Legislature(2021 - 2022)ADAMS 519
03/10/2022 09:00 AM House FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| HB229 | |
| SB9 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | HB 229 | TELECONFERENCED | |
| + | SB 9 | TELECONFERENCED | |
| + | TELECONFERENCED |
HOUSE FINANCE COMMITTEE
March 10, 2022
9:01 a.m.
9:01:03 AM
CALL TO ORDER
Co-Chair Merrick called the House Finance Committee meeting
to order at 9:01 a.m.
MEMBERS PRESENT
Representative Neal Foster, Co-Chair
Representative Kelly Merrick, Co-Chair
Representative Dan Ortiz, Vice-Chair via teleconference
Representative Ben Carpenter
Representative Bryce Edgmon
Representative DeLena Johnson
Representative Andy Josephson
Representative Bart LeBon
Representative Sara Rasmussen
Representative Steve Thompson via teleconference
Representative Adam Wool
MEMBERS ABSENT
None
ALSO PRESENT
Representative Andy Josephson, Sponsor; Elise Sorum-Birk,
Staff, Representative Andy Josephson; Chad Hutchison, State
Director, University of Alaska; Senator Peter Micciche,
Sponsor; Anna Brawley, Senior Associate Agnew-Beck
Consulting.
SUMMARY
HB 229 ALASKA HIGHER EDUCATION INVESTMENT FUND
HB 229 was HEARD and HELD in committee for
further consideration.
SB 9 ALCOHOLIC BEVERAGE CONTROL; ALCOHOL REG
SB 9 was HEARD and HELD in committee for further
consideration.
Co-Chair Merrick reviewed the agenda for the morning.
HOUSE BILL NO. 229
"An Act relating to the Alaska higher education
investment fund; and relating to the Alaska Student
Loan Corporation."
9:01:37 AM
Co-Chair Merrick invited the bill sponsor to the table.
9:01:52 AM
REPRESENTATIVE ANDY JOSEPHSON, SPONSOR, explained that in
2012 the legislature created a higher education investment
fund and populated it with Alaska Scholarship Fund. Since
then, the legislature had taken out about $25 million per
year. More recently the state funded Washington, Wyoming,
Alaska, Montana, and Idaho (WWAMI) with dollars from the
fund.
9:11:46 AM
Representative Carpenter wondered how the constitutional
requirement that stated that the legislature could not
designate funds for a specific purpose integrated with the
legislation.
Representative Josephson indicated the protection of the
armor would be applied to the reverse sweep. The funds
would not be dedicated.
Representative Josephson turned the meeting to his staff.
9:14:27 AM
ELISE SORUM-BIRK, STAFF, REPRESENTATIVE ANDY JOSEPHSON,
introduced the PowerPoint Presentation: "HB 229 -
Protecting the Alaska Higher Education Investment Fund."
She began with reviewing the sectional analysis on slide 2:
Section 1- Allows the Alaska Student Loan Corporation
powers needed to manage the HEIF.
Section 2- Allows the Alaska Student Loan Corporation
to create a subsidiary for the express purpose of
administering the HEIF and related programs.
Section 3- Moves the Alaska education grant account
into the Alaska Student Loan Corporation.
Section 4- Moves the Alaska performance scholarship
award account
Section 6- Establishes the Alaska Higher Education
Investment Fund as a separate fund in the Alaska
Student Loan Corporation.
Section 8- Relates to Powers and Duties of the
Commissioner of Revenue
Sections 5, 7, 9, 10, 11, 12, 13 and 14- Rename the
fund- Adding the word "trust."
9:16:26 AM
Ms. Sorum-Birk continued to slide 3 to review the warnings
and market value of the Higher Education Investment Fund.
She thought everyone was aware of the performance of the
fund and why it was valuable. She would not elaborate, as
it was self-explanatory. She discussed the timeline of
events related to the Higher education Investment Fund on
slide 4.
Ms. Sorum-Birk continued to slide 5. She reviewed a summary
of principles from the Hickel V. Cowper case:
.notdef Two main parameters:
.notdef "available for appropriation"
.notdef In the General Fund
.notdef Relating to "available for appropriation"- "must
include all funds over which the legislature has
retained power to appropriate" AND "which are not
available to pay expenditures without further
legislative appropriation"
.notdef For trust receipts the amount appropriated by the
legislature IS the amount available for appropriation
.notdef This category includes federal funds, funds
given to the state for specific purposes by
private entities AND appropriations from trust
account
.notdef Notably "amounts appropriated by the
legislature out of other funds within executive
agencies for the purpose of administering these
funds, under explicit statutory authority may
also be treated as a type of trust receipt"
(revolving loan funds)
.notdef Monies of public corporations are treated similarly
to trust receipts
.notdef Excludes illiquid assets, funds expendable without
further legislative appropriation, or funds validly
appropriate
Ms. Sorum-Birk presented the notable changes that would
result from the passage of the bill on slide 6:
The HEIF, the Alaska Education Grant account and
Alaska
Performance Scholarship account are relocated out of
the general
fund and into the Alaska Student Loan Corporation.
Allows the Alaska Student Loan Corporation to create a
subsidiary
specifically for managing HEIF and associated funds.
Language is added to clarify that these are all
"separate funds"
For the scholarship and grant funds, language is added
to clarify that
these funds are available without further
appropriation.
Medical education (WWAMI) is added to the statutory
uses of the
HEIF.
9:22:03 AM
Ms. Sorum-Birk reviewed what HB 229 would not change and
offered what adjustments could be made to the legislation
on slide 7:
Overall structure of how the fund is currently
administered under statute including the:
? 7 percent draw annually
? The division of the 7 percent draw- 1/3 to grant
fund and 2/3 to the scholarship fund
? The annual draw requiring appropriation by the
legislature from the HEIF to the scholarship and grant
funds.
Potentially friendly amendments could include
? Reassessing the amount of the draw- a smaller draw
with smoothing
? Adjusting the division of the draw to ensure a
portion goes to WWAM
9:23:16 AM
Representative Josephson commented that friendly amendments
on the slide were doable. He thought time was of the
essence concerning passing the legislation. He thought it
offered a road map for going forward.
Vice-Chair Ortiz asked if the armor Representative
Josephson described protect the appropriations made in
2015. /He thought the legislature might readdress needs in
the future looking to the fund for assistance.
Representative Josephson thought programs he had mentioned
were good and fell under the umbrella of education.
Ms. Sorum-Birk added that there were two different ways of
structuring the funds. The bill would allow the legislature
to maintain its control over how the monies were spent.
Vice-Chair Ortiz asked why the money would need to
specifically assigned.
Representative Josephson indicated that the other body had
a bill that indicated the HEIF was a separate account.
However, he did not think it was enough of a step. By
moving the fund outside of the general fund, it would not
be subject to the reverse sweep provision.
9:28:33 AM
Representative Edgmon noted that the state would soon be in
a position where the state would be coming into additional
revenues from oil. He wanted to contemplate capitalizing
the fund more.
Representative Josephson noted 5 percent was more
sustainable. The fund had done well at 7 percent. He
suggested there was no reason the bill should not be moved
to the governor by Monday.
9:32:04 AM
Representative LeBon asked if there was invited testimony
of the bill in the current meeting.
9:32:48 AM
CHAD HUTCHISON, STATE DIRECTOR, UNIVERSITY OF ALASKA,
indicated the University was very supportive of the
legislation. He noted President Parnell was one of the
supporters. The university thought the creation of a
separate fund would create stability.
Mr. Hutchison relayed some statistics having to do with
WWAMI and certain other grants. He noted that WWAMI was
particular to the University.
9:36:49 AM
Representative LeBon noted the Superior court ruled against
the three students. He wondered if there was an appeal to
the ruling.
Mr. Hutchison replied in the affirmative.
Representative LeBon wondered if the court decision would
be decided in time to be reflected in the budget under
consideration.
Mr. Hutchison responded that the ruling would probably be
too late for the current budget cycle.
Representative LeBon asked if the $25 million would be the
correct figure.
Mr. Hutchison concurred with Representative LeBon's figure.
Representative LeBon offered that a plan B could be to
fund that figure and wait out the court ruling.
Mr. Hutchison responded that it could be a plan B.
9:38:55 AM
Representative Edgmon s wondered how the University would
be impacted in terms of recruitment and retention of
students at the University. He thought the legislation was
a move towards stability.
Representative Carpenter noted that the drafters of the
state constitution felt it was important that the state not
set up pools of money that would be dedicated to a specific
purpose.
9:42:12 AM
Representative Josephson remarked that dedicated funds had
been created since statehood.
Representative Edgmon appreciated the comments by
Representative Carpenter. He thought it was interesting
about hearing about the history of the legislature actions.
Co-Chair Merrick thanked the presenters for bringing the
bill forward.
HB 229 was HEARD and HELD in committee for further
consideration.
9:44:26 AM
AT EASE
9:50:09 AM
RECONVENED
CS FOR SENATE BILL NO. 9(FIN)
"An Act relating to alcoholic beverages; relating to
the regulation of manufacturers, wholesalers, and
retailers of alcoholic beverages; relating to
licenses, endorsements, and permits involving
alcoholic beverages; relating to common carrier
approval to transport or deliver alcoholic beverages;
relating to the Alcoholic Beverage Control Board;
relating to offenses involving alcoholic beverages;
amending Rule 17(h), Alaska Rules of Minor Offense
Procedure; and providing for an effective date."
Co-Chair Merrick invited Senator Micciche to the table to
present SB 9. She noted that the hearing was strictly an
introduction to the bill.
9:50:39 AM
SENATOR PETER MICCICHE, SPONSOR, indicated the bill was
brought to him by request. The bill reset Alcohol statutes.
The legislature has had a heavy hand in the bill as well as
municipalities as well. Alcohol remained the number one
abuse substance in the state. Everything in the bill had
been vetted and taken significant time to craft.
Representative Edgmon appreciated the senator's comment
about alcohol. He stressed that alcohol was the top
contributor of social ills in many parts of the state.
9:55:47 AM
Representative Wool shared that there were many people that
used alcohol responsibly. He had made a living with alcohol
sales. He argued that alcohol helped Alaska's economy, and
brought money and pride to the state. He did not want to
treat alcohol as a terrible subject.
9:58:18 AM
Senator Micciche thought both of the previous comments
represented the balance he was talking about. It also did
some things that were new such as tracking alcohol sales in
rural Alaska. There were communities that had chosen to be
dry and bootleggers preside in those locations. The alcohol
industry provided employment. The bill was about balance.
Representative LeBon asked if invited testimony would be
heard in the current meeting. He also asked if the time
could be spent with questions rather than the presentation.
Co-Chair Merrick replied that there would not be invited
testimony in the meeting.
Senator Micciche thought many of the questions would be
answered within the presentation.
10:02:03 AM
ANNA BRAWLEY, SENIOR ASSOCIATE AGNEW-BECK CONSULTING,
introduced the PowerPoint Presentation: "Alcoholic Beverage
Control (ABC) Board Title 4 Review Project: Overview of
Senate Bill 9."
Ms. Brawley looked at slide 2, Why Alcohol Control? Why
Title 4?
? Since repeal of Prohibition in 1933, states are
responsible for regulating alcohol manufacture,
distribution and sales in its jurisdiction.
? Alcohol is not like other commodities:
Intoxicating substance, not appropriate for children
Economic incentives to encourage drinking
Has social and public costs: law enforcement, health
impacts, violence and assaults, driving under
influence (DUI)
Licensing regulates the market: oversight of sales;
prevents underage access (selling to minors); clear
enforcement.
? Decades of state and federal law say:
it is in the public interest to regulate alcohol, with
a responsible industry and reasonable enforcement.
Ms. Brawley addressed slide 3, Goals of Title 4 Review
Process:
Promote a fair business climate while protecting
public health and safety.
1. Create rational regulation for all tiers of the
alcohol industry.
2. Limit youth access to alcohol.
3. Promote responsible alcohol use and reduce the
harms of overconsumption.
4. Implement changes without negatively impacting
existing, responsible operators.
Make Title 4 clear, consistent laws for the ABC Board,
licensees and law enforcement.
1. Increase swiftness, proportionality and consistency
of penalties.
2. Increase local law enforcement of Title 4.
3. Increase licensee accountability before the ABC
Board for Title 4 violations.
Ms. Brawley pointed to slide 4, Over 120 Stakeholders:
? ABC Board, AMCO (staff)
? Public Safety and Law Enforcement
? Industry
- Manufacturers
- Wholesalers
- Retailers
? Public Health
- Recover Alaska
- Department of Health and Social Services
- Alaska Mental Health Trust Authority
- Rasmuson Foundation
? Community Advocates
? Local Governments
Ms. Brawley continued to slide 5, Categories of
Recommendations:
1. Alcohol Licenses, Permits and Trade Practices
2. Role and Functions of the ABC Board and Staff
3. Underage Drinking and Youth Access to Alcohol
4. Regulation of Internet Sales of Alcohol
5. Technical or Administrative Law Change
10:05:11 AM
Ms. Brawley discussed the 3-tier system on slide 6:
The 3-Tier System Alcohol must be manufactured,
distributed and sold to the public by different
businesses.
This is designed to prevent monopolies.
Ms. Brawley continued to slide 7 which showed the proposed
changes.
10:06:18 AM
Representative Wool asked about the 3-tier system. He
commented that it had been established in federal law. He
wondered if the system would be eroded in the bill.
Ms. Brawley responded that parts of the system had already
gone through substantial change. In one sense it was still
in place in the sense that. However, things had been
opening up especially in the manufacturing tier.
Ms. Brawley turned to slide 8 which showed the retail tier,
she noted that the bill reorganized the licenses for
clarification.
Ms. Brawley advanced to slide 9 reflected licenses that
were designed to meet certain needs recognizing that the
demand was larger than the resident demand.
10:09:45 AM
Ms. Brawley indicated the rest of the presentation
reflected policy changes in the bill.
Ms. Brawley moved to slide 10 which reflected options for
retail portions for manufacturers. The manufacturing
license would not be limited to population.
Representative Wool asked if a brewery in the bill would be
able to purchase a beverage dispensary license (BDL), and
wondered whether the company could buy up all the licenses
in a location and sell on their products.
Ms. Brawley indicated it would be theoretically possible.
It was something that brew pubs could do currently but did
not have production capacity.
Representative Wool was concerned with the possibility of
the larger alcohol companies purchasing the state
breweries.
Ms. Brawley responded in the affirmative, and stated that
it was something prohibited in federal law.
10:14:32 AM
Ms. Brawley advanced to slide 11, Proposed: Endorsements
on Licenses:
Add endorsements to existing licenses,
giving businesses flexibility in how to operate,
without creating more specific license types.
Endorsements would allow sampling on premises,
multiple bar rooms, deliveries by package stores, etc.
Ms. Brawley indicated slide 12, Proposed Endorsements:
? R-7A | Bowling Alley Endorsement
? R-7B | Package Store Shipping Endorsement
? R-7C | Package Store Delivery Endorsement
? R-7D | Package Store Re-Packaging Endorsement
? [R-1] Multiple Fixed Counter Endorsement
? [R-1] Hotel/Motel Endorsement
? [R-1] Large Resort Endorsement
? [R-3] Package Store Sampling Endorsement
? [M-1] Brewery Repackaging Endorsement
Ms. Brawley continued to slide 13 reflecting a proposal of
limited free samples for packaging stores. The idea was to
open things up common to other states.
Ms. Brawley moved to slide 14, Standardize Permits:
? R-7F | Beverage Dispensary Caterer's Permit (AS
04.11.230; 3 AAC 304.685)
? R-7G | Restaurant Caterer's Dining Permit (3 AAC
304.680)
? R-7H | Club Caterer's Permit (3 AAC 304.690)
? R-7I | Nonprofit Event Permit (AS 04.11.240)
? R-7J | Art Exhibit Permit (3 AAC 304.697)
? R-7K | Alcoholic Beverage Auction Permit (3 AAC
304.699)
? R-7L | Inventory Resale Permit (Retail Stock Sale
License, AS 04.11.200)
? R-7M | Package Store Tasting Event Permit (proposed)
? [2020] | Music Festival Permit (proposed)
? [2020] | Live Music and Entertainment Permit
(proposed)
Ms. Brawley reviewed a couple of new proposed permits such
as package store tasting events as listed on slide 15.
Ms. Brawley indicated the next few slides dealt with
population limits.
Ms. Brawley relayed that in slide 16 that addressed
population limits in the current Title 4.
10:19:05 AM
Ms. Brawley continued to slide 17, Proposed Seasonal REPL
Tourism:
? Seasonal restaurant license
? Available in smaller communities (< 40,000 pop.)
? Same operating requirements and privileges as full-
year restaurants (REPL)
? Number of licenses per community determined by
formula:
? Season defined as up to 6 months per year, in any
combination
Example: May through September + 1 winter month
Representative Josephson asked if a brewer could use a 6-
month license potentially add to their license.
Ms. Brawley responded in the affirmative.
10:21:19 AM
Representative Josephson wondered whether the cap was
actually not real.
Senator Micciche replied that bill would allow many other
options for business growth.
Representative Wool returned to slide 16 pointed to the
green line referencing the license exempt from population.
He asked for an explanation.
Ms. Brawley replied that it was to illustrate they still
existed in communities.
10:27:05 AM
Representative Wool He asked if it would be simpler to look
at the number of licenses within a borough.
Senator Micciche explained that cities typically had dense
populations, so the idea was to recognize that there were
under used licenses outside of the city. He was trying to
demonstrate that some of the items could be workable.
10:30:04 AM
Ms. Brawley continued to slide 18 which addressed
convenience licenses and applications.
Ms. Brawley advanced to slide 19 which would put in place a
means of request in additional licenses.
Representative LeBon wondered if a brewery with a tasting
room have the ability to apply for a different license.
Ms. Brawley indicated the city would be the entity to
petition for additional licenses, so it would be allowed.
10:36:23 AM
Representative LeBon used Fairbanks as an example.
Fairbanks had a borough. He wondered if additional
businesses could open, if might not have food. He wondered
if there would be a petition avenue.
Senator Micciche indicated that a tasting room could
because it would allow other options that would free up
tasting rooms.
10:39:18 AM
Representative Wool asked how often the business could go
to the municipality.
Senator Micciche responded that it was every year.
10:40:45 AM
Representative Wool stated that the brewery tasting rooms
for one in every 3,000. He asked for the current number.
Senator Micciche answered it was currently one in 3,000 for
a tasting room, therefore most concerned communities were
capped out. He stated that the current bill did not limit
manufacturers, and only focused on tasting rooms.
Representative Wool stated that if someone hustled, they
could get a brewery tasting room in Fairbanks.
Senator Micciche answered that the bill allowed hundreds of
additional tasting rooms throughout the state. If people
were interested, they had to submit an application to the
ABC Board.
10:44:18 AM
Representative Wool asked if there had been any brewers
opening without a tasting room. He thought many businesses
gained money through the retail side.
Senator Micciche answered that 97 percent of the beer
brewed in the state was sold in other avenues than tasting
rooms. He would follow up with the information.
Ms. Brawley moved to slide 20: Proposed: Option to Relocate
Some Licenses from a Borough to a City.
10:46:42 AM
Ms. Brawley turned to slide 21: Proposed: Regulate Trade
Practices.
Ms. Brawley advanced to slide 22, Adjust License Fees to
Reflect:
Current ABC Budgetary Needs
? Update license fees fairly across similar license,
and
collect revenue sufficient to cover the ABC Board
and AMCO's required activities:
Administration of licenses and permits
Education about Title 4 and related regulations
Enforcement of Title 4 and related regulations
Needed tech upgrade: electronic license renewal
system
? ABC Board required to review fees every 5 years.
? See Appendix, Table 2 of the Title 4 Review report
for
current license fees and proposed changes.
10:48:42 AM
Ms. Brawley turned to slide 23: Proposed: More
Accountability for License Fees Allocated to Local
Governments.
Ms. Brawley turned to slide 24, Internet Sales: No Rules +
Loopholes:
Alaska is one of the only states with no rules for
Internet sales of alcohol.
? Alaska Package Stores cannot sell alcohol online,
only via (paper) written orders.
? Alaska Wineries and Package Stores can ship wine to
customers in some circumstances, only with paper
forms.
? Without state laws restricting online sales, Alaska
licenses are restricted, but there are currently no
limits on purchases of alcohol online from out-of-
state sellers.
? Alaska consumers also do not pay state excise tax on
online purchases, as they do on products sold and
purchased in state. They also may not be paying local
sales taxes.
Ms. Brawley slide 25 regarding regulating internet alcohol
sales.
Representative LeBon asked about the limitation of sales.
He used wine as an example. He wondered how many bottles
were in a case of wine.
Ms. Brawley responded a case of wine contained 12 bottles.
Representative LeBon asked about the applied limit.
Ms. Brawley clarified that the limit was applied to
businesses rather than persons.
Representative Wool surmised that there was no limit
overall.
Ms. Brawley agreed, but remarked that shipping would be a
practical barrier.
Representative Wool suggested that essentially there was no
limit.
Ms. Brawley responded that he was correct but there was
currently no limit.
Senator Micciche added that there was currently no limit,
and stated that the bill dramatically improved the issue.
Representative Wool commented he supported the verification
and ID checking. He was uncertain why it applied to
manufacturers.
Representative Carpenter asked if the limit applied to
phone orders.
Ms. Brawley replied that a responsible licensee under the
bill would note that there would be a record of limit met.
Representative Carpenter clarified that they were talking
about annual purchases, not annual limit of purchases over
the internet.
Ms. Brawley agreed.
Representative Carpenter would need further clarification.
Senator Micciche stated that the goal was to see whether a
person was purchasing a large amount of alcohol. The intent
was to stop the illegal distribution of alcohol.
Representative Carpenter asked if the bill would prohibit
someone from calling a manufacturer and ordering 4 cases of
wine.
Senator Micciche stated that the intent was about a remote
order limit.
Representative Carpenter asked that if he had a successful
business, then he was limited with purchasing alcohol.
Senator Micciche clarified that it was for people at home.
Ms. Brawley turned to slide 26 which was to regulate common
carriers, and would also include deliveries to other
entities which was about closing the loophole that
currently existed.
Co-Chair Merrick thanked the bill sponsor. She reviewed the
agenda for the afternoon.
SB 9 was HEARD and HELD in committee for further
consideration.
ADJOURNMENT
10:59:23 AM
The meeting was adjourned at 10:59 a.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| SB 9_Title4Pres_HouseFinance_3-10-2022 (002).pdf |
HFIN 3/10/2022 9:00:00 AM |
SB 9 |
| SB 9 Letters of Support combined 2.22.22.pdf |
HFIN 3/10/2022 9:00:00 AM |
SB 9 |
| SB 9 Sectional Analysis version W 2-22-22.pdf |
HFIN 3/10/2022 9:00:00 AM |
SB 9 |
| SB 9 Summary of Changes ver G to ver W 2.22.22docx.pdf |
HFIN 3/10/2022 9:00:00 AM |
SB 9 |
| HB 229 Presentation updated 3.4.22.pdf |
HFIN 3/10/2022 9:00:00 AM |
HB 229 |
| HB 229 Sectional Anaylsis ver B 2.24.22.pdf |
HFIN 3/10/2022 9:00:00 AM |
HB 229 |
| HB 229 Summary of Changes- Version A to B 2.24.22.pdf |
HFIN 3/10/2022 9:00:00 AM |
HB 229 |
| SB 9 ltr Fin Com final 3-7-22.pdf |
HFIN 3/10/2022 9:00:00 AM |
SB 9 |