Legislature(2021 - 2022)BARNES 124
04/13/2022 03:15 PM House LABOR & COMMERCE
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| Audio | Topic |
|---|---|
| Start | |
| SB151 | |
| SB131 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | SB 151 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| + | TELECONFERENCED | ||
| += | SB 131 | TELECONFERENCED | |
SB 151-EXTEND ALCOHOLIC BEVERAGE CONTROL BOARD
3:18:46 PM
CO-CHAIR FIELDS announced that the first order of business would
be SENATE BILL NO. 151, "An Act extending the termination date
of the Alcoholic Beverage Control Board; and providing for an
effective date."
3:18:50 PM
SENATOR PETER MICCICHE, Alaska State Legislature, , as prime
sponsor of SB 151, said it is important to extend the Alcoholic
Beverage Control Board (ABC Board) in accordance with the
recommendation of the Division of Legislative Audit. He noted
that a workload will be coming to the ABC Board [if SB 9 is
passed].
3:19:41 PM
MADISON GOVIN, Staff, Senator Peter Micciche, Alaska State
Legislature, presented SB 151 on behalf of Senator Micciche,
prime sponsor. She said SB 151 would extend the Alcoholic
Beverage Control Board for an additional four years, making the
new sunset date 6/30/2026. In accordance with the provisions of
Title 24 and Title 44 a legislative auditor reviewed the
activities of the ABC Board and determined the board is
effectively serving the public interest by controlling the
manufacture, barter, possession, and sale of alcoholic beverages
in the state. Findings also included that board meetings were
conducted effectively, regulations were adopted to implement
statutory changes, and investigations were conducted in a timely
manner.
3:20:58 PM
KRIS CURTIS, CPA, CISA, Legislative Auditor, Division of
Legislative Audit, testified regarding the findings of the
division's audit [sunset review] of the ABC Board. She
explained that the purpose of the sunset audit is to determine
whether a board or commission is serving the public's interest
and whether it should be extended. She pointed out that this
specific audit is unique in that the division also performed a
special audit of the board's license process. She brought
attention to the complete audit report provided in the committee
packet.
MS. CURTIS turned to the Report Conclusions on [page 9 of the
complete report] and related that, overall, the audit found that
this board is serving the public's interest by effectively
conducting its meetings, by amending regulations to implement
statutory changes, and by investigating cases in a timely
manner. She stated that the audit also found that operations of
the Alcohol and Marijuana Control Office (AMCO) were impeded by
significant vacancies and that improvements were needed in [the
ABC Board's] license process. The Division of Legislative
Audit, she continued, is therefore recommending a four-year
extension that is half of the eight-year maximum allowed under
statute. She explained that the reduced extension reflects the
need for more timely oversight of the board's progress in
addressing the need for improvements to its license process.
MS. CURTIS drew attention to Exhibit 2 on page 14 of the
complete report and related that as of February 2021 there was a
total of 1,827 active licenses of various types. She said the
division's review noted a backlog of applications that were due
December 2020, which led the board to issue approximately 300
temporary licenses so applicants could continue to operate while
their application was pending. The division reviewed staffing
after being told the backlog was due to vacancies, she
continued. Exhibit 3 on page 15 depicts the staffing vacancies
that exceeded two months during the audit period, with a total
of 92 months that seven staff positions were vacant from fiscal
year 2018 (FY18) through February 2021. She related that the
reasons for not filling the vacancies included not hiring due
to: uncertainty surrounding an earlier proposal to merge AMCO
with the Division of Corporations, Business and Professional
Licensing, the unknown impact of the pandemic on the industry,
and because the agency could not find workspace for a position
that had transferred from Fairbanks to the [Matanuska-Susitna
Borough]. The extended vacancies, she added, negatively
impacted AMCO's ability to support the ABC Board as well as the
Marijuana Control Board.
MS. CURTIS turned to pages 16-18 of the complete report and said
the division's review of the license process found that 76
percent of new licenses and 85 percent of transfer licenses were
issued within six months. It took an average of 153 days to
issue a new license, she continued, and 131 days to issue a
transfer license. She said the division's analysis of the
process found three main opportunities for reducing the license
timeline. First, applications were deemed incomplete or
inaccurate 96 percent of the time for new applications and 97
percent of the time for transfer applications. When deemed
inadequate, the applications must be sent back, the deficiency
cured, and the application resubmitted, causing delays. Second,
confirming an applicant's compliance with the various statutory
and regulatory requirements adds a significant amount of delay.
Waiting for receipt of the compliance information, including
waiting for notice from the local governing bodies on whether
they want to protest a license action, adds 88 days on average
to the license process for new licenses and 35 days for transfer
licenses. Third, once all the requirements had been met it took
23 days to issue new licenses and 28 days to issue transfer
licenses. She said automating that process could shorten that
timeline.
3:25:33 PM
MS. CURTIS outlined the Division of Legislative Audit's five
recommendations, detailed on pages 27-31 of the complete report,
as follows: The first recommendation is that the Department of
Commerce, Community, and Economic Development (DCCED)
commissioner fill vacancies at AMCO in a timely manner and that
the AMCO director develop written procedures for the license
process. The second recommendation is that the board should
significantly enhance or replace its existing database and
automate the application process where possible because
automating the receipt, review, and issuance of licenses could
reduce the license timeline. The third recommendation is that
the board and AMCO director should strengthen procedures for
entering restricted purchasers in the statewide database of
written orders. This recommendation was made in the division's
prior audit; this time the division found that due to
insufficient procedures all 27 individuals who had been
convicted of relevant violations had not been entered into the
statewide database of written orders. The fourth recommendation
is that the board and AMCO director should implement procedures
to ensure municipalities receiving refunds of biennial license
fees are actively enforcing alcoholic beverage laws. Statutes
require the biennial licensing fees be refunded to
municipalities, but the DCCED commissioner can deny the refund
if the commissioner finds that the alcoholic beverage laws are
not being actively enforced. The division's prior audit found
that the municipalities were not submitting their quarterly
reports, yet the fees were being automatically refunded. This
audit found that the municipalities were submitting the
quarterly reports, but no one was reviewing them prior to
refunding the fees. The fifth recommendation is that the AMCO
director should ensure that refunds to the municipalities are
appropriately reviewed. This audit, like the division's prior
audit, found that just one AMCO employee was responsible for
calculating the refund and then approving the refund, but these
duties should be segregated for adequate control.
MS. CURTIS moved to page 47 of the complete report and related
that the DCCED commissioner agreed with all the Division of
Legislative Audit's recommendations. [Regarding Recommendation
1], the commissioner reported that the vacancies at AMCO had
been filled at the time of her response. Regarding
Recommendation 2 to enhance or replace the database and automate
the application process, the commissioner said that the
department was developing a needs assessment for the project.
Regarding Recommendation 3 to strengthen procedures for
recording the violations in the statewide database of written
orders, the commissioner stated that all 27 individuals had been
entered and that procedures had been developed. Regarding
Recommendation 4 to implement procedures to ensure
municipalities receiving refunds of biennial license fees are
actively enforcing alcoholic beverage laws, the commissioner
stated that [the Program Coordinator] intended to develop
procedures in the future.
MS. CURTIS turned to page 49 and conveyed that the board chair
disagreed strongly with the division's recommendation of only a
four-year extension. She said the board chair states that an
early sunset would jeopardize the public's trust and undermine
the public's confidence in the public process. The board chair,
she continued, states he agrees with all the recommendations but
does not believe they are material enough to shorten the
extension timeline. Responding to Co-Chair Fields, Ms. Curtis
stated that this board has received a three-year or four-year
extension multiple times over the past 20 years.
3:28:57 PM
REPRESENTATIVE MCCARTY expressed his alarm at the audit's
findings. He inquired whether there was any differentiation
between the ABC Board and the Marijuana Control Board in terms
of where challenges are occurring.
MS. CURTIS responded that they are separate boards, with the
Marijuana Control Board not up for sunset for another year or
two. Therefore, she said, the division focused its review on
only the ABC Board with a notation that the staff and resources
support both the ABC Board and the Marijuana Control Board. So,
she continued, any deficiencies in the resources would impact
the Marijuana Control Board as well.
REPRESENTATIVE MCCARTY said it appears that [AMCO] is unable to
support the boards. He asked whether the boards could elect to
go to an outside entity to do the work for them.
MS. CURTIS replied that the Division of Legislative Audit does
not look about whether [AMCO] should prioritize support for the
board. She explained that the main reason for a reduced
extension recommendation is that significant improvements can
and should be made to the license process, which is something
the board is responsible for. The board would be the leader in
how to improve the license process, working in conjunction with
the executive director of the office.
REPRESENTATIVE MCCARTY suggested that boards may think they
cannot operate in certain ways because they are hearing
otherwise from entities within their division. He asked whether
Ms. Curtis is hearing anything about that in this process.
MS. CURTIS answered, "Not that I know of." She stated that
historically this board has been well-equipped to do its job.
She pointed out that boards are filled with volunteers and often
rely heavily on folks within the division to get the work done.
But in the past, she continued, she has felt that this board is
aware of the regulations and the board's role and can provide
that oversight of the office.
REPRESENTATIVE MCCARTY asked whether the board can contract out
to an entity to support its existence if [AMCO] is not able to
make desired fixes happen efficiently or quickly.
MR. CURTIS replied that she does not know and said would have to
look at the board's statutes specifically with that in mind.
She deferred to the board chair to respond to the question.
3:32:49 PM
DANA WALUKIEWICZ, Chair, Alcoholic Beverage Control Board,
Alcohol and Marijuana Control Office (AMCO), Department of
Commerce, Community, and Economic Development (DCCED), urged
that the ABC Board's termination date be extended by six years
rather than the proposed four years. He said he understands it
is typical to accept the legislative auditor's recommendations
and that he appreciates the testimony of Ms. Curtis. He stated
that the board and AMCO do not dispute the findings of the
audit, only the recommendation of a shortened extension term.
He shared the ABC Board's belief that an early sunset of the
board would jeopardize the trust of the industry. He specified
that the ABC Board will have a lot of work to do if SB 9 and the
rewrite of Title 4 is passed, and the public needs to know the
board will be working diligently on the proper regulations to
support the legislative intent.
MR. WALUKIEWICZ addressed the comments regarding staffing levels
found during the audit. He said the ABC Board's ability to
complete its mission was hampered by some interagency politics.
The board had instructed the director to post vacancy
announcements, he explained. Interviews of several individuals
were done to fill the vacancies but sending out offers to get
the individuals onboard to fill the vacancies was denied through
DCCED. Several years ago, he continued, AMCO was moved
underneath DCCED to facilitate for administrative purposes.
MR. WALUKIEWICZ pointed out that four of the five Division of
Legislative Audit recommendations were solved by the time the
audit report was completed. For example, he said, the board
worked out its differences with DCCED and all the positions were
filled by the end of the audit report, which remains the case
today. The board also brought its database up to date with
restricted purchasers and is now ensuring that the refunds to
municipalities are properly reviewed.
MR. WALUKIEWICZ said the ABC Board and AMCO both fully agree
with the legislative auditors that the board's licensing
database is outdated and inadequate for the board's purposes.
He related that each year roughly 900 of the 1,800 licenses
renew, putting an incredible strain on the three licensing
examiners. All those licenses come through in a period of two
months at year-end, he explained, and it takes time to verify
all the information and to ensure that the renewals are done in
compliance with statute. The current method available to office
staff is paper based and very simplistic, such as Word, PDF, and
Excel documents, which is how the staff is tracking these
things. The board has gone through a scoping document for
updating its database with a potential online facilitation of
applications for renewal and new applications and transfer
applications. The intent is for individuals that renew to be
able to apply online so this information can be crosschecked
automatically with DCCED and business licensing databases to
ensure that the error rate is cut down from 97 percent to zero
by the time the button is hit to submit that application.
MR. WALUKIEWICZ pointed out that SB 9 would provide funds for
the development of an [online] application. He said he favors
SB 9 simply so the ABC Board can tackle license renewals on a
much timelier basis. He noted that his seat on the board is as
an industry representative, and as the holder of two licenses he
st
can attest that it is time to step into the 21 Century so the
state can operate more efficiently. He added that he wants to
ensure the audit does not present the staff in a negative way as
they are dedicated and working hard the best they can with the
resources they have.
MR. WALUKIEWICZ reiterated that a longer sunset term would
ensure that the mission of the office is completed and give the
board an appropriate amount of time to work on the coming Title
4 rewrite and implementing a new system of licensing.
3:39:56 PM
CO-CHAIR FIELDS related that the committee shares the board's
enthusiasm for SB 9.
3:40:11 PM
REPRESENTATIVE MCCARTY asked whether Mr. Walukiewicz, as a
business owner, finds that the system of recording his business
license as being the same challenge for this or does he see a
difference.
MR. WALUKIEWICZ understood Representative McCarty to be asking
about the renewal application process and the system to do that.
He replied that it is antiquated and paper-based, so there is no
ability for things to be cross referenced at the time of filing.
REPRESENTATIVE MCCARTY confirmed his understanding that it is
all paper based. He noted that businesses in commerce just go
online, answer [the questions], use their credit card, print
their document right then and there, and it is all done. He
asked whether Mr. Walukiewicz is able do that to keep his
business license, but it isn't the same way for his alcoholic
beverage license because that license is paper based.
MR. WALUKIEWICZ confirmed that that is accurate. He said he and
the director have been discussing ways for how to integrate the
existing systems that are out there. He noted that there are
several systems online within the State of Alaska, with myAlaska
being an example where everyone signs up for their permanent
fund dividend (PFD). He explained that his own myAlaska page
leads to his business entity and he can file his employment
security tax directly online through his myAlaska account. It
took him about 10 minutes to set up that link, he continued, and
now he can file those taxes in about 15 minutes once every
quarter. He said the board is thinking about something just
like that if [online applications] are implemented and integrate
it so that account users can link into their license numbers and
then automate a renewal process by cross referencing with
DCCED's databases of business entities and business officers
since that information must be reviewed by the licensing
examiners at the AMCO office. Right now, he pointed out, the
licensing examiners must pull up and go through every one of
those officers to verify various information.
REPRESENTATIVE MCCARTY asked whether there is any research to
date that indicates how much it would cost to put together such
a system.
MR. WALUKIEWICZ answered that the director has researched this,
met with a couple of vendors, and done a scoping document for
meeting the needs of the system; the next step is to take
proposals. The big limitation, he explained, is that capital
funds must come from outside of the budget of the revenues of
AMCO since AMCO is self-sufficient through the fees that are
applied to licenses. He estimated a cost of $460,000 - $600,000
depending on how integrated the system is with other databases.
[SB 151 was held over.]
| Document Name | Date/Time | Subjects |
|---|---|---|
| SB 151 Sponsor Statement.pdf |
HL&C 4/13/2022 3:15:00 PM SFIN 2/24/2022 9:00:00 AM SL&C 2/9/2022 1:30:00 PM |
SB 151 |
| SB 151 Supporting Document - 2021 Audit Summary.pdf |
HL&C 4/13/2022 3:15:00 PM SFIN 2/24/2022 9:00:00 AM SL&C 2/9/2022 1:30:00 PM |
SB 151 |
| SB 151 Supporting Document - 2021 Complete Audit.pdf |
HL&C 4/13/2022 3:15:00 PM SFIN 2/24/2022 9:00:00 AM SL&C 2/9/2022 1:30:00 PM |
SB 151 |
| SB 151 Fiscal Note 3119 - DCCED.pdf |
HL&C 4/13/2022 3:15:00 PM SL&C 2/9/2022 1:30:00 PM |
SB 151 |
| HCS SB 131 (L&C) v. I Summary of Changes.pdf |
HL&C 4/13/2022 3:15:00 PM |
SB 131 |
| HCS SB 131 (HL&C) v. I.pdf |
HL&C 4/13/2022 3:15:00 PM |
SB 131 |