Legislature(2003 - 2004)
05/14/2003 01:41 PM House 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. 128(FIN) am "An Act relating to licensing common carriers to dispense alcoholic beverages; and providing for an effective date." RICHARD SCHMITZ, STAFF, SENATOR COWDERY, provided information on the bill. He noted that the legislation deals with the fact that common carriers can dispense alcohol and are licensed by the Alcoholic Beverage Control Board. He observed that concern was expressed that airlines would have to license all of their planes because it would be impossible to guarantee which plane would make a run. The legislation was amended to enact a biannual fee of $2,000 dollars per location that Alaska Airlines serves. Pan Air Aviation would be allowed to pay a $1,000 dollar fee for the first aircraft and $100 fee for each additional plane. A bar car on a train would be individually licensed. The Alcoholic Beverage Control Board supports the bill as it cuts back on paperwork and makes it easier to license aircraft. Representative Berkowitz asked if on board alcohol was taxed. After discussion, it was speculated that it was not taxed. Representative Foster asked if the fee pertains to each carrier. Mr. Schultz explained that carriers can chose by location served or by the first 10 aircraft. Representative Foster asked why the choice was necessary. Mr. Schultz observed that the option would affect carriers with less than ten 10 aircraft. TAPE HFC 03 - 94, Side A Representative Kerttula referred to the fiscal note. She pointed out that the choice would cost the State $39 thousand. Mr. Schultz stated that the goal, in talking with the Alcoholic Beverage Control Board, was to lower the paperwork cost and prevent a situation where a carrier would have to register each of its aircraft as it expanded. Representative Kerttula asked how much the planes made from liquor sales each year. Representative Berkowitz asked if a rate level had been examined to make the bill fiscally neutral. Mr. Schultz noted that it had been discussed. He did not think that there was opposition to making the program revenue neutral. LARRY PERSILY, DEPUTY COMMISSIONER, DEPARTMENT OF REVENUE provided information. He observed that alcohol tax in Alaska is an excise tax, not a sales tax. It is assessed at the wholesale level. He assumed that airlines would buy from an out-of-state distributor. The question is whether there would be tax liability for importing the alcohol into the state of Alaska. He did not think an excise tax had been collected. In response to a question by Representative Berkowitz, Mr. Persily responded that the sale would occur in the air and may be subject to federal law. Representative Foster observed that airlines do not make their profit from alcohol sales. Mr. Schmitz noted that ERA sells alcohol on their flights. Representative Berkowitz proposed an amendment to make the legislation revenue neutral by increasing fees by 10 percent; insert 1,100 on page 2 line 4. Mr. Schmitz responded that ERA Aviation would be the only airline affected serving intrastate routes. Vice-Chair Meyer OBJECTED for discussion. He asked if the amount would be in line with charges by other states. Mr. Schmitz indicated that the fee would cover the cost to implement. Mr. Persily recalled that many other states have lower fees but that they have a higher volume of planes licensed. He did not think the fee was grossly out of line with other states. Vice-Chair Meyer questioned if the amendment would be within the range. Mr. Persily noted that Alaska would not be at the highest end. He added that Alaska Airlines has considered the issue and has been looking for a solution. Representative Berkowitz MOVED to AMEND Amendment 1: Page 2, line 8, delete "2,000" and insert "$3,000". Mr. Schmitz questioned if page 2, line 4 should be amended to be in line with the amended amendment. He did not support the amendment. Representative Chenault suggested that $3,000 would be $500 more than the bi-annual bar fee. Representative Stoltze questioned if the increase was justified. A roll call vote was taken on the motion. IN FAVOR: Kerttula; Meyer; Whitaker; Berkowitz, Hawker OPPOSED: Stoltze; Chenault; Foster; Williams; Harris The MOTION FAILED (5-5). Representative Foster MOVED to report CSSB 128(FIN)am out of Committee with individual recommendations and the accompanying fiscal note. There being NO OBJECTION, it was so ordered. CSSB 128(FIN)am was REPORTED out of Committee with a "do pass recommendation" and fiscal impact note #2 from Department of Revenue.
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