02/09/1995 08:05 AM House STA

 HSTA - 02/09/95                                                               
 HB 44 - GAMING PROCEEDS/ DEFINE CHARITABLE ORG'NS                           
                                                                               
 Number 119                                                                    
                                                                               
 TOM ANDERSON, Legislative Assistant to Representative Terry Martin,           
 stated he was there to speak on HB 44 as a representative of                  
 Representative Terry Martin.  He said he wanted to pass out copies            
 of an information sheet that referenced portions of the bill.  He             
 said this was the Internal Revenue Service's 501C listing of tax              
 exempt nonprofit corporations.  He mentioned there was debate at              
 the previous meeting concerning Representative Martin's intention             
 of excluding all other categories of IRS nonprofits on this list,             
 other than the 501C3 category.  This is the category covering                 
 religious, educational, charitable, literary and several groups.              
 He mentioned that Representative Willis had expressed concerns                
 about excluding unions from being able to obtain gaming permits.              
 It was Representative Martin's preference to include only those               
 groups listed under the 501C3 category.  He had also expanded his             
 bill to allow 501C10 organizations, 501C19 groups, and possibly the           
 category of 501C23.  Thus, Representative Martin was willing to               
 include an amendment to include these additional categories, but              
 would prefer to not expand beyond these groups.  He said the intent           
 of this bill was to try to get politics out of "charitable gaming."           
 They were also trying to analyze who can get gaming permits and who           
 can't.  Representative Martin felt that if the idea was to try to             
 support charitable organizations, why should a union be allowed to            
 have a permit or cemetery companies?  He thought it was better to             
 specify those types of organizations considered a charity.                    
                                                                               
 CHAIR JAMES asked if there were any questions or comments for the             
 sponsor.                                                                      
                                                                               
 Number 189                                                                    
                                                                               
 REPRESENTATIVE ROBINSON said she had at the last meeting, asked if            
 raffles were included in this bill.  She said she was told that               
 they weren't, and then when she talked to Legal, they informed her            
 that raffles were included.  She stated she did not know what was             
 wrong with political groups doing a raffle.  She argued that people           
 who participate in a raffle know what they are buying and who they            
 are supporting.                                                               
                                                                               
 MR. ANDERSON agreed that raffles were presently included in the               
 bill, but this could be amended if this was the wish of the                   
 committee.  He said when they drafted the bill, that they were                
 trying to focus on the gaming idea, and realized later that they              
 had included things such as raffles.                                          
                                                                               
 Number 206                                                                    
                                                                               
 CHAIR JAMES asked if this bill would preclude these people from               
 having gaming permits, or if they were just saying they could not             
 use the proceeds for political purposes.                                      
                                                                               
 MR. ANDERSON said the way the bill was written presently, it said             
 that these people could not have gaming permits.  This bill says no           
 one can have them except 501C3 organizations.  The bill is                    
 excluding a lot of groups as a result of a miscommunication with              
 Legal Services.  He stated they were proposing to include the other           
 listed 501 categories and would consider exempting raffles.  He               
 further stated they were trying to make the bill more definitive by           
 saying that just bingo and pull-tabs would be included.  He said              
 they were actually attempting to do two different things with this            
 bill, to prevent gaming proceeds from going to political groups and           
 to define who should qualify for a charitable gaming permit.                  
                                                                               
 REPRESENTATIVE ROBINSON stated this was why she felt the committee            
 didn't have all of the information.  She said she still did not               
 know all of the groups that would be affected by this bill.  She              
 said she thought it was a mistake to include attempts to exclude              
 political groups from the proceeds of charitable gaming and                   
 attempts to define who should have a gaming permit in the same                
 bill.  She said it seemed that in some ways we had politics                   
 involved in this bill, instead of really looking at the issue at              
 hand.  She further stated that at the last meeting it was mentioned           
 that individuals did not know who they were supporting with gaming            
 proceeds, when last year a law was passed that required vendors to            
 post a sign saying who the proceeds were going to, and so this was            
 not true.  She said she was still trying to figure out where they             
 were trying to go with this bill.                                             
                                                                               
 Number 247                                                                    
                                                                               
 REPRESENTATIVE PORTER said he thought this was a reasonable effort            
 to try and get gaming proceeds out of politics, without an entire             
 election reform bill.  He said he thought that what this bill                 
 needed was for the committee to come to a conclusion on who it is             
 they want to have the ability to have permits for bingo and                   
 pull-tabs, the most favored type of gambling in Alaska.  He                   
 mentioned he was under the impression that raffles were not                   
 included in this bill and that could be fixed very easily.  He                
 stated the reason the committee should consider trying to limit the           
 types of organizations that can participate in charitable gaming is           
 that the Act was originally intended to support charitable                    
 organizations only.  This was why, he said, it was called                     
 charitable gaming and not credit union gaming or union gaming.  He            
 stated the problem with saying that everyone could have a gaming              
 permit, but just to not allow the proceeds to go into politics, is            
 the accounting nightmare of trying to figure out which proceeds               
 came from gaming and where they were spent, as opposed to where               
 their other revenues were spent.  He thought it would be much                 
 simpler to only expend the resources necessary to insure that                 
 gaming proceeds go to charities, as originally intended, rather               
 than expecting the Division of Gaming to try and audit where the              
 proceeds from gaming were being spent.                                        
                                                                               
 Number 287                                                                    
                                                                               
 REPRESENTATIVE IVAN was concerned that this bill was too broad and            
 was excluding organizations in his area that were intended for                
 charitable purposes.                                                          
                                                                               
 CHAIR JAMES said she wanted to assign this bill to a subcommittee             
 to work out the details.  She asked for Representatives Porter,               
 Ivan, and Robinson to sit on this committee and to work this bill             
 with Representative Martin's office.  She also asked that they                
 contact Representative Gene Therriault's office, as he had                    
 submitted a similar bill.  She asked Representative Porter to chair           
 the subcommittee.                                                             
                                                                               
 REPRESENTATIVE ROBINSON asked if in the subcommittee there would be           
 greater leeway for interpretation of this bill.  She didn't know if           
 it was better for the sponsor to do this, but she wanted to know              
 the fiscal impact of this bill for the state.  She thought there              
 were a lot of groups that were going to be affected by this bill,             
 that were not necessarily 501C3 organizations, but could be                   
 considered charitable groups.  Thus, she wanted a clear list of all           
 organizations that would be affected by this bill.                            
                                                                               
 REPRESENTATIVE PORTER said he could alleviate any concerns about              
 the fiscal impact of this bill.  He said the Division of Gaming               
 brings in about $1.4 million and spends about $350,000.                       
                                                                               
 MR. ANDERSON reiterated that the idea of this bill was to limit who           
 would be eligible for a gaming permit and to ban all political                
 activities and groups from benefitting from the proceeds of                   
 charitable gaming.  He said they had program receipts and                     
 documentation, which they had not yet presented to the committee,             
 that backed up how much money was going to political organizations.           
                                                                               
 CHAIR JAMES stated she thought the goal of this exercise was to               
 eliminate any gaming or gambling from being used for political                
 reasons.                                                                      
                                                                               
 Number 335                                                                    
                                                                               
 REPRESENTATIVE JOE GREEN asked if the mission of the subcommittee             
 was to study not just who owns the permit, but who the operators              
 were.  He was concerned that with inflated operating costs, there             
 might still be a large sum of revenue from gaming diverted to                 
 political purposes.                                                           
                                                                               
 CHAIR JAMES said she thought every cent that came into a permit as            
 a result of selling or collecting from this activity, that none of            
 these funds should be allowed to go to supporting political                   
 activities.  She said it should not matter whether the funds came             
 from the owner of the permit or the operator, as she understood the           
 intent of the bill sponsor.                                                   
                                                                               
 Number 360                                                                    
                                                                               
 REPRESENTATIVE ROBINSON wanted to point out that this bill could              
 affect organizations who only had gaming money available for                  
 funding political education and advocacy activities.  She                     
 emphasized that she thought the intent of this bill was to insure             
 that gaming proceeds did not go to support political candidates;              
 not necessarily to prevent a citizens group from raising revenue              
 and then be able to educate the legislature on issues that were               
 important to them.  Now she thinks that she is hearing otherwise.             
                                                                               
 CHAIR JAMES answered she thought the intent was to limit gaming               
 proceeds from being used for advocacy.  She said the idea behind              
 this was that these groups should raise their own funds, without              
 depending on a gimmick to trick people into giving them the money,            
 to support something they may or may not consent to.  She said to             
 allow that, was to allow these organizations to, in effect, prey on           
 the people. She stated that because there was extensive                       
 conversation needed on this bill, she would prefer they hold any              
 other discussion until they heard the report of the subcommittee.             
 She also asked that the subcommittee keep her informed of the                 
 schedule of their meetings, as she wanted to participate.  She also           
 urged the subcommittee to speak to their peers, so they could try             
 and get a well rounded bill coming out of committee.                          
                                                                               
 Number 386                                                                    
                                                                               
 REPRESENTATIVE ED WILLIS stated this bill just seemed to be getting           
 broader and broader.  He said he was wondering, that because the              
 Governor had just appointed a commission to study the gaming issue,           
 if it might not be better for the subcommittee to work with this              
 commission or possibly wait for their recommendations.  He said not           
 only was there this bill, but also several other gambling issues              
 before the legislature this session.  He thought maybe the                    
 Governor's commission should study all of these issues and come               
 back with a recommendation.                                                   
                                                                               
 CHAIR JAMES said she could understand his concerns, but his very              
 own testimony spelled out the underlying problem, which was that              
 the legislature had allowed charitable gaming in this state and               
 that proceeds from this activity were supporting political causes.            
 She felt this was the underlying problem and how they decided to              
 fix it, was the decision of this legislature.  She said they could            
 not wait for the commission to find a solution because there had              
 been a lot of commissions and their advice was not always followed.           
 Thus, she thought that to wait for their decision could be a long             
 process, which might not amount to anything, and she would just               
 prefer to keep this bill moving through the process.                          
                                                                               
 MR. ANDERSON added that in Representative Martin's view, that                 
 commission was extremely deficient in its whole representation of             
 the gaming industry, in that it was made up almost entirely of                
 gaming operators and had little representation from the charitable            
 organizations.  He said the commission was very lopsided.                     
                                                                               
 CHAIR JAMES stated she felt there was no reason to belabor the                
 issue now until they heard the recommendations of the subcommittee.           
 She requested Representative Porter to chair the subcommittee.  She           
 said they would be moving down the agenda to HB 38, as the sponsors           
 for the other two bills had not yet arrived.  She called for                  
 Representative Con Bunde to come up and testify as the bill                   
 sponsor.