04/25/2003 02:53 PM House FIN

HOUSE BILL NO. 162                                                                                                            
                                                                                                                                
     "An Act increasing the fee for a state business                                                                            
     license; and providing for an effective date."                                                                             
                                                                                                                                
RICK URION,  DIRECTOR OCCUPATIONAL  LICENSING, DEPARTMENT  OF                                                                   
COMMUNITY AND  ECONOMIC DEVELOPMENT, testified  in support of                                                                   
the  legislation.    He  stated that  the  cost  of  business                                                                   
licensing had remained at $25  per year in Alaska since 1949.                                                                   
He noted that a  method had been devised [in  the House Labor                                                                   
and  Commerce Committee]  of stepping  up  the licensing  fee                                                                   
depending on  the number  of employees:   $50 for  those with                                                                   
five or less employees, $100 for  those with between 6 and 25                                                                   
employees,  and   $200  for  business   with  more   than  25                                                                   
employees.   He stated that  the revenue generated  from that                                                                   
method was less than desired.                                                                                                   
                                                                                                                                
He  explained  that  the  bill proposed  a  new  method  that                                                                   
depends  on  the  type  of business.    He  noted  that  sole                                                                   
proprietors would be charged $100  per year, and corporations                                                                   
$300  per  year.    He  pointed  out  that  this  new  method                                                                   
generated $2.8 million more revenue  for the state of Alaska.                                                                   
He maintained that  the new method was simple  to administer.                                                                   
He noted that  the only objections to the proposal  have come                                                                   
from small businesses.                                                                                                          
                                                                                                                                
TAPE HFC 03 - 65, Side B                                                                                                      
                                                                                                                                
Mr. Urion  referred to  the proposed  changes in a  Committee                                                                   
Substitute.                                                                                                                     
                                                                                                                                
Co-Chair Harris  observed that under the new  system, smaller                                                                   
employers that  were incorporated would still  pay the higher                                                                   
amount since corporations would  typically have a larger cash                                                                   
flow.                                                                                                                           
                                                                                                                                
Vice-Chair  Meyer MOVED  to  Adopt the  Committee  Substitute                                                                   
Work  Draft  23-Gh1102\I  (4/25/03).    Representative  Croft                                                                   
OBJECTED.                                                                                                                       
                                                                                                                                
Representative  Croft  commented  that  his  small  business,                                                                   
because it is incorporated, would  go from paying $25 to $300                                                                   
per  year.    He  maintained  that  this  was  too  large  an                                                                   
increase.    He  stated  that  he  preferred  the  Labor  and                                                                   
Commerce Committee Substitute.                                                                                                  
                                                                                                                                
A roll call vote was taken on the motion.                                                                                       
                                                                                                                                
IN FAVOR: Foster, Meyer, Stoltze, Williams, Harris                                                                              
OPPOSED: Croft, Moses                                                                                                           
                                                                                                                                
There  being  NO  OBJECTION,  the  Committee  Substitute  was                                                                   
ADOPTED.                                                                                                                        
                                                                                                                                
Representative Moses noted that  his small business would now                                                                   
pay the same amount as a large corporation.                                                                                     
                                                                                                                                
Co-Chair  Harris asked  how many categories  now existed;  he                                                                   
pointed out that the previous  Committee Substitute contained                                                                   
three  categores.    Mr.  Urion noted  that  there  were  two                                                                   
categories:    sole proprietorships  and  corporations.    He                                                                   
maintained  that  corporations  would be  more  sophisticated                                                                   
businesses.                                                                                                                     
                                                                                                                                
In  response to  a question  by  Representative Stoltze,  Mr.                                                                   
Urion noted that the licenses  would now be annual.  The cost                                                                   
will be  $190 thousand  more per  year, as  indicated in  the                                                                   
fiscal  note,  due  to  the need  for  more  personnel.    He                                                                   
speculated  that  the  system  might be  streamlined  in  the                                                                   
future  when   the  computer  system  is  updated   to  allow                                                                   
purchasing of businesses licenses online.                                                                                       
                                                                                                                                
Representative  Stoltze asked if  businesses could  apply for                                                                   
two-year  licenses.    Mr.  Urion   conceded  that  this  was                                                                   
possible.  He stated  that the goal was to have  a consistent                                                                   
system.                                                                                                                         
                                                                                                                                
Representative Croft asked for  the reason to begin licensing                                                                   
every year.   Mr.  Urion noted the  rationale that  to charge                                                                   
annually minimized the impact on businesses.                                                                                    
                                                                                                                                
Representative  Moses asked whether  a small family  business                                                                   
would be considered  a sole proprietorship, even  though they                                                                   
have  a  partnership.    Mr.  Urion  confirmed  that  such  a                                                                   
business would be considered a sole proprietorship.                                                                             
                                                                                                                                
Co-Chair  Harris  referred to  the  fiscal note  that  listed                                                                   
three full time positions.  Mr.  Urion stated that the fiscal                                                                   
note referred  to the  Labor and  Commerce proposal  that was                                                                   
more  difficult  to  administer.    He  noted  that  the  new                                                                   
Committee Substitute  required only  two new positions.   Co-                                                                   
Chair Harris observed  that no cost was listed  on the fiscal                                                                   
note for  these two positions.   Mr. Urion could  not produce                                                                   
the rationale for that figure.                                                                                                  
                                                                                                                                
CSHB 162  (FIN) was heard and  HELD in Committee  for further                                                                   
consideration.