Legislature(2021 - 2022)SENATE FINANCE 532
02/24/2022 09:00 AM Senate FINANCE
Note: the audio ![]()
and video ![]()
recordings are distinct records and are obtained from different sources. As such there may be key differences between the two. The audio recordings are captured by our records offices as the official record of the meeting and will have more accurate timestamps. Use the icons to switch between them.
| Audio | Topic |
|---|---|
| Start | |
| SB151 | |
| SB173 | |
| SJR12 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | SB 151 | TELECONFERENCED | |
| + | SB 173 | TELECONFERENCED | |
| + | SJR 12 | TELECONFERENCED | |
| + | TELECONFERENCED |
SENATE BILL NO.151
"An Act extending the termination date of the
Alcoholic Beverage Control Board; and providing for an
effective date."
9:03:26 AM
Co-Chair Bishop relayed that this was the first hearing of
SB 151, and the intention of the committee was to hear the
bill, take public and invited testimony, and set the bill
aside.
9:03:56 AM
SENATOR PETER MICCICHE, SPONSOR, stated that SB 151
proposed a relatively simple board extension for the
Alcoholic Beverage Control (ABC) Board. He asserted that
the board was doing a good job although was faced with some
problems.
9:05:26 AM
MADISON GOVIN, STAFF TO SENATOR MICCICHE, explained that
the legislation would extend the termination date of the
board, which was set to sunset in 2022. She read from the
sponsor statement:
In accordance with the provisions of Title 24 and
Title 44, Legislative Audit reviewed the activities of
the ABC Board and determined the board is 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.
She urged committee support of the legislation and
introduced Kris Curtis.
9:06:57 AM
KRIS CURTIS, LEGISLATIVE AUDITOR, ALASKA DIVISION OF
LEGISLATIVE AUDIT, relayed that the Division of Legislative
Audit had completed an audit of the ABC Board (copy on
file). She detailed that the division had also conducted a
special audit of the boards licensing process. She directed
committee attention to the conclusions of the report
located on Page 9 of the audit:
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's (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.
In accordance with AS 44.66.010(a)(1), the board is
scheduled to terminate on June 30, 2022. 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 Pages 14 and 15 of the audit, which
showed a schedule of licenses:
Based on data provided by Department of Commerce,
Community, and Economic Development (DCCED) staff, the
board issued 1,177 catering and special
event permits from July 1, 2019, through February 28,
2021. Testing of a sample of 25 permits found all were
issued according to statutes.
As shown in Exhibit 2, there were 1,867 active
licenses as of February 28, 2021.
In February 2021, AMCO staff issued approximately 300
temporary licenses for the license period ending
December 31, 2020, due to an application backlog that
was the result of limited staff resources. The
temporary licenses allowed
licensees to continue operating pending review of the
renewal applications. Auditors reviewed AMCO's
staffing during the audit period and found extensive
vacancies. Exhibit 3 displays staffing vacancies that
exceeded two months during the audit period.
Ms. Curtis stated that AMCO reported 7 staff positions
vacant for a total of 92 months from FY 18 through February
29, 2021. She shared that the reasons for the vacancies
included, not hiring due to uncertainty surrounding a
proposal to merge AMCO with the Division of Corporations,
Business, and Professional Licensing, not hiring due to the
unknown impact of the pandemic on the industry, and not
hiring for one position that was transferred form Fairbanks
to the Mat-Sue due to the inability to find workspace. She
said that the extended vacancies negatively impacted AMCOs
ability to support the ABC board, as well as the AMCO.
Ms. Curtis turned to Page 16 of the audit. She highlighted
3 of the 5 troublesome aspects of the application process:
Five main aspects of the application process were
found to delay or potentially delay license review,
approval, and/or issuance.
1. Application completeness and accuracy: License
requirements are complex, making the application
process complicated and inherently subject to error.
Further, the applications must be submitted manually.
As such, the applications are not subject to online
edits designed to help limit errors. 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.
4. Submittal of compliance information by applicable
entities: Approval of 48 percent of new applications
and 55 percent of transfer applications was delayed
due to protest by a local governing body or due to
waiting for receipt of compliance information (i.e.,
state fire marshal approval; building, zoning, or food
safety permits; or notice from creditors). Delays
associated with waiting for receipt of required
information added an average of 88 days for new
licenses and 35 days for transfer licenses.
5. Issuance of licenses by AMCO staff: 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.
9:10:14 AM
Ms. Curtis referenced five recommendations starting on page
27:
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.
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.
Recommendation No. 5:
The AMCO director should improve procedures and fill
vacancies in a timely manner to ensure refunds to
municipalities are appropriately reviewed.
9:12:58 AM
Ms. Curtis relayed that the responses to the audit were
found on page 47. Ms. Curtis summarized. The ABC Board's
response was found on page 49. She related that the chair
of the board strongly disagreed with the 4-year extension
and claimed that an early sunset would jeopardize the
publics trust and undermine confidence in the public
process. He believed that the finding s were not material
enough to warrant a reduced extension.
9:14:06 AM
Senator Hoffman asked whether the chairman of the board had
addressed Recommendation 3.
Ms. Curtis relayed that the chair had agreed with the
recommendations.
Senator Hoffman thought the finding was serious in nature.
Ms. Curtis stated that similar to the prior sunset audit,
it had been found that procedures were not strong. There
had been miscommunication between the court system and the
AMCO Office.
Senator Hoffman had the viewpoint that if the board did not
recognize the seriousness of the issue there would be a
need for corrective action, such as withholding per diem.
He thought that not addressing non-compliant individuals
was ignoring the problem.
Ms. Curtis noted that the commissioner reported that all 27
have now been entered into the database.
9:16:32 AM
Senator Olson asked the reason for vacancies not being
filled.
Ms. Curtis reiterated the reasons offered by the board. She
commented that there was an extreme number of vacancies,
and it was "fairly shocking."
Senator Olson asked whether there had been another time in
which there were as great a number of vacancies, or a time
when the board chair had so strongly disagreed with audit
recommendations.
Ms. Curtis relayed that over the previous 20 years the
board had received a 3 to 4-year extension multiple times.
She thought it was not surprising given the addition of the
Marijuana Control Board. She could not recall a time when a
board chair had so strongly disagreed with the
recommendations.
9:18:33 AM
Co-Chair Bishop recalled that Ms. Curtis had mentioned that
a position had been moved from Fairbanks to the Mat-Su. He
asked her to repeat the reference.
Ms. Curtis stated that one of the positions that was vacant
was because the position had been moved and they were
having trouble finding workspace in Mat-Su.
Co-Chair Bishop opened INVITED testimony.
9:19:22 AM
DANA WALUKIEWICZ, ALCOHOL BEVERAGE BOARD, ANCHORAGE (via
teleconference), spoke in favor of the bill and encouraged
the committee to consider extending the termination date
for 6 years. He stressed that the board did not dispute the
nature of the audit findings, but the overall
recommendation of a shortened term. He mentioned
Recommendation 3, and admitted it was an important step to
include offenders in the database. He drew attention to
page 30:
Additionally, due to miscommunication and turnover of
key agency staff, reports of convictions of AS
04.11.010 violations were not consistently provided by
the court system.
Mr. Walukiewicz explained that the issue stemmed from
several years prior when the previous director had not had
great communication with other agencies. He asserted that
and communication had improved dramatically under the new
director. He shared that all of the restricted purchasers
were now in the consistently updated database.
Mr. Walukiewicz mentioned the vacancy issue and the
reference to a possible merge of functions of the AMCO
office and the DCCED licensing division. He noted that the
matter was an administrative directive that was not
necessarily supported by the board. He related that the job
postings were being prepared, but not posted by the
appropriate parties in DCCED. He said that the issue was
resolved, and the positions were filled.
Mr. Walukiewicz explained that the communication and
cooperating with the department had improved. He pointed
out to the committee that subsequent to the audit period,
all staffing positions had been filled.
9:24:05 AM
Mr. Walukiewicz explained that 4 of the 5 recommendations
had been addressed before the report was published. He
noted that the board and AMCO did not dispute the need for
a new automated application processing system. The alcohol
application process was preformed by 3 people and was paper
based. He stressed that the board and the staff were in
full support of an automated system but did not have the
funds to implement such a system. He said there was funding
available contingent on the passage of SB 9. He stated that
a follow-up audit would be welcome and did not feel like
the issues in the current audit should limit the time of
the board. He felt that a shortened term would hamper the
work of the board.
9:27:24 AM
Senator Wilson identified the issue of application accuracy
and completeness. He recalled an inaccuracy rate of 97
percent, which he believed was high. He asked what Mr.
Walukiewicz how the issue of application accuracy could be
resolved.
Mr. Walukiewicz explained that the application process was
paper-based and very detailed. Much of the information had
to be cross-checked with various databases. He said that
having an electronic submission process that was integrated
with other state databases would streamline the process.
Mr. Walukiewicz continued to address Senator Wilson's
question. He said that one had to understand the statutes,
regulations, and nuances associated with each license
application. He summarized that the board was hopeful that
the automated system would cut the error rate to a
manageable level.
9:30:35 AM
Senator Wilson did not see how an automated system would
help the applicant. He wondered whether the board would
provide technical assistance to applicants.
Mr. Walukiewicz relayed that there was also a position that
assisted with the roll-out of applications and regulations.
He said that due to staffing issues, there was not as great
of outreach to the industry to assist with forms. He added
that now that the board was fully staffed, he anticipated
there would be more outreach that would provide guidance.
He was certain matters would be simplified with the passage
of SB 9.
9:32:37 AM
Co-Chair Stedman commented that the board should worry
about the legislature eliminating the board in 2026. He
relayed that it was helpful to have another review as
proposed in four years. He thought that if the issues were
resolved the next extension would be longer.
9:33:34 AM
Senator Olson agreed with Co-Chair Stedman. He referenced
the high cost of another audit.
9:34:31 AM
Senator Wilson asked whether the board still practiced
fairness in decision making or were appeals based on
politics.
Mr. Walukiewicz could not speak for the previous board
chair. He asserted that while he had been on the board, he
had been committed to strictly following statutes and
regulations. He said that applications were examined solely
on merit and license availability. He noted that the board
was completely new as of the last 12 months. He stressed
the professionalism of the board members.
9:38:09 AM
Co-Chair Bishop asked about the position that had been
moved from Fairbanks to Mat-Su. He asked whether the
position was still vacant.
Mr. Walukiewicz deferred to Glen Klinkhart. He shared that
there were no enforcement related findings in the audit and
all of the administrative staff was housed in Anchorage.
9:39:51 AM
GLEN KLINKHART, INTERIM DIRECTOR, ALCOHOL AND MARIJUANA
CONTROL OFFICE, DEPARTMENT OF COMMERCE, COMMUNITY AND
ECONOMIC DEVELOPMENT (via teleconference), relayed that
there had been a spot open in Fairbanks that was filled by
an investigator but due to organizational issues the spot
had to be moved to Wasilla.
9:41:43 AM
Senator Wilson asked how Mr. Klinkhart felt about the board
being able to make decisions regarding the applicability of
statutes.
Mr. Klinkhart stressed that the board followed statute and
had a qualified Assistant Attorney general present at every
meeting. He felt that there was confusion surrounding
licensing and population numbers. He said that the board
had established guidelines for signature gathering that
simplified the process.
9:44:51 AM
Co-Chair Bishop OPENED public testimony.
9:45:07 AM
Co-Chair Bishop CLOSED public testimony.
Co-Chair Bishop relayed that //
SB 151 was HEARD and HELD in committee for further
consideration.
| Document Name | Date/Time | Subjects |
|---|---|---|
| SJR 12 Sponsor Statement.pdf |
HL&C 3/21/2022 3:15:00 PM SFIN 2/24/2022 9:00:00 AM SSTA 5/4/2021 3:30:00 PM |
SJR 12 |
| SJR 12 GPO Explainer 2.8.21.pdf |
HL&C 3/21/2022 3:15:00 PM SFIN 2/24/2022 9:00:00 AM |
SJR 12 |
| SJR 12 Letter of Support 2.9.22.pdf |
HL&C 3/21/2022 3:15:00 PM SFIN 2/24/2022 9:00:00 AM |
SJR 12 |
| SJR 12 Letter of Support 5.5.21.pdf |
HL&C 3/21/2022 3:15:00 PM SFIN 2/24/2022 9:00:00 AM |
SJR 12 |
| SJR 12 Presentation.pdf |
HL&C 3/21/2022 3:15:00 PM SFIN 2/24/2022 9:00:00 AM |
SJR 12 |
| SJR 12 WEP GPO Key Points 2.9.22.pdf |
HL&C 3/21/2022 3:15:00 PM SFIN 2/24/2022 9:00:00 AM |
SJR 12 |
| SJR 12 WEP Explainer 11.16.21.pdf |
HL&C 3/21/2022 3:15:00 PM SFIN 2/24/2022 9:00:00 AM |
SJR 12 |
| SB 151 Sponsor Statement.pdf |
HL&C 4/13/2022 3:15:00 PM SFIN 2/24/2022 9:00:00 AM SL&C 2/9/2022 1:30:00 PM |
SB 151 |
| SB 151 Supporting Document - 2021 Audit Summary.pdf |
HL&C 4/13/2022 3:15:00 PM SFIN 2/24/2022 9:00:00 AM SL&C 2/9/2022 1:30:00 PM |
SB 151 |
| SB 151 Supporting Document - 2021 Complete Audit.pdf |
HL&C 4/13/2022 3:15:00 PM SFIN 2/24/2022 9:00:00 AM SL&C 2/9/2022 1:30:00 PM |
SB 151 |
| SB 173 Sponsor Statement.pdf |
SFIN 2/24/2022 9:00:00 AM SL&C 2/9/2022 1:30:00 PM |
SB 173 |
| SB 173 Sectional Analaysis version I.pdf |
SFIN 2/24/2022 9:00:00 AM SL&C 2/9/2022 1:30:00 PM |
SB 173 |
| SB 173 Written Testimony Received as of 1.31.22.pdf |
SFIN 2/24/2022 9:00:00 AM SL&C 2/9/2022 1:30:00 PM |
SB 173 |
| SJR 12 Responses to SFIN Committee Questions.pdf |
SFIN 2/24/2022 9:00:00 AM |
SJR 12 |