04/27/2001 01:45 PM Senate CRA

            SB 175-MUNICIPAL PROTESTS OF GAMING PERMITS                                                                     
                                                                                                                              
SENATOR ELTON,  bill sponsor and Senator  from district B,  said the                                                            
bill addressed  a problem that has  arisen in his community.  SB 175                                                            
gives  municipalities  the  opportunity   to  protest  or  recommend                                                            
conditions on the issuance  or renewal of a gaming permit similar to                                                            
the  way  municipalities  now  protest  or  ask  for  conditions  on                                                            
alcoholic beverage control (ABC) licenses.                                                                                      
                                                                                                                                
Under the bill provisions,  a municipality or applicant may, after a                                                            
hearing,  make a  defense and  then protest  the permit  or ask  for                                                            
conditions.  One  provision  would,  under  certain  circumstances,                                                             
preclude  municipalities  from  doing  that.  For  example,  if  the                                                            
municipality  holds gaming  permits, they could  hold a hearing  and                                                            
protest  a  permit  for non-payment  of  taxes.  The  Department  of                                                            
Revenue would  then review  the protest by  the municipality  and if                                                            
they determine  that it is a reasonable protest they  could deny the                                                            
issuance of a  permit. They too would have to hold  a hearing and go                                                            
through a process before  they could deny the permit thus giving the                                                            
applicant another chance to present their case.                                                                                 
                                                                                                                                
Without  the bill,  municipalities  may  only  have a  local  option                                                            
election that  would allow them to ban all gaming  or just pull-tabs                                                            
or,  by ordinance,  they  may prohibit  a  vendor or  operator  from                                                            
managing  a permit. The permit  would then  go to another vendor  or                                                            
operator.                                                                                                                       
                                                                                                                                
The situation  is Juneau was that three operators  did not pay taxes                                                            
and over a three  year period, their tax liability  grew to $627,000                                                            
plus $300,000 in attorney  and other costs. There was no way for the                                                            
municipality  to protest  the issuance  of the  permits even  though                                                            
they  are issued  on a yearly  basis.  Since the  operators have  no                                                            
assets to attach,  there is no way  of recovering the liability.  In                                                            
doing  nothing to  the  operators  who are  flaunting  the law,  the                                                            
municipality  is  giving  them  a  competitive  advantage  over  the                                                            
operators who are paying the taxes.                                                                                             
                                                                                                                                
This sets in place a system  to give municipalities control over the                                                            
operations  of the permits.  Other situations  in which a  community                                                            
might want  to have a hearing before  protesting a license  are fire                                                            
safety or public nuisance issues.                                                                                               
                                                                                                                                
Side B                                                                                                                          
                                                                                                                                
This solution is reserved for organized municipalities.                                                                         
                                                                                                                                
CHAIRMAN TORGERSON  commented that public nuisance  is in the eye of                                                            
the beholder and he does  not like the idea of a municipality having                                                            
to define  nuisance and then  place conditions  on the activity.  He                                                            
looks upon  the tax as a good policy  but the nuisance bothers  him.                                                            
He recommended tightening the definition a bit.                                                                                 
                                                                                                                                
SENATOR ELTON  responded arbitrary, capricious and  unreasonable are                                                            
definitions  lifted from  the ABC  statutes and  there is  precedent                                                            
behind those issues so new definitions should not be necessary.                                                                 
                                                                                                                                
CHAIRMAN  TORGERSON  asked whether  anyone  from the  Department  of                                                            
Revenue was present.                                                                                                            
                                                                                                                                
SENATOR  ELTON  said  the Deputy  Commissioner  showed  up  for  the                                                            
previous hearing that was  canceled and his arrival was anticipated.                                                            
                                                                                                                                
CHAIRMAN  TORGERSON said he  could not get  there in time.  He asked                                                            
for the next committee of referral.                                                                                             
                                                                                                                                
SENATORS LINCOLN AND PHILLIPS said it was Labor and Commerce.                                                                   
                                                                                                                                
CHAIRMAN TORGERSON  said he had some  problems with the bill  but he                                                            
would entertain  a motion to move the bill. He wants  to continue to                                                            
work with  Senator Elton  to narrow  the focus  to taxes. He  wasn't                                                            
sure about fire  hazard. He thought perhaps they could  come up with                                                            
an amendment to offer.                                                                                                          
                                                                                                                                
SENATOR  ELTON asked to  be advised  of which  staff member  to work                                                            
with and he would get any information that was needed.                                                                          
                                                                                                                                
CHAIRMAN  TORGERSON indicated  his  Community and  Regional  Affairs                                                            
staff person, Mary Jackson.                                                                                                     
                                                                                                                                
SENATOR  LINCOLN  moved  SB  175  from  committee   with  individual                                                            
recommendations   and  accompanying  fiscal  note.   There  were  no                                                            
objections.