Legislature(1995 - 1996)
04/12/1995 08:08 AM House RES
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HB 258 - HUNTING/FISH LICENSE VENDOR COMPENSATION Number 484 REPRESENTATIVE CON BUNDE, PRIME SPONSOR, stated the purpose of HB 258 is to place a cap on the amount of compensation vendors receive for selling hunting, sport fishing, trapping licenses and tags. Currently, the state of Alaska compensates vendors by allowing them to retain 5 percent of the fee charged for each hunting and fishing license or tag, plus additional compensation at a later date. He noted the additional compensation received by the vendor amounts to $50 per year or $1 per tag or license, whichever is greater. REPRESENTATIVE BUNDE told committee members HB 258 limits vendor compensation to $10,000 per year. The result of the cap will be a Fish and Game fund savings of $312,104 per year. He said the new cap will, in varying degrees, affect only 4 percent of the vendors throughout the state. The vendors will lose some of their state subsidy, but will retain the ability to draw business by continued sales of licenses and tags. He stressed HB 258 saves state money while allowing vendors to recover their actual expenses. Additionally, vendors may continue to sell fish and game licenses both as a service and as an item that will increase customer traffic in their store. He urged committee members to pass HB 258. REPRESENTATIVE KOTT declared a conflict of interest as his wife works for the number one vendor in the state. He said he will abstain from voting on the bill. REPRESENTATIVE BUNDE noted he had worked for a sporting goods store and written licenses in the past. He said in the summer he currently works for a company that sells many licenses, particularly to nonresidents and noted the company would probably lose approximately $1,000 a year in compensation through HB 258. Number 540 REPRESENTATIVE AUSTERMAN expressed opposition to HB 258. He agreed that selling licenses generates traffic into a store, but also generates a headache due to employees having to take extra time to perform the service. He added that selling licenses does generate more money for the stores but also takes the burden off the Alaska Department of Fish and Game (ADF&G). He wondered if some stores would quit offering the service if they were on the borderline of being capped. CO-CHAIRMAN GREEN asked if HB 258 passed and a person who always got his license at a particular store arrived at the store after the cap has been reached and has to go somewhere else, will this create havoc with the person who is planning to go fishing at 6:00 p.m. and has to go somewhere else. He wondered if a store will stop issuing licenses after the cap is reached. Number 570 GERON BRUCE, LEGISLATIVE LIAISON, ADF&G, stated a store would continue to sell licenses, regardless of whether or not their compensation is capped. He said he cannot imagine a store only selling licenses up to the $10,000 cap. CO-CHAIRMAN GREEN noted that some vendors would be selling 80 percent of their licenses with no compensation. He wondered if those stores would continue to provide the service, especially convenience type stores that stay open later. REPRESENTATIVE BUNDE stated the cap applies to each vendor, not a corporation, so each store could sell up to the $10,000 cap. He urged committee members to think about the competitive nature of the retail business and how important the service aspect is. He noted in Representative Green's scenario where a store sells licenses and suddenly does not sell them, he felt the adverse customer reaction would not be something the store would be inclined to generate. CO-CHAIRMAN GREEN noted the fiscal note indicates with capping the compensation, the vendors will continue to sell licenses because the fee that would have been paid, will not be paid and will come back to ADF&G. Number 615 REPRESENTATIVE AUSTERMAN felt HB 258 asks 4 percent of the vendors to supplement ADF&G's budget. He did not know why 4 percent of the vendors in the state were being asked to supplement ADF&G's budget, when the remaining vendors were not. REPRESENTATIVE BUNDE felt the volume of the demand for licenses will continue and people will continue to go where they can get the service. He said that foot traffic generates a lot of income for retail outlets. He asked why is the state of Alaska subsidizing certain retail outlets to a much higher level than what it is going to cost them to write the licenses and not subsidizing the others. He noted it takes about one minute to write a license. He added there is some record keeping involved which does take time. He pointed out that an employee spends his other 59 minutes doing store work and stores do not hire people to write licenses. REPRESENTATIVE DAVIES said he is puzzled by what the purpose is of HB 258. He asked if the purpose is to raise money for ADF&G or is it to beat 4 percent of the vendors over the head. He assumed the purpose is to raise money and if that is true, it seems like there are two other options which could raise equivalent amounts of money and would be more fair. The first is to uniformly decrease the rate of compensation for all vendors. The other option is to add 25 cents to each license which would raise the $300,000. He reiterated there are other ways to accomplish the desired goal. Number 669 REPRESENTATIVE BUNDE stated there are two purposes for HB 258. The first is to allow ADF&G to have more money but the overriding purpose is to reduce the state subsidy. He stressed it does not cost $35,000 for the number one vendor to write licenses. He added there is also an economy of scale involved. The mom and pop stores that only write a few hundred dollars worth of licenses per year would be unfairly impacted by reducing everyone's compensation. REPRESENTATIVE OGAN thought it takes more than one minute to complete a license. He said a store will make a lot less money than if that same clerk was handling a transaction on a retail sale. He noted the state just recently raised license fees a couple of years ago. He felt the agreement between the public sector and private sector and having the private sector help the state is good. TAPE 95-49, SIDE B Number 000 REPRESENTATIVE BUNDE said most people fill out their own licenses. He felt it is not a complicated process. He stated it is not his desire to penalize private enterprise, as they deserve their opportunity but he is not sure he wants to continue subsidizing them with state money. REPRESENTATIVE KOTT asked Mr. Bruce how long had it been since the state implemented the 5 percent compensation. MR. BRUCE replied he was not sure but said it had been there for quite some time. REPRESENTATIVE KOTT noted the 5 percent is not something which was recently done and he assumed the costs when it was implemented were much lower than they are today. He said if the state is looking at privatizing many aspects of government, it is a bad message to send that yes the state wants an entity to sell a license, compensating that entity a dollar but two years from now the state may only compensate that entity 25 cents. He stressed it takes more than one minute to complete a license. He noted his wife has said she wished her store did not even issue licenses because they are a pain. Number 075 REPRESENTATIVE BUNDE stated if it was not important to provide the service, most stores would not do it. He questioned whether or not the state has to continue to subsidize the vendors at the current level for them to provide the service. He said many of the larger vendors would write licenses at no compensation just to have the traffic. CO-CHAIRMAN GREEN wondered if Representative Bunde is using the word subsidy differently for the first $10,000 and not after that point. REPRESENTATIVE BUNDE said a private entity is not expected to subsidize the state, but rather it should be a wash. He stated he had done research and had looked at capping the compensation at $5,000 but that did not seem fair. He noted it costs between $8,000 and $11,000 to write licenses and he decided that a $10,000 cap seemed like a fair compensation for the average time a vendor would spend writing licenses. REPRESENTATIVE DAVIES stated the sponsor is focusing on the fact it does not cost as much to write licenses or that vendors are compensated in other ways. He said if that is the case, the committee should be more even-handed about reducing the benefit. He added if 13,000 unit sales is compared to a total compensation of $35,000, that is $3.00 a unit for the processing of a single license. Most of the estimates he has seen for processing a single piece of paper is closer to $10. He felt the vendors are already subsidizing the state. He pointed out there is no evidence that there is a gross over-compensation going on which needs to be reduced. REPRESENTATIVE KOTT clarified that Representative Davies feels his second approach, raising license fees by a small amount, would be more appropriate since the goal is to raise more money for ADF&G. Number 148 MR. BRUCE said there is an advantage to increasing revenues to the Fish and Game fund with HB 258. He felt Representative Bunde has an argument about the efficiency involved and whether or not there is a subsidy occurring to the larger vendors. To answer that question definitely, some sort of analysis would need to be done to determine the actual cost of issuing a license. He noted that the person issuing the license is the one who does the most work filling out the license. MR. BRUCE stated the department does have a request in the form of an amendment to HB 258 having to do with the effective date. He said it would be much more orderly for any transition dealing with licenses to occur at the beginning of the calendar year because the department's license contracts are signed on a calendar year, the stock is issued on a calendar year, etc. He told committee members the department would like to see an effective date on HB 258 that would be January 1 of the year it was enacted. REPRESENTATIVE BUNDE noted it was not long ago the licenses in Alaska were doubled and he encouraged committee members to talk with constituents before suggesting an increase in license fees. He said in his personal opinion, licenses in Alaska are a bargain as compared to other states. REPRESENTATIVE KOTT stated he has talked to a number of his constituents and they have all suggested an increase in nonresident tags. Number 212 REPRESENTATIVE IRENE NICHOLIA stated HB 258 would only provide a one-time savings and would only reduce the number of vendors. She felt vendors would not take employees time to complete licenses as it would be a loss to the value of what their employees are there for. She said ADF&G would probably have to install an office to sell licenses. REPRESENTATIVE OGAN observed the committee has a problem with capping the compensation at $10,000. He suggested that some sort of sliding scale might be more appropriate and more palatable. REPRESENTATIVE BUNDE stated vendors below $10,000 do not get $10,000 but only get their normal compensation per unit up to $10,000. He said if the committee prefers, he will do more research and come back to the committee with a proposed committee substitute. REPRESENTATIVE KOTT said his concern is not a sliding scale but rather the fact there is a processing fee involved. If that fee is three dollars, that is a bargain for the state. He stated he would like to hear testimony or see letters from a few of the top vendors. CO-CHAIRMAN GREEN announced HB 258 will be held for further consideration. CO-CHAIRMAN GREEN passed the gavel to Co-Chairman Williams.
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