Legislature(2021 - 2022)GRUENBERG 120
04/09/2021 08:00 AM House LABOR & COMMERCE
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| Audio | Topic |
|---|---|
| Start | |
| HB61 | |
| HB90 | |
| HB110 | |
| Occupational Safety & Health Review Board | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 110 | TELECONFERENCED | |
| += | HB 146 | TELECONFERENCED | |
| *+ | HB 61 | TELECONFERENCED | |
| *+ | HB 90 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
ALASKA STATE LEGISLATURE
HOUSE LABOR AND COMMERCE STANDING COMMITTEE
April 9, 2021
8:05 a.m.
DRAFT
MEMBERS PRESENT
Representative Zack Fields, Co-Chair
Representative Ivy Spohnholz, Co-Chair
Representative Calvin Schrage
Representative Liz Snyder (via teleconference)
Representative David Nelson
Representative James Kaufman
Representative Ken McCarty
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
HOUSE BILL NO. 61
"An Act relating to commercial interior designers and commercial
interior design; establishing registration and other
requirements for the practice of professional commercial
interior design; relating to the State Board of Registration for
Architects, Engineers, and Land Surveyors; relating to liens for
labor or materials furnished; relating to the procurement of
commercial interior design services; and providing for an
effective date."
- HEARD & HELD
HOUSE BILL NO. 90
"An Act relating to rental vehicles; relating to vehicle rental
networks; relating to liability for vehicle rental taxes; and
providing for an effective date."
- HEARD & HELD
HOUSE BILL NO. 110
"An Act raising the minimum age to purchase, sell, exchange, or
possess tobacco, a product containing nicotine, or an electronic
smoking product; relating to transporting tobacco, a product
containing nicotine, or an electronic smoking product; relating
to the taxation of electronic smoking products; and providing
for an effective date."
- MOVED CSHB 110(L&C) OUT OF COMMITTEE
CONFIRMATION HEARING(S):
Board of Social Work Examiners
Mindy Swisher - Palmer
- CONFIRMATION(S) ADVANCED
Alcoholic Beverage Control Board
John Cox - Anchor Point
- CONFIRMATION(S) ADVANCED
Alaska Labor Relations Agency
Patty Burley - Soldotna
Johnny Dewitt - Juneau
Justin Mack - Anchorage
- CONFIRMATION(S) ADVANCED
Alaska State Board of Public Accountancy
Rachel Hanke - Fairbanks
Lance Johnson - Anchorage
Donald Vieira - Palmer
- CONFIRMATION(S) ADVANCED
Alaska Workers' Compensation Board
Michael Dennis - Anchorage
Anthony Ladd - Anchorage
Jason Motyka - Anchorage
Nancy Shaw - Anchorage
Robert Weel - Anchorage
Lake Williams - Fairbanks
- CONFIRMATION(S) ADVANCED
Board of Chiropractic Examiners
Tim Kanady - Anchorage
John Loyd - Anchorage
- CONFIRMATION(S) ADVANCED
Board of Massage Therapists
Kristin Tri - Eagle River
- CONFIRMATION(S) ADVANCED
Board of Nursing
Lena Lafferty - Anchorage
Wendy Monrad - Anchorage
Michael Wilcher - North Pole
- CONFIRMATION(S) ADVANCED
Board of Pharmacy
Richard Holt - Anchorage
- CONFIRMATION(S) ADVANCED
Board of Veterinary Examiners
Dr. Denise Albert - Denali
- CONFIRMATION(S) ADVANCED
Occupational Safety & Health Review Board
John Stallone - Anchorage
- CONFIRMATION(S) ADVANCED
PREVIOUS COMMITTEE ACTION
BILL: HB 61
SHORT TITLE: REGISTER COMMERCIAL INTERIOR DESIGNERS
SPONSOR(s): REPRESENTATIVE(s) CLAMAN
02/18/21 (H) PREFILE RELEASED 1/15/21
02/18/21 (H) READ THE FIRST TIME - REFERRALS
02/18/21 (H) L&C, FIN
04/09/21 (H) L&C AT 8:00 AM GRUENBERG 120
BILL: HB 90
SHORT TITLE: VEHICLE RENTALS & VEHICLE RENTAL NETWORKS
SPONSOR(s): REPRESENTATIVE(s) WOOL
02/18/21 (H) READ THE FIRST TIME - REFERRALS
02/18/21 (H) L&C, FIN
04/09/21 (H) L&C AT 8:00 AM GRUENBERG 120
BILL: HB 110
SHORT TITLE: AGE FOR NICOTINE/E-CIG; TAX E-CIG.
SPONSOR(s): REPRESENTATIVE(s) HANNAN
02/24/21 (H) READ THE FIRST TIME - REFERRALS
02/24/21 (H) CRA, JUD
03/17/21 (H) CRA & JUD REFERRALS REMOVED
03/17/21 (H) L&C & FIN REFERRALS ADDED
03/17/21 (H) BILL REPRINTED
04/05/21 (H) L&C AT 3:15 PM BARNES 124
04/05/21 (H) Heard & Held
04/05/21 (H) MINUTE(L&C)
04/09/21 (H) L&C AT 8:00 AM GRUENBERG 120
WITNESS REGISTER
REPRESENTATIVE MATT CLAMAN
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: As prime sponsor, introduced HB 61.
JOEY BOSWORTH, Staff
Representative Matt Claman
Juneau, Alaska
POSITION STATEMENT: Detailed the sectional analysis for HB 61
on behalf of Representative Claman, prime sponsor.
DANA NUNN, Interior Design Director
Bettisworth North Architects and Planners
Anchorage, Alaska
POSITION STATEMENT: Testified in support of HB 61.
TOM BANKS, Chief Executive Officer
Council for Interior Design Qualification
Alexandria, Virginia
POSITION STATEMENT: Testified in support of HB 61.
REPRESENTATIVE ADAM WOOL
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: As prime sponsor, introduced HB 90.
ASHLEY CARRICK, Staff
Representative Adam Wool
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Presented a PowerPoint during the hearing
on HB 90 on behalf of Representative Wool, prime sponsor.
NICOLE REYNOLDS, Deputy Director
Tax Division
Department of Revenue
Juneau, Alaska
POSITION STATEMENT: Provided information and answered questions
during the hearing on HB 90.
SABRINA COMBS
Palmer, Alaska
POSITION STATEMENT: Testified in support of HB 110.
ALYSSA KEILL
Fairbanks, Alaska
POSITION STATEMENT: Testified in support of HB 110.
DR. MELINDA RATHKOPF
Eagle River, Alaska
POSITION STATEMENT: Testified in support of HB 110.
SHAUN D'SYLVA, Member
Alaska Smoke Free Trade Association
Seattle, Washington
POSITION STATEMENT: Testified in opposition to HB 110.
MIKE COONS
Palmer, Alaska
POSITION STATEMENT: Testified in opposition to HB 110.
PATTY OWEN
Alaska Public Health Association
Juneau, Alaska
POSITION STATEMENT: Testified in support of HB 110.
JOHNA BEECH
Kenai, Alaska
POSITION STATEMENT: Testified in support of HB 110.
ROBIN MINARD, Chief Communications Officer
Mat-Su Health Foundation
Wasilla, Alaska
POSITION STATEMENT: Testified in support of HB 110.
SARAH EATON
Wasilla, Alaska
POSITION STATEMENT: Testified in opposition to HB 110.
JESSI WALTON
Fairbanks, Alaska
POSITION STATEMENT: Testified in opposition to HB 110.
KRISTIN GEORGE
Anchorage, Alaska
POSITION STATEMENT: Testified in support of HB 110.
CARRIE NYSEEN, Senior Director of Advocacy
American Lung Association
Vancouver, Washington
POSITION STATEMENT: Testified in support of HB 110.
JAMIE MORGAN
American Heart Association
Sacramento, California
POSITION STATEMENT: Testified in support of HB 110.
ALEX MCDONALD
Fairbanks, Alaska
POSITION STATEMENT: Testified in opposition to HB 110.
REPRESENTATIVE SARA HANNAN
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: As prime sponsor, provided information and
answered questions during the hearing on HB 110.
JOE DARNELL, Chief Investigator
Tobacco Enforcement and Youth Education Program
Division of Behavioral Health
Department of Health and Social Services
Anchorage, Alaska
POSITION STATEMENT: Answered questions during the hearing of HB
110.
STEPHANIE ANDREW, Staff
Representative Sara Hannan
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Answered questions during the hearing on HB
110 on behalf of Representative Hannan, prime sponsor.
ACTION NARRATIVE
8:05:33 AM
CO-CHAIR SPOHNHOLZ called the House Labor and Commerce Standing
Committee meeting to order at 8:05 a.m. Representatives
Spohnholz, Schrage, Nelson, and Snyder (via teleconference) were
present at the call to order. Representatives Fields, McCarty,
and Kaufman arrived as the meeting was in progress.
HB 61-REGISTER COMMERCIAL INTERIOR DESIGNERS
8:06:38 AM
CO-CHAIR SPOHNHOLZ announced that the first order of business
would be HOUSE BILL NO. 61, "An Act relating to commercial
interior designers and commercial interior design; establishing
registration and other requirements for the practice of
professional commercial interior design; relating to the State
Board of Registration for Architects, Engineers, and Land
Surveyors; relating to liens for labor or materials furnished;
relating to the procurement of commercial interior design
services; and providing for an effective date."
8:07:05 AM
REPRESENTATIVE MATT CLAMAN, Alaska State Legislature, as prime
sponsor, introduced HB 61. He said the proposed legislation
would change the professional licensing statute to recognize the
expertise of certified professional interior designers who have
passed the National Council of Interior Design Qualification
(NCIDQ), a three-part, 11-hour exam created to identify interior
design professionals who have the skills and experience
necessary to take on additional responsibility. He said the
test is designed to assess the competency of candidates to
protect the public through design elements such as fire safety,
Americans with Disabilities Act of 1990 (ADA) compliance,
emergency egress, and material flammability. He said that in
order to be eligible to take the NCIDQ exam one must have a
degree from an accredited institution along with a minimum of 60
credit hours of postsecondary interior design coursework. He
noted that there are no state licenses in Alaska for the
profession of interior design, and one consequence of that is
the absence of access to a construction stamp permitting
interior designers to submit their work for permitting; this
would be changed under HB 61. The practice of commercial
interior design described in the text of the proposed
legislation is specific and limited to nonstructural, or
nonloadbearing, interior design elements; interior planning for
occupant loads and exiting; and specification of code-compliant
interior finishes, furnishings, and fixtures. The scope of
commercial interior design practice described in HB 61, he said,
is well within the competencies of interior designers as
determined by education, training, and examination.
REPRESENTATIVE CLAMAN said HB 61 would bring economic benefits
by increasing professional employment opportunities, providing
incentive to hire Alaskans for professional interior design,
attracting high-quality design talent to the state, encouraging
small business and unrestrained trade, and expanding consumer
choices for qualified design professionals. He noted that HB 61
would not change the requirements or daily practice for any
other professional in design or construction including
architects, engineers, contractors, tradespeople, decorators, or
residential designers. Intended to be cost neutral to the
state, Representative Claman explained, HB 61 would be self-
funded through the Alaska State Board of Registration for
Architects, Engineers, and Land Surveyors through application,
registration, and renewal fees. As shown in the attached fiscal
note, he said, passage of HB 61 would allow the board to hire an
additional occupational license examiner, and the annual cost
per licensee would be an additional $30.
8:11:41 AM
CO-CHAIR SPOHNHOLZ noted 46 sections in the proposed legislation
and told Mr. Bosworth he could summarize the sectional analysis.
8:11:57 AM
JOEY BOSWORTH, Staff, Representative Matt Claman, summarized the
sectional analysis. He said that Sections 1-4 relate to
establishing the new terms in the AELS Licensing Board. Section
5 would add two seats to the board, one for a commercial
interior designer and an additional engineering seat, creating
separate seats for electrical and mechanical engineering, which
currently share a seat. He said Sections 6-9 would establish
commercial interior design as a certification tracked by the
State of Alaska. Sections 8-14 would establish the examination
requirements for registration as a commercial interior designer.
Section 15, he said, would establish commercial interior design
as a seal to be affixed to construction plans; Sections 16-22
would establish commercial interior design terminology in
relation to the registration of corporations, limited liability
partnerships, and limited liability companies. He said Sections
23-28 would protect the term "commercial interior design" from
use by those not registered, and Section 29 would relate to
exemptions. Sections 30-32 would establish definitions for
terms used in the statute, and Sections 33-42 would establish
"commercial interior design" as a term in legal context relating
to statute. He said Sections 43-46 would establish the
effective date and grace period for registration.
8:14:14 AM
REPRESENTATIVE KAUFMAN noted that interior designers' work would
include certain elements previously done only by architects. He
asked whether the same liability requirements would apply.
8:15:09 AM
MR. BOSWORTH deferred to Ms. Nunn.
8:15:44 AM
DANA NUNN, Interior Design Director, Bettisworth North
Architects and Planners, informed the committee that she is a
National Council for Interior Design Qualification (NCIDQ)
certified interior designer. She said she works in environments
impacting the public including daycares, schools, hospitals,
senior living centers, museums, performing arts facilities,
courthouses, churches, hotels, and athletic facilities. She
described her work as providing standalone interior design
services as well as serving as a project manager for larger
projects, coordinating the work of multiple disciplines to
achieve successful, safe, and code-compliant projects. She said
HB 61 would provide another measure of public safety,
protection, and risk mitigation in commercial buildings and
would expand the choice of qualified professionals, increase
professional employment opportunities, attract high quality
talent, and encourage students who must leave Alaska to achieve
their degree to return to Alaska for career opportunities. She
described interior designers as qualified and ready to create
safe, sustainable, accessible, and efficient interior
environments in compliance with law and regulation. Interior
designers in Alaska, she said, are already independently
practicing these activities in states that recognize the
profession.
8:17:58 AM
CO-CHAIR SPOHNHOLZ asked Ms. Nunn whether she would like to
address Representative Kaufman's question about liability.
MS. NUNN replied that under HB 61 interior design would be added
to the qualifications and requirements already in statute.
8:18:40 AM
TOM BANKS, Chief Executive Officer, Council for Interior Design
Qualification, testified in support of HB 61, which he described
as recognizing qualified interior designers. He explained that
the Council for Interior Design Qualification (CIDQ) is the
premier credentialling organization for interior design
professionals, developing and administering the three-part NCIDQ
exam required for regulated jurisdictional certification in the
United States and Canada. He said NCIDQ-certified interior
designers are required to undergo formal education and thousands
of hours of supervised experience in order to sit for the exam,
which tests knowledge of core competencies required for
professional practice including code-based environments such as
hospitals, office buildings, and schools. He said the exam has
frequently been cited and mischaracterized by those in
opposition to HB 61, specifically citing an unsupported claim
that says two-thirds of the test may be passed with a score of
50 percent, and could include zero correct answers on the
subject of building codes and standards. He said that none of
these assertions are true, with building and safety code
knowledge assessed in multiple sections of the test. An
analysis of each question on the exam, he explained, found that
it would be impossible to get all questions pertaining to those
topics wrong and still pass the exam. He said CIDQ supports HB
61, along with all other proposed legislation that would allow
certified interior designers to practice to the full extent of
their capabilities as evidenced by education, experience, and
examination. He noted that the public benefits when that
happens.
8:21:18 AM
REPRESENTATIVE KAUFMAN asked Mr. Banks about the liability
obligations for interior designers relative to architects.
MR. BANKS replied that, as he was not an expert on the bill
language, he would defer to the bill sponsor.
MR. BOSWORTH told Representative Kaufman that he would research
his question.
CO-CHAIR SPOHNHOLZ said that the committee would wait for an
answer to the liability question before taking formal action.
[HB 61 was held over.]
HB 90-VEHICLE RENTALS & VEHICLE RENTAL NETWORKS
8:22:24 AM
CO-CHAIR SPOHNHOLZ announced that the next order of business
would be HOUSE BILL NO. 90, "An Act relating to rental vehicles;
relating to vehicle rental networks; relating to liability for
vehicle rental taxes; and providing for an effective date."
8:22:48 AM
REPRESENTATIVE ADAM WOOL, Alaska State Legislature, introduced
HB 90 as prime sponsor. He described peer-to-peer car rental as
a platform through which an individual can rent out their car to
someone without using a traditional car rental service. He said
Alaska currently has a statewide vehicle rental tax of 10
percent, and the municipality of Anchorage has a car rental tax
of 8 percent; therefore, renting a car at the airport in
Anchorage carries a total tax of 18 percent. Peer-to-peer
rental, he said, is taxed in 29 other states but not in Alaska.
He said the municipality of Anchorage recently passed an
ordinance to tax transactions on peer-to-peer car rental
platforms at the same tax rate as traditional car rental
companies. He said that in a typical year, vehicle rental tax
revenues total approximately $10 million, and that it's
estimated that business conducted through the peer-to-peer
platforms could amount to as much as 20 to 30 percent of the
rental market. He stated that the tax would be paid by the
renter, collected through the application platform, and remitted
by the company, in the same manner as practiced by rideshare
services such as Uber or Lyft.
8:27:45 AM
ASHLEY CARRICK, Staff, Representative Adam Wool, Alaska State
Legislature, on behalf of Representative Wool, prime sponsor,
presented a PowerPoint titled, "HB 90: Private Vehicle Rental
Networks." She presented slide 2, "Definitions," which read as
follows [original punctuation provided]:
Vehicle Rental Business:
Traditional car rental Examples: Alamo, Enterprise,
Thrifty, etc.
Vehicle Rental Network (AKA Peer-to-Peer):
Peer-to-Peer and Traditional car rental Examples:
Turo, Getaround, Enterprise CarShare
MS. CARRICK presented slide 3, "States where DOR have determined
Vehicle Rental Networks to be Taxable," which highlighted
Alaska, Arizona, Arkansas, Colorado, Florida, Hawaii, Idaho,
Illinois, Maryland, Mississippi, Montana, Nebraska, North
Dakota, Oklahoma, and Wyoming. The slide read as follows
[original punctuation provided]:
? 16 States including Alaska have a Department of
Revenue with a position supporting Vehicle Rental
Network Taxation
? Anchorage Ordinance 2020-55 has begun to collect tax
on P2P car rental:
logicalnot 8% tax on BOTH vehicle rentals and P2P
logicalnot Adds a new definition for hosting platform
MS. CARRICK presented slide 4, "States where Vehicle Rental
Networks are Collecting Tax," which read as follows [original
punctuation provided]:
? 29 States currently apply rental taxes to vehicle
rental networks
? Alaska's current tax rates:
logicalnot 10% for motor vehicles
logicalnot 3% for recreational vehicles
? Historically, vehicle rental tax revenue has been
around $10 million, which could increase 10-30% with
the addition of vehicle rental networks
MS. CARRICK presented slide 5, "Different Standards for the Same
Business mode:," which read as follows [original punctuation
provided]:
logicalnotTraditional car rental and peer-to-peer networks have
the same business model with different tax burdens
logicalnotThe business model of P2P aligns with other app-based
industries such as AirBnb and Uber
logicalnotP2P networks are clearly operating in Alaska, despite
having headquarters in other States
MS. CARRICK noted that the activities of renting vehicles,
providing insurance protection, selling ancillary products such
as car seats or ski racks, and offering digital technology and
mobile apps are activities that traditional car rental
businesses and peer-to-peer vehicle rental networks have in
common. She then presented slide 6, "Testimony Supporting HB
90," which read as follows [original punctuation provided]:
"If you're Hertz, we know about you. You register with
us and pay your taxes. Turo is invisible to us because
we don't know the names, let alone contact
information, for people renting the cars... We're
losing something, but it's hard to tell how much."
-State of Alaska Department of Revenue
8:33:21 AM
REPRESENTATIVE SCHRAGE said that the objection he's heard is
that a person is not a rental company; hosting your car for
rental is a different business model, and taxing an individual
at the same rate as a rental car company doesn't actually level
the playing field. He said that he's also heard the objection
that there hasn't been stakeholder engagement in this proposed
legislation. He asked Representative Wool whether he's spoken
with Turo or others, and whether there has been discussion of
compromise or amendments.
8:34:34 AM
REPRESENTATIVE WOOL responded that he's spoken with Turo, which
obviously doesn't want the tax because it currently has a
competitive advantage because anyone using its platform doesn't
pay tax, making it cheaper to rent cars. Turo naturally would
like to keep that advantage, he said, adding that Turo doesn't
have brick and mortar stores or traditional employees.
Representative Wool noted that Turo representatives engage in
the legislative process, advocating for a lower tax rate than
proposed, and he expressed that he doesn't see any logic for
allowing Turo a lower tax rate. He stressed that the consumer
renting the car would be paying the tax and noted that Airbnb
pays the same bed tax as a hotel. He said that the same law
affecting peer-to-peer accommodations should apply to peer-to-
peer vehicle sharing.
8:37:33 AM
REPRESENTATIVE SNYDER asked Representative Wool to elaborate on
the competitive differences between peer-to-peer and traditional
car rental companies.
REPRESENTATIVE WOOL replied that there could be a wider range of
vehicles offered in a peer-to-peer car sharing application than
by a traditional car rental business, and that prices seem to be
similar.
8:40:04 AM
REPRESENTATIVE MCCARTY asked whether Turo has a corporate
license in Alaska.
MS. CARRICK replied that Turo is located in California and does
not have a location or business license in Alaska.
REPRESENTATIVE MCCARTY summed up his understanding of what Turo
is and asked whether Airbnb or Uber have business licenses in
Alaska.
REPRESENTATIVE WOOL explained that the business model of peer-
to-peer sharing applications depends on calling their providers
"independent contractors." He said that the business avoids
labor obligations and is able to say that only independent
contractors operate in Alaska, but the business doesn't. He
said that owners sharing their car through Turo, or renting a
house through Airbnb, generally don't disclose that they're
operating as a business.
8:43:20 AM
CO-CHAIR SPOHNHOLZ passed the gavel to Co-Chair Fields.
8:43:31 AM
REPRESENTATIVE MCCARTY stated his support for HB 90.
8:44:32 AM
REPRESENTATIVE KAUFMAN asked whether the names of people renting
cars is typically reported to the Department of Revenue (DOR).
MS. CARRICK responded that the quote on the slide referred to
people who are making their vehicle available for rent,
otherwise known as "hosting." She said the state has asked Turo
for information on how many are hosting, who they are, and who
DOR could pursue to collect vehicle rental tax; the companies,
she said, declined to provide the information.
REPRESENTATIVE KAUFMAN agreed that the people paying to rent a
car would be paying the tax and asked whether the service is
"more biased towards individuals who live near each other,
renting cars." He said that he is trying to "play devil's
advocate" and find some way in which a peer-to-peer car rental
is different from a traditional car rental.
8:47:10 AM
REPRESENTATIVE WOOL, in his response, surmised that
Representative Kaufman's question was whether there is something
demographically different about a peer-to-peer car rental. He
said that fewer people rent from Turo than traditional car
rental outlets, but that the trend is changing nationwide,
especially due to many people having more than one car. He
added that he knows individuals who have bought new cars
specifically to host them through an app such as Turo. He noted
that the law currently says that an individual providing a car
for another to rent is required to pay car rental tax; however,
there is no way to learn who those individuals are. Under HB
90, he said, application platforms like Turo would be required
to collect and remit sales tax to the state.
8:49:52 AM
CO-CHAIR FIELDS noted that Airbnb pays bed taxes and said, "It's
totally insulting that we would let a Silicon Valley-based
company pay a lower tax burden than local companies. It makes
no sense. They're an international car rental company that
aggregates products from multiple people." He characterized
companies engaging in this practice as engaging in a form of tax
evasion.
8:50:28 AM
REPRESENTATIVE KAUFMAN noted that Amazon doesn't have a physical
presence, but is doing business, in Alaska. He mused about
every business that provides a virtual interface owing a tax.
REPRESENTATIVE WOOL pointed out that Amazon pays local and state
sales taxes in states where there is no physical store. He
suggested that one could argue that companies not physically
operating in the state should pay more taxes because they're not
paying property taxes, rent, or local employees. He noted that
there is no statewide sales tax in Alaska, so certain companies
have a competitive advantage.
8:53:15 AM
MS. CARRICK recalled South Dakota v. Wayfair, Inc., No. 17-494
(U.S. Jun. 21, 2018), which set the precedent that internet
companies are liable for state and local taxes.
8:53:40 AM
CO-CHAIR FIELDS explained to committee members that South Dakota
v. Wayfair, Inc. was a U.S. Supreme Court decision in 2018 that
affirmed the right of states to collect sales tax for online
transactions.
8:53:50 AM
REPRESENTATIVE SCHRAGE asked whether Turo provides an IRS Form
1099 to individuals who host their cars.
REPRESENTATIVE WOOL replied that the company does not provide
such tax forms, which goes to the heart of the problem. He said
he doesn't know whether an individual claims associated rental
income, comparing the situation to a restaurant server claiming
tips.
8:54:51 AM
REPRESENTATIVE NELSON introduced a hypothetical situation in
which an individual allowed another person to rent their car
while the individual was out of state. He asked whether HB 90
would apply in that situation.
REPRESENTATIVE WOOL replied, "This bill deals with
transportation network companies." He said that, technically,
those who rent their vehicles out are liable for vehicle rental
tax. The helpfulness of HB 90, he said, would be due to the
fact that most people who rent vehicles do so through a more
centralized organization such as a car rental company or a
platform such as Turo.
REPRESENTATIVE NELSON expressed understanding that several
online car sharing platforms such as Turo are being used within
Alaska; the platforms are not paying car rental taxes; and
someone who privately rents a car to a friend would be in
violation of the law requiring payments of car rental tax.
REPRESENTATIVE WOOL responded:
This law does not create the vehicle rental tax. This
just says that if you're a transportation - a peer-to-
peer rental company then you're responsible to remit
the tax. If you rent a car to someone else you
already owe that tax, and if you don't pay it, you
already are in violation, regardless of if this bill
passes. It's already in state law: there is a vehicle
rental tax.
REPRESENTATIVE WOOL said that the state would not pursue tax
remittance from an individual periodically renting out their car
privately, but peer-to-peer businesses such as Turo are doing a
high value of business. He stressed that HB 90 would require
Turo to collect and remit car rental taxes.
8:58:23 AM
CO-CHAIR SPOHNHOLZ asked Representative Wool to confirm that HB
90 would not be creating a new tax, but a mechanism for ensuring
existing law would be enforced.
REPRESENTATIVE WOOL confirmed that the proposed legislation
would not be creating a new tax, but would mandate that the
business operating the peer-to-peer platform would be required
to collect the car rental tax and remit it to the state.
8:59:05 AM
REPRESENTATIVE NELSON asked whether the quote on slide 6 in the
PowerPoint presentation is due to Turo not having an Alaska
business license.
MS. CARRICK replied that the proposed legislation would add
clarity to the statute. She said that according to DOR, Turo
and other peer-to-peer applications are liable for taxes, which
the department has tried to collect. She explained that the
quote referred to the state's previous attempts to collect car
rental tax.
9:00:41 AM
REPRESENTATIVE KAUFMAN expressed interest in hearing testimony
from TechNet.
9:01:32 AM
CO-CHAIR FIELDS noted that the committee would hear public
testimony and said, "I think that's a great idea. Let's reach
out to TechNet and let them explain why they shouldn't pay
taxes, but Alaskans should." He then opined that it "seems
pretty straightforward" that companies such as Turo are engaging
in tax evasion, and he asked Ms. Reynolds to what extent the
Department of Revenue has engaged with the Office of the
Attorney General to enforce tax payment.
9:01:54 AM
NICOLE REYNOLDS, Deputy Director, Tax Division, Department of
Revenue, responded that there was a case in Alaska Superior
Court several years ago during which the State of Alaska had
tried to subpoena Turo's records; however, the case was
dismissed.
9:02:45 AM
CO-CHAIR FIELDS announced that HB 90 was held over.
HB 110-AGE FOR NICOTINE/E-CIG; TAX E-CIG.
9:03:08 AM
CO-CHAIR FIELDS announced that the next order of business would
be HOUSE BILL NO. 110, "An Act raising the minimum age to
purchase, sell, exchange, or possess tobacco, a product
containing nicotine, or an electronic smoking product; relating
to transporting tobacco, a product containing nicotine, or an
electronic smoking product; relating to the taxation of
electronic smoking products; and providing for an effective
date."
9:03:27 AM
CO-CHAIR SPOHNHOLZ moved to adopt the committee substitute (CS)
for HB 110, Version 32-LS0446\I, Nauman, 4/8/21, as the working
document. There being no objection, Version I was before the
committee.
9:03:47 AM
CO-CHAIR FIELDS opened public testimony on CSHB 110(L&C).
9:04:09 AM
SABRINA COMBS testified in support of HB 110. She expressed
alarm at how common vaping has become and how the products are
marketed toward a younger demographic. She said e-cigarettes
should be treated and taxed as regular tobacco products and more
difficult to purchase. She said e-cigarettes are often labeled
as cessation devices, but are having the opposite effect among
teens.
9:05:29 AM
ALYSSA KEILL testified in support of HB 110 and informed the
committee that she is a swim coach of middle school-aged kids.
She said the kids have told her they know students who have
tried vaping and said there is confusion stemming from
misleading messages surrounding the safety of vaping compared to
smoking cigarettes. She said her swimmers most commonly express
knowledge of disposable vaping products that come in different
flavors.
9:07:35 AM
DR. MELINDA RATHKOPF testified in support of HB 110. She said
she has been a practicing physician for over 20 years, and she
provided statistics showing the increase of e-cigarette use
among teens. She expressed that addiction happens more quickly
in children than adults and is much harder to overcome, and
leads to mood disorders, attention difficulty, and increased
risk of addiction to other substances. She stated that raising
the tobacco purchasing age to 21 would be an important part of
reducing tobacco use; in 2015, she said, the Institute of
Medicine concluded that raising the minimum age for tobacco
sales nationwide would reduce tobacco initiation, particularly
among adolescents. She said that three-fourths of adults over
the age of 21 support raising the minimum age for purchase along
with increasing the price through higher taxes.
9:11:40 AM
SHAUN D'SYLVA, Member, Alaska Smoke Free Trade Association,
testified in opposition to HB 110. He said that the latest
tobacco survey done by the Centers for Disease Control and
Prevention (CDC) showed that 13.3 percent of middle and high
school students had tried e-cigarettes within the past 30 days.
He expressed that those in favor of increased regulations on
vaping are using "old" data, with the most current data showing
use having dropped significantly. He expressed that the
proposed wholesale tax of 75 percent could lead to an increase
in the smoking rate, saying that studies have shown that, as e-
cigarette taxes went up, people moved to smoking regular
cigarettes.
9:15:08 AM
MIKE COONS testified in opposition to HB 110 and said the
country has a problem deciding at what age a person becomes an
adult. He said that at age 18 a person can vote, be subject to
criminal prosecution as an adult, and be drafted into the
military or join without parental consent, but cannot own a
revolver, drink alcohol, or buy cigarettes. He listed several
hypotheticals concerning the age a person should be when making
decisions.
9:17:46 AM
PATTY OWEN, Alaska Public Health Association, testified in
support of HB 110. She asked committee members to consider
surveys done on Alaska's youth, as opposed to national data,
regarding e-cigarette use, pointing out that in 2019, 46 percent
of high school students had tried e-cigarettes. Current use of
the product among high school students, she said, is 26 percent.
She expressed concern about the health effects of vaping and of
the practice of marketing directly to children.
9:20:21 AM
JOHNA BEECH testified in support of HB 110 and presented her
written testimony [included in the committee packet], which read
as follows [original punctuation provided]:
The FDA acknowledges e-cigarettes as tobacco products.
They should be taxed at the same rate as traditional
tobacco projects. At this time, in the state of
Alaska, E-cigarettes are not taxed at all. Also, the
entire product should be taxed, not just a portion of
it.
We have done so well in our advancement in our fight
against cancer; with early detection and prevention
being two major players in reducing death rates. Our
youth know that traditional tobacco is a bad deal. Yet
we see an increase in youth use of e-cigarettes. If we
can prevent our youth from using ecigarettes by taxing
the tobacco product, why wouldn't we do so?
Please support a strong e-cigarette tax to keep our
young people safe and healthy.
9:21:28 AM
ROBIN MINARD, Chief Communications Officer, Mat-Su Health
Foundation, testified in support of HB 110. She pointed out
that most tobacco use begins before age 18. Local and state-
level policies that increase the per-unit price of tobacco
products, create smoke-free environments, and restrict minors'
access to tobacco products, she said, have been shown to
contribute to the non-use of tobacco among youth. The vapor of
e-cigarettes, she said, while containing fewer carcinogenic
substances than cigarette smoke, cannot be regarded as simply
"harmless." She stated that peer-reviewed studies have found
that tobacco taxes increase the overall number of smokers who
quit, reduce the overall consumption of tobacco, and introduces
the possibility of cessation for those who continue to smoke; in
addition, those who don't smoke benefit from increased taxes by
experiencing reduced exposure to secondhand smoke and vapor.
9:23:45 AM
SARAH EATON testified in opposition to HB 110. She told the
committee that she has smoked since the age of 12 and has had
breast cancer, chronic obstructive pulmonary disorder (COPD),
and emphysema. She said she has tried many methods of cessation
before moving to vaping, using products from China that weren't
yet available in the United States. A year later, she said,
vaping products she characterized as "clean nicotine" began
being regulated in the United States. She said she has been
told that she no longer has COPD or emphysema, and that she
believes vaping saved her life.
9:27:16 AM
JESSI WALTON testified in opposition to HB 110. She said vaping
has saved her life and that military members should be able to
make their own decisions.
9:28:16 AM
KRISTIN GEORGE stated her support for HB 110.
9:28:40 AM
CARRIE NYSEEN, Senior Director of Advocacy, American Lung
Association, testified in support of HB 110, stating that
increasing prices is one of the best ways to decrease
consumption, encourage users to quit, and delay use in children.
She said that with the COVID-19 pandemic and record use of
vaping among children, now is the time to do anything possible
to discourage the use of products that compromise lung function.
She stated that the association between compromised lungs and
adverse COVID-19 outcomes is well known. She characterized HB
110 as a "good bill" and said it could be made better by
removing the youth possession and use penalties, expressing that
they're unlikely to reduce youth initiation and that research
suggests such laws are counterproductive. "Heating up toxic
chemicals and inhaling these toxins into the lungs is not
healthy," she said, adding that the chemicals can cause lung
disease while added flavorings cause inflammation. While some
of the flavorings are food additives, she said, they're designed
and approved to be ingested rather than inhaled. She pointed
out that manufacturers of vaping products have taken no steps to
have their products approved as smoking cessation devices.
9:30:57 AM
JAMIE MORGAN, American Heart Association, testified in support
of HB 110. She said tobacco use remains the leading cause of
preventable death in Alaska, costing the state $571 million in
direct health care costs and $261 million in lost productivity.
She said e-cigarettes are now the most commonly-used tobacco
products by youth and adolescents. She noted that e-cigarettes
increase the odds of stroke, heart attack, and coronary heart
disease, and research shows that vaping damages the function of
blood vessels, increasing arterial stiffness and blood vessel
damage similar to that found in the bodies of traditional
smokers. She explained that one vape pod can contain as much
nicotine as two to four packs of cigarettes, and that children
are vaping as much as four pods per day.
9:33:30 AM
ALEX MCDONALD testified in opposition to HB 110. He shared that
he watched his grandmother die of lung cancer from smoking and
has tried everything to quit his own addiction. He said he
switched to vaping in 2013 and has been tobacco-free ever since,
noting that he submitted an article that said vaping is more
effective than traditional nicotine replacement therapy in
cessation. He said getting people to stop smoking traditional
cigarettes would help the state's budget, and HB 110 would be
counterproductive to public health.
9:36:37 AM
CO-CHAIR FIELDS, after ascertaining that no one else wished to
testify, closed public testimony on HB 110.
9:36:58 AM
REPRESENTATIVE NELSON asked for an explanation for the increase
in age for tobacco sales.
9:37:15 AM
REPRESENTATIVE SARA HANNAN, Alaska State Legislature, as prime
sponsor, replied that the change in age is to comply with
federal law. She mentioned a 2019 executive order from
President Donald Trump mandating a minimum age of 21 as the age
of legal use.
REPRESENTATIVE NELSON asked Representative Hannan to clarify
whether the executive order required an individual to be 21 in
order to purchase the products, or to sell them.
REPRESENTATIVE HANNAN replied that the age for selling tobacco
products is up to each state.
REPRESENTATIVE NELSON surmised that it would be up to the
legislature to increase the age required for selling tobacco.
REPRESENTATIVE HANNAN responded that HB 110 would bring Alaska's
statutes into compliance with federal age of use requirements.
REPRESENTATIVE NELSON asked, "But not the age to sell?"
REPRESENTATIVE HANNAN replied, "Correct."
REPRESENTATIVE NELSON asked whether anyone knows what the price
of an e-cigarette would be if HB 110 were to pass.
REPRESENTATIVE HANNAN said that she doesn't know, and explained
that HB 110 would add the current tobacco tax onto the entire
category of products.
9:39:37 AM
CO-CHAIR SPOHNHOLZ pointed out that in Anchorage one must be 21
to either purchase or sell tobacco products. She referred to an
earlier mention of the military and said that it had been her
understanding that the military doesn't allow the sale of
tobacco on military bases to anyone under 21.
REPRESENTATIVE HANNAN replied that as of August 1, 2020, the
U.S. Department of Defense no longer sells any tobacco products
in its facilities.
9:41:06 AM
REPRESENTATIVE SNYDER stated her support of the proposed
legislation but said she wants to make sure she understands the
current costs of vaping products and cigarettes.
REPRESENTATIVE NELSON expressed the possibility of a return to
regular cigarettes if the price of e-cigarettes was much higher
in comparison.
REPRESENTATIVE HANNAN said she purchased an e-cigarette several
years prior in order to figure out what exactly it was. She
said the particular product is not sold in brick-and-mortar
stores, noting that HB 110 would ban Internet sales of tobacco
products, thereby pushing people to purchase in person. She
said she did not delve into prices beyond taxes.
REPRESENTATIVE NELSON asked whether HB 110 would include
products such as the transportation mechanism for the vape.
REPRESENTATIVE HANNAN replied, "Correct."
REPRESENTATIVE NELSON asked whether HB 110 would include pipes
for regular tobacco.
REPRESENTATIVE HANNAN replied, "No."
9:44:06 AM
REPRESENTATIVE KAUFMAN, noting that HB 110 would eliminate
Internet sales of vaping products, said he pictured a situation
in which someone doesn't have close, physical access to an
outlet.
REPRESENTATIVE HANNAN responded that a person living in a
community without a tobacco store could order directly from a
store, which is different from simply ordering from a website.
A case of tobacco shipped to Dillingham could involve age
verification, she said.
9:46:00 AM
CO-CHAIR SPOHNHOLZ recalled testimony suggesting that taxing e-
cigarette products could incentivize people to use traditional
tobacco use due to the cost. She pointed out that HB 110 would
bring the vaping mechanisms and liquid into the same tax
structure already applicable to tobacco. She noted that tobacco
was first taxed because it's dangerous; having an increased tax
on e-cigarettes would not force someone to use traditional
tobacco, she opined, because it's expensive, not necessarily
easier to use, and not safer. She noted that public health
experts have stated that one-third of youths are vaping, with a
70 percent increase of e-cigarette use between 2017 and 2018.
This is a grooming tool with no public health benefit, she said,
to get people into another addictive product.
9:47:49 AM
REPRESENTATIVE MCCARTY asked whether there are other products
for which purchase via the Internet has been banned.
REPRESENTATIVE HANNAN replied that she hasn't looked into it,
but that she believes alcohol is banned from being sold online
in Alaska.
CO-CHAIR FIELDS agreed.
9:48:36 AM
REPRESENTATIVE NELSON discussed the apparent disparity in cost
between regular tobacco products and e-cigarettes when some
municipalities already have a tax in place. He also asked
whether there is a reason why a tobacco pipe would not be taxed.
REPRESENTATIVE HANNAN replied that Section 22 addresses self-
contained and disposable units. "Juul is one," she said, "where
you can only use in a Juul device, Juul pods." She said the
goal of the section was to discourage the use of such devices.
9:50:48 AM
CO-CHAIR FIELDS pointed out that companies such as Juul market
to children.
9:51:12 AM
REPRESENTATIVE SCHRAGE said, "I believe in personal liberties
and the freedom to make bad choices." He opined that vape
options are less risky and less harmful than traditional
cigarettes and expressed that he recognizes there are some
health and societal consequences to e-cigarettes. He said that
he manages a tutoring program and has observed students leave
school to seek addiction treatment because they couldn't
maintain focus for an hour in class without vaping. He stated
his support for HB 110 and asked whether there could be a
staggered implementation to prevent workers who are under 21
from losing their jobs.
REPRESENTATIVE HANNAN replied that most of the punishment for
age violations fall on the business. She then deferred to Mr.
Darnell.
9:53:36 AM
JOE DARNELL, Chief Investigator, Tobacco Enforcement and Youth
Education Program, Division of Behavioral Health, Department of
Health and Social Services, told the committee that businesses
know the age requirement is forthcoming and are slowly starting
to integrate the expected requirements into their operations.
He alluded to a rollout similar to what was put into place when
Alaska moved to smoke-free workplaces.
REPRESENTATIVE SCHRAGE said he could see it causing hardship in
small communities.
9:55:15 AM
REPRESENTATIVE KAUFMAN expressed understanding that the tax rate
would apply to the device as well as to the liquid.
REPRESENTATIVE HANNAN responded, "Yes, currently it taxes
disposable electronic smoking products that contain vape."
REPRESENTATIVE KAUFMAN asked whether a standalone device would
be included in the tax.
9:56:20 AM
STEPHANIE ANDREW, Staff, Representative Sara Hannan, Alaska
State Legislature, replied, "My understanding is that in the new
definition, the cartridge would be taxed, but the device, if it
is not contained in a kit or all-in-one, that it would not be
taxed separately. So, it refers to the part of the device that
includes the nicotine."
9:56:40 AM
CO-CHAIR FIELDS expressed that if the devices were legitimately
used for smoking cessation, the proposed legislation would not
be considered. He stated that the body of evidence shows that
the devices are used to foster addiction in children. He then
read an excerpt from a letter from the Mat-Su Health Foundation
[included in the committee packet], which read as follows
[original punctuation provided]:
they are a grooming tool, grooming kids to accept,
like, and become dependent on smoking and nicotine.
Recent research indicates that adolescents and teens
who try e-cigs are much more likely than other youth
to progress to traditional cigarettes.
9:57:17 AM
CO-CHAIR SPOHNHOLZ moved to report CSHB 110, Version 32-
LS0466\I, Nauman, 4/8/21, from committee with individual
recommendations and the accompanying fiscal notes.
9:57:31 AM
REPRESENTATIVE NELSON objected, saying that he agrees that
smoking carries negative effects but that small business owners
might want to hire their own children who may be under 21.
9:58:15 AM
REPRESENTATIVE KAUFMAN asked whether Representative Nelson would
consider a conceptual amendment.
REPRESENTATIVE NELSON replied that a conceptual amendment is no
longer possible since the motion was already put forward.
9:58:37 AM
CO-CHAIR FIELDS asked Representative Hannan about the next
committee of referral.
REPRESENTATIVE HANNAN replied that the House Finance Committee
would next hear the proposed legislation.
CO-CHAIR FIELDS suggested that the House Finance Committee may
wish to amend HB 110.
9:59:13 AM
CO-CHAIR SPOHNHOLZ, pointing out that she may have misspoken
during her earlier motion, moved again to report CSHB 110,
Version 32-LS0466\I, Nauman, 4/8/21, from committee with
individual recommendations and the accompanying fiscal notes.
9:59:34 AM
CO-CHAIR FIELDS recognized Representative Nelson's earlier
objection.
9:59:39 AM
REPRESENTATIVE KAUFMAN said that there needs to be changes to HB
110 and that he has not decided how he will vote. He said he
will seek amendments.
10:00:05 AM
CO-CHAIR SPOHNHOLZ thanked Representative Hannan for introducing
HB 110 and noted that one of the reasons for the higher age
requirement for selling is to avoid youths selling the products
to their peers. She said that the same reasoning applies to the
statute that mandates an individual who sells alcohol products
be of legal drinking age.
10:00:47 AM
REPRESENTATIVE SNYDER pointed out that it would be helpful
during future hearings to state the cost of cigarettes more
precisely in comparison to vaping products.
10:01:37 AM
A roll call vote was taken. Representatives Schrage, Snyder,
Spohnholz, McCarty, and Fields voted in favor of reporting CSHB
110, Version 32-LS0466\I, Nauman, 4/8/21, from committee with
individual recommendations and the accompanying fiscal notes.
Representatives Kaufman and Nelson voted against it. Therefore,
by a vote of 5-2, CSHB 110(L&C) was reported out of the House
Labor and Commerce Standing Committee.
^CONFIRMATION HEARING(S):
CONFIRMATION HEARING(S):
^Board of Social Work Examiners
Board of Social Work Examiners
^Alcoholic Beverage Control Board
Alcoholic Beverage Control Board
^Alaska Labor Relations Agency
Alaska Labor Relations Agency
^Alaska State Board of Public Accountancy
Alaska State Board of Public Accountancy
^Alaska Workers' Compensation Board
Alaska Workers' Compensation Board
^Board of Chiropractic Examiners
Board of Chiropractic Examiners
^Board of Massage Therapists
Board of Massage Therapists
^Board of Nursing
Board of Nursing
^Board of Pharmacy
Board of Pharmacy
^Board of Veterinary Examiners
Board of Veterinary Examiners
^Occupational Safety & Health Review Board
Occupational Safety & Health Review Board
10:02:43 AM
CO-CHAIR FIELDS announced that the final order of business would
be confirmation hearings for the governor's appointees to the
Board of Social Work Examiners, the Alcoholic Beverage Control
Board, the Alaska Labor Relations Agency, the Alaska State Board
of Public Accountancy, the Alaska Workers' Compensation Board,
the Board of Chiropractic Examiners, the Board of Massage
Therapists, the Board of Nursing, the Board of Veterinary
Examiners, and the Occupational Safety & Health Review Board.
CO-CHAIR FIELDS announced that the House Labor and Commerce
Standing Committee had reviewed the qualifications of the
governor's appointees and recommends that the names be forwarded
to a joint session for consideration: Mindy Swisher for the
Board of Social Work Examiners; John Cox for the Alcoholic
Beverage Control Board; Patty Burley, Denny Dewitt, and Justin
Mack for the Alaska Labor Relations Agency; Rachel Hanks, Lance
Johnson, and Donald Vieira for the Alaska State Board of Public
Accountancy; Michael Dennis, Anthony Ladd, Jason Motyka, Nancy
Shaw, Robert Weel, and Lake Williams for the Alaska Workers'
Compensation Board; Dr. Tim Kanady and John Loyd for the Board
of Chiropractic Examiners; Kristin Tri for the Board of Massage
Therapists; Lena Lafferty, Windy Monrad, and Michael Wilcher for
the Board of Nursing; Richard Holt for the Board of Pharmacy;
Dr. Denise Albert for the Board of Veterinary Examiners; and
John Stallone for the Occupational Safety & Health Review Board.
He said that signing the reports regarding appointments to
boards and commissions in no way reflects an individual member's
approval or disapproval of the appointees, and the nominations
are merely forwarded to the full legislature for confirmation or
rejection.
10:04:05 AM
ADJOURNMENT
There being no further business before the committee, the House
Labor and Commerce Standing Committee meeting was adjourned at
10:04 a.m.