Legislature(2021 - 2022)ADAMS 519
05/02/2022 01:30 PM House FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| SB193 | |
| SB151 | |
| SB186 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | SB 190 | TELECONFERENCED | |
| + | SB 186 | TELECONFERENCED | |
| + | SB 193 | TELECONFERENCED | |
| + | SB 151 | TELECONFERENCED | |
| + | TELECONFERENCED |
SENATE BILL NO. 151
"An Act extending the termination date of the
Alcoholic Beverage Control Board; and providing for an
effective date."
1:38:57 PM
Co-Chair Merrick indicated that Representative Josephson
and Representative Wool had joined the meeting.
MADISON GOVIN, STAFF, SENATOR PETER MICCICHE, introduced
the bill with prepared remarks. She relayed that SB 151
extended the board's termination date to June 30, 2027. She
furthered that the Legislative Audit Division reviewed the
activities of the ABC Board and determined the board was
effectively serving the public interest by controlling the
manufacture, barter, possession, and sale of alcoholic
beverages in the state. Findings also included that board
meetings were conducted effectively, regulations were
adopted to implement statutory changes, and investigations
were conducted in a timely manner.
Co-Chair Merrick asked to hear from the Division of
Legislative Audit.
1:40:23 PM
KRIS CURTIS, LEGISLATIVE AUDITOR, ALASKA DIVISION OF
LEGISLATIVE AUDIT, indicated that the audit was unique
because the Alcoholic Beverage Control Board (ABC) audit
report contained findings from both a Sunset Review Audit
and a Special Review Audit of the boards licensing process
requested by the Legislative Budget and Audit Committee
(LBA). She read from the reports conclusions as follows:
Overall, the audit found that board meetings were
conducted effectively, regulations were adopted to
implement statutory changes, and investigations were
conducted in a timely manner. The audit also concluded
that the Alcohol and Marijuana Control Office (AMCO)
operations were impeded by the lack of an automated
application process and significant vacancies.
Further, deficiencies in controls over processing
licensee fee refunds were identified.
We recommend the legislature extend the board's
termination date to June 30, 2026, which is four years
less than the maximum allowed in statute. The reduced
extension reflects the need for more timely oversight
to evaluate the board's progress in addressing
licensing inefficiencies and filling vacancies.
Ms. Curtis pointed to Page 14 of the audit report that
contained a chart titled "Exhibit 2" that displayed ABC's
license count by type as of February 28, 2021. She reported
that 1,867 licenses were active. A backlog of applications
due December 2020, caused by extensive vacancies resulted
in the issuance of approximately 300 temporary licenses.
She elaborated that Auditors reviewed AMCO's staffing
during the audit period and found extensive vacancies.
Exhibit 3 on page 15 displayed the staff vacancies from FY
2018 through February 28, 2021 and showed staffing
vacancies that exceeded two months during the audit period.
In total, 7 staff positions were vacant over 92 months. The
department offered that the hiring of the two positions was
not approved due to "the substantial uncertainty
surrounding an earlier proposal to merge AMCO into DCCED's
Division of Corporations, Business and Professional
Licensing. The impact of the COVID-19 pandemic to the
alcoholic beverage and marijuana industries was also
unknown, and these two positions were not materially
involved in licensing functions. In addition, one position
was not filled due to difficulty with finding workspace for
the special investigator position, which was moved from
Fairbanks to the Matanuska-Susitna Borough. The extended
vacancies negatively impacted AMCOs ability to support the
ABC board as well as the Marijuana Control Board (MCB). She
referred to Pages 10 through 18 that summarized the
auditors detailed review of the boards licensing process.
The auditors found that 76 percent of new licenses and 85
percent of transfer applications were issued or finalized
within six months of receipt. She added that on average it
took 153 days to issue a new license and 131 days to issue
a transfer license. The audit reported that license
requirements were complex, making the application process
complicated and inherently subject to error. Further, the
applications must be submitted manually. As such, the
applications were not subject to online edits designed to
help limit errors. The audit identified the following three
opportunities for gaining licensing efficiencies:
1:43:53 PM
Analysis of the 505 applications received during the
audit period found applications were incomplete and/or
inaccurate at a rate of 96 percent for new
applications and 97 percent for transfer applications.
Once determined deficient, the applications are sent
back to the applicants for correction. Returning
applications added, on average, 20 days to AMCO's
review process.
Ms. Curtis relayed that the second opportunity confirming
an applicants compliance with the regulations and
statutory requirements caused significant delays. Delays
due to protest by a local governing body or due to waiting
for receipt of compliance information added an average of
88 days for new licenses and 35 days for transfer licenses.
Thirdly, the audit found that AMCO staff issued new and
transfer licenses an average of 23 days and 28 days,
respectively, after all outstanding requirements were met.
She added that automation of the process would
significantly shorten the timeline. She highlighted the
five recommendations contained in the report found on Pages
27 through 31:
Recommendation No. 1: The Department of Commerce,
Community, and Economic Development (DCCED)
commissioner should ensure AMCO staff vacancies are
filled in a timely manner and the AMCO director should
implement written licensing procedures.
Recommendation No. 2: The board should significantly
enhance or replace its licensing database and automate
the application process where possible.
Recommendation No. 3: The board and AMCO director
should strengthen procedures for entering restricted
purchasers in the statewide database of written
orders.
Ms. Curtis elaborated that the board failed to address the
finding in its prior audit. Twenty-seven individuals
convicted of relevant violations during the audit period
were either not entered in the statewide database or
entered, but not marked as restricted purchasers due to
insufficient procedures. She continued to the fourth
recommendation:
Recommendation No. 4: The board and AMCO director
should implement procedures to ensure municipalities
receiving refunds of biennial license fees are
actively enforcing alcoholic beverage laws.
1:47:16 PM
Alaska Statute 04.11.610 requires biennial licensing
fees to be refunded to municipalities, and states that
if the officers of a municipality fail to actively
enforce laws related to the manufacture and sale of
alcoholic beverages in the state, the DCCED
commissioner may deny the refund. The audit found the
reports were not reviewed by the board or AMCO staff.
Ms. Curtis disclosed that the refunds were being
automatically issued. She moved to the fifth
recommendation:
Recommendation No. 5: The AMCO director should improve
procedures and fill vacancies in a timely manner to
ensure refunds to municipalities are appropriately
reviewed.
The audit found one AMCO employee was responsible for
calculating the amounts to be refunded to
municipalities and the calculation was not reviewed
prior to processing the refund.
Ms. Curtis recommended that the duties should be segregated
for better internal control and the extended vacancies
contributed to the deficiency. She addressed the response
by the Department of Commerce, Community and Economic
Development (DCCED) commissioner found on Page 47. She
related that the commissioner agreed with all the
recommendations. The commissioner stated that all the
vacancies had been filled. In addition, DCCED was
developing a needs assessment for an automated database and
license renewal system. The violators had been entered into
the statewide database of written orders and procedures had
been adopted to ensure the data was entered going forward.
Finally, the commissioner ensured that procedures for
recommendation 4 would be implemented in the future. She
turned to Page 49 and reviewed the ABC board chairs
response. She indicated that the chair disagreed strongly
with the four-year early extension recommendation and
believed that the finding would jeopardize the publics
trust and undermine confidence in the public process. The
chair agreed with all the recommendations but did not agree
that the issues warranted a reduced extension
recommendation. She added that the board had routinely
received a 4 to 5 year extension over the last 20 years.
Representative Josephson referenced the chair's comments
about undermining integrity and it struck him as
hyperbolic.
Co-Chair Merrick indicated that Representative Carpenter
had joined the meeting.
1:49:02 PM
DANA WALUKIEWICZ, ALCOHOL BEVERAGE BOARD, DEPARTMENT OF
COMMERCE, COMMUNITY AND ECONOMIC DEVELOPMENT (via
teleconference), testified in support of the bill with the
current five-year extension. He relayed that AMCO agreed
with the audits findings but disagreed with the
recommendation for a four-year extension. The board was
thankful for the five-year extension in the current version
of the bill. He elaborated that if the Title 4 rewrite (SB
9 - Alcoholic Beverage Control; Alcohol Reg) were to pass,
the board would take on a lengthy and large project to
update the regulations consistent with the bill. He
addressed the audit findings. He shared that many of the
recommendations made were corrected. The only outstanding
issue was the lack of an IT system to support the licensing
process. He reported that the board was in support of
revamping and updating the system to create a fully
automated system. It was outside the board's authority to
independently develop the system as it would take capital
funds. He informed the committee that funds were included
in SB 9 to support the automation effort. The system would
be similar to the myAlaska state log-in system. He
concluded that he was happy the board was extended to 5-
years instead of four years in the current version of SB
151.
1:52:18 PM
Representative Josephson thought it sounded like the board
was relatively satisfied. He asked if the statement was
fair. Mr. Walukiewicz replied that the extra year extension
was warranted to implement SB 9 and obtain the funds
necessary and deploy a new IT system to address licensing
delays and inefficiencies. He restated the board was pretty
happy overall. Representative Josephson perceived that the
board would always receive criticism and deal with
competing tensions. He apologized if his prior comment
seemed out of hand. He referenced the chairs comments,
jeopardizing the publics trust and undermining their
confidence. He asked if the chair still held the same
view.
Mr. Walukiewicz responded in the negative. He explained
that his concern was over the four year period being
insufficient to accomplish the boards work and shared the
industrys and the publics concern over an early sunset.
He offered that issues brought before the board could be
very political in nature. The public and the industry
wanted certainty that the board would be in existence to
address issues when needed. He had been with the board for
just over two years, and he was pleased to see the amount
of public process during board meetings. He believed that
the board's commitment to hear the publics and industrys
concerns and take the opportunity to address them was
important. He deduced that shortening the board's term
would potentially jeopardize the public's trust. He assured
the committee that he would work to improve ABCs process
over 5 years hopefully, resulting in a consensus to extend
the board for an even longer period of time.
1:56:04 PM
Representative Carpenter referenced Ms. Curtis's comment
that one of the recommendations was also a previous
recommendation. He asked which recommendation she had been
referring to.
Ms. Curtis answered that there were two recommendations
that were repeated dealing with the statewide database of
written orders and the refund process for biannual license
fees. The two were continuing recommendations from the
prior audit. She maintained that her reduced extension
recommendation was not associated with the five
recommendations. She felt that there was a need to monitor
the boards progress in addressing its licensing
deficiencies and was what drove the four-year
recommendation.
Representative Carpenter cited the report on page 5 and
read the following:
Alaska Statute 04.11.370(a) requires a license to be
suspended or revoked if the board finds a licensee
violated an alcoholic beverage statute or regulation,
a condition or restriction imposed by the board, or a
municipal ordinance. Statutes also state that a
license should be suspended or revoked if the board
finds the licensee failed to correct a defect that
constitutes a violation after receipt of notice issued
by the board or its enforcement agents.
Representative Carpenter noted that there were two audits
in a row with the same recommendation, yet the board
received an extension from four to five years. He was
concerned that even an audit every four years had not
resulted in fixing recommendations. He did not understand
why the sunset was extended to five years.
1:58:49 PM
Ms. Curtis responded that on page 21, the report
acknowledged that the boards enforcement activity had
increased during the audit period. She added that when the
audit had been conducted, SB 9 had not passed and whether
or not the bill passed she still would recommend a 4-year
extension to allow auditors time to determine the boards
progress in implementing SB 9. She believed that
legislative oversight was important when a board was tasked
with extensive changes.
Co-Chair Merrick asked the department to review the fiscal
note.
GLENN HOSKINSON, DIVISION OF CORPORATIONS, BUSINESSES AND
PROFESSIONAL LICENSING, DEPARTMENT OF COMMERCE, COMMUNITY
AND ECONOMIC DEVELOPMENT (via teleconference), deferred to
AMCO to review the fiscal note.
CARRIE CRAIG, ACTING DIRECTOR, ALCOHOL AND MARIJUANA
CONTROL OFFICE, DEPARTMENT OF COMMERCE, COMMUNITY AND
ECONOMIC DEVELOPMENT (via teleconference), did not have the
fiscal note on hand.
SB 151 was HEARD and HELD in committee for further
consideration.
| Document Name | Date/Time | Subjects |
|---|---|---|
| SB 186 Optometry Audit June 2021.pdf |
HFIN 5/2/2022 1:30:00 PM |
SB 186 |
| SB 186 Optometry Letters of Support _bundled as of 3.4.2022.pdf |
HFIN 5/2/2022 1:30:00 PM |
SB 186 |
| SB 186 Optometry Sponsor Statement 2.22.2022.pdf |
HFIN 5/2/2022 1:30:00 PM |
SB 186 |
| SB 193 Audit Summary.pdf |
HFIN 5/2/2022 1:30:00 PM |
SB 193 |
| SB 193 Explanation of Changes, version I to G.pdf |
HFIN 5/2/2022 1:30:00 PM |
SB 193 |
| SB 193 Full Audit.pdf |
HFIN 5/2/2022 1:30:00 PM |
SB 193 |
| SB 193 Sponsor Statement Version G.pdf |
HFIN 5/2/2022 1:30:00 PM |
SB 193 |
| SB 193_Letter of Support.pdf |
HFIN 5/2/2022 1:30:00 PM |
SB 193 |
| SB 151 Explanation of Changes.pdf |
HFIN 5/2/2022 1:30:00 PM |
SB 151 |
| SB 151 Research Audit Summary.pdf |
HFIN 5/2/2022 1:30:00 PM |
SB 151 |
| SB 151 Research Full Audit.pdf |
HFIN 5/2/2022 1:30:00 PM |
SB 151 |
| SB 151 Sponsor Statement.pdf |
HFIN 5/2/2022 1:30:00 PM |
SB 151 |