03/25/2024 01:30 PM Senate LABOR & COMMERCE

                  SB 203-BUSINESS LICENSE FEES                                                                              
                                                                                                                                
1:33:16 PM                                                                                                                    
CHAIR  BJORKMAN announced  the consideration  of SENATE  BILL NO.                                                               
203, "An  Act relating  to business  license fees;  and providing                                                               
for an effective date."                                                                                                         
                                                                                                                                
1:33:40 PM                                                                                                                    
MICAELA  FOWLER,  Deputy  Commissioner, Department  of  Commerce,                                                               
Community  and  Economic  Development  (DCCED),  Juneau,  Alaska,                                                               
introduced SB 203 on behalf  of the administration. She said that                                                               
over  the  past   year  and  a  half,  the   department  has  had                                                               
discussions  with the  business community  about interest  in the                                                               
ways the  state can  do more  to promote  industries that  do not                                                               
have  a promotional  entity (e.g.  the  Alaska Seafood  Marketing                                                               
Institute (ASMI) and Alaska  Travel Industry Association (ATIA)).                                                               
She said  that in  2023, the legislature  provided $5  million in                                                               
the  capital  budget  to  start  doing some  of  this  work.  The                                                               
Division  recognizes  that  requesting  an  Unrestricted  General                                                               
Funds (UGF)  appropriation on  an ongoing  basis is  difficult in                                                               
the present  economy. The Division  has been seeking a  small fee                                                               
increase (impacting  the population that would  benefit from that                                                               
activity).                                                                                                                      
                                                                                                                                
1:35:18 PM                                                                                                                    
MS. FOWLER  explained that  the business  license fees  have been                                                               
set at  $50 per  year since  2008. Prior to  this, the  fees were                                                               
$100 per  year. SB 203  proposes returning to the  $100 licensing                                                               
fee. The  intention is  that the funds  could be  appropriated to                                                               
support business  marketing should  the legislature choose  to do                                                               
so.  She gave  a brief  overview of  the $5  million received  in                                                               
2023. She  expressed gratitude  for the funds  and said  that the                                                               
Department has  a contract with  the Alaska Chamber  to determine                                                               
where Alaskans would like to  see that money invested. This would                                                               
also offer  information on where appropriate  market research can                                                               
be done  and allow the  division to offer appropriate  support to                                                               
thriving  or  emerging   industries.  Prior  administrations  saw                                                               
promotional activities  around peonies  - which helped  grow this                                                               
industry.  She  noted   that  additional  promotional  activities                                                               
occurred around that  time - this is providing data  on where the                                                               
greatest interest is going forward.                                                                                             
                                                                                                                                
1:37:28 PM                                                                                                                    
SYLVAN  ROBB, Director,  Division of  Corporations, Business  and                                                               
Professional  Licensing, Department  of  Commerce, Community  and                                                               
Economic Development,  Juneau, Alaska, offered a  presentation on                                                               
SB 203 and advanced to slide 2:                                                                                                 
                                                                                                                                
[Original punctuation provided.]                                                                                                
                                                                                                                                
     What Does SB 203 Do?                                                                                                     
                                                                                                                                
        • Increases regular business license fees from $50                                                                      
          to $100 per year                                                                                                      
        • Increases   business   license   fees   for   sole                                                                    
          proprietorships owned by a disabled veteran or                                                                        
          individual who is 65 years of age or older from                                                                       
          $25 to $50 per year                                                                                                   
        • Increases tobacco endorsement fees from $100 to                                                                       
          $200 per renewal                                                                                                      
                                                                                                                                
1:38:22 PM                                                                                                                    
MS. ROBB advanced to slide 3:                                                                                                   
                                                                                                                                
[Original punctuation provided.]                                                                                                
                                                                                                                                
     Why Increase These Fees?                                                                                                 
                                                                                                                                
        • All funds received each fiscal year in excess of                                                                      
          what's  required  to  run the  business  licensing                                                                    
          program are deposited into UGF                                                                                        
        • Increasing business licensing fees is a way to                                                                        
          generate  additional  revenue  for  the  State  of                                                                    
          Alaska  without heavily  impacting one  profession                                                                    
          or industry over another                                                                                              
                                                                                                                                
MS. ROBB noted  that the impact for a single  business would be a                                                               
$50 increase.  She stated  that the  estimated revenue  from this                                                               
increase is $2.7 million. She  added that Alaska would remain in-                                                               
line with other  states' business license fees,  which range from                                                               
$20 to  $500. She stated  that the intention behind  the increase                                                               
is  to  use  the  funds   to  promote  the  businesses  that  are                                                               
requesting promotional assistance.                                                                                              
                                                                                                                                
1:39:14 PM                                                                                                                    
MS. ROBB advanced to slide 4:                                                                                                   
                                                                                                                                
[Original punctuation provided.]                                                                                                
                                                                                                                                
       When is a Business License or Tobacco Endorsement                                                                      
     Required?                                                                                                                
                                                                                                                                
        • A business license is required for the privilege                                                                      
          of engaging in  a business in the  State of Alaska                                                                    
          (AS 43.70.020(a))                                                                                                     
        • "Business" means a for-profit or non-profit                                                                           
          entity engaging or offering to  engage in a trade,                                                                    
          a service,  a profession, or an  activity with the                                                                    
          goal of receiving a  financial benefit in exchange                                                                    
          for the provision of services,  or goods, or other                                                                    
          property. (AS 43.70.110(1))                                                                                           
        • A person who sells cigarettes, cigars, products                                                                       
          containing  tobacco, electronic  smoking products,                                                                    
          or  products  containing  nicotine as  a  retailer                                                                    
          must  have  a  business license  and  a  [tobacco]                                                                    
          endorsement. (AS 43.70.105(b))                                                                                        
                                                                                                                                
1:39:49 PM                                                                                                                    
MS. ROBB advanced to slide 5:                                                                                                   
                                                                                                                                
[Original punctuation provided.]                                                                                                
                                                                                                                                
     When is a Business License Not Required?                                                                                 
                                                                                                                                
     Business license exemptions (AS 43.70.105):                                                                              
                                                                                                                                
        • Fisheries business                                                                                                    
        • Sale  of liquor  under a  license issued  under AS                                                                    
          04.11                                                                                                                 
        • Insurance business                                                                                                    
        • Mining business                                                                                                       
        • Supplying services as an employee                                                                                     
        • Furnishing goods or services  by a person who does                                                                    
          not represent to be regularly engaged in                                                                              
          furnishing goods or services                                                                                          
        • Activities of an investment club  as defined in AS                                                                    
          43.70.105(7)                                                                                                          
        • Bank  organized  under AS  06.05  or  the laws  of                                                                    
          another state                                                                                                         
        • National bank chartered by the U.S.                                                                                   
        • Credit union organized under AS  06.45 or the laws                                                                    
          of another state                                                                                                      
        • Credit  union  regulated  by the  National  Credit                                                                    
          Union Administration                                                                                                  
        • Mutual savings  bank chartered  under AS  06.15 or                                                                    
          organized under the laws of another state                                                                             
                                                                                                                                
1:40:37 PM                                                                                                                    
SENATOR  DUNBAR  asked  why insurance  businesses  and  financial                                                               
businesses  are exempt  from this  requirement and  if they  have                                                               
separate fees to pay.                                                                                                           
                                                                                                                                
MS.  ROBB  answered that  this  is  correct. She  explained  that                                                               
insurance  businesses  are  licensed   through  the  Division  of                                                               
Insurance and  alcohol businesses are licensed  through Alcohol &                                                               
Marijuana  Control  Office  (AMCO),  both of  which  are  in  the                                                               
Department  of  Commerce,   Community  and  Economic  Development                                                               
(DCCED).                                                                                                                        
                                                                                                                                
SENATOR DUNBAR asked about financial institutions.                                                                              
                                                                                                                                
MS.  ROBB replied  that these  are licensed  through Banking  and                                                               
Securities in DCCED.                                                                                                            
                                                                                                                                
SENATOR DUNBAR surmised that these licenses are not free.                                                                       
                                                                                                                                
MS. ROBB answered no.                                                                                                           
                                                                                                                                
1:41:36 PM                                                                                                                    
CHAIR BJORKMAN commented that  oftentimes, banks require business                                                               
licenses  before they  will  open a  business  banking account  -                                                               
including  those listed  as exempt  from licensing.  He asked  if                                                               
there is  a short cut by  which businesses that are  not required                                                               
to  obtain  a  business  license  can  provide  other  supporting                                                               
documents to open an account.                                                                                                   
                                                                                                                                
MS. ROBB  stated she could not  speak in depth to  this question.                                                               
She  commented  that  some  exempt businesses  choose  to  get  a                                                               
business license for various reasons.                                                                                           
                                                                                                                                
1:42:53 PM                                                                                                                    
MS. ROBB advanced to slide 6,  displaying a graph of the scope of                                                               
new business  licenses and endorsements  from 2014  through 2023.                                                               
She pointed  out that these  numbers reached a high  point during                                                               
the COVID-19  pandemic. She noted  that this includes  the number                                                               
of endorsements  for tobacco and  related products.  In addition,                                                               
there are around 100 thousand licensed businesses.                                                                              
                                                                                                                                
1:43:38 PM                                                                                                                    
SENATOR DUNBAR asked  what caused the spike  in business licenses                                                               
during the COVID-19 pandemic.                                                                                                   
                                                                                                                                
MS. ROBB  replied that  from April  3, 2020  to February  1, 2023                                                               
there  was no  charge for  business licenses.  She surmised  that                                                               
this  may have  been a  factor.  She speculated  that during  the                                                               
pandemic,  work was  disrupted, and  people may  have taken  that                                                               
opportunity to  open businesses;  however, the division  does not                                                               
keep data on the reasons for obtaining business licenses.                                                                       
                                                                                                                                
1:44:42 PM                                                                                                                    
MS.  ROBB advanced  to  slide  7, displaying  a  graph of  FY2014                                                               
through  FY2023 business  licenses -  new, renewed,  and current.                                                               
She explained  that "current business  license" applies  to those                                                               
who have  purchased a two-year  business license. (This  does not                                                               
include a  monetary discount  but saves  the business  owner from                                                               
reapplying each  year.) She noted  that this brings the  total to                                                               
roughly $100 thousand.                                                                                                          
                                                                                                                                
1:45:20 PM                                                                                                                    
MS.  ROBB advanced  to  slide  8, displaying  a  graph of  FY2014                                                               
through  FY2023 business  licenses  with  endorsements. She  said                                                               
that  this shows  the number  of businesses  that have  a tobacco                                                               
endorsement -  along with  the number  of actual  endorsements. A                                                               
business  may have  a number  of endorsements,  as each  location                                                               
selling nicotine products needs its own endorsement.                                                                            
                                                                                                                                
1:45:45 PM                                                                                                                    
MS. ROBB moved to slide 9  displaying a graph of business license                                                               
revenue  deposited  into  the general  fund  for  FY2017  through                                                               
FY2023.  She  explained  that,  currently,  the  money  generated                                                               
through business license  fees exceeds the cost  of operating the                                                               
program. The excess  funds flow into the general  fund. The graph                                                               
shows the amount  generated through business licenses  as well as                                                               
the amount that has lapsed into the general fund in the past.                                                                   
                                                                                                                                
1:46:22 PM                                                                                                                    
MS. ROBB  moved to  slide 10, which  listed business  license and                                                               
endorsement  reports and  resources. She  offered to  present the                                                               
sectional analysis if it was the will of the committee.                                                                         
                                                                                                                                
1:46:46 PM                                                                                                                    
CHAIR BJORKMAN  stated that the committee  understood the concept                                                               
and would forego the sectional analysis.                                                                                        
                                                                                                                                
1:47:04 PM                                                                                                                    
CHAIR BJORKMAN held SB 203 in committee.