Legislature(2019 - 2020)BELTZ 105 (TSBldg)

03/21/2019 01:30 PM LABOR & COMMERCE

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Audio Topic
01:30:10 PM Start
01:31:58 PM Confirmation Hearing(s):
01:36:15 PM SB65
01:41:35 PM SB66
01:53:44 PM SB69
02:25:32 PM Confirmation Hearing(s)
02:39:06 PM SJR8
02:48:45 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ Consideration of Governor's Appointees: TELECONFERENCED
- Workers' Compensation Board - Chuck Collins,
Sarah Lefebvre
- Board of Physical Therapy & Occupational
Therapy - Dr. Enlow Walker
-- Public Testimony --
Heard & Held
-Invited Testimony Followed by Public Testimony-
Heard & Held
-Invited Testimony Followed by Public Testimony-
+ Bills Previously Heard/Scheduled: TELECONFERENCED
Moved SB 65 Out of Committee
Moved SB 66 Out of Committee
**Streamed live on AKL.tv**
        SB 69-EXEMPT CHARITABLE GAMING FROM PERMIT/FEES                                                                     
1:53:44 PM                                                                                                                    
CHAIR  REINBOLD reconvened  the  meeting and  announced that  the                                                               
next  order of  business would  be SENATE  BILL NO.  69, "An  Act                                                               
establishing an  exception from permit  and fee  requirements for                                                               
certain  charitable  gaming  activities;  relating  to  fees  for                                                               
applicants  for   a  charitable   gaming  permit;   amending  the                                                               
definition of 'permittee'; and providing for an effective date."                                                                
1:54:00 PM                                                                                                                    
BRUCE  TANGEMAN, Commissioner  Designee,  Department of  Revenue,                                                               
Anchorage,  stated   that  the   Department  of   Revenue  issues                                                               
charitable  gaming permits  and  licenses and  collects fees  and                                                               
taxes.  Municipalities and  qualified organizations  that hold  a                                                               
permit are  authorized to conduct  gaming activities.  The annual                                                               
permit is based  on a tiered fee structure.  The department would                                                               
charge a  $20 fee for  an applicant  with gross receipts  of less                                                               
than  $20,000, a  $50 fee  for an  applicant with  gross receipts                                                               
greater than $20,000  but less than $100,000, and a  $100 fee for                                                               
an applicant with gross receipts greater than $100,000.                                                                         
He  said  that   SB  69  would  eliminate  the   permit  and  fee                                                               
requirement for small charitable  organizations with annual gross                                                               
receipts of  less than $20,000.  The bill would reduce  costs and                                                               
workload  for small  charitable  organizations  to conduct  these                                                               
activities.  This reduction  of  regulation  on small  charitable                                                               
organizations  is  part  of  the   governor's  pledge  to  reduce                                                               
regulations, he said.                                                                                                           
COMMISSIONER  DESIGNEE TANGEMAN  said  this would  result in  the                                                               
lack of  regulation for small  charitable organizations,  but the                                                               
department   requires   an    annual   certification   of   these                                                               
organizations that  would serve  as a  quality check.  Only those                                                               
that  qualify for  regulatory relief  would benefit.  He reported                                                               
that  in  2017,   of  the  1,071  reports  that   were  filed  by                                                               
permitholders,  403 or  approximately 38  percent reported  gross                                                               
receipts of  less than $20,000.  He reported that of  the $61,400                                                               
in permit  fees, $8,000  was from  those organizations  with less                                                               
than $20,000 in gross receipts.                                                                                                 
He summarized that  SB 69 would provide an  exemption from annual                                                               
permits  and  fees for  qualified  organizations  with less  than                                                               
$20,000 in annual gross receipts.  Exempt organizations must file                                                               
an  annual certification,  under penalty  of perjury,  to certify                                                               
that  the  organization qualifies  for  the  exemption. The  bill                                                               
would take effect  January 2020, so it would not  have any effect                                                               
in calendar year 2019.                                                                                                          
1:57:26 PM                                                                                                                    
COLLEEN GLOVER,  Director, Tax  Division, Department  of Revenue,                                                               
Anchorage, reviewed  the sectional analysis  for SB 69.  She read                                                               
Sections 1-4.                                                                                                                   
     Section 1:  Amends AS  05.15 to add  a new  section, AS                                                                  
     05.15.055,  to   allow  a  municipality   or  qualified                                                                    
     organization  to  conduct  charitable  gaming  activity                                                                    
     without  a permit  and  without paying  a  fee, if  the                                                                    
     annual gross  receipts from charitable  gaming activity                                                                    
     are less than $20,000.  Provides that a municipality or                                                                    
     qualified  organization  conducting limited  charitable                                                                    
     gaming  does not  need to  file a  report or  apply for                                                                    
     registration but  must file an annual  certification of                                                                    
     compliance. (Page 1, beginning on line 5)                                                                                  
     Section 2: Amends  AS 05.15.115(a) to use  the words "a                                                                  
     permittee"  rather than  "a  municipality or  qualified                                                                    
     organization holding  a permit  to conduct  an activity                                                                    
     under this chapter." (Page 2, beginning on line 3)                                                                         
     Section  3: Amends  AS 05.15.185  to use  the words  "a                                                                  
     permittee"  rather than  "a  municipality or  qualified                                                                    
     organization holding  a permit  to conduct  an activity                                                                    
     under this chapter." (Page 2, lines 9-18)                                                                                  
     Section 4:  Amends the definition of  "permittee" in AS                                                                  
     05.15.690(35)  to include  a municipality  or qualified                                                                    
     organization   conducting  limited   charitable  gaming                                                                    
     activity  without a  permit and  without paying  a fee.                                                                    
     (Page 2, lines 19-23)                                                                                                      
1:59:12 PM                                                                                                                    
MS. GLOVER read Sections 5-8:                                                                                                   
     Section 5: This section  repeals AS 05.15.020(c)(1) and                                                                  
     05.15.020(c)(2). (Page 2, line 24)                                                                                         
     Section 6:  Allows the Department  of Revenue  to adopt                                                                  
     transition regulations. (Page 2, lines 25-30)                                                                              
     Section  7: Provides  an immediate  effective date  for                                                                  
     Section 6. (Page 2, line 31)                                                                                               
     Section 8:  Provides for an  effective date  of January                                                                  
     1, 2020, for Sections 1-5. (Page 3, line 1)                                                                                
1:59:44 PM                                                                                                                    
MS.  GLOVER   said  that  the   bill  would  replace   the  terms                                                               
"municipality or  qualified organization  holding a  permit" with                                                               
the term  "permittee" since smaller organizations  would not hold                                                               
a permit. It also would define "permittee."                                                                                     
2:00:17 PM                                                                                                                    
SENATOR GRAY-JACKSON  asked whether  the fees  were the  same for                                                               
every organization.                                                                                                             
MS.  GLOVER answered  that  the  fees were  tiered  based on  the                                                               
amount of gross receipts.                                                                                                       
SENATOR GRAY-JACKSON  asked whether  some organizations  bring in                                                               
less than $20,000.                                                                                                              
COMMISSIONER DESIGNEE  TANGEMAN answered that the  total fees for                                                               
all permittees  was $61,400 and  $8,000 of that was  derived from                                                               
those organizations with gross receipts of less than $20,000.                                                                   
2:01:37 PM                                                                                                                    
SENATOR GRAY-JACKSON  asked for  confirmation that the  total was                                                               
COMMISSIONER DESIGNEE TANGEMAN answered yes.                                                                                    
2:01:47 PM                                                                                                                    
SENATOR BIRCH remarked that hockey  teams from all over the state                                                               
are  likely rejoicing  that they  do not  have to  dive into  the                                                               
regulatory  morass  for modest  fundraising  for  their kids.  He                                                               
expressed gratitude for the bill.                                                                                               
2:02:09 PM                                                                                                                    
SENATOR BISHOP  asked whether the organizations  would be totally                                                               
COMMISSIONER DESIGNEE  TANGEMAN answered that they  would provide                                                               
a year-end report to prove they qualify for the exemption.                                                                      
SENATOR BISHOP said he wanted to avoid fraud.                                                                                   
2:02:50 PM                                                                                                                    
SENATOR  COSTELLO  said she  appreciates  the  comment about  the                                                               
hockey  organizations.  She  referred  to an  email  that  voiced                                                               
concern that it might be confusing  to the public as to who would                                                               
need a permit. She asked how that would be addressed.                                                                           
COMMISSIONER DESIGNEE TANGEMAN deferred to Ms. Glover.                                                                          
MS. GLOVER  answered that the  division was  currently discussing                                                               
this. She  said that it would  be part of the  regulation packet.                                                               
She  assured  members that  the  department  wants people  to  be                                                               
2:03:57 PM                                                                                                                    
SENATOR COSTELLO related another  concern about criminal activity                                                               
such  as altering  pull  tabs to  resemble  winning tickets.  She                                                               
asked  whether  the department  considered  that  the bill  might                                                               
potentially increase illegal activity  or if the department could                                                               
provide assurances that this will not happen.                                                                                   
MS.  GLOVER answered  that this  bill  does not  affect pull  tab                                                               
regulations.  This  bill  only affects  charitable  organizations                                                               
that need a permit.                                                                                                             
SENATOR COSTELLO requested the answer in writing for clarity.                                                                   
MS. GLOVER agreed to provide a written answer to the committee.                                                                 
2:06:12 PM                                                                                                                    
CHAIR REINBOLD opened public testimony on SB 69.                                                                                
2:06:45 PM                                                                                                                    
SARAH   OATES,  President   and  CEO,   Alaska  Cabaret,   Hotel,                                                               
Restaurant and Retail Association  (CHARR), Anchorage, stated her                                                               
opposition to SB  69. She expressed concern that  it would create                                                               
a massive loophole  with no means of  enforcement. Although CHARR                                                               
would  not  currently qualify  for  an  exemption, nothing  would                                                               
prevent  them from  creating new  corporations that  individually                                                               
would  gross  less than  $20,000  per  year.  She said  that  the                                                               
department  would  not  know  whether  an  organization  exceeded                                                               
$20,000  since  it would  only  file  a  simple affidavit.  If  a                                                               
violation did  occur, there would  not be  any means to  impose a                                                               
civil penalty, suspend, or revoke  a permit. She asked whether an                                                               
entity  would  have  to  retroactively  file  a  report  if  they                                                               
exceeded the  threshold or  how the  department would  know about                                                               
new entities who  anticipated they would gross  less than $20,000                                                               
per year. She  offered her belief that the $50  cost and supposed                                                               
regulatory  burden was  minimal  at best.  She  urged members  to                                                               
oppose the bill.                                                                                                                
2:08:59 PM                                                                                                                    
STEVEN BORCHERDING,  Manager, Gold  Cache Bingo,  Wasilla, stated                                                               
he has  bingo operations  in Wasilla  and Anchorage.  He reviewed                                                               
his background  to show  that he  had considerable  experience in                                                               
the industry and as a distributor.  He said he has also served on                                                               
task force and regulatory committees.                                                                                           
He stated  his opposition to  SB 69. He  said that the  bingo and                                                               
pull  tab  industries are  highly  regulated  ones. They  require                                                               
substantial   oversight   similar   to  alcohol,   tobacco,   and                                                               
marijuana, he  said. SB  69 would remove  this oversight  for the                                                               
smaller groups  that likely  need it  because they  probably lack                                                               
the  knowledge  and  experience in  the  industry.  He  expressed                                                               
concern that  this lack of  knowledge would lead to  problems. In                                                               
fact,  it has  already led  to problems  with smaller  groups, he                                                               
said. The  permit process  ensures a  certain level  of oversight                                                               
and  a basic  knowledge  of statutes  and  regulations, he  said.                                                               
Members  in  charge and  gaming  managers  must  take a  test  to                                                               
receive a permit.                                                                                                               
MR.  BORCHERDING  said that  the  permit  and regulatory  process                                                               
currently  requires businesses  to  provide  proof of  insurance,                                                               
payroll  submissions, tax  documentation, manager  contracts, and                                                               
various other  requirements. The state oversees  these operations                                                               
through the  permitting process and applicants  prove legitimacy,                                                               
in part, by providing a  physical address where gaming operations                                                               
will occur. The  state can revoke permits, but  without a permit,                                                               
these businesses  would have  no reason  to comply.  For example,                                                               
the bill  does not have  any reporting requirements,  even though                                                               
previous testimony indicated an  annual report would be required.                                                               
He  said  that he  has  taught  several  courses at  AFN  {Alaska                                                               
Federation  of Natives]  conventions on  gaming. Just  because an                                                               
operation is  a small  one does  not mean that  it should  not be                                                               
regulated  in this  highly regulated  industry. He  urged members                                                               
not to pass the bill.                                                                                                           
2:13:22 PM                                                                                                                    
CHAIR  REINBOLD   asked  him  to  submit   written  testimony  to                                                               
2:14:03 PM                                                                                                                    
SENATOR BIRCH  asked what percentage  of net revenues  from bingo                                                               
are given to charities. He recalled that it was substantial.                                                                    
MR. BORCHERDING answered that it  was over $20 million. This year                                                               
Gold  Cache Bingo  donated about  $2.2 million  to charities.  He                                                               
offered his belief  that the gross revenue  for charitable gaming                                                               
was about $300 million.                                                                                                         
CHAIR REINBOLD  asked Commissioner  Designee Tangeman  to respond                                                               
to Mr. Borcherding's testimony.                                                                                                 
2:15:29 PM                                                                                                                    
COMMISSIONER DESIGNEE TANGEMAN deferred to Ms. Glover.                                                                          
2:15:44 PM                                                                                                                    
MS.  GLOVER  responded that  the  bill  would require  an  annual                                                               
certification for  small charitable  organizations that  would be                                                               
exempt from the  permit application process and  fees. They would                                                               
not be required to submit an  annual report of revenues, but they                                                               
must certify their gross revenues, she said.                                                                                    
She  explained  this permit  process  would  apply to  charitable                                                               
organizations  with  less than  $20,000  in  gross receipts  that                                                               
often contract  with operators,  such as a  bingo parlor  or pull                                                               
tab operators. Bingo and pull  tab entities would not be affected                                                               
by this bill. Regulations for  pull tab operators, manufacturers,                                                               
or distributors would not change.                                                                                               
MS. GLOVER said the division  was still considering how to handle                                                               
retroactive permits  for entities who exceeded  the $20,000 gross                                                               
receipts limit but  had not applied for a  permit. The department                                                               
planned to  address the issue of  identifying small organizations                                                               
by regulation,  likely by requiring  an initial  certification at                                                               
the beginning of the year rather than the end of the year.                                                                      
2:18:41 PM                                                                                                                    
SENATOR BISHOP asked  whether the 38 percent  of organizations in                                                               
the category  of small organizations  would fall under  the realm                                                               
of raffle tickets.                                                                                                              
MS. GLOVER said she did not have that information.                                                                              
2:19:23 PM                                                                                                                    
KATRINA MITCHELL, Gaming Group  Manager, Tax Division, Department                                                               
of   Revenue,  Juneau,   said  she   thought  that   the  primary                                                               
organizations  with  $20,000  or  less in  gross  receipts  would                                                               
conduct raffles.  She said that  organizations involved  in bingo                                                               
or  pull  tabs  would  easily and  quickly  surpass  the  $20,000                                                               
2:20:01 PM                                                                                                                    
SENATOR  BIRCH recalled  earlier testimony  with concern  that an                                                               
unscrupulous  operator might  try to  keep the  operation's gross                                                               
receipts under $20,000. He asked her to address the concern.                                                                    
MS. GLOVER  replied that the  question related to  operators, but                                                               
they will  not be  impacted by  this bill.  This bill  would only                                                               
affect  small  charitable  organizations or  municipalities.  She                                                               
said she did not see any risk.                                                                                                  
2:21:18 PM                                                                                                                    
SENATOR COSTELLO asked for the  difference between a permit and a                                                               
certification,  whether  a  permit must  be  displayed  publicly,                                                               
whether operators  are regulated,  and if operators  are required                                                               
to pay corporate income tax to the state.                                                                                       
MS.  GLOVER answered  that  when an  organization  applies for  a                                                               
permit, the division would approve  or disapprove the permit. The                                                               
required annual  certification includes  a report,  under penalty                                                               
of perjury, on  the gross annual receipts. She  deferred the next                                                               
three questions to Ms. Mitchell.                                                                                                
MS. MITCHELL  confirmed that the  gaming permit must  be publicly                                                               
displayed   where  the   activity  occurs.   The  operators   are                                                               
regulated. They must  obtain a license, post a  bond depending on                                                               
the number  of permittees they  game for, and file  quarterly and                                                               
annual  reports  with  the  division.   In  response  to  whether                                                               
operators  must pay  state corporate  income  tax, she  explained                                                               
that an applicant must be a  natural person in order to obtain an                                                               
operator's license.  She did  not think  that operators  would be                                                               
required  to  pay  state  corporate  taxes  unless  they  have  a                                                               
2:24:33 PM                                                                                                                    
SENATOR COSTELLO asked what purpose  is the statute requiring the                                                               
applicant to  be "a natural person"  as opposed to a  business or                                                               
MS. MITCHELL answered that she was unsure of the reason.                                                                        
CHAIR REINBOLD stated that she would hold SB 69 in committee.                                                                   

Document Name Date/Time Subjects
L&C Physical Therapy Resume - Walker.pdf SL&C 3/21/2019 1:30:00 PM
L&C Workers Compensation Resume - Collins.pdf SL&C 3/21/2019 1:30:00 PM
L&C Workers Compensation Resume - LeFebvre.pdf SL&C 3/21/2019 1:30:00 PM
SB 69 Version A.PDF SL&C 3/21/2019 1:30:00 PM
SB 69
SB 69 Transmittal Letter - 02.21.19 President Giessel.pdf SL&C 3/21/2019 1:30:00 PM
SB 69
SB 69 FN SB69-DOR-TAX-3-20-2019.pdf SL&C 3/21/2019 1:30:00 PM
SB 69
SJR 8 Ver. A.PDF SL&C 3/21/2019 1:30:00 PM
SJR 8 - Sponsor Statement.pdf SL&C 3/21/2019 1:30:00 PM
SJR 8 Supporting Document - GDP and Trade AK 2017.pdf SL&C 3/21/2019 1:30:00 PM
SJR 8 Supporting Document - june_13_-_pnwer_press_release_on_tariffs_-_for_immediate_release.pdf SL&C 3/21/2019 1:30:00 PM
SJR 8 Supporting Document - Proposed USMCA Trade Agreement (1).pdf SL&C 3/21/2019 1:30:00 PM
SJR8 Support Letter.pdf SL&C 3/21/2019 1:30:00 PM
SJR 8 Supporting Document - Alaska - Canada trade.pdf SL&C 3/21/2019 1:30:00 PM
SJR 8 Supporting Document - Alaska USMCA.pdf SL&C 3/21/2019 1:30:00 PM
SB 65 SB 66 DOLWD Responses to Committee Questions from (S) L&C hearing on 03.19.19.pdf SL&C 3/21/2019 1:30:00 PM
SB 65
SB 66