Legislature(2001 - 2002)
03/05/2002 09:12 AM Senate FIN
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
CS FOR SENATE BILL NO. 215(TRA)
"An Act relating to licensing common carriers to dispense
alcoholic beverages; and providing for an effective date."
This was the first hearing for this bill in the Senate Finance
Committee.
DON SMITH, Staff to Senator Cowdery, testified the intent of this
legislation is to streamline the licensing procedure for common
carrier licenses, which includes airlines and the Alaska Railroad.
He explained this bill consolidates the licensing to a single
effective date, as there is currently confusion, especially with
Alaska Airlines, which has over 100 licenses, many with different
renewal dates.
Mr. Smith continued the bill would impose a $700 fee for each of
the first ten licenses and $100 for each additional license. He
projected this would annually produce approximately $16,000,
pointing out this is approximately eight times the amount charged
in the State of Virginia.
AT EASE 9:15 AM / 9:16 AM
[Note: Audio equipment malfunction. Portion of the meeting is not
recorded on master tape, but alternate recording is available
although of poor quality.]
IRV BERTRAM, Associate General Council, Alaska Airlines, testified
via teleconference from an off-net site about his legal credentials
in Alaska. He stated he oversees the application process for the
airlines as well as providing legal advice relating to acquiring
and financing aircraft.
Mr. Bertram informed that each time an aircraft is added to the
company's fleet, the extensive application process of "posting,
publishing and then waiting for the approval," must be undertaken.
He furthered that the Alcohol Beverage Control (ABC) Board must
also undertake a significant amount of work for each license issued
or renewed. He noted the licenses are effective for two years,
which results in some of the airline's licenses for 102 aircraft
expiring each year. He informed the number of licenses required
would increase as the company acquires new routes and new aircraft,
all of which rotate into the state. He stated the advertising and
public comment process is unnecessary for each license as there has
never been objection to granting the airlines licenses.
Mr. Bertram also expressed the high fee imposed to obtain these
licenses are "out of character with the fees that we pay in any
other state." As a result, he said the airlines has requested this
legislation to streamline the process once a common carrier
acquires a standard license for its first vessel, to allow licenses
for other vessels owned and operated by that carrier could be
easily obtained. He also pointed out this bill reduces the license
fees for multiple vessels.
Senator Olson noted this legislation would result in reduced
revenues for the state. He asked how other states streamline the
process of multiple common carrier liquor licenses.
Mr. Bertram replied that other states require the carrier to obtain
a single license for the company, with copies obtained for each
aircraft. He defined this as a fleet license. He listed the cost of
the master license in the State of Washington is $750, and the
license cost for each aircraft is $5.
DOUG GRIFFIN, Director, Alcohol Beverage Control Board, testified
via teleconference from Anchorage and agreed the procedure of
multiple common carrier liquor licenses in Alaska is more
cumbersome and expensive. He stated the biannual license system has
generally been successful in allowing renewal every other year,
however it does create confusion when multiple licenses are
involved.
Mr. Griffin explained this legislation would provide licenses for
new vessels to be issued on the same cycle. He stressed this would
benefit the ABC licensing staff as well as Alaska Airlines and
another corporation: West Tours.
Mr. Griffin informed this legislation would result in lost revenue
to the state of $53,500 every other year. He noted the ABC Board
currently generates approximately $1.8 million annually from
license fees, penalties and fines.
Co-Chair Kelly asked for an explanation of language inserted in
Section 2(c) of the Senate Transportation committee substitute on
page 2, lines 1 through 5, which reads as follows.
Upon request of the common carrier and payment of the
proportionate prorated applicable fee, the board shall change
the license period of a license for a vehicle, boat, aircraft,
or railroad buffet car to allow registration to occur in the
biennial period of the balance of the licensee's common
carrier licenses.
Mr. Griffin detailed the current biannual process whereby each
license is renewed every other year. He stated Alaska Airlines has
licenses for approximately 12 of its aircraft that expire in even
numbered years and the balance expire in odd numbered years. He
expressed this causes confusion in tracking which aircraft licenses
are in what status. He explained this provision would allow Alaska
Airlines to renew the 12 licenses for one year, rather than two, so
those licenses would be converted to the same cycle as the majority
of the fleet. This, he said, would result in all aircraft due for
license renewal in the same year. He furthered, licenses for new
aircraft acquired "mid-cycle" would be prorated so that they would
eventually become on the same cycle as the remainder of the
aircraft.
Co-Chair Kelly next referenced the fiscal note, which indicates a
revenue reduction of $37,000 rather than the $53,500 the witness
stated.
Mr. Griffin clarified additional review was conducted after that
fiscal note was submitted resulting in the higher amount. He said a
revised fiscal note had been submitted.
Co-Chair Kelly established the revised fiscal note had not yet been
received.
Senator Olson asked the reason this process was not adopted when it
was discussed a couple years ago.
Mr. Griffin responded statutory changes are required and enabling
legislation at that time did not complete the legislative process
before the end of that legislative session.
Co-Chair Donley noted the biannual fee contained in this
legislation is $700 and asked if this is the same amount as the
existing fee.
Mr. Griffin affirmed.
Co-Chair Donley asked the date of the last increase.
Mr. Griffin responded none of the license fees have increased since
approximately 1980. He qualified the fees doubled when the process
changed from an annual renewal to biannual, although the overall
cost did not increase and there was no net affect on revenue.
Co-Chair Kelly commented this legislation "brings us in line with
other states" regarding licensing fees, which he noted are "far far
less" than Alaska. He noted total license fees in the state of
Illinois are $2,000.
Mr. Griffin calculated Alaska Airlines currently pays $700 every
two years plus a $200 application fee for each aircraft, averaging
over $45,000 per year. He noted the $200 application fee would not
change under this legislation.
Co-Chair Kelly clarified that although all 102 aircraft in the
Alaska Airlines fleet does not constantly service Alaska, the state
charges licensing fees for every one.
JOE SPRAGUE, Director, Alaska Sales, Alaska Airlines, affirmed and
detailed the process of aircraft rotating routes through the state,
although the number of planes operating in the state at a given
time is considerably less than 102.
Co-Chair Kelly listed the approximate licensing fees of other
states: Arizona, $550; California, $1600; Illinois, $1200; Oregon,
$200; Virginia $1800; Washington State $1200.
AT EASE 9:33 AM / 9:41 AM
Co-Chair Kelly announced the revised fiscal note had arrived and he
asked for an explanation of the differences.
Mr. Griffin explained a calculation error.
Amendment #1: This amendment increases the biennial fee for a
common carrier dispensary license from $700 to $1,000 for each of
the first ten licenses. This language is on page 1, lines 13 and 14
of the bill.
Co-Chair Donley moved for adoption noting inflation has increased
although this fee has not since 1980. He expressed, "there would
still be considerable savings" to the industry.
Senator Green requested comment from the industry.
Mr. Sprague relayed that Alaska Airlines has no objection to this
amendment.
The amendment was ADOPTED without objection.
Senator Olson commented other tourism businesses would be affected
by this legislation and the amendment and asked if any
representatives from the industry or the Alaska Railroad wanted to
testify.
Co-Chair Kelly established no representatives of these businesses
were present.
Senator Wilken offered a motion to moved CS SB 215 (FIN) from
Committee with a new zero fiscal note from the Department of
Revenue.
There was no objection and the bill MOVED from Committee.
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