS
3:31:59 PM
CHAIR KITO announced that the only order of business would be
HOUSE BILL NO. 18, "An Act relating to race classics."
3:32:33 PM
REPRESENTATIVE DAN ORTIZ, Alaska State Legislature, stated that
in 2014, Thomas Basin Harbor became the finish line for an
unpowered boat race that started in Port Townsend, Washington,
and journeyed 750 miles to Ketchikan. The vessels in the race
included kayaks and pedal boats. The first team to arrive was
awarded a $10,000 prize, and the second place team has,
throughout the years, won steak knives, ski goggles, or corn cob
holders. The event is called The Race to Alaska. He noted that
HB 18 would allow people to wager on the first place finisher
and their time of arrival. The bill is in similar spirit of the
Nenana Ice Classic. He expressed that the bill was brought
forward at the request of the Greater Ketchikan Chamber of
Commerce.
3:35:30 PM
CHELSEA GOUCHER, Vice President, Greater Ketchikan Chamber of
Commerce, stated her support of HB 18. The proposed bill would
allow the Ketchikan Chamber of Commerce to raise money by
administering a race classic with a gaming permit. This is
similar to the Seward Chamber operations with the Mount Marathon
race classic. She stated her support of the letter written by
Bill Swift [Included in the committee packet]. She emphasized
the importance of the provisions of HB 18 to Ketchikan. She
listed the chamber's recent projects including: workforce
development initiatives, economic and community development
programs, lighting the town Christmas tree, the Fourth of July
parade, employee wellness trainings, informational programs,
networking events, and assistance to developing businesses.
These activities are self-funded by the chamber, which depends
primarily on member dues and fundraisers. She explained that
the chamber is diverse and non-partisan, and HB 18 would help
sustain the chamber's efforts to serve the community despite
reductions in state and local funding. The race classic would
likely bring in outside money from racers and families coming in
from Washington.
3:38:17 PM
REPRESENTATIVE BIRCH opined that the bill should be made more
general. He asked who would prevent the classic from being held
without the bill being passed.
MS. GOUCHER stated that it would be a violation of the chamber's
gaming permit from the tax division.
REPRESENTATIVE BIRCH asked whether this falls under the gaming
commission in revenue. He asked if it is possible to make the
bill more general so the next person interested in a race
classic doesn't have to request specific legislation.
MS. GOUCHER responded that it would be a good idea, but the
Department of Revenue (DOR) would have to agree. She stated
that the chamber's general gaming permit does not provide for
this type of classic, but does allow raffles, et cetera.
3:40:01 PM
REPRESENTATIVE STUTES asked how long the race has been going on.
3:40:12 PM
REPRESENTATIVE ORTIZ stated the race began in 2014.
3:40:44 PM
Bill Swift, Executive Director, Greater Ketchikan Chamber of
Commerce, testified to express the chamber's unanimous support
of HB 18. He stated that the chamber is a non-profit, member-
driven community organization, dedicated to supporting
businesses in the community. He spoke about the history of the
race. The chamber seeks to raise funds for local community
projects and increase excitement around the race with a
community guessing game fundraiser. He mentioned the proceeds
of the fundraiser would be used for the chamber's special
activities, other community projects, economic development, and
a scholarship fund. He stated that the chamber is a 501(c)(6)
and is made up of more than 250 members - mostly Ketchikan
businesses.
MR. SWIFT stated that the chamber conducted research and
determined that specific legislative authority is necessary to
conduct the charitable community fundraising around the Race to
Alaska by including it in the state's existing definition of
race classics. He noted that the Alaskan tradition of classics
includes dog musher classics, rain classics, fish derbies, moose
derbies, and a canned salmon classic. Many non-profit entities
throughout Alaska have been given permission by the legislature
to conduct classics fundraisers. He reported that there is a
strong precedent for the chamber of commerce organizations to
host events of this type; similar events are hosted by chambers
in Juneau, Fairbanks, Kenai, Seward, Petersburg, Delta, and Big
Lake. He recognized that the legislature has lots of decisions
to make, and he thanked the committee for hearing the chamber's
request for a small and necessary change.
3:44:20 PM
REPRESENTATIVE SULLIVAN-LEONARD asked how financially successful
the race has been since the inception in 2014.
MR. SWIFT stated there has not been calculated economic activity
around this event in particular. It's hard to determine the
race's impact on the economy in Ketchikan with cruise ships in
town during that time. He noted that race participants and
other visitors come in to follow the race during that time.
REPRESENTATIVE SULLIVAN-LEONARD asked what the financial benefit
was for the chamber.
MR. SWIFT stated that to this point there's been no connection
or benefit to the chamber.
3:46:00 PM
REPRESENTATIVE BIRCH asked if Mr. Swift would have an objection
to eliminating the statement "is limited to" and permit race
classics to continue unabated through the state.
MR. SWIFT stated that he would have no objection to a more
general procedure.
3:46:44 PM
REPRESENTATIVE WOOL asked if there is a formula for a fund
dispersement between chamber funds and participant awards.
MR. SWIFT stated that the chamber's formula with the current
gaming license has been a 50/50 raffle, so that's likely the
formula that would be applied.
3:47:33 PM
Jason Custer, Board Member, Greater Ketchikan Chamber of
Commerce, testified in full support of HB 18. He stated that he
agrees with Mr. Swift and Ms. Goucher's testimonies. He
remarked:
The [Greater] Ketchikan Chamber of Commerce is perhaps
the largest and the most diverse non-profit
organization in Ketchikan, with over 200 members. Our
members include individuals, businesses, non-profit
organizations, and local and tribal governments.
We're a non-partisan organization, which works to
promote a healthy and vibrant economy and a livable,
sustainable community that families and businesses are
proud to call home. The benefits of HB 18 to our
organization and community would include providing a
new source of locally generated revenue for community
projects, which otherwise would not be present or
possible. This is ever more important and meaningful
to us given the fact that state, local, and even
federal grants and discretionary funds are in short
supply.
He stated that HB 18 would support community and economic
development activities and programs, would help get Alaskans
excited about contributing to community projects, and would
promote a culture of community giving and self-sufficiency. The
initiative would not cost anything to the state but would create
a new source of funding for community initiatives. He stated
that the chamber is seeking the same ability given to other
chambers of commerce in other Alaskan communities to administer
similar programs. He acknowledged that the bill seems like a
modest request, but it is important and meaningful to the
community with state and local grant funding decreasing. He
urged the committee's support of HB 18, and stated that every
new source of revenue for community projects is important and
welcome.
3:51:22 PM
REPRESENTATIVE BIRCH asked if it is possible to modify the
legislation and "let race classics run amok."
KATRINA MITCHELL, Gaming Group Manager, Tax Division, Department
of Revenue (DOR), answered that there are several types of
classics defined by the [Alaska Gaming Reform Act], some are
specific to organizations. Currently animal classics are not
limited. However, the Cabbage Classic at the Cabbage Weigh-Off
in Palmer is limited to be operated and administered by the
Palmer Rotary Club. She stated that she is not sure why some
classics are limited to certain organizations and some are not.
She speculated that if you open up a classic that was limited to
everyone, it might take away from the organization that
originally hosted the event.
REPRESENTATIVE BIRCH offered his understanding that everyone
must have a gaming permit in order to make any revenue from such
an event. He asked if Ms. Mitchell sees a downside to
eliminating the language limiting the statute to the Mount
Marathon Classic and the Race to Alaska Classic.
MS. MITCHELL said that as far as administering the program goes,
she sees no downside to opening it up as long as the definition
is adequate.
REPRESENTATIVE BIRCH stated that this is good news for classic
fans around the state.
3:54:49 PM
CHAIR KITO suggested doing research before the next meeting to
determine if Representative Birch's idea is workable and then an
amendment could be considered.
3:55:21 PM
REPRESENTATIVE JOSEPHSON asked if the statute requires the money
from any classic to go to a charitable purpose.
MS. MITCHELL responded that in order to conduct a classic, an
organization must hold a gaming permit and is required to donate
"net proceeds" to a mission or cause within one year of receipt.
REPRESENTATIVE JOSEPHSON voiced that the purchase of the Nenana
Ice Classic tickets around the state resembles gambling. He
asked whether the proposed bill might create a habit-forming
misspending of money in a more isolated community.
MS. MITCHELL responded that anyone with a gaming permit is
required to report - at least annually - the proceeds and
itemized donations and donation recipients. The department can
review that and can verify if it is correct.
REPRESENTATIVE JOSEPHSON restated his concern with creating
habits for wagering money in a small community, and asked
whether the legislature should be concerned if the statute were
opened up to any opportunity in any community.
MS. MITCHELL stated that it would be impermissible for anyone or
any organization to conduct a race classic without obtaining a
charitable gaming permit through the state.
REPRESENTATIVE JOSEPHSON asked how difficult the task is.
MS. MITCHELL stated that the permits are only issued to
municipalities or non-profit organizations that have been in
existence for 3 years.
3:58:58 PM
CHAIR KITO offered his understanding that Representative
Josephson's concern is about whether charitable gaming is a good
activity. The legislature establishes the policy, and it's up
to the department to administer the policy.
3:59:28 PM
REPRESENTATIVE KNOPP asked if there are many annual events
beyond the listed classics and if it would be reasonable to
expand the bill.
MS. MITCHELL stated that she doesn't see a downside from the
perspective of the administration, but mentioned that there are
many kinds of classics limited to certain organizations. For
example the Canned Salmon Classic can only be administered by
the Petersburg Chamber of Commerce and the King Salmon Classic
can only be run by [Douglas Island Pink and Chum, Inc.] (DIPAC).
Those organizations have the market on that type of classic.
She stated that the bill would not impact the gaming section in
managing the program, but she is unsure if it would impact the
organizations with the special privilege.
REPRESENTATIVE KNOPP asked about potential for abuse. He
further asked if the Greater Ketchikan Chamber of Commerce would
have to go back to the legislature if it wanted to host another
event. He stated that he also has concerns about routine
gambling. He noted his hope is to open the door to less
regulation restriction, while avoiding abuse.
MS. MITCHELL stated that she is not sure striking the language
limiting [classics] to specific organizations would result in
abuse. She noted that it would allow an organization in every
town to have a guessing game with participants, such as the Race
to Alaska.
4:04:30 PM
REPRESENTATIVE SULLIVAN-LEONARD asked if Mr. Burnett could give
some history on classics across the state and how and why the
gaming rules became more stringent.
JERRY BURNETT, Deputy Commissioner, Department of Revenue (DOR),
answered that gambling is prohibited in Alaska. The statute
lists what is allowed for charitable organizations with a
permit. He mentioned that it used to be allowable to have
"Monte Carlo" nights, but the legislature was concerned about
having casinos in Alaska "in Indian country." He offered his
understanding that any type of gambling allowed in Alaska for
any purpose would be allowable under the Indian gaming laws. He
stated that the legislature did not want to have any type of
casinos in Alaska, so the rules for a "Monte Carlo" night were
adjusted. He noted that cruise ships can gamble in state waters
and Alaska taxes the proceeds, but the statute specifies that it
is taxing an unlawful activity.
4:08:11 PM
REPRESENTATIVE SULLIVAN-LEONARD noted some classics from her
districts. She stated her opinion that these classics are not
habit forming, rather the funds from these gaming pieces are
beneficial for chambers of commerce and other groups.
4:09:07 PM
REPRESENTATIVE WOOL asked if there is a limit on how many gaming
permits are issued.
MS. MITCHELL stated that any non-profit organization that meets
the requirements can apply and may be granted a permit. There
is not a cap on the number of permits issued.
REPRESENTATIVE WOOL asked if any governing body, other than the
legislature, could handle a request for more classics in the
future, or if there is a process within the department that
would be a gateway. He noted that the idea of many chambers
jumping in on a race would hurt the initial hosting organization
and the race would lose vitality.
4:10:51 PM
MR. BURNETT stated that there has been legislation to set up a
gaming commission. He added that in order for the department to
manage requests for classics, either discretion could be given
to the commissioner of revenue or it could be done through a
regulation process, which would be difficult and sometimes
slower than the legislative process. He voiced that it is not a
responsibility he would like to have or want someone in the
department to have, because they also regulate the activities.
4:11:53 PM
REPRESENTATIVE BIRCH questioned if getting rid of the
limitations has a downside.
MR. BURNETT stated that it doesn't matter to the department so
long as there is a clear definition.
REPRESENTATIVE BIRCH stated that he supports the intent of the
bill and wants to make the process easier in the future. He
asked if the animal classic is limited to gerbils or hamsters.
4:13:01 PM
MS. MITCHELL stated a catch-all phrase - "other rodent" - is in
the statute.
4:13:20 PM
REPRESENTATIVE ORTIZ stated that in changing the bill as
Representative Birch suggested, the potential downside would not
fall in the department's realm, but would dilute the revenues
and potential benefits to the groups that have permits.
MS. MITCHELL stated that Representative Ortiz's assessment is
reasonable.
4:14:28 PM
REPRESENTATIVE WOOL commented that there are exceptions to the
gaming statute in Alaska, including rodents, cabbage, ice
melting and pull tabs, so a gaming commission might not be a bad
idea.
4:15:10 PM
MR. BURNETT stated that he does not have thoughts on that
comment. He stated that the way the legislature has done this
historically has been workable for the State of Alaska.
4:15:37 PM
CHAIR KITO opened public testimony on HB 18.
CHAIR KITO announced that HB 18 was held over.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB018 Sponsor Statement 01.27.17.pdf |
HL&C 1/30/2017 3:30:00 PM HL&C 2/3/2017 3:15:00 PM |
HB 18 |
| HB018 Sectional Analysis 01.27.17.pdf |
HL&C 1/30/2017 3:30:00 PM HL&C 2/3/2017 3:15:00 PM |
HB 18 |
| HB018 Supporting Document-Chamber Flyer 01.27.17.pdf |
HL&C 1/30/2017 3:30:00 PM HL&C 2/3/2017 3:15:00 PM |
HB 18 |
| HB018 Supporting Document-Chamber Letter 01.27.17.pdf |
HL&C 1/30/2017 3:30:00 PM HL&C 2/3/2017 3:15:00 PM |
HB 18 |
| HB018 Fiscal Note DOR TAX 1.27.17.pdf |
HL&C 1/30/2017 3:30:00 PM HL&C 2/3/2017 3:15:00 PM |
HB 18 |