Legislature(2003 - 2004)

05/14/2003 01:41 PM House FIN

Audio Topic
* first hearing in first committee of referral
+ 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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