Legislature(2001 - 2002)
05/01/2001 02:11 PM House FIN
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE FINANCE COMMITTEE
May 01, 2001
2:11 P.M.
TAPE HFC 01 - 109, Side A
TAPE HFC 01 - 109, Side B
TAPE HFC 01 - 110, Side A
TAPE HFC 01 - 110, Side B
CALL TO ORDER
Co-Chair Williams called the House Finance Committee meeting
to order at 2:11 P.M.
MEMBERS PRESENT
Representative Bill Williams, Co-Chair
Representative Eldon Mulder, Co-Chair
Representative Con Bunde, Vice-Chair
Representative Eric Croft
Representative John Davies
Representative Carl Moses
Representative Richard Foster
Representative John Harris
Representative Bill Hudson
Representative Ken Lancaster
Representative Jim Whitaker
ALSO PRESENT
Representative Lisa Murkowski; Judy McDonald, Juneau; Butch
Tangney, Odom Co., Juneau; Syd Abrams, Wine Institute,
Juneau; Pete Thibodeau, Thibodeau's Inc., Juneau; Caleb
Stewart, Juneau; Pam Watts, Advisory Board on Alcoholism &
Drug Abuse, Juneau; Nelson Page, Alaska Mental Health Trust
Authority, Anchorage; Geoffrey Larson, Brewers Guild,
Juneau; Matt Felix, National Council on Drug and Alcohol
Abuse (NCDAA), Juneau; Cindy Cashen, Mothers Against Drunk
Driving (MADD), Juneau; Karen Perdue, Commissioner,
Department of Health and Social Services; Howard Scamal,
CAAPS, Juneau; Jack Manning, Juneau; Jane Demmert, Director,
Alaska Commission on Aging, Juneau; Brett Fried, Economist,
Department of Revenue.
PRESENT VIA TELECONFERENCE
James Elkins, Elkins Liquor, Ketchikan; George Tipton,
Ketchikan Entertainment Center, Ketchikan; Crystal
Schoenrock, 4-Lands Bar, Kenai; Gary Superman, Hunger Hut
Bar, Motel & Liquor Store, Kenai; Patti Mackey, Ketchikan
Visitors Bureau, Ketchikan; Torie Foots, Fairbanks Native
Association (FNA), Fairbanks; Jeff Carter, K&L Distributors,
Fairbanks; Glenn Brandy, Silver Gulch Brewers, Fairbanks;
Jim Fredette, Speedway Inn, Fairbanks; Annette Freiburger,
Fairbanks; Ken Lindley, Turtle Club, Fairbanks; Rick Mensik,
El Sombrero, Fairbanks; John Cruikshank, Fairbanks; Sandy
Barker, Salty Dawg, Homer; Nelton Palma, El Pescador, Homer;
Leonard Wells, Karacters, Homer; Karen Berger, Homer Brewing
Co., Homer; Stanley Sobocienski, Nome; Norman Stiles, Nome;
Obed Nelson, Council on Alcohol Abuse and Public Safety
(CAAPS), Anchorage; Frank Dahl, CHARR, Anchorage; Vicki
Otte, Anchorage; Tim Schrage, Anchorage; Mary Rosenzweig,
Anchorage; Karen Rogina, Alaska Hospitality Association
(AHA), Anchorage; Steve Bye, CITC, Anchorage; Terry Latham,
Hotel Association, Anchorage; John Pattee, Anchorage; Joel
Kadarauch, Odom Co., Anchorage; Molly Merritt-Duren,
Anchorage; David McMullen, Anchorage; Kace McDowell, Alaska
Cabaret Hotel & Restaurant Retail Association (CHARR),
Anchorage; Joan Dimond, Anchorage; Jim Crary, Anchorage;
Kirsten Holzshu, Humpy's, Anchorage; Steve Bye, Anchorage;
John Pattee, Anchorage; Mike Gaddis, Fairbanks; Joel
Kadarauch, Anchorage; Kevin Murphey, Ketchikan; Andy
Lundquist, Kodiak; Phyllis Tucker, Kodiak; Lovine Shutes,
Village Bar, Kodiak; Jan Wrentmore, Red Onion Saloon,
Skagway; Randy Koelsch, Fairbanks; Don Grasse, Anchorage;
Carol Jackson, K&L Distributors, Anchorage; Mike Gaddis,
Fairbanks.
SUMMARY
HB 225 An Act relating to municipal taxation of alcoholic
beverages and increasing the alcoholic beverage
tax rates.
HB 225 was HELD in Committee for further
consideration.
HOUSE BILL NO. 225
An Act relating to municipal taxation of alcoholic
beverages and increasing the alcoholic beverage tax
rates.
REPRESENTATIVE LISA MURKOWSKI advised that HB 225 was
designed to help offset the soaring cost of the State's
alcohol-related expenses. The current State excise tax
collects between 3 to 4 cents per drink on beer, wine or
distilled spirits. That rate has not been adjusted in 18
years. HB 225 would increase the rate by 10 cents per
drink, increasing the annual State alcohol tax revenue to
approximately $34 million dollars from the current $12.1
million dollars.
She stressed that it is important to understand the
startling State numbers:
· Alaska has the highest alcohol related death rate-
11.2% compared to 5% nationally;
· Alaska has the highest incidence of Fetal Alcohol
Syndrome (FAS) in the nation, four times the
national average;
nd
· Alaska has the 2 highest per capita alcohol
consumption in the United States;
· In Alaska, alcohol is implicated in 83% of child
abuse investigations, 63% of sexual assaults and
60% of domestic violence reports;
· Alaska Advisory Board on Alcoholism and Drug Abuse
study indicates that the negative impacts
associated with alcohol abuse in Alaska cost more
than $250 million dollars per year;
· Rural Alaska alcohol-related deaths are seven
times the national average; and
· The prevalence of alcohol dependence and alcohol
abuse is nearly 14% of Alaska's population,
compared to 7% nationally.
Representative Murkowski stressed that HB 225 is an
important part of the effort to address the problem of
alcohol and alcohol abuse in Alaska. The passage of the
legislation would help provide revenue needed for the
expanded treatment, therapeutic courts, diversion programs
and other initiatives now under consideration in the
Legislature. She urged the Committee's support of the
legislation.
Vice-Chair Bunde commented that similar legislation has made
some people rich. He commented that using the tax with the
intent to reduce consumption would be a prohibition. He
suggested that the legislation would only reduce the usage
of the casual user. He asked if there was data that showed
the tax would reduce usage in the hard-core drinkers,
especially in rural Alaska.
Representative Murkowski responded that increasing the cost
of alcohol would not remedy the situation. For the chronic
abuser, the tax would not curtail the drinking habits of
that individual. The incentive not to drink would be
recognized more with younger people, who currently do not
drink. If the tax can keep the kids from drinking alcohol
at an early age, then it would be successful. She commented
that the legislation presents the possibility that if there
is going to be expenses associated with drinking, the State
must determine a way to pay for it.
Co-Chair Williams commented that "taking care of the younger
kids" had been attempted with the tobacco tax. He stressed
that it did not work. Co-Chair Williams questioned if the
proposed legislation would be effective.
JAMES ELKINS, (TESTIFIED VIA TELECONFERENCE), ELKINS LIQUOR,
KETCHIKAN, spoke in opposition to the proposed legislation.
GEORGE TIPTON, (TESTIFIED VIA TELECONFERENCE), KETCHIKAN
EMTERTAINMENT CENTER, KETCHIKAN, spoke in opposition to the
legislation. He stated that the proposed amount would be an
unreasonable increase. He requested that the bill be
delayed for further consideration and revised. He stressed
that the tax would be unfair to the responsible drinkers,
which represent 90% of the industry. He reiterated that the
proposed legislation was unreasonable. Mr. Tipton surmised
that most people in the industry do their job responsibly.
Mr. Tipton concluded that the problem exists with the repeat
offenders.
STANLEY SOBOCIENSKI, (TESTIFIED VIA TELECONFERENCE), NOME,
spoke in opposition to the proposed legislation. He
recommended holding the legislation in order to determine a
fair tax.
NORMAN STILES, (TESTIFIED VIA TELECONFERENCE), CABARET HOTEL
AND RESTAURANT RETAIL ASSOCIATION (CHARR), NOME, commented
that the proposed increase was too high. He commented that
the economy in Nome is not good and that the tax would be a
further burden. He recommended holding the bill to
determine a more fair tax.
Representative Davies inquired the CHARR number recommended.
Mr. Stiles understood that number to be an approximate 50%
increase.
SANDY BARKER, (TESTIFIED VIA TELECONFERENCE), SALTY DAWG
SALOON, HOMER, recommended that the bill be postponed so
that the industry could have more time to consider something
that would benefit both sides.
NELTON PALMA, (TESTIFIED VIA TELECONFERENCE), EL PESCADOR,
HOMER, reiterated that the bill be held for further
consideration to determine a more workable solution.
CRYSTAL SCHOENROCK, (TESTIFIED VIA TELECONFERENCE), 4-LANDS
BAR, NIKISKI, suggested that the bill be postponed for
further consideration of a tax that would be more fair. She
advocated a smaller tax and that the responsibility be
spread throughout the State.
GARY SUPERMAN, (TESTIFIED VIA TELECONFERENCE), HUNGER HUT
BAR, MOTEL & LIQUOR STORE, CHARR, NIKISKI, spoke in
opposition to the legislation and voiced his resentment. He
agreed that individuals should be accountable for their
actions. He stated that it is preposterous that the idea
that the funds raised from this tax would help alleviate
alcohol problems. He emphasized that the proposed tax would
put the smaller merchants out of business. Mr. Superman
stressed that people will drink. He stated that he was not
opposed to taxation but that the proposed bill was
prohibitive. Mr. Superman proposed that consideration be
given to a civil retribution bill.
ANDY LUNDQUIST, (TESTIFIED VIA TELECONFERENCE), KODIAK,
echoed the sentiments expressed by Mr. Superman and
testified in opposition to the proposed legislation. He
reiterated that a 300% increase was prohibitive. Mr.
Lundquist suggested how it would affect the tourist
industry. He added that the alcohol industry was open to a
reasonable increase in taxes.
PHYLLIS TUCKER, (TESTIFIED VIA TELECONFERENCE), KODIAK,
requested that the bill be postponed so that a compromise
could be discussed.
TORIE FOOTE, (TESTIFIED VIA TELECONFERENCE), FAIRBANKS
NATIVE ASSOCIATION (FNA), FAIRBANKS, spoke in support of the
legislation. She discussed the damages that alcohol does to
our State, communities and families. Ms. Foote stressed
that damage continues to increase. She pointed out that
there has not been a tax raise to alcohol since 1983. Ms.
Foote added that drinkers tend not to self regulate their
drinking.
JEFF CARTER, (TESTIFIED VIA TELECONFERENCE), K & L
DISTRIBUTORS, FAIRBANKS, stated that the tax is
"outrageous". He pointed out that the tax is higher than
any other state in the country. He recommended there should
be further studies to understand the impact of the tax. He
pointed out that the responsible drinkers would be the ones
most adversely affected.
OBED NELSON, (TESTIFIED VIA TELECONFERENCE), COUNCIL ON
ALCOHOL ABUSE AND PUBLIC SAFETY (CAAPS), ANCHORAGE,
testified in support of the legislation. He urged that the
Committee make a decision that would benefit the people of
Alaska. He stressed that the tax would only cost an
additional ten cents per drink. He voiced concern with the
alcohol related deaths, suicides and the problem in the
State with Fetal Alcohol Syndrome (FAS). The proposal would
be a user tax, those that drink the most, would pay the
most. He stressed those those that drink the most, cost the
State the most. Mr. Nelson stressed that the tax was
reasonable.
FRANK DAHL, (TESTIFIED VIA TELECONFERENCE), ANCHORAGE CHARR,
ANCHORAGE, asked that consideration of the bill be delayed
for further discussion on a more reasonable taxation. He
emphasized that there should be no more taxes in the State,
which he claimed would be more punishment. He claimed that
raising taxes on alcohol would have "no" affect on young
people's drinking.
Representative Davies questioned what would be a more
correct approach to pay for alcohol education and treatment
programs throughout the State. Mr. Dahl suggested that be a
community approach. He recommended approaching it like
other crimes.
Representative Davies noted that the State is short on
revenue to balance the budget and asked Mr. Dahl what sort
of revenues he would use to support the proposed budget.
Mr. Dahl proposed a reasonable tax, including taxation to
the other industries.
Representative Hudson questioned who would end up paying the
tax. Mr. Dahl acknowledged that the costs would be passed
on to the consumer.
JUDY MCDONALD, JUNEAU, agreed that the State is due for a
tax increase. She recommended that it be done over a slower
period of time and in smaller increments. Ms. McDonald
noted that the industry could handle the 35% increase as
proposed by CHARR. She stressed that the increase in tax
would not decrease the problem drinker. The system needs to
be reevaluated and provide a different way to approach
dealing with the abuser. Most of the drunk driving arrests
tends to be repeat offenders. Ms. McDonald voiced support
for confiscating license plates as proposed by
Representative Rokeberg. She echoed concern that more
discussion is needed on the bill.
BUTCH TANGNEY, ODOM CORPORATION, JUNEAU, claimed that
alcohol abuse is not the source of the State's problems. He
discussed drunk driving, suggesting that taxation is not a
solution to that concern. Mr. Tangney echoed concerns
regarding those people who are repeat offenders. He
commented that it is the very intoxicated person who is
responsible for deaths on the road. He claimed that
drinking is a socio-economic problem.
PATTI MACKEY, (TESTIFIED VIA TELECONFERENCE), EXECUTIVE
DIRECTOR, KETICHIKAN VISITORS BUREAU, KETCHIKAN, spoke in
opposition to the proposed legislation.
TAPE HFC 01 - 109, Side B
Ms. Mackey requested that the bill be held for further
consideration. She commented that the bill would not be a
deterrent for any person's drinking condition.
KEVIN MURPHEY, (TESTIFIED VIA TELECONFERENCE), DEPUTY
DIRECTOR, HUMAN SERVICES, KETCHIKAN, spoke in favor of the
legislation. He stressed that the State of Alaska
definitely does have alcohol problems. Putting passage of
the bill off for another year would not solve the problems.
He pointed out that the proposed tax would be a user tax.
He agreed that the State needs to work with the industry to
address treatment. Mr. Murphey reiterated that there is a
tremendous cost to the State of Alaska associated with
alcohol use. There are large criminal justice costs
associated with the problems. The bill is a compromise.
The Criminal Justice Assessment Division recommended 25
cents a drink increase. He concluded that the bill as
written at 10 cents a drink is a compromise.
LEONARD WELLS, (TESTIFIED VIA TELECONFERENCE), KARACTERS
BAR, HOMER, recommended that the bill be considered next
year after a compromise with the sponsor and the industry
had been reached. He recommended a sales tax be added to
everything and not just alcohol. He agreed that all people
should be held responsible for their actions and that
alcohol is a public problem.
KAREN BERGER, (TESTIFIED VIA TELECONFERENCE), HOMER BREWING
COMPANY, HOMER, spoke in opposition to the proposed tax.
She stressed that the proposed amount was not a fair
increase. She commented that the industry is currently
proactive in educating consumers. She believed that the tax
could not be designated.
LOUISE SHUTES, (TESTIFIED VIA TELECONFERENCE), VILLAGE BAR,
KODIAK, testified in opposition to the legislation in order
that the industry and Legislature could arrive at a
compromise over the summer.
JAN WRENTMORE, (TESTIFIED VIA TELECONFERENCE), RED ONION
SALOON, SKAGWAY, stated that the legislation was excessive
and punitive. She commented that it is not fair to attack
fiscal problems by going after one industry. Ms. Wrentmore
recommended adding a seasonal income tax or sales tax.
GLENN BRADY, (TESTIFIED VIA TELECONFERENCE), SILVER GULCH
BREWERS, FAIRBANKS, testified against the tax proposal. He
advised that currently, this industry is taxed very high.
He claimed that alcohol has been a meaningful part of
society for thousands of years. He suggested that treatment
programs tend to be more substance abuse related. He
advised that the alcohol market is an "easy target". He
acknowledged that the industry supports a reasonable
increase.
JIM FREDETTE, (TESTIFIED VIA TELECONFERENCE), SPEEDWAY INN,
NORTH POLE, reiterated that the proposed tax is excessive.
He asked that the tax be reconsidered next year following
discussion with the industry.
ANNETTE FREIBURGER, (TESTIFIED VIA TELECONFERENCE),
FAIRBANKS NATIVE ASSOCIATION (FNA), FAIRBANKS, spoke in
support of the legislation. She stressed that alcohol
problems make Alaskan people struggle and suffer daily. She
pointed out that it is difficult to meet the requirements
asked by the State Division of Alcohol and Drug Abuse and
that there has been flat funding for over 10 years. It is
difficult to provide the services that are needed. She
supported the idea of the "happy" medium.
RICK MENSIK, (TESTIFIED VIA TELECONFERENCE), EL SOMBRERO,
FAIRBANKS, spoke in opposition to the legislation. He
reiterated that social problems are associated more with the
use of illegal drugs. Mr. Mensik stated that the alcohol
industry suffers the brunt of accusations for many people's
social problems. He asked for more time to determine a fair
tax.
VICKI OTTE, (TESTIFIED VIA TELECONFERENCE), ANCHORAGE, spoke
movingly about the problems of alcohol in Rural Alaska. She
stressed that alcohol has been devastating to Bush Alaska.
She recommended that the tax be more. She advised that the
Alaska Federation of Natives supports a 25 cents a drink tax
increase. Ms. Otte pointed out that the State of Alaska
spends more than $250 million a year dealing with alcohol
caused crime and public health problems. That is not enough
funding to support the efforts in Rural Alaska. Tragedies
can be avoided. She urged the Committee's support of the
legislation.
TIM SCHRAGE, (TESTIFIED VIA TELECONFERENCE), ANCHORAGE,
spoke in opposition to HB 225. He commented that the
legislation would do nothing to solve the problem of the
multi offenders and people with Driving-While-Intoxicated
(DWI) problems. He added that the bill would only hurt the
small business owners and punish the average Alaskan who
drinks in a responsible manner. Per capita, alcohol
consumption has decreased over the years. He advised that
the beverage industry is heavily taxed in Alaska.
MARY ROSENZWEIG, (TESTIFIED VIA TELECONFERENCE), EXECUTIVE
DIRECTOR, SUBSTANCE ABUSE PROGRAM, ANCHORAGE, voiced support
for the legislation. She advised that the proposed tax
would shift the burden to those that use alcohol for
programs associated with alcohol. She stressed that the tax
would be a good investment for the entire State. She urged
that the Committee support the legislation.
KAREN ROGINA, (TESTIFIED VIA TELECONFERENCE), ALASKA
HOSPITALITY ALLIANCE (AHA), ANCHORAGE, spoke in opposition
to any increase in the alcohol excise tax. She pointed out
that Alaska is the highest taxed in the United States for
that industry. Ms. Rogina stated that the increase was
unfair and punitive in nature. She stated that it was
unfair to target a specific industry for community related
problems. Increasing the costs will not decrease the
problems, and that increasing the costs would only punish
the business owners. The costs should not be targeted on
one industry. She noted that the legislation should be held
during the summer so that people could be appropriately
educated regarding the concern.
SYD ABRAMS, WINE INSTITUTE, JUNEAU, voiced opposition to the
proposed tax. He claimed that the higher excise tax would
only affect the responsible drinkers. He outlined the
increases which have occurred in other states. He noted
that Alaska spends 9% of the State's fiscal budget on
alcohol abuse problems. Mr. Abrams claimed that taxes have
little to do with prohibiting the use of alcohol.
PETE THIBODEAU, THIBIDEAU INC., JUNEAU, testified in
opposition to the legislation. He noted that his business
could not survive with a 300% tax increase. He noted that
he would agree to a smaller tax increase.
CALEB STEWART, JUNEAU, spoke in support of the legislation.
He pointed out that 11% of this years budget is going to be
spent on alcohol related problems. He stressed that he does
not want to see his tax money being used that way. He urged
that alcohol users pay. He predicted that the State's
alcohol problem is going to get worse. He voiced his
support for HB 225 in its current form.
PAM WATTS, EXECUTIVE DIRECTOR, ADVISORY BOARD ON ALCOHOL AND
DRUG ABUSE, JUNEAU, voiced strong support for the
legislation. The Board's current State plan outlines
strategies to help Alaskans achieve the desired results.
Research shows the strategies that work. Ms. Watts spoke to
therapeutic approaches. She stressed that additional
financial resources are needed to help treat alcohol abuse
problems. Ms. Watts stated that intervening early helps
greater expenditures later. Research clearly shows that for
every dollar spent on treatment, $7 dollars is saved on
Courts, prisons, child protection and foster care services.
Ms. Watts stressed that HB 225 calls for a fair tax
increase. She stated that there is no evidence that jobs
will cease or that businesses will close with the
implementation of the legislation. The Board urges the
Legislature's support for the proposed legislation.
RANDY KOELSCH, (TESTIFIED VIA TELECONFERENCE), FAIRBANKS,
voiced opposition to the proposed tax. He added that he was
opposed to any taxation or imposition on his self-
independence.
LARRY HACKENMILLER, (TESTIFIED VIA TELECONFERENCE), CLUB
MANCHU, CHARR, FAIRBANKS, noted that the proposed tax was
unfair. He stressed that the tax was strictly punitive. He
stated that the tax would be taking something of value from
those that use something that is legal. He referenced the
sponsor statement and the implication that alcohol was the
reason for all crime in the State. He urged that the bill
be "killed" in Committee.
TAPE HFC 01 - 110, Side A
MIKE GADDIS, (TESTIFIED VIA TELECONFERENCE), JERRY'S LIQUOR
STORE, FAIRBANKS, commented that passage of the legislation
would hurt his business. He voiced opposition to the
legislation.
STEVE BYE, (TESTIFIED VIA TELECONFERENCE), COOK INLET TRAVEL
COUNCIL (CITC), ANCHORAGE, spoke in support of HB 225. He
identified the problems associated with alcohol use. He
spoke to the need for creative ways of addressing those that
are still on the welfare caseload. Mr. Bye noted that many
clients are limited to Medicaid and that more affordable
treatment is needed. He claimed that next session would be
too late.
KAREN PERDUE, COMMISSIONER, DEPARTMENT OF HEALTH AND SOCIAL
SERVICES, observed that alcohol is a big problem in the
State of Alaska. She maintained that the State is already
paying an alcohol tax through the cost of abuse. She
stressed that the public wants the abuse side of alcohol
taken care of, which costs money. The costs associated with
alcohol are huge for enforcement, courts and treatment.
Commissioner Perdue advised that the 1984 revenue the State
received from alcohol was $14 million dollars. Last year,
that amount was $12 million dollars. The capital
consumption of alcohol has gone down, but the actual amount
being paid for alcohol tax is less than in it was in 1984.
The cost of taking care of the problem has risen
dramatically.
Commissioner Perdue commented that enforcement laws have put
more demand on treatment programs. There are long waiting
lists for treatment. The monitoring of drunk drivers has
been decreased which is not good for public safety. The tax
has not generated sufficient funds to keep up with the cost
of treatment.
JOHN PATTEE, (TESTIFIED VIA TELECONFERENCE), ANCHORAGE,
testified in opposition to the legislation. He stressed
that there is no other substance with a 300% tax. He
pointed out that there are many people who depend on this
industry.
JOEL KADARAUCH, (TESTIFIED VIA TELECONFERENCE), ODOM CO.,
ANCHORAGE, testified in opposition to HB 225. He maintained
that the majority of people that consume alcohol do so
responsibly. He asserted that the legislation punishes
responsible drinkers. The high tax amount would do little
to solve problems. He urged that the bill be held until a
more reasonable compromise could be reached.
JOAN DIMOND, (TESTIFIED VIA TELECONFERENCE), ANCHORAGE,
testified in support of the legislation. She noted that she
was willing to pay for something better for her family. Ms.
Dimond indicated that she is a responsible drinker. She
observed that the opposition voiced was only from those
people that sell alcohol. She hoped that the tax could help
delay drinking by young people throughout the State.
JAMES CRARY, (TESTIFIED VIA TELECONFERENCE), ATTORNEY,
ANCHORAGE, voiced support for HB 225. He noted that as a
district attorney, 85% of the prosecutions were alcohol
related. He maintained that alcohol is involved in most
domestic violence cases. He noted that the 300% increase is
a response to the success in and by the industry in keeping
taxes low in the last eighteen years. He maintained that
the tax would amount to an additional 3 cents on a drink and
that it would not stop responsible drinkers. Mr. Crary
claimed that alcohol is a drug that affects people's
judgment, memory and coordination. He emphasized that the
death of children from alcohol related incidents are
unjustified and are the issue.
DON GRASSE, (TESTIFIED VIA TELECONFERENCE), GENERAL MANAGER,
K & L DISTRIBUTORS, ANCHORAGE, spoke in opposition to HB
225. He discussed the statistics in Alaska regarding drunk
driving. He advised that the industry has done a lot to
help decrease the statistics. Mr. Grasse noted that the
bill has no support from the industry in its current form.
CAROL JACKSON, (TESTIFIED VIA TELECONFERENCE), CREDIT
MANAGER, K & L DISTRIBUTORS, ANCHROAGE, warned of how the
tax would affect her Cost-on-Delivery (COD) accounts and
clients. The tax could force small businesses to close
their doors. She noted that many small accounts have been
in the business for many decades. Ms. Jackson claimed that
the tax increase would affect more than those that consume
alcohol.
NELSON PAGE, ALASKA MENTAL HEALTH TRUST AUTHORITY (AMHTA),
JUNEAU, testified that the legislation should be supported
in the State of Alaska. He responded to previous testimony.
He stressed that Alaska has one of the highest per capita
alcohol abuse problems in the Nation. Alaska spends the
lowest per capita on treatment.
Mr. Page advised that the proposed tax would provide one of
the few opportunities to target a revenue source to those
that use a particular activity. The fact is that the more
people drink, the more tax they would pay. The rest of
society does pay on alcohol abuse concerns. Mr. Page stated
that the tax would raise a small amount needed to be used in
the treatment of alcohol abuse.
Mr. Page stipulated that the tax would only be 10 cents per
drink, per night. He suggested that on a heavy night of
drinking, the extra charge would be approximately 50 cents.
The tax would provide an opportunity to fund programs that
are desperately needed to address alcohol problems. Mr.
Page addressed the Suicide Prevention Council and alcohol
related concerns. He claimed that one of the solutions to
the suicide problem in the State is dealing with the alcohol
problem.
GEOFFREY LARSON, PRESIDENT, ALASKA BREWING COMPANY, JUNEAU,
testified that the tax would hurt the hospitality business
in the State. He quoted a letter written by the Guild and
how the tax would adversely affect that business. He
claimed that the excise rate is currently high. He stated
that the intent would hurt the drinkers of Alaska.
He added that Alaska does pay the highest tax for
distribution at this time, pointing out that Alaska pays the
10th highest in the Nation. The State is not being under-
taxed. He claimed that the State is paying a reasonable tax
and that the industry is paying a part of the cost. When
consumed responsibly, the consumer should have a reasonable
cost for their product. Beer has been a part of society for
centuries. Responsible consumption should be required and
proactivity in educating the youth. He voiced opposition to
the legislation.
MATT FELIX, DIRECTOR, NATIONAL COUNCIL ON DRUG AND ALCOHOL
ABUSE (NCDAA), JUNEAU, spoke in support to the proposed
legislation. He commented on the amount of State budget,
which is spent, on alcohol abuse throughout the State. He
acknowledged that the tax would not affect the problem in
the State and that the 10 cents per drink will not make a
difference in the consumption. He argued that the extra
charge would not deter anyone from drinking any amount. Mr.
Felix stressed that the current tax base is so low that 300%
really means nothing. At present time, a person can walk
into five different bars and each would have five different
costs for the same beer. He stressed that 10 cents is not
going to matter.
In reference to previous testimony, Mr. Felix advised that
in 1470, over 100,000 people died from alcohol abuse. There
was no alcohol tax at that time. That was when the first
tax was implemented on alcohol, which did help control the
problem at that time. He stressed that taxation is a valid
way to raise revenue and encouraged the passage of HB 225.
Vice-Chair Bunde asked if there were any other states that
had a comparable change in their tax amount. Mr. Felix
stated that in Juneau in the late '80's, the tax was raised
3% and there was no reduction in per capita consumption.
Including the 5% sales tax, it totaled an 8% increase with
no effect.
TAPE HFC 01 - 110, Side B
Representative Moses pointed out that a 10% increase
translates to a 50-cent increase to the consumer. He added
that some taxes in the State have not been increased since
statehood. Mr. Felix agreed and recommended taxing
industries which cost the State the most. He reiterated
that alcohol concerns cost the State substantial money.
CINDY CASHEN, MOTHERS AGAINST DRUNK DRIVING (MADD), JUNEAU,
stated that MADD strongly supports HB 225. She noted that
when programs go unfunded, when laws in the books are not
enforced and education is not taught in the schools, there
will be more Alaskans killed by drunk driving and underage
drinking. When money is not put where it is needed, then
the problem grows.
Ms. Cashen stressed that the statistics on drunk driving in
Alaska being presented are incorrect. Alaska now ranks #2
in drunk driving fatalities. Alaska has always been in the
top #5 and currently is now behind only Washington D.C. She
offered to provide those statistics to Committee members.
Ms. Cashen stressed that MADD is concerned that Alaska does
not have enough State Troopers. Alaskans needs the income
generated from this tax source for income to protect our
loved ones. She claimed that where there is alcohol, there
is abuse. The State cannot expect the offenders to pay for
the abuse. She pointed out that most offenders come from
consistent alcohol abusing families. There are no alcohol
education programs in the schools. Ms. Cashen stressed that
before the children of today become drunk drivers of
tomorrow, education programs need to be placed into the
schools. She encouraged the Committee to support the bill.
Ms. Cashen noted the delay tactic being encouraged by other
testifiers.
HOWARD SCAMAL, COUNCIL ON ALCOHOL ABUSE AND PUBLIC SAFETY,
JUNEAU, spoke in support of the legislation. He commented
that the extra 10% would not affect the purchase of alcohol.
He noted that the State sells 320 million drinks in Alaska.
The proposed tax is a proposed increase of 300% to the tax,
not the cost of the product. Mr. Scamal claimed, "Every
drink costs the State 70 cents". He stressed that alcohol
is a dangerous product.
JACK MANNING, DUCK CREEK MARKET, JUNEAU, commented on the
effect of the tax on his business. He thought that the tax
would be difficult for his small independent business store.
He feared his business could survive with a 10% tax increase
to alcohol; however, a 300% increase would be prohibitive.
He commented that it is unfair to tax only this particular
industry. He recommended that there are other tools
available to generate money for the general fund.
JANE DEMMERT, EXECUTIVE DIRECTOR, ALASKAN COMMISSION ON
AGING, JUNEAU, noted that the Commission on Aging supports
the increase to the alcohol excises tax. Most families in
Alaska are severely affected by the impacts of excessive use
of alcohol and treatment by addiction. She noted that
alcohol addiction does affect older people. Ms. Demmert
underlined that the concern which affects on all Alaskans.
Ms. Demmert questioned how the State could come to a more
effective approach regarding the alcohol problem. She
agreed that the tax is a beginning solution and that it is
fair for people to pay for the costs associated on a drink-
by-drink basis.
BRETT FRIED, ECONOMIST, DEPARTMENT OF REVENUE, offered to
answer any questions on the fiscal note. Co-Chair Williams
advised that testimony would be restricted to public comment
only.
HB 225 was HELD in Committee for further consideration.
ADJOURNMENT
The meeting was adjourned at 4:45 P.M.
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