Legislature(2001 - 2002)
05/03/2001 03:55 PM STA
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
HB 228-SALE OF TOBACCO PRODUCTS JOHN MANLY, staff to Representative Harris, introduced the bill. Under the federal Synar amendment, the state is being penalized $1.5 million in federal drug and alcohol grants because it is not in compliance with the limits set for the sale of tobacco to minors. In a recent DHSS initiated survey of tobacco retailers, it was determined that nearly 2/3 of vendors in rural Alaska sold tobacco products to minors, while more than 1/3 of those in urban Alaska did. Both are well above the 20 percent federal allowable limit indicating far too many minors are buying and presumably using tobacco products. The state has agreed to invest an additional $481,687 in the tobacco abatement and enforcement programs in an effort to meet federal compliance limits and qualify for the $1.5 million in federal drug and alcohol grants. HB 228 has an attached $487,900 Department of Health and Social Services (DHSS) fiscal note and a zero fiscal note from the Department of Revenue. There are also fiscal notes from the Department of Law and the Department of Community and Economic Development that are funded with a reimbursable services agreement (RSA) from the DHSS fiscal note. This bill increases the penalties to businesses that sell tobacco to minors. For a first offense businesses would be fined $300 and receive a 20 day suspension of their tobacco endorsement, a second offense within a two year period would bring a $500 fine and a 45 day suspension of the tobacco endorsement. For a third offense and a forth offense within a two year period there would be a $1,000 fine and a 90 day suspension and a $2,500 fine and a one year suspension of the tobacco endorsement respectively. In addition, the bill would increase the fee for a tobacco endorsement on a business license from the current $25 for a two- year period to $100 for that same period. An individual endorsement would be required for each location at which a chain sells tobacco products, which would make it easier for DHSS to track where violations occur. CHAIRMAN THERRIAULT asked whether the $100 endorsement was yearly. MR. MANLY responded it was for two years. CHAIRMAN THERRIAULT asked for a recap of the penalties for the offenses and Mr. Manly obliged. [They are outlined above and fully described in section 6 of the bill.] CHAIRMAN THERRIAULT asked whether there was any position paper or feedback from vendors. MR. MANLY replied they had not gotten any feedback from vendors. ELMER LINDSTROM, Special Assistant to Department of Health and Social Services Commissioner Perdue, said he was happy to answer any questions. CHAIRMAN THERRIAULT asked whether businesses ever defend sales to minors by charging that the minors used false identification (ID) and if so, what kind of protection does the vendor have in that type of situation? MR. LINDSTROM said the DHSS sting operations are conducted using local law enforcement and there is an extensive protocol on how the operations will be conducted. One of the primary requirements is that if a minor is asked for an ID they produce their ID that shows they are underage. CHAIRMAN THERRIAULT asked whether the provisions in section 6 are applied only through the state conducted sting operations. MR. LINDSTROM didn't believe so but he couldn't think of any enforcement activity that was not sponsored by local law enforcement or DHSS, which is the agency that trains local law enforcement on protocol. ED SASSOR, Tobacco Enforcement Coordinator for Public Health, added that theoretically it could be possible. Just as a minor can be cited for smoking, a vendor could be cited for selling tobacco products to a minor. Enforcement is carried out with local law enforcement using established protocols that involve the use of real ID cards and in no way tries to trick the vendor. Even with that protocol in place there is up to 60 percent non-compliance in rural areas and 34 percent in urban areas. Side B CHAIRMAN THERRIAULT asked whether the section 6 provisions would apply if a minor used a fake ID to purchase tobacco and alcohol and was subsequently apprehended. MR. SASSOR said that scenario is the same as under current law and this bill doesn't affect current statutes. The magistrate or judge would have discretion to determine whether the clerk had sufficient knowledge or should have known that the ID was false. SENATOR PHILLIPS requested an explanation of the $1.5 million loss in federal grants. MR. SASSOR explained there is federal law referred to as the Synar amendment that holds hostage the federal block grant for substance abuse treatment. If the compliance checks are conducted and if youth are successful in purchasing tobacco products more than 20 percent of the time, the state is in non-compliance and the penalty is $1.4 million, 40 percent of the state block grant. Several months ago, Congress passed a law that provided for an alternative penalty and that is that if you are a state that is in non- compliance and you put in an amount of money for the tobacco enforcement program that will be accepted in lieu of the $1.5 million penalty. Therefore, for the amount of the fiscal note the $1.5 million penalty is avoided. This makes sense as a business expense because a $487,000 cost to the state is less than a $1.5 million cost. From the department's perspective, this bill will provide an enforcement program that will make it possible to avoid the penalties in the future. SENATOR PHILLIPS asked how the 20 percent is measured and who does the measuring. MR. LINDSTROM responded that compliance checks were mandatory as a condition of receiving the block grant and they have to select a random sample of retail businesses that sell tobacco. There are about 1,700 existing endorsements for selling tobacco and about 400 of those outlets had to be randomly selected and sampled and that becomes the basis for the annual sample. CHAIRMAN THERRIAULT asked how the bill interacts with the proposed operating budget because the loss of the grant funds were made up in the operating budget and through the passage of this legislation the $1.5 wouldn't be lost. He asked if those funds would be put back in general fund. MR. LINDSTROM said neither the House nor the Senate included the request from DHSS of the additional $1.5 million to offset the loss in the budget. Instead, Representative Harris brought forward this legislation and in the absence of this legislation and the fiscal note there would be a reduction to the program base of $1.5 million. There is no increment in the House of Senate version of the budget to replace these dollars. CHAIRMAN THERRIAULT asked whether there were any more questions or anyone else to testify. There was no response. There was no prepared CS and no amendments from the committee. He asked for the will of the committee. SENATOR DAVIS moved HB 28 and four attached fiscal notes from committee with individual recommendations. There was no objection.