02/23/2004 03:25 PM House L&C

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled

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ALASKA STATE LEGISLATURE HOUSE LABOR AND COMMERCE STANDING COMMITTEE February 23, 2004 3:25 p.m. MEMBERS PRESENT Representative Tom Anderson, Chair Representative Carl Gatto, Vice Chair Representative Nancy Dahlstrom Representative Bob Lynn Representative Norman Rokeberg Representative David Guttenberg MEMBERS ABSENT Representative Harry Crawford COMMITTEE CALENDAR HOUSE BILL NO. 389 "An Act relating to certain monetary advances in which the deposit or other negotiation of certain instruments to pay the advances is delayed until a later date; and providing for an effective date." - MOVED CSHB 389(L&C) OUT OF COMMITTEE HOUSE BILL NO. 418 "An Act extending the termination date of the Real Estate Commission; and providing for an effective date." - MOVED CSHB 418(L&C) OUT OF COMMITTEE HOUSE BILL NO. 509 "An Act relating to establishing the Alaska Gaming Commission." - MOVED CSHB 509 (L&C) OUT OF COMMITTEE PREVIOUS COMMITTEE ACTION BILL: HB 389 SHORT TITLE: DEFERRED DEPOSIT ADVANCES (PAYDAY LOANS) SPONSOR(S): LABOR & COMMERCE 01/20/04 (H) READ THE FIRST TIME - REFERRALS

01/20/04 (H) L&C, FIN

01/23/04 (H) L&C AT 3:15 PM CAPITOL 17

01/23/04 (H) <Bill Hearing Postponed 1/28/04>

01/28/04 (H) L&C AT 3:30 PM SENATE FINANCE 532

01/28/04 (H) Heard & Held

01/28/04 (H) MINUTE(L&C)

01/30/04 (H) L&C AT 3:15 PM CAPITOL 17

01/30/04 (H) BILL: HB SHORT TITLE: EXTEND REAL ESTATE COMMISSION SPONSOR(S): LABOR & COMMERCE BILL: HB SHORT TITLE: ALASKA GAMING COMMISSION SPONSOR(S): REPRESENTATIVE(S) KOTT WITNESS REGISTER CLYDE (ED) SNIFFEN, JR., Assistant Attorney General Fair Business Practices Section Civil Division (Anchorage) Department of Law Anchorage, Alaska POSITION STATEMENT: Addressed changes in the proposed committee substitute for HB commerce clause. STEVE CLEARY, Executive Director Alaska Public Interest Research Group (AkPIRG) Anchorage, Alaska POSITION STATEMENT: Testified in opposition to HB but noted concern about changes to the surety fund proposed in the audit. DAVE FEEKEN, Legislative Chair Alaska Association of Realtors Kenai, Alaska POSITION STATEMENT: Testified in favor of ACTION NARRATIVE TAPE 04-16, SIDE A Number 0001 CHAIR TOM ANDERSON called the House Labor and Commerce Standing Committee meeting to order at 3:25 p.m. Representatives Anderson, Gatto, Dahlstrom, Lynn, Rokeberg, and Guttenberg were present at the call to order. HB CHAIR ANDERSON announced that the first order of business would be HOUSE BILL NO. 389, "An Act relating to certain monetary advances in which the deposit or other negotiation of certain instruments to pay the advances is delayed until a later date; and providing for an effective date." [HB 389, saying of Law and others on this bill, it doesn't deal with what he sees as the central issue. This bill will allow payday lenders to lend money at interest rates in excess of 400 percent, which AkPIRG believes is unfair to consumers. It allows payday lenders to charge 417 percent APR [annual percentage rate] for a two-week loan of $500. This often leads consumers to a cycle of debt from which they cannot recover. MR. CLEARY said the State of Alaska adequately protects consumers who borrow $600, and he feels it should do the same for consumers who borrow $500 or less. Payday loans currently exist in Alaska in a legal vacuum, he said. Although Alaska is one of 15 states that still have usury laws, small-loan rate caps, and no safe harbor for payday lenders, no one is enforcing laws to protect the consumers. Increasingly, payday loans are chosen by people as a last resort, and while payday lenders can currently sue borrowers for treble damages and court costs, no one is enforcing Alaska's laws to protect these same consumers. MR. CLEARY suggested it makes no sense that the legislature thought consumers borrowing $600 should be protected by a 36 percent APR cap but those borrowing $500 should get no protection and pay over 400 percent APR. He said purports to limit the amount a payday lender can charge to $15 per $100, which sounds like a firm regulation, until one realizes this is what the industry is currently charging and, therefore, it's no limit at all. MR. CLEARY pointed out that other states have been inundated when they decided to turn their backs on consumers. He cited a bill enabling payday loans, enacted in Oklahoma; since it took effect in September 2003, almost 300 storefront lenders have sprung up in Oklahoma, all but 17 with out-of-state owners. He noted that Internet loans are proliferating, and feels an upswing in this industry signals an unhealthy economy. Similarly, he said, the boom in payday loans is equivalent to a boom in hospital usage, which only shows that more people are ill - financially, in this case. Number 1570 MR. CLEARY suggested some changes that AkPIRG would support. One is prohibiting loans based on personal checks held for future deposits. The lenders could continue to make small loans, but couldn't hold the borrower's check as security. Nonpayment of a payday loan should be collected just as other small loans are, where the lender sues for the amount owed. In addition, payday lenders should be subject to the small loan Act in order to adequately protect consumers. MR. CLEARY said consumers need to be aware, and groups like AkPIRG are educating people every day on how to more wisely budget their finances. He noted that AkPIRG recently cooperated with the Department of Law and other groups during the national consumer protection week to promote financial literacy. He felt that, as a society, people have adopted usury statutes because of the belief that usury is wrong, and simply because these payday loans are smaller doesn't mean outrageous interest rates are not usurious. Clarifying that AkPIRG opposes HB contacted by consumers with complaints; they work together with the Department of Law, referring consumers to state agencies where they can get help with any type of consumer complaints. REPRESENTATIVE GATTO asked, "If a person has a bill that they need to pay, that's going to charge them even more for being late than the amount they could pay by borrowing this money. Is that something you would oppose?" MR. CLEARY responded that he wouldn't oppose that, but pointed out that consumers who take out payday loans are often the most vulnerable consumers that AkPIRG sees. Laws set loan rates for housing and small loans, often at a rather low percentage compared with the 400-plus percent this bill would allow. He agreed there might be emergencies when people need payday loans, but said they shouldn't be paying triple-digit percentage rates on them. REPRESENTATIVE GATTO responded: If a triple-digit percentage is bad, what about a quadruple-digit percentage? If, indeed, that's the choice an individual has that says, "I'm going to pay a whole lot more unless I get this thing taken care of because I have a penalty and I may have to get something repossessed and then try to get it back again" - and this 417 percent may be the annual percentage rate, but for $15 they may be able to avoid an awful lot of grief, hassle, and $25 or whatever the other penalties would be - why would you want to deny them at least the possibility of reducing the liability and the obligations to an individual that they also owe some money to? MR. CLEARY replied: That is a good question. And that, again, points to the fact of what we would consider predatory lending or why we have usury laws in the first place, because if somebody is vulnerable, do they deserve to be loaned to for such an outrageous rate? Don't we need to figure out another way to protect them, rather than subjecting them to the only option that they have left, ... to go to a payday lender and come out with a loan that charges them 400 percent interest? These are people living, literally, paycheck to paycheck, and we don't believe they should be subject to that type of predatory lending. Number 1960 GORIUNE DUDUKGIAN, Staff Attorney, Alaska Legal Services Corporation (ALSC), Anchorage, testified against TAPE 04-16, SIDE B Number 2342 MARIE DARLIN, Coordinator, AARP Capital City Task Force, testified in opposition to HB 389. individuals supportive of the legislation, and said the committee hadn't heard from any customers who had problems. CHAIR ANDERSON commented that he wanted to maintain consumer protection but at the same time have a law that regulates payday lenders. The attorney general's office wanted conformity and statutory definition as to levels of licensure, he said, and consumer protection; he surmised that the attorney general's office supports this bill. He noted that eight major revisions had been made to the bill, but acknowledged that these changes didn't completely satisfy AARP. Number 1693 REPRESENTATIVE LYNN said military people and seniors aren't stupid and know what interest rates are. He remarked: I think there are just as many qualified people that know how to conduct their business in the military as in any other segment of the population. The same goes with seniors. I don't think military or seniors are any less capable of making financial decisions than anybody else. Number 1653 REPRESENTATIVE DAHLSTROM moved to report CSHB Standing Committee. HB Number 1520 CHAIR ANDERSON announced that the next order of business would be HOUSE BILL NO. 418, "An Act extending the termination date of the Real Estate Commission; and providing for an effective date." [HB Standing Committee.] REPRESENTATIVE ROKEBERG asked that the proposed committee substitute (CS), Version D, be adopted. He explained, "The original draft is under the sunset extension for the Real Estate Commission, and I have taken the liberty of using it to do some cleanup work in this area." Number 1488 CHAIR ANDERSON moved to adopt the proposed CS, Version 23- LS1548\D, Mischel, 2/20/04, as a work draft. There being no objection, Version D was before the committee. Number 1474 REPRESENTATIVE ROKEBERG explained that Version D includes certain aspects of a former bill that could only be corrected through statute. Section 2 clarifies that a firm or business can have a policy in which its inspectors are covered, rather than have each individual licensee get his/her own individual insurance. Section 3 relates to a request to the Division of Occupational Licensing about the timing of inactive licenses and active licenses, and directs that an inactive license be reactivated; he described this change as a housekeeping measure. Section 4 is another housekeeping measure, an added request from the Division of Occupational Licensing to clarify issues surrounding notification of a licensee; sometimes the division has difficulty, and this allows access to the current mailing address and other ways to find [licensees]. REPRESENTATIVE ROKEBERG explained that Section 5 corrects a problem in the old home-inspector bill, which allows current practitioners to become home inspectors without an examination; in former HB 9, registration issued under this section may not be renewed or extended", and the assistant attorneys generals said there was a need to take the exam again because of the word "not". Thus Section 5 of the current bill says that if the [license is given to the applicant], the applicant doesn't have to take an examination again [for renewal]. He called this a housekeeping measure as well. Section 6 provides for a new effective date. Number 1285 REPRESENTATIVE LYNN disclosed that he is a licensed associate real estate broker with a major company in Anchorage. He also stated support for HB REPRESENTATIVE ROKEBERG disclosed that he is also a licensed real estate broker in Alaska, with a current license although he isn't actively engaged in this. CHAIR ANDERSON asked both members to vote nonetheless. Number 1245 KATHRYN CLARK, President, Alaska Association of Realtors, spoke in support of HB commission to the June 30, 2008, date. However, she noted that she'd been asked to suggest that the changes to the surety fund wouldn't be supported, which Mr. Feeken could speak to better. REPRESENTATIVE ROKEBERG clarified for the committee that there was a recommendation in the audit to raise the surety fund claim level from $10,000 to $20,000, and the aggregate to one licensee from $50,000 to $100,000. He said he didn't agree with this and hadn't put it in the bill "for various reasons," there are split opinions within the industry. REPRESENTATIVE ROKEBERG also referred to a recommendation in the audit that mobile homes or trailers should be subject to claims under the surety fund. He said this recommendation wasn't included in the bill either, because the industry is 100 percent opposed to it. Noting that trailers and mobile homes are personal property, not real property, he said when the mobile home dealers or sellers want to start paying into the surety fund, then they can have a claim to it, but not until that time. Number 1133 REPRESENTATIVE LYNN noted that typically realtors can list and sell mobile homes. He asked whether the buyers would have need of the surety fund. REPRESENTATIVE ROKEBERG said the realtor would be selling personal, not real, property and that the "mobile home people" don't contribute to the fund. "If they want to become real estate licensees, then that's fine," he added, saying old issue that has been debated in this committee previously. He added that at one time there was licensure of mobile home dealers, which was repealed. REPRESENTATIVE LYNN asked, though, if he sold a mobile home and made some error and the buyer wanted redress, whether that person could go to the surety fund. REPRESENTATIVE ROKEBERG replied that hearing officers had made that finding based on that claim before, but he feels so strongly about it that he has contemplated adding a statutory prohibition. Number 1037 DAVE FEEKEN, Legislative Chair, Alaska Association of Realtors, Kenai, testified in favor of Version D. However, he said his association had concerns about raising the surety fund claim amounts and the mobile home issue, and was happy these recommendations weren't included in the bill. With regard to mobile homes, he said if someone who has a real estate license is subject to surety fund claims. Mr. Feeken explained that claims involving earnest money agreements require mandatory mediation; there are currently three to four claims a year with two to three mediation hearings a month. The Alaska Association of Realtors hears three to four arbitrations annually, providing this service to practically all licensees in the state, whether or not they are members of the organization. MR. FEEKEN informed the committee that when the surety fund was put in place, it covered fraud, deceit, misrepresentation, and conversion of funds. Previously, errors and omissions (E&O) insurance didn't cover fraud, deceit, and misrepresentation, but now it does. Thus he said he felt many avenues were available for the public to correct a wrong. He added that the Alaska Association of Realtors had invested a substantial amount of money and time over the last 15 years to deal with disputes and provide consumer protection. MR. FEEKEN also explained that $10,000 is the standard settlement in a claim against licensed professionals. He said E&O claims average $6,000 to $7,000; mediation cases, which currently happen at the rate of two or three a month, have average settlement claims of $5,000 to $6,000; and small claims court remedies up to $7,500, and there's currently a bill that would raise this to $10,000. He emphasized that many remedies are available to the public without resorting to a surety fund claim or a lawsuit, and he said those remedies are far more expedient than either the surety fund claim or a lawsuit, which may take multiple years. For example, it costs $75 to file for mediation. MR. FEEKEN went on to say that has been input to the industry that the surety fund claims are used to "finance further losses." He said that's a valid concern. [Chair Anderson noted that Pat Davidson was present from the Division of Legislative Audit to answer questions.] Number 0754 REPRESENTATIVE LYNN moved to report HB CHAIR ANDERSON announced that the final order of business would be HOUSE BILL NO. 509, "An Act relating to establishing the Alaska Gaming Commission." Number 0691 REPRESENTATIVE ROKEBERG moved to adopt the proposed committee substitute (CS), Version 23-LS1768\I, Luckhaupt, 02/23/04, as a work draft. There being no objection, Version I was before the committee. Number 0655 SUE STANCLIFF, House Majority Office, Alaska State Legislature, presented HB introduced Version I by saying the Alaska Gaming Commission will regulate all forms of gaming activity in Alaska; this includes current forms and additional forms that may be authorized by the legislature under AS 05.15." Reading from the sponsor statement, she said gaming activity currently allowed in AS 05.15.100 includes bingo, "classics," fish derbies, and contests of skill. If additional forms of gaming become legal in Alaska in the future, it will be critical that appropriate regulatory oversight be in place. MS. STANCLIFF said the goal of AS 05.15. tools necessary to administer gaming once the legislature and governor adopt this activity into law. Number 0558 MS. STANCLIFF said Version I was a result of working with different members of the gaming industry, taking their recommendations and incorporating them. There is also a new fiscal note attached that will have minimal impact. Version I limits the ability of gaming to expand in Alaska, since it could only do so with the authorization of the legislature. The sponsor didn't feel it was appropriate to give the commission broad authority to do interstate gambling or take up extended gaming activities, she explained. Ms. Stancliff pointed out that while it had been recommended to appoint one member of the commission from the gaming industry, the decision had been to choose three. It would be a seven-member commission, which she characterized as large, and this was the reason for choosing three commissioners that would have direct industry ties. MS. STANCLIFF referred to changes on page 6 that would require the legislature to authorize various gaming activities. She said she'd verified the ages of people in the prohibited acts on page 6 and explained: It says a person "may not". And if you look on number 3, line 28, it says "knowingly sell or offer to sell a gaming product to a person under the age of 21." Now, for bingo it is age 19; pull-tabs is age 21. I felt that this was appropriate to put in here for the construction of this commission. MS. STANCLIFF related that the proposed commission was modeled after several states, including Idaho and Colorado. She said 47 states have commissions similar to the one proposed in this bill, with only Utah, Hawaii, and Alaska absent from this count. CHAIR ANDERSON said a representative from the Department of Revenue would stand by for technical questions. Number 0214 DARWIN BIWER, Cabaret Hotel Restaurant & Retailers Association (CHARR) for Alaska and for Anchorage, said his organization is totally in favor of HB several types of gambling are legal in Alaska and some that are illegal need to be "cleaned up." He suggested this was not a bill for or against gambling, but a bill to regulate the present activities of gambling in Alaska. CHAIR ANDERSON asked how many members were in Alaska CHARR. MR. BIWER said he thought there were approximately 200 statewide members in CHARR; in Anchorage there were about 200. Number 0069 REPRESENTATIVE ROKEBERG noted that there is already gambling on licensed premises in Alaska. CHAIR ANDERSON offered his understanding that Mr. Biwer was in favor of the seven-member commission. TAPE 04-17, SIDE A Number 0033 CHAIR ANDERSON suggested the commission was proportioned throughout the state for the selection of the commissioners. MR. BIWER said he understood that the proposed CS indicates one commissioner from the pull-tab industry, one from the bingo industry, and one from the general gaming. He reiterated that this is to "clean up our act." He said illegal gambling is prolific around the state, especially in Anchorage. He wanted the commission to oversee electronic gaming, pari-mutuel gambling, and any other type of gambling in the state. CHAIR ANDERSON recalled that in the 1990s there was a charitable-gaming division under Department of Revenue. Now there is a need for coverage and analysis of gambling issues, whether or not there's expansion. The bill would also provides for enforcement and overview where there hasn't been any before. He suggested this is a preparation in case there is expansion as well. MR. BIWER recalled a visit last year from Dennis Jackson, former head of the Idaho State Lottery, to the House Special Committee on Ways and Means [and the House Special Committee on Economic Development, International Trade and Tourism as well]. He recalled that Mr. Jackson explained two basic premises: gaming must be run like a business, and it requires airtight security. Mr. Biwer said he felt the commission would do that. Number 0252 REPRESENTATIVE GATTO offered his initial reaction, if there is a seven-member commission, with three representing the industry, and the commission is designed to clean up the industry, that this is overweighted. MR. BIWER responded that three out of seven is not a majority. REPRESENTATIVE GATTO said he was well aware of that and added, "You only need one more vote to do whatever you like as far as cleaning up the industry. It just seems overweighted." CHAIR ANDERSON suggested the weighting should perhaps be addressed by the sponsor. REPRESENTATIVE LYNN asked for clarification [page 2, line 14] on who might be the third member from the gaming industry. He surmised it would be from something that would come in the future. MR. BIWER said it could be an ice classic, for example, or a salmon derby. CHAIR ANDERSON said it isn't designated, but presumably will be someone from the industry. He suggested this is an important aspect for this committee to look at. MR. BIWER referred to page 2, lines [14-17], and said it would be someone holding a permit for a charitable gaming activity other than bingo or pull-tabs. Number 0423 REPRESENTATIVE GUTTENBERG asked Mr. Biwer, "Do you think this bill would be necessary if we weren't ready to expand gaming in this state?" MR. BIWER responded, "Absolutely." He said it is needed because of current illegal gambling activities. He referred to after- hours joints, gray machines, the need to tighten reporting on pull-tab revenue, and loss to the state of revenue from taxation as current issues that need to be dealt with. In response to remarks from Chair Anderson, who noted he used to work with CHARR, Mr. Biwer said the reporting system isn't airtight and remarked, "If you're against this bill, I would favor of not having control or regulation." CHAIR ANDERSON asked Mr. Biwer whether he has pull-tabs in his bar. MR. BIWER said no. Number 0566 REPRESENTATIVE GUTTENBERG asked what a gray machine is. MR. BIWER explained that those are illegal machines imported into the state that are in bars; there is an agreement with the manager or owner of a bar that they'll pay off. CHAIR ANDERSON pointed out that none of that money goes to the state, in addition to its being illegal. Number 0605 REPRESENTATIVE LYNN asked how this commission would address the problem of illegal gambling. MR. BIWER replied that if the commission had regulatory control, it would monitor and regulate illegal gambling. He noted that there may be a federal angle as well, and mentioned the Federal Bureau of Investigation (FBI) and interstate commerce related to shipping the machines. He said the Municipality of Anchorage won't prosecute this; when an after-hours joint does get busted, the penalty is lax, basically a "slap on the hands." REPRESENTATIVE LYNN asked whether the commission would use civil or criminal laws to come down on these activities. CHAIR ANDERSON suggested that the Department of Revenue answer that question later. Number 0732 ROBERT LOESCHER, Chairman, Legislative Committee, Alaska Native Brotherhood, Camp 2; President, Juneau Tlingit-Haida Community Council, said he represents a number of other community organizations. He testified in favor of HB 509, had been addressed. With regard to the last issue talked about by Mr. Loescher, he said Sec. 05.18[.030] on page 3, line 20, says the commission shall enter into contracts and agreements necessary to carry out the provisions of the chapter, and on the next page it says the commission shall employ the director who is qualified and so forth. Number 1050 REPRESENTATIVE ROKEBERG asked Mr. Loescher if he there had been discussion of having three versus two members of the gaming industry. MR. LOESCHER replied, "We would fully support three." REPRESENTATIVE GATTO asked, "Would you support five? Would you support four? ... How do you arrive at the number that is important to you?" MR. LOESCHER replied: Considering the size of the commission, the commission shouldn't be ... too big, so that it couldn't make decisions, but it should be large enough that it at least have representation from the industry as we know it today, because there's a lot of experience there and they have familiarity with the regulatory development already. ... And the growth of the industry would probably evolve from these people that are involved. And so my thinking basically was to make sure that there was at least representation from the existing industry. MR. LOESCHER, in further response, indicated he believes it would be pragmatic to have at least a third of whatever size the [commission] is. REPRESENTATIVE GUTTENBERG suggested perhaps party affiliation should be further diminished so that no two members could be of any political party. MR. LOESCHER said he'd served on other commissions, having been appointed by President Clinton to the study commission on a national gasoline cap that had three members from the House of Representatives, three from the Senate, and three from the President. He said this was basically done on a party basis. He commented that in state government commissions are often appointed with members from the legislature, members of industry, or from citizens groups. Saying this is kind of unusual, he said his organization hadn't wanted to challenge where the people came from, as long as there was representation from the industry. Number 1187 CHAIR ANDERSON said he thought it was the intent to ensure there wouldn't be partisanship by having a limit. He then noted that the sponsor was shaking his head. REPRESENTATIVE LYNN asked about nonpartisan and undeclared persons, and asked whether they should be included also. REPRESENTATIVE ROKEBERG suggested the term "affiliation" rather than "party". CHAIR ANDERSON said Representative Lynn had brought up a good point, and noted that Representative Rokeberg had brought up a possible rewording. REPRESENTATIVE KOTT said, "No more than four from a particular party." He then asked about "nonpartisan" [Chair Anderson called upon David Lambert, but then announced that Fairbanks was disconnected.] Number 1272 ED MOEGLEIN, Alaska Nonprofit Charitable Organizations, Soldotna, expressed concern about issues that may impact his organization's fundraising capabilities on behalf of charities they support. He explained: Each organization that belongs to our organization pays $50 annually to cover costs of mailing, phones, and copying. We've been having regular meetings twice a month, on the first and third Mondays. Our members are from a number of organizations that have statewide affiliations that represent the posts and lodges of the [American veterans], VFW [Veterans of Foreign Wars], American Legion, Disabled American Veterans, Moose, Elks, Eagles, as well as their state departments that oversee and promote the programs and charities of these lodges that post across the entire state. Also supporting us is the local chamber of commerce that also recognized our efforts and contributions to our communities. MR. MOEGLEIN said he was present to listen to others' testimony, get additional information, and support formation of the gaming commission. As for accountability with regard to pull-tabs, he said there is strict accountability as to the total amount of money taken in both by his organization and the vendors that sell pull-tabs for his organization; there are annual reports, and this also is reflected in the cost of the permit. He explained that his organization has no problem with the commission, but just wants the nonprofits to be fairly represented so they can continue to serve communities. He expressed the need for representation on this commission in order to address his organization's concerns. Number 1463 GREG PETERSON, Allied Charities, Ketchikan, testified against HB 509 proposed gaming commission. He expressed being stunned that there was new attention being paid to the gaming industry, since previous regulation had diminished through time due to decreased funding. Countering Mr. Biwer's comments, he said there are laws on the books that deal with after-hours joints and incorrect accounting in the pull-tab business, as well as investigators. MR. PETERSON said he feels the reason for this commission is that the Department of Revenue recommended that before Alaska enters into any video gaming, a commission be formed. He feels it isn't because of new concern or caring about the charitable gaming industry. He said, "We've asked and lobbied for all kinds of different things over the years to help ... clean up the industry; we've never been listened to once." He again questioned the reason and intent for the proposed commission. CHAIR ANDERSON said he'd talk to Mr. Peterson later about CAGE (ph), an organization Mr. Peterson is a member of; he expressed concern about whether that organization is registered with the Alaska Public Offices Commission for lobbying purposes. Number 1614 CHAIR ANDERSON, upon determining no one else wished to testify, closed public testimony. REPRESENTATIVE DAHLSTROM stated: With all due respect to the maker of this bill, I am going to disagree with many of the things that I've heard this afternoon. ... I acknowledge that we currently have pull-tabs and we have other games that are being played. In acknowledging that and in knowing that they're there, to me that does not make it right. And as the gentleman who previously just spoke [said], we do have laws and regulations that are in place that I feel should be held accountable, and ... that we need to enforce the laws that are there as far as regulating. An example that continues to be brought up today are the after-hour joints. I personally don't ever want to see our state become dependent on money that comes in, in this form. And I also believe that setting regulations for money that comes in, in the wrong way isn't right. I don't think you can take something that I believe is wrong and make it right by creating regulations for it. Again, with ... respect for the maker of ... the bill, I have no intention of being any part of ... moving this ... commission forward. I feel that this is part of an overall plan of allowing electronic gaming and other gambling to become legal. And I just cannot support that. REPRESENTATIVE ROKEBERG commented with regard to the Alaska Native Brotherhood letter that Mr. Loescher had presented: His first point about ... the duplication of responsibility between this new Alaska Gaming Commission and the, presumably, ABC Board, which is under the Department of ... Revenue, ... in Section 1 of the bill, ... I'd like to state for the record that it's my interpretation of the bill that the license or permit referred to in Section 1 are the bill's licenses and permits under AS 05.15 and not under Title 4. ... Representative Kott, is that correct? So, I just want to make sure that's on the record, and we don't need to amend it in any way. ... That takes care of that one issue they brought up. It is a valid point of clarification; I think it's necessary. CHAIR ANDERSON said Representative Kott, for the record, agrees. Number 1753 REPRESENTATIVE ROKEBERG began discussion of Conceptual Amendment 1. He referred to page 2, line 12, and suggested adding "affiliation or" after "political". "members of the same political affiliation or party". explained that a nonpartisan person isn't a member of a party. CHAIR ANDERSON asked whether the sponsor concurred with encapsulating those registered voters as well. [There was no audible response.] Number 1820 REPRESENTATIVE ROKEBERG moved to adopt the foregoing as Conceptual Amendment 1, leaving to the drafters wording such that any registered voter in Alaska could qualify for that position, whether a party member or not. REPRESENTATIVE GUTTENBERG said it seemed simple but could be complex. For example, there couldn't be a full commission of nonpartisan or unaffiliated persons. REPRESENTATIVE ROKEBERG specified that he was trying to make it more open to all people. Number 1883 CHAIR ANDERSON asked whether there was any objection to Conceptual Amendment 1. REPRESENTATIVE GUTTENBERG said he wasn't sure it answered the problem, but he wouldn't object. CHAIR ANDERSON announced that Conceptual Amendment 1 was adopted. Number 1899 REPRESENTATIVE ROKEBERG moved to adopt Conceptual Amendment 2, on page 2, line 11, changing the number from "four" of the seven members. There being no objection, it was so ordered. Number 1920 REPRESENTATIVE ROKEBERG began discussion of Conceptual Amendment 3, page 2, line 12. He said: The three member commission that are permittees, I'd make that two members and they could just hold the charitable gaming permit under [AS] 05.15 and not make them bingo, pull-tab, whatever. They'd just have to have a permit and they'd be two of the seven members. ... The reason I'm going to this method is I would be concerned about if the people that are regulating themselves may have too much weight. The current statutory structure would be overweighted in this group. One of the charges, quite frankly - and I don't think anybody is trying to hide anything here - is for this commission to look at the policy and the future policy of the State of Alaska. So, if we get too many members that are ingrained in the current status quo, we won't get any movement at all; we won't make any changes, and I don't think that's the intention of the bill. REPRESENTATIVE ROKEBERG clarified that two of those members would be permittees. He said sometimes it's hard to get people who are qualified or who want to serve who are particular kinds of licensees or permit holders. CHAIR ANDERSON clarified: "So, rather than one bingo commissioner and one pull-tab commissioner and then a third unknown, there will be two commissioners with permits, and not designated bingo or pull-tab, just open." Number 2037 REPRESENTATIVE ROKEBERG moved to adopt Conceptual Amendment 3, page 2, line 12, to delete "three" and insert have it read, "Two members of the commission must be involved in charitable gaming in this state, and hold a permit under AS 05.15." CHAIR ANDERSON, hearing no objection, announced that Conceptual Amendment 3 was adopted. CHAIR ANDERSON remarked that he understands and respects Representative Dahlstrom's philosophy, but said: I think that ... this is important. The commission is necessary, and not just from the testimony we have heard, but from my experience in the industry, and also looking at legislation last year, which really didn't move anywhere. But through analysis we determined that, and I think the [House Special Committee on Ways and Means] also determined that a gaming commission is the first step, an essential foundation, whether gaming expands or does not expand. And I think Mr. Biwer testified to that, that ... CHARR did not come here saying, "Hey, we support or are against other issues of gaming." They came to support the Alaska Gaming Commission concept because it will increase enforcement. ... The last testifier stated that he didn't think it would help, but I do. I do think it will help. And I think that it will prevent those gray machines and [illegal] gaming and gambling, and it will make it more stricter. And so I support the bill to that end. Number 2059 REPRESENTATIVE GUTTENBERG stated: In the early 90s I was involved peripherally in gaming, and watched ... the funding and the enforcement officers and investigators ... through a variety ... of governors kind of dissipate, and oversight kind of diminish. ... If Mr. Meyers is still on [teleconference], I would like him to comment on the state of charitable-gaming oversight now, because basically what we're doing is saying the system we have doesn't work, and we want to replace it with this commission. So how is it broken? ... Is it a matter of ... [nonenforcement]? Is it a matter of no investigations? Is it a matter of inadequate laws or regulation? Number 2129 LARRY MEYERS, Deputy Director, Tax Division, Department of Revenue, explained that one of the programs for which he has oversight is the charitable gaming unit. He offered background as follows: Charitable gaming used to be a division. In 1997, for budget reasons, they were reduced from a division to a unit. The division used to comprise ... 13 people. At the time that it was transferred over into the income and excise audit division at that time, there were seven folks that transferred over: one supervisor, two accounting techs, two auditors, ... and two investigators. Since that time, the unit has not grown in size. ... During the six or seven years ... that it's been under my responsibility, we've tried to increase the enforcement. ... We haven't had any new positions. I think that ... we have shown that we've done a lot with the tools that we have had, but gaming continues to grow. It is a ... very controversial area. ... It deals in a lot of cash, and there are some problems out there. We've tried to set out in our annual report some of the major cases that we've worked and some of the good that we've brought to the industry, and it is an industry that needs a lot of oversight. MR. MEYERS, in response to Representative Guttenberg, said there are two investigators statewide, over 1,200 permittees, approximately 200 complaints a year, and two auditors. In response to Representative Gatto, he said the most common complaint has come from people who have felt there was insider action, that is, collusion between select players and the person running the game. Number 2239 REPRESENTATIVE KOTT agreed there have been some troubling aspects in this particular area. He said this committee has in its possession a bill from the governor that deals with pull- tabs, but there are problems with that bill and thus it has been referred back to this committee. He remarked, "It's a continuation of various activities that are somewhat problematic in this state regarding gaming." Turning to the current bill, he told members: Right now, this commission is not needed. Regardless of what one of the members said, this commission is not needed to implement or expand gaming operations in this state. We can do it without this commission. Now, what we're saying is there's an extra layer here that's first going to have to evaluate everything around the state to determine whether or not whatever it is, is good for the State of Alaska. Once that recommendation is made and forwarded to us, then the legislature, in the same process we would go through right now, ... would have to introduce legislation and pass it through the committee process. So this particular commission allows for a second layer. But thirdly, and probably more importantly, is that this protects us against an initiative process. [If] an initiative comes forward, I think most of you have recognized in the various polls that there's some forms of gaming opportunities in this state that would probably pass, albeit a lottery or maybe the electronic gaming machines. That goes on the ballot in the form of an initiative and passes. Guess what we got? We got it. We don't have the luxury of going back and debating the issue. At least we have the commission that is in place to deal with it and to regulate. I think that's the most important aspect of this because I believe it's coming. Number 2330 REPRESENTATIVE ROKEBERG moved to report HB 389. href='/basis/Bill/Detail/23?Root=HB389'>HB 389. href='/basis/Bill/Detail/23?Root=HB389'>HB 389; spoke on name='HB389' href='/basis/Bill/Detail/23?Root=HB389'>HB 389 as href='/basis/Bill/Detail/23?Root=HB389'>HB 389. 418 that extends the real estate commission to June 30, 2008, href='/basis/Bill/Detail/23?Root=HB418'>CSHB 418, Version D. Detail/23?Root=HB509'>CSHB 509, Version I, on behalf of href='/basis/Bill/Detail/23?Root=HB509'>HB 509. href='/basis/Bill/Detail/23?Root=HB509'>HB 509, with some href='/basis/Bill/Detail/23?Root=HB509'>HB 509. href='/basis/Bill/Detail/23?Root=HB509'>HB 509 and sought href='/basis/Bill/Detail/23?Root=HB509'>HB 509 and questioned the 389-DEFERRED DEPOSIT ADVANCES (PAYDAY LOANS) href='/basis/Bill/Detail/23?Root=HB389'>HB 389 was sponsored by href='/basis/Bill/Detail/23?Root=HB389'>HB 389. He said Mr. Sniffen's though he appreciated the work by the Department HB 389 href='/basis/Bill/Detail/23?Root=HB389'>HB 389 in its 389 and utility rates. The organization is often href='/basis/Bill/Detail/23?Root=HB389'>HB 389. She href='/basis/Bill/Detail/23?Root=HB389'>HB 389 and is 26,000 loans might only represent 2,000 borrowers. When this is tail/23?Root=HB389'>HB 389 as it was introduced. She HB 389 there's any 36 percent cap that has been recommended. In addition, she has He said it He noted that Ms. Fink had provided correspondence from href='/basis/Bill/Detail/23?Root=HB389'>CSHB 389 [the undated, 389(L&C) was reported from the House Labor and Commerce 418-EXTEND REAL ESTATE COMMISSION 418 was sponsored by the House Labor and Commerce page 23, a subsection said "a certificate of 418. 418 as far as the extension of the real estate but noted that it's an href='/basis/Bill/Detail/23?Root=HB418'>CSHB 418, Version 23- Root=HB418'>CSHB 418(L&C) was reported from the House 509-ALASKA GAMING COMMISSION 509 on behalf of Representative Kott, sponsor. She raffles, lotteries, pull-tab games, l/Detail/23?Root=HB509'>HB 509 is to put the regulatory It only gives the commission 509. He felt the bill was overdue, since think you're in href='/basis/Bill/Detail/23?Root=HB509'>HB 509 with href='/basis/Bill/Detail/23?Root=HB509'>HB 509. He opined responded that he didn't believe a five-member quorum and said that's fine. and questioned the reason for and the intent of the Thus it would say He to "three" "two" and further The rest of the sentence would be deleted. href='/basis/Bill/Detail/23?Root=HB509'>CSHB 509 [Version 23- il/23?Root=HB509'>CSHB 509(L&C) was reported from the s"> id="docLink">Open document in new windowX ght:100%;min-height:600px" id="docFrame"> width="105" height="107" alt="The Seal of the State of Alaska"> eg.gov/basis/btmf_login.asp?session=33">track bills, locate and contact your legislators, and access committee information. Questions? Try our help wizard or call 907-465-4648.

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