Legislature(2013 - 2014)HOUSE FINANCE 519
02/17/2014 01:30 PM House FINANCE
| Audio | Topic |
|---|---|
| Start | |
| HB32 | |
| HB187 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | HB 32 | TELECONFERENCED | |
| + | HB 187 | TELECONFERENCED | |
| + | TELECONFERENCED |
HOUSE BILL NO. 32
"An Act providing for the issuance of one business
license for multiple lines of business; and providing
for reissuance of a business license to correct a
mistake on the license."
1:37:33 PM
Vice-Chair Neuman explained that version Y of the CS was
before the committee for discussion.
Representative Costello introduced her legislation. She
noted that the bill would allow individuals who apply for a
business license to list several lines of business through
the Department of Commerce, Community and Economic
Development. The current practice dictated that if a
license fell into several categories, several business
licenses were required. The CS proposed a common-sense
approach to licensing by allowing applicants to receive one
business license while listing the activities or
categories.
Representative Costello mentioned another aspect of the
bill allowing a change to an application to be made during
a 30 day time period.
Co-Chair Stoltze stated that most questions would be
directed to the fiscal notes. He OPENED public testimony.
1:40:59 PM
PEGGY ANN MCCONOCHIE, SELF, JUNEAU testified in support of
the bill. She stated that she obtained a business license
as a real estate broker and was required to have a separate
business license for real estate education. She encouraged
the committee to pass the legislation, as it allowed
business owners to obtain reasonable fees.
Co-Chair Stoltze asked if Ms. McConochie represented the
National Federation of Independent Business (NFIB).
Ms. McConochie replied that she was a member of NFIB, but
spoke for herself in favor of the legislation.
Co-Chair Stoltze CLOSED public testimony. He requested that
Don Habeger testify with special attention to the bill's
fiscal notes.
1:42:33 PM
DON HABEGER, DIRECTOR, DIVISION OF CORPORATIONS, BUSINESS
AND PROFESSIONAL LICENSING, DEPARTMENT OF COMMERCE,
COMMUNITY AND ECONOMIC DEVELOPMENT testified on section 3,
which opened a change for the business license within the
first 30 days after the issuance. Occasionally business
partners failed to agree about requested changes. He noted
the potential that requests in those situations might be
submitted repeatedly throughout the 30-day period.
1:45:00 PM
Representative Wilson asked if the name of the company must
be the same for both activities. She asked if a new license
would be indicated if she wanted to change the business
name.
Mr. Habeger replied that if a business owner had identical
owners and name, then the legislation allowed for multiple
lines of business. He added that business partners could
apply jointly.
1:47:01 PM
Representative Wilson asked about the potential for two
different businesses with different names. She wondered if
she would have two different business licenses.
Mr. Habeger concurred.
Vice-Chair Neuman recalled that a brewery in Talkeetna
wanted to open a restaurant. The statute stated that you
could not own a brewery and then a restaurant.
Mr. Habeger responded that if the brewery wished to change
the license, there were licensing requirements from other
agencies and organizations unrelated to business licensing.
He noted that the professional licensing statute required
that a professional license be secured prior to
administration of another business license. The legislation
addressed those businesses with the same name, interested
in multiple lines of business.
1:49:31 PM
Co-Chair Stoltze joked that the regulation of the alcohol
industry would remain as complicated and convoluted as it
always had been.
Mr. Habeger laughed.
1:49:51 PM
Co-Chair Austerman asked if the goal was to help small
businesses in Alaska. He asked if the legislation defined
small business.
Mr. Habeger responded no.
Co-Chair Austerman provided an example of a native
corporation under the regional corporation and its
subsidiaries and business licenses could become lumped
under one name. He asked how many licenses could be wrapped
under one business name. He expressed discomfort about the
lack of parameters in the bill.
1:51:28 PM
Representative Costello responded to Co-Chair Austerman's
second question. If business name remained the same, the
lines of business would involve approximately 20 different
categories. She deferred the question about higher levels
of categories to Mr. Habeger.
Mr. Habeger stated that a current requirement in regulation
was for businesses to operate their activities and
advertise with their licensed business names. He believed
that a large organization might choose to consolidate under
the corporate name, which would not be prohibited by the
proposed legislation.
Co-Chair Austerman saw many businesses advertising under
the Doing Business As (DBA) category. He discussed the need
for legislative parameters.
1:53:29 PM
Representative Munoz asked if a professional and business
license could be consolidated.
Mr. Habeger replied that the department had considered
consolidating the two licensing fees, but the state faced
an issue regarding the rewrite of the professional
licensing database. The upgrade was necessary prior to
matching the professional and business licensing databases.
Representative Munoz asked if an opportunity for
consolidation existed with the upcoming rewrite of the
system.
Mr. Habeger replied yes.
1:55:07 PM
Representative Thompson noticed the $37,500 drop in revenue
resulting from the legislation. He asked if an increase in
business licenses was projected.
Mr. Habeger replied that the department combined
corporations and business license activity. He believed
that the proposed changes would bring in more revenue than
expenses.
Representative Edgmon added that the benefit sometimes
outweighed the cost. He stated that $37 thousand was a
small price to pay to allow conveniences to small
businesses. He commented that the native corporations and
subsidiary companies were careful to set up a corporate
liability for the separate businesses. He supposed that
additional licenses would not be indicated.
1:57:23 PM
Representative Gara asked about businesses that sold hand-
made items once a year at a craft fair. He opined that
operating once a year was not a "regular business" as
stated in the statute. The division considered a onetime
event a regular license. He asked if the division continued
to interpret the statute in the same way.
Mr. Habeger stated no. He agreed that one time a year was
not considered a regular business.
1:59:33 PM
Representative Gara stated that he liked the bill. He knew
that larger businesses combined multiple services. He spoke
about the size of a company. He wondered if a small
business could potentially be identified by the number of
employees.
Representative Costello stated that the bill's fiscal note
utilized data from 750 business license holders. She
thought that the question might be better directed to the
company. She understood that an elaborate business
structure or higher type license for a corporation or
Limited Liability Corporation (LLC) might not be served
well by the legislation. The intent was to target Alaskans
that applied for a business license with the intention of
providing two or more of the specified service categories.
She requested a response from the department regarding the
750 people affected by the passage of the proposed
legislation.
2:02:15 PM
Co-Chair Stoltze pointed out that many of the state's craft
fairs lasted longer than one day. He added that municipal
jurisdictions often established permitting requirements for
such events. He wished to omit the idea that the state
would exempt state fair or the Alaska Federation of Natives
(AFN) vendors for their multi-day fairs.
2:03:13 PM
Representative Thompson asked if there was a projected
reduction in the price of Alaskan business licenses.
Mr. Habeger stated that the business licensing fee was set
in statute and regulated by the legislature. The current
licensing fee was $50 per year and a biannual license for
two years was also an option.
Representative Thompson asked about vendors that sell
homemade items out of their cars.
Mr. Habeger replied that the privilege of doing business
required a business license. He stated that additional
definitions defined business as one that yielded a
financial benefit to the business person. He appreciated
Co-Chair Stoltze's comments regarding financial gain for
any level of business.
Representative Wilson asked about the determination of 750
affected businesses.
2:05:45 PM
Mr. Habeger replied that a business license had certain
elements required by statute. A business was not required
to report their size to the department. Duplicate business
names were researched in the department's database to
arrive at the number. The line of business was also
considered in the approximate determination of 750
businesses affected. He clarified that the figure was an
estimate.
2:07:13 PM
Co-Chair Austerman pointed out the change of wording from
line of businesses to trade, service, protection or
activities. He asked if the words trade, service,
protection and activities were defined in statute.
Mr. Habeger replied yes.
Co-Chair Austerman asked if the definitions were a
component of the research leading to the 750 affected
business licenses.
Mr. Habeger replied that the department searched the
database and the terms trade, service, profession or
activity provided a definition in statute.
Co-Chair Austerman stated that he would look up the
statute.
Vice-Chair Neuman asked if the department offered fines or
penalties for Alaskans doing business without a business
license.
Mr. Habeger replied that a fine limit of $300 was
established in statute for a business operating without a
business license. He noted that an investigation to
determine the standard was expensive for the state. A
letter citing the statute was delivered to business owners
alerting them of the licensing requirement.
Vice-Chair Neuman stated that the combined licenses might
prove advantageous to the department.
2:10:08 PM
Representative Edgmon asked about potential federal tax
complications that might arise from the establishment of
multiple businesses.
Mr. Habeger stated that he was not familiar with the
federal tax statutes.
Co-Chair Stoltze stated that each individual business could
decide how to address their tax issues.
Representative Edgmon noted his support of the bill. He
offered to research the tax issue.
Co-Chair Stoltze recalled an amendment he submitted for a
business license fee reduction for seniors during his first
legislative term. He opined that the bill would prove
advantageous to seniors. He appreciated the industrial
nature of Alaskans.
2:13:55 PM
Representative Gara revisited the idea of a business
license exemption for those people doing a minimal amount
of business.
Mr. Habeger replied that he would get back to
Representative Gara with an answer.
Co-Chair Stoltze asked if the department refunded licensing
fees for businesses that did not fit the established
criteria.
Mr. Habeger replied stated that refunds were sometimes
offered.
Co-Chair Stoltze shared a story.
Mr. Habeger replied that businesses were offered refunds
for business and professional licensing when required.
Co-Chair Stoltze asked about a business license for
solicitous or illegal activity. He recalled that that the
Division of Motor Vehicles did not allow the use of
profanity when creating a personalized license plate.
Mr. Habeger replied that a business license application
must include the line of business. The state adopted
multiple lines of business.
2:18:10 PM
Co-Chair Austerman supported the bill's intention and
wished to help small businesses in Alaska. He asked for a
definition of small business and wished for additional time
to read and analyze the bill.
Co-Chair Stoltze stated that he wished to discuss the
fiscal note during the current hearing.
2:19:31 PM
Representative Munoz asked about non-profit organizations
with commercial lines of business. She wondered if the non-
profits were required to have a business license.
Mr. Habeger replied that a non-profit did not require a
business license, but many chose to have them. The
financial benefit was the deciding factor. A non-profit may
or may not solicit funding through the state.
Co-Chair Stoltze clarified that Mr. Habeger was discussing
an intentional non-profit.
Mr. Habeger replied that non-profits may do service work
within Alaska while funding was derived from outside of the
state.
Co-Chair Stoltze stated that a business that did not earn a
profit was required to purchase a business license.
Mr. Habeger concurred.
Representative Munoz asked about a retail store owned by
the non-profit organization. She wondered if the store
would require a business license.
Mr. Habeger replied yes, because of the financial benefit
offered to the non-profit organization through the retail
store.
2:21:30 PM
Vice-Chair Neuman stated that he appreciated the bill. He
hoped that municipalities might adopt a similar concept. He
wondered if Representative Costello had discussed the idea
with municipalities.
Representative Costello stated that she had an afternoon
appointment with Mayor Dan Sullivan and offered to discuss
the issue.
Co-Chair Stoltze commented that Mayor Sullivan might not
see a financial benefit in the proposal. He cautioned that
some municipalities might attempt to benefit from the bill
by charging more from businesses for municipal needs.
Co-Chair Stoltze asked Mr. Habeger about potential
complications with the fiscal note. He noted the
anticipated reduction of $37.5 thousand. He asked how the
estimations complicated the adjustments.
Mr. Habeger explained the difficulty estimating the level
of activity impacted by HB 32. He stated that the name
search in connection with lines of business was the optimal
way to discern the data required. He noted that each
business paid $50 per year, so the 750 businesses impacted
were spread across the years as an average.
2:25:47 PM
Co-Chair Austerman asked how many business licenses were
issued in the state.
Mr. Habeger replied approximately 60 thousand.
Co-Chair Austerman stated that the relatively small impact
on the overall budget made him wonder why the savings was
not spread among all business licenses. He wondered about
opportunities to help all small businesses and not only
those wishing to consolidate.
Representative Gara noted that multiple lines of businesses
existed on the business license application. He liked the
idea of the bill, but wondered if the bill was limited to
small businesses.
2:28:17 PM
Vice-Chair Neuman asked about businesses that collected
taxes for cigarettes or alcohol. He wondered about tax
codes for federal or municipality needs.
Mr. Habeger replied that business licensing had an
endorsement for retail sales of tobacco products. The
annual fee was $100 per establishment. He was unsure about
the tax implications.
Representative Guttenberg asked if business insurance
requirements would be complicated by the proposed
legislation. He wondered if multiple businesses appearing
on one license might confuse insurers.
Representative Costello clarified that the legislation
would not require people to apply for multiple lines under
one business name. If the business owner would receive
greater benefit from using one name per business, the cost
and benefit was best weighed.
2:31:43 PM
Representative Guttenberg believed the recommendation would
be made by the business's insurance company as well.
Co-Chair Stoltze remarked that small businesses make daily
decisions that change their risk assessment.
Representative Costello thanked the committee for hearing
the bill. She believed it was incumbent upon the committee
to consider the value created in governmental efficiencies.
HB 32 was HEARD and HELD in committee for further
consideration.
2:35:12 PM
AT EASE
2:35:42 PM
RECONVENED
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB 32 Letters of Support.pdf |
HFIN 2/17/2014 1:30:00 PM |
HB 32 |
| HB32 Sectional Summary.pdf |
HFIN 2/17/2014 1:30:00 PM |
HB 32 |
| HB32 Sponsor Statement.pdf |
HFIN 2/17/2014 1:30:00 PM |
HB 32 |
| HB 187 Letters of Support.pdf |
HFIN 2/17/2014 1:30:00 PM |
HB 187 |
| HB 187 Repealed Statutes (section 44-ver C).pdf |
HFIN 2/17/2014 1:30:00 PM |
HB 187 |
| HB 187 Sectional Analysis.pdf |
HFIN 2/17/2014 1:30:00 PM |
HB 187 |
| HB 187 Sponsor Statement.pdf |
HFIN 2/17/2014 1:30:00 PM |
HB 187 |
| HB 32 NEW FN DCCED 21714.pdf |
HFIN 2/17/2014 1:30:00 PM |
HB 32 |
| CSHB 32 - Explanation of Changes.pdf |
HFIN 2/17/2014 1:30:00 PM |
HB 32 |
| HB 187 Testimony ANA Patricia Senner.pdf |
HFIN 2/17/2014 1:30:00 PM |
HB 187 |
| HB 32 Letter from Bridget Lujan.pdf |
HFIN 2/17/2014 1:30:00 PM |
HB 32 |
| HB32 - Business License Counts_2-18-14.pdf |
HFIN 2/17/2014 1:30:00 PM |
HB 32 |