Legislature(2001 - 2002)

05/03/2001 03:55 PM STA

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= 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.                                                            

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