Legislature(1995 - 1996)

02/27/1996 01:05 PM CRA

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
 HB 383 - REIMBURSE FOR LOCAL SERVICE TO INEBRIATES                          
                                                                               
 Number 0657                                                                   
                                                                               
 CO-CHAIR IVAN noted that HB 383 had been heard previously by the              
 committee and been discussed by a subcommittee chaired by                     
 Representative Austerman.  It had undergone substantial change.               
 Co-Chair Ivan asked for a motion to adopt the committee substitute            
 for HB 383, draft 9-LS1447\F, for discussion purposes.                        
                                                                               
 Number 0715                                                                   
                                                                               
 CO-CHAIR AUSTERMAN moved that the committee accept work draft CSHB
 383, version F, for discussion purposes.  There being no objection,           
 it was so ordered.                                                            
                                                                               
 Number 0773                                                                   
                                                                               
 TOM WRIGHT, Legislative Assistant to Representative Ivan, sponsor             
 of HB 383, explained the intent of finding a way to reimburse                 
 municipalities for the cost associated with the Title 47 public               
 inebriates.  One of the problems with the first draft of HB383 had            
 been that the Mental Health Trust Fund was the source of funding.             
 There had been discussions among Representative Austerman and his             
 staff, Representative Ivan and his staff and the Mental Health                
 Trust Fund representatives to try to find solutions for undertaking           
 the program.  Although the Mental Health trustees expressed                   
 interest in the program, they did not see how they could fund it,             
 since it only earned approximately $2 million per year and had to             
 fund other programs.                                                          
                                                                               
 Number 0816                                                                   
                                                                               
 MR. WRIGHT continued, saying in order to try to fund the program              
 without using general fund revenue, they came up with the alcohol             
 excise tax to fund the program under HB 383 and generate revenues             
 for the state.  He referred to CSHB 383, Section 1, and pointed out           
 that HB 96 and HB 97 were incorporated into the new draft.  Those             
 bills were sponsored by Representative Kay Brown, who had concurred           
 with incorporating them into HB 383.  One of those two bills was              
 the municipal tax bill, under which a municipality may impose an              
 alcoholic beverage sales tax equal to, higher than or lower than              
 the applicable sales tax in the municipality.                                 
                                                                               
 Number 0834                                                                   
                                                                               
 MR. WRIGHT referred to Section 2, addressing the alcohol tax, and             
 said the numbers inserted in CSHB 383 were those recommended by the           
 Long Range Financial Planning Commission.  He said Section 3                  
 allowed the Department of Revenue each year to "adjust the tax                
 rates imposed under (a) of this section to reflect increases in the           
 Consumer Price Index for all urban consumers for all items for the            
 Anchorage metropolitan area compiled by the Bureau of Labor                   
 Statistics".  Mr. Wright referred to Section 4 and Section 5, which           
 he said were really the meat of the original bill, the                        
 reimbursement program to municipalities.  He indicated                        
 representatives were available from the Department of Revenue and             
 the Department of Health and Social Services to answer questions.             
                                                                               
 Number 0929                                                                   
                                                                               
 REPRESENTATIVE ELTON asked Mr. Wright about Section 5, page 3,                
 relating to municipalities or traditional village councils seeking            
 an offset to services provided to incapacitated individuals.  He              
 wondered if consideration had been given to broadening the language           
 so prevention and education programs would also be eligible through           
 this revenue source.  "That way, you're not just treating a symptom           
 at the end, but you're also doing some prevention at the                      
 beginning," he added.                                                         
                                                                               
 Number 0979                                                                   
                                                                               
 MR. WRIGHT responded that it had been discussed, although probably            
 not at as great a length as for the reimbursement program.  Some of           
 those programs were already established, funded either through                
 Mental Health Trust funds, general funds or program receipts.  What           
 CSHB 383 was trying to accomplish was establishment of the new                
 program.  The legislature could then decide where to dedicate the             
 other revenues.                                                               
                                                                               
 Number 1009                                                                   
                                                                               
 REPRESENTATIVE ELTON thought this area was important to the state.            
 He was concerned about just supplanting general fund dollars with             
 a new revenue source, instead of increasing treatment or prevention           
 services.  He asked if that had been discussed as the committee               
 substitute was put together.                                                  
                                                                               
 Number 1035                                                                   
                                                                               
 MR. WRIGHT replied he would defer to Co-Chair Austerman for that              
 aspect.  He mentioned another piece of legislation, HB493, which              
 dealt with involuntary commitments of people who were "going                  
 through a revolving door process."  He noted that HB 493 was                  
 currently in the House Judiciary Committee and said, "that's                  
 another piece of the puzzle."  He explained that with so many                 
 pieces to it, it had been difficult to ascertain what existed just            
 for the program under consideration.                                          
                                                                               
 Number 1086                                                                   
                                                                               
 CO-CHAIR AUSTERMAN, in response to Representative Elton's question,           
 said, "Mr. Wright is correct.  We did talk about this quite                   
 extensively."  He explained part of the problem was lack of a                 
 cohesive, overall, umbrella-type structure in Alaska that                     
 encompassed alcoholism problems all together, directing education,            
 prevention and other aspects.  Co-Chair Austerman suggested that              
 was the direction towards which they were leaning, for future                 
 legislation, in the hopes of addressing alcoholism on a statewide             
 basis.  He indicated that HB 383 was a stop-gap measure but that it           
 was a step in the right direction.  Rather than taking on the                 
 whole, broad issue of alcoholism this late in the session, they had           
 decided to push through legislation on one part of it.                        
                                                                               
 Number 1162                                                                   
                                                                               
 CO-CHAIR IVAN pointed out the problem addressed by HB 383 had                 
 initially been recognized in the Dillingham area, where the                   
 municipality paid a quarter of a million dollars per year for                 
 services to inebriates.  There had been a debate between the                  
 community of Dillingham and the regional health corporation that              
 provided services under contract with the Indian Health Service.              
 Co-Chair Ivan expressed he had first thought it was a simple                  
 solution; the first draft of HB 383 had targeted Mental Health                
 Trust funds to pay for those costs.  However, he now realized they            
 were just scratching the surface of a problem that existed                    
 statewide.  He mentioned there were other bills, including the one            
 relating to involuntary commitment, HB 493, brought up earlier by             
 Mr. Wright.  There was also a resolution asking for establishment             
 of a task force to take a close look at these problems across the             
 state.  Co-Chair Ivan noted that taxation was the second source of            
 funds that the committee had looked at for reimbursement to                   
 municipalities.                                                               
                                                                               
 Number 1283                                                                   
                                                                               
 CO-CHAIR AUSTERMAN stated that the people with whom they had met,             
 in reference to the Mental Health Trust Fund, had been highly                 
 supportive of the concept of trying to come up with a concrete,               
 statewide plan.  They recognized their responsibility, as well, he            
 said.  By next year, he suggested, a fairly decent plan could be              
 arrived at if they could get started in the interim.                          
                                                                               
 Number 1330                                                                   
                                                                               
 MR. WRIGHT pointed out that the Department of Revenue had prepared            
 a fiscal note for the blank committee substitute that had been                
 provided to committee members.                                                
                                                                               
 REPRESENTATIVE NICHOLIA moved that CSHB 383 move with attached                
 fiscal notes and individual recommendations.                                  
                                                                               
 Number 1346                                                                   
                                                                               
 CO-CHAIR IVAN expressed that he wanted to take further testimony on           
 the bill and provide opportunity for discussion.                              
                                                                               
 REPRESENTATIVE NICHOLIA withdrew the motion.                                  
                                                                               
 Number 1376                                                                   
                                                                               
 DENNIS OAKLAND, Chief of Police, Police Department, City of Homer,            
 testified via teleconference.  Although he had no new comments, he            
 wanted to reference previous testimony by himself and William                 
 Walters, Judicial Services Officer in Homer, in support of HB 383.            
 He hoped that testimony, presented January 16, 1996, had been                 
 incorporated into the new draft, which they had not had the                   
 opportunity to review.                                                        
                                                                               
 Number 1424                                                                   
                                                                               
 CRISTY TILDEN, Program Director, Drug and Alcohol Services, Bristol           
 Bay Area Health Corporation, and Board Member, Advisory Board on              
 Alcohol and Drug Abuse, testified via teleconference from                     
 Dillingham.  "We are still in support of the bill and even more               
 so," she said.  She noted that the regional advisory committee, the           
 opinions of which guided their program, had one source of                     
 discomfort with the original bill, which was using the Mental                 
 Health Trust Fund as a source of revenue.  They therefore believed            
 this version was much improved.  She drew the committee's attention           
 to state of Alaska Bulletin Number 6, dated February 5, 1996, which           
 concluded that increases in alcohol taxation had been associated              
 with decreased alcohol consumption, cirrhosis mortality and motor             
 vehicle injury rates.                                                         
                                                                               
 Number 1497                                                                   
                                                                               
 JEWEL JONES, Manager, Social Services Division, Health and Human              
 Services Department, Municipality of Anchorage, testified via                 
 teleconference that this was the first opportunity to see the                 
 committee substitute.  Therefore, the municipality had not yet                
 taken an official position related to the sales tax.  She noted               
 that the tax had been discussed by the municipality for some time.            
 She indicated she would take the committee substitute to the                  
 municipality and ask that something be forwarded to the committee.            
                                                                               
 Number 1537                                                                   
                                                                               
 MS. JONES said in general, the municipality spent a considerable              
 amount of money on, and was very much in favor of, reimbursements             
 for this particular service.  Under the Title 47 statute, they                
 picked up people who were incapacitated or otherwise of danger to             
 themselves or to others due to alcohol.  They provided what they              
 called a "minimal humanitarian services," which included picking              
 people up, taking them some place safe, performing occasional                 
 medical screening, and letting them sleep off the intoxication.               
 Often, she said, treatment was not available.  It was a vicious               
 circle and not very cost-effective.  For just the service they did            
 provide, it cost the municipality over half a million dollars per             
 year, not including money expended by the community nor funds for             
 police services.  Ms. Jones explained that Anchorage had, through             
 the years, attempted to address the problem of public inebriation             
 through task forces.  She expressed interest in participating with            
 the legislature and pointed out that the municipality had compiled            
 data and information that was available.                                      
                                                                               
 Number 1744                                                                   
                                                                               
 C. JOE DIMATTEO, Director, Alaska Council on the Prevention of                
 Alcohol and Drug Abuse, testified via teleconference from                     
 Anchorage, saying, "I am very supportive and I echo everything that           
 my colleagues and friends from around the state have talked about."           
 With the funds coming through the state, there was no way all the             
 problems could be solved.  "I certainly support any new revenues              
 that we can bring into our communities to help the communities get            
 a start to combat this," he said.                                             
                                                                               
 MR. DIMATTEO expressed approval of the prevention and education               
 aspects mentioned by Representative Elton.  He referred to the idea           
 of an umbrella agency and said he thought some of that was already            
 in place with the Division of Alcohol and Drug Abuse, which was the           
 state agency with experts in the field.  That, he said, would be              
 the ideal starting place for this.  He mentioned his own council's            
 statewide prevention effort but indicated Alaska's size made it               
 difficult.  The council's approach, he said, included sending                 
 people into communities to help persons there take ownership of               
 their own problems and to provide technical assistance, locate                
 resources and so forth.  However, that needed expanded.  He thought           
 the umbrella approach was good, but he hated "to see the wheel                
 reinvented."  Things were in place but the amount being expended              
 only took care of a certain portion of the problem.  He referred to           
 a recent study, but did not specify what it was, that showed the              
 success of the statewide treatment programs.  "Don't forget us out            
 there," he added.                                                             
                                                                               
 LOREN JONES, Director, Central Office, Division of Alcohol and Drug           
 Abuse, Department of Health and Social Services (DHSS), said the              
 Administration was supportive of the tax increases included in                
 CSHB383.  He noted that the Long Range Financial Planning                     
 Commission had recommended those taxes, as well as tobacco taxes,             
 as a means to raise revenue to shorten the fiscal gap; on that                
 basis, the Administration supported them.                                     
                                                                               
 Number 1938                                                                   
                                                                               
 MR. JONES said that DHSS's concern was with public health and                 
 ameliorating issues around alcohol and drug abuse.  Therefore, DHSS           
 supported the tax, as well.  The department felt increasing the tax           
 would affect availability of alcohol to young persons, who were               
 sensitive to economic costs.  Mr. Jones acknowledged that was a               
 debate that "everybody is positive of" on the tobacco tax.                    
 However, there was dissention as to whether price affected alcohol            
 consumption; Mr. Jones said he would argue that it did.  He                   
 referred to a packet provided to the committee that showed some of            
 the research that had been done, as well as some of the impacts               
 this tax could have on consumption.                                           
                                                                               
 Number 1974                                                                   
                                                                               
 MR. JONES stated support for the ability of municipalities to have            
 a differential sales tax.  He explained that the City and Borough             
 of Juneau was the only community that had passed a differential tax           
 prior to the law being changed.  Although the amount of experience            
 with it was not great, it worked in Juneau and was a source of                
 funds that the local community contributed to prevention,                     
 education, early intervention and treatment services.  It was a way           
 for local communities to have revenues available to address the               
 issue.  Mr. Jones reaffirmed that both the Administration and DHSS            
 were supportive of the tax increases.                                         
                                                                               
 Number 2033                                                                   
                                                                               
 MR. JONES said, "We are not, however, supportive of the last part             
 of the bill that, in essence, without a cap or without any                    
 discussion of how, simply allows communities to bill for what they            
 feel is the amount of expenses they pay for the public inebriate.             
 We are not in agreement that this is an unfunded mandate.  We feel            
 that even without Title 47, communities would deal with citizens              
 that were having problems with alcohol and drug abuse."  Mr. Jones            
 indicated there was funding available through DHSS for some                   
 services.  In addition, some communities contributed local                    
 revenues.  He emphasized that it was hard to get a handle on how              
 much money a community thought it was spending on incapacitated               
 persons and what that definition was.  He did not want to just                
 "open a checkbook" for people submitting bills.                               
                                                                               
 Number 2083                                                                   
                                                                               
 MR. JONES stated that if the intent of the legislation was, as he             
 thought it was, to find a way to provide income or a revenue stream           
 to a community, so that the community had ownership over how they             
 addressed their problems, that was something that DHSS supported.             
 One possible way to do that, he suggested, would be looking at a              
 mechanism to share back the revenues collected to the communities.            
 That way, the communities would have a source of money.  They                 
 could, then, through their desires, design how they wanted to spend           
 that money on the problem.  Mr. Jones requested that if that were             
 taken under consideration, that there also be some responsibility             
 placed on the municipalities to show that they were using those               
 funds for the problem, rather than just have them, at the end of              
 the year, submit a bill to the Department of Revenue.                         
                                                                               
 Number 2126                                                                   
                                                                               
 MR. JONES provided a brief recap, saying, "We are supportive of the           
 tax increases in here.  We are not supportive of the method of                
 payment in the back of the bill."  He added that the bill discussed           
 adjusting the tax based on the Consumer Price Index (CPI) every               
 year.  Although they agreed it should be adjusted, they recommended           
 thinking about doing so every two or three years instead.                     
                                                                               
 Number 2177                                                                   
                                                                               
 CO-CHAIR AUSTERMAN requested that Mr. Jones submit his suggestions            
 in writing, so that the committee could use them to put together a            
 committee substitute to present to the House State Affairs                    
 Committee.                                                                    
                                                                               
 REPRESENTATIVE ELTON said he also appreciated some of Mr. Jones's             
 suggestions.  He asked Mr. Jones if, for example, a local person              
 who was inebriated broke his arm and went to Bartlett Hospital, the           
 hospital could then seek reimbursement for the medical services               
 provided for the broken arm.                                                  
                                                                               
 Number 2229                                                                   
                                                                               
 MR. JONES replied that if he were to look at the language of CSHB
 383 to make that decision, he could not do it.  "That's part of our           
 objection," he said.  He pointed out that there was a specific                
 definition of "incapacitated person."  "The section of statute it             
 references is a person that is incapacitated that has been put in             
 protective custody by a police officer," he explained.  If, for               
 example, an intoxicated person broke his arm and was brought in by            
 a relative, the hospital probably would not be eligible for                   
 reimbursement.  On the other hand, if he was brought in by a police           
 officer, he would be in protective custody and would fit that                 
 narrow definition.  While CSHB 383 hinted at that, the rules were             
 not written.  "I think that complicates the issue for the                     
 Department of Revenue as a CS bill, as to how you figure out who's            
 billing you for what and is it an appropriate billing,"  Mr. Jones            
 stated.  "And that kind of thing costs some money."                           
                                                                               
 Number 2286                                                                   
                                                                               
 REPRESENTATIVE ELTON asked if Mr. Jones was talking about a "shared           
 revenue kind of tax, so that municipalities could then make the               
 decision on their own on which costs would be reimbursable."                  
                                                                               
 MR. JONES replied there were various mechanisms used in statute to            
 share revenues back.  For example, for the fish processor's tax,              
 there was a certain percentage of the tax collected shared back               
 with the communities affected by offshore processing.  In Title 4,            
 for individuals having licenses for alcohol sales, including bars             
 and package stores, a portion of those fees were turned back to               
 local communities for enforcement of liquor laws.                             
                                                                               
 Number 2333                                                                   
                                                                               
 REPRESENTATIVE ELTON referred to sales taxes collected on the local           
 level and asked if the sales tax was also collected on the tax                
 being assessed through this bill.                                             
                                                                               
 MR. JONES said he would assume that was correct.  He believed the             
 current excise tax was collected at the wholesale level.                      
                                                                               
 Number 2384                                                                   
                                                                               
 REPRESENTATIVE KOTT asked Mr. Jones if he was aware of other states           
 with similarly adjusted taxation rates on alcoholic beverages and,            
 if so, what the consumption rates had shown after the adjustment.             
                                                                               
 MR. JONES replied that taxing alcoholic beverages was not a popular           
 thing and did not change a lot in most states.  He referred to                
 materials provided to the committee and said he believed the last             
 tax increase in Alaska was in 1983.  Beginning about 1984 and 1985,           
 the consumption in Alaska started to drop and had dropped steadily            
 every year since.  In the last year, he said, they had seen "a                
 little flattening of that and going back up."  He felt that because           
 the tax was not indexed to inflation, liquor was becoming                     
 relatively inexpensive compared to amounts of disposable income.              
 Unlike tobacco, he pointed out, this relationship had been                    
 discussed and researched more in theory than in practice, because             
 tax rates on alcohol in many states had not changed often.                    
                                                                               
 Number 2454                                                                   
                                                                               
 MR. JONES explained that one of the main concerns and main targets            
 was kids.  For them, it was price-sensitive.  If it cost more for             
 them to purchase something, it would decrease their use of it.                
                                                                               
 REPRESENTATIVE KOTT suggested there may have been other reasons for           
 the reduction after the last tax increase.  It could have been                
 tougher DWI laws or greater public awareness, for example.                    
                                                                               
 TAPE 96-16, SIDE B                                                            
 Number 0004                                                                   
                                                                               
 REPRESENTATIVE KOTT referred to a 10-cent-per-glass increase for a            
 12-ounce glass of beer.  "I could hardly believe that those                   
 adjustments would do anything at that level," he said.                        
                                                                               
 MR. JONES responded that in Alaska, beer was the beverage for which           
 consumption had continued to rise, whereas consumption for wine and           
 distilled spirits had decreased in Alaska and the rest of the                 
 country.  "I don't believe that a person that sells 4 ounces of               
 wine is going to raise their price 4 cents because that's the                 
 increase in tax.  More than likely, they would raise it 10 or 25              
 cents," he said.  He believed that would have an impact.                      
                                                                               
 Number 0046                                                                   
                                                                               
 REPRESENTATIVE KOTT expressed agreement with Mr. Jones's                      
 assessment.  "I've talked with a number of establishments and                 
 they've indicated that if there was anything less than a 25-cent              
 increase, it's going to 25 cents."                                            
                                                                               
 Number 0089                                                                   
                                                                               
 BOB BARTHOLOMEW, Deputy Director, Central Office, Income and Excise           
 Audit Division, Department of Revenue, explained that his division            
 was responsible for administering the alcohol tax program.  He                
 referred to the fiscal note and affirmed that the last increase to            
 the alcohol tax rate was in 1983.  The proposed legislation would             
 change the rates effective July 1, 1996, and would raise $15                  
 million in the first year.  The bill required annual increases,               
 according to the CPI, every July 1st.  Mr. Bartholomew expressed              
 support for indexing or some kind of regular mechanism to increase            
 the tax, in order to keep up with inflation.  However, he                     
 recommended that adjustments not be made annually, because of the             
 burden that would create from changing tax rates and communicating            
 changes to the taxpayers.  He suggested doing something every two             
 or three years, catching up to the CPI for that number of years,              
 which would make the tax easier to administer.                                
                                                                               
 Number 0148                                                                   
                                                                               
 MR. BARTHOLOMEW referred to the issue of whether price would affect           
 consumption, which in economists' terms was called the "elasticity            
 factor."  As Mr. Jones had indicated, for fiscal notes prepared on            
 tobacco taxes, it was much easier to find information on what                 
 factors to use.  In the current fiscal note, however, the                     
 Department of Revenue had not yet included elasticity, although               
 they had requested information from numerous agencies and were                
 planning to come up with a recommendation on what the reduction               
 would be.  "And there would be a reduction in the fiscal note for             
 that," he stated.                                                             
                                                                               
 Number 0184                                                                   
                                                                               
 MR. BARTHOLOMEW referred to "the other part of the fiscal note,"              
 and said, "we do have personal service costs of $20,000 and                   
 contractual of $1,000 to deal with communicating out to the                   
 taxpayers."  He explained the Department of Revenue was not asking            
 for a new position.  However, the proposed legislation would more             
 than double the taxes collected, with a total of nearly $30 million           
 per year.  Currently, the department had "a little over one-and-a-            
 half full-time equivalents" that dealt with the alcohol tax                   
 program, including monthly filings and following up to ensure that            
 people were making payments.  Because of the large increase, extra            
 compliance work would need to be done by the department to address            
 the potential for finding loopholes or looking at other ways to               
 bring alcohol into the state.  The money would fund part of a Tax             
 Examiner II position.                                                         
                                                                               
 Number 0238                                                                   
                                                                               
 MR. BARTHOLOMEW referred to Section 5 of the bill, which required             
 the Department of Revenue to administer the refunding of costs back           
 to local governments.  As previous testimony reflected, the                   
 Administration did not feel that was an effective or appropriate              
 way to refund the money.  He pointed out that the bill originally             
 asked DCRA to perform that role; that department had a fiscal note            
 on file requesting $42,000 to administer and run the cost-                    
 reimbursement program.  "Our feeling is, we don't have anyone that            
 could administer that program currently," he said.  "If the thought           
 was for the Department of Revenue to do it, the fiscal note that              
 Community and Regional Affairs has put in would be similar to what            
 we would do."  He suggested that if it moved forward, they would              
 even discuss which agency was the most appropriate to do that, as             
 it might not be the Department of Revenue.   He added, "we would              
 hope to come up with a different solution than that."                         
                                                                               
 Number 0306                                                                   
                                                                               
 RICHARD B. LAUBER, Lobbyist, Anheuser-Busch Company, Inc.,                    
 indicated he was only addressing that portion of the committee                
 substitute concerning tax increases.  "I think it should be made              
 very clear that what you're doing is imposing a tax on a large                
 portion of the citizens of the state of Alaska that consume                   
 beverages of an alcoholic nature in the form of beer, wine and hard           
 liquor," he said.  If the bill passed, Alaska would have, by far,             
 the highest taxes in the United States on alcoholic beverages.  He            
 asserted that the Department of Revenue would find that substantial           
 tax increases would reduce consumption.  However, he said, it would           
 not reduce consumption by the people with problems with alcohol.              
 Instead, it targeted the average person who consumed a few drinks             
 per day.  "A person goes in for a weekly case of beer; they may               
 reduce that to a couple of six-packs," he said.  Persons who were             
 addicted, however, would drink anything they could.                           
                                                                               
 Number 0440                                                                   
                                                                               
 MR. LAUBER discussed drinking by youths and suggested a dollar or             
 two would not make the difference if young people wanted to drink.            
 He discussed the high prices charged by bootleggers.  An alcoholic            
 or person who really wanted that drink would be willing to pay that           
 price, whereas the average citizen would not pay exorbitant prices.           
 He suggested that the tax would increase the risk of illegal                  
 activities.  "You'll think you're reducing consumption, but                   
 actually it may not be reducing it as much as you think," he said.            
 "If nothing else, people [will be] brewing their own."                        
                                                                               
 Number 0520                                                                   
                                                                               
 MR. LAUBER referred to the concept of "sin taxes" and said that               
 term no longer applied.  He mentioned the health benefits of                  
 consuming small amounts of beer or wine.  He indicated it was the             
 abuse of the alcoholic beverage, not the consumption of minor                 
 amounts, that was the problem.  "The vast majority of this tax is             
 going to be paid by people who are moderate consumers of alcohol              
 beverage, not the people you're targeting," he said.                          
                                                                               
 REPRESENTATIVE KOTT referred to his earlier question about whether            
 the Department of Revenue was aware of a correlation between                  
 increasing taxes on alcoholic beverages and consumption.  He asked            
 whether Mr. Lauber was aware of any statistics based on what other            
 states had done.                                                              
                                                                               
 Number 0600                                                                   
                                                                               
 MR. LAUBER replied yes, he had seen figures to that effect.  He               
 stated that although Alaska had last increased alcohol taxes in               
 1983, the federal government had doubled its taxes on beer since              
 that time.  "Their records indicate a drop in consumption ...                 
 directly related to the tax increase," he said.  He thought this              
 might be the largest increase percentage-wise in the history of the           
 United States.  "It's certainly greater than doubling of the tax on           
 beer," he added.  "It will reduce consumption."  He mentioned the             
 law of economics, which said increasing prices lowered consumption.           
 He emphasized that the vast majority of beer was consumed by                  
 moderate drinkers, not by people who had to have it.  Those                   
 moderate drinkers had the option of not buying as much.                       
                                                                               
 Number 0706                                                                   
                                                                               
 REPRESENTATIVE NICHOLIA commented on reasons for decreasing alcohol           
 consumption.  She thought the decrease was not a direct result of             
 a tax increase.  In the late 1980s, there was more of an awareness            
 of alcohol and drug prevention program.  There was also a                     
 prevention movement across the state.  From her experience of being           
 in a rural area, it was not until about 1987 that these prevention            
 programs became more noticeable, with increased awareness and                 
 pushing for sobriety.  She thought that was probably the largest              
 force in decreasing consumption of alcohol.                                   
                                                                               
 Number 0758                                                                   
                                                                               
 MR. LAUBER specified that the decrease he knew about was                      
 nationwide, following an increase in federal tax.  He acknowledged            
 there were many reasons why people changed their drinking habits.             
                                                                               
 REPRESENTATIVE KOTT pointed out the law of economics would apply in           
 almost any case; as the price of a commodity increased, the chances           
 of buying it at the same level would decrease.  Furthermore, people           
 on budgets for entertainment would have less purchasing power if              
 the price was increased.                                                      
                                                                               
 Number 0864                                                                   
                                                                               
 KEVIN RITCHIE, Executive Director, Alaska Municipal League,                   
 testified that the Alaska Municipal League was strongly in support            
 of allowing local communities to set their own rates for the                  
 alcohol tax.  The league was also generally in support of the                 
 concept of the entire bill.  "This is one area where municipalities           
 and the state really come together," Mr. Ritchie said.  There was             
 a wide range of costs attributable to alcohol, not only on the part           
 of people who drank frequently, but also in health areas including            
 insurance and others, he added.                                               
                                                                               
 Number 0899                                                                   
                                                                               
 MR. RITCHIE explained he had been involved with the Long Range                
 Financial Planning Commission.  "During that time, one of the                 
 questions asked was, `how can we decrease court costs, corrections            
 costs and other public safety cost,' and the answer was `control              
 alcohol.'"  Mr. Ritchie acknowledged that CSHB 383 may or may not             
 affect consumption.  However, on a level of taxation in                       
 municipalities, people had generally been more supportive when they           
 knew a tax being imposed would solve a problem related to that tax.           
 He thought the legislation was a very positive step and offered the           
 assistance of the Alaska Municipal League.                                    
                                                                               
 Number 0958                                                                   
                                                                               
 CO-CHAIR AUSTERMAN thought there had been several good suggestions            
 for possible changes.  He noted that the bill had two more                    
 committees of referral, the House State Affairs Committee and the             
 House Finance Committee.  "I would like to see it move on and we'll           
 take a good look at those suggestions and propose a CS," he said.             
                                                                               
 Number 0977                                                                   
                                                                               
 REPRESENTATIVE ELTON said he was greatly encouraged by the kind of            
 debate and testimony that had been heard.  He did not see this as             
 a tax increase.  "We already have the tax.  We could just say that            
 we're accounting for inflation over the last 14 years, since it was           
 last raised," he said.  He added, "even with the new provisions, we           
 fall far short of reimbursing the state and local communities for             
 the costs incurred through the use of alcohol."  He applauded the             
 work that had been done and endorsed Co-Chair Austerman's comment             
 that this was a first step.  He suggested looking at consolidation            
 and some of the prevention and education programs.  He hoped the              
 revenues would not be used to simply supplant other general fund              
 dollars that were already being applied to the problem, because the           
 dimensions of the problem necessitated this being an increment to             
 the programs now in place.                                                    
                                                                               
 Number 1061                                                                   
                                                                               
 REPRESENTATIVE KOTT noted that there were two issues being                    
 addressed.  The first was whether the increase in revenues would              
 substantially change social behavior.  As for the second, he felt             
 this indeed was a tax increase.  He questioned the concept of                 
 imposing a tax of any kind on Alaskans in order to close the fiscal           
 gap.  "I can't answer any of those in the affirmative, so I won't             
 be supporting the bill," he concluded.                                        
                                                                               
 Number 1096                                                                   
                                                                               
 REPRESENTATIVE NICHOLIA moved that CSHB 383 be moved from committee           
 with attached fiscal notes and individual recommendations.                    
                                                                               
 CO-CHAIR IVAN noted that there was an objection and asked for a               
 roll call vote.  Voting in favor of moving CSHB 383 from committee            
 were Representatives Nicholia, Elton, Austerman and Ivan.  Voting             
 against the motion were Representatives Kott and Vezey.  Therefore,           
 CSHB 383 moved from committee with attached fiscal notes and                  
 individual recommendations.                                                   

Document Name Date/Time Subjects