Legislature(2001 - 2002)

04/25/2001 01:48 PM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
HOUSE BILL NO. 228                                                                                                            
     "An Act  relating to  the offense  of selling  or giving                                                                   
     tobacco  to a  minor,  to the  accounting  of fees  from                                                                   
     business license  endorsements for tobacco  products, to                                                                   
     the  disclosure of  certain  confidential cigarette  and                                                                   
     tobacco product  information, to notification  regarding                                                                   
     a  cigarette   manufacturer's  noncompliance   with  the                                                                   
     tobacco   product   Master  Settlement   Agreement,   to                                                                   
     business  license  endorsements   for  sale  of  tobacco                                                                   
     products, to  citations and penalties for  illegal sales                                                                   
     of  tobacco products;  and  providing  for an  effective                                                                   
Members were  provided with Amendment 1,  22LS0797\J.1, Ford,                                                                   
4/25/01 (copy on file).                                                                                                         
Representative  Harris spoke in  support of the  legislation.                                                                   
He  observed that  the  state of  Alaska  received a  federal                                                                   
penalty that resulted in the loss  of $1.5 million dollars in                                                                   
federal receipts  because it was  out of compliance  with the                                                                   
federal  regulations  for the  sale  of tobacco  products  to                                                                   
minors.  The state  needs to  maintain a  20 percent  success                                                                   
rate. He explained that the legislation  stiffens the penalty                                                                   
for selling  tobacco to  a minor.  Business license  fees for                                                                   
endorsement of  tobacco sales would be increased.  The fiscal                                                                   
note is $487 thousand dollars.                                                                                                  
TAPE HFC 01 - 95, Side B                                                                                                      
Representative  Harris concluded  that the legislation  would                                                                   
allow  the  state  to retain  the  $1.5  million  dollars  in                                                                   
federal funds.                                                                                                                  
ELMER LINDSTROM, SPECIAL ASSISTANT,  DEPARTMENT OF HEALTH AND                                                                   
SOCIAL SERVICES  spoke in  support of HB  228. He  noted that                                                                   
the  legislation   responds  to  federal   noncompliance  for                                                                   
federal fiscal year 1999. In the  absence of the bill and the                                                                   
attached  funding,  the  state  of  Alaska  would  lose  $1.5                                                                   
million  dollars  from  its  federal  substance  abuse  block                                                                   
grant. These  funds would  come out  of treatment of  alcohol                                                                   
abuse.  Substance Abuse  dollars are  being held hostile  for                                                                   
enforcement  activities related  to  the sell  of tobacco  to                                                                   
minors.  The  department  appealed  the  penalty.  While  the                                                                   
appeal was pending  Congress passed legislation  allowing for                                                                   
an  alternative  penalty.  The   alternative  penalty  allows                                                                   
states to put  the amount of funding reflected  in the fiscal                                                                   
note into  new tobacco enforcement  resources to  satisfy the                                                                   
federal  fiscal year 1999  Synar penalty  [the federal  Synar                                                                   
Amendment  requires  sales  to  minors  to be  less  than  20                                                                   
percent]. The  legislation would give support  to enforcement                                                                   
and   allow  the   noncompliance  numbers   to  be   reduced.                                                                   
Currently, 34  percent of minors  that attempted  to purchase                                                                   
tobacco were successful.                                                                                                        
Vice-Chair  Bunde  spoke  in   support  of  enforcement,  but                                                                   
questioned  how  it  would  affect   small  communities.  Mr.                                                                   
Lindstrom  stressed  the  need   for  rural  enforcement.  He                                                                   
observed that  in communities  with less  than 9 outlets,  by                                                                   
and large  small rural  communities, 61  percent of  the time                                                                   
minors were able to purchase tobacco.  He observed that youth                                                                   
flown  in from  Anchorage were  able to  purchase tobacco  in                                                                   
these small rural communities.                                                                                                  
Mr. Lindstrom  discussed the fiscal notes. He  explained that                                                                   
the  fiscal  notes  from  the  Department  of  Community  and                                                                   
Economic   Development,   Occupational  Licensing   and   the                                                                   
Department of Law are interagency  receipts that are included                                                                   
in  the Department  of  Health  and Social  Services'  $487.9                                                                   
thousand dollar  fiscal note. The general  fund appropriation                                                                   
would  be  made  to  the  Department  of  Health  and  Social                                                                   
Services and they  would contract for the services  needed to                                                                   
complete enforcement activities.                                                                                                
MIKE  LIVINGSTON,  DETECTIVE,   ANCHORAGE  POLICE  DEPARTMENT                                                                   
testified via  teleconference in support of  the legislation.                                                                   
He has  conducted tobacco  compliance  checks since 1997.  He                                                                   
suggested the addition of language  on page 3, line 19: or an                                                                   
agent  or an  employee working  under the  endorsement of  an                                                                   
agent. He emphasized the need for education.                                                                                    
Co-Chair Mulder pointed out that  the language in subject (1)                                                                   
on  page 3  is  modified  by subsection  (d)  on  page 3.  He                                                                   
concluded that an agent would  be responsible for a violation                                                                   
the  agent  or the  employee  of  the agent.  Mr.  Livingston                                                                   
pointed out that  the wording is included in  subsections (2)                                                                   
and  (3) and  argued  that subsection  (1)  would be  further                                                                   
clarified by its inclusion.                                                                                                     
DAN  BRANCH, ASSISTANT  ATTORNEY GENERAL,  DEPARTMENT OF  LAW                                                                   
testified  that the  trigger was  contained  in the  previous                                                                   
section,  but  that the  additional  language  would make  it                                                                   
He observed  that an amendment  to section 6,  subsection (1)                                                                   
would clarify the concern.                                                                                                      
Mr.  Branch agreed  that  subsection (d)  is  the trigger  to                                                                   
subsection (1) on page 3. He acknowledged  that the inclusion                                                                   
of the language  recommended by Mr. Livingston  would further                                                                   
clarify that  if a person  has not had  a prior  violation or                                                                   
their clerk has not had a prior  violation then they would be                                                                   
treated as a  first offender. He discussed Amendment  1 (copy                                                                   
on file.) He  suggested that the amendment would  resolve the                                                                   
problem by clarifying that if  there were no prior offense or                                                                   
penalties under paragraph (2)  - (4) they would be treated as                                                                   
a first  offender and receive  the 20-day minimum  provision.                                                                   
The intent  was to  make sure that  people were covered  that                                                                   
had prior offenses older than  24 months. Those with offenses                                                                   
older than 24 months would be treated as first offenders.                                                                       
Mr. Branch further  discussed amendment 1. He  noted that the                                                                   
Title 11  provides that vending  machines cannot be  used for                                                                   
the sale of  tobacco accept in bars and employee  break rooms                                                                   
where  they  are  not  accessible   to  minors.  Owners  must                                                                   
adequately supervise  the use of the machines.  The amendment                                                                   
would clarify that vending machine  owners would have to have                                                                   
an endorsement to  place a vending machine in a  bar. The bar                                                                   
owner would also have to have  an endorsement. Vendor machine                                                                   
companies  only have  to buy  one endorsement  for all  their                                                                   
vending  machines. Other  vendors  of tobacco  would have  to                                                                   
have an endorsement for each location  where tobacco is sold.                                                                   
Additional language  on line 27,  page 4 would  clarify that,                                                                   
during  the period  of suspension,  a  vending machine  owner                                                                   
could not operate a vending machine  at the location that the                                                                   
offense took place.  The machine in violation  would be taken                                                                   
out of service during the period  of suspension and could not                                                                   
be used in  another location. The original  legislation would                                                                   
have taken all  of the vendor's machines out  of business for                                                                   
the period of  the suspension. This provision  was removed in                                                                   
House Judiciary.  Amendment 1 is a compromise,  which strikes                                                                   
a fair  balance and  ensures that  the vending machine  owner                                                                   
could not  take the machine to  another location in  order to                                                                   
continue making money.                                                                                                          
Representative  Harris  MOVED  to ADOPT  Amendment  1.  There                                                                   
being NO OBJECTION, it was so ordered.                                                                                          
Co-Chair Mulder  MOVED to change  the funds source  on fiscal                                                                   
note  #3  to   tobacco  settlement  funds.   There  being  NO                                                                   
OBJECTION, it was so ordered.                                                                                                   
Representative Foster  MOVED to report CSHB 228  (FIN) out of                                                                   
Committee with  the accompanying fiscal note.  There being NO                                                                   
OBJECTION, it was so ordered.                                                                                                   
CSHB  228 (FIN)  was REPORTED  out  of Committee  with a  "do                                                                   
pass"  recommendation  and with  and a  previously  published                                                                   
zero  fiscal note  (#1)  by the  Department  of Revenue;  and                                                                   
three previously  published fiscal impact notes  (#2, #3, and                                                                   
#4):  Department  of Law,  Department  of Health  and  Social                                                                   
Services   and   Department   of   Community   and   Economic                                                                   

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