Legislature(1999 - 2000)
02/16/1999 01:35 PM House FIN
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HOUSE JOINT RESOLUTION NO. 12
Relating to federal claims against funds obtained by
settlement of state tobacco litigation.
Co-Chair Therriault pointed out to the Committee that
Representative Harris and his staff worked with the
Chairman's office in preparing the proposed committee
substitute.
REPRESENTATIVE JOHN HARRIS spoke to the work draft that
addresses the tobacco settlement which the State of Alaska
has been involved with the federal government. The State is
requesting Congress to not include funding from the lawsuit
in the federal budget. The lawsuit states that Alaska,
along with other states, should receive the full amount of
those funds.
DOUG GARDNER, ASSISTANT ATTORNEY GENERAL, DEPARTMENT OF LAW,
distributed a handout "Presentation on Tobacco Issues and
HJR 12". [Copy on file]. The handout summarizes some of
the issues relating to the tobacco settlement. It was
Attorney General Botelho's view that in order to better
understand the Health Care Finance Administration (HCFA)
claims against the federal level, it would be important to
create a context for it.
(Tape Change HFC 99 - 21, Side 2).
Mr. Gardner addressed the enforcement of tobacco vendor and
tax laws. The tobacco vendor enforcement (STING Operations)
has resulted in many criminal citations and convictions for
clerks selling tobacco. A settlement has been reached with
those vendors. Rather than litigating those issues with the
vendors, the Department of Law has entered into a settlement
which provides for a suspension of their licenses and will
require that they re-train their clerks. The stores
involved have agreed to make contributions to an advertising
campaign to further the effort to educate people that
tobacco is a dangerous substance.
He continued, the Legislature has increased the per pack tax
with regard to the State sales tax enforcement. Mr. Gardner
noted that there is no evidence of smuggling of cigarettes
into the State, however, the State is working to guarantee
that all taxes are being paid on cigarettes imported into
the State. The average monthly revenues received by the
State has increased from $1.5 million to $4.3 million
dollars.
Mr. Gardner spoke to the litigation and the national
settlement which the State has entered into. The settlement
consists of $670 million dollars to Alaska to be paid over
25 years. HCFA, the federal agency that administers the
Medicaid program, has taken a position that as much as $400
million dollars of the settlement belongs to them. The
State of Alaska, however, assumes that the State did not sue
to recover "federal" money. Mr. Gardner understood that the
HCFA claim would not be made until the year has past,
allowing time for the issue to be debated.
Mr. Gardner advised that U.S. Senator Murkowski and U.S.
Senator Kay Bailey Hutchinson co-sponsored SB 346, which
would essentially protect all states tobacco settlement
dollars from HCFA's claim. He pointed out the payment
distribution date chart accompanying the handout on Page #5.
Mr. Gardner noted that there is currently legislation
relating to the settlement. It is assumed that all states
will enact the legislation called the "Model Statute" or the
"Renegade Provision". The Department expects to have the
Model Law available and conforming to statute within the
next two weeks. It is not necessary for this legislation to
be enacted in order for the State to receive settlement
money, but it is essential for it to be enacted against the
tobacco industry fight.
Co-Chair Therriault asked if the Department was involved
with any litigation with Internet sales currently taking
place for tax-free cigarettes. Mr. Gardner replied that
anyone who causes cigarettes to be imported into the State
of Alaska must have a license and must pay tax. The
Department of Revenue is monitoring that activity closely.
Co-Chair Mulder asked how much the State would be receiving
from settlement payments. Mr. Gardner stated that a total
of $8.1 million dollars followed by $30 million dollars
would be received before June 30, 2000.
Representative Bunde questioned the use of the settlement
funds, and asked if the committee substitute was essential.
Mr. Gardner advised that the State's position is that we do
not want the federal government to "take" any of this money.
However, many states are taking steps to try to comply with
the McCain Bill. The debate on that legislation states that
if you use 50% of the money from the tobacco bill to
supplement existing health care programs, the feds would
then assume a "hands-off" approach. Many states are
allocating funds in a way which would insulate them from
HFCA's plan.
Representative Bunde asked, without the resolution, could
the State spend these funds on something other than health
care. Mr. Gardner pointed out that the proposed resolution
does not deal with particular appropriations.
Co-Chair Therriault stated that the McCain Bill did not pass
U.S. Congress. Mr. Gardner added that the Attorney General
believes that this is a long-standing commitment of HFCA and
that agency wants to see the problem fixed and health care
interests addressed. Representative J. Davies asked if
there was information available regarding the position of
HFCA and that of the Clinton Administration. Mr. Gardner
replied that it is a broadly held view and that he could
supply some info regarding that concern.
Co-Chair Mulder MOVED to adopt work draft version 1-
LS0418\G, Ford, 2/16/99, as the version before the
Committee. There being NO OBJECTION, it was adopted.
Co-Chair Mulder MOVED to report CS HJR 12 (FIN) out of
Committee with individual recommendations and with the
accompanying zero fiscal note. There being NO OBJECTION, it
was so ordered.
CS HJR 12 (FIN) was reported out of Committee with a "do
pass" recommendation and with a zero fiscal note by the
House Finance Committee.
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