Legislature(2001 - 2002)

03/05/2002 09:12 AM Senate FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                                                                                                                                
     CS FOR SENATE BILL NO. 215(TRA)                                                                                            
     "An Act relating to licensing common carriers to dispense                                                                  
     alcoholic beverages; and providing for an effective date."                                                                 
                                                                                                                                
                                                                                                                                
This  was the first  hearing  for this  bill in  the Senate  Finance                                                            
Committee.                                                                                                                      
                                                                                                                                
DON SMITH,  Staff to Senator Cowdery,  testified the intent  of this                                                            
legislation  is to  streamline the  licensing  procedure for  common                                                            
carrier licenses,  which includes airlines and the  Alaska Railroad.                                                            
He  explained  this bill  consolidates  the  licensing  to a  single                                                            
effective  date, as there  is currently  confusion, especially  with                                                            
Alaska Airlines,  which has over 100  licenses, many with  different                                                            
renewal dates.                                                                                                                  
                                                                                                                                
Mr. Smith  continued the bill  would impose  a $700 fee for  each of                                                            
the first  ten licenses  and $100  for each  additional license.  He                                                            
projected  this  would   annually  produce  approximately   $16,000,                                                            
pointing out  this is approximately  eight times the amount  charged                                                            
in the State of Virginia.                                                                                                       
                                                                                                                                
AT EASE 9:15 AM / 9:16 AM                                                                                                       
                                                                                                                                
[Note: Audio  equipment malfunction.  Portion of the meeting  is not                                                            
recorded  on  master tape,  but  alternate  recording  is  available                                                            
although of poor quality.]                                                                                                      
                                                                                                                                
IRV BERTRAM, Associate  General Council, Alaska Airlines,  testified                                                            
via teleconference from  an off-net site about his legal credentials                                                            
in Alaska.  He stated he  oversees the application  process  for the                                                            
airlines  as well as providing  legal advice  relating to  acquiring                                                            
and financing aircraft.                                                                                                         
                                                                                                                                
Mr. Bertram  informed  that each time  an aircraft  is added  to the                                                            
company's  fleet, the  extensive  application process  of  "posting,                                                            
publishing and  then waiting for the approval," must  be undertaken.                                                            
He furthered  that  the Alcohol  Beverage Control  (ABC) Board  must                                                            
also undertake a significant  amount of work for each license issued                                                            
or renewed.  He  noted the  licenses are  effective  for two  years,                                                            
which results  in some of  the airline's  licenses for 102  aircraft                                                            
expiring  each year.  He  informed the number  of licenses  required                                                            
would increase as the company  acquires new routes and new aircraft,                                                            
all of which  rotate into the state.  He stated the advertising  and                                                            
public comment process  is unnecessary for each license as there has                                                            
never been objection to granting the airlines licenses.                                                                         
                                                                                                                                
Mr. Bertram  also expressed  the high  fee imposed  to obtain  these                                                            
licenses  are "out of  character with  the fees that  we pay  in any                                                            
other state."  As a result, he said the airlines has  requested this                                                            
legislation  to  streamline   the  process  once  a  common  carrier                                                            
acquires a standard license  for its first vessel, to allow licenses                                                            
for  other vessels  owned  and operated  by  that carrier  could  be                                                            
easily obtained.  He also pointed out this bill reduces  the license                                                            
fees for multiple vessels.                                                                                                      
                                                                                                                                
Senator  Olson  noted  this  legislation  would  result  in  reduced                                                            
revenues  for the state.  He asked how other  states streamline  the                                                            
process of multiple common carrier liquor licenses.                                                                             
                                                                                                                                
Mr. Bertram replied that  other states require the carrier to obtain                                                            
a single  license for  the company,  with copies  obtained for  each                                                            
aircraft. He defined this  as a fleet license. He listed the cost of                                                            
the master  license  in the  State of  Washington is  $750, and  the                                                            
license cost for each aircraft is $5.                                                                                           
                                                                                                                                
DOUG GRIFFIN,  Director, Alcohol Beverage  Control Board,  testified                                                            
via  teleconference  from  Anchorage  and agreed  the  procedure  of                                                            
multiple  common   carrier  liquor   licenses  in  Alaska   is  more                                                            
cumbersome and expensive.  He stated the biannual license system has                                                            
generally  been successful  in allowing  renewal  every other  year,                                                            
however  it  does  create  confusion  when  multiple   licenses  are                                                            
involved.                                                                                                                       
                                                                                                                                
Mr. Griffin  explained this legislation  would provide licenses  for                                                            
new vessels to  be issued on the same cycle. He stressed  this would                                                            
benefit  the ABC  licensing staff  as well  as Alaska  Airlines  and                                                            
another corporation: West Tours.                                                                                                
                                                                                                                                
Mr. Griffin informed  this legislation would result  in lost revenue                                                            
to the state  of $53,500  every other year.  He noted the ABC  Board                                                            
currently  generates   approximately  $1.8  million   annually  from                                                            
license fees, penalties and fines.                                                                                              
                                                                                                                                
Co-Chair  Kelly asked  for an explanation  of  language inserted  in                                                            
Section 2(c)  of the Senate Transportation  committee substitute  on                                                            
page 2, lines 1 through 5, which reads as follows.                                                                              
                                                                                                                                
     Upon  request  of  the  common   carrier  and  payment  of  the                                                            
     proportionate  prorated applicable fee, the board  shall change                                                            
     the license period  of a license for a vehicle, boat, aircraft,                                                            
     or railroad  buffet car to allow  registration to occur  in the                                                            
     biennial  period  of  the  balance  of  the  licensee's  common                                                            
     carrier licenses.                                                                                                          
                                                                                                                                
Mr.  Griffin detailed  the  current  biannual process  whereby  each                                                            
license is renewed  every other year. He stated Alaska  Airlines has                                                            
licenses for  approximately 12 of  its aircraft that expire  in even                                                            
numbered  years and  the balance expire  in odd  numbered years.  He                                                            
expressed this causes confusion  in tracking which aircraft licenses                                                            
are in what status.  He explained this provision would  allow Alaska                                                            
Airlines to renew the 12  licenses for one year, rather than two, so                                                            
those licenses would be  converted to the same cycle as the majority                                                            
of the fleet.  This, he said, would  result in all aircraft  due for                                                            
license renewal  in the same  year. He furthered,  licenses  for new                                                            
aircraft acquired  "mid-cycle" would be prorated so  that they would                                                            
eventually  become  on  the  same  cycle as  the  remainder  of  the                                                            
aircraft.                                                                                                                       
                                                                                                                                
Co-Chair Kelly  next referenced the  fiscal note, which indicates  a                                                            
revenue reduction  of $37,000  rather than  the $53,500 the  witness                                                            
stated.                                                                                                                         
                                                                                                                                
Mr. Griffin  clarified additional  review  was conducted after  that                                                            
fiscal note was submitted  resulting in the higher amount. He said a                                                            
revised fiscal note had been submitted.                                                                                         
                                                                                                                                
Co-Chair Kelly established  the revised fiscal note had not yet been                                                            
received.                                                                                                                       
                                                                                                                                
Senator Olson asked the  reason this process was not adopted when it                                                            
was discussed a couple years ago.                                                                                               
                                                                                                                                
Mr. Griffin  responded statutory changes  are required and  enabling                                                            
legislation  at that time did not  complete the legislative  process                                                            
before the end of that legislative session.                                                                                     
                                                                                                                                
Co-Chair   Donley  noted   the  biannual   fee  contained   in  this                                                            
legislation  is $700 and  asked if  this is the  same amount  as the                                                            
existing fee.                                                                                                                   
                                                                                                                                
Mr. Griffin affirmed.                                                                                                           
                                                                                                                                
Co-Chair Donley asked the date of the last increase.                                                                            
                                                                                                                                
Mr. Griffin responded none  of the license fees have increased since                                                            
approximately  1980. He qualified the fees doubled  when the process                                                            
changed from  an annual  renewal to biannual,  although the  overall                                                            
cost did not increase and there was no net affect on revenue.                                                                   
                                                                                                                                
Co-Chair Kelly  commented this legislation  "brings us in  line with                                                            
other states" regarding  licensing fees, which he noted are "far far                                                            
less"  than Alaska.  He noted  total license  fees in  the state  of                                                            
Illinois are $2,000.                                                                                                            
                                                                                                                                
Mr. Griffin  calculated Alaska  Airlines currently  pays $700  every                                                            
two years plus  a $200 application fee for each aircraft,  averaging                                                            
over $45,000 per  year. He noted the $200 application  fee would not                                                            
change under this legislation.                                                                                                  
                                                                                                                                
Co-Chair  Kelly clarified  that  although  all 102  aircraft in  the                                                            
Alaska Airlines fleet does  not constantly service Alaska, the state                                                            
charges licensing fees for every one.                                                                                           
                                                                                                                                
JOE SPRAGUE, Director,  Alaska Sales, Alaska Airlines,  affirmed and                                                            
detailed the process of  aircraft rotating routes through the state,                                                            
although  the number of  planes operating  in the  state at  a given                                                            
time is considerably less than 102.                                                                                             
                                                                                                                                
Co-Chair  Kelly  listed  the approximate  licensing  fees  of  other                                                            
states: Arizona,  $550; California, $1600; Illinois,  $1200; Oregon,                                                            
$200; Virginia $1800; Washington State $1200.                                                                                   
                                                                                                                                
AT EASE 9:33 AM / 9:41 AM                                                                                                       
                                                                                                                                
Co-Chair Kelly announced  the revised fiscal note had arrived and he                                                            
asked for an explanation of the differences.                                                                                    
                                                                                                                                
Mr. Griffin explained a calculation error.                                                                                      
                                                                                                                                
Amendment  #1:  This amendment  increases  the  biennial  fee for  a                                                            
common carrier  dispensary license  from $700 to $1,000 for  each of                                                            
the first ten licenses.  This language is on page 1, lines 13 and 14                                                            
of the bill.                                                                                                                    
                                                                                                                                
Co-Chair Donley  moved for adoption  noting inflation has  increased                                                            
although  this fee has not  since 1980. He  expressed, "there  would                                                            
still be considerable savings" to the industry.                                                                                 
                                                                                                                                
Senator Green requested comment from the industry.                                                                              
                                                                                                                                
Mr. Sprague  relayed that Alaska Airlines  has no objection  to this                                                            
amendment.                                                                                                                      
                                                                                                                                
The amendment was ADOPTED without objection.                                                                                    
                                                                                                                                
Senator Olson  commented other tourism businesses  would be affected                                                            
by  this   legislation   and  the   amendment  and   asked  if   any                                                            
representatives  from the industry or the Alaska Railroad  wanted to                                                            
testify.                                                                                                                        
                                                                                                                                
Co-Chair Kelly  established no representatives  of these  businesses                                                            
were present.                                                                                                                   
                                                                                                                                
Senator  Wilken offered  a  motion to  moved  CS SB  215 (FIN)  from                                                            
Committee  with  a new  zero  fiscal  note from  the  Department  of                                                            
Revenue.                                                                                                                        
                                                                                                                                
There was no objection and the bill MOVED from Committee.                                                                       
                                                                                                                                

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